RESTRICTED CAREER SHARE AGREEMENT
RESTRICTED CAREER SHARE AGREEMENT (the "Agreement"), dated as
of June 20, 1995, between LIZ CLAIBORNE, INC., a Delaware corporation (the
"Company"), and ____________________ (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 __________ issued shares of Common Stock of the Company currently
held by the Company, subject to the terms, conditions and restrictions set out
in this Agreement (the "Restricted Career Shares").
Notwithstanding any provision hereof, this Agreement shall not
become effective until the Grantee shall have executed and delivered to the
Company (a) this Agreement and (b) a stock power duly endorsed in blank, which
will be returned to the Grantee if and when restrictions on the Restricted
Career Shares have expired as provided hereunder.
In consideration of the foregoing and of the mutual
undertakings set forth in this Agreement, the Company and the Grantee agree as
follows:
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SECTION 1. Issuance of Restricted Career Shares. As
soon as practicable after receipt from the Grantee of this executed
Agreement and related stock power, the Company shall cause to be
issued under the Plan in the name of the Grantee a stock
certificate representing that number of shares of Common Stock set
forth on the first page of this Agreement as Restricted Career
Shares. Such certificate shall contain a legend referring to this
Agreement and the restrictions set forth in Sections 2.1 and 6
hereof. Each certificate shall remain in the possession of the
Company until the Restricted Career Shares represented thereby are
free of restrictions as set forth in this Agreement. Upon the
issuance of such certificate, the Grantee shall have the rights of
a stockholder with respect to the Restricted Career Shares, subject
to the terms, conditions and restrictions set forth in this
Agreement.
SECTION 2. Restrictions; Vesting.
2.1 Restricted Career Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of prior to vesting.
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 Career Shares as a result of any stock split, stock dividend,
combination of shares or other change or any exchange, reclassification or
conversion of securities.
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2.2. Unless sooner terminated pursuant to the terms hereof,
and subject to accelerated termination pursuant to Section 2.3, the restrictions
set forth in Section 2.1 shall expire on December 20, 2004, provided that the
Grantee is then and has at all times since the date of grant remained an
employee of the Company. For purposes of this Agreement, "Vesting Date" means
December 20, 2004 and any other date as of which Restricted Career Shares become
vested pursuant to Section 2.3(a), 3.2 or 4. As soon as practicable after a
Vesting Date, the Company shall deliver to the Grantee, subject to the
provisions of Section 6, a stock certificate (containing a legend referring to
the restrictions set forth in Section 6) representing the Restricted Career
Shares which became free of the restrictions set forth in Section 2.1 on the
Vesting Date and dividends thereon as described in Section 5. Shares which
become vested shall remain subject to Sections 6 and 7.
2.3. (a) The following definitions shall apply in this
Agreement:
(1) "Competitor Group" shall mean (i) with respect to the First Three-Year
Performance Vesting Period, the apparel and related companies as
previously designated by the Committee and (ii) with respect to
subsequent Three-Year Performance Vesting Periods, such apparel and
related companies as shall be
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designated by the Committee, and shall for all purposes
hereunder include the Company.
(2) A "Three-Year Performance Vesting Period" shall mean each of
the First Three-Year Performance Vesting Period, the Second
Three-Year Performance Vesting Period and the Third Three-Year
Performance Vesting Period. The "First Three-Year Performance
Vesting Period" shall be the period commencing January 1, 1995
and ending December 31, 1997; the "Second Three-Year
Performance Vesting Period" shall be the period commencing on
January 1, 1998 and ending December 31, 2000; and the "Third
Three-Year Performance Vesting Period" shall be the period
commencing January 1, 2001 and ending December 31, 2003. Each
Three-Year Performance Vesting Period shall consist of sixteen
(16) separate three-year calculation periods (each a
"Performance Period") which shall commence on each of the last
eight Tuesdays of the year preceding the first year of the
Three-Year Performance Vesting Period and on each of the first
eight Tuesdays of the first calendar year of such Three-Year
Performance Vesting Period; provided, that if any such Tuesday
is a day on which major securities markets are not open, the
next preceding day on which such markets are open shall be
substituted.
(3) The "Final Value" for any company shall mean the Market Value
(as defined below) as of the last day of each Performance
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Period of the number of shares of such company's capital stock which
had a market value of $100 as of the first day of such Performance
Period, assuming the reinvestment of any dividends paid with respect to
such shares during the Performance Period on a pre-tax basis in
additional shares of such company's capital stock and taking into
account any stock splits, reclassifications or any similar events;
provided, that if any company enters into bankruptcy reorganization
during any Three-Year Performance Vesting Period, all Final Values of
such company shall be deemed to be $0.00 for all purposes hereunder.
The "Average Final Value" for any company shall mean the average of the
Final Values for such company for each Performance Period in a
Three-Year Performance Vesting Period. The "Market Value" of a share of
a company's capital stock shall be determined for any day as follows:
(i) if the shares are then listed or admitted to trading on a national
securities exchange, the closing sales price of such shares on such day
as reported on the consolidated transaction or other reporting system
for securities listed or traded on such exchange, or in case no such
reported sales take place on such day, the average of the last reported
high bid and low asked prices for the shares on such exchange; and (ii)
if sales of the shares are then reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"), National
Market System, the closing sales price of the shares on such day as
reported on the NASDAQ, National Market System,
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or in case no such reported sales take place on such day, the average
of the last reported high bid and low asked prices for the shares as
reported on the NASDAQ, National Market System; or (iii) if the shares
are not then listed or admitted to trading on a national securities
exchange or if sales of the shares are not then reported on the NASDAQ,
National Market System, the average of the last reported high bid and
low asked prices for the shares in the over-the-counter market, as
reported by NASDAQ or the National Quotation Bureau (or, if such prices
are not so published by NASDAQ or the National Quotation Bureau, as
furnished by any New York Stock Exchange member firm which is a market
maker for such stock). In the event the Market Value cannot be
determined as aforesaid, the Compensation Committee shall in good faith
determine such value on such basis as it considers appropriate. If a
company included in the Competitor Group at the beginning of a Three-
Year Performance Vesting Period is merged into or consolidated with, or
acquired by, another entity, its subsequent Market Value for purposes
of this Agreement shall be deemed to be the fair value at the
transaction date of the consideration received by a holder of a share
of such company's common stock, carried forward from such date to any
subsequent date at a rate of change equal to that of an index to be
constructed and calculated substantially as the Standard and Poor's 500
Index, but reflecting only the performance of the
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shares of the remaining companies comprising the Competitor
Group during such interval.
(b) Vesting of the Restricted Career Shares shall be
accelerated at the end of a Three-Year Performance Vesting Period if (a) the
Grantee has held the Restricted Career Shares for at least 18 months during such
Three-Year Performance Vesting Period and holds such Shares at the end of such
Three-Year Performance Vesting Period and (b) the Company's Average Final Value
for such Three-Year Performance Vesting Period ranks at or above the 50th
percentile of the Average Final Values for all companies in the Competitor
Group; provided, that in no event shall Restricted Career Shares vest with
respect to any Three-Year Performance Vesting Period if the average annual total
shareholder return on the Company's Common Stock during such Three-Year
Performance Vesting Period does not exceed the interest rate on a three-year
Treasury security acquired on the first business day of such Three-Year
Performance Vesting Period.
(c) If the Company's Average Final Value ranks at or above the
75th percentile of the Average Final Values for all of the companies in the
Competitor Group in a Three-Year Performance Vesting Period, all of the
Restricted Career Shares shall vest as of the last day of such Three-Year
Performance Vesting Period. If the Company's Average Final Value ranks at the
50th percentile of the Average Final Values for all companies in the Competitor
Group
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in a Three-Year Performance Vesting Period, one-half of the Restricted Career
Shares shall vest as of the last day of such Three-Year Performance Vesting
Period. If the Company's Average Final Value ranks above the 50th percentile of
the Average Final Values of all of the companies in the Competitor Group in a
Three- Year Performance Vesting Period, but below the 75th percentile, one-half
of the Restricted Career Shares shall vest as of the last day of such Three-Year
Performance Vesting Period, plus the number of Restricted Career Shares equal to
the product of (i) one-half of the Restricted Career Shares multiplied by (ii) a
fraction, the numerator of which is the difference between (1) the Company's
Average Final Value and (2) the Average Final Value for the 50th Percentile
Company (as defined) and the denominator of which is the difference between (1)
the Average Final Value for the 75th Percentile Company (as defined) and (2) the
Average Final Value for the 50th Percentile Company.
(d) For purposes of this Section 2.3, the company representing
the 50th percentile of the Average Final Values for all companies in the
Competitor Group (the "50th Percentile Company") shall be determined as follows:
(i) list all companies in order of Average Final Values;
(ii) multiply the number of companies in the Competitor
Group by 0.50, round any fractional result down to the next
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whole number, and designate the result as "n";
(iii) the nth company, counting up from the bottom of the
list, represents the 50th percentile.
The company representing the 75th percentile (the "75th Percentile Company")
shall be determined in the same manner but substituting 0.75 for 0.50. The
percentile rank of the Company among all companies in the Competitor Group
listed in order of Average Final Values shall be a percentage equal to (i) the
Company's rank in such list, counting up from the bottom, divided by (ii) the
number of companies in the Competitor Group, with the result rounded down to the
nearest whole number.
(e) Restricted Career Shares that do not vest at the end of a
Three-Year Performance Vesting Period may vest subsequently in accordance with
the terms of this Agreement.
SECTION 3. Termination of Employment.
3.1 Except as provided in Section 3.2, effective upon
termination of the Grantee's employment with the Company for any reason, the
Company shall cancel the stock certificate representing any unvested Restricted
Career Shares, and the Dividend Escrow Account (as defined in Section 5) shall
thereupon be terminated, it
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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 in connection with such cancellation and termination.
3.2 (a) For purposes of this Agreement, "Retirement" means
Grantee's ceasing to be employed by the Company and any of its affiliates on or
after the Grantee's 65th birthday, on or after the date on which Grantee has
attained age 60 and completed at least six years of Vesting Service (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, if approved by the Compensation
Committee of the Company's Board of Directors, on or after the date Grantee has
completed at least 20 years of Vesting Service.
(b) For purposes of this Agreement, "Disability" shall mean
Grantee's total physical or mental inability to perform the usual duties of
employment with the Company or any affiliate, which inability continues for at
least six months.
(c) In the event that Grantee's employment with the Company
terminates during the course of a Three-Year Performance Vesting Period on
account of Retirement, Disability or death, Restricted Career Shares that are
then unvested shall be subject to vesting as of the last day of such Three-Year
Performance Vesting
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Period in accordance with the provisions of Section 2.3(c); provided, however,
that the number of Restricted Career Shares that become vested in such
circumstances shall be equal to the number that would otherwise vest pursuant to
Section 2.3(c) multiplied by a fraction, the numerator of which is the number of
months (including any fractional month) elapsed in the Three-Year Performance
Vesting Period prior to the Grantee's employment termination and the denominator
of which is 36.
(d) In the event that Grantee's employment with the Company
terminates after December 31, 2003 and prior to December 20, 2004 on account of
Retirement, Disability or death, Restricted Career Shares that are then unvested
shall become vested on December 20, 2004.
SECTION 4. Change in Control.
4.1 For purposes of this Agreement, "Change in Control" shall
have the meaning set forth in Section 3.7 of the Plan, but shall be deemed to
have occurred only if and after the event constituting such a Change in Control
results in the Company's Common Stock no longer being quoted on an established
market.
4.2 In the event that a Change in Control occurs more than six
months after the date hereof, the date of such Change in Control shall be
treated as though it were the final day of such
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Three-Year Performance Vesting Period, and the performance rankings described in
Section 2.3(c) shall be determined accordingly; provided that the Market Values
of the Competitor Group (other than the Company) shall be based on the eight
Tuesdays before such date; and provided further that the Market Value of the
Company's Common Stock shall be determined based solely upon such Value on the
closing date of the change in control event. The number of Restricted Career
Shares that become vested as of such date shall be the greater of:
(a) the number determined pursuant to Section 2.3(c), as
modified by the above provisions of Section 4.2; or
(b) the excess of (i) over (ii) where:
(i) is a number equal to the product of (A) the
number of Restricted Career Shares originally granted
hereunder multiplied by (B) a fraction, the numerator of which
is the number of months (including any fractional month)
elapsed from January 1, 1995 to the date of Change in Control
and the denominator of which is 120; and
(ii) is the number of Restricted Career Shares
previously vested pursuant to Section 2.3(c).
Restricted Career Shares that do not vest pursuant to this Section
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4.2 shall be forfeited.
SECTION 5. Dividends. Dividends that become payable on
Restricted Career 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 Career 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
Career Shares in a number of phantom shares of Common Stock (including any
fractional share) equal to the quotient of such dividend divided by the 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 Career
Shares under this Agreement, with such additional Restricted Career Shares being
subject to the same vesting and other restrictions as the Restricted Career
Shares with respect to which dividends became payable, and with any fractional
share being treated as a cash dividend that is subject to the escrow and
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reinvestment procedures in this Section 5. Any other non-cash dividends credited
with respect to Restricted Career Shares shall be subject to the escrow and
reinvestment procedures in this Section 5, and shall be valued for purposes of
this Section 5 at the fair market value thereof as of the relevant RS Dividend
Date, as determined by the Committee in its sole discretion. At any Vesting
Date, the Company shall deliver out of escrow to the Grantee that whole number
of shares of Common Stock equal to the whole 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 to the
Restricted Career Shares on which restrictions lapse at such Vesting Date. The
value of any fractional share shall be paid in cash.
SECTION 6. Transferability; Stock Ownership Requirement.
Grantee and the Company acknowledge as a common goal that Grantee will
accumulate a personal holding of unrestricted, unencumbered shares of Common
Stock (either directly, or indirectly through the Company's 401(k) Plan or
Supplemental Executive Retirement Plan or any similar plan hereafter adopted)
having a market value at any date of reference not less than the Grantee's then
annual salary. Grantee shall not (except for the withholding of shares to pay
taxes in accordance with Section 7) sell, transfer, give, pledge, deposit,
alienate or otherwise encumber or dispose of (as used in this Section 6,
collectively "transfer") any shares of Common Stock (or any securities issued as
a dividend or distribution on such
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shares, or in respect of such shares in connection with a recombination or
reclassification of the Common Stock) issued to Grantee pursuant hereto if,
following such transfer, Grantee would not be the beneficial owner of
unrestricted, unencumbered shares of Common Stock with a value not less than
Grantee's then annual salary. The Committee may in appropriate circumstances
waive the operation of the foregoing sentence; provided that if Grantee is not
an executive officer of the Company under the applicable regulations of the
Securities and Exchange Commission, such waiver may be granted by the Company's
Chief Executive Officer.
SECTION 7. Withholding Taxes. Whenever a stock certificate
representing Restricted Career 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. Until an election by Grantee under the provisions currently
set forth in Rule 16b- 3(d)(1)(i) as adopted February 21, 1991 under the
Securities Exchange Act of 1934 (the "New Rule") shall have become effective in
accordance with the terms of the New Rule, the Company shall automatically
withhold from delivery shares having a Fair Market Value on the Vesting Date
equal to the amount of tax to be
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withheld. Fractional share amounts shall be settled in cash. Any such election
by Grantee under the New Rule shall take effect in accordance with the New Rule
and shall remain in effect until revoked by an election made at least six months
in advance of the revocation date.
SECTION 8. Nature of Payments. The grant of the Restricted
Career 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 9. 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 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
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govern.
SECTION 10. Miscellaneous.
10.1 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.
10.2 Notices. Any notice 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 10.2. Any notice
given to the Grantee hereunder shall be addressed to the Grantee at the address
set forth beneath his or her signature hereto, or at such other address as (s)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.
10.3 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 3.2 of this
Agreement, the heirs and personal representatives of the Grantee.
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10.4 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:________________________
GRANTEE
Name:__________________________
Date:__________________________
