Liz
Claiborne Inc.
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:
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”).
(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.
(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
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