Restricted Share Agreement - Liz Claiborne Inc. and Paul R. Charron
RESTRICTED SHARE AGREEMENT
RESTRICTED SHARE AGREEMENT (the "Agreement"), dated as of March 4, 2004
between LIZ CLAIBORNE, INC., a Delaware corporation (the "Company"), and Paul R.
Charron (the "Grantee").
The Company has determined that the objectives of the Company's 2000 Stock
Incentive Plan (the "Plan") will be furthered by the grant to the Grantee of
49,847 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 Shares").
Notwithstanding any provision hereof, this Agreement shall not become
effective until the Grantee shall have executed and delivered to the Company a
copy of this Agreement.
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
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receipt from the Grantee of this executed Agreement, the Company shall cause to
be issued under the Plan in the name of the Grantee, either represented by a
stock certificate or book entry registration at the Company's transfer agent,
that number of shares of Common Stock set forth on the first page of this
Agreement as Restricted Shares. Such issuance shall be subject to this Agreement
and the restrictions set forth in Sections 2.1 and 5 hereof. No shares or
certificates with respect thereto shall be delivered to the Grantee until the
Restricted Shares represented thereby are free of restrictions as set forth in
this Agreement. Upon the issuance of shares, the Grantee shall have the rights
of a stockholder with respect to the Restricted Shares, subject to the terms,
conditions and restrictions set forth in this Agreement.
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SECTION 2. Restrictions; Vesting.
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2.1 Restricted 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 Shares as a
result of any stock split, 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 on the Restricted Shares, plus the
dividends relating thereto, shall expire on (i) with respect to 16,616
Restricted Shares and the dividends relating to such Restricted Shares, the
first anniversary of the date hereof, provided that the Grantee is then and has
at all times since the date of grant remained an employee of the Company, (ii)
with respect to 16,615 Restricted Shares and the dividends relating to such
Restricted Shares, the second anniversary of the date hereof, provided that the
Grantee is then and has at all times since the date of grant remained an
employee of the Company, and (iii) with respect to 16,616 Restricted Shares and
the dividends relating to such Restricted Shares, December 31, 2006, provided
that the Grantee is then and has at all times since the date of grant remained
an employee of the Company; provided, however, that the restrictions set forth
in Section 2.1 on all Restricted Shares, plus all dividends relating thereto, if
not previously expired, shall expire upon the occurrence of (x) a Change in
Control, provided that the Grantee is then and has at all times since the date
of grant remained an employee of the Company, or (y) a termination of the
Grantee's employment with the Company due to the Grantee's death or Disability
(as defined in the Employment Agreement dated November 3, 2003 between the
Company and the Grantee (as it may be amended from to time, the "Employment
Agreement")). The date on which such restrictions set forth in Section 2.1
expire with respect to a Restricted Share (plus the dividends relating thereto)
is referred to herein as the "Vesting Date" with respect to such Restricted
Share. As soon as practicable after the Vesting Date with respect to any
Restricted Shares, the Company shall deliver to the
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Grantee, subject to the provisions of Section 5, a stock certificate
representing such Restricted Shares and the dividends thereon as described in
Section 4. Shares which become vested shall remain subject to Sections 5 and 6.
SECTION 3. Termination of Employment. Effective upon termination of the
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Grantee's employment with the Company for any reason other than death or
Disability, the Company shall cancel the stock certificate or book-entry
registration representing any unvested Restricted Shares, and the Dividend
Escrow Account (as defined in Section 4) 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 in connection with such cancellation and termination.
SECTION 4. Dividends. Dividends that become payable on Restricted Shares
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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
the 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 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, with such additional
Restricted Shares being subject to the same vesting and other restrictions as
the Restricted Shares with respect to which dividends
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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 4. Any
other non-cash dividends credited with respect to Restricted Shares shall be
subject to the escrow and reinvestment procedures in this Section 4, and shall
be valued for purposes of this Section 4 at the fair market value thereof as of
the relevant RS Dividend Date, as determined by the Compensation Committee of
the Board of Directors (the "Committee") in its sole discretion. On the 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 Shares. The value of any fractional share shall be paid in cash.
SECTION 5. Transferability; Stock Ownership Requirement.
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5.1 Grantee and the Company acknowledge that as a common goal Grantee will
accumulate a significant 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), and that the Restricted Shares (as well as any shares distributed to
Grantee from the Dividend Escrow Account) shall be subject to the restrictions
on sale and transferability set forth in Section 4(e)(iv) of the Employment
Agreement.
5.2 If Grantee is at the time a member of the Company's Executive Council,
Grantee shall not (except for the withholding of shares to pay taxes in
accordance with Section 6) sell, transfer, give, pledge, deposit, alienate or
otherwise encumber or dispose of (as used in this Section 5, 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 reclassification of the Common Stock) issued to Grantee
pursuant hereto if, following such transfer, Grantee would not be the beneficial
owner of unrestricted,
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unencumbered shares of Common Stock with a value not less than the Grantee's
then annual base 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
Chairman of the Board of Directors.
SECTION 6. Withholding Taxes. If and when Restricted Shares vest in
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accordance with the terms hereof and are 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 such
shares. The Company shall, upon the written request of the Grantee,
automatically withhold from delivery shares having a Fair Market Value on the
applicable Vesting Date equal to the amount of tax to be withheld. Fractional
share amounts shall be settled in cash.
SECTION 7. Nature of Payments. The grant of the Restricted Shares hereunder
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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 8. Plan Provisions to Prevail. Subject to the final sentence of
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this Section 8, 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
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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.
Notwithstanding the foregoing provisions of this Section 8 or anything else
herein or in the Plan, the definition of "Change in Control" for purposes of
this Agreement and the Restricted Shares shall be the definition contained in
the Executive Termination Benefits Agreement between the Grantee and the Company
dated January 1, 2001, as it may be amended from time to time, and not the
definition contained in the Plan.
SECTION 9. Miscellaneous.
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9.1 Section Headings. The Section headings contained herein are for
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purposes of convenience only and are not intended to define or limit the
contents of the Sections.
9.2 Notices. Any notice given to the Company hereunder shall be in writing
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and shall be addressed to each of the Company's Senior Vice President, Human
Resources and the Company's Chief Financial Officer, at One Claiborne Avenue,
North Bergen, NJ 07047, or at such other address as the Company may hereafter
designate to the Grantee by notice as provided in this Section 9.2. 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.
9.3 Successors and Assigns. This agreement shall be binding upon and inure
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to the benefit of the parties hereto and the successors and assigns of the
Company and the heirs and personal representatives of the Grantee.
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9.4 Governing Law. This Agreement shall be interpreted, construed and
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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.
By: /s/ Michael Scarpa
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Title: Senior Vice President -
Chief Financial Officer
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PAUL CHARRON
/s/ Paul Charron
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