EXHIBIT 10.1
December 24, 2008
William L. McComb,
     Re: Employment Agreement
Dear Bill:
     This is your amended and restated Employment Agreement (this “Agreement”)
with Liz Claiborne, Inc. (the “Company”). This Agreement is being amended and
restated as of the date first above written with the intention to comply with
Section 409A of the Internal Revenue Code of 1986, as amended (“IRC”), as
further described in Section 12(b). This Agreement sets forth the terms and
conditions of your continued employment with the Company and its subsidiaries
and affiliates from time to time (together, the “Group”) during the term of your
employment with the Company (the “Term of Employment”).
1. Your Position, Performance and Other Activities.
     (a) Position. At all times during the Term of Employment, you will (i) hold
the title and office of, and serve in the position of, Chief Executive Officer
of the Company (“CEO”), and (ii) serve as a member of the Board of Directors of
the Company (the “Board”).
     (b) Authority, Responsibilities and Reporting. At all times during the Term
of Employment, you will report directly and solely to the Board, and will
perform such duties and services as a director and the CEO (including services
as an officer, director or equivalent position of any subsidiary, affiliated
company or venture of the Group, without additional compensation) as the Board
will reasonably and lawfully request consistent with your position. You will be
based at the Company’s principal executive offices, currently in New York,
New York, subject to reasonable and customary travel requirements. Your
performance will be reviewed periodically by the Board.
     (c) Performance. During the Term of Employment, you agree to (i) devote
your full business time and attention and best efforts to the business and
affairs of

 

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the Group and to faithfully and diligently perform, using your best efforts, all
of your duties and responsibilities; (ii) abide by all applicable policies of
the Group from time to time in effect; and (iii) not take any action or conduct
yourself in any manner which would tend to harm the reputation or goodwill of
the Group.
     (d) Other Activities. During the Term of Employment, you may (i) serve, but
only with the express written prior approval of the Board (which shall not be
unreasonably withheld), as director, trustee or member of a committee of any
business organization if such service involves no conflict of interest with the
interests of the Group; (ii) engage in charitable and community activities; and
(iii) manage your personal investments and affairs; provided that such
activities do not, individually or collectively, materially interfere with the
performance of your duties and responsibilities of your employment or otherwise
constitute restricted activities under Sections 7 and 8 hereof. You hereby
represent that you have disclosed all of your current board affiliations to the
Company prior to entering into this Agreement.
2. Term of Your Employment.
     (a) Term. Your employment under this Agreement (a) began on November 6,
2006 (the “Start Date”) and (b) will end at the close of business on the earlier
of (1) November 6, 2009, or (2) the effective date of early termination of your
employment in accordance with Section 5 hereof (the “Initial Term”). The Company
may provide you notice of its intent to extend and renew the Term of Employment
beyond the conclusion of (i) the Initial Term or (ii) any extension of the Term
of Employment at least 90 days prior to the end of the Initial Term or the end
of any extension of the Term of Employment after the Initial Term.
     (b) Non-Extension. If the Company fails to timely extend and renew the Term
of Employment at least 90 days prior to the end of the Initial Term or the end
of any extension period of the Term of Employment after the Initial Term in
accordance with Section 2(a) hereof at a time when you have been continuously
employed by the Company as its CEO and are willing and able to continue in the
employ of the Company as its CEO, then, subject to the remainder of this
Section 2:
          (1) The Company will pay to you on the date specified in Section 2(d)
below a lump sum cash payment equal to $4,000,000, provided that you continue to
be employed until the earlier of (i) the end of the Term of Employment or (ii) a
date mutually agreed to in writing by you and the Company that is earlier than
the end of the Term of Employment;
          (2) 50% of the Other Restricted Stock (as defined and described in
Section 3(c)(1)(D) hereof) will immediately vest; and
          (3) Upon your termination of employment at or following the end of the
Term of Employment, for a period of two (2) years following the date of such
termination of employment, the Company will provide you and your family with
coverage substantially identical to that provided to other senior executives of
the Group in its medical, dental, vision and life insurance programs (subject in
the case

 

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of life insurance to insurability at standard rates), or the after-tax
equivalent in cash at the Company’s discretion.
     (c) No Severance Benefits. The Company and you hereby acknowledge and agree
that the payments and benefits set forth in Section 6 of this Agreement shall be
void and shall no longer apply under any circumstance if you are entitled to
receive the payments and benefits set forth in Section 2(b).
     (d) Release Requirement; Payment Date. The Company expressly conditions its
provision of all payments and benefits due to you pursuant to this Section 2 on
receipt from you and non-revocation of a full release of all claims against the
Group, and its officers, directors, and affiliates, in substantially the form
attached as Exhibit A, on or within 55 days following the end of the Term of
Employment. The Company shall furnish to you the form of release no later than
five (5) days following the end of the Term of Employment. The date of payment
and vesting of the amounts set forth in Sections 2(b)(1) and (2) shall not be
later than 3 business days after the effective date of the release required by
this Section 2(d).
     (e) Possible At-Will Employment After Non-Extension. In the event of the
non-extension of the Term of Employment as described in Section 2(b), after the
end of the Term of Employment, the Company and you may determine that you will
continue to be an employee of the Company “at-will,” in which case the
provisions of Sections 3(c)(2), 7, 8, 11, 12 and 13 hereof shall survive the
non-extension of the Term of Employment and continue to be in effect to the
extent applicable.
3. Your Compensation.
     (a) Salary. During the Term of Employment, you will receive an annualized
base salary (your “Salary”) of not less than $1,300,000. The Company will review
your Salary annually and may increase it at any time. However, your Salary may
not be decreased at any time (including after any increase), and any increase in
your Salary will not reduce or limit any other obligation to you under this
Agreement. Your Salary will be paid in accordance with the Group’s normal
practices for senior executives of the Group.
     (b) Bonus. During the Term of Employment, you will participate, in
accordance with and subject to the terms and conditions thereof and the
provisions of this Agreement, in the Company’s Section 162(m) Cash Bonus Plan.
Your target bonus under such Section 162(m) Plan for each fiscal year of your
employment will be 100% of your Salary. For each such year, the Compensation
Committee of the Board (the “Compensation Committee”) will establish a target
performance threshold (the “Target Threshold”), a minimum performance threshold
(the “Minimum Threshold”) and a maximum performance threshold (the “Maximum
Threshold”). All such thresholds will be determined in good faith by the
Compensation Committee. Your bonus (the “Bonus”) will be computed in the
following manner for each such year:

 

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                    (1) If the performance results for such year are below the
Minimum Threshold, you will receive no Bonus for such year;
                    (2) If the performance results for such year equal the
Minimum Threshold, you will receive a Bonus of 50% of your Salary for such year;
                    (3) If the performance results for such year equal the
Target Threshold, you will receive a Bonus of 100% of your Salary for such year;
                    (4) If the performance results for such year equals or
exceeds the Maximum Threshold, you will receive a bonus of 200% of your Salary
for such year; and
                    (5) If the performance results for such year fall between
the Thresholds set forth herein, you will receive a Bonus as determined by the
Compensation Committee, which will be an amount based on straight line
interpolation based on the actual performance results and the Bonus percentages
established herein.
(c) Initial Equity Awards.(1) In addition to your Salary and Bonus, and as an
inducement to your agreement to join the Company as its CEO, on your Start Date,
you were (A) granted options to purchase 185,200 shares of the Company’s common
stock with an exercise price equal to the fair market value of the Company’s
common stock at the close of business on the Start Date, (B) granted options to
purchase 63,150 shares of the Company’s common stock with an exercise price
equal to 1.2 multiplied by the fair market value of the Company’s common stock
at the close of business on the Start Date, (C) awarded 76,355 restricted shares
of the Company’s common stock (your “Make-Whole Restricted Stock”) and
(D) awarded 62,500 restricted shares of the Company’s common stock (your “Other
Restricted Stock”).
     (2) All shares of Company common stock acquired pursuant to the exercise of
options (including the Sign-On Options) and the vesting and delivery of stock
awards (excluding the Make-Whole Restricted Stock but including the Other
Restricted Stock) will be subject to the following restrictions on sale and
transferability (except as limited below): With respect to any exercise of
options prior to December 31, 2009 and any stock that vests and is delivered
prior to December 31, 2009, you will be immediately permitted to sell only 25%
of (A) with respect to options, the net shares acquired pursuant to such
exercise, and (B) with respect to stock, the net shares acquired pursuant to the
vesting and delivery of such restricted stock or restricted stock units, and you
must retain the remainder of the net shares in accordance with the following:
you will be permitted to sell half of such remaining net shares only on or after
December 31, 2009, and you will be permitted to sell the remaining half of such
remaining net shares only on or after December 31, 2010. With respect to any
exercise of options or any stock that vests and is delivered on or after
December 31, 2009 but prior to December 31, 2010, you will

 

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be immediately permitted to sell 62.5% of the net shares, and you will be
permitted to sell the remaining 37.5% of such net shares only on or after
December 31, 2010.
     The foregoing restrictions on sale and transferability will be limited by
each of the following: (x) you will be permitted at any time to transfer shares
to any one or more of your spouse, children, or grandchildren, one or more
trusts for the primary benefit of you or any or all of them, or limited
partnerships or other entities wholly-owned by you or any one or more of the
individuals or entities referred to in this clause (x), provided that such
transferred shares will be deemed to be held by you for purposes of the
restrictions on sale and transfer under this Section 3(c)(2), (y) the
restrictions on sale and transfer will not apply to any involuntary transfer or
a transfer by operation of law, such as upon the consummation of a merger or
other change in control of the Company or in connection with a bankruptcy
proceeding, and (z) the restrictions on sale and transfer will automatically
terminate upon your death or your Disability. Additionally, upon a termination
of your employment by the Company without Cause or by you for Good Reason, the
Company will determine in good faith whether to waive the foregoing restrictions
on sale and transferability, it being agreed that the Company will, in making
such determination, operate under a presumption that such restrictions will
generally be waived.
     For purposes of this Section 3(c)(2), the (1) “net shares acquired
pursuant” to a stock option exercise will mean (A) the number of shares which
are purchased pursuant to such exercise minus (B) any such shares which are not
distributed to you in order to satisfy applicable tax withholding or in order to
pay the exercise price (or which are sold by you to reimburse yourself or any
advance of any such withholding or exercise price) and (2) “net shares acquired
pursuant to” the vesting and delivery of restricted stock or restricted stock
units will mean (C) the number of shares that actually vest minus (D) any such
shares which are not distributed to you in order to satisfy applicable tax
withholding (or which are sold by you to reimburse yourself for any advance of
any such withholding).
     (d) Other Executive Compensation Plans. During the Term of Employment, you
will be entitled to participate in all of the Group’s executive compensation
plans, including any management incentive plans, deferred compensation plans,
supplemental retirement plans and stock and stock option plans, on a basis that
is at least as favorable as that provided to other senior executives of the
Group. Stock options and restricted shares and/or all other equity which may be
granted to other senior executives of the Group (“Equity Awards”) from and after
the Start Date shall be granted to you at the same time and subject to the terms
and conditions (including vesting schedules) that are substantially identical to
those Equity Awards granted to such other senior executives.

 

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4. Other Employee Benefits.
     (a) Vacation. You will be entitled to paid annual vacation during the Term
of Employment (totaling at least four weeks a year) on a basis that is at least
as favorable as that provided to other senior executives of the Group.
     (b) Business Expenses. The Company will reimburse you during the Term of
Employment, in accordance with its standard senior executive policies from time
to time in effect, for such reasonable and necessary vouchered out-of-pocket
business expenses as may be incurred by you during the Term of Employment in the
performance of your duties and responsibilities under this Agreement. The
Company will pay directly or reimburse you for all attorneys’ fees,
disbursements and costs incurred by you in connection with amending and
restating this Agreement, up to a maximum of $12,500, subject to proper
documentation.
     (c) Travel and Transportation. During the Term of Employment, the Company
will provide you with appropriate ground transportation at the level consistent
with the practices in effect immediately prior to the date hereof. Your air
travel will be subject to the Company’s travel policy in effect from time to
time.
     (d) Housing. During the Term of Employment, the Company will provide you
with the use of an appropriate Company-owned or leased apartment in New York
City.
     (e) Employee Benefit Plans. During the Term of Employment, you and your
family will participate, generally on the same basis as other senior executives
of the Group, in accordance with and subject to the respective terms and
conditions thereof as to eligibility and otherwise, in the Company’s retirement,
medical, dental, vision, long-term disability and life insurance programs
(subject in the case of life insurance to insurability at standard rates) and
employee discount purchase program.
     (f) Plans May be Changed. Your rights under this Agreement with respect to
the Company’s Section 162(m) Cash Bonus Plan, 401(k) Savings Plan, Supplemental
Executive Retirement Plan, Incentive Plan, medical, dental, vision, long-term
disability and life insurance programs and other programs, perquisites and
policies shall not preclude the Group 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; provided,
however, that if the Company’s Section 162(m) Cash Bonus Plan, Supplemental
Executive Retirement Plan, or Incentive Plan are terminated or modified in any
material adverse respect with respect to your compensation opportunities,
benefits, or other rights such that your overall package of compensation and
benefits is materially adversely affected, the Company shall provide you with an
alternative or substitute plan or arrangement such that your overall package of
compensation and benefits is not materially adversely affected.

 

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5. Early Termination of Your Employment.
     (a) No Reason Required. You or the Company may terminate your employment
prior to the end of the Term of Employment at any time for any reason, or for no
reason, subject to the terms and conditions of this Agreement.
     (b) Termination by the Company for Cause.
          (1) “Cause” means any of the following:
     (A) Your willful or intentional failure or refusal to perform or observe
any of your material duties, responsibilities or obligations set forth in, or as
contemplated under, this Agreement, if such breach is not cured, if curable,
within 30 days after notice thereof to you by the Company;
     (B) Any willful or intentional act or any willful or intentional failure to
act, either of which of a material nature, involving fraud, misrepresentation,
theft, embezzlement, dishonesty or moral turpitude affecting the Group or any
customer, supplier or employee of the Group;
     (C) Your conviction of (or plea of nolo contendere to) an offense which is
a felony in the jurisdiction involved or a misdemeanor in the jurisdiction
involved but which involves moral turpitude;
     (D) Any willful or intentional act which could reasonably be expected to
materially injure the reputation, business or business relationships of the
Group, or your reputation or business relationships, if such breach is not
cured, if curable, within 30 days after notice thereof to you by the Company;
     (E) Your willful or intentional failure to comply with any reasonable and
lawful request or direction of the Board not contrary to the provisions of this
Agreement and the policies of the Company, if such breach is not cured, if
curable, within 30 days after notice thereof to you by the Company.
For this definition, no act, or failure to act, on your part will be deemed
“willful” or “intentional” unless done, or omitted to be done, by you without
reasonable belief that your action or omission was in the best interests of the
Group.
     (2) To terminate your employment “for Cause”, the Board must determine in
good faith that Cause has occurred after endeavor in good faith to provide you
with a prompt hearing before the Board (at which you may be accompanied by
counsel) prior to such determination.

 

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     (3) The Company may place you on paid leave for up to 30 consecutive days
while it is determining whether there is a basis to terminate your employment
for Cause. This leave will not constitute Good Reason.
(c) Termination by You for Good Reason.
     (1) “Good Reason” means any of the following:
     (A) A change so that your are no longer serving as the CEO or a member of
the Board, a change so that you no longer report solely and directly to the
Board, or a material adverse change in your duties as described in Section 1
hereof, including the assignment to you of duties materially inconsistent with
your position (including as a director), in any case without your prior written
consent, which is not cured within 30 days after written notice of such
circumstances by you to the Company;
     (B) A material adverse change in the nature or scope of your authority,
power, function, duties or responsibilities as CEO, without your prior written
consent, which is not cured within 30 days after written notice of such
circumstances by you to the Company;
     (C) The Company’s moving its principal executive offices by more than 35
miles if such move increases your commuting distance by more than 35 miles,
without your prior written consent; or
     (D) A material breach by the Company of any of its material obligations
under this Agreement, without your prior written consent, which is not cured
within 30 days after written notice thereof is given by you to the Company.
     (2) To terminate your employment “for Good Reason”, Good Reason must have
occurred. Unless you will give the Company notice of any event which, after any
applicable notice and the lapse of any applicable 30-day grace period, would
constitute Good Reason within 90 days of the initial existence of such event,
such event will cease to be an event constituting Good Reason. Subject to the
Company’s cure rights described above, you may terminate your employment by
written notice to the Company at any time that Good Reason for the termination
exists.
     (d) Termination on Disability or Death.
     (1) Your employment will terminate, at the Group’s option, by written
notice to you (or your legal representative) upon your Disability. “Disability”
means your inability to perform your duties and responsibilities as contemplated
under this Agreement for a period of more than 180 consecutive days due to
physical or mental incapacity or impairment. A determination of Disability will
be made by a licensed

 

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physician satisfactory to both you and the Company; provided that if you and the
Company cannot agree as to a licensed physician, then each will select a
licensed physician and these two together will select a third licensed
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 will have the right to present to the Company and such licensed physician
such information and arguments on your behalf as you or they deem appropriate,
including the opinion of your personal physician.
(2) Your employment will terminate automatically on your death.
6. The Company’s Obligations in Connection With Your Termination.
     (a) General Effect. On a termination of your employment in accordance with
Section 5 hereof, your employment will end, and the Group will have no further
obligations to you, except as provided in this Section 6.
     (b) For Good Reason or Without Cause. If, during the term of this
Agreement, the Company terminates your employment without Cause or you terminate
your employment for Good Reason:
          (1) The Company will pay your accrued but unpaid Salary.
     (2) The Company will pay, as a severance payment, $4,000,000.
     (3) Your Make-Whole Restricted Stock (but, for purposes of clarity, not
your Sign-On Options) will immediately vest in full.
     (4) Your Other Restricted Stock will be treated as follows:
          (A) If the termination of your employment occurs on or after the first
anniversary of the Start Date, 25% of the Other Restricted Stock will
immediately vest; and
          (B) If the termination of your employment occurs on or after the third
anniversary of the Start Date, an additional 25% of the Other Restricted Stock
will immediately vest (such that, for purposes of clarity, an aggregate of 50%
of the Other Restricted Stock shall be vested as of such date in such
circumstance).
     (5) For two (2) years, the Company will provide you and your family with
coverage substantially identical to that provided to other senior executives of
the Group in its medical, dental, vision, long-term disability and life
insurance programs (subject in the case of life insurance to insurability at
standard rates), or the after-tax equivalent in cash at the Company’s
discretion.

 

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     (c) For Cause or without Good Reason, for your Disability or Death. In the
event that your employment is terminated due to (i) a termination by the Company
for Cause, (ii) your resignation without Good Reason, or (iii) a termination of
your employment on account of your death or Disability, the Company will pay to
you an amount equal to your accrued but unpaid Salary through the date of such
termination, and, in the case of death or Disability, (x) the Company will
continue to provide you and/or your family with coverage substantially identical
to that provided to other senior executives of the Group in its medical, dental,
long-term disability and life insurance programs (subject in the case of life
insurance to insurability at standard rates) for 12 months following the date of
such termination and (y) all unvested Equity Awards (including but not limited
to all Equity Awards provided for in Section 3(c) hereof) will immediately vest.
     (d) Change in Control. Notwithstanding the foregoing, in the event that
your employment is terminated under circumstances constituting a Covered
Termination (as defined in the Executive Termination Benefits Agreement between
you and the Company dated October 13, 2006 (the “Change in Control Agreement”))
during the Protected Period (as defined in the Change in Control Agreement),
this Section 6 will be of no force or effect, and the provisions of the Change
in Control Agreement will govern.
     (e) Condition. The Company expressly conditions its provision of all
payments and benefits due to you pursuant to this Section 6 on receipt from you
and non-revocation of a full release of all claims against the Group, and its
officers, directors, and affiliates, in substantially the form attached as
Exhibit A. The Company shall furnish to you the form of release no later than
five (5) days following the end of the Term of Employment.
     (f) Timing. The benefits provided in this Section 6 will begin at the end
of your employment, and any cash payments owed to you under this Section 6 will
be paid in one lump sum payment within 55 days of the end of your employment
(but in no event later than 3 business days after the effective date of the
release required by Section 6(e) hereof) or at any earlier time required by
applicable law.
     (g) Sole Remedy. Your rights set out in this Section 6 will constitute your
sole and exclusive rights and remedies as a result of your actual or
constructive termination of employment without Cause or for Good Reason, and you
hereby waive any such other claims against the Group in such event.
7. Proprietary Information.
     (a) The 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 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 will be the sole and exclusive property of
the Group. Confidential Information includes all proprietary information that
has or could have

 

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commercial value or other utility in the business in which the Group is engaged
or contemplates engaging, and all proprietary information the unauthorized
disclosure of which could be detrimental to the interests of the Group, whether
or not such information is specifically labeled as Confidential Information, and
includes any and all information developed, obtained or owned by the Group
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, tests 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 will not in any event
include information that (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) you are required to disclose by applicable law,
regulation, or legal process (provided, that unless prohibited by law, 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 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 Group’s interests, an invasion of privacy and an improper disclosure of
trade secrets. You agree that you will 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 Group, any Confidential Information,
either during the Term of Employment or thereafter.
     (c) In the event your employment with the Company ceases for any reason,
you will not remove from the 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 Group, including those which
relate to or contain Confidential Information, 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 the 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 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 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 Group.

 

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     (e) You and the Company agree that you will not disclose to the Group or
use for the 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.
8. Ongoing Restrictions on Your Activities.
     (a) You acknowledge and agree (1) that the services to be rendered by you
for the Group are of a special, unique, extraordinary and personal character,
(2) that you have and will continue to develop a personal acquaintance and
relationship with one or more of the Group’s customers, employees, suppliers and
independent contractors, which may constitute the Group’s primary or only
contact with such customers, employees, suppliers and independent contractors,
and (3) that you will be uniquely identified by customers, employees, suppliers,
independent contractors and retail consumers with the Group’s products. You
acknowledge that you have been represented by counsel and fully understand the
provisions of this Agreement. Consequently, you agree that it is fair,
reasonable and necessary for the protection of the business, operations, assets
and reputation of the Group that you make the covenants contained in this
Section 8.
     (b) You agree that, during the Term of Employment and for a period of
18 months thereafter, you will 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 8(b) will prevent you from owning less than 2% of the voting stock of a
publicly held corporation for investment purposes. For purposes of this
Section 8(b), the term “Competing Business” will mean a business engaged in the
design, manufacture, distribution or marketing of better apparel and related
products that competes with any business then being operated by the Company
(except where such competition is de minimis) provided that the Company was
operating such business during the Term of Employment.
     (c) You agree that, during the Term of Employment and for a period of
18 months thereafter, you will not, directly or indirectly,
          (1) persuade or seek to persuade any customer of the Group to cease to
do business or to reduce the amount of business which any customer has
customarily done or contemplates doing with the Group, whether or not the
relationship between the Group and such customer was originally established in
whole or in part through your efforts;
          (2) seek to employ or engage, or assist anyone else to seek to employ
or engage, any person (other than your executive assistant) who at any time
during the year preceding the termination of your employment hereunder was in
the employ of the Group or was an independent contractor providing material
manufacturing, marketing, sales, financial or management consulting services in

 

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William L. McComb   -13-

connection with the business of the Group and with whom you had regular contact;
or
          (3) interfere in any manner in the relationship of the Group with any
of its suppliers or independent contractors, whether or not the relationship
between the Group and such supplier or independent contractor was originally
established in whole or in part by your efforts.
As used in this Section 8, the terms “customer” and “supplier” will 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 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 and the Company agree that, during your employment and for a period
of 18 months thereafter, you and it will take no action which is intended, or
would be reasonably expected, to harm, in the case of you, the Group or its
reputation or which would reasonably be expected to lead to unwanted or
unfavorable publicity to the Group and, in the case of the Company, you or your
reputation or which would reasonably be expected to lead to unwanted or
unfavorable publicity to you.
     (e) You acknowledge that the Company and the Group would sustain
irreparable harm and injury in the event of a violation by you of any of the
provisions of Sections 7 and 8 hereof, and by reason thereof, you consent and
agree that if you violate any of such provisions, in addition to any other
remedies available, the Company and the Group will be entitled to a decree
specifically enforcing such provisions, and will be entitled to a temporary and
permanent injunction restraining you from committing or continuing any such
violation, from any court of competent jurisdiction (as more fully described in
Section 11(d) hereof), without the necessity of proving actual damages, posting
any bond or seeking arbitration in any forum.
9. Successors.
     (a) Payments on Your Death. If you die and any amounts become payable under
this Agreement, we will pay those amounts to your estate within 30 days of the
date of your death.
     (b) Assignment by You. You may not assign this Agreement without the
Company’s consent. Also, except as required by law, your right to receive
payments or benefits under this Agreement may not be subject to execution,
attachment, levy or similar process. Any attempt to effect any of the preceding
in violation of this Section 9(b), whether voluntary or involuntary, will be
void.
     (c) Company’s Successors. The rights and obligations of the Company
hereunder will be binding upon the successors and assigns of the Company and run
in favor of any successor and any assignee of all or substantially all of the

 

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William L. McComb   -14-

assets of the Company provided that such successor or assignee agrees in writing
to assume all of the obligations of the Company under this Agreement. No such
assumption will relieve the Company of its liability to you under this
Agreement.
10. Life Insurance.
     You agree that the Group will have the right to obtain and maintain life
insurance on your life, at its expense, and for its benefit. You agree to
cooperate fully with the 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.
11. Disputes.
     (a) Employment Matter. This Section 11 applies to any controversy or claim
between you and the Group arising out of or relating to or concerning this
Agreement or any aspect of your employment with the Group or the termination of
that employment (together, an “Employment Matter”).
     (b) Mandatory Arbitration. Subject to the provisions of this Section 11,
any Employment Matter will be finally settled by arbitration in the County of
New York administered by the American Arbitration Association under its
Commercial Arbitration Rules then in effect. However, the rules will be modified
in the following ways: (1) each arbitrator will agree to treat as confidential
evidence and other information presented to the same extent as the information
is required to be kept confidential under Section 7 hereof, (2) a decision must
be rendered within 10 business days of the parties’ closing statements or
submission of post-hearing briefs and (3) the arbitration will be conducted
before a panel of three arbitrators, one selected by you within 10 days of the
commencement of arbitration, one selected by the Company in the same period and
the third selected jointly by these arbitrators (or, if they are unable to agree
on an arbitrator within 30 days of the commencement of arbitration, the third
arbitrator will be appointed by the American Arbitration Association; provided
that the arbitrator will be a partner or former partner at a nationally
recognized law firm).
     (c) Limitation on Damages. You and the Group agree that there will be no
punitive damages payable as a result of any Employment Matter and agree not to
request punitive damages.
     (d) Injunctions and Enforcement of Arbitration Awards. You or the Group may
bring an action or special proceeding in a state or federal court of competent
jurisdiction sitting in the County of New York to enforce any arbitration award
under Section 11(b) hereof. Also, the Group may bring such an action or
proceeding, in addition to its rights under Section 11(b) hereof and whether or
not an arbitration proceeding has been or is ever initiated, to temporarily,
preliminarily or permanently enforce any part of Sections 7 and 8 hereof.
     (e) Jurisdiction and Choice of Forum. You and the Group irrevocably submit
to the exclusive jurisdiction of any state or federal court located in the

 

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William L. McComb   -15-

County of New York over any Employment Matter that is not otherwise arbitrated
or resolved according to Section 11(b) hereof. This includes any action or
proceeding to compel arbitration or to enforce an arbitration award. Both you
and the Group (1) acknowledge that the forum stated in this Section 11(e) has a
reasonable relation to this Agreement and to the relationship between you and
the Group and that the submission to the forum will apply even if the forum
chooses to apply non-forum law, (2) waive, to the extent permitted by law, any
objection to personal jurisdiction or to the laying of venue of any action or
proceeding covered by this Section 11(e) in the forum stated in this Section,
(3) agree not to commence any such action or proceeding in any forum other than
the forum stated in this Section 11(e) and (4) agree that, to the extent
permitted by law, a final and non-appealable judgment in any such action or
proceeding in any such court will be conclusive and binding on you and the
Group. However, nothing in this Agreement precludes you or the Group from
bringing any action or proceeding in any court for the purpose of enforcing the
provisions of Section 11(b) hereof and this Section 11(e).
     (f) Governing Law. This Agreement will be governed by and construed in
accordance with the law of the State of New York applicable to contracts made
and to be performed entirely within that State.
     (g) Costs. In the event that (1) you make a claim against the Company under
this Agreement, (2) the Company disputes such claim, and (3) you prevail with
respect to such disputed claim, then the Company will reimburse you for your
reasonable costs and expenses (including reasonable attorneys’ fees) incurred by
you in pursuing such disputed claim.
12. Tax Matters.
     (a) Withholding. You and the Group will treat all payments to you under
this Agreement as compensation for services as an employee. Accordingly, the
Group will withhold from any payment any taxes that are required to be withheld
under any law, rule or regulation (and, for the purpose of clarity, all amounts
set forth herein will represent gross amounts in U. S. dollars, prior to the
deduction for employment and income taxes).
     (b) Section 409A.
          (1) Full Compliance. It is the parties’ intention that the payments
and benefits to which you could become entitled in connection with your
employment under this Agreement be exempt from or comply with IRC Section 409A
and the regulations and other guidance promulgated thereunder. The provisions of
this Section 12(b) shall qualify and supersede all other provisions of this
Agreement as necessary to fulfill the foregoing intention. If you or the Company
believes, at any time, that any of such payment or benefit is not exempt or does
not so comply, you or it will promptly advise the other party and will negotiate
reasonably and in good faith to amend the terms of such arrangement such that it
is exempt or complies with IRC Section 409A (with the most limited possible
economic effect on you and on the Company) so as to eliminate to the maximum
extent practicable any additional tax, interest and/or penalties that may

 

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William L. McComb   -16-

apply under IRC Section 409A. The Company agrees that it will not, without your
prior written consent, knowingly (or as to which it should have known) take any
action, or knowingly (or as to which it should have known) refrain from taking
any action, other than as required by law, that would result in the imposition
of tax, interest and/or penalties upon you under IRC Section 409A, unless such
action or omission is pursuant to your written request.
          (2) Separate Payments. To the extent applicable, each and every
payment made pursuant to Section 6 of this Agreement shall be treated as a
separate payment and not as a series of payments treated as a single payment for
purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii).
          (3) Specified Employee. If you are a “specified employee” (determined
by the Company in accordance with IRC Section 409A and Treasury
Regulation Section 1.409A-3(i)(2)) as of your “separation from service” (as such
term is defined for purposes of IRC Section 409A and the Treasury Regulations
promulgated thereunder (a “Separation from Service”)) with the Group, and if any
payment, benefit or entitlement provided for in this Agreement or otherwise both
(i) constitutes a “deferral of compensation” within the meaning of IRC
Section 409A (“Nonqualified Deferred Compensation”) and (ii) cannot be paid or
provided in a manner otherwise provided herein without subjecting you to
additional tax, interest and/or penalties under IRC Section 409A, then any such
payment, benefit or entitlement that is payable during the first 6 months
following the date of termination shall be paid or provided to you in a lump sum
cash payment (including interest thereon calculated using the prime rate of
interest as reported in the Wall Street Journal on the date which is 5 business
days prior to the date of payment) to be made on the earlier of (x) your death
and (y) the first business day of the seventh month immediately following your
Separation from Service.
          (4) Expense Reimbursements. Except to the extent any reimbursement,
payment or entitlement under this Agreement does not constitute Nonqualified
Deferred Compensation, (i) the amount of expenses eligible for reimbursement or
the provision of any in-kind benefit (as defined in IRC Section 409A) to you
during any calendar year will not affect the amount of expenses eligible for
reimbursement or provided as in-kind benefits to you in any other calendar year
(subject to any lifetime and other annual limits provided under the Company’s
health plans), (ii) the reimbursements for expenses for which you are entitled
shall be made on or before the last day of the calendar year following the
calendar year in which the applicable expense is incurred, (iii) the right to
payment or reimbursement or in-kind benefits may not be liquidated or exchanged
for any other benefit and (iv) in no event shall the Company’s obligations to
make such reimbursements or to provide such in-kind benefits apply later than
your remaining lifetime (or if longer, through the 20th anniversary of the date
first above written).
          (5) Reimbursement of Expenses in Connection with a Separation from
Service. Any payment or benefit paid or provided under Section 6 hereof or
otherwise paid or provided due to a Separation from Service that is exempt from
IRC Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(v) will
be paid or provided to you only to the extent the expenses are not incurred or
the

 

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William L. McComb   -17-

benefits are not provided beyond the last day of your second taxable year
following your taxable year in which the Separation from Service occurs;
provided, however, that the Company reimburses such expenses no later than the
last day of the third taxable year following your taxable year in which your
Separation from Service occurs.
          (6) Involuntary Separation due to Good Reason. It is the parties’
intention that the definition of Good Reason and the separation-from-service
procedures specified in Section 5 hereof satisfy the conditions set forth in
Treasury Regulation Section 1.409A-1(n)(2) for a termination for Good Reason to
be treated as an “involuntary separation from service” for purposes of IRC
Section 409A.
          (7) Dispute Resolution Payments. Any dispute resolution payment
(including related reimbursable expenses, fees and other costs) that does not
constitute a “legal settlement” in accordance with Treasury
Regulation 1.409A-1(b)(11) will be paid by the Company to you not later than the
last day of your taxable year following the year in which the dispute is
resolved.
          (8) Separation from Service. Any payment, benefit or entitlement
provided for in this Agreement that constitutes Nonqualified Deferred
Compensation due upon a termination of employment shall be paid or provided to
you only upon a Separation from Service.
13. General Provisions.
(a) Construction. (1) References (A) to Sections are to sections of this
Agreement unless otherwise stated; (B) to any contract (including this
Agreement) are to the contract as amended, modified, supplemented or replaced
from time to time; (C) to any statute, rule or regulation are to the statute,
rule or regulation as amended, modified, supplemented or replaced from time to
time (and, in the case of statutes, include any rules and regulations
promulgated under the statute) and to any section of any statute, rule or
regulation include any successor to the section; (D) to any governmental
authority include any successor to the governmental authority; (E) to any plan
include any programs, practices and policies; (F) to any entity include any
corporation, limited liability company, partnership, association, business trust
and similar organization and include any governmental authority; and (G) to any
affiliate of any entity are to any person or other entity directly or indirectly
controlling, controlled by or under common control with the first entity.
     (2) The various headings in this Agreement are for convenience of reference
only and in no way define, limit or describe the scope or intent of any
provisions or Sections of this Agreement.
     (3) Unless the context requires otherwise, (A) words describing the
singular number include the plural and vice versa, (B) words denoting any gender
include all genders and (C) the words “include”, “includes” and “including” will
be deemed to be followed by the words “without limitation.”

 

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William L. McComb   -18-

     (4) It is your and the Group’s intention that this Agreement not be
construed more strictly with regard to you or the Group.
     (5) This Agreement contains the entire understanding and agreement between
the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, between the parties with respect thereto.
     (6) If any provision of any agreement, plan, program, policy, arrangement
or other written document between or relating to the Company and you conflicts
with any provision of this Agreement, the provision of this Agreement will
control and prevail.
     (b) No Conflict. You represent and warrant that you are not a 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 act for the Group in all of the respects
contemplated hereby. The Company represents and warrants that it is fully
authorized and empowered to enter into this Agreement and that the performance
of its obligations under this Agreement will not violate any agreement between
it and any other person, firm or organization.
     (c) Indemnification. The Company shall provide you with director and
officer indemnification to the fullest extent permissible under the Company’s
charter and by-laws as in effect from time to time.
     (d) Severability. If any provision of this Agreement is found by any court
of competent jurisdiction (or legally empowered agency) to be illegal, invalid
or unenforceable for any reason, then (1) the provision will be amended
automatically to the minimum extent necessary to cure the illegality or
invalidity and permit enforcement and (2) the remainder of this Agreement will
not be affected. In particular, if any provision of Section 8 hereof is so found
to violate law or be unenforceable because it applies for longer than a maximum
permitted period or to greater than a maximum permitted area, it will be
automatically amended to apply for the maximum permitted period and maximum
permitted area.
     (e) No Set-off or Mitigation. Your and the Company’s respective obligations
under this Agreement will not be affected by any set-off, counterclaim,
recoupment or other right you or any member of the Group may have against each
other or anyone else. You do not need to seek other employment or take any other
action to mitigate any amounts owed to you under this Agreement, and those
amounts will not be reduced if you do obtain other employment (except as this
Agreement specifically states).
     (f) Notices. All notices, requests, demands and other communications under
this Agreement must be in writing and will be deemed given (1) on the business
day sent, when delivered by hand or facsimile transmission (with confirmation)
during normal business hours, (2) on the business day after the

 

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William L. McComb   -19-

business day sent, if delivered by a nationally recognized overnight courier or
(3) on the third business day after the business day sent if delivered by
registered or certified mail, return receipt requested, in each case to the
following address or number (or to such other addresses or numbers as may be
specified by notice that conforms to this Section13(f)):
     If to you, to the address stated in the heading of this Agreement, or any
changed address on the books and records of the Company from time to time, and
with a copy to:
Stewart Reifler, Esq.
Vedder Price P.C.
1633 Broadway
New York, NY 10019
Facsimile: (212) 407-7799
     If to the Company or any other member of the Group, to:
Liz Claiborne, Inc.
One Claiborne Avenue
North Bergen, NJ 07047
Attention: General Counsel
     (g) Amendments and Waivers. Any provision of this Agreement may be amended
or waived but only if the amendment or waiver is in writing and signed, in the
case of an amendment, by you and the Company or, in the case of a waiver, by the
party that would have benefited from the provision waived. Except as this
Agreement otherwise provides, no failure or delay by you or the Group to
exercise any right or remedy under this Agreement will operate as a waiver, and
no partial exercise of any right or remedy will preclude any further exercise.
     (h) Survival. To the extent that any provision of this Agreement would
require the survival of such provision beyond the Term of Employment in order to
effectuate its intent, such provision shall survive the Term of Employment
according to its terms.
     (i) Counterparts. This Agreement may be executed in counterparts, each of
which will constitute an original and all of which, when taken together, will
constitute one agreement.

 

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William L. McComb   -20-

            Very truly yours,

Liz Claiborne, Inc.
      By:   /s/ NICHOLAS RUBINO                      

ACCEPTED AND AGREED:

     
/s/ WILLIAM L. MCCOMB
 
   
William L. McComb
   

 

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Exhibit A
GENERAL RELEASE
     GENERAL RELEASE (this “Release”), by [Name] (the “Executive”) in favor of
Liz Claiborne, Inc. (the “Company”), its subsidiaries, affiliates, officers,
directors, employees, shareholders, attorneys and agents and their predecessors,
successors and assigns, individually and in their official capacities (together,
the “Released Parties”).
     WHEREAS, Executive has been employed as Chief Executive Officer of the
Company; and
     WHEREAS, Executive is seeking payments under his amended and restated
Employment Agreement, dated December 24, 2008 (as the same may have been amended
from time to time, the “Employment Agreement”), with the Company that are
conditioned on the effectiveness of this Release.
     NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter set forth, the parties agree as follows:
          1. General Release. Executive knowingly and voluntarily waives,
terminates, cancels, releases and discharges forever the Released Parties from
any and all actions, causes of action, claims, allegations, rights, obligations,
liabilities, or charges (collectively, “Claims”) that he (or his heirs,
executors, administrators, successors and assigns) has or may have, whether
known or unknown, by reason of any matter, cause or thing occurring at any time
before and including the date of this Release arising under or in connection
with Executive’s employment or termination of employment with the Company,
including, without limitation, claims for compensation or bonuses (including,
without limitation, any claim for an award under any compensation plan or
arrangement); breach of contract; tort; wrongful, abusive, unfair, constructive,
or unlawful discharge or dismissal; impairment of economic opportunity
defamation; age and national origin discrimination; sexual harassment; back pay;
front pay; benefits; attorneys’ fees; whistleblower claims; emotional distress;
intentional infliction of emotional distress; assault; battery, pain and
suffering; punitive or exemplary damages; violations of the Equal Pay Act, Title
VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age
Discrimination in Employment Act of 1967 (“ADEA”), the Americans with
Disabilities Act of 1991, the Employee Retirement Income Security Act, the
Worker Adjustment Retraining and Notification Act, the Family Medical Leave Act,
the New York State and New York City Human Rights Laws, including all amendments
to any of the aforementioned acts; and violations of any other federal, state,
or municipal fair employment statutes or laws, including, without limitation,
violations of any other law, rule, regulation, or ordinance pertaining to
employment, wages, compensation, hours worked, or any other matters related in
any way to Executive’s employment with the Company and its affiliates (together,
as constituted from time to time, the “Group”) or the termination of that
employment. In addition, in consideration of the provisions of this Release, the
Executive further agrees to waive any and all rights under the laws of any
jurisdiction in the United

 

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States, or any other country, that limit a general release to those claims that
are known or suspected to exist in Executive’s favor as of the Effective Date
(as defined below).
          2. Surviving Claims. Notwithstanding anything herein to the contrary,
this Release shall not:

  (i)   release any Claims relating to the payments and benefits set forth in
Section [2 or 6, as applicable] of the Employment Agreement;     (ii)   release
any Claims arising after the date of this Release;     (iii)   limit or prohibit
in any way Executive’s (or his beneficiaries’ or legal representatives’) ability
to bring an action to enforce the terms of this Release;     (iv)   release any
claim for employee benefits under plans covered by the Employee Retirement
Income Security Act of 1974, as amended, to the extent that such claims may not
lawfully be waived or for any payments or benefits under any plans of the Group
that have vested according to the terms of those plans; or     (v)   release any
claims for indemnification in accordance with applicable laws and the corporate
governance documents of the Company or any other member of the Group, including
any right to contribution, in accordance with their terms as in effect from time
to time or pursuant to any applicable directors and officers insurance policy
with respect to any liability incurred by Executive as an officer or director of
the Company or any member of the Group or any right Executive may have to obtain
contribution as permitted by law in the event of entry of judgment.

          3. Additional Representations. Executive further represents and
warrants that he has not filed any civil action, suit, arbitration,
administrative charge, or legal proceeding against any Released Party nor has he
assigned, pledged, or hypothecated as of the Effective Date his claim to any
person and no other person has an interest in the claims that he is releasing.
          4. Acknowledgements by Executive. Executive acknowledges and agrees
that he has read this Release in its entirety and that this Release is a general
release of all known and unknown claims, including, without limitation, to
rights and claims arising under ADEA. Executive further acknowledges and agrees
that:

  (i)   this Release does not release, waive or discharge any rights or claims
that may arise for actions or omissions after the date of this Release;

 

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  (ii)   Executive is entering into this Release and releasing, waiving and
discharging rights or claims only in exchange for consideration which he is not
already entitled to receive;     (iii)   Executive has been advised, and is
being advised by the Release, to consult with an attorney before executing this
Release; Executive acknowledges that he has consulted with counsel of his choice
concerning the terms and conditions of this Release;     (iv)   Executive has
been advised, and is being advised by this Release, that he has twenty-one
(21) days within which to consider the Release; and     (v)   Executive is aware
that this Release shall become null and void if he revokes his agreement to this
Release within seven (7) days following the date of execution of this Release.
Executive may revoke this Release at any time during such seven-day period by
delivering (or causing to be delivered) to the [Contact] written notice of his
revocation of this Release no later than 5:00 p.m. eastern time on the seventh
(7th) full day following the date of execution of this Release (the “Effective
Date”). The Executive agrees and acknowledges that a letter of revocation that
is not received by such date and time will be invalid and will not revoke this
Release

          5. Additional Agreements. Executive agrees that should any person or
entity file or cause to be filed any civil action, suit, arbitration, or other
legal proceeding seeking equitable or monetary relief concerning any claim
released by Executive herein, Executive shall not seek or accept any personal
relief from or as the result of such civil action, suit, arbitration, or other
legal proceeding.
     IN WITNESS WHEREOF, Executive has signed this Release on the date set forth
on the first page hereof.

                        [Executive]           

Accepted and agreed:
Liz Claiborne, Inc.

         
By: