Exhibit 10(f)(iii)

Liz Claiborne, Inc.

Outside Directors’ Deferral Plan

 

1.

General

1.1  Purpose. The Liz Claiborne, Inc. Outside Directors’ Deferral Plan (the
“Plan”) is an amendment and restatement of the Liz Claiborne, Inc. 1991 Outside
Directors’ Stock Ownership Plan, deleting the provisions for equity grants and
amending the deferral provisions to the extent necessary to avoid the imposition
of tax under section 409A of the Internal revenue Code of 1986, as amended (the
“Code”). The purpose of the Plan is to provide those directors of Liz Claiborne,
Inc. (the “Company”) who are not employees of the Company an opportunity to
defer part or all of their director fees and any awards of common stock made
pursuant to the Company’s equity incentive plans and arrangements (“Common Stock
Awards”).

1.2  Administration. The Plan shall be administered by the Board or, in the
discretion of the Board, by a committee comprised of the members of the Board
who are not Outside Directors (the “Committee”). The determination of the Board
or the Committee, as the case may be, on all matters relating to the Plan shall
be final, binding and conclusive.

1.3  Persons Eligible for Awards. Only Outside Directors shall be eligible to
participate in this Plan. As of any applicable date, an Outside Director is a
person who is a member of the Board and is not an employee of the Company or any
subsidiary thereof.

1.4  Fair Market Value. For all purposes hereunder, the Fair Market Value of a
share of the Company’s common stock (“Common Stock”) on any date shall be the
closing price of a share of Common Stock on the New York Stock Exchange on the
last preceding day for which such a closing price was reported.

1.5  Payment in Common Stock. To the extent that any distributions under the
plan are made in Common Stock pursuant to Section 2.4(a) hereof, such shares
shall be distributed pursuant to an equity compensation plan established by the
Company.

2.

Deferral of Fees and Common Stock Awards

2.1  Election to Defer.

(a)  Prior to the beginning of any calendar year, each Outside Director (or any
individual who is expected to become an Outside Director during such year) may
elect to defer receipt of all or any part of the retainer fees and meeting fees
(collectively, “Director Fees”) that would otherwise become payable to him
during such calendar year and succeeding calendar years and of the Common Stock
Awards that are awarded to him during such calendar year and succeeding calendar
years. An individual who becomes an Outside Director during a calendar year
without having previously been an employee of the Company may, prior to the
commencement of his term as director, make the election described in the
preceding sentence, applicable for the remainder of such calendar year and for
succeeding calendar years.

(b)  The Distribution Date on which payment of amounts deferred pursuant to an
election hereunder (including imputed income) shall be made or commenced shall
be the January 1 following termination of the Outside Director’s membership on
the Board, unless an alternative date is specified at the time of such election.
Such alternative date may be any month end that is at least three years
subsequent to the date of the election.

(c)  Each deferral election shall specify the method by which payment is to be
made of all amounts deferred pursuant to such election (including imputed
income). Such method shall be either a lump-sum payment or annual installments
(not to exceed 10), as set forth in Section 2.4. If Director Fees otherwise
payable in cash are deferred, the deferral election shall specify whether the
deferred amounts shall be deemed invested in shares of Common Stock or shall be
credited with interest, as set forth in Section 2.3.

 

 

 

 

(d)  Each deferral election shall be made by written notice in accordance with
rules established by the Company, and shall remain in effect until terminated by
written notice. A notice of termination shall be effective as of December 31 in
the year in which such notice is given, and shall apply only with respect to
Director Fees becoming payable and Common Stock Awards awarded thereafter. An
Outside Director who terminates a deferral election may make a new election
pursuant to Section 2.1(a) effective for future calendar years.

2.2  Deferral Accounts.

(a)  All amounts deferred under Section 2.1 shall be credited to a bookkeeping
account maintained by the Company in the name of the Outside Director (the
“Deferral Account”), which shall have two subaccounts, called the “Cash
Subaccount” and “Company Stock Subaccount.” Deferred Director Fees which would
otherwise be payable for attending a meeting of the Board or of a committee
thereof shall be credited to the Deferral Account as of the day of such meeting;
Director Fees which would otherwise be payable as a retainer shall be credited
to the Deferral Account as of the day on which they would otherwise be payable.
A deferred Common Stock Award shall be credited as of the day on which it would
otherwise be payable.

(b)  Deferred Director Fees otherwise payable in cash shall be credited to the
Cash Subaccount unless the Outside Director elects otherwise pursuant to Section
2.1(c), in which case the deferred amount shall be credited to the Company Stock
Subaccount as a number of phantom shares (including any fractional share) of
Common Stock equal to the quotient of (i) such amount divided by (ii) the Fair
Market Value of a share of Common Stock on the date such amount is credited.
Deferred Common Stock Awards and deferred Director Fees otherwise payable in
Common Stock shall be credited to the Company Stock Subaccount as an equal
number of phantom shares of Common Stock.

2.3  Imputed Income on Deferral Accounts.

(a)  The balance standing credited to each Cash Subaccount as of the last
business day of each month shall be increased by an amount reflecting interest
on such balance for such month calculated using one-twelfth of the then
applicable Plan Interest Rate. The Plan Interest Rate applicable during any year
shall be a rate one percentage point in excess of the highest prime rate (or
base rate) reported for the first business day of such year in the money rates
column or section of The Wall Street Journal as the rate in effect for corporate
loans at large U.S. money center commercial banks (whether or not such rate has
actually been charged by any such bank) as of such date. In the event The Wall
Street Journal ceases publication of such a prime rate, the prime rate (or base
rate) announced for the applicable date by Citibank, N.A. in New York City
(whether or not such rate has actually been charged by such bank) shall be used.

(b)  Whenever a cash dividend is paid on Common Stock, each Company Stock
Subaccount shall be credited as of the payment date with a number of phantom
shares (including any fractional share) equal to the quotient of (i) an amount
equal to the cash dividend payable on a number of shares of Common Stock equal
to the number of phantom shares (excluding any fractional share) standing
credited to such Subaccount at the record date divided by (ii) the Fair Market
Value on such payment date. In the event of a stock dividend or distribution,
stock split, recapitalization or the like, each Company Stock Subaccount shall
be credited as of the payment date with a number of phantom shares (including
any fractional share) equal to the number of shares (including any fractional
share) of Company Stock payable in respect of shares of Company Stock equal in
number to the number of phantom shares (excluding any fractional share) standing
credited to such Subaccount at the record date.

2.4  Distribution.

(a)  On or within 30 days after each Distribution Date, the Company shall pay
(or commence installment payment of) the amount standing credited to the Outside
Director’s Deferral Account as the result of all deferrals for which such
Distribution Date is applicable. All future installments shall be paid on the
anniversary of the payment of the first installments. Distributions from the
Cash Subaccount shall be made in cash. Distributions from the Company Stock
Subaccount shall be made in shares of Common Stock equal in number to the number
of phantom shares to be distributed, with a cash payment for any fractional
shares. If the Outside Director has elected installment payments pursuant to
Section 2.1(c), each annual installment payment shall be an amount equal to the
balance standing credited to the Deferral Account as of the payment date divided
by the number of installments

 

 

 

(including the one then due) remaining to be paid. Amounts standing credited to
a Deferral Account during the period in which installments are paid shall be
adjusted to reflect the crediting of income in accordance with Section 2.3.

(b)  In the event of an Outside Director’s death while serving as a member of
the Board, or after termination of service but while receiving installment
payments, the entire amount standing credited to his or her Deferral Account
shall be paid within 30 days following such death, in the manner set forth in
Section 2.4(d)(ii).

(c)  Notwithstanding any other provision of this Plan, phantom shares credited
to an Outside Director’s Company Stock Subaccount on the date of a Change in
Control shall be converted to cash and credited to the Outside Director’s Cash
Subaccount. Such conversion shall be made using the highest Fair Market Value
during the period extending ten business days before and ten business days after
the Change in Control.

(d)  Payments hereunder shall be made to the Outside Director except that:

(i)  in the event that the Outside Director shall be determined by a court of
competent jurisdiction to be incapable of managing his or her financial affairs,
and if the Company has actual notice of such determination, payment shall be
made to the Outside Director’s personal representative(s); and

(ii)  in the event of the Outside Director’s death, payment shall be made to the
last beneficiary designated by the Outside Director for purposes of receiving
such payment in such event in a written notice delivered to the Company;
provided, that if such beneficiary has not survived the Outside Director, or no
valid beneficiary designation is in effect, payment shall instead be made to the
Outside Director’s estate.

2.5  Statements. The Company shall provide an annual statement to each Outside
Director showing such information as is appropriate, including the aggregate
amount standing credited to the Deferral Account, as of a reasonably current
date.

2.6  Unfunded Status .  The Company’s obligation to make payments from a
Deferral Account shall be a general obligation of the Company and such payments
shall be made from the Company’s general assets. An Outside Director shall be a
general unsecured creditor of the Company, and the creation of a Deferral
Account shall not create or be construed to create a trust or fiduciary
relationship of any kind between the Company and the Outside Director, his or
her designated beneficiary or any other person, or a security interest of any
kind in any property of the Company in favor of the Outside Director or any
other person. Deferral arrangements created hereunder are intended to be
unfunded and no trust, security, escrow, or similar account shall be required to
be established for the purposes of payment hereunder. However, the Company may
in its discretion establish a “rabbi trust” (or other arrangement having
equivalent taxation characteristics under the Internal Revenue Code or
applicable regulations or rulings) to hold assets, subject to the claims of the
Company’s creditors in the event of insolvency, for the purpose of making
payments hereunder. If the Company establishes such a trust, amounts paid
therefrom shall discharge the obligations of the Company hereunder to the extent
of the payments so made.

3.

Miscellaneous

3.1  Nonalienation. An Outside Director’s interest in his or her Deferral
Account shall not be assignable or transferable in any manner.

3.2  Limitation of Rights. This Plan shall not be construed to confer on any
Outside Director any right to be or remain a member of the Board or to receive
any, or any particular rate of, director’s fees.

3.3  Withholding. The Company shall deduct from any distribution hereunder any
amounts required, in the opinion of the Company, for federal, state or local
withholding tax purposes.

 

 

 

 

3.4  Amendment of the Plan. The Board may, at any time, suspend or terminate the
Plan or revise or amend it in any respect whatsoever; provided, however, that no
amendment that materially impairs the rights or materially increases the
obligations of an Outside Director hereunder shall be made except with the
consent of the Outside Director (or the Outside Director’s successor hereunder).

3.5  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.

3.6  Effective Date and Term of Plan. The Plan was initially adopted by the
Board on November 21, 1991 as the Liz Claiborne, Inc. 1991 Outside Directors’
Stock Ownership Plan, and was amended and restated as of March 22, 1996. The
Board amended and restated the Plan, and renamed the Plan the Liz Claiborne,
Inc. Outside Directors’ Deferral Plan, effective as January 24, 2006. The Plan,
as amended and restated, shall remain in effect until terminated by action of
the Board.

3.7  Governing Law. All rights and obligations under the Plan shall be construed
and interpreted in accordance with the laws of the State of Delaware, without
giving effect to principles of conflict of laws.