Exhibit 10.18


 


RESTRICTED
STOCK AGREEMENT


This
RESTRICTED STOCK AGREEMENT (the “Agreement”),
dated as of January 1, 2007 (the “Date of
Grant”), is entered into by and between GUESS?, INC., a Delaware
corporation (the “Company”), and  Paul Marciano (the “Grantee”).


RECITALS


WHEREAS, the Company maintains
the Guess?, Inc. 2004 Equity Incentive Plan (the “Plan”).


WHEREAS, the Compensation Committee of the
Company’s Board of Directors (the “Committee”) has determined to grant a
restricted stock award (the “Award”) to the Grantee under the Plan in
order to increase Grantee’s participation in the success of the Company and as
an inducement to enter into the Executive Employment Agreement dated as of
January 1, 2007 by and between the Company and the Grantee (the “Employment
Agreement”);


NOW, THEREFORE, the parties hereto agree as
follows:


1.                                       Definitions;
Incorporation of Plan Terms. 
Capitalized terms used herein without definition shall have the meanings
assigned to them in the Plan.  The Award
and all rights of the Grantee under this Agreement are subject to, and the
Grantee agrees to be bound by, all of the terms and conditions of the Plan,
incorporated herein by this reference. 
In the event of any conflict or inconsistency between the Plan and this
Award Agreement, the Plan shall govern.


2.                                       Grant
of Restricted Stock.  The Grantee
shall be entitled to purchase 500,000
restricted shares of the Company’s common stock, par value $0.01 per share (the
“Common Stock”), pursuant to the terms and conditions of this Agreement
(the “Restricted Stock”).


3.                                       Purchase
Price.  The Grantee shall pay to the
Company, in cash, an aggregate purchase price of $5,000
(the “Purchase Price”), which amount is equal to the aggregate amount of
the par value of the Restricted Stock. 
Such payment of the Purchase Price shall be made to the Company within
15 days after the date hereof.


4.                                       Restricted
Period.  Subject to Section 7 below,
the Award shall vest and restrictions shall lapse as follows (the period from
the date hereof through each applicable vesting date, the “Restricted Period”):


A.                                   If
in any whole fiscal year of the Company (“Fiscal Year”) commencing on or
after January 1, 2007 and during the Employment Term (as defined in the
Employment Agreement), the Company shall record earnings per share (“Earnings
per Share”) growth of greater than the Applicable Annual Target (as defined
below) as compared to the immediately preceding Fiscal Year, then 20% of the
Restricted Stock shall become vested as of the first business day following the
issuance of the Company’s financial statement for such year, provided the Grantee
is then employed by the Company.  If the
Earnings per Share growth requirement is not met for any such year, all of the
shares of the Restricted Stock 












eligible for vesting for that year shall vest on the
first business day following the issuance of the Company’s financial statement
for any subsequent Fiscal Year during the Original Employment Term (as defined
in Employment Agreement) if the cumulative compound average Earnings per Share
growth after the 2006 Fiscal Year through such subsequent Fiscal Year is more
than the Applicable Cumulative Target (as defined below) for such subsequent
Fiscal Year.  The “Applicable Annual
Target” for each of the first, second and third whole Fiscal Years that
commences on or after January 1, 2007 is a growth in Earnings per Share of 15%
or more as compared to the immediately preceding Fiscal Year.  The “Applicable Cumulative Target” for
each of the first, second and third whole Fiscal Years that commences on or
after January 1, 2007 is a 15% rate of cumulative compound average Earnings per
Share growth.  The “Applicable Annual
Target” and the “Applicable Cumulative Target” for each of the fourth and fifth
whole Fiscal Years that commences on or after January 1, 2007 will be a rate of
Earnings per Share growth and cumulative compound average Earnings per Share
growth, respectively, determined by the Compensation Committee of the Board in
its sole discretion not later than the end of the first quarter of such Fiscal
Year.


B.                                     For
purposes of this Agreement, Earnings per Share shall be equal to the basic
earnings per share calculated in accordance with accounting principles
generally accepted in the United States and as reported in the Company’s financial
statements as filed with the Securities and Exchange Commission, except that
certain adjustments may be made for certain non-recurring or unusual non-cash
items recognized in accordance with accounting principles generally accepted in
the United States including, but not limited to, any write-offs of unamortized
deferred financing costs and any asset impairment write-downs, which the
Committee determines in its sole discretion to exclude for purposes of this
Agreement.


5.                                       Rights
of a Stockholder.  From and after the
Date of Grant and for so long as the Restricted Stock is held by or for the
benefit of the Grantee, the Grantee shall have all the rights of a stockholder
of the Company with respect to the Restricted Stock, including but not limited
to the right to receive dividends, if applicable, and the right to vote such
shares.


6.                                       Adjustments Upon Specified Events.  Upon the occurrence of certain events
relating to the Company’s Common Stock contemplated by Section 16(b) of the
Plan, the Committee will make adjustments, if appropriate, in the number and
kind of securities subject to the Award. 
If any adjustment is made under Section 16(b) of the Plan, the
restrictions applicable to the shares of Restricted Stock shall continue in
effect with respect to any consideration or other securities (the “Restricted
Property” and, for the purposes of this Award Agreement, “Restricted Stock”
shall include “Restricted Property,” unless the context otherwise requires)
received in respect of such Restricted Stock. 
Such Restricted Property shall vest at such times in such proportion as
the shares of Restricted Stock to which the Restricted Property is
attributable.  To the extent that the
Restricted Property includes any cash (other than regular cash dividends provided
for in Section 5 hereof), such cash shall be invested, pursuant to policies
established by the 



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Committee, in interest
bearing, FDIC-insured (subject to applicable insurance limits) deposits
of a depository institution selected by the Committee, the earnings on which
shall be added to and become a part of the Restricted Property.


7.                                       Effect
of Cessation of Employment.


A.                                   The
shares of the Restricted Stock not yet vested or forfeited shall become 100%
vested in the event that the Grantee dies or becomes Disabled (as defined in Section
7(a) of the Employment Agreement) or there is a Change in Control (as defined
below), in each case while employed by the Company or an affiliate during the
Employment Term.  For this purpose, the
term “Change in Control” is used as defined in the Plan except that in
no event shall a “Change in Control” be triggered pursuant to clause (A) of
such term as so defined unless the Acquiring Person becomes the Beneficial
Owner of twenty percent (20%) or more of the then outstanding shares of Common
Stock or the Combined Voting Power of the Company (except pursuant to an offer
for all outstanding shares of Common Stock at a price and upon such terms and
conditions as a majority of the Continuing Directors determine to be in the
best interests of the Company and its shareholders (other than an Acquiring
Person on whose behalf the offer is being made)) in one or more bona fide
transactions and such level of ownership of such Common Stock or Combined
Voting Power, as applicable, exceeds the aggregate level of ownership of the
Marcianos (as defined below) of such Common Stock or Combined Voting Power,
respectively.  For purposes of the
preceding sentence, “Marcianos” means Maurice Marciano, Paul Marciano,
and any trust established in whole or in part for the benefit of one or more of
them or their family members, or any other entity controlled by one or more of
them, and any other capitalized term used in such sentence is used as defined
in the Equity Plan if not otherwise defined in this Agreement.  If the Grantee terminates his employment with
the Company for “Good Reason” (as defined in Section 7(e) of the Employment Agreement),
or is terminated by the Company without “Cause” (as defined in Section 7(c) of
the Employment Agreement) or for Disability, the shares of the Restricted Stock
not yet vested or forfeited shall become 100% vested.


B.                                     In
all events other than those previously addressed in Section 7(A) herein, if the
Grantee ceases to be an employee of the Company or an affiliate, the Grantee
shall be vested only as to that percentage of shares of the Restricted Stock
which are vested at the time of the termination of his employment and the Grantee
shall forfeit the right to the shares of the Restricted Stock which are not yet
vested on the termination date.  Further,
any Restricted Stock which is unvested at the conclusion of the Original
Employment Term shall be forfeited and terminate.


C.                                     Upon
the occurrence of any forfeiture of shares of Restricted Stock hereunder, such
unvested, forfeited shares and related Restricted Property shall be
automatically transferred to the Company, without any other action by the
Grantee, or the Grantee’s beneficiary or personal representative, as the case
may be, and the Company shall refund the Purchase Price to the Grantee (or the
Grantee’s beneficiary or personal representative); no additional consideration
shall be paid by the Company with respect to such transfer.  No interest shall be credited with respect to
nor shall any other adjustments be made to the Purchase 



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Price for fluctuations in the fair market value of the
Common Stock either before or after the transfer date.  The Company may exercise its powers under
Section 10(D) hereof and take any other action necessary or advisable to
evidence such transfer.  The Grantee, or
the Grantee’s beneficiary or personal representative, as the case may be, shall
deliver any additional documents of transfer that the Company may request to
confirm the transfer of such unvested, forfeited shares and related Restricted
Property to the Company.


8.                                       Reserved.


9.                                       Restrictions
on Transfer.  Prior to the lapse of
the Restricted Period, neither the Restricted Stock, nor any interest therein,
amount payable in respect thereof or Restricted Property shall be sold, transferred,
pledged, hypothecated or otherwise disposed of by the Grantee; provided,
however, that such transfer restrictions shall not apply to (i) transfers to
the Company or (ii) transfers by will or descent and distribution.  Grantee agrees that the Restricted Stock will
not be sold or otherwise disposed of in any manner that would constitute a
violation of any applicable federal or state securities laws.


10.                                 Stock
Certificates.


A.                                   Book Entry Form.  The Company shall, in its
discretion, issue the shares of Restricted Stock subject to the Award either:
(i) in certificate form as provided in Section 10(B) below; or (ii) in book
entry form, registered in the name of the Grantee with notations regarding the
applicable restrictions on transfer imposed under this Agreement.


B.                                     Certificates
to be Held by Company; Legend.  Any certificates representing shares of
Restricted Stock that may be delivered to the Grantee by the Company prior to
the lapse of restrictions shall be immediately redelivered by the Grantee to
the Company to be held by the Company until the restrictions on such shares
shall have lapsed and the shares shall thereby have become vested or the shares
represented thereby have been forfeited hereunder.  Such certificates shall bear the following
legend:


“The ownership of this certificate
and the shares of stock evidenced hereby and any interest therein are subject
to substantial restrictions on transfer under an Agreement entered into between
the registered owner and Guess?, Inc.  A
copy of such Agreement is on file in the office of the Secretary of Guess?,
Inc.”


C.                                     Delivery of Certificates Upon Lapse of Restricted Period.  Promptly after the lapse of the Restricted
Period as to any shares of Restricted Stock pursuant to Section 4 and the
satisfaction of any and all related tax withholding obligations pursuant to
Section 11, the Company shall, as applicable, either remove the notations on
any shares of Restricted Stock issued in book entry form which have vested or
deliver to the Grantee a certificate or certificates evidencing the number of
shares of Restricted Stock which have vested (or, in either case, such lesser
number of shares as may be permitted pursuant to Section 11).  The Grantee (or the Beneficiary or Personal
Representative of the Grantee in the event of the Grantee’s death or
incapacity, as the case may be) shall deliver to the Company any
representations or other documents or assurances as the Company may deem 



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necessary or reasonably
desirable to ensure compliance with all applicable legal and regulatory
requirements.  The shares so delivered
shall no longer be restricted shares hereunder.


D.                                    Stock Power; Power of Attorney.  Concurrent with the execution and delivery of
this Agreement, the Grantee shall deliver to the Company an executed stock
power in the form attached hereto as Exhibit A, in blank, with respect to the
Restricted Stock.  The Grantee, by
acceptance of the Award, shall be deemed to appoint, and does so appoint by
execution of this Agreement, the Company and each of its authorized
representatives as the Grantee’s attorney(s) in fact to effect any transfer of
unvested, forfeited shares (or shares otherwise reacquired by the Company
hereunder) to the Company as may be required pursuant to the Plan or this
Agreement and to execute such documents as the Company or such representatives
deem necessary or advisable in connection with any such transfer.


E.                                      Postponement of Issuance.  Notwithstanding any other provisions of this
Agreement, the issuance or delivery of any shares of Common Stock (whether
subject to restrictions or unrestricted) may be postponed for such period as
may be required to comply with applicable requirements of any national
securities exchange or any requirements under any law or regulation applicable
to the issuance or delivery of such shares. 
The Company shall not be obligated to issue or deliver any shares of
Stock if the issuance or delivery thereof shall constitute a violation of any
provision of any law or of any regulation of any governmental authority or any
national securities exchange.


11.                                 Withholding
of Tax.  The Company shall reasonably
determine the amount of any federal, state, local or other income, employment,
or other taxes which the Company or any of its affiliates may reasonably be
obligated to withhold with respect to the grant, vesting, making of an election
under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”),
or other event with respect to the Restricted Stock.  The Company may, in its sole discretion,
withhold and/or reacquire a sufficient number of shares of Restricted Stock in
connection with the vesting of such shares at their then Fair Market Value
(determined either as of the date of such withholding or as of the immediately
preceding trading day, as determined by the Company in its discretion) to
satisfy the amount of any such withholding obligations that arise with respect
to the vesting of such shares.  The
Company may take such action(s) without notice to the Grantee and shall remit
to the Grantee the balance of any proceeds from withholding and/or reacquiring
such shares in excess of the amount reasonably determined to be necessary to
satisfy such withholding obligations. 
The Grantee shall have no discretion as to the satisfaction of tax
withholding obligations in such manner. 
If, however, the Grantee makes an election under Section 83(b) of the
Code with respect to the Restricted Stock, if any other withholding event
occurs with respect to the Restricted Stock other than the vesting of such
stock, or if the Company for any reason does not satisfy the withholding
obligations with respect to the vesting of the Restricted Stock as provided
above in this Section 11, the Company shall be entitled to require a cash
payment by or on behalf of the Grantee and/or to deduct from other compensation
payable to the Grantee the amount of any such withholding obligations.



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12.                                 Compliance.  Grantee hereby agrees to cooperate with the
Company, regardless of Grantee’s employment status with the Company, to the
extent necessary for the Company to comply with applicable state and federal
laws and regulations relating to the Restricted Stock.


13.                                 Notices.  Any notice required or permitted under this
Agreement shall be deemed given when personally delivered, or when deposited in
a United States Post Office, postage prepaid, addressed, as appropriate, to the
Grantee either at the address on record with the Company or such other address
as may be designated by Grantee in writing to the Company; or to the Company,
Attention: Angelina Orona, Stock Plan Administrator, 1444 South Alameda Street,
Los Angeles, California  90021, or such
other address as the Company may designate in writing to the Grantee.


14.                                 Failure
to Enforce Not a Waiver.  The failure
of the Company or the Grantee to enforce at any time any provision of this
Agreement shall in no way be construed to be a waiver of such provision or of
any other provision hereof.


15.                                 Governing
Law.  This Agreement shall be
governed by and construed according to the laws of the State of Delaware.


16.                                 Amendments.  This Agreement may be amended or modified at
any time by an instrument in writing signed by both parties.


17.                                 Agreement
Not a Contract of Employment. 
Neither the grant of the Restricted Stock, this Agreement nor any other
action taken in connection herewith shall constitute or be evidence of any
agreement or understanding, express or implied, that the Grantee is an employee
of the Company or any subsidiary of the Company.


18.                                 Committee’s
Powers.  No provision contained in
this Agreement shall in any way terminate, modify or alter, or be construed or
interpreted as terminating, modifying or altering any of the powers, rights or
authority vested in the Committee or, to the extent delegated, in its delegate
pursuant to the terms of the Plan or resolutions adopted in furtherance of the
Plan, including, without limitation, the right to make certain determinations
and elections with respect to the Restricted Stock.


19.                                 Section
83(b) Election.  The Grantee hereby
acknowledged that, with respect to the grant of the Restricted Stock, an
election may be filed by the Grantee with the Internal Revenue Service, within
30 days, of the Date of Grant, electing pursuant to Section 83(b) of the
Code, to be taxed currently on the fair market value of the Restricted Stock on
the Date of Grant.


THE GRANTEE HEREBY
ACKNOWLEDGES THAT IT IS THE GRANTEE’S SOLE RESPONSIBILITY AND NOT THE
RESPONSIBILITY OF THE COMPANY TO TIMELY FILE AN ELECTION UNDER SECTION 83(b) OF
THE CODE, EVEN IF THE GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO
MAKE THIS FILING ON THE GRANTEE’S BEHALF.


20.                                 Termination
of this Agreement.  Upon termination
of this Agreement, all rights of the Grantee hereunder shall cease.



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IN WITNESS WHEREOF, the Company has caused
this Agreement to be executed on its behalf by a duly authorized officer and
the Grantee has hereunto set his or her hand as of the date and year first
above written.


	
   

  	
  GUESS?, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deborah Siegel

  	
   

  
	
   

  	
   

  
	
   

  	
  Print Name:
  Deborah Siegel

  
	
   

  	
   

  
	
   

  	
  Its: Secretary

  
	
   

  	
   

  
	
   

  	
  GRANTEE

  
	
   

  	
   

  
	
   

  	
  /s/ Paul
  Marciano

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Paul Marciano

  	
   

  
	
   

  	
  Print Name

  
	
   

  	
   

  
	
   

  	
  05457

  	
   

  
	
   

  	
  Employee
  ID