Exhibit 10.5


 


RESTRICTED
STOCK AGREEMENT


 


This
RESTRICTED STOCK AGREEMENT (the “Agreement”),
dated as of May 1, 2008
(the “Date of Grant”), is entered into by and between GUESS?, INC., a
Delaware corporation (the “Company”), and  Nancy C.
Shachtman (the “Grantee”).


 


RECITALS


 


WHEREAS, the Company maintains the Guess?, Inc. 2004
Equity Incentive Plan, as it may be amended from time to time (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;


 


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 10,000
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 $ 100.00
(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
30 days after the date hereof.


 


4.                                       Vesting.  Subject to Section 10 below, the total
number of shares of the Restricted Stock subject to the Award shall vest and
restrictions shall lapse based on the level of achievement of the performance
goals and applicable targets set forth on Exhibit A, as previously communicated
verbally to the Grantee by the Company. 
Subject to Section 8 below, shares of Restricted Stock that have
not theretofore vested in accordance with Exhibit A or Section 10
shall be forfeited on the first business day following the filing of the Company’s
audited financial statements with the Securities and Exchange Commission for
the final year of the performance period (as set forth on Exhibit A)
applicable to the shares of Restricted Stock subject to the Award.


 


5.                                       Continued
Employment Required.  The vesting
schedule requires continued employment from the date hereof through each
applicable vesting date as a condition to the vesting of the applicable
installment of the Award.  Employment for
only a portion of the vesting period, even if a substantial portion, will not
entitle the Grantee to any proportionate vesting or avoid or mitigate a
termination of rights and benefits upon or following a termination of
employment as provided in Section 9 below or under the Plan.


 

















 


6.                                       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.


 


7.                                       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 6 hereof), such cash shall be invested, pursuant to
policies established by the 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.


 


8.                                       Effect of
Cessation of Employment. 
Unless the Committee determines otherwise in its sole discretion, if the
employment of the Grantee by the Company, a Parent or a Subsidiary shall
terminate for any reason, whether with or without cause, voluntarily or
involuntarily, any of the shares of the Restricted Stock that are not vested on
the date of the Grantee’s termination of employment shall be forfeited.


 


9.                                       Return of
Shares; Refund of Purchase Price.  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 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 12(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.


 


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10.                                 Change in
Control.  As provided in Section 17
of the Plan, in the event of a Change in Control and except as the Committee
(as constituted immediately prior to such Change in Control) may otherwise
determine in its sole discretion, all of the shares of Restricted Stock then
outstanding and not otherwise vested shall thereon become fully vested.


 


11.                                 Restrictions on
Transfer.  Prior to
shares of Restricted Stock becoming vested, 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.


 


12.                                 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 12(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 Shares Upon Lapse of Restricted Period.  Promptly after any shares of Restricted Stock
becoming vested pursuant to Section 4 or Section 10 and the
satisfaction of any and all related tax withholding obligations pursuant to Section 13,
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 13).  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
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.


 


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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 B, 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.


 


13.                                 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 13, 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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14.                                 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.


 


15.                                 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: Stock Plan Administration, 1444 South Alameda Street, Los Angeles,
California  90021, or such other address
as the Company may designate in writing to the Grantee.


 


16.                                 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.


 


17.                                 Governing Law.  This Agreement shall be governed by and
construed according to the laws of the State of Delaware, without regard to
Delaware or other laws that might cause other law to govern under applicable
principles of conflicts of law.  For purposes of litigating any dispute
that arises under this Agreement, the parties hereby submit to and consent to
the jurisdiction of the State of California, and agree that such litigation
shall be conducted in the courts of Los Angeles County, or the federal courts
for the United States for the  Central
District of California, and no other courts, where this Agreement is made
and/or to be performed.


 


18.                                 Electronic Delivery.  The
Company may, in its sole discretion, decide to deliver any documents related to
the Restricted Stock awarded under the Plan or future restricted stock that may
be awarded under the Plan by electronic means or request Grantee’s consent to
participate in the Plan by electronic means. 
Grantee hereby consents to receive such documents by electronic delivery
and agrees to participate in the Plan through an on-line or electronic system
established and maintained by the Company or another third party designated by
the Company.


 


19.                                 Severability.  The provisions of this Agreement are severable
and if any one or more provisions are determined to be illegal or otherwise
unenforceable, in whole or in part, the remaining provisions shall nevertheless
be binding and enforceable.


 


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


 


21.                                 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.


 


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22.                                 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.


 


23.                                 Section 83(b) Election.  The Grantee hereby acknowledges 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.


 


24.                                 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/
  Nancy C. Shachtman

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Nancy C. Shachtman

  
	
   

  	
  Print Name

  
	
   

  	
   

  
	
   

  	
  02691

  
	
   

  	
  Employee ID

  



 


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EXHIBIT A


 


PERFORMANCE GOALS AND TARGETS


 


20% of the total number of shares of Restricted
Stock subject to the Award are eligible to become vested on the first business
day following the filing of the Company’s audited financial statements with the
Securities and Exchange Commission for each of the fiscal years listed in the
table below based on the Company’s “Applicable
Operating Earnings” for such year. 
For purposes of this Award, “Applicable
Operating Earnings” shall mean the U.S. dollar value of the Company’s total
earnings from operations for its wholesale segment’s operations in the United
States, Canada and Mexico.  For purposes
of calculating the value of the “Applicable Operating Earnings,” earnings from
operations shall be calculated in the same manner as it is for purposes of the
Company’s internal management reporting and budgeting.


 


In order for any annual installment of the shares of
Restricted Stock to be become vested, the Company must achieve the “Applicable
Annual Goal” for the fiscal year listed in the table below.  If any annual installment does not become
vested because the Company fails to achieve the “Applicable Annual Goal” for
the fiscal year, the annual installment of the shares of Restricted Stock will
become vested if the Company achieves the “Applicable Cumulative Goal” for such
year or any subsequent fiscal year listed in the table below.  For example, if the Company does not achieve
the “Applicable Annual Goal” for fiscal 2009 but achieves the “Applicable
Cumulative Goal” for fiscal 2010, then 40% of the total number of shares of
Restricted Stock subject to the Award shall vest following the end of the 2010
fiscal year (20% attributable to the fiscal 2009 annual installment and 20%
attributable to the fiscal 2010 annual installment).  Any shares of Restricted Stock that are not
vested following the end of the 2013 fiscal year shall be forfeited on the
first business day following the filing of the Company’s audited financial
statements with the Securities and Exchange Commission for the 2013 fiscal
year.


 


	
  Fiscal
  Year

  	
   

  	
  Applicable

  Annual Goal 

  (amounts in millions)

  	
   

  	
  Applicable

  Cumulative Goal 

  (amounts in millions)

  
	
  2009

  	
   

  	
  Applicable
  Operating Earnings
  of $38

  	
   

  	
  Applicable
  Operating Earnings
  of $ 38

  
	
  2010

  	
   

  	
  Applicable
  Operating Earnings
  of $40

  	
   

  	
  Applicable
  Operating Earnings
  of $ 78

  
	
  2011

  	
   

  	
  Applicable
  Operating Earnings
  of $41

  	
   

  	
  Applicable
  Operating Earnings
  of $119

  
	
  2012

  	
   

  	
  Applicable
  Operating Earnings
  of $43

  	
   

  	
  Applicable
  Operating Earnings
  of $162

  
	
  2013

  	
   

  	
  Applicable
  Operating Earnings
  of $45

  	
   

  	
  Applicable
  Operating Earnings
  of $207

  



 


Whether and the extent to which any “Applicable
Annual Goal” or “Applicable Cumulative Goal” has been achieved will be
determined by the Committee (or, to the extent consistent with Section 162(m) of
the Code, its delegate), and no vesting shall be deemed to have occurred absent
such a determination by the Committee (or such a delegate as the case may
be).  The “Applicable Annual Goals” and “Applicable
Cumulative Goals” listed in the table above shall be proportionally adjusted by
the Committee (in its sole discretion) as may be necessary to mitigate the
unbudgeted impact of material, unusual or nonrecurring gains and losses,
accounting changes or other extraordinary events not foreseen at the time the “Applicable
Annual Goals” and “Applicable Cumulative Goals” were established.


 


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EXHIBIT B


 


STOCK POWER


 


FOR VALUE RECEIVED and
pursuant to that certain Restricted Stock Agreement between Guess?, Inc.,
a Delaware corporation (the “Company”), and the individual named below (the “Individual”)
dated as of                           ,
              ,
the Individual hereby sells, assigns and transfers to the Company, an aggregate
                            
shares of Common Stock of the Company, standing in the Individual’s name on the
books of the Company and, if such shares are in certificate form, represented
by stock certificate number(s)                                                                                           
to which this instrument is attached, and hereby irrevocably constitutes and
appoints                                                                                     
as his or her lawful attorney in fact and agent to transfer such shares on the
books of the Company, with full power of substitution in the premises.


 


	
  Dated

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Nancy C. Shachtman

  
	
   

  	
  Signature

  
	
   

  	
  Nancy C. Shachtman

  
	
   

  	
  Print Name

  



 


(Instruction: Please do not fill in any blanks other than
the signature line.  The purpose of the
assignment is to enable the Company to exercise its rights set forth in the
Restricted Stock Agreement in connection with the forfeiture of any restricted
shares subject thereto without requiring additional signatures on the part of
the Individual.)