Document:

EX-10.1

Exhibit 10.1

SECOND SETTLEMENT AGREEMENT

     SECOND SETTLEMENT AGREEMENT, dated the 22nd day of December, 2008 (this “Agreement”),
by and among O’Charley’s Inc., a Tennessee corporation (the “Company”), and Eric S.
Rosenfeld, Crescendo Partners II, L.P., Series Z (“Crescendo Partners II”), Crescendo
Partners III, L.P., Crescendo Investments II, LLC, Crescendo Investments III, LLC (collectively,
“Crescendo” and each a “Crescendo Party”).

     WHEREAS, Crescendo and the Company entered into a settlement agreement dated March 12, 2008
(the “First Settlement Agreement”), pursuant to which, among other things: (i) Arnaud
Ajdler, Gregory Monahan and Douglas Benham (each a “Crescendo Director,” and together with
the individual to be appointed to the Company’s Board of Directors (the “Board”) pursuant
to Section 1(a), the “Crescendo Directors”) were appointed to the Board and certain
of its committees; (ii) the Company agreed to declassify its Board of Directors, which such
declassification was subsequently approved by the Company’s shareholders; (iii) the parties agreed
to take certain actions with respect to the Company’s 2008 Annual Meeting of Shareholders; and (iv)
Crescendo agreed to refrain from certain other actions generally through the adjournment of the
2009 Annual Meeting of Shareholders (the “2009 Annual Meeting”), subject to certain
conditions, which were not met; and

     WHEREAS, the parties desire to avoid a proxy contest with respect to the 2009 Annual Meeting,
and in light of the Chief Executive Officer’s planned retirement from the Company, have concluded
that it is in the Company’s and its shareholders’ best interests to come to an agreement with
respect to certain matters related to the 2009 Annual Meeting and certain other matters, as
provided herein.

     NOW, THEREFORE, in consideration of the foregoing premises and the respective representations,
warranties, covenants and agreements hereinafter set forth, and, intending to be legally bound
hereby, the parties hereby agree as follows:

     1. Crescendo Board Appointment; 2009 Annual Meeting and Related Matters.

          (a) Board Expansion. The Company hereby agrees that, no later than 10 business days
from the date hereof, the size of the Board will be expanded from 11 to 12 directors. Promptly
following the execution of this Agreement, Crescendo shall recommend to the Board an individual
with relevant restaurant, hospitality or retail industry experience who qualifies as “independent”
under NASDAQ listing standards to fill the newly-created directorship resulting from the increase
in the size of the Board; provided, that the Board, upon the recommendation of its Nominating and
Corporate Governance Committee (the “Nominating Committee”), will have determined, after a
prompt, good faith, reasonable and customary review that such individual qualifies to serve on the
Board and is “independent” pursuant to the listing standards of the NASDAQ Stock Market (the
“NASDAQ”). If the Nominating Committee determines that such person does not meet the
qualifications of the Board or is not “independent” pursuant to the listing standards of the NASDAQ
Stock Market, Crescendo shall have the right to propose additional individuals so qualified to be
considered and appointed in accordance with the provisions of this Section 1(a). The Board
shall immediately appoint any such qualified candidate proposed by Crescendo to fill the newly
created directorship as soon as such candidate’s qualifications have been reviewed and approved by
the Nominating Committee. The Company will promptly thereafter expand the size of the Board and
appoint such individual to the Board, subject only to the Nominating Committee’s and the Board’s
prompt, good faith, reasonable and customary review of such individual’s qualifications.

          (b) Board Composition Following 2009 Annual Meeting. The parties hereby agree to the
following with respect to the composition of the Board of Directors:

 

 

               (i) Board Size Through 2009 Annual Meeting. The size of the Board will not be
increased to more than 12 directors before the Company’s Board of Directors’ meeting held in
connection with the Company’s 2009 Annual Meeting.

               (ii) Board Restructuring at 2009 Annual Meeting. Effective as of the adjournment of
the 2009 Annual Meeting, the Board will be comprised of 10 directors. To effect this reduction in
the Board’s size from 12 to 10 members: (a) Gregory L. Burns will not stand for re-election at the
2009 Annual Meeting and his term as a director will expire at the adjournment thereof; (b) the
Company will either (x) nominate a total of seven directors for election at the 2009 Annual
Meeting, which slate will consist of Messrs. Ajdler and Monahan, the individual appointed to the
Board upon the recommendation of Crescendo pursuant to Section 1(a) and four other nominees
of the Company, or (y) the Company will, effective as of the adjournment of the 2009 Annual
Meeting, obtain the resignation of an incumbent director (other than Douglas Benham) whose term
expires at the 2010 Annual Meeting of Shareholders (the “2010 Annual Meeting”), and will
nominate a total of eight directors for election, which will consist of Messrs. Ajdler and Monahan,
the individual appointed to the Board upon the recommendation of Crescendo pursuant to Section
1(a) and five other nominees of the Company.

     The Company will solicit proxies for the election of the Crescendo Directors at the 2009
Annual Meeting in the same manner as it does with respect to all other director nominees. The
Company will use its reasonable best efforts to cause all Voting Securities (as such term is
defined in Section 10) that members of the Board are entitled to vote at the 2009 Annual
Meeting to be voted in favor of the election of Crescendo Directors. Each Crescendo Party will
vote, and will cause its respective Affiliates and Associates (as such terms are defined in
Section 10) to vote, all Voting Securities (as such term is defined in Section 10)
that it is entitled to vote at the 2009 Annual Meeting (i) in favor of the election of each of the
Company’s nominees for election to the Board, and (iii) in its discretion with regard to any other
items of business that are brought before such meeting.

     Notwithstanding anything to the contrary herein, the Board may expand its size at any time by
one director in connection with the hiring of a new permanent chief executive officer (the “New
CEO”), if the Board determines to appoint the New CEO to the Board.

               (iii) 2009 Annual Meeting Date and Items of Business. The Company will hold its 2009
Annual Meeting at such time as is determined by the Board; provided, that the Company will
use all reasonable efforts to cause the 2009 Annual Meeting to be held on or before May 29, 2009,
and in no event will such meeting be held later than June 30, 2009. The only items to be put to a
shareholder vote at the 2009 Annual Meeting will be (i) the election of directors as contemplated
herein, (ii) ratification of the Company’s auditors and (iii) any shareholder proposal that the
Company is required to bring to a vote under applicable law.

               (iv) Board Representation Upon Reduction in Crescendo Ownership. Notwithstanding
anything to the contrary herein, at any time during the term hereof, (A) if Crescendo owns less
than the lesser of 5% of the Company’s outstanding Voting Securities (as such term is defined in
Section 10) and 1,065,774 shares of the Company’s common stock (“Common Stock”),
but more than the lesser of 1% of the Company’s outstanding Voting Securities and 213,155 shares of
Common Stock, it will be entitled to representation on the Board of no more than two Crescendo
Directors and (B) if Crescendo owns less than the lesser of 1% of the Company’s outstanding Voting
Securities and 213,155 shares of common stock, it will not be entitled to any representation on the
Board. Immediately after Crescendo’s beneficial ownership of the Company’s Voting Securities falls
below the aforementioned requisite thresholds, Crescendo will so notify the Company and will cause
the appropriate number of Crescendo Directors to immediately resign. If a Crescendo Director is
required to resign from the Board

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pursuant to subpart (A) of the preceding sentence, Crescendo will cause a Crescendo Director
appointed to the class of directors whose current terms expire at the 2009 Annual Meeting to
resign.

               (v) Crescendo Director Vacancies. If any Crescendo Director leaves the Board (whether
by resignation or otherwise) before the 2010 Annual Meeting (other than pursuant to Section
1(b)(iv) hereof), Crescendo will be entitled to recommend to the Nominating Committee
replacement director(s) (each of whom will be deemed a Crescendo Director for purposes of this
Agreement) who will qualify as “independent” pursuant to NASDAQ listing standards;
provided, that any such successor nominee to Douglas Benham or the individual appointed to
the Board pursuant to Section 1(a) (the “New Director”) will have relevant
restaurant, hospitality or retail industry experience. The Nominating Committee will not
unreasonably withhold acceptance of any replacement director(s) recommended by Crescendo. In the
event the Nominating Committee does not accept a replacement director(s) recommended by Crescendo,
Crescendo will have the right to recommend additional replacement director(s) for consideration by
the Nominating Committee. The Board will appoint such replacement director(s) to the Board no later
than five (5) business days after the Nominating Committee’s recommendation of such replacement
director(s).

          (c) Committee Membership of Crescendo Directors. Upon the execution of this Agreement,
Gregory Monahan shall continue to serve as a member of each of the Nominating Committee of the
Board and Executive Committee of the Board and Arnaud Ajdler shall continue to serve as a member of
the Compensation and Human Resources Committee of the Board. The Company will take all action
necessary in furtherance of the appointment of the New Director to the Audit Committee of the Board
assuming he satisfies the applicable NASDAQ listing requirements and Securities and Exchange
Commission (“SEC”) rules and subject to his approval to serve on such committee.

          (d) Related Board Matters; Liaison Director. The parties hereby agree to the
following with respect to certain other matters relating to the Board of Directors:

               (i) Resignation of Gregory Burns. Messr. Burns will continue to serve as the
Company’s Chief Executive Officer, President, Chairman of the Board and Chairman of the Executive
Committee of the Board through the Board’s regularly scheduled meeting in February 2009 (the
“February Board Meeting”), at which time Messr. Burns will tender his resignation from each
such position with the Company; provided however, Messr. Burns shall continue to serve as a
director until the 2009 Annual Meeting.

               (ii) Matters Relating to the February Board Meeting. At the February Board Meeting,
the Board will (i) name Lawrence E. Hyatt as interim Chief Executive Officer and President to act
in that capacity until the hiring of the New CEO, (ii) appoint Messr. Benham as Chairman of the
Executive Committee of the Board and (iii) appoint Richard Reiss, Jr. as Lead Independent Director.

               (iii) Interim Liaison Director. Upon the execution of this Agreement, the Company
will take all action necessary in furtherance of (i) the appointment of Messr. Benham to the
Executive Committee of the Board, (ii) the creation of the role of Interim Liaison Director of the
Executive Committee of the Board and (iii) the appointment of Messr. Benham to serve as Interim
Liaison Director beginning as of the date hereof. Messr. Benham’s duties in his role as Interim
Liaison Director shall include (i) spending two days per week, on average, at the Company beginning
the week of January 5, 2009, (ii) serving as liaison between the management team and the Executive
Committee of the Board, (iii) monitoring the performance of the Company, (iv) attending meetings of
the Company’s Executive Leadership Council, (v) providing advice and guidance to the management
team on strategic direction and major decisions and (vi) performing such other duties as requested
by the Executive

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Committee and agreeable to Messr. Benham. Messr. Benham’s role as Interim Liaison Director
shall terminate upon Messr. Benham’s appointment as Chairman of the Executive Committee of the
Board at the February Board Meeting, at which time Messr. Benham will continue the aforementioned
duties of Interim Liaison Director in such new role. In connection with serving as Interim Liaison
Director and Chairman of the Executive Committee of the Board, the Company has agreed to compensate
Messr. Benham as follows: (i) on January 5, 2009, Messr. Benham will be granted 7,500 shares of
the Company’s common stock under the Company’s 2008 Equity and Incentive Plan and be paid $15,000
in cash; (ii) on February 27, 2009 and at the conclusion of every subsequent four-week accounting
period (an “Accounting Period”) in which he serves in such capacity, Messr. Benham will be
paid $30,000, which amounts shall be in addition to the compensation Messr. Benham otherwise
receives in connection with his service as a director of the Company and which shall be prorated
accordingly in the event Messr. Benham’s service begins or ends during any Accounting Period; and
(iii) the Company will reimburse Messr. Benham for his reasonable out-of-pocket expenses, including
travel expenses, incurred in connection with serving as Interim Liaison Director or Chairman of the
Executive Committee of the Board, as the case may be. After serving in such role for a period of
four Accounting Periods, the Executive Committee of the Board will review the duties performed by
Messr. Benham and the related time requirements for such services and decide whether Messr.
Benham’s duties should be adjusted and the appropriate level of compensation for such duties. Any
decision to revise Messr. Benham’s duties as Chairman of the Executive Committee of the Board and
corresponding compensation at such time will require the approval of a majority of all of the
members of the Executive Committee.

               (iv) Matters Relating to the New CEO. Promptly following the date hereof, the
Executive Committee of the Board will initiate a search for the New CEO. Upon the later of the
date of the 2009 Annual Meeting and the date of election of the New CEO, the Executive Committee of
the Board will recommend for approval by the Board a director to serve as the non-executive
Chairman of the Board, which recommendation will require the approval of a majority of all of the
members of the Executive Committee. At any such time as a non-executive Chairman of the Board is
appointed, the position of lead independent director shall cease to exist. Following the
appointment of the New CEO, Messr. Benham shall remain Chairman of the Executive Committee of the
Board, unless a majority of all of the members of the Executive Committee shall determine
otherwise.

     2. Termination. This Agreement will remain in full force and effect and will be fully binding
on the parties hereto in accordance with the provisions hereof until the date that is five business
days prior to the last date on which a shareholder of the Company may submit nominations for the
Board in connection with the Company’s 2010 Annual Meeting of Shareholders (the “Termination
Date”). Section 14 and Section 15 will survive any termination of this
Agreement.

     3. Standstill.

          (a) Each Crescendo Party agrees that during the period commencing on the date hereof and
ending on the Termination Date, without the prior written consent of the Board specifically
expressed in a written resolution adopted by a majority vote of the entire Board, it will not, and
will cause each of its Affiliates, Associates, officers, agents and other Persons acting on its
behalf not to:

               (i) acquire, offer or propose to acquire, or agree to acquire (except by way of stock
dividends or other distributions or offerings made available to holders of Voting Securities (as
such term is defined in Section 10) generally on a pro rata basis, provided that any such
securities so received will be subject to the provisions hereof), directly or indirectly, whether
by purchase, tender or exchange offer, through the acquisition of control of another Person (as
such term is defined in Section 10), by joining a partnership, limited partnership,
syndicate or other “group” (within the meaning

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of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) or otherwise, any Voting Securities, or otherwise become the economic owner (as such
term is defined in Section 10) of any such securities, if after giving effect to such
acquisition it (by itself or together with any other Crescendo Party, its respective Affiliates and
Associates and any other Person with whom it, such other Crescendo Party or any such Affiliate or
Associate has any agreement, understanding or arrangement with respect to Voting Securities) would
be the beneficial owner or economic owner of more than 15% of the Company’s outstanding Voting
Securities. For the purposes of this Section 3(a)(i), any Voting Securities, including
options to acquire Voting Securities, that have been or are hereafter issued or granted to Mr.
Benham in his capacity as a director, or any other Voting Securities otherwise acquired by Mr.
Benham in his individual capacity, shall not be deemed to be Voting Securities held, beneficially
owned or controlled by Crescendo or any other Crescendo Party. For the purposes of computing the
beneficial ownership at the time of any purchase, the number of outstanding Voting Securities will
be determined by the latest available Company filing with the Securities and Exchange Commission
(the “SEC”);

               (ii) engage, or in any way participate, directly or indirectly, in any “solicitation” (as such
term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) of proxies or
consents (whether or not relating to the election or removal of directors), seek to advise,
encourage or influence any Person with respect to the voting of any Voting Securities; initiate,
propose or otherwise “solicit” (as such term is defined in Rule 14a-1(l) promulgated by the SEC
under the Exchange Act) shareholders of the Company for the approval of shareholder proposals
whether made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act or otherwise; induce or
attempt to induce any other Person to initiate any such shareholder proposal; or otherwise
communicate or seek to communicate with the Company’s shareholders or others pursuant to Rule
14a-1(l)(2)(iv) under the Exchange Act; provided, however, that nothing herein will
limit the ability of any Crescendo Party, or its respective Affiliates and Associates, except as
otherwise provided in Section 1(b)(ii), to vote its Voting Securities on any matter
submitted to a vote of the stockholders of the Company or announce its opposition to any
Board-approved proposals not supported by Messrs. Ajdler or Monahan or limit the ability of the
Crescendo Directors to exercise their rights as members of the Board while serving as members of
the Board;

               (iii) form, join or in any way participate in any “group” (within the meaning of Rule 13d-5 of
Regulation 13D-G under the Exchange Act) with respect to any Voting Securities, other than a
“group” that includes all or some lesser number of the Crescendo Parties, but does not include any
other members who are not currently identified as a Crescendo Party;

               (iv) deposit any Voting Securities in any voting trust or subject any Voting Securities to any
arrangement or agreement with respect to the voting of any Voting Securities, except as expressly
set forth in this Agreement;

               (v) seek to have called, or cause to be called, any meeting of shareholders of the Company;

               (vi) make any public demand to inspect the books and records of the Company, including
pursuant to any statutory right that Crescendo may have;

               (vii) have any discussions or communications, or enter into any arrangements, understanding or
agreements (whether written or oral) with, or advise, finance, assist or encourage, any other
Person in connection with any of the foregoing, or make any investment in or enter into any
arrangement with, any other Person that engages, or offers or proposes to engage, in any of the
foregoing;

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               (viii) make any proposal (including to publicly disclose or discuss any proposal) or enter
into any discussion regarding any of the foregoing, or make any proposal, statement or inquiry, or
disclose any intention, plan or arrangement (whether written or oral) inconsistent with the
foregoing, or make or publicly disclose any request to amend, waive or terminate any provision of
this Agreement; provided, however, that nothing herein will limit the ability of
any Crescendo Party, or its respective Affiliates and Associates, except as otherwise provided in
Section 1(b)(ii), to vote its Voting Securities on any matter submitted to a vote of the
stockholders of the Company or announce its opposition to any Board-approved proposals not
supported by Messrs. Ajdler or Monahan or limit the ability of the Crescendo Directors to exercise
their rights as members of the Board while serving as members of the Board; and provided,
further, that notwithstanding anything in this Section 3(a) to the contrary, if, at
any time a third party (A) commences a tender offer for at least 50% of the outstanding capital
stock of the Company or (B) enters into an agreement with the Company contemplating the acquisition
(by way of merger, tender offer or otherwise) of at least 50% of the outstanding capital stock of
the Company or all or substantially all of its assets, then the restrictions on Crescendo set forth
in Sections 3(a)(ii), 3(a)(iii) and 3(a)(vi) with respect to solicitations of proxies shall
terminate and cease to be of any further force or effect, such that Crescendo may (i) solicit
proxies with respect to any shareholder vote required in connection with any transactions of the
nature contemplated in subparts (A) and (B) of this proviso, and (ii) take any actions in
connection with any such solicitation of proxies, including requesting a stockholder list and
related information, filing an amendment or amendments to its Schedule 13D regarding the Common
Stock of the Company as required by law or taking any other action related to the solicitation of
proxies or making any public filings or announcements in furtherance thereof; or

               (ix) take or cause or induce others to take any action inconsistent with any of the foregoing.

          (b) Each Crescendo Party will be released from its standstill obligations set forth in
Section 3(a) on the Termination Date.

     4. Representations and Warranties of Crescendo. Each Crescendo Party represents and warrants
as follows:

          (a) Each Crescendo Party has the power and authority to execute, deliver and carry out the
terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

          (b) This Agreement has been duly and validly authorized, executed, and delivered by each
Crescendo Party, constitutes a valid and binding obligation and agreement of each Crescendo Party,
and is enforceable against each Crescendo Party in accordance with its terms.

          (c) Crescendo, together with its Affiliates and Associates, are beneficial owners and/or
economic owners, directly or indirectly, of an aggregate of shares of Common Stock as set forth by
beneficial owner and amount on Schedule A hereto and such shares of Common Stock constitute
all of the Voting Securities of the Company owned by each Crescendo Party and its respective
Affiliates and Associates.

     5. Representations and Warranties of the Company. The Company hereby represents and warrants
as follows:

          (a) The Company has the corporate power and authority to execute, deliver and carry out the
terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

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          (b) This Agreement has been duly and validly authorized, executed and delivered by the
Company, constitutes a valid and binding obligation and agreement of the Company, and is
enforceable against the Company in accordance with its terms.

     6. Specific Performance. Each of Crescendo, on the one hand, and the Company, on the other
hand, acknowledges and agrees that irreparable injury to the other party hereto would occur in the
event any of the provisions of this Agreement were not performed in accordance with their specific
terms or were otherwise breached and that such injury would not be adequately compensable in
damages. It is accordingly agreed that Crescendo, on the one hand, and the Company, on the other
hand (the “Moving Party”), will each be entitled to specific enforcement of, and injunctive
relief to prevent any violation of, the terms hereof and the other party hereto will not take
action, directly or indirectly, in opposition to the Moving Party seeking such relief on the
grounds that any other remedy or relief is available at law or in equity.

     7. Press Release. Immediately following the execution and delivery of this Agreement, the
Company will issue the press release attached hereto as Exhibit A (the “Press
Release”). None of the parties hereto will before the Termination Date make any public
statements (including in any filing with the SEC or any other regulatory or governmental agency,
including any stock exchange) that are inconsistent with, or otherwise contrary to, the statements
in the Press Release issued pursuant to this Section 7. Following the date hereof, no
Crescendo Party, nor any of their respective Affiliates or Associates, will before the Termination
Date issue or cause the publication of any press release or other public announcement with respect
to this Agreement, the Company, its management or the Board or the Company’s business without prior
written consent of the Company, provided, however, that Crescendo may make such
filings as are required by law or as may be required by law per advice from its outside counsel;
provided further, that nothing herein will limit the ability of any Crescendo
Party, its respective Affiliates and Associates to publicly announce its opposition to any
Board-approved proposals not supported by Messrs. Ajdler or Monahan.

     8. Expenses. Within 10 business days following receipt of reasonably satisfactory
documentation thereof, the Company will reimburse Crescendo for its reasonable out-of-pocket fees
and expenses incurred on or before the date hereof in connection with its negotiation and execution
of this Agreement and all related activities and matters; provided, such reimbursement will
not exceed $35,000 in the aggregate.

     9. No Waiver. Any waiver by either the Representative (as defined in Section 17) or
the Company of a breach of any provision of this Agreement will not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this
Agreement. The failure of either the Representative or the Company to insist upon strict adherence
to any term of this Agreement on one or more occasions will not be considered a waiver or deprive
that party of the right thereafter to insist upon strict adherence to that term or any other term
of this Agreement.

     10. Certain Definitions. As used in this Agreement, (a) the term “Person” will mean
any individual, partnership, corporation, group, syndicate, trust, government or agency, or any
other organization, entity or enterprise; (b) the terms “Affiliates” and
“Associates” will have the meanings set forth in Rule 12b-2 under the Exchange Act and will
include Persons who become Affiliates or Associates of any Person subsequent to the date hereof;
(c) the term “Voting Securities” will mean any securities of the Company entitled, or which
may be entitled, to vote in the election of directors, or securities convertible into or
exercisable or exchangeable for such securities, whether or not subject to passage of time or other
contingencies; (d) the terms “beneficial owner” and “beneficially own” have the
same meanings as set forth in Rule 13d-3 promulgated by the SEC under the Exchange Act; and (e) the

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terms “economic owner” and “economically own” will have the same meanings as
“beneficial owner” and “beneficially own,” except that a Person will also be deemed
to economically own and to be the economic owner of (i) all shares of the Common Stock that such
Person has the right to acquire pursuant to the exercise of any rights in connection with any
securities or any agreement, regardless of when such rights may be exercised and whether they are
conditional and (ii) all shares of Common Stock in which the Person has any economic interest,
including, without limitation, pursuant to a cash-settled call option or other derivative security,
contract or instruction in any way related to the price of shares of Common Stock.

     11. Successors and Assigns. Neither this Agreement nor any right, interest or obligation
hereunder may be assigned by any party hereto without the prior written consent of the other
parties hereto and any attempt to do so will be void. Subject to the preceding sentence, this
Agreement is binding upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.

     12. Entire Agreement; Amendments. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof. There are no restrictions, agreements,
promises, representations, warranties, covenants or undertakings other than those expressly set
forth herein. This Agreement may be amended only by a written instrument duly executed by the
parties hereto or their respective successors or assigns.

     13. Headings. The section headings contained in this Agreement are for reference purposes
only and will not affect in any way the meaning or interpretation of this Agreement.

     14. Notices. All notices, demands and other communications to be given or delivered under or
by reason of the provisions of this Agreement will be in writing and will be deemed to have been
given (a) when delivered by hand (with written confirmation of receipt), (b) upon sending if sent
facsimile, with electronic confirmation of sending; provided, however, that a copy
is sent on the same day by registered mail, return receipt requested, in each case to the
appropriate mailing address set forth below (or to such other mailing address as a party may
designate by notice to the other parties in accordance with this Section 14), (c) one (1)
day after being sent by nationally recognized overnight carrier to the addresses set forth below
(or to such other mailing addresses as a party may designate by notice to the other parties in
accordance with this Section 14) or (d) when actually delivered if sent by any other method
that results in delivery (with written confirmation of receipt):

	 	 	 	 	 
	 

	 	If to the Company:
	 	O’Charley’s Inc.
	 

	 	 	 	3038 Sidco Drive
	 

	 	 	 	Nashville, TN 37204
	 

	 	 	 	Attn: Lawrence E. Hyatt, Chief Financial Officer
	 

	 	 	 	Facsimile: (615) 782-5043
	 
	 	 	 	 
	 

	 	          with a copy to:
	 	Bass, Berry & Sims PLC
	 

	 	 	 	315 Deaderick Street, Suite 2700
	 

	 	 	 	Nashville, TN 37238-3001
	 

	 	 	 	Attn: J. Page Davidson
	 

	 	 	 	Facsimile: (615) 742-2753
	 
	 	 	 	 
	 

	 	If to Crescendo	 	 
	 

	 	or the Representative:
	 	Eric S. Rosenfeld
	 

	 	 	 	c/o Crescendo Partners II, L.P., Series Z
	 

	 	 	 	825 Third Avenue, 40th Floor
	 

	 	 	 	New York, New York 10022
	 

	 	 	 	Facsimile: (212) 319-0760
	 
	 	 	 	 
	 

	 	          with a copy to:
	 	Olshan Grundman Frome Rosenzweig & Wolosky LLP
	 

	 	 	 	65 East 55th Street
	 

	 	 	 	New York, New York 10022
	 

	 	 	 	Attention: Steven Wolosky
	 

	 	 	 	Facsimile: (212) 451-2222

or to such other address as the Person to whom notice is given may have previously furnished to the
others in writing in the manner set forth above.

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     15. Jurisdiction; Applicable Law. Each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of the Court of Chancery or other federal or state courts in Davidson
County in the State of Tennessee in the event any dispute arises out of this Agreement, (b) agrees
that it will not bring any action relating to this Agreement in any court other than the Court of
Chancery or other federal or state courts of the State of Tennessee, (b) agrees that it will not
attempt to deny or defeat such personal jurisdiction by motion or other request for leave form any
such court, and (c) agrees that service of process in any proceeding in any such court may be made
by registered mail, return receipt requested, in the case of the Company, to the address set forth
in Section 14 and in the case of any Crescendo Party, to the address of Crescendo and the
Representative set forth in Section 14. This Agreement will be governed in all respects,
including validity, interpretation and effect, by the laws of the State of Tennessee applicable to
contracts executed and to be performed wholly within such state without giving effect to the choice
of law principles of such state.

     16. Counterparts. This Agreement may be executed in counterparts, each of which will be an
original, but all of which together will constitute one and the same Agreement.

     17. Crescendo Representative. Crescendo hereby irrevocably appoints Eric S. Rosenfeld as its
attorney-in-fact and representative (the “Representative”), in its place and stead, to do
any and all things and to execute any and all documents and give and receive any and all notices or
instructions in connection with this Agreement. The Company will be entitled to rely, as being
binding on Crescendo, upon any action taken by the Representative or upon any document, notice,
instruction or other writing given or executed by the Representative.

     18. First Settlement Agreement. This Agreement supersedes and replaces the First Settlement
Agreement, which is of no further force and effect and under which the parties have no remaining
liabilities or obligations.

[The remainder of this page intentionally left blank]

9

 

     IN WITNESS WHEREOF, each of the undersigned parties has executed or caused this Agreement to
be executed or caused to be executed on its behalf on the date first above written.

	 	 	 	 	 	 	 	 	 
	 	 	O’CHARLEY’S INC.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lawrence E. Hyatt 	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	Lawrence E. Hyatt	 	 
	 	 	Title:	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CRESCENDO PARTNERS II, L.P., SERIES Z	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Crescendo Investments II, LLC, General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Eric S. Rosenfeld 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Eric S. Rosenfeld	 	 
	 

	 	 	 	Title:
	 	Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CRESCENDO PARTNERS III, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Crescendo Investments III, LLC, General Partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Eric S. Rosenfeld 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Eric S. Rosenfeld	 	 
	 

	 	 	 	Title:
	 	Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CRESCENDO INVESTMENTS II, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Eric S. Rosenfeld 	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	Eric S. Rosenfeld	 	 
	 	 	Title:	 	Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	CRESCENDO INVESTMENTS III, LLC	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Eric S. Rosenfeld 	 	 
	 	 	 	 	 	 	 
	 	 	Name:	 	Eric S. Rosenfeld	 	 
	 	 	Title:	 	Managing Member	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	/s/ Eric S. Rosenfeld	 	 
	 	 	 	 	 	 	 
	 	 	 	 	ERIC S. ROSENFELD	 	 

Signature Page to Second Settlement Agreement

 

 

Schedule A

Summary of Beneficial and Economic Ownership of Shares of Common Stock of O’Charley’s Inc.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Beneficially	 	Economically	 	Percent of
	Owner	 	Owned	 	 Owned	 	Class
	Crescendo Investments II, LLC
	 	 	2,534,891	 	 	0 shares	 	11.4%
	 
	Crescendo Investments III, LLC
	 	 	136,474	 	 	0 shares	 	Less than 1%
	 
	Crescendo Partners II, L.P., Series Z
	 	 	2,534,891	 	 	 	2,534,891	 	 	11.4%
	 
	Crescendo Partners III, L.P.
	 	 	136,474	 	 	 	136,474	 	 	Less than 1%
	 
	Eric S. Rosenfeld
	 	 	2,671,365	 	 	0 shares	 	12.0%
	 
	Arnaud Ajdler
	 	 	11,265	 	 	 	11,265	 	 	Less than 1%
	 
	Douglas Benham
	 	 	18,865	 	 	 	18,865	 	 	Less than 1%
	 
	Gregory R. Monahan
	 	 	10,015	1	 	 	10,015	 	 	Less than 1%

 

			
	1	 	Includes 400 shares of Common Stock held in Mr.
Monahan’s IRA account.EX-10.1

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

 

 

			
	William L. McComb
	 	-2-

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

 

 

			
	William L. McComb
	 	-3-

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:

 

 

			
	William L. McComb
	 	-4-

                    (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

 

 

			
	William L. McComb
	 	-5-

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.

 

 

			
	William L. McComb
	 	-6-

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.

 

 

			
	William L. McComb
	 	-7-

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.

 

 

			
	William L. McComb
	 	-8-

     (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

 

 

			
	William L. McComb
	 	-9-

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.

 

 

			
	William L. McComb
	 	-10-

     (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

 

 

			
	William L. McComb
	 	-11-

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.

 

 

			
	William L. McComb
	 	-12-

     (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

 

 

			
	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

 

 

			
	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

 

 

			
	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

 

 

			
	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

 

 

			
	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.”

 

 

			
	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

 

 

			
	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.

 

 

			
	William L. McComb
	 	-20-

	 	 	 	 	 
	 	Very truly yours,

Liz Claiborne, Inc.

 	 
	 	By:  	/s/ NICHOLAS RUBINO
 	 
	 	 	 	 
	 	 	 	 
	 

ACCEPTED AND AGREED:

	 	 	 
	/s/ WILLIAM L. MCCOMB
 

	 	 
	William L. McComb
	 	 

 

 

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

 

 

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;

 

 

	 	(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:

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