Document:

Exhibit 10(y)

EXHIBIT 10(y)

The registrant has requested confidential treatment with regard to portions of this exhibit. This
exhibit omits such confidential information (denoted by asterisks) that has been filed separately
with the Securities and Exchange Commission.

LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”), is made and entered into as of the 7th day of
October 2009 by and between Liz Claiborne, Inc. (referred to herein as “Licensor”), and J. C.
Penney Corporation, Inc., its parent, J.C. Penney Company, Inc. and their directly and indirectly
wholly owned subsidiaries (referred herein as “Licensee”).

WHEREAS, Licensor is the owner of the “Liz Claiborne”, “Liz & Co.”, “Claiborne”, “and
“Concepts By Claiborne” trademarks with various stylized designs, together with the trade dress and
the goodwill associated with the such trademarks; and

WHEREAS, Licensor and Licensee desire to enter into this License Agreement with respect to the
sale and manufacture of certain merchandise specified herein upon the terms and conditions herein
set forth.

NOW, THEREFORE, the parties hereto agree as follows:

1. DEFINITIONS. As used in this Agreement the following terms will mean:

1.1 Trademarks or Marks will mean only the “Liz Claiborne”, “Liz & Co.”, “Claiborne”,
and “Concepts By Claiborne” trademarks, with such logomarks and in the type styles and typefaces
that are related thereto as of the date hereof, as well as any taglines or phrases associated with
or created during the Term that function as trademarks and any of the logos created during the
Term.

1.2 Licensed Merchandise, Licensed Goods or Licensed Products will mean merchandise
designed by or for Licensor, or subject to Licensor’s prior approval, designed by or for Licensee,
which is offered by Licensee by virtue of the authority granted in this Agreement which displays
the Trademarks on such products, hang-tags, labels and/or other means of packaging or source
identification. Merchandise purchased from Licensor’s Existing Licensees is not Licensed
Merchandise for which any royalties are due under this Agreement.

1.3 Product Categories will mean the product categories listed on Exhibit A.

 

 

1.4 Territory will mean (i) worldwide only with respect to the manufacture of Licensed
Products; and (ii) for the sale, marketing, merchandising, advertising and promotion of Licensed
Products (a) retail stores in the United States (including the District of Columbia), and Puerto
Rico; and (b) normal distribution territory in the United States (including the District of
Columbia) and Puerto Rico for orders received by Licensee’s catalog and electronically enabled
commerce, whether currently known or hereafter coming into existence, and those United States
military installations throughout the world provided such sales originate in the United States (the
“Sales Territory”, with the “Sales Territory” being a subset of the “Territory”). Licensor agrees
that on a non-exclusive basis, a de minimus amount, as reasonably determined by Licensor, of
sales made through Licensee’s United States based catalog and e-commerce platforms may be shipped
to consumers outside of the United States. For the purposes of liquidation, Licensee agrees that
Licensee shall not knowingly authorize the sale, resale or transfer of any Licensed Products
outside the Sales Territory. Licensee agrees that it will not knowingly authorize the resale or
transfer of any Licensed Products to any other retailer, wholesaler, intermediary, or agent of any
other person or entity, foreign or domestic, that Licensee knew or should have known had the intent
to resell the Licensed Products, without Licensor’s consent, unless all tags, labels or other
references to the Licensed Marks have been, or will be before resale, removed or otherwise made
illegible and unidentifiable with the Licensed Marks.

1.5 Net Sales shall mean (i) for retail store sales, the actual retail price paid to
Licensee by Licensee’s retail customers (not including any sales or other taxes, transportation or
handling charge) for all Licensed Products sold, less any discounts, refunds, credits, or returns
given by Licensee to its customers; and (ii) for catalog, mail order and e-commerce sales, gross
shipments, less free transportation and handling promotional programs, less returns, less an
amount not to exceed *** of the actual aggregate retail price paid to Licensee by Licensee’s
retail customers that represents customer order adjustments (as distinct from discounts, refunds,
credits or returns) for damaged or defective Licensed Products sold to retail customers via
Licensee’s catalog, mail order and e-commerce operations (“Customer Order Adjustments”).

 

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1.6 Gross Profit will mean ***

1.7 IP Rights  will mean all intellectual and industrial property interests in or to
items now or hereafter owned and/or created by or on behalf of Licensor (including by Licensee),
other than the Trademarks, whether or not copyrightable or patentable, including, without
limitation, patterns, designs and trade dress in and to any products and to any prints, package
designs, labels, advertising and other promotional materials, used on or in conjunction with any of
the Trademarks or the Licensed Products.

1.8 Concept Sample will mean the prototype sample prepared by Licensee in accordance with
the design specifications described in Section 4, including color, concept and design aesthetic.

 

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1.9 Affiliate will mean any entity having any relationship, contract, or arrangement
with either party with respect to any matter which affects or is affected by this Agreement wherein
this entity has or exercises or has the power to exercise, directly or indirectly, in any manner,
control, direction, or restraint of that party or wherein such entity and that party are subject to
common or mutual control, direction, or restraint or wherein that party has the power to exercise,
directly or indirectly, in any manner, control, direction, or restraint of such entity.

1.10 Contract Year will mean a 12 month period (other than for the First Contract
Year), as defined in Section 5.1.

2. GRANT OF LICENSE. Upon the terms and conditions contained in this Agreement, and
subject to Section 3, Licensor hereby grants to Licensee, and Licensee hereby accepts, the
non-exclusive right and license to use the Trademarks and IP Rights during the Term (i) to sell,
market, distribute, advertise, promote and/or otherwise exploit the Licensed Products in the
Product Categories in the Sales Territory (the “Sales Territory License”) and (ii) to manufacture
and/or have manufactured Licensed Products in the Product Categories worldwide (the “Manufacturing
License”); provided that the Sales Territory License (x) will become exclusive on August 1, 2010
(the “Exclusivity Effective Date”) and (y) will not include the right to grant sublicenses to third
parties, except to Licensee’s third party contract manufacturers of any Licensed Product. Licensee
agrees that, subject to the foregoing clause (y) and Section 12, the Sales Territory License and
the Manufacturing License are strictly personal to Licensee.

 

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Licensee and Licensor will devote sufficient financial resources to support their businesses
and operations as required hereunder. Licensee will use its reasonable best efforts to develop and
maintain a substantial, enduring and expanding business under this Agreement, and to sell a
maximum quantity of Licensed Merchandise consistent with the high standards and prestige associated
with the Trademarks during the Term of this Agreement and consistent with the terms of this
Agreement.

3. EXCLUSIVITY.

(a) Licensor warrants and represents that it will not itself sell, distribute or otherwise
exploit, nor license or grant any other person or entity the rights to sell, distribute or
otherwise exploit any products bearing (i) the Trademarks; (ii) any mark that comprises, consists
of or includes ELIZABETH, LIZ, and/or CLAIBORNE; (iii) or any combination of the foregoing; (iv)
any derivative of any of the foregoing; or (iv) any mark confusingly similar to the foregoing in
the Sales Territory from the Exclusivity Effective Date and continuing throughout the Term of this
Agreement. Notwithstanding the preceding, Licensee acknowledges and agrees that:

(i) the Trademarks are subject to licenses for certain product categories with third parties
as indicated on Exhibit C (the “Existing Licenses”) and that Licensee’s rights hereunder do not
include rights to the categories of products listed on such Exhibit; ***

 

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***

(ii) Licensor will retain the right to manufacture jewelry products (other than “watches” and
“fine jewelry”, defined as jewelry made of precious metals, such as karat gold and .925 silver,
jewelry set with genuine or created precious or semiprecious stones or pearls, and in-case watches)
bearing any of the Trademarks, provided that Licensor will sell such jewelry products only to
Licensee on terms to be agreed to by the parties from time to time. Licensor agrees to notify
Licensee of any changes to the current manufacturing structure for jewelry products it manufactures
under this subsection.

(b) Furthermore, during the term of this Agreement, Licensor retains the following rights in
the Sales Territory:

(i) all rights to the Liz Claiborne New York trademark; provided that Licensor will limit
distribution in the Sales Territory to retail sales through Licensor’s retail stores (the “Outlet
Stores”) and through QVC, Inc. ***. It is understood that there shall be no limitation on
distribution outside of the Sales Territory.

(ii) all rights to the Lizwear trademark; provided that Licensor agrees that distribution of
Lizwear will be limited to ***.

 

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(iii) all rights to the LizGolf trademark; provided that Licensor agrees that distribution of
LizGolf will be limited to ***; and

(iv) all rights to the Trademarks not otherwise granted under this Agreement.

(v) In addition, Licensee acknowledges that the lenders and certain other secured partners
under Licensor’s Amended and Restated Credit Agreement, together with any amendment, modification,
replacement, renewal, extension or refinancing thereof (the “Credit Agreement”), have been and may
in the future be granted, an irrevocable, royalty-free, non-exclusive license in order for the
lenders and such secured parties to exercise their rights in the event of a Licensor default under
the Credit Agreement.

4. DESIGN AND PRODUCTION.

4.1 During the Term, Licensor will provide design services to Licensee as provided in this
Section 4, and Licensee will only utilize designs provided or approved by Licensor on Licensed
Products. Licensor will reasonably adhere to Licensee’s design and sourcing calendar by category
and collection by season. A sample calendar is attached as Exhibit D. Design calendars may be
updated from time to time upon mutual agreement of the parties, any such updates to be agreed to in
adequate time for both parties to comply with such updated calendar.

4.2 Licensee agrees to consider Licensor’s suggestions regarding fabric and trim vendors.
Licensee has the final approval regarding which fabric and trim vendor will be utilized, provided
that Licensee meets the Licensor’s specifications in the product packages.

4.3 If Licensor provides the product design, Licensor is responsible for providing the design
aesthetic, including color, concept, print and pattern, substantially in the form of the product
packages in Exhibit E. Beginning on March 1, 2010, or as soon as the parties are
reasonably able to meet software and technical requirements, both parties will be responsible
for directly utilizing the Flex PLM system, provided Licensee will be responsible for any license
fees related to the Flex PLM system incurred by Licensor. Licensor may, from time to time, request
that Licensee provide designs. In such event, Licensee will provide such designs for Licensor’s
approval, including color, concept, print and pattern.

 

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4.4 ***

4.5 Licensee will provide the Concept Sample and submit to Licensor. Licensor will evaluate
the Concept Sample to ensure it meets the design specifications and for initial fit. On the
initial fit, Licensor will give feedback as to technical specifications and design aesthetic to
bring the Concept Sample in line with the original design aesthetic. If Licensor, in its
reasonable discretion, advises Licensee that such Concept Sample materially differs from the design
specifications or fit, Licensee will revise and resubmit a Concept Sample.

4.6 Licensee will be responsible for the final approval of color, production and fit,
consistent with the design specifications. Licensor will be responsible for the final approval of
print strike offs.

4.7 Licensee will provide a final confirmation sample to Licensor before Licensee’s final line
turnover.

4.8 Licensor will provide conceptual design for the product packaging in the form of digital
camera-ready artwork for the logos. Licensee will create a packaging style guide to be reviewed
and mutually agreed upon at the major divisional strategy meetings. Before November 20, 2009,
Licensor will review the logos to be utilized with the Trademarks. Such logos should be planned
for use for a reasonable period of time. Following the launch of the first seasonal offerings,
Licensor will review with Licensee any changes to its Trademark strategy in
the Sales Territory, including any logo changes. In such event, both parties will discuss
Licensor’s Trademark strategy and the sharing of any expenses related to logo changes. In any
event, unless mutually agreed to by the parties, Licensee is not obligated to use any new versions
of the Trademarks or logos. Licensee will source all product packaging.

 

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4.9 For samples or designs submitted under this Section 4 from the date of execution through
February 28, 2010, Licensor will have ten (10) business days to approve the sample or design, such
approval not to be unreasonably withheld. For samples or designs submitted under this Section 4
from March 1, 2010, through July 31, 2010, Licensor will have seven (7) business days to approve
the sample or design, such approval not to be unreasonably withheld. For samples or designs
submitted under this Section 4 from and after August 1, 2010, Licensor will have five (5) business
days to approve the sample or design, such approval not to be unreasonably withheld. If Licensor
fails to respond to a request for approval within the agreed time-frame, the sample will be deemed
approved.

4.10 Before the start of a design season, Licensee must provide a conceptual merchandise plan
that includes a number of styles by category, target cost and SKU count within an item. Licensor
will target developing styles at a minimum 2:1 ratio to the number of styles in the conceptual
merchandise plan, unless otherwise agreed upon by the parties.

4.11 Licensor agrees to maintain 15-20 full time employees dedicated to design for the
Licensed Merchandise. Licensee agrees to maintain a sourcing and product development team for the
Licensed Products in Plano, Texas. In Asia, Licensee agrees that the Licensed Merchandise will
receive the same type of staffing that Licensee normally affords to its similar private brands.

 

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4.12 A semi-annual review with Senior Product Development and Merchandising Management will be
held around the timing of the division strategy meetings as set forth on Exhibit D.

4.13 Licensee acknowledges that, subject to the Purchase Options and the licenses granted
under this Agreement, this Agreement does not grant any rights to Licensee with respect to any
design independently developed by Licensee or Licensee’s suppliers and used on any Licensed
Products. Subject to the Purchase Options, Licensee and Licensor agree and intend that all created
works of authorship including, but not limited to, such works comprising or included in Licensed
Products, advertising, packaging, and merchandising materials, created by Licensee or other persons
or entities and used with the Licensed Mark(s), are Works Made For Hire within the meaning of the
United States Copyright Act of 1976 shall be the property of Licensor who shall be entitled,
subject to the licenses granted to Licensee under this Agreement, to use and license others to use
such works of authorship. To the extent such works of authorship are not Works Made For Hire as
defined by the United States Copyright Act of 1976, Licensee shall assign to Licensor copyright in
such works of authorship.

5. EFFECTIVE DATE, TERM, TERMINATION, OPTIONS.

5.1 This Agreement shall be effective as of the date first written above and shall extend from
such effective date through July 31, 2020, (the “Expiration Date”) equaling 10 Contract Years
(defined below), unless earlier terminated as provided below, provided that, unless terminated for
default earlier, the first seasonal offering under this Agreement will be the Fall 2010 season and
the last seasonal offering will be the Summer season of the last Contract Year. All contract
periods referred to in this Agreement shall be 12-month periods, with each Contract Year commencing
the first day of Licensee’s fiscal month of August and each Contract Year
expiring the last day of Licensee’s fiscal month of July (each such 12 month period a
“Contract Year”); provided that the First Contract Year will consist of approximately 20 months,
commencing on the date first written above (the “Commencement Date”) and expiring on the last day
of Licensee’s fiscal July 2011. Notwithstanding the commencement of this Agreement on the
Commencement Date, Licensee’s exclusive rights will not begin until August 1, 2010 (the
“Exclusivity Effective Date”).

 

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5.2 Licensee will have the option to terminate this Agreement for convenience prior to the
Expiration Date (“Termination Option”). Licensee must exercise the Termination Option, if at all,
during the fourth Contract Year, but in no event later than July 31, 2014. If the Licensee
exercises the Termination Option, the term of this Agreement will expire at the end of the sixth
Contract Year.

5.3 It is the parties’ intention that the Licensee be granted options (the “Purchase Options”)
to acquire from Licensor the Option Assets (defined below) on the terms and conditions set forth in
this section. However, Licensee understands and acknowledges that pursuant to Licensor’s Credit
Agreement, the Option Assets are subject to a first priority lien in favor of the lenders and
certain other secured parties thereunder. Moreover, Licensee understands and acknowledges that
pursuant to the terms of the Credit Agreement, Licensor must obtain the consent of certain required
lenders under the Credit Agreement in order to grant an option (including the Purchase Option) to
the Option Assets (the “Lender Consent”). Upon Licensor obtaining the Lender Consent, Licensor
will grant to Licensee the Purchase Option, on the terms and subject to the conditions set forth in
this Section 5.3. Notwithstanding anything to the contrary contained in this Agreement, a Purchase
Option, if granted, may only be exercised by Licensee during an Option Period.

 

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5.3.1 The “Option Assets” shall mean the “Acquired Assets” as defined in the Purchase
Agreement attached hereto as Exhibit G (the “Purchase Agreement”).

5.3.2 No later than 30 calendar days before the Year 4 Option Period (as defined below), and
the Year 10 Option Period, Licensor will provide Licensee with a then current draft Disclosure
Letter (as defined in the Purchase Agreement).

5.3.3 Year Four Purchase Option. During the period ending 10 calendar days after the
end of the fourth Contract Year (the “Year 4 Option Period”), Licensee may exercise the Purchase
Option.

(a) If Licensee elects to exercise the Year Four Purchase Option, Licensee shall deliver to
Licensor, during the Year 4 Option Period and in accordance with the requirements of Section 17.1
hereof, an irrevocable written notice (the “Exercise Notice”) of such exercise, together with two
originals of the Purchase Agreement, revised only to reflect the provisions of this Section 5.3.3
and to include a then current Disclosure Letter, duly executed by Licensee. Within 10 calendar
days after valid delivery of the Exercise Notice to Licensor by Licensee, Licensor shall date and
duly execute the two originals of the Purchase Agreement executed and delivered by Licensee to
Licensor and shall deliver to Licensee, in accordance with the requirements of Section 17.1 hereof,
one fully executed original of the Purchase Agreement, together with all required exhibits, annexes
and disclosure schedules thereto, which thereupon shall become binding on the parties in accordance
with its terms (the “Executed Year 4 Purchase Agreement”). Licensor shall not be obligated (i) in
connection with Licensee’s exercise of the Year Four Purchase Option, to accept any terms or
conditions, or to make any representations, warranties or covenants, regarding the Option Assets or
otherwise, that are not set forth in the Purchase Agreement or (ii) to sell the
Option Assets to Licensee except in accordance with the terms and conditions set forth in the
Executed Year 4 Purchase Agreement.

 

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(b) If Licensee elects to exercise the Year Four Purchase Option, this License Agreement will
terminate upon the Closing of the Executed Year 4 Purchase Agreement. If Licensee does not validly
exercise the Year Four Purchase Option during the Year 4 Option Period, the Year Four Purchase
Option shall terminate, and be of no further force and effect, as of the expiration of the Year 4
Option Period, in which event this Agreement will continue in full force and effect.

(c) If Licensee elects to exercise the Year 4 Purchase Option, the “Purchase Price” (as used
in the Purchase Agreement) to be paid by Licensee will be an amount equal to the greater of (i) ***
and (ii) *** times the average of the total payments paid or payable by Licensee in respect of the
fourth and fifth Contract Years, but not to exceed ***.

(d) If Licensee elects to exercise the Year 4 Purchase Option, the “Closing” (as used in the
Purchase Agreement) shall be subject to a closing condition, for the benefit of Licensor, that all
Fees in respect of all periods through and including the fifth Contract Year shall have been paid
in full.

5.3.4 Change of Control Purchase Option. Licensee may exercise the Purchase Option,
following a Change of Control (defined below), during the period of 10 calendar days after the
later of Licensee’s receipt of (i) written notice from Licensor of a Change of Control and (ii)
Licensor’s Disclosure Letter (the “Change of Control Option Period”).

 

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 (a) “Change of Control” shall mean the first occurrence of any of the following:

(i) the sale, in one or a series of related transactions, of all or substantially all of the
assets of the Licensor and its subsidiaries, taken as a whole;

(ii) the liquidation or dissolution of the Licensor;

(iii) the acquisition by any person or group (within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934) of beneficial ownership of more than 50% of the common stock of
Licensor; or

(iv) the Licensor consolidates with, or merges with or into, any person or group (within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934), or any person or group (within
the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934), consolidates with, or
merger with or into, the Licensor, in any such event pursuant to a transaction in which the
outstanding voting stock of the Licensor is converted into or exchanged for cash, securities or
other property, other than any such transaction where the voting stock of the Licensor outstanding
immediately prior to such transaction is converted into or exchanged for voting stock of the
surviving or transferee person constituting a majority of the outstanding shares of such voting
stock of such surviving or transferee person immediately after giving effect to such transaction.

(b) If Licensee elects to exercise the Change of Control Purchase Option, Licensee shall
deliver to Licensor, during the Change of Control Option Period and in accordance with the
requirements of Section 17.1 hereof, the Exercise Notice, together with two originals of the
Purchase Agreement, revised only to reflect the provisions of this Section 5.3.4, and to include a
then current Disclosure Letter, duly executed by Licensee. Within 10 calendar days after valid
delivery of such Exercise Notice to Licensor by Licensee, Licensor shall date and duly execute the
two originals of the Purchase Agreement executed and delivered by Licensee to Licensor and shall
deliver to Licensee, in accordance with the requirements of Section 17.1 hereof, one fully executed
original of the Purchase Agreement, together with all required exhibits, annexes and disclosure
schedules thereto, which thereupon shall become binding on the parties in accordance with its terms
(the “Executed COC Purchase Agreement”). Licensor shall not be obligated (i) in connection with
Licensee’s exercise of the Change of Control Purchase Option, to accept any terms or conditions, or
to make any representations, warranties or covenants, regarding the Option
Assets or otherwise, that are not set forth in the Purchase Agreement or (ii) to sell the
Option Assets to Licensee except in accordance with the terms and conditions set forth in the
Executed COC Purchase Agreement.

 

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(c) If Licensee exercises the Change of Control Purchase Option, this License Agreement will
terminate upon the Closing of the Executed COC Purchase Agreement. If Licensee does not validly
exercise the Change of Control Purchase Option during the Change of Control Option Period, the
Change of Control Purchase Option shall terminate, and be of no further force and effect, as of the
expiration of the Change of Control Option Period, in which event this Agreement will continue in
full force and effect.

(d) If Licensee exercises the change of Control Purchase Option, the “Purchase Price” (as used
in the Purchase Agreement) to be paid by Licensee will be the sum of Fees payments due through the
Closing of the Executed COC Purchase Agreement plus the amounts shown below:

	 	 	 
	EXERCISE NOTICE IN CONTRACT YEAR(S)	 	AMOUNT
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***

5.3.5 LCNY Purchase Option. Licensee may exercise the Purchase Option during the period of 10
calendar days after the later of (i) *** or (ii) Licensor’s Disclosure Letter (the “LCNY Option
Period”).

 

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(a) If Licensee elects to exercise the LCNY Purchase Option (defined in Section 10.2.5),
Licensee shall deliver to Licensor, during the LCNY Option Period and in accordance with the
requirements of Section 17.1 hereof, the Exercise Notice, together with two originals of the
Purchase Agreement, revised only to reflect the provisions of this Section 5.3.5, and to include a
then current Disclosure Letter, duly executed by Licensee. Within 10 calendar days after valid
delivery of the Exercise Notice to Licensor by Licensee, Licensor shall date and duly execute the
two originals of the Purchase Agreement executed and delivered by Licensee to Licensor and shall
deliver to Licensee, in accordance with the requirements of Section 17.1 hereof, one fully executed
original of the Purchase Agreement, together with all required exhibits, annexes and disclosure
schedules thereto, which thereupon shall become binding on the parties in accordance with its terms
(the “Executed LCNY Purchase Agreement”). Licensor shall not be obligated (i) in connection with
Licensee’s exercise of the LCNY Purchase Option, to accept any terms or conditions, or to make any
representations, warranties or covenants, regarding the Option Assets or otherwise, that are not
set forth in the Purchase Agreement or (ii) to sell the Option Assets to Licensee except in
accordance with the terms and conditions set forth in the Executed LCNY Purchase Agreement.

(b) If Licensee exercises the LCNY Purchase Option, this License Agreement will terminate upon
the Closing of the Executed LCNY Purchase Agreement. If Licensee does not validly exercise the
LCNY Purchase Option during the LCNY Option Period, the LCNY Purchase Option shall terminate, and
be of no further force and effect, as of the expiration of the LCNY Option Period, in which event
this License Agreement will continue in full force and effect, unless Licensee exercises, or has
exercised, its right to terminate this Agreement.

 

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(c) If Licensee exercises the LCNY Purchase Option, the “Purchase Price” (as used in the
Purchase Agreement) to be paid by Licensee will be the sum of Fees payments due through the Closing
of the Executed LCNY Purchase Agreement plus the amounts shown below:

	 	 	 
	EXERCISE NOTICE IN CONTRACT YEAR(S)	 	AMOUNT
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***

5.3.6 Year Ten Option. Licensee may exercise the Purchase Option during the period
ending 10 calendar days after the end of the ninth Contract Year (“Year 10 Option Period”),
together with the Year 4 Option Period, the Change of Control Option Period and the LCNY Option
Period, the “Option Periods”).

(a) If Licensee elects to exercise the Year Ten Purchase Option, Licensee shall deliver to
Licensor, during the Year 10 Option Period and in accordance with the requirements of Section 17.1
hereof, the Exercise Notice, together with two originals of the Purchase Agreement, revised only to
reflect the provisions of this Section 5.3.6, and to include a then current Disclosure Letter, duly
executed by Licensee. Within 10 calendar days after valid delivery of the Exercise Notice to
Licensor by Licensee, Licensor shall date and duly execute the two originals of the Purchase
Agreement executed and delivered by Licensee to Licensor and shall deliver to Licensee, in
accordance with the requirements of Section 17.1 hereof, one fully executed original of the
Purchase Agreement, together with all required exhibits, annexes and disclosure schedules thereto,
which thereupon shall become binding on the parties in accordance with its terms (the
“Executed Year 10 Purchase Agreement”). Licensor shall not be obligated (i) in connection with
Licensee’s exercise of the Year Ten Purchase Option, to accept any terms or conditions, or to make
any representations, warranties or covenants, regarding the Option Assets or otherwise, that are
not set forth in the Purchase Agreement or (ii) to sell the Option Assets to Licensee except in
accordance with the terms and conditions set forth in the Executed Year 10 Purchase Agreement.

 

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(b) If Licensee exercises the Year Ten Purchase Option, this License Agreement will terminate
upon the Closing of the Executed Year 10 Purchase Agreement. If Licensee does not validly exercise
the Year Ten Purchase Option during the Year 10 Option Period, the Year 10 Purchase Option shall
terminate, and be of no further force and effect, as of the expiration of the Year 10 Option
Period, in which event this Agreement will continue in full force and effect.

(c) If Licensee exercises the Year 10 Purchase Option, the “Purchase Price” (as used in the
Purchase Agreement) to be paid by Licensee will be ***.

(d) If Licensee exercises the Year 10 Purchase Option, the “Closing” (as used in the Purchase
Agreement) shall be subject to a closing condition, for the benefit of Licensor, that all Fees in
respect of all periods through and including the tenth Contract Year shall have been paid in full.

5.4 If Licensor has not obtained the Lender Consent by October 8, 2010, the Licensee shall
have the right to request by notice delivered under Section 17.1 to renegotiate the terms hereof.
If Licensee has made such request and the parties have not reached an agreement on new terms within
sixty days from Licensor’s receipt of Licensee’s notice, either party can terminate this Agreement,
which shall be the sole and exclusive remedy of Licensee under this Agreement or otherwise against
Licensor as a result of the failure to obtain the Lender Consent.

 

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6. RIGHTS ON TERMINATION/EXPIRATION.

(a) Upon the expiration or termination of this Agreement (whether by reason of the expiration
of the Term of this Agreement, or by earlier termination of this Agreement as provided hereunder or
otherwise, but not including if this Agreement is terminated following Licensee’s exercise of any
Purchase Option), all rights herein granted to Licensee shall terminate and revert automatically to
Licensor without any payment of consideration of any kind to Licensee, and, subject to Licensee’s
rights set forth in Section 6(d), Licensee hereby irrevocably releases and disclaims any right or
interest in or to any and all of the foregoing after the effective date of such expiration or
termination of this Agreement and neither Licensee nor any of its receivers, representatives,
trustees, agents, successors or assigns (by operation of law or otherwise) will have any right to
manufacture, exploit, advertise, merchandise, promote, sell, distribute or deal in or with Licensed
Merchandise, and Licensee and all of its assignees, successors or assigns (by operation of law or
otherwise) will forthwith discontinue all use of the IP Rights, Marks and any derivation,
component, variation or simulation thereof, or any mark confusingly similar therewith, and all
references thereto or hereto.

(b) Licensee agrees that from the date of expiration or termination of this Agreement (whether
by reason of the expiration of the term of this Agreement, or by earlier termination of this
Agreement as provided hereunder or otherwise but not including if this Agreement is terminated
following Licensee’s exercise of any Purchase Option), Licensee shall not place new orders for
Licensed Products to be manufactured.

 

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(c) Following the expiration or termination of this Agreement (whether by reason of the
expiration of the term of this Agreement, or by earlier termination of this Agreement as provided
hereunder or otherwise but not including if this Agreement is terminated following Licensee’s
exercise of any Purchase Option), Licensee will maintain Licensor’s access to systems and
information for at least nine months after the termination or expiration.

(d) Following the expiration or termination of this Agreement (whether by reason of the
expiration of the term of this Agreement, or by earlier termination of this Agreement as provided
hereunder or otherwise, but not including if this Agreement is terminated following Licensee’s
exercise of any Purchase Option), Licensee may, on a non-exclusive basis use the Licensed Marks in
connection with the sale of Approved Licensed Merchandise for the six (6) month period immediately
following the expiration or termination (the “Sell-off Period”) provided Licensee fully complies
with the provisions of this Agreement in connection with such disposal. Licensee will be obligated
to pay Licensor the sale royalty of *** in respect of all of its sales of Licensed Merchandise
during the Sell-off Period.

6.1 Outlet Rights & Obligations. In the event Licensee exercises the Year 4 Purchase
Option, Licensor agrees that net sales of products bearing trademarks licensed to Licensor under
the Reverse License in the Purchase Agreement through its Outlet Stores (“Outlet Net Sales”) during
the period of the sixth Contract Year through the tenth Contract Year shall be subject to payment
of a commission to Licensee of ***. Outlet Net Sales shall mean the actual retail price paid to
Licensor by Licensor’s retail customers (not including any sales or other taxes, transportation or
handling charge) for all products sold under the Reverse License at its Outlet Stores, less any
discounts, refunds, credits, or returns given by Licensor to its customers. Licensor agrees to pay
Licensee any commissions due under this Subsection 6.1. on a quarterly basis within
forty-five (45) days after the end of the fiscal calendar. If payments of such commissions
are delayed for any reason, interest will accrue on the unpaid principal amount of such payment at
the prime rate (as defined) plus two (2%) percent (the “Default Rate”). The “prime rate” shall be
as published from time to time by JP Morgan Chase Bank in New York City, adjusted each January 1
and July 1, to reflect the prime rate in effect at each such date, each such adjusted rate to apply
for the six (6) months immediately following such adjustment.

 

20

 

6.2 Notwithstanding any termination or expiration of this Agreement (whether by reason of the
expiration of the term of this Agreement, or by earlier termination of this Agreement as provided
hereunder or otherwise), the parties will have, and hereby reserve, all the rights and remedies
which either party may have, at law or in equity, including with respect to (a) the collection of
royalties or other funds payable by the other party pursuant to this Agreement; (b) the enforcement
of all rights relating to the establishment, maintenance and protection of the Licensed Mark(s);
and (c) damages for breach of this Agreement on the part of the other party.

6.3 Notwithstanding anything to the contrary contained in this Agreement, if this Agreement
expires or terminates other than under a Purchase Option, Licensor will have the right to grant
licenses with respect to Licensed Merchandise, in the Territory, at any time commencing twelve (12)
months prior to the expiration or termination of this Agreement, except that in no event may
Licensor or any third party licensee of Licensor ship for sale any Licensed Merchandise until after
the effective date of the termination or expiration of this Agreement, and the first collection of
Merchandise to be sold thereunder is the collection following the last seasonal collection sold
hereunder. Nothing contained herein will be construed to prevent any
such third party licensee from showing such Licensed Merchandise and accepting orders
therefore prior to the termination hereof.

 

21

 

7. DESIGN SERVICE FEES AND ROYALTIES.

7.1 Payment Periods. Each Contract Year will consist of four quarterly payment
periods, with the first quarterly period of each year commencing on the first day of Licensee’s
fiscal month of August and the fourth quarterly period ending on the last day of Licensee’s fiscal
month of July, with the first quarterly payment period of the first Contract Year commencing on the
first day of Licensee’s fiscal month of August 2010 and the last quarterly period of the first
Contract Year ending on the last day of Licensee’s fiscal month of July 2011. For each quarterly
payment period, Licensor will make a payment that includes a Design Service Fee and a Royalty, as
described below (collectively, “Fees”) within forty-five (45) days after the end of each fiscal
quarter.

7.2 Design
 Service Fee. In each Contract Year, Licensee will pay a Design Service Fee of ***, in equal
quarterly payments, for the design services performed by Licensor, as described in Section 4 (“Design Service Fee”).

7.3
 Royalty. In each Contract Year, Licensee will pay Licensor a Royalty, in
quarterly payments consisting of the Sales Royalty plus the Gross Profit Share (“Royalty”).

7.4 Sales Royalty. The Sales Royalty will be an amount equal to:

*** on Net Sales up to the first *** achieved in each Contract Year,
then

*** on Net Sales over *** achieved in such Contract Year

***

 

22

 

  ***

7.5 ***

7.6
 Guaranteed Minimum Fee. At a minimum, in each Contract Year Licensee will pay to
Licensor for such Contract Year a guaranteed minimum royalty and Design Service fee (“Guaranteed
Minimum Fee” or “GMF”), as set forth below. Other than the First Contract Year, the GMF for each
Contract Year shall be paid in equal quarterly installments (each such amount a “Quarterly GMF”),
with each Quarterly GMF payment to be made within forty-five (45) days of the end of each of
Licensee’s fiscal quarters for such Contract Year. For the First Contract Year, Licensee shall pay
Licensor the amount of *** as part of the First Contract Year’s GMF payment, such amount to be
payable within five (5) business days of the Licensor notifying Licensee of the Lender Consent, and
the rest of the First Contract Year’s GMF in four equal quarterly installments within forty-five
(45) days of the end of each of the Licensee’s fiscal quarters for the First Contract Year. No
credit shall be permitted against the GMF paid or payable in respect of any Contract Year on
account of GMF or Fee paid or payable in respect of any other Contract Year.

 

23

 

7.7 Excess
 Royalty. For each quarterly payment period of each Contract Year, Licensee will
pay Licensor an excess royalty, which will be the amount by which the Royalty calculated for such
quarterly period exceeds the Quarterly GMF. Such payments will be made within forty-five (45)
days of the end of such quarterly payment period for such Contract Year (the “Excess Royalty”).
Each quarterly Royalty Payment will be adjusted so the year to date sum of Royalty payments within
such contract year is equal to the greater of year to date GMF or the total year to date royalty
calculated. Notwithstanding the preceding, the parties agree that for purposes of calculating the
First Contract Year’s Excess Royalty, in lieu of using such Contract Year’s Annual GMF to calculate
excess royalty payment and any true-up, the parties will use the amount of ***.

 

24

 

***

If at any time, Licensor owes Licensee after the Quarterly Royalty calculation, Licensee can apply
this credit towards quarterly GMF payments. If Licensor owes Licensee more than quarterly GMF due,
than Licensor must pay Licensee within 45 days of the end of Licensee’s fiscal quarterly period.

 

25

 

7.8 Guaranteed Minimum Fee Amounts.

GUARANTEED MINIMUM FEES (GMF)

	 	 	 
	CONTRACT YEAR	 	AMOUNT
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***
	***

	 	***

***

7.9 If the payment of any Fees is delayed for any reason, interest will accrue on the unpaid
principal amount of such payment at the prime rate (as defined) plus two (2%) percent (the “Default
Rate”). The “prime rate” shall be as published from time to time by JP Morgan Chase Bank in New
York City, adjusted each January 1 and July 1, to reflect the prime rate in effect at each such
date, each such adjusted rate to apply for the six (6) months immediately following such
adjustment.

7.10 ***

 

26

 

***

8. REPORTS, RECORD KEEPING AND AUDITS.

8.1 Maintenance of Records. The parties shall keep true and accurate books of account
and records in accordance with generally accepted accounting principles, consistently applied,
covering all transactions relating to this Agreement and the licenses hereby granted or the Reverse
License granted in the Purchase Agreement (the “Books and Records”). Such Books and Records shall
be maintained for a period sufficient for the other party to perform any audits authorized by this
Agreement, such period to consist of at least a 24-month rolling period.

8.2 Quarterly Reports. All quarterly fee payments shall be accompanied by a report
(individually, the “Quarterly Report” and collectively, the “Quarterly Reports”) substantially in
the form set forth on Exhibit G.

8.3 Audit. Once a year for the prior 24 months only, a party and its duly authorized
financial representatives, following the other party’s Chief Financial Officer’s receipt of a
notice from the first party’s Chief Financial Officer, will have the right upon reasonable notice
and at all reasonable hours during normal business days to examine the Books and Records relevant
to the payments of amounts due by the other party under this Agreement or the Purchase Agreement,
and all other documents and materials in the possession or under the control of the party being
audited that are reasonably related to payment of amounts under this Agreement. Each party will
be responsible for its own costs of any such audit. Any undisputed amounts due under this
Agreement discovered as a result of such audit will be paid within five (5) business days.

This Section 8 will survive any termination of this Agreement.

 

27

 

9. STANDARDS OF QUALITY / QUALITY CONTROL.

9.1 Standards of Quality. The Licensed Merchandise and any expression by Licensee,
directly or indirectly, which by its nature conveys to others the existence of a relationship
between Licensee and the Trademarks or the Licensed Merchandise (including, without limitation, all
packaging, labeling, fixturing, advertising, point of sale and sales promotion materials and
product literature (any such expression is herein referred to as “Trademark Use Materials”) shall
be of a quality, style, appearance, distinctiveness and quality which shall be materially
consistent with Licensee’s private brand merchandise of a similar price and taste level and shall
in all respects (including, without limitation, the manufacture, sale, marketing and advertising)
be in accordance with all of the terms and provisions of this Agreement, with all applicable laws,
rules and regulations and with any approval decision made by Licensor, shall not materially and
adversely affect any rights of ownership of Licensor in the Trademarks and shall not materially
derogate or detract from the repute of Licensor or the Trademarks.

9.2 Manufacturing/Sourcing. (a) Licensee shall ensure that each of its suppliers of
Licensed Products agrees to the standards set forth in Licensee’s standard purchase contract forms,
and Licensee will monitor the performance of its contractors for compliance with such standards,
and will enforce such standards, all in the usual manner in which such standards are enforced in
regard to other suppliers of Licensee’s private brand merchandise. In addition, with respect to the
Licensed Products, Licensee shall (a) require that each of its suppliers (i) post Licensor’s
Standards of Engagement in a conspicuous place in such suppliers’ facilities, (ii) complies with
Licensor’s Standards of Engagement, as set forth in Exhibit H; and (b) provide Licensor with a copy
of its legal compliance survey for each supplier and make available details regarding such survey
upon request. Furthermore, Licensor shall have the right to review
Licensee’s supplier and manufacturer list. In addition, Licensor shall have the right to
inspect, and audit, either directly or through its auditors or the Fair Labor Association or its
auditors, such suppliers and manufacturers, and Licensee shall take commercially reasonable efforts
to assist in the inspection and auditing of such suppliers and factories. Licensee agrees to cease
doing business with any supplier, with respect to Licensed Product, in the event such supplier
fails to permit such inspection and audit or fails to comply with Licensee’s standards or
Licensor’s Standards of Engagement within sixty (60) days of such failure. All information or
documents provided to Licensor under this subsection will be held confidential and will not be used
other than to verify compliance with this section. In no instance will this information be shared
with Licensor’s sourcing organization.

 

28

 

10. PROTECTION OF TRADEMARKS.

10.1 Acknowledgments and Agreements of Licensee. As a material inducement to Licensor
to enter into this Agreement, and as a material part of the consideration to Licensor hereunder,
Licensee hereby acknowledges and agrees that:

10.1.1 (i) As between the parties, Licensor owns the Trademarks in the Sales Territory and all
rights, registrations, applications and filings with respect to such Trademarks and all renewals
and extensions of any such registrations, applications and filings; and (ii) Licensee is acquiring
hereby only the right to use the Trademarks for the purpose stated in and pursuant to the terms and
conditions of the Agreement.

10.1.2 (i) Great value is placed on the Trademarks, and the goodwill associated therewith;
(ii) the Trademarks and the IP rights and all rights therein and goodwill pertaining
thereto belong exclusively to Licensor; and (iii) all authorized use of the Trademarks and the
IP rights by Licensee shall inure to the benefit of Licensor.

 

29

 

10.1.3 The consuming public and the industry associate the Trademarks with products of
consistently high quality.

10.2
Protection of Rights.

10.2.1 Restriction on Use. Licensee shall not use or permit the use of the Trademarks
for any purpose or use other than the uses licensed under this Agreement.

10.2.2 General. Licensee shall cooperate fully and in good faith with Licensor, at
Licensor’s sole expense, for the purpose of securing and preserving Licensor’s rights in and to the
Trademarks and in connection with protecting lenders’ and other secured parties’ rights under the
Credit Agreement. Licensee shall cause to appear on and in connection with the Licensed Products
and the stores and advertising such reasonable statutory trademark notices and other notices
proclaiming and identifying the Trademarks as property of Licensor as Licensor may deem appropriate
from time to time.

10.2.3 Registration. Licensee shall, upon reasonable request and at Licensor’s sole
expense, supply to Licensor enough specimens of advertisements, tags, labels and other uses of the
Trademarks as may be required in connection with any of Licensor’s Trademark applications or
registrations in the Territory. Licensee shall execute any instrument Licensor shall reasonably
deem necessary or desirable to record or cancel Licensee as a registered user of the Trademarks, it
being understood and agreed that Licensee’s right to use the Trademarks in the event that the
filing of a registered user application is required or is requested by Licensor shall commence only
upon the filing of such registered user application, and shall continue only so long as this
Agreement remains in effect.

 

30

 

10.2.4 Customer Complaints. Licensee shall, in connection with its duty to use the
Trademarks so as to promote the continuing goodwill thereof, give immediate attention and take any
reasonably necessary action, consistent with its customer relations and other policies, to satisfy
all legitimate customer complaints brought against Licensee in connection with the Licensed
Products. Licensee shall give Licensor immediate written notice of all complaints that might
result in legal action between Licensor and any third party.

10.2.5 ***

10.3 Covenants and Agreements of Licensor. As a material inducement to Licensee to
enter into this Agreement, Licensor hereby agrees that: (i) subject to the Credit Agreement and the
Existing Licenses, as each such Existing License exists as of the effective date of this Agreement,
Licensor will not (and shall not permit any third party to) assign, transfer or convey any of the
Trademarks or IP Rights or encumber any of the Trademarks or IP Rights in
any manner in the Sales Territory, including, without limitation, by way of granting or permitting
any Lien (as defined below) on any of the Trademarks or IP

 

31

 

 Rights; (ii) Licensor will use
commercially reasonable efforts to maintain the standards set forth in the Existing Licenses with
respect to the prestige associated with each of the Trademarks; (iii) Licensor will periodically
confer with Licensee with respect to the prosecution and maintenance of all applications to
register and registrations for any of the Trademarks in the Territory; (iv) upon Licensee’s written
request and at Licensee’s cost and expense, Licensor will promptly file application(s) to register
any of the Trademarks for goods and/or services for which Licensee intends to use such Trademarks
and for which there is not, at the time of such request by Licensee, any pending application or
valid and unexpired registration for such Trademarks for such goods and/or services; (v) Licensor
will diligently prosecute all applications for registration of any of the Trademarks in the
Territory and obtain registrations for such Trademarks in the Territory; (vi) Licensor will
maintain in full force and effect all registrations for any Trademarks in the Territory; and (vii)
Licensor will pay all applicable fees and make all applicable filings when due with respect to all
of the foregoing in clauses (iv), (v) and (vi). For purposes of this Agreement, “Lien” means any
charge, claim, pledge, condition, encumbrance, equitable interest, option, security interest,
mortgage, right of first refusal, or restriction of any kind, including, without limitation, any
restriction on use, transfer, receipt of income or exercise of any other attribute of ownership.

10.4 Additional Covenant and Agreement of the Parties. Neither party will take any
action or omit to take any action (and shall not permit any third party to take any action or omit
to take any action) that is reasonably likely to tarnish or diminish the reputation or goodwill
associated with any of the Trademarks or the IP Rights;

 

32

 

10.5
Enforcement. Each party agrees to reasonably promptly notify the other party in
writing of any infringement, dilution or violation of any of the Trademarks in the Sales Territory
by any third party of which such party becomes aware (collectively, “Violation”). Licensor will,
at its sole cost and expense, promptly take all action the parties mutually deem necessary to abate
such Violation. If any such Violation is not completely abated to the parties’ mutual satisfaction
within ninety (90) days after Licensor first becomes aware of such Violation, Licensor will, if
mutually agreed upon by the parties in their reasonable business judgment, promptly commence, and
diligently prosecute, litigation or other appropriate legal proceeding against such third party
engaged in such Violation (or reasonably suspected to be engaged in such Violation). As between
the parties, Licensor will control the prosecution of any such litigation or proceeding unless
otherwise mutually agreed upon by the parties in writing, provided that Licensor will regularly
confer with Licensee regarding, and keep Licensee apprised of the current status of, such
prosecution and will in good faith consider the comments, suggestions and other input of Licensee
and/or its counsel with respect to such prosecution. If Licensor controls such prosecution, the
parties agree that Licensee may, at its own expense, retain its own legal counsel to monitor such
prosecution. Licensee agrees to reasonably cooperate with Licensor, at Licensor’s expense, in
connection with any such litigation or proceeding (including, without limitation, by providing
documents and information as may be necessary or helpful in connection therewith). In the event
Licensor is awarded any damages or receives any settlement amounts in connection with any such
litigation or proceeding, such damages or settlement amounts, as the case may be, shall first be
distributed to the parties to reimburse each party for the out-of-pocket costs and expenses
incurred by such party in connection with such litigation or proceeding (in the case of Licensee,
including, without limitation, the expenses incurred by Licensee to retain its own legal counsel to
monitor the prosecution of such litigation or proceeding), and any such damages or settlement
amounts, as the case may be, remaining thereafter shall be distributed equally between the parties.

 

33

 

11. EVENTS OF DEFAULT; TERMINATION.

11.1. Each of the following constitutes an event of default under this Agreement:

(a) If Licensee fails to pay any undisputed funds owing to Licensor pursuant to this Agreement
as and when due, provided that with respect to the first such failure by Licensee, Licensor will
not be entitled to call a default under this Section 11.1(a) until it gives Licensee notice thereof
and Licensee fails to cure such default within five business (5) days of such notice; or

(b) if either party institutes proceedings to be adjudicated a voluntary bankrupt or
insolvent, or consents to the filing of a bankruptcy proceeding against it, or files a petition or
answer seeking reorganization or arrangement under any bankruptcy act or any other similar
applicable law of any country, or consents to the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency for itself, or any of its property, or makes an
assignment for the benefit of creditors, or is unable to pay its debts generally as they become
due, or shall cease doing business as a going concern, or corporate action is taken by it in
furtherance of any of the foregoing purposes; or

(c) if an order, judgment or decree of a court having jurisdiction is entered adjudicating
Licensee, a bankrupt or insolvent, or approving, as properly filed, a petition seeking
reorganization of Licensee, or of all or a substantial part of its properties or assets under any
bankruptcy act or other similar applicable law, as from time to time amended, or appointing a
receiver, trustee or liquidator of Licensee, and such order, judgment or decree remains in force,
undischarged and unstayed for a period of thirty (30) days, or a judgment or lien for the payment
of money in excess of $500,000 which is secured by a security interest in the licensed merchandise is rendered or
entered against it and the same remains undischarged or unbonded for a period of thirty (30) days,
or any writ or warrant or attachment shall be issued or levied against a substantial part of its
property and the same is not released, vacated or bonded within thirty (30) days after issue or
levy; or

 

34

 

(d) if Licensee defaults, subject to applicable cure or waiver provisions, on any obligation
in excess of $500,000 which is secured by a security interest in Licensed Merchandise; or

(e) if Licensee for any reason completely discontinues the sale of all Licensed Merchandise,
or shall liquidate or dissolve; or

(f) if Licensee fails to materially comply with any of the quality requirements set forth
herein, subject to the ability to cure such failure within thirty (30) days; or

(g) if either party conducts its business hereunder in a manner which causes the other party
to send such party two or more notices of a default under this Section 11.1 in any consecutive
12-month period; or

(h) if Licensee has not begun the bona fide sale of Licensed Merchandise on or before
September 2010, unless a delay in such sales has been approved in advance in writing by Licensor;
or

(i) if any representation or warranty of either party contained herein is or becomes false or
misleading in any material respect, or if either party fails to perform or observe any material
term, condition, agreement or covenant in this Agreement on its part to be performed or
observed, other than as provided in Paragraphs (a) through (h) of this Section 11.1, and such
default is not remedied within thirty (30) days after written notice thereof from the nondefaulting
party, unless such default is curable but is not capable of being cured through the defaulting
party’s diligent and continuous effort within such thirty (30) day period, and such party
immediately commences to cure such default, and thereafter applies its diligent and continuous best
efforts to cure such default, and does in fact cure such default within ninety (90) days of the
initial notice of default.

 

35

 

11.2 As used in this Agreement, the term “default” shall mean any condition, event or state of
facts which, after notice or lapse of time, or both, would be an event of default.

11.3 If any event of default occurs and is continuing, the nondefaulting party may, by written
notice to the defaulting party, immediately terminate this Agreement, subject to the cure periods
set forth in this Agreement; provided that in the event of default under Sections 11.1(b), (c),
(d), (e) (f) or (g), this Agreement will terminate automatically.

12. 
ASSIGNMENTS. Neither this Agreement nor any of the rights or duties hereunder may
be assigned or otherwise transferred in any way by Licensor, without the prior written consent and
agreement of Licensee, which consent shall not be unreasonably withheld; provided, that no consent
will be required in connection with any collateral assignment of this Agreement, or the rights
hereunder, to the lenders or other secured parties under the Credit Agreement. For the avoidance
of doubt, a change in control of Licensor (including any Change of Control) shall not constitute an
assignment requiring Licensee’s consent. Neither this Agreement nor any of the rights granted to or
obligations undertaken by Licensee hereunder may be transferred, assigned, pledged, sold,
mortgaged, sublicensed (except as provided in Section 2) or otherwise hypothecated or disposed of,
either directly or indirectly, in whole or in part, by
operation of law or otherwise to any third-party without the prior written approval of
Licensor, which may be withheld in Licensor’s sole discretion; any attempted transfer shall be
null, void, and of no force or effect.

 

36

 

13. INDEMNIFICATIONS.

13.1 Indemnification of Licensor. Licensee shall defend, indemnify and hold Licensor
and its affiliates, directors, officers, employees and agents harmless from and against any and all
third party liability claims, causes of action, suits damages and expenses (including reasonable
attorneys’ fees and expenses) (collectively, “Indemnified Losses”), which Licensor may become
liable for, or may incur, or be compelled to pay, by reason of any acts or alleged acts, whether of
omission or commission, that may arise under or in connection with this Agreement, in connection
with Licensed Merchandise manufactured by or on behalf of Licensee, except to the extent such
liability results from a breach of this Agreement by Licensor or from requirements supplied or
imposed by Licensor on a Licensed Product.

13.2 Indemnification of Licensee. Licensor shall defend, indemnify and hold Licensee
and its affiliates, directors, officers, employees and agents harmless of, from and against
Indemnified Losses, which Licensor may become liable for, or may incur, or be compelled to pay, by
reason of any claim of any third party with respect to Licensee’s use of the Marks or the IP
Rights, including without limitation, Trademark, Trade Dress, copyright or design infringement
arising out of the use of Licensee of the Trademarks as authorized in this Agreement, except to the
extent such liability results from a breach of this Agreement by Licensee.

13.3 An indemnified party will immediately give notice to the indemnifying party of any claim,
action or suit that may give rise to liability under this Section 13, provided that the failure of
any indemnified party to provide such notice will not relieve the indemnifying party
of its obligations hereunder except to the extent of actual prejudice against an indemnifying
party. The indemnifying party will have the option to defend any such claim, action or suit,
including the right to select counsel, control the defense, assert counterclaims and crossclaims,
bond any lien or judgment, take any appeal and to settle on such terms as it, in its discretion,
reasonably deems advisable, provided prior notice of any settlement is given to the indemnified
party and such party provides its express prior consent thereto. No settlement of any claim may be
effected without the prior written consent of the indemnifying party.

 

37

 

14. WARRANTIES.

Each party represents and warrants to the other that:

14.1 It is authorized to enter into this Agreement; that this Agreement has been duly executed
by an authorized signatory of such party and constitutes the valid and binding obligation
enforceable in accordance with its terms; that at all times during the term of this Agreement, it
shall have the power and authority to perform all of its obligations under this Agreement; and that
the execution, delivery, and performance of this Agreement will not violate any agreement or
instrument to which it is a party.

14.2 This Agreement has been duly executed and delivered and constitutes a legal, valid and
binding obligation enforceable in accordance with its terms;

14.3 Neither the execution and delivery of this Agreement or any of the instruments or
agreements herein referred to nor the consummation of any of the transactions contemplated hereby
or thereby nor the performance of this Agreement or any of the instruments or agreements herein
requires the consent, approval, order or authorization of, or registration with, or the giving of
notice to, any third party or any governmental agency, public body or authority,
other than any required consent under the Credit Agreement, including the Lender Consent
described above.

 

38

 

14.4 Neither the execution and delivery of this Agreement or any of the instruments or
agreements referred to nor the consummation of any of the transactions contemplated hereby or
thereby nor compliance with any of their respective terms and provisions will contravene any
existing federal, state or local law, rule or regulation or any judgement, decree or order or will
contravene or result in any breach of, or constitute any default under any agreement or instrument.

15. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF LICENSOR.

Licensor represents and warrants to Licensee that:

15.1 Except as set forth on Exhibit I, as of the date hereof, Licensor exclusively owns all
right, title and interest in and to the Trademarks in the Sales Territory. The Trademarks that are
registered in the Sales Territory are valid and enforceable.

15.2 Except as set forth on Exhibit I, as of the date hereof, (a) to Licensor’s knowledge, no
person or entity is infringing, conflicting with, violating or diluting any of the Trademarks in
the Sales Territory in any material respect, and (b) within the three (3) year period prior to the
date hereof, Licensor has not provided any written or, to Licensor’s knowledge, unwritten notice or
other communication to any person or entity, and no action or proceeding or claim has been asserted
by Licensor, alleging that any person or entity is infringing, conflicting with, violating or
diluting any of the Trademarks in the Sales Territory.

15.3 Except as set forth on Exhibit I, as of the date hereof, (a) to Licensor’s knowledge,
none of the Trademarks or the use, practice or exploitation of any of the Trademarks
infringes, conflicts with, violates or dilutes any intellectual property rights owned by any
person or entity; (b) within the three (3) year period prior to the date hereof, no written claim,
notice or other communication alleging that any of the Trademarks infringes, conflicts with,
violates or dilutes any intellectual property rights owned by any person or entity has been served
on or otherwise received by Licensor from any person or entity; and (c) there is no claim or action
or proceeding pending or threatened against Licensor with respect to any of the Trademarks or the
ownership, use, validity or enforceability thereof, other than any non-final determinations of any
governmental authority with respect to the Trademarks.

 

39

 

15.4 All necessary registration, maintenance, renewal and other relevant filing fees in
connection with any registrations or pending applications for any of the Trademarks have been
timely paid, and all necessary documents, certificates and other relevant filings in connection
with any registrations or pending applications for any of the Trademarks have been timely filed,
with the relevant governmental authorities for the purpose of maintaining the Trademarks and all
registrations and applications therefor. No registration obtained by Licensor for any of the
Trademarks in the Territory has been cancelled, abandoned or not renewed except where Licensor has,
in its reasonable business judgment, decided to cancel, abandon or not renew such registration.

15.5 Licensor makes no representation that the use of the Marks or IP Rights in connection
with the Manufacturing License does not or will not infringe or violate the rights of any third
party.

 

40

 

16. INSURANCE.

Both parties will maintain from and after the effective date and until the expiration or
termination of this Agreement, insurance of the following kinds and amounts, or in the amounts
required by law, whichever is greater:

16.1 Worker’s Compensation Insurance. Worker’s Compensation and Employer’s Liability
Insurance affording (a) protection under the Worker’s Compensation Law of the state in which work
is to be performed, or containing an all-states endorsement; and (b) Employer’s Liability
protection subject to a limit of not less than ***.

16.2 General Liability Insurance. Commercial General Liability Insurance written on
an occurrence basis in amounts not less than:

	 	 	 	 	 
	 

	 	Bodily Injury
	 	Property Damage
	 

	 	*** per person
	 	*** per occurrence
	 

	 	*** annual aggregate
	 	*** annual aggregate

This insurance shall include (a) products and completed operations liability coverage; and (b)
contractual liability coverage for the liabilities assumed under this Agreement for which such
policy applies. The commercial general liability insurance will be written as a primary policy not
contributing with any other coverage which a party may carry.

All insurance policies required to be maintained under this Agreement will be procured from
insurance companies rated at least A-VIII or better by the then current edition of Best’s Insurance
Reports published by A.M. Best Co. Upon request, each party will provide the other party with
certificates of insurance evidencing the required coverage concurrently with the execution of this
Agreement and upon each renewal of such policies thereafter, including a clause
that obligates the insurer to give that party at least thirty (30) days prior written notice of any
material change or cancellation of such policies.

 

41

 

If any portion of the obligations of either party covered under this Agreement is
subcontracted, Licensee shall require each subcontractor to maintain and furnish satisfactory
evidence that such subcontractor has Worker’s Compensation and Employer’s Liability and such other
forms and amounts of insurance as Licensor deems reasonably adequate.

So long as Licensee has a net worth in excess of ***, Licensee may self-insure with respect to
the insurance coverage described herein as long as Licensee has adopted a bona fide and legally
qualified plan of self insurance with respects to such coverage that is sufficient to provide for
any losses that occur in connection with Licensee’s obligations covered by this Agreement.

This section shall in no way affect the indemnification, remedy, or warranty provisions set
forth in this Agreement.

17. GENERAL PROVISIONS

17.1 Notices. All notices and other communications required or permitted to be given
under this Agreement shall be in writing and shall be delivered either by personal service,
overnight delivery service, facsimile or by United States mail, registered or certified mail,
postage prepaid, return receipt requested, and addressed as follows:

If to Licensor:

Liz Claiborne, Inc.

Attn: Executive Vice President — Partnered Brands

1441 Broadway

New York, NY 10018

 

42

 

With a copy to:

Liz Claiborne, Inc.

Attn: Legal Department

One Claiborne Ave

North Bergen, NJ 07047

If to Licensee:

General Merchandise Manager

responsible for applicable Product Category

J. C. Penney Corporation, Inc.

6501 Legacy Drive

Plano, TX 75024

With a copy to

Legal Department

J. C. Penney Corporation, Inc.

6501 Legacy Drive

Plano, TX 75024

If delivered personally or by overnight delivery service, such notices or other communications
shall be deemed delivered upon delivery. If sent by fax, such notice or other communications shall
be deemed delivered when received provided that the sender has confirmation of receipt. If sent by
United States mail, registered or certified mail, postage prepaid, return receipt requested, such
notices or other communications shall be deemed delivered upon delivery or refusal to accept
delivery as indicated on the return receipt. Either party may change its address at any time by
written notice to the other party as set forth above.

17.2 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties with respect to the subject matter hereof and supersedes any and
all prior negotiations, discussions and agreements relating to the subject matter hereof. This
Agreement may not be orally changed, altered, modified or amended in any respect.

 

43

 

17.3 Successors and Assigns. This Agreement shall be binding upon and shall insure to
the benefit of the successors and permitted assigns of the parties.

17.4 Choice of Law and Jury Waiver. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW THEREOF. EACH PARTY HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

17.5 Equitable Relief. Each party acknowledges that the other will suffer great and
irreparable harm as a result of the breach of any covenant or agreement to be performed or observed
under this Agreement other than the covenants to make monetary payments, and, whether such breach
occurs before or after the termination of this Agreement, each party acknowledges that the
non-breaching party will be entitled to apply for and receive from any court of competent
jurisdiction a temporary restraining order, preliminary injunction and permanent injunction,
without any necessity of proving damages or any requirement for the posting of a bond or other
security, enjoining the breaching party from further breach of this Agreement or further
infringement or impairment of Licensor’s rights in and to the Marks. Such relief will be in
addition to and not in substitution of any other remedies available to the non-breaching party
pursuant to this Agreement or otherwise.

17.6 No Waiver. No waiver by either party, whether express or implied, of any
provision of this Agreement or of any breach or default of any party, shall constitute a continuing
waiver of such provision or any other provisions of this Agreement, and no such waiver by any
party shall prevent such party from acting upon the same or any subsequent breach or default of the
other party of the same or any other provision of this Agreement.

 

44

 

17.7 No Joint Venture. Nothing in this Agreement shall create a partnership or joint
venture or establish the relationship of principal and agent, franchise and franchiser, or any
other relationship of a similar nature between the parties hereto, and neither Licensee nor
Licensor shall have the power to obligate or bind the other in any manner whatsoever.

17.8 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.

17.9 Authority. Each individual signing on behalf of a party hereto represents and
warrants that he or she is authorized to execute this Agreement on behalf of such party.

17.10
 Confidential Information. Each party, acting in any capacity, may provide the
other with, or allow access to, certain proprietary information not generally known to the public.
Such information shall be known as “Confidential Information.” The parties shall not at any time
disclose, permit the disclosure of, release, disseminate, or transfer, whether orally or by any
other means, any part of the disclosing party’s Confidential Information to any other person or
entity, whether corporate, governmental, or individual, without the express written consent of the
other party except as required by applicable law or in connection with legal process. However,
disclosure is permitted to those persons who are involved in the final contract negotiations
between the respective parties. The provisions of this Section shall not apply to any Confidential
Information which: (a) at the time disclosed or obtained is in the public domain; (b) after being
disclosed or obtained becomes part of the public domain through no act, omission or fault of any
party; (c) was in a party’s possession at the time of disclosure or receipt and was

 

45

 

not acquired,
directly or indirectly, under an obligation of confidence; (d) such party demonstrates that
the Confidential Information was received by it from a third party after the time it was disclosed
or obtained hereunder and was not acquired by the third party, directly or indirectly, from the
party sharing the Confidential Information or from a director, employee, agent or other
representative of that party under an obligation of confidence with the other; (e) a party is
legally required to disclose. This Section shall continue in full force and effect and any rights
or remedies either party may have with respect to the other arising out of the other’s termination
of this Agreement for a period of three (3) years.

17.11 Non Disclosure. Other than as may be legally required, neither party shall
publicly disclose the existence or terms of this Agreement or its terms without the prior written
consent of the other party.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
above written.

	 	 	 	 	 	 	 	 	 
	        LICENSEE:	 	J. C. PENNEY CORPORATION, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Myron E. (Mike) Ullman, III	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Myron E. (Mike) Ullman, III	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	Chairman and Chief Executive Officer	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	J. C. PENNEY COMPANY, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ Myron E. (Mike) Ullman, III	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	Myron E. (Mike) Ullman, III	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	Chairman and Chief Executive Officer	 	 
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	        LICENSOR:	 	LIZ CLAIBORNE, INC., a Delaware corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	/s/ William L. McComb	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	William L. McComb	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Title:	 	Chief Executive Officer	 	 
	 

	 	 	 	 	 	 	 	 

 

 

 

EXHIBITS

A. Product Categories

B. ***

C. Existing Licenses

D. Design Calendar

E. Product Packages

F. Purchase Agreement

G. Quarterly Report Samples

H. Standards of Engagement

I. Trademark Disclosure

 

 

 

EXHIBIT A

Product Categories

 

 

 

EXHIBIT A

Product Categories

Set forth below is the list of product categories. This list is subject to the Existing Licenses,
as set forth on Schedule 3. No trademark licensed pursuant to the Existing Licenses is included in
the product categories below.

Women’s Apparel: Missy, Petites, Women’s, Swimwear, Outerwear, Sleepwear, and Dresses

Accessories (Men & Women): Scarves/Wraps, Cold Weather, Sunglasses, Optical, Belts,
Hosiery, Intimates, Watches and Fine Jewelry (defined as defined in License Agreement) Handbags,
Small Leather Good’s (SLG’s)

Men’s: Sportswear, Big & Tall, Tailored Clothing, Dress Shirts, Neckwear, Belts, Underwear,
Sleepwear, Classification Pants, Denim, Outerwear, Suited Separates, Dress Trousers & Sportcoats

Footwear: Women’s & Men’s

Home & Travel: Bath, Bedding, Window, Tabletop, Floor Covering, Lighting, Furniture &
Luggage

Children: Boys & Girls

Cosmetics and Fragrance

 

 

 

EXHIBIT B

***

 

 

 

EXHIBIT C

Existing Licenses

 

 

 

	 	 	 	 	 	 	 
	SCHEDULE 3	 	Product Category	 	Trademarks	 	Licensed Categories
	1

	 	Men’s Hosiery
	 	Concepts by Claiborne	 	 
	 
	 	 	 	 	 	 
	2

	 	Belts, Cold Weather Accessories (Felt Hats,

Leather Gloves, Woven Scarves, Knit Hats, Knit

Gloves, Knit Scarves), Soft Accessories

(Scarves, Capes, Wraps, Ruanas)
	 	Liz Claiborne,	 	 
	 
	 	 	 	 	 	 
	3

	 	Women’s sleepwear, loungewear, and robes
	 	Liz Claiborne, Liz
Claiborne Woman, Liz
& Co;	 	 
	 
	 	 	 	 	 	 
	4

	 	Women’s foundations, daywear, underwear, and
shapewear sold in intimate apparel or
foundations and daywear departments of
Department Stores including bras, panties,
t-shirts, camisoles, boxer shorts, garter
belts, and any other coordinated pieces
typically sold in these departments
	 	Liz Claiborne, Liz
Claiborne Woman, Liz
Claiborne, Liz & Co.	 	 
	 
	 	 	 	 	 	 
	5

	 	cosmetics and fragrance products including
cologne, perfume, eau de parfum, and eau de
toilette, and scented ancillary products in
any form which bear the Licensed Marks, as the
case may be. The term “ancillary products”
means scented body lotions, bath/shower gels,
soaps, powder, deodorant, antiperspirants,
suntan lotions, scrubs, body lotions, body
soufflés, and body mists to be rubbed, poured,
sprinkled or sprayed on, introduced into, or
otherwise applied to the human body or any
part thereof for cleansing, beautifying, or
promoting attractiveness, and any scented
candles, sachets, potpourri or home fragrance
products that use the same scent properties as
those used for colognes, perfumes, eau de
parfum or eau de toilette products.
	 	Liz Claiborne,

Claiborne for

Men,Concepts by

Claiborne, Liz & Co	 	 
	 
	 	 	 	 	 	 
	6

	 	Men’s footwear. Licensee shall have a right of
first negotiation with respect to boy’s
footwear
	 	Claiborne, Concepts

by Claiborne	 	 
	 
	 	 	 	 	 	 
	7

	 	Boy’s dress apparel sizes 4-7 and 8-20, as
sold as a collection, including suits, suiting
separates, i.e. blazers, dress shirts, dress
pants (including khakis), sweaters and vests;
boys’ apparel, sizes 2T-4T, boys’ apparel
sizes 2-3, boys’ school uniforms sizes 4 to 20
and girls’ uniforms sizes 4 to 16x.
	 	Claiborne and Liz
Claiborne with
respect to girls’
uniform merchandise	 	 
	 
	 	 	 	 	 	 
	8

	 	Men’s suits, suit separates, sport-coats,
trousers, vests, other than vests for tuxedos,
raincoats, and overcoats characterized as
“tailored” clothing; casual pants and slacks
	 	Claiborne and
Concepts by
Claiborne	 	 

 

 

 

	 	 	 	 	 	 	 
	SCHEDULE 3	 	Product Category	 	Trademarks	 	Licensed Categories
	9

	 	Men’s Dress Shirts
	 	CLAIBORNE, CONCEPTS

BY CLAIBORNE	 	 
	 
	 	 	 	 	 	 
	10

	 	Men’s robes, loungewear, pajamas, jog suits,

swim suits, boxers, and, on a non-exclusive

basis, knit underwear, as sold in main floor

classification departments
	 	 Claiborne; right of first negotiation
with respect to the
Concepts by
Claiborne trademark;	 	 
	 
	 	 	 	 	 	 
	11

	 	Women’s career, career casual, casual and
sport shoes (including sneakers and other
vulcanized shoes)
	 	Liz Claiborne, Liz
Claiborne New York,
Liz & Co.	 	 
	 
	 	 	 	 	 	 
	12

	 	Women’s Socks, Trouser Socks, Tights and Sheers
	 	Liz Claiborne, Liz

Claiborne Woman	 	 
	 
	 	 	 	 	 	 
	13

	 	(a) Women’s fashion outerwear and rainwear,
which include overcoats and raincoats made of
wool, cotton, synthetics, leather, suede and
fake fur and (b) men’s fashion outerwear and
rainwear, including raincoats and overcoats
and outerwear made of cotton, synthetics,
suede and leather, excluding dress wool
overcoats
	 	LIZ CLAIBORNE,

CLAIBORNE, LIZ

CLAIBORNE WOMAN, LIZ

& CO, CONCEPTS BY

CLAIBORNE, LIZWEAR	 	 
	 
	 	 	 	 	 	 
	14

	 	Men’s neckwear,and formal wear, limited to
ties, cummerbunds, and pocket squares, and
shall not include any other items whatsoever
	 	Claiborne	 	 
	 
	 	 	 	 	 	 
	15

	 	Area rugs, Accent rugs
	 	Liz Claiborne Home	 	 
	 
	 	 	 	 	 	 
	16

	 	Men’s and boy’s neckwear
	 	Concepts by Claiborne	 	 
	 
	 	 	 	 	 	 
	17

	 	Luggage, garment bags, business cases,
portfolios, satchels, backpacks, and related
travel organizers and accessories, all to be
sold only as a separate classification to
luggage departments of approved customers
	 	Claiborne, Concepts
by Claiborne, Liz &
Co. and Liz
Claiborne	 	 
	 
	 	 	 	 	 	 
	18

	 	Solid color, woven and print decorative home
fabrics / piece goods. Home Decorative
Trimmings, including but not limited to
cording, brushed fringe, tassel fringe, bail
fringe, loop fringe, gimp, borders, rosettes,
chair tassels, pillow tassels and cord curtain
tie-backs.
	 	Liz Claiborne, Liz
Claiborne Collection
and Liz Claiborne
Home	 	 
	 
	 	 	 	 	 	 
	19

	 	Sunglasses Products, consisting of sunglasses
and cases made specifically for sunglasses;
and, Optics Products, consisting of ophthalmic
eyewear frames which shall include sunglass
clips made specifically for such frames and
any replacement sunglass clips sold with such
frames, non-prescription reading glasses, and
eyewear cases made specifically for such
eyewear frames.
	 	Claiborne, Liz
Claiborne, Concepts
by Claiborne, Liz &
Co.	 	 
	 
	 	 	 	 	 	 
	20

	 	Men’s belts, jewelry (including cuff links,
studs, tie clips, but excluding watches),
braces & small leather goods (such as without
limitation, wallets, billfolds, trifolds,
hipfolds, credit card cases, secretaries, key
fobs & agendas) and shall not include any
other items whatsoever
	 	Concepts by

Claiborne, Claiborne	 	 
	 
	 	 	 	 	 	 
	21

	 	
Women’s swimwear, including coordinating

cover-ups, sold in swimwear departments only
	 	Liz Claiborne, Liz
Claiborne Woman, Liz

& Co	 	 

 

 

 

EXHIBIT D

Design Calendar

***

 

 

 

EXHIBIT E

Product Packages

***

 

 

 

EXHIBIT F

Purchase Agreement

***

 

 

 

EXHIBIT G

Quarterly Report Samples

***

 

 

 

EXHIBIT H

Standards of Engagement

 

 

 

Standards of Engagement

Liz Claiborne, Inc. and its subsidiaries are committed to producing high quality products at a good
value to our consumer. The Company follows the letter and spirit of all applicable laws, and
maintains a high standard of business ethics and regard for human rights. Moreover, we require
sound business ethics from our suppliers. Suppliers must observe all applicable laws of their
country, including laws relating to employment, discrimination, the environment, safety and the
apparel and related fields. Suppliers must comply with all applicable United States laws relating
to the import of products, including country of origin labeling, product labeling and fabric and
product testing. If local or industry practices exceed local legal requirements, the higher
standard applies.

Forced Labor. There shall not be any use of forced labor, whether in the form of prison
labor, indentured labor, bonded labor or otherwise.

Child Labor. No person shall be employed at an age younger than 15 or younger than the age
for completing compulsory education in the country of manufacture where such age is higher than 15.

Harassment or Abuse. Every employee shall be treated with respect and dignity. No
employee shall be subject to any physical, sexual, psychological or verbal harassment or abuse.

Nondiscrimination. No person shall be subject to any discrimination in employment,
including hiring, salary, benefits, advancement, discipline, termination or retirement, on the
basis of gender, race, religion, age, disability, sexual orientation, nationality, political
opinion, or social or ethnic origin.

Health and Safety. Employers shall provide a safe and healthy working environment to
prevent accidents and injury to health arising out of, linked with or occurring in the course of
work as a result of the operation of employer facilities.

Freedom of Association and Collective Bargaining. Employers shall recognize and respect
the right of employees to freedom of association and collective bargaining.

Wages and Benefits. Employers recognize that wages are essential to meeting employees’
basic needs. Employers shall pay employees, as a floor, at least the minimum wage required by
local law or the prevailing industry wage, whichever is higher, and shall provide legally mandated
benefits.

Hours of Work. Except in extraordinary business circumstances, employees shall not be
required to work more than the lesser of 60 hours per week or the limits on regular and overtime
hours allowed by the law of the country of manufacture. Except in extraordinary circumstances,
employees shall be entitled to at least one day off every seven day period.

Overtime Compensation. In addition to their compensation for regular hours of work,
employees shall be compensated for overtime hours at such premium rate as is legally required in
the country of manufacture or, in those countries where such laws do not exist, at a rate at least
equal to their regular hourly compensation rate.

If you believe that these Standards of Engagement are not being upheld or if you have any questions
regarding these Standards of Engagement, please contact the Liz Claiborne country manager. Your
identity will be kept in confidence.

 

 

 

EXHIBIT I

Trademark Disclosure

***exv10w14

    Exhibit
    10.14

 

 

    PENTAIR,
    INC.

    COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS

    As Amended and Restated

    Through December 16, 2009

 

 

    SECTION 1

    

 

    BACKGROUND
    AND PURPOSE
    

 

    1.1  Background.  Effective as
    of January 17, 1986, Pentair, Inc. adopted a Compensation
    Plan for Non-Employee Directors. The Plan has been amended and
    restated several times since its adoption, with the last such
    restatement made effective January 1, 2008.

 

    Pentair is again amending the Plan, by way of restatement, to
    permit Non-Employee Directors to defer grants of equity awards
    in addition to cash fees.

 

    1.2  Purpose.  Pentair has
    created this Plan to permit its non-employee directors to defer
    all or a portion of their retainer and meeting fees, whether to
    be paid in the form of cash or Equity Awards, for future payment
    in shares of Pentair common stock, together with earnings on
    such deferred compensation as measured by changes in the value
    of said stock.

 

    SECTION 2

    

 

    DEFINITIONS
    

 

    Unless the context clearly requires otherwise, when capitalized
    the terms listed below shall have the following meanings when
    used in this Section or other parts of the Plan:

 

    (a) “Account” is an account maintained
    under the Plan by the Plan Agent to record a Director’s
    Share Units.

 

    (b) “Administrator” is Pentair.

 

    (c) “Board” is the Board of Directors of
    Pentair, as elected from time to time.

 

    (d) “Change in Control” is any one of the
    following:

 

    (i) When a Person, or more than one Person acting as a
    group, acquires more than fifty percent (50%) of the total fair
    market value or total voting power of Pentair’s stock;

 

    (ii) When a Person, or more than one Person acting as a
    group, acquires within a twelve (12) month consecutive
    period, ending with the date of the most recent stock
    acquisition, stock of Pentair possessing at least thirty percent
    (30%) of the total voting power of Pentair’s stock;

 

    (iii) When a majority of the members of Pentair’s
    Board is replaced within a twelve (12) month period by
    directors whose appointment or election is not endorsed by a
    majority of the members of such Board as constituted before such
    appointment or election; or

 

    (iv) When a Person, or more than one Person acting as a
    group, acquires within a twelve (12) month consecutive
    period assets from Pentair or an entity controlled by Pentair
    that have a total gross fair market value equal to seventy-five
    percent (75%) of the total fair market value of the assets of
    Pentair and all such entities.

 

    Once a Person or group acquires stock meeting the thresholds set
    forth in paragraphs (i) and (ii) immediately
    preceding, additional acquisitions of such stock by that Person
    or group shall be ignored in determining whether another Change
    in Control has occurred. Asset transfers between or among
    controlled entities as determined before such transfers shall
    not be considered in applying paragraph (iv) immediately
    preceding.

 

    (e) “Code” is the Internal Revenue Code of
    1986, as amended.

 

    (f) “Deferred Compensation” is an amount
    of Fees, meeting attendance fees and Equity Awards, the payment
    of which a Director has elected to receive at some future time
    pursuant to the terms of the Plan, together with any matching
    contributions made by Pentair with respect to Fees deferred.

 

    (g) “Director” is a member of the Board
    who is neither simultaneously also an employee of Pentair or a
    related company, nor an individual rendering other services to
    Pentair or a related company as an independent contractor.

 

    (i) “Equity Awards” are awards granted to
    a Director under the Omnibus Incentive Plan that are designated
    as eligible to be deferred under this Plan in the award letter
    or other document evidencing such award.

 

    (ii) “Fair Market Value” has the meaning
    ascribed in the Omnibus Incentive Plan.

 

    (h) “Fees” are a Director’s annual
    Board and committee retainer and committee chair and lead
    director fees and other similar amounts, excluding meeting
    attendance fees, paid in cash periodically by Pentair.

 

    (i) “Omnibus Incentive Plan” is the
    Pentair, Inc. 2008 Omnibus Stock Incentive Plan, or any
    successor thereto, as it may be amended from time to time.

 

    (i) “Pentair” is Pentair, Inc., a
    Minnesota corporation.

 

    (j) “Person” is any individual, firm,
    partnership, corporation or other entity, including any
    successor (by merger or otherwise) of such entity, or a group of
    any of the foregoing acting in concert.

 

    (k) “Plan” is the Pentair, Inc.
    Compensation Plan for Non-Employee Directors as described in
    this plan document effective December 16, 2009, and as it
    may be amended from time to time thereafter.

 

    (l) “Plan Agent” is the entity duly
    appointed by Pentair to (i) receive funds resulting from a
    Director’s deferral of Fees, meeting attendance fees and
    cash-based Equity Awards, from Pentair matching contributions
    and from dividends declared on Stock; (ii) purchase shares
    of Stock with such funds; and (iii) maintain Plan Accounts.

 

    (m) “Share Unit” is a unit equal in value
    to one share of Stock.

 

    (n) “Stock” is Pentair common stock, par
    value $0.162/3 per share.

 

    (o) “Year” is the twelve
    (12) consecutive month period beginning January 1 and
    ending December 31.

 

    SECTION 3

    

 

    DEFERRAL OF
    FEES AND EQUITY AWARDS
    

 

    3.1  Eligibility.  Upon
    becoming a member of the Board, a Director may elect to defer
    receipt of payment of some or all of the Fees paid, or Equity
    Awards granted, on account of service as a Director until such
    future time as the Director shall designate. A Director may also
    make a deferral election with respect to meeting attendance
    fees. If a Director does not make a timely deferral election
    with respect to the Fees or meeting attendance fees payable for
    a Year, then all such amounts shall be paid in cash to the
    Director. If a Director does not make a timely deferral election
    with respect to an Equity Award, then all such amounts shall be
    paid in the time and manner provided by such Equity Award.

 

    3.2  Deferral Election.
    (a) General Rule. Each Year a Director may
    elect to defer receipt of (i) a designated dollar amount or
    percentage of Fees and meeting attendance fees, with any
    percentage designation being made in ten percent (10%)
    increments up to one hundred percent (100%) of such amounts, and
    (ii) a percentage of Equity Awards, with any such
    percentage designation being made in ten percent (10%)
    increments up to one hundred percent (100%), and to receive such
    amount or percentage as Deferred Compensation. No election to
    receive Deferred Compensation shall be valid unless entered into
    by the date prescribed by the Administrator. Generally, a
    deferral election must be made prior to the first day of the
    Year in which the amounts to be deferred are earned or the
    Equity Award is to be granted; but for individuals who first
    become Directors during a Year, the deferral election for such
    first Year may be made no later than thirty (30) days
    following the date such individual’s Board service begins
    and shall apply to Fees, meeting attendance fees and Equity

    

    2

 

    Awards earned or granted after the date of such election. A
    deferral election is irrevocable with respect to the Year or the
    Equity Award for which such election is made. Once the time for
    making a timely election has passed, a Director who did not
    timely make a deferral election for a Year or an Equity Award
    shall be deemed to have elected to not participate in the Plan.

 

    Notwithstanding the foregoing, if an Equity Award is subject to
    a substantial risk of forfeiture, a Director may elect to defer
    that portion of the Equity Award that will vest at least twelve
    (12) months after the date of the deferral election;
    provided that such deferral election must be made no later than
    the first thirty (30) days after the date such Equity Award
    is granted (or such earlier time as is prescribed by the
    Administrator); and provided further that if the Equity Award
    actually vests prior to such twelve (12) month period by
    reason of the Director’s death, disability, or a Change in
    Control, then the deferral election shall be cancelled.

 

    The Administrator also may permit deferrals of Fees, meeting
    attendance fees and Equity Awards at such other times as are
    permitted by Code section 409A.

 

    (b) Former Director.  A Director who was
    eligible to participate in the Plan, who loses such eligibility
    by reason of ceasing to serve on the Board or otherwise, and who
    again becomes eligible to participate in the Plan, shall be able
    to again make an election to defer payment of Fees, meeting
    attendance fees and Equity Awards as provided in Code
    section 409A. If the individual can instead qualify as a
    newly elected Director, then the election rule for such
    Directors will apply.

 

    3.3  Matching
    Contribution.  Pentair shall make a matching
    contribution each month on behalf of each Director who has
    elected to defer payment of some or all of the Fees otherwise
    payable in cash to the Director. Said matching contribution
    shall be equal to fifteen percent (15%) of such amount of the
    Fees as the Director shall have elected to defer hereunder.

 

    3.4  Accounting for Deferred
    Compensation.  (a) The Administrator
    shall cause the Plan Agent to establish an Account for each
    Director who elects to participate in the Plan. All Deferred
    Compensation shall be allocated to Accounts as Share Units.

 

    (b) The Plan Agent shall purchase Stock on the open market
    with the Deferred Compensation funds received from Pentair. The
    Plan Agent shall make all such purchases over one (1) or
    more business days each month, as agreed to by the Plan Agent
    and Pentair. All Stock so purchased shall be allocated to
    Accounts based on the average purchase price obtained over said
    monthly purchase period and held in a street name or a nominee
    name; no Director shall have voting or other ownership rights
    with respect to any Stock acquired for purposes of the Plan.
    Stock purchased under the Plan by the Plan Agent shall be held
    by Pentair as an investment to assist Pentair in meeting its
    obligation to pay Deferred Compensation to Directors.

 

    (c) If a deferred Equity Award relates to shares or is
    valued in relation to the Fair Market Value of a share, the
    Director’s Account shall be credited with a number of Share
    Units equal to the number of shares or share-related Equity
    Awards so deferred. If a deferred Equity Award is valued in
    relation to cash (such as dividend equivalents), such deferred
    cash amount shall be used to purchase Stock as provided in
    subsection (b).

 

    (d) Share Units allocated to Accounts shall be adjusted to
    reflect Stock dividends or splits or other similar adjustments.
    Cash dividends paid with respect to Stock purchased for purposes
    of the Plan shall be used to purchase Stock and allocated to
    Accounts as Share Units.

 

    (e) The portion of an Account attributable to a deferred
    Equity Award shall vest at the same time as the related Equity
    Award vests. All other Deferred Compensation shall be
    immediately vested. Only vested Deferred Compensation shall be
    payable hereunder.

 

    3.5  Time of Distribution of Deferred
    Compensation.
    (a) General.  Except as otherwise
    provided for in the Plan, or as designated by the Director at
    the time a deferral election is made, the Director shall receive
    his or her entire vested Account balance allocable to a Year
    within ninety (90) days of the first to occur of the
    Director’s (i) ceasing to be a member of the Board for
    any reason other than death, (ii) death, or (iii) a
    Change in Control. For purposes hereof, a deferred Equity Award
    shall be allocable to the Account established for the Year in
    which the Equity Award is granted.

    

    3

 

    (b) Specific Dates of Distribution.  A
    Director may timely elect to receive distribution of his or her
    entire vested Account balance allocable to a Year as of one
    specific future date or one objectively determinable future
    event date (e.g., a Director’s sixty-fifth (65th)
    birthday). Such an election, once finally effective, cannot be
    changed by the Director. In the event of a Change in Control, a
    Director who has elected a specific future date or an
    objectively determinable future event date shall remain entitled
    to payment on such date, regardless of whether a Change in
    Control shall first occur. In the event of the death of a
    Director prior to the date elected hereunder for a distribution,
    the entire vested Account balance shall be paid within ninety
    (90) days of the date of such Director’s death.

 

    (c) Distribution in Event of Death.  In
    the event of a Director’s death, the vested Deferred
    Compensation allocated to such Director’s Account will be
    distributed to the beneficiary designated by the Director, or
    (if there shall be no such beneficiary designated) to the person
    who would have a right to receive such distribution by will or
    (if there shall be no will) by the laws of descent and
    distribution of the state in which the Director was domiciled at
    death. Such distribution shall be made in a single payment and,
    except as otherwise described herein, in Stock. The Plan Agent
    shall deliver to the beneficiary a number of whole shares of
    Stock equal to the whole number of vested Share Units allocated
    to such Director’s Account. Any fractional Share Units
    allocated to such Director’s Account shall be converted to
    cash using the then Fair Market Value, and the cash shall be
    delivered to the beneficiary.

 

    A beneficiary designation made by a Director shall remain in
    effect until such time as a Director files a new beneficiary
    designation with the Administrator. Prior to distribution, the
    Administrator will verify the identity of the Director’s
    named beneficiary and such beneficiary will establish the right
    to receive distribution of any unpaid vested Deferred
    Compensation.

 

    3.6  Form of Distribution of Deferred
    Compensation.  A Director’s vested
    Account shall be distributed in a single payment and, except as
    otherwise described herein, in Stock. The Stock so distributed
    shall be either (i) deposited into the Director’s
    dividend reinvestment account, if any, in which case any
    fractional shares shall also be allocated to such account, or
    (ii) delivered directly to said Director, in which case the
    Plan Agent shall deliver a number of whole shares of Stock equal
    to the whole number of Share Units allocated to such
    Director’s Account, and any fractional Share Units
    allocated to such Account shall be converted to cash using the
    then Fair Market Value, and the cash shall be delivered to the
    Director. Shares delivered in payment of any deferred Equity
    Award shall be issued under the Omnibus Incentive Plan.

 

    SECTION 4

    

 

    PLAN
    ADMINISTRATION
    

 

    4.1  Reporting.  The Plan
    Agent shall periodically report the following information to
    Pentair:

 

    (a) the total number of Share Units allocated to Accounts;

 

    (b) the total shares of Stock purchased by the Plan Agent
    since its last report; and

 

    (c) the number of shares of Stock into which Share Units
    then allocated to Accounts may be converted.

 

    4.2  Accounting.  The
    Administrator and the Plan Agent shall assure that the following
    records are kept under the Plan for each Year for each Director:

 

    (a) whether the Director made an election to defer Fees,
    meeting attendance fees or Equity Awards for the Year;

 

    (b) the amount or percentage of Fees, meeting attendance
    fees or Equity Awards deferred;

 

    (c) the matching contribution made with respect to the Fees
    deferred;

 

    (d) the distribution election, if any, made by the
    Director; and

    

    4

 

    (e) the Year in which the Fees and meeting attendance fees
    deferred were earned and the Year in which the Equity Awards
    were granted.

 

    4.3  Costs.  Pentair shall pay
    all commissions, service charges or other costs incurred with
    respect to the purchase of Stock for purposes of the Plan. When
    any such Stock is sold, the Director is responsible for payment
    of any commissions, service charges or other costs incurred on
    account of such sale.

 

    SECTION 5

    

 

    MISCELLANEOUS
    

 

    5.1  Term of Plan.  This
    restated Plan shall be effective December 16, 2009, and
    shall remain in effect until April 30, 2014, which
    represents the end of the ten (10) year term approved by
    shareholders effective as of May 1, 2004, unless earlier
    terminated by the Board.

 

    5.2  Board Tenure.  The fact
    that a Director has elected to participate in the Plan shall not
    affect or qualify the right of the Board or of Pentair
    shareholders to remove such individual from the Board,
    consistent with the provisions of the Pentair Articles of
    Incorporation or By-Laws, or applicable provisions of Minnesota
    law.

 

    5.3  Code
    Section 409A.  The Plan shall be
    administered in a manner consistent with Code section 409A
    and Treasury Regulations thereunder. Any permissible discretion
    to accelerate or defer a Plan distribution under such
    Regulations, the power to exercise which is not otherwise
    described expressly in the Plan, shall be exercised solely by
    the Administrator. The distribution provisions of
    Section 3.6 are subject to exceptions or overrides in the
    discretion of the Administrator or its delegate, but not in the
    discretion of the Director concerned, as otherwise provided in
    the Plan or as allowed under Code section 409A and Treasury
    Regulations thereunder.

 

    5.4  Delegation.  To the
    extent permitted under Minnesota law, the Administrator or the
    Board may delegate to officers of Pentair any or all of their
    duties, power and authority under the Plan, subject to such
    conditions or limitations as the Administrator or the Board, as
    applicable, may establish. Notwithstanding the prior sentence,
    the Board may not delegate the power to amend or terminate the
    Plan.

 

    5.5  Funding.  The Plan is a
    non-qualified, unfunded and unsecured deferred compensation
    arrangement. Pentair shall not establish, nor is it required to
    establish, a trust to fund benefits provided to Directors
    hereunder, or to earmark or segregate assets to provide for such
    benefits. In the event of default of payment hereunder by
    Pentair, the Directors shall have no greater entitlements or
    security than does an unsecured general creditor of Pentair.

 

    5.6  Nonalienability.  Except
    as otherwise expressly provided herein or as otherwise required
    by law, no right or interest of any Director or the beneficiary
    named by a Director under the Plan shall be subject in any
    manner to anticipation, alienation, sale, transfer, assignment,
    pledge, encumbrance, charge, attachment, garnishment, execution,
    levy, bankruptcy or any other disposition of any kind, either
    voluntarily or involuntarily, prior to actual receipt of payment
    by the person entitled to such right or interest under the
    provisions hereof, and any such disposition or attempted
    disposition shall be void.

 

    5.7  Facility of Payment.  If
    the Administrator shall determine a Director or a
    Director’s named beneficiary entitled to a distribution
    hereunder is incapable of caring for his or her own affairs
    because of illness or otherwise, it may direct any distribution
    from such Director’s Account be made, in such amounts as it
    shall determine, to the spouse, child, parent or other blood
    relative of such Director or beneficiary, or any of them, or to
    such other person or persons as the Administrator may determine,
    until such date as the Administrator shall determine such
    incapacity no longer exists; provided, however, the exercise of
    this discretion shall not cause an acceleration or delay in the
    time of distribution of Plan benefits except to the extent, and
    only for the duration of, the time reasonably necessary to
    resolve such matters or otherwise protect the interests of the
    Plan. The Administrator shall be under no obligation to see to
    the proper application of the distributions so made to such
    person or persons and any such distribution shall be a complete
    discharge of any liability under the Plan to such Director or
    beneficiary, to the extent of such distribution.

    

    5

 

    5.8  Default.  In the event
    Pentair shall fail to pay when due any Deferred Compensation,
    and such failure to pay continues for a period of thirty
    (30) days from receipt of written notice of nonpayment from
    the affected Director, Pentair shall be in default hereunder and
    shall reimburse the Director for expenses incurred in the
    collection of such amount, including reasonable attorneys’
    fees. Pursuant to applicable provisions of Code
    section 409A, any such reimbursement must be paid to the
    affected Director not later than the end of the year following
    the year in which such expenses are incurred. Failure to timely
    submit a claim for reimbursement of any such expenses shall
    result in the forfeiture of the claim.

 

    5.9  Amendment or
    Termination.  The Plan may be amended or
    terminated at any time by the Board; provided that the rights of
    Directors or former Directors accrued under the Plan through the
    date of such amendment or termination shall not be affected by
    such action without the express written consent of those
    individuals. Nothing herein shall be construed to prevent any
    modification, alteration or amendment of the Plan which is
    required to comply with the provision of any applicable law or
    regulations relating to the establishment or maintenance of this
    Plan.

 

    5.10  Federal Securities and Other
    Laws.  Notwithstanding anything in the Plan to
    the contrary, and to the extent and for the time reasonably
    necessary to comply with federal securities laws (or other
    applicable laws or regulations), distribution dates under the
    Plan may be suspended, changed or delayed as necessary to comply
    with such laws or regulations; provided, however, any
    distributions so delayed shall be paid to the Director, or a
    beneficiary named by a Director, as of the earliest date the
    Administrator determines such distribution will not cause a
    violation of any laws or regulations.

 

    5.11  Applicable Law.  To the
    extent not preempted by applicable federal law, the Plan shall
    be interpreted and construed in accordance with the substantive
    laws of the State of Minnesota, but without regard to any choice
    or conflict of laws provisions thereof.

 

    5.12  Construction.  The
    Administrator shall have full power and authority to interpret
    and construe any provision of the Plan, to adopt rules and
    regulations not inconsistent with the Plan for purposes of
    administering the Plan with respect to matters not specifically
    covered in the Plan document and to amend and revoke any rules
    and regulations so adopted. Except as otherwise provided in the
    Plan, any interpretation of the Plan and any decision on any
    matter within the discretion of the Administrator which is made
    in good faith by the Administrator shall be final and binding.

 

    5.13  Indemnification.  To the
    extent permitted by law, members of the Board shall be
    indemnified and held harmless by Pentair with respect to any
    loss, cost, liability or expense that may reasonably be incurred
    in connection with any claim, action, suit or proceeding which
    may arise by reason of any act or omission under the Plan which
    is taken within the scope of the Plan. Such indemnification
    shall cover any and all reasonable attorneys’ fees and
    expenses, judgments, fines and amounts paid on settlement, but
    only to the extent such amounts are (i) actually and
    reasonably incurred, (ii) not otherwise paid or
    reimbursable under an applicable Pentair paid insurance policy,
    and (iii) not duplicative of other payments made or
    reimbursements due under other indemnity agreements. In no event
    shall this Section 5.13 be construed to require Pentair to
    indemnify third parties with whom it may contract to perform
    administrative duties with respect to the Plan.

 

    5.14  Tax Withholdings and Consequences.
    (a) Tax Withholdings.  Benefits
    earned under the Plan and payment of such benefits shall be
    subject to tax reporting and withholding as required by law. The
    amount of such withholding may be determined by treating such
    benefits as being paid in the nature of supplemental wages.

 

    (b) Tax Consequences.   Pentair
    does not represent or guarantee that any particular federal,
    foreign, state or local income, payroll or other tax consequence
    will result from participation in this Plan or payment of
    benefits under the Plan.

 

    5.15  Savings Clause.  If any
    term, covenant or condition of this Plan, or the application
    thereof to any person or circumstance, shall to any extent be
    held to be invalid or unenforceable, the remainder of this Plan,
    or the application of any such term, covenant or condition to
    persons or circumstances other than those as to which it has
    been held to be invalid or unenforceable, shall not be affected
    thereby, and, except to the extent

    

    6

 

    of any such invalidity or unenforceability, this Plan and each
    term, covenant and condition hereof shall be valid and shall be
    enforced to the fullest extent permitted by law.

 

    5.16  Interpretation.  Section
    and subsection headings are for convenience of reference and not
    part of this Plan, and shall not influence its interpretation.
    Whenever any words are used in the Plan in the singular,
    masculine, feminine or neuter form, they shall be construed as
    though they were also used in the plural, feminine, masculine or
    non-neuter form, respectively, in all cases where such
    interpretation is reasonable.

 

    5.17  Communications.  Pentair
    or the Plan Agent may, unless otherwise prescribed by any
    applicable state or federal law or regulation, provide the
    Plan’s prospectus, and any notices, forms or reports by
    using either paper or electronic means.

 

    SECTION 6

    

 

    TRANSITIONAL
    RULES
    

 

    6.1  Introduction.  This Plan
    document is effective on December 16, 2009 (i.e., the
    “effective date”) and, except as otherwise provided
    herein, shall apply to only those Directors who are eligible to
    actively participate in the Plan on or after the effective date
    and to only such Fees, meeting attendance fees and Equity Awards
    as are earned or granted on or after the effective date. The
    provisions of the Plan document as in effect prior to the
    effective date shall continue to govern the rights and
    entitlements of persons and Fees and meeting attendance fees not
    described in the immediately preceding sentence except to the
    extent application of this Plan document does not materially
    diminish or enlarge such rights and entitlements.

 

    6.2  Grandfathered Deferred
    Compensation. (a)  Equity
    Grants.  The Plan as in effect prior to
    January 1, 2008 (i.e., the “prior plan”) provided
    for grants of Equity Compensation, as such term was defined in
    the prior plan. No such grants have been made to Directors since
    2002, meaning all Equity Compensation which was payable under
    applicable provisions of the prior plan are grandfathered
    amounts and are not subject to the provisions of Code
    section 409A.

 

    (b) Deferred Compensation.  All
    Fees and meeting attendance fees earned prior to January 1,
    2005 and subject to an election to defer payment made by a
    Director under applicable provisions of the prior plan are
    grandfathered amounts and are not subject to the provisions of
    Code section 409A. Any Fees and meeting attendance fees
    earned on or after January 1, 2005 with respect to which an
    election to defer payment has been made shall be subject to
    applicable provisions of Code section 409A. Since
    January 1, 2005, the prior plan was operated in accordance
    with applicable provisions of Code section 409A, which
    provisions are reflected in the Plan. Therefore, the Plan shall
    govern elections to defer Fees and meeting attendance fees made
    on or after January 1, 2005, even though the Plan does not
    so retroactively amend the prior plan.

 

    6.3  Separate Accounting.  For
    purposes of tracking Deferred Compensation which is treated as
    grandfathered for purposes of Code section 409A, the
    Administrator and the Plan Agent shall assure that records as
    defined in Section 4.2 are kept in a manner as will clearly
    differentiate between Fees and meeting attendance fees earned
    and deferred prior to January 1, 2005, and Fees, meeting
    attendance fees and Equity Awards earned or granted, and
    deferred, on or after January 1, 2005.

    

    7

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