Document:

EX-10.18

 

Exhibit 10.18

POLO RALPH LAUREN CORPORATION

RESTRICTED STOCK UNIT AWARD AGREEMENT

     THIS AGREEMENT (the “Agreement”) is made effective as of the 1st day of July 2004
(the “Grant Date”), between Polo Ralph Lauren Corporation, a Delaware corporation (hereinafter
called the “Company”), and Roger N. Farah (hereinafter called the “Participant”).

R E C I T A L S:

          WHEREAS, the Company has adopted the Polo Ralph Lauren Corporation 1997 Long-Term Stock
Incentive Plan (the “Plan”) and, subject to approval of stockholders at the Company’s 2004 annual
meeting, has adopted an amendment and restatement to the Plan, effective as of July 1, 2004 (the
“Restated Plan”) (capitalized terms not otherwise defined herein shall have the same meanings as in
the Restated Plan); and

          WHEREAS, the Company and the Participant have executed an Amendment No. 1 to the Amended and
Restated Employment Agreement dated July 23, 2002 (such agreement, as amended from time to time,
the “Employment Agreement”), which contemplates that the Committee will grant the Unit Award (as
hereinafter defined) to the Participant; and

          WHEREAS, the Committee has determined that it would be in the best interests of the Company
and its stockholders to grant the restricted stock unit award provided for herein (the “Unit
Award”) to the Participant pursuant to the Restated Plan and the terms set forth herein.

          NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:

          1. Grant of the Restricted Stock Units. Subject to stockholder approval of the
Restated Plan at the 2004 annual meeting, and subject further to the terms and conditions of the
Restated Plan and the additional terms and conditions set forth in this Agreement, the Company
hereby grants to the Participant a Restricted Stock Unit Award consisting of 437,500 Restricted
Stock Units (each, a “Unit”), 187,500 of which shall vest upon the attainment of certain
performance goals (the “Performance Award”) and 250,000 of which shall vest based upon
Participant’s continued employment with the Company (the “Time-Based Award”). The Units shall vest
and become nonforfeitable in

 

 

accordance with Section 2 hereof. Each Unit represents the right to receive one share of
Class A Common Stock of the Company (each, a “Share”).

          2. Vesting.

               (a) Time-Based Award. Subject to the Participant’s continued employment with the Company
through the applicable vesting date, or as otherwise set forth in Section 2(c) hereof, the Units
subject to the Time-Based Award shall vest and become nonforfeitable with respect to one-third
(1/3) of such Units on the last day of the Company’s 2008, 2009 and 2010 fiscal years, (i.e., the
fiscal years ending in those calendar years), respectively (determined without regard to any future
changes of the Company’s fiscal year).

               (b) Performance Award. Subject to the Participant’s continued employment with the Company
through the applicable fiscal year, or as otherwise set forth in Section 2(c) hereof, the Units
subject to the Performance Award shall vest and become nonforfeitable with respect to up to
one-third (1/3) of such Units on the last day of the Company’s 2005, 2006 and 2007 fiscal years
(i.e., the fiscal years ending in those calendar years), respectively (determined without regard to
any future changes of the Company’s fiscal year), based on the extent to which the performance
goals set forth in Exhibit A hereto shall have been attained. Any Units subject to the
Performance Award which are eligible to vest at the end of the applicable fiscal year noted above,
but which do not so vest, shall thereupon be cancelled and forfeited to the Company and shall
terminate immediately.

               (c) If the Participant’s employment with the Company is terminated due to Participant’s death
or Disability, by the Company without Cause or by the Participant for Good Reason, (i) any then
outstanding unvested Units attributable to the Time-Based Award shall vest immediately and the
Participant shall be entitled to payment in respect of all outstanding vested Units attributable to
the Time-Based Award in accordance with Section 3 hereof and (ii) a pro rata portion of any
outstanding Units attributable to the Performance Award shall vest immediately, such pro rata
portion to be determined based upon a fraction the numerator of which is the number of full and
partial months commencing April 2004 through the date of termination and the denominator of which
is thirty-six (36), and the Executive shall be entitled to payment in respect of such vested Units
in accordance with Section 3 hereof. If a Change of Control occurs during the Participant’s
employment, all then outstanding Units (whether or not vested) shall thereupon vest and the
Participant shall be entitled to payment in respect of such Units in accordance with Section 3
hereof.

               (d) For purposes of this Agreement, the terms “Disability,” “Cause,” “Good Reason” and “Change
of Control” shall have the respective meanings specified in the Employment Agreement.

          3. Distribution of Shares.

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               (a) The Participant shall be entitled to receive payment in the form of Shares for each vested
Unit subject to the Performance Award as soon as practicable following the end of the applicable
fiscal year at which vesting of such Units is determined (or at such earlier time of vesting
prescribed by Section 2(c) hereof). The Participant shall be entitled to receive payment in the
form of Shares for each vested Unit subject to the Time-Based Award as soon as practicable
following the Participant’s termination of employment for any reason (or, if earlier, upon the
occurrence of a Change of Control during participant’s employment). In connection with any such
payment, the Company shall issue and deliver to the Participant or to his estate, as applicable,
one Share in respect of each whole vested Unit and cash in lieu of any vested fractional Unit
(based on the fair market value per Share on the vesting date or, in the case of fractional Units
attributable to the Time-Based Award which are settled in connection with Participant’s termination
of employment, based on the fair market value per Share on the date of such termination). The
Company shall deliver to the Participant or to his estate, as applicable, certificates in respect
of such Shares along with the stock powers relating thereto.

               (b) Any Unit not previously cancelled and forfeited pursuant to Section 2(b) above that
remains unvested on the date of Participant’s termination of employment, after taking into account
any applicable acceleration of vesting of Units pursuant to Section 2(c) hereof, shall thereupon be
cancelled and forfeited to the Company and shall terminate immediately.

          4. Rights as a Stockholder. Neither the Participant nor Participant’s successor in
interest shall have any rights as a stockholder of the Company with respect to any Shares subject
to the Units until such Shares have been issued to or in respect of the Participant.

          5. Dividend Equivalents. In the event of any issuance of a cash dividend on the
Shares (a “Dividend”), the Participant shall be credited, as of the payment date for such Dividend,
with an additional number of Units (each, a “Dividend Unit”) equal to the quotient obtained by
dividing (a) the product of (i) the number of Units granted pursuant to this Agreement and
outstanding as of the record date for such Dividend multiplied by (ii) the amount of the Dividend
per Share, divided by (b) the fair market value per Share on the payment date for such Dividend,
such quotient to be rounded to the nearest one-one hundredth of a Unit. Once credited, each
Dividend Unit shall be treated as a Unit granted hereunder and shall be subject to all terms and
conditions set forth in this Agreement and the Restated Plan applicable to the Units in respect of
which the Dividend Unit was created (i.e., Units subject to the Time-Based Award or
Performance Award, as the case may be).

          6. Unit Award Subject to the Restated Plan. By accepting this Agreement and the Unit
Award evidenced hereby, the Participant agrees and acknowledges that the Participant has received
and read a copy of the Restated Plan. The Unit Award is subject to the Restated Plan. The terms
and provisions of the Restated Plan as amended from time to time are hereby incorporated herein by
reference. In the event of a conflict between any term or provision contained herein and a term or

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provision of the Restated Plan, the applicable terms and provisions of the Restated Plan will
govern and prevail.

          7. No Right to Continued Employment. Neither the Restated Plan nor this Agreement
shall be construed as giving the Participant the right to be retained in the employ of, or in any
consulting relationship to, the Company or any Affiliate. Further, the Company or an Affiliate may
at any time dismiss the Participant or discontinue any consulting relationship, free from any
liability or any claim under the Restated Plan or this Agreement, except as otherwise expressly
provided herein.

          8. Transferability. Except as expressly contemplated in this Agreement, the Units may
not at any time be sold, assigned, transferred, pledged or otherwise encumbered.

          9. Withholding. By accepting this Unit Award, the Participant agrees to make
appropriate arrangements with the Company for satisfaction of any applicable federal, state or
local income tax withholding requirements, including the payment to the Company of all such taxes
and requirements in connection with the distribution or delivery of the Shares, or other settlement
in respect of the Units, and the Company shall be authorized to take such action as may be
necessary in the opinion of the Company’s counsel (including, without limitation, withholding
Shares otherwise deliverable to Participant hereunder and/or withholding amounts from any
compensation or other amount owing from the Company to the Participant) to satisfy all obligations
for the payment of such taxes; provided, however, that in no event shall the value of Shares so
withheld by the Company exceed the minimum withholding rates required by applicable statutes.

          10. Securities Laws. Prior to issuance and delivery of any Shares, the Participant
will make or enter into such written representations, warranties and agreements as the Committee
may reasonably request in order to comply with applicable securities laws or with this Agreement.

          11. Notices. Any notice necessary under this Agreement shall be addressed to the
Company in care of its Secretary at the principal executive office of the Company and to the
Participant at the address appearing in the personnel records of the Company for such Participant
or to either party at such other address as either party hereto may hereafter designate in writing
to the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.

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

          13. Authority of Committee. The Committee shall have full authority to interpret and
construe the terms of the Restated Plan and this Agreement. The determination of the Committee as
to any such matter of interpretation or construction shall be final, conclusive and binding.

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          14. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF STATE OF THE NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

          15. Stockholder Approval of Restated Plan. This Agreement shall take effect as of the
date hereof, subject to approval of the stockholders of the Company, at the 2004 annual meeting, of
the Restated Plan. In the event that the Restated Plan is not so approved, this Agreement shall be
null and void and of no force and effect.

          16. Modification. No provision of this Agreement may be modified, waived or
discharged unless such waiver, modification or discharge is agreed to in writing signed by the
Participant and an appropriate officer of the Company.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed and the
Participant has hereunto set his hand, effective as of the Grant Date, subject to the conditions
set forth herein.

	 	 	 	 	 	 	 	 	 
	 	 	POLO RALPH LAUREN CORPORATION
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	/s/ Mitchell A. Kosh
	 	 	 	 	 
	

	 	 	 	 	 	Name:
	 	Mitchell A. Kosh
	

	 	 	 	 	 	Title:
	 	Senior Vice President,
	

	 	 	 	 	 	 	 	  Human Resources
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Roger N. Farah
	 	 	 
	 	 	Participant:     Roger N. Farah

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EXHIBIT A

Performance Goals

for Initial Performance-Based Grant

Performance-Based Award of 187,500 restricted stock units that shall be subject to the vesting
criteria set forth below. Straight-line interpolation shall be applied for net income amounts
achieved between the threshold and 100% target as of the end of the applicable fiscal year as set
forth below. Performance below the threshold as of the end of the applicable fiscal year shall
result in 0% vesting.

	 	 	 	 	 	 	 
	 
	Number of Units

	 	Vesting Date1
	 	Net
Income2
Threshold for

Vesting3
	 	New
Income2 Target for

100% Vesting
	 
	62,500

	 	End of fiscal year 2005
	 	For fiscal year
2005, net income
equal to
$197,529,000 (prior
to reduction for
“Award
Expense"4
for fiscal year
2005).
	 	For fiscal year
2005, net income
equal to
$240,858,000 minus
the Award Expense
for fiscal year
2005.
	 
	62,500

	 	End of fiscal year 2006
	 	For fiscal years
2005 — 2006,
cumulative net
income equal to
$408,886,000 (prior
to reduction for
cumulative Award
Expense for fiscal
years 2005 —
2006).
	 	For fiscal years
2005 — 2006,
cumulative net
income equal to
$507,609,000 minus
the cumulative
Award Expense for
fiscal years 2005
— 2006.
	 
	62,500

	 	End of fiscal year 2007
	 	For fiscal years
2005 — 2007,
cumulative net
income equal to
$635,038,000 (prior
to reduction for
cumulative Award
Expense for fiscal
years 2005 —
2007).
	 	For fiscal years
2005 — 2007,
cumulative net
income equal to
$818,058,000 minus
the cumulative
Award Expense for
fiscal years 2005
— 2007.
	 

 

1 All references to “fiscal year” shall be
without regard to any future changes to the Company’s fiscal year. 

2 Net income shall be determined taking into
account the performance of RL Childrenswear Company LLC. All net income
targets shall otherwise be adjusted to omit the effects of extraordinary items;
gain or loss on the disposal of a business segment; unusual or infrequently
occurring events and transactions (including, without limitation, restructuring
charges); and cumulative effects of changes in accounting principles; and
changes to the Company’s fiscal year.

3 50% vesting at end of fiscal 2005; 60%
vesting at end of fiscal year 2006; and 75% vesting at end of fiscal year 2007.

4 “Award Expense” shall mean the after-tax
expense to the Company attributable to the grant of restricted stock unit
awards pursuant to Amendment No.1 to the Employment Agreement with Mr. Farah.

6EX-10.19

 

Exhibit 10.19

POLO RALPH LAUREN CORPORATION

RESTRICTED STOCK AWARD AGREEMENT

     THIS AGREEMENT (the “Agreement”) is made effective as of the 23rd day of July 2002 (the
“Grant Date”), between Polo Ralph Lauren Corporation, a Delaware corporation (hereinafter called
the “Company”), and Roger N. Farah (hereinafter called the “Participant”).

R E C I T A L S:

     WHEREAS, the Company has adopted the Polo Ralph Lauren Corporation 1997 Long-Term Stock
Incentive Plan (the “Plan”), which Plan is incorporated herein by reference and made a part of this
Agreement. Capitalized terms not otherwise defined herein shall have the same meanings as in the
Plan; and

     WHEREAS, the Committee has determined that it would be in the best interests of the Company
and its stockholders to grant the restricted stock award provided for herein (the “Restricted Stock
Award”) to the Participant pursuant to the Plan and the terms set forth herein.

     NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
hereto agree as follows:

     1. Grant of the Restricted Shares. Subject to the terms and conditions of the Plan and the
additional terms and conditions set forth in this Agreement, the Company hereby grants to the
Participant a Restricted Stock Award consisting of 300,000 Shares (hereinafter called the
“Restricted Shares”). The Restricted Shares shall vest and become nonforfeitable in accordance
with Section 2 hereof.

     2. Vesting.

          (a) Subject to the Participant’s continued employment with the Company, the Restricted Shares
shall vest and become nonforfeitable with respect to one fifth (1/5) of the Shares initially
granted hereunder on each of the first five anniversaries of the Grant Date. Notwithstanding the
foregoing, in the event the above vesting schedule results in the vesting of any fractional Shares,
such fractional Shares shall not be deemed vested hereunder but shall vest and become
nonforfeitable when such fractional Shares aggregate whole Shares.

          (b) (i) If the Participant’s employment with the Company is terminated by the Participant for
Good Reason (as defined below) or by the Company without Cause (as defined below) (other than as a
result of the Company’s election not to extend the Term of the Employment Agreement (as defined
below) as contemplated by Section 2 of the Employment Agreement, or by reason of death or
Disability (as defined below)), then the Restricted Shares shall vest with respect to the greater
of (x) the percentage of Restricted Shares that otherwise would have vested on the next anniversary
of the Grant Date if no such termination had occurred and (y) the percentage of Restricted Shares
so that, in the aggregate, 150,000 Restricted Shares would then be vested hereunder.

 

 

               (ii) If the Participant’s employment with the Company is terminated for any reason other than
as set forth in Section 2(b)(i), then the Restricted Shares shall, to the extent not then vested,
be forfeited by the Participant without consideration.

               (iii) For purposes of this Agreement the (x) the term “Employment Agreement” shall mean the
Amended and Restated Employment Agreement between the Participant and the Company dated as of July
23, 2002 and (y) the terms “Cause,” “Good Reason,” “Disability” and “Change of Control” shall have
the respective meanings specified in such Amended and Restated Employment Agreement.

          (c) Notwithstanding any other provision of this Agreement to the contrary, in the event of a
Change of Control (either as defined in Section 2(b)(iii) above or in the Plan), the Restricted
Shares shall, to the extent not then vested and not previously forfeited, immediately become fully
vested as contemplated by Section 13 of the Plan.

     3. Certificates. Certificates evidencing the Restricted Shares shall be issued by the
Company and shall be registered in the Participant’s name on the stock transfer books of the
Company promptly after the date hereof, but shall remain in the physical custody of the Company or
its designee at all times prior to the vesting of such Restricted Shares pursuant to Section 2. As
a condition to the receipt of this Restricted Stock Award, the Participant shall deliver to the
Company a stock power, duly endorsed in blank, relating to the Restricted Shares. No certificates
shall be issued for fractional Shares.

     4. Rights as a Stockholder. The Participant shall be the record owner of the Restricted
Shares until or unless such Shares are forfeited pursuant to Section 2 hereof, and as record owner
shall be entitled to all rights of a common stockholder of the Company, including, without
limitation, voting rights with respect to the Restricted Shares; provided that (i) any cash
or in-kind dividends paid with respect to the Restricted Shares which have not previously vested
shall be withheld by the Company and shall be paid to the Participant only when, and if, such
Restricted Shares shall become fully vested pursuant to Section 2 and (ii) the Restricted Shares
shall be subject to the limitations on transfer and encumbrance set forth in Section 7. As soon as
practicable following the vesting of any Restricted Shares pursuant to Section 2, certificates for
the Restricted Shares which shall have vested shall be delivered to the Participant or to the
Participant’s legal guardian or representative along with the stock powers relating thereto.

     5. Legend on Certificates. The certificates representing the vested Restricted Shares
delivered to the Participant as contemplated by Section 4 above shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under the Plan or the
rules, regulations, and other requirements of the Securities and Exchange Commission, any stock
exchange upon which such Shares are listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     6. No Right to Continued Employment. Neither the Plan nor this Agreement shall be
construed as giving the Participant the right to be retained in the employ of, or in any

2

 

consulting relationship to, the Company or any Affiliate. Further, the Company or an Affiliate may
at any time dismiss the Participant or discontinue any consulting relationship, free from any
liability or any claim under the Plan or this Agreement, except as otherwise expressly provided
herein.

     7. Transferability. The Restricted Shares may not, at any time prior to becoming vested
pursuant to Section 2, be assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by the Participant and any such purported assignment, alienation, pledge, attachment,
sale, transfer or encumbrance shall be void and unenforceable against the Company or any Affiliate;
provided that the designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.

     8. Withholding. By accepting this Restricted Stock Award, the Participant agrees to make
appropriate arrangements with the Company for satisfaction of any applicable federal, state or
local income tax, withholding requirements or like requirements, including the payment to the
Company upon the vesting of the Restricted Shares (or such earlier or later date as may be
applicable under Section 83 of the Internal Revenue Code of 1986), or other settlement in respect
of, the Restricted Shares of all such taxes and requirements and the Company shall be authorized to
take such action as may be necessary in the opinion of the Company’s counsel (including, without
limitation, withholding vested Shares otherwise deliverable to Participant hereunder and/or
withholding amounts from any compensation or other amount owing from the Company to the Participant
) to satisfy all obligations for the payment of such taxes.

     9. Securities Laws. Upon the vesting of any Restricted Shares, the Participant will make
or enter into such written representations, warranties and agreements as the Committee may
reasonably request in order to comply with applicable securities laws or with this Agreement.

     10. Notices. Any notice necessary under this Agreement shall be addressed to the Company
in care of its Secretary at the principal executive office of the Company and to the Participant at
the address appearing in the personnel records of the Company for such Participant or to either
party at such other address as either party hereto may hereafter designate in writing to the other.
Any such notice shall be deemed effective upon receipt thereof by the addressee.

     11. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.

3

 

     12. Restricted Stock Award Subject to Plan. By accepting this Agreement and the Award
evidenced hereby, the Participant agrees and acknowledges that the Participant has received and
read a copy of the Plan. The Restricted Stock Award is subject to the Plan. The terms and
provisions of the Plan as it may be amended from time to time are hereby incorporated herein by
reference. In the event of a conflict between any term or provision contained herein and a term or
provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

	 	 	 
	ROGER FARAH

	 	POLO RALPH LAUREN CORPORATION
	 
	 	 
	 
	 	 
	     /s/ Roger Farah     

	 	By:     /s/ Mitchell Kosh               
	 
	 	 
	

	 	Title:      Senior Vice President — Human Resources

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