Document:

EX10.4.2013.2Q.10Q

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
AMENDED AND RESTATED EMPLOYMENT AGREEMENT (“Agreement”), dated as of July 23, 2013, between PVH B.V., a private limited liability company organized under the laws of the Netherlands (“PVH Europe” and, together with its affiliates, including, without limitation, its indirect parent corporation, PVH Corp. (the “Company”; the Company shall refer to PVH Europe or PVH Corp. (“PVH”) or PVH and its affiliates and subsidiaries, including PVH Europe, collectively, as the context may require), and FRED GEHRING (the “Executive”).
WITNESSETH:
WHEREAS, the Executive currently serves as Chief Executive Officer of Tommy Hilfiger and PVH International Operations, pursuant to an Employment Agreement between the Executive and PVH Europe (formerly known as Tommy Hilfiger B.V.), dated as of May 6, 2010, as amended (the “Existing Agreement”);
WHEREAS, the Executive has been employed with PVH Europe or one of its affiliates continuously since June 1, 1997, which date, for purposes of calculating the Executive’s seniority, shall be deemed as the date of commencement of his employment with PVH Europe;
WHEREAS, the Executive desires to continue to be employed by PVH Europe on the terms and conditions set forth herein, and agrees that this Agreement shall amend and supersede the terms and conditions of the Existing Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants herein contained, the parties hereto hereby agree as follows:
1.Employment.
(a)    Effective Date. This Agreement shall be effective as of July 1, 2013 (the “Effective Date”).
(b)    Employment Period. PVH Europe agrees to continue to employ the Executive, and the Executive agrees to continue to be employed by PVH Europe, in accordance with the terms and conditions hereof. The Executive shall be an employee at will and this Agreement shall not constitute a guarantee of employment. Each of the parties acknowledges and agrees that either party may terminate the Executive’s employment at any time, for any reason, with or without Cause (as defined in Section 3(a)), subject to the applicable notice periods. Each party hereto may terminate this Agreement by giving written notice before the end of a calendar month, subject to a notice period of 90 days for the Executive and 180 days for PVH Europe, if applicable. This Agreement will automatically terminate upon the end of the month during which the Executive reaches the State pension age (AOW-gerechtigde leeftijd). The period commencing on the Effective Date and ending on the last day of the applicable notice period is hereinafter referred to as the “Employment Period.”

 

(c)    Position and Duties.
(i)    During the Employment Period and subject to Section 1(c)(iii), the Executive shall serve as Chief Executive Officer of PVH Europe and hold the title “Chief Executive Officer of Tommy Hilfiger and PVH International Operations.”
(A)    As Chief Executive Officer of Tommy Hilfiger, the Executive shall have such duties and responsibilities as shall from time to time be assigned to him and as are consistent and commensurate with his title and position. Without limiting the generality of the foregoing, the managers of the European and Asian businesses operated by PVH Europe under the Tommy Hilfiger brands will report to the Executive or to persons reporting to the Executive; provided, however, that, it is understood and agreed that (x) the Chief Financial Officer of PVH Europe will report to both the chief operating officer of PVH Europe and the principal financial officer of PVH and (y) the international managers for PVH Europe’s legal, risk, audit, governance and compliance, treasury and other integral corporate functions (not including human resources) may also be required to report with respect to certain matters to PVH’s head of their respective function (or such PVH’s head’s direct reports).
(B)    As Chief Executive Officer of PVH International Operations, the Executive shall oversee (x) the European operations of PVH’s Calvin Klein business (excluding those Calvin Klein business activities directly overseen by PVH’s Calvin Klein, Inc. subsidiary) and (x) PVH’s other direct operations in Europe (excluding business activities directly overseen by PVH).
(C)    In addition to the Executive’s duties and responsibilities described in Sections 1(c)(i)(A), 1(c)(i)(B), and 1(c)(iii), the Executive shall perform an advisory role on the future plans to gradually integrate PVH’s Tommy Hilfiger and Calvin Klein business operations in Asia and South America.
(D)    The Executive’s services shall be performed at PVH Europe’s headquarters in Amsterdam, The Netherlands (or such other location as may be mutually agreed between the Company and the Executive), except for travel and visits to Company offices and facilities worldwide, reasonably required to attend to the Company’s business.
(ii)        During the Employment Period and subject to Section 1(c)(iii), and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote substantially all of his business attention and time (with business time determined in accordance with the Company’s usual and customary standards for its senior executives) to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive hereunder, to use the Executive’s reasonable best efforts to perform faithfully and conscientiously such responsibilities. During the Employment Period, the Executive shall be entitled to serve as a member of the board of directors of a reasonable number of other companies, to serve on civic and charitable boards and to manage his personal and family investments, in each case, to the extent such activities do not materially interfere, in the reasonable judgment of PVH’s Board of Directors (which, for purposes of this Agreement, includes any committee thereof, unless the context requires otherwise (the “Board”)), with the performance of his duties for the Company and are otherwise consistent with the Company’s governance policies. Notwithstanding 

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the foregoing, (A) the Executive may continue to maintain a direct or indirect ownership interest in each of Pepe Holdings Ltd., TH Asia Limited, and Karl Lagerfeld B.V. (formerly known as Asian and Western Classics B.V.), including the right to increase his ownership interest in each such entity; and (B) the Executive may purchase and maintain a direct or indirect ownership interest in Denham the Jeanmaker B.V. and may increase his ownership in such entity. Furthermore, the Executive may continue his directorship in TH Asia Limited and Karl Lagerfeld B.V. and support Apax Partners L.P. and/or any of its affiliates in defining a new business strategy for Karl Lagerfeld B.V.; provided, however, that in all such cases, such directorship and support shall not interfere with the Executive’s performance of his duties hereunder in any significant manner and any services provided to any such entity shall not directly conflict with, or bring such entity into direct competition with, any of the Company’s businesses. For the avoidance of doubt, the Executive is not allowed to perform services for Pepe Holdings Ltd.
(iii)    In addition to the duties and responsibilities outlined in paragraphs (A), (B), (C) and (D) of Section 1(c)(i), it is acknowledged and agreed that during the term of this Agreement, the Executive is expected to train a successor chief executive officer of PVH Europe and transitioning his responsibilities to such person no later than the third anniversary of the Effective Date.  The Executive shall report regularly to the principal executive officer of PVH (“PVH’s CEO”) on the progress of the development of the Executive’s successor, provide for appropriate interactions between the successor and PVH’s CEO, and make a recommendation to PVH’s CEO as to when the Executive believes that his successor is ready to succeed him; provided, however, that in no event shall a transition take place prior to the first anniversary of the Effective Date.  Upon the confirmation by PVH’s CEO that the successor is ready to assume the Executive’s duties, the Executive shall transition to the role of “Executive Chairman of PVH Europe” and shall no longer hold the title of “Chief Executive Officer of Tommy Hilfiger” or “Chief Executive Officer of PVH International Operations” as of a date established by PVH’s CEO (the “Transition Date”). The parties acknowledge and agree that whether or not the Executive resigns as managing director of PVH Europe in connection with the transition, this Employment Agreement will continue following the Transition Date and will not automatically terminate as a result of the Executive no longer being a managing director of PVH Europe following the Transition Date, unless they agree otherwise at that time.  As Executive Chairman of PVH Europe, the Executive shall be involved in establishing the overall strategy of PVH Europe but shall no longer be responsible for day-to-day operations of PVH Europe. The Executive shall also serve as an advisor to his successor as chief executive officer of PVH Europe and to PVH’s CEO on matters related to PVH.  Following the Transition Date, the Executive’s working hours shall be reduced to 50% of his working hours prior to the Effective Date (although the Executive’s responsibilities may from time to time require that the Executive’s working hours be adjusted by plus or minus 10%) or approximately two to three days per business week. Following the Transition Date, the Executive may regulate his working hours and work location as he reasonably determines, so long as he continues to satisfy his responsibilities pursuant to this Agreement.  
(iv)    During the Employment Period, the Executive shall report only to PVH’s CEO.
2.    Compensation.
(a)    Base Salary. During the Employment Period and prior to the Transition Date, PVH Europe shall pay the Executive a salary at the annual rate of 950,000 Euros (“Base Salary”), which amount includes holiday pay, payable in accordance with the normal payroll 

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procedures of PVH Europe in effect from time to time. The Executive’s Base Salary shall be reviewed for increase at least annually by the Board in connection with its normal performance review policies for senior executives. Except as otherwise provided in the following sentence, Base Salary shall not be reduced after any increase. From and after the Transition Date, the Base Salary shall be reduced by 50%. Following the Transition Date, the Base Salary, as reduced pursuant to the foregoing sentence, shall be reviewed for increase annually by the Board pursuant to its normal performance review policies for senior executives. The term Base Salary as utilized in this Agreement shall refer to the Executive’s annual base salary as then in effect.
(b)    Incentive and Bonus Compensation. The Executive shall be eligible to participate in the Company’s existing and future bonus and stock plans and other incentive compensation programs for similarly situated executives (collectively, “Plans”), to the extent that the Executive is qualified to participate in any such Plan under the generally applicable provisions thereof in effect from time to time; provided, however, that it is acknowledged, understood and agreed that the Executive has received an equity award in PVH’s 2013 fiscal year (the “2013 Award”) and no further equity awards will be made to him in PVH’s 2013, 2014, or 2015 fiscal years. For the avoidance of doubt, the parties acknowledge and agree that the Executive’s transition to the role of Executive Chairman of PVH Europe, as contemplated in Section 1(c)(iii), shall not affect his rights with respect to the 2013 Award.  The Executive acknowledges and agrees that eligibility to participate in a Plan is not a guarantee of participation in or of the receipt of any award, payment or other compensation under any Plan. 
(i)    Notwithstanding anything herein to the contrary, the Executive acknowledges and agrees that following the Transition Date, the Executive’s bonus opportunity under any such Plan shall be reduced by 50%; provided, however, that the Executive shall be eligible to receive with respect to the year in which the Transition Date occurs any bonus earned multiplied by a fraction, the numerator of which is equal to the sum of (A) the number of days during the year prior to the Transition Date plus (B) the product of (x) the number of days during such year from and after the Transition Date multiplied by (y) 0.5 and the denominator of which is 365. 
(ii)    To the extent the Executive does participate in a Plan and the Plan does not expressly provide otherwise, PVH’s CEO and/or the Board, as appropriate, may determine all terms of participation (including, without limitation, the type and size of any award, payment or other compensation and the timing and conditions of receipt thereof by the Executive) in the sole and absolute discretion of PVH’s CEO or the Board. Nothing herein shall be deemed to prohibit the Company or the Board from amending or terminating any and all Plans in its sole and absolute discretion. Except as otherwise provided herein, the terms of each Plan shall govern the Executive’s rights and obligations thereunder during the Executive’s employment and upon the termination thereof. Without limiting the generality of the foregoing, the definition of “Cause” hereunder shall not supersede the definition of “cause” in any Plan (unless the Plan expressly defers to the definition of “cause” under an executive’s employment agreement) and any rights of the Executive hereunder upon and subsequent to the termination of the Executive’s employment shall be in addition to, and not in lieu of, any right of the Executive under any Plan then in effect upon or subsequent to a termination of employment.

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(c)    Benefits.
(i)    The Executive shall be eligible to participate in all employee benefit and insurance plans sponsored or maintained by the Company for similarly situated executives (including any savings, retirement, life, health and disability plans), to the extent that the Executive is qualified to participate in any such plan under the generally applicable provisions thereof in effect from time to time and subject to applicable law, it being acknowledged that by virtue of the Executive’s residence and principal workplace being in Amsterdam, the Netherlands, as well as the continuation of the Executive’s participation in certain plans that were in effect for him and/or the employees of PVH Europe prior to the Effective Date, that there may be differences in the employee benefit and insurance plans provided to him and PVH’s executives in the United States. Nothing herein shall be deemed to prohibit the Company or the Board from amending or terminating any such plan in its sole and absolute discretion. Except as otherwise provided herein, the terms of each such plan shall govern the Executive’s rights and obligations thereunder during the Executive’s employment and upon the termination thereof.
(ii)    In furtherance of the foregoing, the parties acknowledge and agree as follows:
(A)    The Executive shall continue to participate in the collective pension scheme of PVH Europe. The Executive’s pensionable basis (pensioengevend salaris) was equal to [672,525] Euros as of the Effective Date. The Executive’s pensionable basis will be increased annually by the same percentage, if any, as the percentage increase of the Base Salary during any fiscal year of PVH during the Employment Period that commences after the Effective Date.
(B)    The Company shall continue to procure at its cost accident insurance covering the Executive for business-related accidents and for accidents of everyday life with coverage of 2,500,000 Euros in case of death and 200,000 Euros in case of disability caused by illness or an accident, in favor of the Executive and his heirs, as the case may be.
(C)    The Company shall continue to procure at its cost Directors’ and Officer’s Liability Insurance covering the Executive providing customary and adequate insurance coverage for him consistent with the policy or policies in effect immediately prior to the Effective Date, including, without limitation, with respect to deductibles and coverage amounts.
(D)    The Company shall continue to procure at its cost disability insurance for the benefit of the Executive providing for a maximum of 200,000 Euros of annual income in case the Executive becomes fully disabled through illness or an accident.
(d)    Vacation. The Executive shall be entitled to paid vacation totaling (i) 25 working days (excluding Saturdays) each calendar year during the Employment Period prior to the Transition Date, and (ii) 10 working days (excluding Saturdays) each calendar year during the Employment Period from and after the Transition Date. Vacation days shall be taken at the reasonable discretion of the Executive in accordance with the Company’s interests and after consultation with PVH’s CEO and the Chief Financial Officer and Chief Operating Officer of PVH Europe. The Executive shall ensure that he can be reached at all times during his vacation on reasonable notice.  

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(e)    Expenses. The Company shall pay or reimburse the Executive for reasonable expenses incurred or paid by the Executive in the performance of the Executive’s duties hereunder in accordance with the generally applicable policies and procedures of the Company, as in effect from time to time and subject to the terms and conditions thereof. Such procedures include the reimbursement of approved expenses within 30 days after approval.
3.    Termination of Employment.
(a)    Termination for Cause by PVH Europe. If PVH Europe terminates this Agreement for Cause, PVH Europe shall have no further obligation to the Executive hereunder except for the payment or provision, as applicable, of (i) the portion of the Base Salary for periods prior to the effective date of termination accrued but unpaid (if any), (ii) all unreimbursed expenses (if any), subject to Section 2(e), and (iii) other payments, entitlements or benefits, if any, in accordance with terms of the applicable plans, programs, arrangements or other agreements of PVH Europe or any affiliate thereof (other than any severance plan or policy) as to which the Executive held rights to such payments, entitlements or benefits, whether as a participant, beneficiary or otherwise on the date of termination (“Other Benefits”). For the avoidance of doubt, the Executive shall have no right to receive any amounts under the Company’s severance policy upon his termination for Cause.
(i)    For purposes of this Agreement, “Cause” shall be defined as: (1) gross negligence or willful misconduct, as the case may be, in the performance of the material responsibilities of the Executive’s office or position, which results in material economic harm to the Company or its affiliates or in material reputational harm causing demonstrable injury to the Company or its affiliates; (2) the willful and continued failure of the Executive to perform substantially the Executive’s duties with the Company or any affiliate (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board or the Company that specifically identifies the manner in which the Board or the Company believes that the Executive has not substantially performed the Executive’s duties, and the Executive has not cured such failure to the reasonable satisfaction of the Board or the Company within 20 days following the Executive’s receipt of such written demand; (3) the Executive is convicted of, or pleads guilty or nolo contendere to, a felony within the meaning of U.S. Federal, state or local law or the equivalent of a felony under applicable foreign law (other than a traffic violation); (4) the Executive having willfully divulged, furnished or made accessible to anyone other than the Company, its directors, officers, employees, auditors and legal advisors, otherwise than in the ordinary course of business, any Confidential Information (as hereinafter defined); or (5) any act or failure to act by the Executive, which, under the provisions of applicable law, disqualifies the Executive from acting in any or all capacities in which he is then acting for the Company.
(ii)    For purposes of this provision, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon an obligation under law or upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Board or PVH’s CEO or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

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(b)    Termination without Cause by PVH Europe or for Good Reason by the Executive.
(i)    If PVH Europe terminates the Executive’s services without Cause or the Executive terminates his employment with PVH Europe for Good Reason, the Executive shall be entitled to receive from the Company (W) the portion of the Base Salary for periods prior to the effective date of termination accrued but unpaid (if any); (X) all unreimbursed expenses (if any), subject to Section 2(e); (Y) an aggregate amount (the “Severance Amount”) equal to one and one half times the sum of (1) the Base Salary plus (2) an amount equal to the bonus that would be payable if “target” level performance were achieved under the Company’s annual bonus plan (if any) in respect of the fiscal year during which the termination occurs (or the prior fiscal year if bonus levels have not yet been established for the year of termination); and (Z) the payment or provision of any Other Benefits. The Severance Amount shall be paid in a lump sum. The lump sum amount shall be paid on the first scheduled payroll date (in accordance with the Company’s payroll schedule in effect for the Executive immediately prior to such termination) that occurs on or following the date that is 30 days after the Executive’s termination of employment in such way as indicated by the Executive provided such payment will not cause additional expenses to the Company.
(A)    “Good Reason” shall mean the occurrence of any of the following events or circumstances without the Executive’s prior written consent:
(1)    the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1(c), or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, including but not limited to substantial interference and/or amendment of the reporting lines provided for herein and the assignment of additional or alternate duties or responsibilities to the Executive in connection with his professional development or the reallocation of some of the Executive’s duties or responsibilities to other executives of the Company in connection with the evolution of the Executive’s position and expressly excluding any isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by the Executive;
(2)    a reduction of the Executive’s Base Salary;
(3)    the taking of any action by the Company that substantially diminishes (A) the aggregate value of the Executive’s total compensation opportunity, and/or (B) the aggregate value of the employee benefits provided to the Executive pursuant to the Company’s employee benefit and insurance plans as in effect on the Effective Date;
(4)    the Company requiring that the Executive’s services be rendered primarily at a location or locations more than 35 miles from the location set forth in Section 1(c); or

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(5)    the failure of the Company to require any successor to the Company (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.
(ii)    In addition, if PVH Europe terminates the Executive’s employment with PVH Europe without Cause or the Executive terminates his employment with PVH Europe for Good Reason, then the Company shall also provide to the Executive, during the 18–month period following the Executive’s date of termination, medical, dental, life and disability insurance coverage for the Executive and the members of his family which is not less favorable to the Executive than the group medical, dental, life and disability insurance coverage carried by the Company for the Executive and the members of his family immediately prior to such termination of employment; provided, however, that the obligations set forth in this sentence shall terminate to the extent the Executive obtains comparable medical, dental, life or disability insurance coverage from any other employer during such period, but the Executive shall not have any obligation to seek or accept employment during such period, whether or not any such employment would provide comparable medical and dental insurance coverage, and provided further, however, that the Executive shall be obligated to pay an amount equal to the active employee contribution, if any, for each such coverage.
(iii)    For the avoidance of doubt, the payment of the Severance Amount shall be in lieu of any amounts payable under the Company’s severance policy (as then in effect) and the Executive hereby waives any and all rights thereunder.
(iv)    For the avoidance of doubt, the automatic termination of this Agreement upon the end of the month during which the Executive reaches the State pension age (AOW-gerechtigde leeftijd) as referred to in Section 1(b) will not be regarded as termination without Cause by the Company or for Good Reason by the Executive.
(v)    For the avoidance of doubt, the Executive’s transition to the role of Executive Chairman of PVH Europe pursuant to Section 1(c)(iii) will not be regarded as constituting Good Reason and, from and after the Transition Date, the determination of whether “Good Reason” exists shall be determined by reference to the Executive’s new and adjusted position, authority, duties, responsibilities, compensation and other terms and conditions of employment, as provided in Sections 1(c)(iii), 2(a), 2(b), 2(c) and 2(d), as applicable.
(vi)    For the avoidance of doubt, the failure of the Company to pay the Executive a bonus during the 104-week period referred to in Section 3(d) shall not constitute Good Reason within the meaning of clause (3) of Section 3(b)(i)(A).
(c)    Termination by Voluntary Resignation (without Good Reason) by the Executive. The Executive may terminate his employment with PVH Europe without Good Reason at any time by voluntary resignation. Upon such termination, the Company shall have no further obligation to the Executive hereunder except for the payment of (i) the portion of the Base Salary for periods prior to the effective date of termination accrued but unpaid (if any), (ii) all unreimbursed expenses (if any), subject to Section 2(e), and (iii) the payment or provision of any Other Benefits.

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(d)    Disability. The Executive’s employment shall be terminable by PVH Europe, subject to applicable law and the Company’s short-term and long-term disability policies then in effect, if the Executive becomes physically or mentally disabled, whether totally or partially, such that he is prevented from performing his usual duties and services hereunder during the 104-week period referred to in section 7:629 subsection 1 of the Dutch Civil Code (“Disability”).
(i)    In the case of Disability, PVH Europe shall continue to pay the Executive 70% of his Base Salary during such 104-week period.
(ii)    The Executive must strictly comply with the rules and guidelines which have been communicated to him by or on behalf of the Company.
(iii)    If the Executive’s employment is terminated by PVH Europe due to his Disability if and when permitted by applicable law, PVH Europe shall have no further obligation to the Executive hereunder, except for the payment to the Executive or his legal guardian or representative, as appropriate, of (i) the portion of the Base Salary for periods prior to the effective date of termination accrued but unpaid (if any), (ii) all unreimbursed expenses (if any), subject to Section 2(e), and (iii) the payment or provision of any Other Benefits.
(e)    Death. If the Executive shall die during the Employment Period, this Agreement shall terminate on the date of the Executive’s death and the Company shall have no further obligation to the Executive hereunder except for the payment to the Executive’s estate of (i) the portion of the Base Salary for periods prior to the effective date of termination accrued but unpaid (if any), (ii) an amount equal to three months’ Base Salary, (iii) all unreimbursed expenses (if any), subject to Section 2(e) and (iii) the payment or provision of any Other Benefits.
(f)    Notice of Termination. Any termination by PVH Europe or by the Executive, other than a termination by reason of the Executive’s death, shall be communicated by a Notice of Termination to the other party hereto given in accordance with Section 7(c). “Notice of Termination” means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated, and (iii) if the date of termination is other than the date of receipt of such notice, specifies the date of termination.
(g)    Date of Termination. For purposes of this Agreement the Executive’s date of termination of employment shall be (i) if the Executive’s employment is terminated by PVH Europe with or without Cause, by the Executive for or other than for Good Reason, or due to the Executive’s Disability, the date of termination shall be the last day of the applicable notice period (if any), which begins to run on the date on which the other party receives the Notice of Termination, unless a later date is set forth in the Notice of Termination, and (ii) if the Executive’s employment is terminated by reason of death, the date of termination shall be the date of death.
(h)    Resignation. Upon termination of the Executive’s employment for any reason, the Executive agrees to resign, effective as of the date of termination, from any positions that the Executive holds with PVH Europe and its affiliates, the Board (and any committees thereof), 

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unless the Board requests otherwise and the Executive agrees, and the board of directors (and any committees thereof) of any of the Company’s subsidiaries and affiliates.
4.    Effect of Termination. 
(a)    Full Settlement. In the event of termination without a Cause or termination with Good Reason, the amounts paid to the Executive pursuant to Section 3(b) shall be in full and complete satisfaction of the Executive’s rights under this Agreement and any other claims he may have with respect to his employment by the Company and the termination thereof, other than as expressly provided in (i) Section 2(b) or in other existing agreements and arrangements related to stock and stock-options, (ii) Section 7(h) or (iii) Section 7(i). Without limiting the foregoing, any severance required by a court of law to be paid to the Executive shall be subtracted from the amounts paid to the Executive pursuant to Section 3(b). Such amounts shall constitute liquidated damages with respect to any and all such rights and claims.
(b)    No Duplication; No Mitigation; Limited Offset. In no event shall the Executive be entitled to duplicate payments or benefits under different provisions of this Agreement or pursuant to the terms of any other plan, program or arrangement of the Company or its affiliates. In the event of any termination of the Executive’s employment, the Executive shall be under no obligation to seek other employment, and, there shall be no offset against amounts due the Executive under this Agreement or pursuant to any plan of the Company or any of its affiliates on account of any remuneration attributable to any subsequent employment or any claim asserted by the Company or any of its affiliates, except with respect to the continuation of benefits under Section 3(b), which shall terminate immediately upon obtaining comparable coverage from another employer.

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5.    Restrictive Covenants. 
(a)    Confidentiality. The Executive recognizes that any knowledge and information of any type whatsoever of a confidential nature relating to the business of the Company, including, without limitation, all types of trade secrets, vendor and customer lists and information, employee lists and information, information regarding product development, marketing plans, management organization information, operating policies and manuals, sourcing data, performance results, business plans, financial records, and other financial, commercial, business and technical information (collectively, “Confidential Information”), must be protected as confidential, not copied, disclosed or used, other than for the benefit of the Company, at any time. The Executive further agrees that at any time during the Employment Period or thereafter he will not divulge to anyone (other than the Company or any person employed or designated by the Company), publish or make use of any Confidential Information without the prior written consent of the Company, except as (and only to the extent) (i) required by an order of a court having competent jurisdiction or under subpoena from an appropriate government agency and then only after providing the Company with the reasonable opportunity to prevent such disclosure or to receive confidential treatment for the Confidential Information required to be disclosed, (ii) with respect to any other litigation, arbitration or mediation involving this Agreement, including, but not limited to the enforcement of this Agreement or (iii) as to Confidential Information that becomes generally known to the public or within the relevant trade or industry other than due to the Executive’s violation of this Section 5(a). The Executive further agrees that following the termination of the Employment Period for whatever reason, (A) the Company shall keep all tangible property assigned to the Executive or prepared by the Executive and (B) the Executive shall not misappropriate or infringe upon the Confidential Information of the Company (including the recreation or reconstruction of Confidential Information from memory).
(b)    Non-Competition. The Executive acknowledges and recognizes the highly competitive nature of the businesses of the Company, and, accordingly, agrees that during the Restricted Period, the Executive will not, without the prior written consent of the Company, directly or indirectly, on the Executive's behalf or on behalf of any other person, firm, corporation, association or other entity (each, a “Person”), as an employee, director, advisor, partner, consultant or otherwise, engage in any business of, provide services to, enter the employ of, or have any interest in any Competitive Business Entity. “Competitive Business Entity” shall mean any of the companies listed on Exhibit A and any of their respective controlled affiliates. Nothing herein shall restrict the Executive from owning, for personal investment purposes only, less than 2% of the voting stock or other securities of any publicly held Person or 5% of the ownership interest in any non-publicly held Person, if the Executive has no other connection or relationship with the issuer of such securities. The “Restricted Period” for purposes of this Agreement shall mean the period commencing on May 6, 2010 and ending on the first anniversary of the Executive’s termination of employment with the Company; provided, however, that if the Executive's employment with the Company is terminated by the Company without Cause or the Executive resigns with Good Reason, the Restricted Period shall end on the date Executive ceases to be an employee of the Company.
(c)    Non-Solicitation. The Executive agrees that during the term of the Executive’s employment with the Company and for a period ending on the date that is 18 months 

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following the termination of the Executive's employment with the Company for any reason, the Executive will not (i) hire or solicit to hire, whether on the Executive's own behalf or on behalf of any other Person (other than the Company), any employee of the Company or any individual who had left the employ of the Company within 12 months of the termination of Executive's employment with the Company, or (ii) directly or indirectly, encourage or induce any employee of the Company to leave the Company's employ, except in the ordinary course of the Company's business.
(d)    Public Comment. The Executive, during the Employment Period and at all times thereafter, shall not make any derogatory comment concerning the Company or any of its current or former directors, officers, stockholders or employees. Similarly, the then current (i) members of the Board and (ii) members of the Company’s senior management shall not make any derogatory comment concerning the Executive, and the Company shall use reasonable efforts to ensure that the former (A) members of the Board and (B) members of the Company’s senior management do not make any derogatory comment concerning the Executive.
(e)    Blue Penciling. It is expressly understood and agreed that although the Executive and the Company consider the restrictions to be reasonable, if a final judicial determination is made by a court of competent jurisdiction that the time or any other restriction contained in this Agreement is an unenforceable restriction against the Executive, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to such maximum time and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other restrictions contained herein.
(f)    Injunctive Relief. The Executive acknowledges and agrees that the covenants and obligations of the Executive set forth in this Section 5 relate to special, unique and extraordinary services rendered by the Executive to the Company and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury for which adequate remedies are not available at law. Therefore, the Executive agrees that the Company shall be entitled to seek an injunction, restraining order or other temporary or permanent equitable relief (without the requirement to post bond) restraining the Executive from committing any violation of the covenants and obligations contained herein. These injunctive remedies are cumulative and are in addition to any other rights and remedies the Company may have at law or in equity.
(g)    Penalty. If the Executive is in breach of any of the covenants and obligations contained in this Section 5, the Executive shall owe to the Company without any demand or other prior notice a non-recurrent penalty of 10,000 Euros, to be increased by a penalty of 1,000 Euros for each day, including a portion of a day, that the breach continues. The Company shall be entitled to the penalty without prejudice to any claim for performance of the covenants and obligations set out in this Section 5. The Company shall have the right to claim damages in addition to the aforementioned penalty.
6.    Work for Hire. The Executive agrees that all marketing, operating and training ideas, sourcing data, processes and materials, including all inventions, discoveries, improvements, enhancements, written materials and development related to the business of the Company (“Proprietary Materials”) to which the 

12

Executive may have access or that the Executive may develop or conceive while employed by the Company shall be considered works made for hire for the Company and prepared within the scope of employment and shall belong exclusively to the Company. Any Proprietary Materials developed by the Executive that, under applicable law, may not be considered works made for hire, are hereby assigned to the Company without the need for any further consideration, and the Executive agrees to take such further action, including executing such instruments and documents as the Company may reasonably request, to evidence such assignment.
7.    Miscellaneous.
(a)    Assignment and Successors. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, legatees, executors, administrators, legal representatives, successors and assigns. Notwithstanding anything in the foregoing to the contrary, the Executive may not assign any of his rights or obligations under this Agreement without first obtaining the written consent of the Company. The Company may assign this Agreement in connection with a sale of all or substantially all of its business and/or assets (whether direct or indirect, by purchase, merger, consolidation or otherwise) and will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. “Company” means the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that assumes and agrees to perform this Agreement by operation of law or otherwise.
(b)    Survival. The provisions of Sections 3, 4, 5, 6 and 7 shall survive the termination of this Agreement pursuant to Section 3.
(c)    Notices. Any notices to be given hereunder shall be in writing and delivered personally or sent by registered or certified mail, return receipt requested, postage prepaid as follows:
If to the Executive, addressed to the Executive at the address then shown in the Executive’s employment records.

13

	
	
	If to the Company at:

	PVH Corp.

	200 Madison Avenue

	New York, New York 10016

	Attention: Chairman

	 

	With a copy to:

	 

	PVH Corp.

	200 Madison Avenue

	New York, New York 10016

	Attention: Senior Vice President, General Counsel

Any party may change the address to which notices are to be sent by giving notice of such change of address to the other party in the manner provided above for giving notice.
(d)    Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of The Netherlands, without regard to the principles thereof relating to the conflict of laws.
(e)    Consent to Jurisdiction. Any judicial proceeding brought against the Executive with respect to this Agreement may be brought in any court of competent jurisdiction in Amsterdam, The Netherlands and, by execution and delivery of this Agreement, the Executive: (i) accepts, generally and unconditionally, the nonexclusive jurisdiction of such courts and any related appellate courts, and irrevocably agrees to be bound by any final judgment (after exhausting all appeals therefrom or after all time periods for such appeals have expired) rendered thereby in connection with this Agreement, and (ii) irrevocably waives any objection the Executive may now or hereafter have as to the venue of any such suit, action or proceeding brought in such a court or that such court is an inconvenient forum.
(f)    Severability. The invalidity of any one or more provisions of this Agreement or any part thereof shall not affect the validity of any other provision of this Agreement or part thereof; and in the event that one or more provisions contained herein shall be held to be invalid, the Agreement shall be reformed to make such provisions enforceable.
(g)    Waiver. The Company, in its sole discretion, may waive any of the requirements imposed on the Executive by this Agreement. The Company, however, reserves the right to deny any similar waiver in the future. Each such waiver must be express and in writing and there will be no waiver by conduct. Pursuit by the Company of any available remedy, either in law or equity, or any action of any kind, does not constitute waiver of any other remedy or action. Such remedies and actions are cumulative and not exclusive. The Executive’s or the Company’s failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason or the Company’s right to terminate the 

14

Executive’s employment for Cause, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.
(h)    Indemnification. The Executive shall be entitled to indemnification (and the advancement of expenses) in connection with a litigation or proceeding arising out of the Executive’s acting as chief executive officer of PVH Europe, Chief Executive Officer of Tommy Hilfiger, Chief Executive Officer of PVH International Operations, or Executive Chairman of PVH Europe or an employee, officer or director of the Company (or, to the extent such service is requested by the Company, any of its affiliates), to the maximum extent permitted by applicable law; provided, however, that in the event that it is finally determined that the Executive is not entitled to indemnification, the Executive shall promptly return any advanced amounts to the Company. In addition, the Executive shall be entitled to liability insurance coverage pursuant to a Company-purchased directors’ and officers’ liability insurance policy on the same basis as other directors and officers of the Company.
(i)    Legal Fees. The Company agrees to reimburse the Executive (within 10 days following the Company’s receipt of an invoice from the Executive), at any time from the Effective Date of this Agreement through the Executive’s remaining lifetime (or, if longer, through the 20th anniversary of the Effective Date) to the fullest extent permitted by law, for all legal fees and expenses that the Executive may reasonably incur as a result of any contest by the Company, the Executive or others of the validity or enforceability of, or liability under, any provision of this Agreement or any guarantee of performance thereof (including as a result of any contest by the Executive about the amount of any payment pursuant to this Agreement), provided, that the Executive prevails with respect to at least one substantive issue in dispute.
(j)    Section Headings. The section headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(k)    Withholding. Any payments provided for herein shall be reduced by any amounts required to be withheld by the Company from time to time under applicable Federal, State or local employment or income tax laws or similar statutes or other provisions of law then in effect.
(l)    Section 409A of the Code. The following provisions of this Section 7(l) shall be applicable only if the Executive is a taxpayer who is covered by Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and any related regulations or other effective guidance promulgated thereunder (collectively, “Section 409A”). To the extent applicable, the provisions of this Agreement and any payments made herein are intended to comply with, and should be interpreted consistent with, the requirements of Section 409A. The time or schedule of a payment to which the Executive is entitled under this Agreement may be accelerated at any time that this Agreement fails to meet the requirements of Section 409A and any such payment will be limited to the amount required to be included in the Executive’s income as a result of the failure to comply with Section 409A. If an amendment of the Agreement is necessary in order for it to comply with Section 409A, the parties hereto will negotiate in good faith to amend the Agreement in a manner that preserves the original intent of the parties to the extent reasonably possible. Notwithstanding any provision in this Agreement to the contrary, if the Executive is a “specified employee” (as 

15

determined under the Company’s policy for identifying specified employees) on the date of his “separation from service” (within the meaning of Section 409A), then with regard to any payment or benefit that is considered “deferred compensation” under Section 409A payable on account of a “separation from service” that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code (after taking into account any applicable exceptions to such requirement), such payment or benefit shall not be paid or commence to be paid on any date prior to the first business day after the date that is six months following the Executive’s separation from service. The first payment that can be made shall include the cumulative amount of any amounts that could not be paid during such six-month period. In addition, interest will accrue at the 10-year T-bill rate (as in effect as of the first business day of the calendar year in which the separation from service occurs) on all payments not paid to the Executive prior to the first business day after the six-month anniversary of his separation from service that otherwise would have been paid during such six-month period had this delay provision not applied to the Executive and shall be paid with the first payment after such six-month period. Notwithstanding the foregoing, a payment delayed pursuant to the preceding three sentences shall commence earlier in the event of the Executive’s death prior to the end of the six-month period. Notwithstanding any provision in this Agreement to the contrary, for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment that are considered “deferred compensation” under Section 409A, references to the Executive’s “termination of employment” (and corollary terms) with the Company shall be construed to refer to the Executive’s “separation from service” (within the meaning of Treas. Reg. Section 1.409A-1 (h)) with the Company. With respect to any reimbursement or in-kind benefit arrangements of the Company that constitute “deferred compensation” for purposes of Section 409A, except as otherwise permitted by Section 409A, the following conditions shall be applicable: (i) the amount eligible for reimbursement, or in-kind benefits provided, under any such arrangement in one calendar year may not affect the amount eligible for reimbursement, or in-kind benefits to be provided, under such arrangement in any other calendar year (except that the health and dental plans may impose a limit on the amount that may be reimbursed or paid), (ii) any reimbursement must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred, and (iii) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within 30 days after termination of employment”), the actual date of payment within the specified period shall be within the sole discretion of the Company. Whenever payments under this Agreement are to be made in installments, each such installment shall be deemed to be a separate payment for purposes of Section 409A.
(m)    Entire Agreement. This Agreement contains the entire understanding, and cancels and supersedes all prior agreements, including, without limitation, the Existing Agreement, and any agreement in principle or oral statement, letter of intent, statement of understanding or guidelines of the parties hereto with respect to the subject matter hereof, excluding the Plans or the plans referred to in Section 2(c), as well as all other then-existing agreements and arrangements related to stock and stock options, the terms and conditions of which shall not be affected hereby. This Agreement may be amended, supplemented or otherwise modified only by a written document executed by each of the parties hereto or their respective successors or assigns, provided that the Company shall have the right to amend this Employment Agreement unilaterally within the scope of section 7:613 of the Dutch Civil Code. The Executive acknowledges that he is entering into this 

16

Agreement of his own free will and accord with no duress, and that he has read this Agreement and understands it and its legal consequences.
(n)    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

17

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the day and year first above written.
PVH B.V.

  /s/ Fred Gehring                By   /s/ Ludo Onnink                    
                  Fred Gehring                     Ludo Onnink, Director

Date:  July 23, 2013                    Date:  July 23, 2013

By   /s/ Michiel Rubenkamp            
     Michiel Rubenkamp, Director

Date:  July 23, 2013

18

EXHIBIT A
Competitive Business Entities
VF Corporation
Polo Ralph Lauren
Liz Claiborne
Jones Apparel
Perry Ellis
Oxford
Kenneth Cole
Hugo Boss
Guess
DKNY- Donna Karan
Diesel
G-Star
Pepe Jeans
Gant
Lacoste
J Brand
Scotch & Soda

A-1Ex. 10.12 FY 2014 Incentive Plan

 
 
LIFEVANTAGE CORPORATION
FY2014 ANNUAL INCENTIVE PLAN

		
	SECTION 1.  
	INTRODUCTION.

The Board adopted this Lifevantage Corporation FY2014 Annual Incentive Plan as of the Adoption Date.
The purpose of this Plan is to provide appropriate incentives to Participants to grow Company revenues and EBITDA and to manage Company department investment and expense and achieve employee developmental and strategic personal goals. 
The Plan seeks to achieve its purpose by granting Awards which provide for discretionary Performance Bonus payments for the Fiscal Year that are based on the respective achievements of Company Performance Metrics and Individual Performance Metrics.  Performance Bonus amounts will be determined by a percent-of-goal approach and measured and paid after the end of the Fiscal Year.  Performance Bonus payments may only be made with cash. No Shares will ever be issued under this Plan.  
Capitalized terms shall have the meaning provided in Section 2 unless otherwise provided in this Plan or any applicable Award Agreement.
		
	SECTION 2.  
	DEFINITIONS.  If a Participant's Award Agreement (or other written agreement executed by and between Participant and the Company) expressly includes defined terms that expressly are different from and/or conflict with the defined terms contained in this Plan then the defined terms contained in the Award Agreement  (or other written agreement executed by and between Participant and the Company) shall govern and shall supersede the definitions provided in this Plan.

(a)“Adoption Date” means June 24, 2013.
(b)“Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.  For purposes of determining an individual's “Service,” this definition shall include any entity other than a Subsidiary, if the Company, a Parent and/or one or more Subsidiaries own not less than 50% of such entity.
(c)“Award” means an opportunity for a Participant to earn a discretionary cash Performance Bonus for the Fiscal Year.  No payment underlying an Award is earned until it has been paid to the Participant and all payments remain subject to the Committee's discretion at all times based on all relevant factors, including but not limited to business conditions, performance issues, employment status, and/or any equitable considerations.  A Participant may have at most one outstanding Award under the Plan. A Participant's Award will cease to be outstanding once the Participant is no longer an Eligible Employee.
(d)“Award Agreement” means an agreement between the Company and a Participant evidencing an Award.  
(e)“Base Salary” means, with respect to a Participant, the annual base salary that such Participant is receiving as of July 1, 2013.
(f)“Board” means the Board of Directors of the Company, as constituted from time to time.
(g)“Change in Control” means the occurrence of any one or more of the following: (i) any merger, consolidation or business combination in which the shareholders of the Company immediately prior to the merger, consolidation or business combination do not own at least a majority of the outstanding equity interests of the surviving parent entity, (ii) the sale of all or substantially all of the Company's assets, (iii) the 

acquisition of beneficial ownership or control of (including, without limitation, power to vote) a majority of the outstanding Shares by any person or entity (including a "group" as defined by or under Section 13(d)(3) of the Exchange Act), (iv) the dissolution or liquidation of the Company, (v) a contested election of directors, as a result of which or in connection with which the persons who were directors of the Company before such election or their nominees cease to constitute a majority of the Board, or (vi) any other event specified by the Board or the Committee.
A transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately before such transactions.
(h)“Code” means the Internal Revenue Code of 1986, as amended, and the regulations and interpretations promulgated thereunder.
(i)“Committee” means the Compensation Committee of the Board.
(j)“Company” means Lifevantage Corporation, a Colorado corporation.
(k)“Company Performance Metrics” means the two separate Company financial performance goals for the Fiscal Year and these two goals consist of (i) Company revenue and (ii) EBITDA. Achievement of Company Performance Metrics will comprise 70% of a Participant's Performance Bonus opportunity.  The Company Performance Metrics will have four hurdle levels (Threshold, Probable, Stretch and Super Stretch) and corresponding hurdle dollar amounts which will be reflected in the Performance Bonus Schedule.  The hurdle dollar amounts will be appropriately adjusted by the Committee if a Change in Control occurs during the Fiscal Year.
(l)“Department Budget” means the department budget established for the Fiscal Year for a Participant.  All of the Company's Department Budgets collectively are referred to in this Plan as the “Company Department Budgets”.  Department Budgets can be adjusted by the Company during the first eleven (11) months of the Fiscal Year  to accommodate changes in business needs provided the aggregate budget amount for Company Department Budgets does not change from the Company's approved Fiscal Year plan as of July 1, 2013.  
(m)“EBITDA” means the Company's Fiscal Year earnings before interest, taxes, depreciation and amortization.
(n)“Eligible Employee” means an Employee who:
		
	(i)
	is not on a leave of absence for any reason for ninety calendar days or more in the Fiscal Year;

		
	(ii)
	is not on any type of corrective action plan; and

		
	(iii)
	is not a participant in the Company's FY2014 Sales Incentive Plan.

(o)“Employee” means any individual who is a common-law employee of the Company, or of a Parent, or of a Subsidiary or of an Affiliate.
(p)“Exchange Act” means the Securities Exchange Act of 1934, as amended.
(q)“Fiscal Year” means the Company's fiscal year for 2014 which runs from July 1, 2013 through June 30, 2014.
(r)“GAAP” means United States generally accepted accounting principles as established by the Financial Accounting Standards Board.
(s)“Individual Performance Metrics” means the specific, measureable developmental objectives for a Participant established in writing by a Participant's supervisor before July 2013 (or within 30 days of 

the Eligible Employee becoming a Participant if such participation in the Plan commences after July 1, 2013). Achievement of Individual Performance Metrics will comprise 30% of a Participant's Performance Bonus opportunity. 
For all Participants, the Performance Bonus amount for the Individual Performance Metrics will be based upon the Participant's supervisor's written assessment of the Participant's performance in the Fiscal Year and the degree of Participant's achievement of his/her Individual Performance Metrics. This assessment of performance must be reviewed and concurred with by the supervisor's manager prior to review with the Participant.  The Participant's immediate supervisor and his/her supervisor will determine the magnitude of the Participant's Individual Performance Metrics Performance Bonus based on the Participant's individual performance and subject to the limits on payment imposed by the Performance Bonus Schedule.  No individual Performance Bonus payment amount will be communicated or paid to the Participant until the review process is completed and the Participant, his/her supervisor, and the next level manager have acknowledged their review of the performance assessment document in writing.  
In addition, the Individual Performance Metrics will have four hurdle levels (Threshold, Probable, Stretch and Super Stretch) and corresponding hurdle dollar amounts which will be reflected in the Performance Bonus Schedule.  The hurdle dollar amounts will be appropriately adjusted by the Committee if a Change in Control occurs during the Fiscal Year.
(t)“Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Parent on a date after the Adoption Date shall be considered a Parent commencing as of such date.
(u)“Participant” means an Eligible Employee who has been selected by the Committee to participate in this Plan and receive an Award.  An individual will cease to be a Participant once such individual is no longer an Eligible Employee.
(v)“Performance Bonus” means the discretionary cash incentive bonuses that a Participant can separately earn for achievement of Company Performance Metrics and Individual Performance Metrics pursuant to his/her Award.
(w) “Performance Bonus Percentage” means, except as expressed otherwise in an Award Agreement, the percentages identified in the Performance Bonus Schedule which are based on the Participant's job level and the degree of actual achievement of the Performance Metrics.  In no case can a Participant's Performance Bonus amount for a Performance Metric exceed the product of the Performance Bonus Percentage obtained from the Performance Bonus Schedule multiplied by the Participant's Base Salary.
(x)“Performance Bonus Schedule” means the schedule that the Committee will establish which will specify the hurdle dollar amounts for each of the four hurdle levels along with the Performance Bonus Percentages for each job level and hurdle level.
(y)“Performance Metrics” means the Company Performance Metrics and the Individual Performance Metrics.   Each of the two Performance Metrics will be evaluated and measured separately and each can generate a potential Performance Bonus payment based on the respective degrees of achievement of each.
(z)“Plan” means this Lifevantage Corporation FY2014 Annual Incentive Plan as it may be amended by the Board in its discretion.
(aa)“Reduction Percentage” means the reduction that may be applied to a Participant's Performance Bonus portion for Company Performance Metrics.  For Senior Staff Participants, the Performance Bonus portion for Company Performance Metrics shall be reduced by 5% for every 10% that 

Company Department Budgets exceed their Fiscal Year budget plan. For Participants who are not Senior Staff, the Performance Bonus portion for Company Performance Metrics shall be reduced by 5% for every 10% that the Participant's Department Budget exceeds its Fiscal Year budget plan.
(ab)“Senior Staff” means the Company's Chief Executive Officer, Chief Operating Officer, Chief Financial Officer, Chief Science Officer, General Counsel, most senior Human Resources executive, President of Lifevantage Japan K.K., General Manager Asia Pacific, and any other senior management position designated by the Committee.
(ac)“Separation From Service” has the meaning provided to such term under Code Section 409A and the regulations promulgated thereunder.
(ad)“Service” means uninterrupted service as an Employee.  Service will be deemed terminated as soon as the entity to which Service is being provided is no longer either (i) the Company, (ii) a Parent, (iii) a Subsidiary or (iv) an Affiliate.  
(ae)“Share” means a share of Company common stock (which has a par value of $0.001 per Share).
(af)“Specified Employee” means a Participant who is considered a “specified employee” within the meaning of Code Section 409A.
(ag)“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a Subsidiary on a date after the Adoption Date shall be considered a Subsidiary commencing as of such date.
SECTION 3.  ADMINISTRATION.
(a)Committee Composition.  A Committee shall administer the Plan.  Unless the Board provides otherwise, the Board's Compensation Committee (or a comparable committee of the Board) shall be the Committee.  The Board may also at any time terminate the functions of the Committee and reassume all powers and authority previously delegated to the Committee.
(b)Authority of the Committee.  Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take any actions it deems necessary or advisable for the administration of the Plan.  Such actions shall include without limitation:  
(i) determining Eligible Employees who are to receive Awards under the Plan and the amount of payments provided to a Participant (if any) with respect to an Award;
(ii) determining the terms, conditions, Performance Metrics (or other objective/subjective goals (if any)) and their degree of satisfaction, and other features and conditions of such Awards, and amending such Awards;
(iii) correcting any defect, supplying any omission, or reconciling or clarifying any inconsistency in the Plan or any Award Agreement;
(iv) waiving restrictions of Awards at any time and under such terms and conditions as it deems appropriate;
(v) interpreting any extenuating circumstances and modifying the Plan or Award Agreement in its discretion as needed;
(vi) accepting or canceling an order or discontinuing service to a customer;
(vii) disallowing sales that are determined not to be in the normal course of business;

(viii) interpreting the Plan and any Award Agreements;
(ix) making such modifications to the Plan as are necessary to effectuate the intent of the Plan as a result of any changes in applicable laws or accounting treatment; 
(x) modifying, amending or revoking the Plan, or discontinuing (either temporarily or permanently) the distribution of any payment at any time and for any reason and making appropriate adjustments to revenues, EBITDA or compensation targets due to favorable or unfavorable events unrelated to a Participant's efforts of performance; and
(xi) making all other decisions relating to the operation of the Plan; 
(xii) granting Awards to Eligible Employees who are foreign nationals on such terms and conditions different from those specified in the Plan, which may be necessary or desirable to foster and promote achievement of the purposes of the Plan, and adopting such modifications, procedures, and/or subplans (with any such subplans attached as appendices to the Plan) and the like as may be necessary or desirable to comply with provisions of the laws or regulations of other countries or jurisdictions to ensure the viability of the benefits from Awards granted to Participants employed in such countries or jurisdictions, or to meet the requirements that permit the Plan to operate in a qualified or tax efficient manner, and/or comply with applicable foreign laws or regulations.
The Committee may adopt such rules or guidelines, as it deems appropriate to implement the Plan.  The Committee's determinations under the Plan shall be final, conclusive and binding on all persons.  The Committee's decisions and determinations need not be uniform and may be made selectively among Participants in the Committee's sole discretion.  The Committee's decisions and determinations will be afforded the maximum deference provided by applicable law.
The Company shall effect the granting of Awards under the Plan in accordance with the determinations made by the Committee, by execution of instruments in writing in such form as approved by the Committee.  
(c)Indemnification.  To the maximum extent permitted by applicable law, each member of the Committee, or of the Board, or any persons (including without limitation Employees and officers) who are delegated by the Board or Committee to perform administrative functions in connection with the Plan, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or any Award Agreement, and (ii) from any and all amounts paid by him or her in settlement thereof, with the Company's approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company's Articles of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any power that the Company may have to indemnify them or hold them harmless.
SECTION 4.  GENERAL.
(a)General Eligibility.  Only Eligible Employees shall be eligible for designation as Participants. 
(b)No Rights as a Shareholder.  A Participant shall have no rights as a shareholder with respect to any Award. 

(c)Termination of Service.  Except as otherwise provided in the applicable Award Agreement, a Participant's outstanding Award shall terminate without consideration upon termination of such Participant's Service.
(d)Code Section 409A.  Notwithstanding anything in the Plan to the contrary, the Plan and Awards granted hereunder are intended to be exempt from the requirements of Code Section 409A and shall be interpreted in a manner consistent with such intention.  In the event that any provision of the Plan or an Award Agreement is determined by the Committee to not comply with the applicable requirements of Code Section 409A or the applicable regulations and other guidance issued thereunder, the Committee shall have the authority to take such actions and to make such changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements.  Any payment made pursuant to any Award shall be considered a separate payment and not one of a series of payments for purposes of Code Section 409A.  
Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if upon a Participant's Separation From Service he/she is then a Specified Employee, then solely to the extent necessary to comply with Code Section 409A and avoid the imposition of taxes under Code Section 409A, the Company shall defer payment of “nonqualified deferred compensation” subject to Code Section 409A payable as a result of and within six (6) months following such Separation From Service under this Plan until the earlier of (i) the first business day of the seventh month following the Participant's Separation From Service, or (ii) ten (10) days after the Company receives written confirmation of the Participant's death.  Any such delayed payments shall be made without interest.  
While it is intended that all payments and benefits provided under the Plan or an Award will be exempt from (or comply with) Code Section 409A, the Company makes no representation or covenant to ensure that the payments under the Plan or an Award are exempt from or compliant with Code Section 409A.  In no event whatsoever shall the Company be liable if a payment or benefit under the Plan or an Award is challenged by any taxing authority or for any additional tax, interest or penalties that may be imposed on a Participant by Code Section 409A or any damages for failing to comply with Code Section 409A.  The Participant will be entirely responsible for any and all taxes on any benefits payable to such Participant as a result of the Plan or an Award.  
(e)Electronic Communications.  Subject to compliance with applicable law and/or regulations, an Award Agreement or other documentation or notices relating to the Plan and/or Awards may be communicated to Participants (and executed by Participants) by electronic media.
(f)Unfunded Plan.  The Plan shall be unfunded.  Although bookkeeping accounts may be established with respect to Participants who are granted Awards under this Plan, any such accounts will be used merely as a bookkeeping convenience.  The Company shall not be required to segregate any assets which may at any time be represented by Awards, nor shall this Plan be construed as providing for such segregation, nor shall the Company or the Board or Committee be deemed to be a trustee of cash to be awarded under the Plan.
(g)Liability of Company.  The Company (or members of the Board or Committee) shall not be liable to a Participant or other persons as to any unexpected or adverse tax consequence or any tax consequence expected, but not realized, by any Participant or other person due to the grant, receipt, or settlement of any Award granted hereunder.
(h)Reformation.  In the event any provision of this Plan shall be held illegal or invalid for any reason, such provisions will be reformed by the Board if possible and to the extent needed in order to be held legal and valid.  If it is not possible to reform the illegal or invalid provisions then the illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or invalid provision had not been included.  

(i)Successor Provision.  Any reference to a statute, rule or regulation, or to a section of a statute, rule or regulation, is a reference to that statute, rule, regulation, or section as amended from time to time, both before and after the Adoption Date and including any successor provisions.  
(j)Governing Law.  This Plan and (unless otherwise provided in the Award Agreement) all Awards shall be construed in accordance with and governed by the laws of the State of Utah, but without regard to its conflict of law provisions.  The Committee may provide that any dispute as to any Award shall be presented and determined in such forum as the Committee may specify, including through binding arbitration.  Unless otherwise provided in the Award Agreement, recipients of an Award under the Plan are deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of Utah to resolve any and all issues that may arise out of or relate to the Plan or any related Award Agreement.
(k)Assignment or Transfer of Awards.  No Award shall be transferable by the Participant.  No Award or interest therein may be transferred, assigned, pledged or hypothecated by the Participant during his or her lifetime, whether by operation of law or otherwise, nor may an Award be anticipated, assigned, attached, garnished, optioned, transferred or made subject to any creditor's process, whether voluntarily, involuntarily or by operation of law, nor may an Award be made subject to execution, attachment or similar process.  Any act in violation of this Section 4(k) shall be null and void.
(l)Company Rights.  The Company reserves the right at any time to assign accounts, or remove accounts, or  to accept or reject orders from customers, and to refrain from paying incentive on draw fees the Company receives, freight charges to customers or with respect to similar or dissimilar transactions..
SECTION 5.  TERMS AND CONDITIONS OF AWARDS.
(a)Award Agreement.  Each grant of an Award under the Plan shall be evidenced by an executed Award Agreement between the Participant and the Company in the form attached as Exhibit A or such other form that the Committee adopts.  Such Award shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Award Agreements entered into under the Plan need not be identical.
(b)Eligibility for Payments.  An individual must be a Participant on the date of any Performance Bonus payment in order to receive such payment.  
(c)Determination of Performance Bonus Amounts.  After the Fiscal Year (or within 15 days before a Change in Control that occurs during the Fiscal Year), the Committee will determine the actual Company revenues and EBITDA for the Fiscal Year (in the case of a Change in Control, the actual Company revenues and EBITDA will be measured as of through the end of the month prior to the month of the Change in Control).  These revenue and EBITDA figures will derive the Performance Bonus Percentages from the Performance Bonus Schedule with the lowest degree of performance between revenue and EBITDA determining which hurdle level (if any) was attained.  If the actual revenue and EBITDA fall between two hurdle levels then there will be proportionate scaling between the two hurdle levels to determine the Performance Bonus Percentage (and such scaling shall be based upon the lowest degree of performance between revenue or EBITDA).  The achieved Performance Bonus Percentages will then be multiplied by the Participant's Base Salary to determine the potential Performance Bonus amount for each of the Company Performance Metrics and Individual Performance Metrics.  The Performance Bonus amount for the Company Performance Metrics will then be reduced by the Reduction Percentage if applicable as described in Section 2(y).  The Performance Bonus amount for the Individual Performance Metrics will then be reduced by the Participant's supervisor if applicable as described in Section 2(s).  The Committee may also apply its discretion to reduce any Participant's Performance Bonus.  After taking into account the forgoing process of this Section 5(c) and subject to the other terms of this Plan and the Award Agreement, a Participant will then be eligible to receive the resulting Performance Bonus amounts for the Company Performance Metrics and/or Individual Performance Metrics in accordance with Section 5(d).

(d)Form and Time of Settlement of Awards.  Payment of any Performance Bonuses shall be made solely in the form of cash and in the time frames set forth in this Section 5(d).  Subject to the following sentence, any Performance Bonuses shall be paid out to Participants during the first 2.5 months after the end of the Fiscal Year. Notwithstanding the foregoing, all Performance Bonuses payments will be paid earlier upon the consummation of a Change in Control (and performance will be measured on a pro-rated basis).
(e)Creditors' Rights.  A holder of an Award shall have no rights other than those of a general creditor of the Company.  Awards represent an unfunded and unsecured obligation of the Company.
SECTION 6.  ADJUSTMENTS.
Notwithstanding satisfaction of any Company Performance Metrics or Individual Performance Metrics, the value of a Participant's Award or Performance Bonus or any other benefits granted, issued, retainable, vested and/or to be paid under an Award on account of satisfaction of such Performance Metrics may be reduced by the Committee on the basis of such further considerations as the Committee in its sole discretion shall determine.  In other words, this Plan is a discretionary plan and a Participant has no rights to any payment and has not earned any payment under this Plan unless and until the Company has actually provided the Participant with the applicable payment.
SECTION 7.  LIMITATIONS ON RIGHTS.
(a)Retention Rights.  Neither the Plan nor any Award granted under the Plan shall be deemed to give any individual a right to remain in Service or to continued participation in the Plan.  The Company and its Parents and Subsidiaries and Affiliates reserve the right to terminate the Service of any person at any time, and for any reason, subject to applicable laws, the Company's Articles of Incorporation and Bylaws, and a written employment agreement (if any).
(b)Other Company Benefit and Compensation Programs.  Payments and other benefits received by a Participant under an Award made pursuant to the Plan shall not be deemed a part of a Participant's regular, recurring compensation for purposes of the termination indemnity or severance pay law of any state. Furthermore, such benefits shall not be included in, nor have any effect on, the determination of benefits under any other employee benefit plan or similar arrangement provided by the Company or a Subsidiary  or Affiliate unless expressly so provided by such other plan or arrangement, or except where the Committee expressly determines that inclusion of an Award or portion of an Award should be included. Awards under the Plan may be made in combination with or in addition to, or as alternatives to, grants, awards or payments under any other Company or Subsidiary or Affiliate plans. The Company or any Subsidiary or any Affiliate may adopt such other compensation programs and additional compensation arrangements (in addition to this Plan) as it deems necessary to attract, retain, and motivate officers, directors, employees or independent contractors for their service with the Company and its Subsidiaries and its Affiliates.
(c)Clawback Policy.  The Company may (i) cause the cancellation of any Award, (ii) require reimbursement of any Award by a Participant and (iii) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in accordance with Company policies as may be adopted and/or modified from time to time by the Company and/or applicable law (each, a “Clawback Policy”).  In addition, a Participant may be required to repay to the Company certain previously paid compensation, whether provided under this Plan or an Award Agreement or otherwise, in accordance with the Clawback Policy.  By accepting an Award, a Participant is also agreeing to be bound by the Company's Clawback Policy which may be amended from time to time by the Company in its discretion (including without limitation to comply with applicable laws or stock exchange requirements) and is further agreeing that all of the Participant's Awards may be unilaterally amended by the Company to the extent needed to comply with the Clawback Policy.
SECTION 8.  TAXES.

A Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations (including without limitation federal, state, local and foreign taxes) that arise in connection with his or her Award.  The Company shall not be required to make any payment under the Plan until such obligations are fully satisfied and the Company shall, to the maximum extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant.
SECTION 9.  DURATION AND AMENDMENTS.
(a)Term of the Plan.  The Plan is effective on July 1, 2013 and  may be terminated by the Board on any date pursuant to Section 10(b).  No further Awards may be granted after the earlier of the Board's termination of the Plan under Section 10(b), the date of a Change in Control, or June 30, 2014.  This Plan will terminate after the Company has provided all payments (if any) to Participants.  This Plan will not in any way affect outstanding awards that were issued under any other Company compensation plans.  
(b)Right to Amend or Terminate the Plan.  The Board may amend or terminate the Plan or any outstanding Awards at any time and for any reason.  In the event of any conflict in terms between the Plan and any Award Agreement, the terms of the Plan shall prevail and govern.
SECTION 10.  EXECUTION.
To record the adoption of this Plan by the Board, the Company has caused its duly authorized officer to execute this Plan on behalf of the Company.
	
			
	 
	LIFEVANTAGE CORPORATION

	 
	By:
	 

	 
	Title:
	 

 

 
EXHIBIT A
LIFEVANTAGE CORPORATION FY2014 ANNUAL INCENTIVE PLAN
AWARD AGREEMENT

Pursuant to the Lifevantage Corporation FY2014 Annual Incentive Plan (“AIP”), the Company hereby informs the Participant named below that he/she has been selected to be a Participant subject to Participant timely executing and delivering to the Company this Award Agreement (the "Agreement").  The governing terms and conditions of Participant's participation in the AIP are set forth herein and in the AIP and Participant agrees to be bound by such terms and conditions.  The entire text of the AIP is incorporated in this Agreement by reference.  Certain capitalized terms used in this Agreement are defined in the AIP.  This Agreement and the AIP and its Exhibits A and B constitute the entire understanding between the Participant and the Company regarding this incentive compensation opportunity.  Any prior agreements, commitments or negotiations concerning this incentive compensation opportunity are superseded except as provided in the AIP.  As a condition of participation in the AIP and receiving payments under the AIP and notwithstanding any obligation that the Company has to make certain public disclosures about the AIP and its Awards, Participant agrees never to disclose any information regarding the existence or contents of the AIP or this Agreement or Participant's participation in the AIP to any third party (including without limitation other Company employees) except for Participant's spouse, Participant's financial/tax advisors, and/or Participant's legal counsel, each of whom will be informed by Participant of the foregoing confidentiality obligations and each of whom will similarly agree to also maintain such confidentiality. 
Name of Participant:  ___________________________________________
Date of Becoming Participant:  ______, 201_
Job Level: __________________________________________________
Annual Base Salary: ____________________________________________
Name of Department: ___________________________________________
Individual Performance Metrics:

This Agreement will be interpreted and enforced under the laws of the State of Utah.
By signing below, the Participant agrees to all of the terms and conditions described in this Agreement and in the AIP and its exhibits.
Participant:    ________________________            _______________________
(Signature)                        (Date)
Company:    ________________________            _______________________    
(Signature)                         (Date)
Title:          ________________________

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