Document:

Exhibit 10.1

 

Kate Spade & Company

2016 Restricted Stock Unit Grant Confirmation Statement

 

	
Name of Grantee:
    	
 
    
	
 
    	
 
    
	
Employee ID#:
    	
 
    
	
 
    	
 
    
	
Plan:
    	
2013 Stock Incentive   Plan
    
	
Grant Date:
    	
 
    
	
 
    	
 
    
	
Number of RSUs Granted:
    	
___________ (subject to   adjustment under Section 3.7(b) of the Plan)
    
	
 
    	
 
    
	
Vesting Schedule:
    	
50% on second   anniversary of Grant Date and 50% on third anniversary of Grant Date, subject   to Section 10 of the attached Terms and Conditions
    

 

WHILE EVERY EFFORT HAS BEEN MADE TO ENSURE THE ACCURACY OF THIS INFORMATION, THESE FIGURES ARE SUBJECT TO FINAL AUDIT.

 

THE GRANT OF RESTRICTED STOCK UNITS SHALL NOT CONFER ON THE RECIPIENT ANY RIGHT TO CONTINUE IN THE EMPLOY OR OTHER SERVICE OF THE COMPANY, OR AFFECT ANY RIGHT WHICH THE COMPANY MAY HAVE TO TERMINATE SUCH EMPLOYMENT OR SERVICE.

 

 

Restricted Stock Unit Grant Certificate — Terms and Conditions

 

1. Restricted Stock Unit Grant: Pursuant to the provisions of and in accordance with the Company’s 2013 Stock Incentive Plan (the “Plan”) specified on the attached “Restricted Stock Unit Grant Confirmation Statement” (the “Statement”), the Compensation Committee of the Board of Directors (the “Committee”) of Kate Spade & Company (“the Company”) has authorized the grant to the Grantee of an award of restricted stock units (the “RSUs”) as specified on the Statement.  The Grantee’s award of RSUs represents an unsecured, conditional future right to receive common shares of the Company.  Upon vesting as provided herein, each RSU will be converted into one share of Common Stock of the Company subject to the terms and conditions of the Plan and this Grant Certificate.

 

2. Voting: The Grantee shall not be a stockholder of record of the Company with respect to the award of RSUs and shall have no voting rights with respect to the RSUs.

 

3. Dividend Equivalents: The Grantee shall not be entitled to receive dividend equivalents in respect of the RSUs unless otherwise determined by the Committee.

 

4. No Rights as a Stockholder: Prior to the issuance of the shares pursuant to this Grant Certificate, the Grantee shall not be treated as the owner of the shares, shall not have any rights as a shareholder as to those shares, and shall have only a contractual right to receive them, subject to the terms of the Plan and this Grant Certificate, and unsecured by any assets of the Company or any Affiliate.

 

5. Vesting: The RSUs will vest on the date or dates indicated on the Statement, subject to Section 10 below (the “Vesting Date”), provided in each case, that the Grantee is then and has at all times remained an employee of the Company until the Vesting Date and since the Grant Date.

 

6. Delivery of Vested Shares: As soon as practicable after each Vesting Date subject to Plan Section 3.6(b) and Section 13 below (relating to withholding taxes), the Company shall cause a number of

 

 

shares of Common Stock of the Company equal to the number of vested RSUs to be issued in the name of and delivered to the Grantee (including jointly with a spouse or in the name of a trust established by Grantee), by book entry registration at the Company’s transfer agent.  Such issuance and delivery will be made within the applicable short-term deferral period specified by Code Section 409A.  The Grantee shall have all the rights of a stockholder with respect to the shares of Common Stock once the shares of Common Stock are issued.

 

7. Brokerage Account: The Grantee remains responsible for any federal, state, local (including non-U.S.) or other tax and other applicable compliance requirements resulting from his or her receipt of the RSUs, his or her subsequent ownership and possible sale of the shares of Common Stock of the Company and the opening and use of a US brokerage account.

 

8. Market Fluctuations: The Company is not responsible for foreign exchange fluctuations between the Grantee’s local currency and the US dollar nor is the Company liable for any decrease in the value of the Company’s Common Stock (including during any period between the Vesting Date and the issuance of the shares to Grantee).

 

9. Transferability: The Grantee may not sell, assign, transfer, pledge or otherwise encumber or dispose of the RSUs in except to a trust in connection with estate planning as permitted by the Committee on a case by case basis consistent with Code Section 409A.

 

10. Termination of Employment: Upon termination of the Grantee’s employment with the Company for any reason other than death, any unvested RSUs will be forfeited and, the Grantee shall not be entitled to any payment whatsoever under this Statement or provisions of the Plan relating to this Statement in connection with such forfeiture; provided, however, that the Grantee will be entitled to accelerated vesting in accordance with Plan Section 3.8(b)(ii) (relating to certain terminations at or following a Change in Control).  In the event of the Grantee’s death, all unvested RSUs will become vested as of the date of death and shares of Common Stock will be delivered to the Grantee’s estate as soon as practicable after vesting in accordance with Section 6.  The foregoing notwithstanding, if there exists an employment agreement between the Grantee and the Company (or any Affiliate) in effect at the time of termination of employment or death (an “Applicable Employment Agreement”), the terms of such Applicable Employment Agreement will govern, in place of the above provisions in this Section 10, in the event of a termination of employment (including in connection with a Change in Control) other than by reason of death.    For purposes of any Applicable Employment Agreement, the total number of RSUs will be deemed the “target” number of RSUs.

 

11. No Acquired Rights: The RSUs do not entitle the Grantee to any benefit other than that specifically granted under the Plan or to any future awards or other benefits under the Plan or any similar Plan.  The RSUs do not form part of the Grantee’s employment contract (except as may be provided in an Applicable Employment Agreement) or any other working arrangement with the Grantee’s employer and the RSUs are no guarantee of continued employment. Nor do the RSUs or any future awards become a term or condition of employment, regardless of whether prescribed by local law.  Moreover, any benefits granted under the Plan are not part of Grantee’s ordinary compensation, and will not be considered as part of such compensation in the event of severance, redundancy or resignation.   The Grantee understands and hereby accepts that the benefits granted under the Plan are granted entirely at the discretion of the Committee and that the Company retains the right to amend or terminate the Plan, and/or the Grantee’s participation therein, at any time, at the Company’s sole discretion and without notice.

 

12. Notice: A notice will be deemed to have been duly given when personally delivered or mailed by registered or certified mail to the party entitled to receive it.

 

12.1. Notice by the Grantee: The Grantee shall give any notice to the Company in writing and shall address the Chief Legal Officer, Kate Spade & Company, 2 Park Avenue, New York, NY 10016, or at such other address as the Company may designate to the Grantee by notice according to Section 12.2.

 

 

12.2. Notice by the Company: The Company shall address any notice to the Grantee at the address set forth beneath his or her signature hereto, or at such other address as he or she may designate to the Company by notice according to Section 12.1.

 

13. Withholding Taxes: In connection with the vesting of the RSUs in accordance with the terms and conditions of the Plan and this Statement, the Company shall automatically withhold from the Grantee’s account a number of shares having a Fair Market Value (as defined in the Plan) on the Vesting Date or other issuance date as specified by the Company, rounded up to the nearest whole share, equal to an amount sufficient to satisfy all mandatory withholding requirements for federal, state, local taxes, social security and employment taxes and other governmental tax withholding requirements related to the expiration of restrictions on such shares in each country.  The Company may withhold such amounts in cash from the Grantee’s wages or other payments due to the Grantee at any time (including with regard to any withholding taxes due prior to the settlement date of the RSUs), or the Company may require the Grantee to remit such withholding amount in cash to the Company, in lieu of share withholding.  Alternatively, the Grantee may elect to remit such amount in cash directly to the Company in lieu of share withholding.  Should the Grantee wish to do so the Grantee must contact the Corporate Compensation department in advance of the RSUs vesting, at or before such deadline as the Company may specify.

 

To the extent that the Company or its Affiliate withholds any amounts in Shares to cover the taxes required to be withheld, it will do so at the minimum statutory rate.  Should the Company or the Affiliate withhold any amounts in cash or retain any Shares in excess of Grantee’s actual tax withholding amount, the Company and/or Grantee’s employer will refund the excess amount to the Grantee, with any fractional Share being repaid in cash, within a reasonable period and without any interest.  The Grantee authorizes the Company or the Affiliate, or their agents (including, without limitations, any broker or bank) to withhold cash or Shares as appropriate.  Grantee agrees to pay the Company and/or the Affiliate employing Grantee any amount of the tax withholding obligation that is not satisfied by the means described herein.  If any of the foregoing methods of collection are not allowed under applicable local laws or if Grantee fails to comply with his or her obligations in connection with the tax withholding due as described above, the Company may refuse to deliver the Shares; provided that delivery will be made within the short-term deferral period (this may be in escrow or through some other means that assures the Company will receive applicable withholding taxes). Grantee is liable and responsible for all taxes owed in connection with the RSUs, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the RSUs.  The Company does not commit and is under no obligation to structure the RSUs to reduce or eliminate Grantee’s tax liability.

 

14. Successors and Assigns: This Grant Certificate is binding upon and inure to the benefit of the parties hereto and the successors and assigns of the Company and the heirs and personal representatives of the Grantee.

 

15. Data Privacy: For the purpose of implementing the Plan and administering the RSUs, the Grantee by accepting this Grant Certificate explicitly consents to the collection, processing and transfer, electronically of otherwise, of personal data by the Company, and its affiliates as necessary.  Moreover, the Grantee acknowledges and agrees by signing this Grant Certificate that personal data, (including but not limited to: Grantee’s name, home address, telephone number, employee number, employment status, tax identification number, data for tax withholding purposes) may need to be transferred to third parties assisting the Company with the implementation of the Plan and the administration of the RSUs. The Grantee by signing this Certificate expressly authorizes such transfer to and processing by third parties. Moreover, the Grantee understands and acknowledges that the Company may need to transfer Grantee’s personal data to countries other than his or her country of employment including the United States of America.   The Company will only hold the Grantee’s personal data as long as is necessary to implement, administer the Grantee’s RSUs.  The Grantee may, at any time, request a list with the names and addresses of any third party recipients of his or her personal data, view his or her personal data, request additional information about the storage and processing of his or her personal data, require any necessary amendments to his or her personal data and refuse or withdraw the consents herein, without cost, by contacting in writing the Company’s legal department representative.  However, Grantee acknowledges that refusing or withdrawing his or her

 

 

consent to the above described processing and transfer may affect Grantee’s ability to receive RSUs under the Plan.

 

16. Prevailing Plan Provisions; Company Policies: This Grant Certificate is subject to all the terms and provisions of the Plan, which are incorporated herein by reference. Without limiting the generality of the foregoing, the Grantee hereby agrees that no member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan, the RSUs or this Grant Certificate. All capitalized terms used in this Grant Certificate have the meaning set forth in the Plan, unless the context requires a different meaning. In the event that there is any inconsistency between the provisions of the Grant Certificate and the Plan, the provisions of the Plan will govern.  The RSUs, any sale of shares issued and delivered in settlement of the RSUs, and the right of Grantee to retain such shares or the proceeds of such sales are subject to the terms of Plan Section 2.11 and to other Company policies governing insider trading and recoupment.

 

17. Governing Law: The Grant Certificate will be interpreted, construed and administered in accordance with the laws of the State of Delaware.

 

18. Receipt of Grant Materials and Translation: The Grantee hereby acknowledges that he or she has received a copy of this Grant Certificate relating to the RSUs and the shares of Common Stock of the Company under the Plan. To the extent that the Grantee has been provided with this Grant Certificate and/or any other explanatory materials in a language other than English, the English language version of this Grant Certificate will prevail in case of any discrepancies or ambiguities due to translation.

 

 

	
KATE SPADE &   COMPANY
    
	
By the Compensation   Committee
    
	
of the Board of   Directors:
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    
	
 
    	
Authorized Signature
    
	
 
    	
 
    
	
 
    	
 
    
	
Name:
    	
[Name]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Consented and Agreed   to:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[by physical signature]Exhibit 10.2

 

KATE SPADE & COMPANY [      ] PERFORMANCE SHARE UNIT AWARD -- NOTICE OF GRANT:

 

PARTICIPANT NAME:

 

PARTICIPANT ID:

 

GRANT DATE:

 

	
NUMBER   OF UNITS (TARGET):
    	
(subject   to adjustment under Section 3.7(b) of the Equity Plan and   Section 4 below)
    

 

We are pleased to inform you that, pursuant to the Company’s 2013 Stock Incentive Plan, the Compensation Committee of the Board of Directors of Kate Spade & Company has authorized the grant of an award of performance share units to you, subject to the terms and conditions set forth in the attached Grant Certificate.

 

*              *             *

 

[      ] PERFORMANCE SHARE UNIT AWARD GRANT CERTIFICATE

 

This Grant Certificate (the “Grant Certificate”) is made as of the Grant Date set forth in the attached Notice of Grant (the “Grant Date”), by and between Kate Spade & Company (the “Company”) and the employee named in the attached Notice of Grant (the “Participant”).

 

The Compensation Committee (the “Committee”) of the Board of Directors of the Company (“Board”) has approved the grant of the award described herein (this “Award”) to the Participant under the Company’s 2013 Stock Incentive Plan (the “Equity Plan”).  Any term that is capitalized but not defined herein shall have the meaning given to such term in the Equity Plan.

 

1.         [      ] Performance Share Unit Award.  This Award consists of a number of performance share units (the “Performance Shares”) set forth in the Notice of Grant (such number of Performance Shares, the “Target Performance Shares”).

 

2.         Threshold Section 162(m) Goal.

 

(a)        No part of this Award shall vest and no amount shall be paid (or shares delivered) in respect of this Award unless and until the Committee certifies that the Company has achieved an adjusted operating income for the [      ] fiscal year of $[      ] (the “162(m) Goal”).  If the 162(m) Goal is not achieved during the [      ] fiscal year, the Award shall be immediately cancelled and the Participant shall have no further rights with respect to the Award.  “Adjusted operating income” has the meaning as defined for purposes of the Kate Spade & Company 162(m) Annual Incentive Plan for annual incentive awards for the [      ] fiscal year (as set forth in the resolutions of the Committee authorizing the grant of such awards).  This Section 2 is subject to the limited exceptions set forth in Section 6.

 

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(b)        Once the Committee certifies that the 162(m) Goal has been achieved, the Participant’s entitlement to payment in respect of the Award shall be determined in accordance with the terms of this Grant Certificate.  In no event shall the Participant receive payment in respect of the Award in an amount that exceeds the maximum amount payable per person under the Equity Plan.

 

3.         Vesting.

 

(a)        The “Performance Period” shall be the period beginning on the first day of the Company’s [      ] fiscal year and ending on the last day of the Company’s [      ] fiscal year.

 

(b)        The number of Performance Shares that shall vest and become earned (the “Earned Performance Shares”) shall be determined as follows:

 

(1)        Subject to the TSR Modifier below, 60% of the Performance Shares shall vest and become Earned Performance Shares based on the Cumulative Adjusted EBITDA for the Performance Period as set forth below:

 

	
If the Company Cumulative Adjusted
   EBITDA over the
   Performance Period is:
    	
 
    	
Then the Percentage of Target Performance
    Shares (times 60%) that become
   Earned Performance Shares
   Subject to the TSR Modifier is:*
    
	
Equal   to or greater than $[ ] million
    	
 
    	
160%   (maximum)
    
	
$ [   ] million
    	
 
    	
100%
    
	
$ [   ] million
    	
 
    	
75%
    
	
$ [   ]million
    	
 
    	
60%
    
	
Less   than $[ ] million
    	
 
    	
0%
    

 

* Except as noted in the table, to the extent that the Company Cumulative Adjusted EBITDA is between two of the listed performance levels, the percentage of the Target Performance Shares that, subject to the TSR Modifier, shall vest and become Earned Performance Shares shall be determined by the use of straight-line interpolation.

 

(2)        Subject to the TSR Modifier below, 40% of the Performance Shares shall vest and become Earned Performance Shares based on the Average Cumulative Adjusted EBITDA Margin Percentage for the Performance Period as set forth below:

 

	
If the Company Average Cumulative
   Adjusted EBITDA Margin Percentage over
    the Performance Period is:
    	
 
    	
Then the Percentage of Target Performance
   Shares (times 40%) that become
   Earned Performance Shares
    Subject to the TSR Modifier is:*
    
	
Equal   to or greater than [ ]%
    	
 
    	
160%   (maximum)
    
	
[ ]%
    	
 
    	
100%
    
	
[ ]%
    	
 
    	
75%
    
	
[ ]%
    	
 
    	
60%
    
	
Less   than [ ]%
    	
 
    	
0%
    

 

* Except as noted in the table, to the extent that the Company Average Cumulative Adjusted EBITDA Margin Percentage is between two of the listed performance levels, the percentage of

 

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the Target Performance Shares that, subject to the TSR Modifier, shall vest and become Earned Performance Shares shall be determined by the use of straight-line interpolation.

 

(3)        The total number of Earned Performance Shares shall equal the sum of the Performance Shares determined pursuant to Sections 3(b)(1) and 3(b)(2) above multiplied by a percentage (the “TSR Modifier”) determined based on the Company TSR as compared to the TSR of the companies in the S&P MidCap 400 on the first day of the Performance Period as set forth in the table below.  To determine the multiplier, such S&P MidCap 400 companies and the Company shall be listed in order of ascending TSR.  For example, the company with the lowest TSR shall be ranked 1, and the company with the highest TSR shall be ranked 400.

 

	
If the Company TSR over the Performance Period is
   (ranking   in S&P MidCap 400 list described above):
    	
 
    	
Then the TSR Modifier
   is:
    	
 
    
	
301   or greater
    	
 
    	
125%
    	
 
    
	
Between   101 and 300
    	
 
    	
100%
    	
 
    
	
100   or less
    	
 
    	
67%
    	
 
    

 

(c)        The number of Earned Performance Shares shall be determined by the Committee within 60 days following the end of the Performance Period.  The date the Committee determines the number of Earned Performance Shares is the “Vesting Date,” except as otherwise provided under Section 6.

 

(d)        The following terms have the meanings indicated below:

 

(1)        “Average Price” for any day means the average official closing price per share over the 40-consecutive-trading days ending with and including that day (or, if there is no official closing price on that day, the last trading day before that day).

 

(2)        “Cause” and “Good Reason” have the meanings provided in the Executive Severance Agreement between the Participant and the Company (as it may be amended, replaced or supplemented in accordance with its terms); provided that if there is no Executive Severance Agreement between the Participant and the Company, then Cause shall mean:

 

(A)       the Participant’s willful and intentional repeated failure or refusal, continuing after notice that specifically identifies the breach(es) complained of, to perform substantially his or her material duties, responsibilities and obligations (other than a failure resulting from the Participant’s incapacity due to physical or mental illness or other reasons beyond the control of the Participant), and which failure or refusal results in demonstrable direct and material injury to the Company or any of its affiliates;

 

(B)       any willful or intentional act or failure to act involving fraud, misrepresentation, theft, embezzlement, dishonesty or moral turpitude (collectively, “Fraud”) which results in demonstrable direct and material injury to the Company or any of its respective affiliates;

 

(C)       the Participant’s conviction of (or a plea of nolo contendere to) an offense which is a felony in the jurisdiction involved or which is a misdemeanor in the jurisdiction involved but which involves Fraud; or

 

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(D)       the Participant’s material breach of a written policy of the Company or the rules of any governmental or regulatory body applicable to the Company.

 

For purposes of this definition, no act, or failure to act, on the Participant’s part shall be deemed “willful” or “intentional” unless done, or omitted to be done, by the Participant without reasonable belief that the Participant’s action or omission was in the best interests of the Company.

 

and “Good Reason” shall mean the occurrence of one or more of the following events:

 

(E)       the Participant experiences a material diminution in duties or responsibilities, without the Participant’s consent (provided that a change in reporting structure shall not be deemed a diminution in duties or responsibilities);

 

(F)        the Company moves the Participant’s work location or its principal offices by more than 100 miles (provided that such move increases the Participant’s commuting distance by more than 100 miles);

 

(G)       a material reduction in the Participant’s base salary; or

 

(H)       a material breach by the Company of any of its material obligations under any employment agreement between the Participant and the Company then in effect;

 

provided, however, that no event or condition shall constitute Good Reason unless (x) the Participant gives the Company a written notice of termination for Good Reason no fewer than 30 days prior to the date of termination and not more than 90 days after the initial existence of the condition giving rise to Good Reason, and (y) the grounds for termination (if susceptible to correction) are not corrected by the Company within 30 days of its receipt of such notice.

 

(3)        “Company TSR” means the Company’s TSR for the Performance Period.

 

(4)        “Average Cumulative Adjusted EBITDA Margin Percentage” means Cumulative Adjusted EBITDA divided by the aggregate amount of total Company net sales during the measurement period.

 

(5)        “Cumulative Adjusted EBITDA” means the aggregate amount of total Company Adjusted EBITDA during the measurement period.  Adjusted EBITDA shall have the meaning as specified in and be calculated consistent with, Appendix B-2 to the Company’s 201[_] Proxy Statement, provided that impairment charges and losses on asset disposals shall be excluded if and to the extent that the Committee determines such adjustments will fairly reflect the year-over-year earnings performance of the Company with a view toward comparability of results with the Company’s budgeting for the initial year of the measurement period. The Committee will confirm Adjusted EBITDA for each fiscal year within the Performance Period no later than ninety (90) days after the end of each such fiscal year.

 

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(6)        “S&P MidCap 400” means the companies in the S&P MidCap 400 index on the first day of the Performance Period as published by Standard & Poor’s Financial Services LLC.

 

(7)        “TSR” means total shareholder return, which is the percentage that equals:

 

(A)       the cumulative amount of cash dividends for the Performance Period, assuming same-day reinvestment into the common stock on the ex-dividend date, plus the Average Price at the end of the Performance Period,

 

(B)       divided by the Average Price at the beginning of the Performance Period,

 

(C)       raised to the power of one divided by the number of the Company’s fiscal years ending with or within the Performance Period, and

 

(D)        then subtracting one.

 

TSR expressed as a formula is as follows:

 

TSR = [((Cumulative Dividends + Average PriceEnd)/Average PriceBeginning)˄(1/no. of yrs. )]- 1

 

TSR shall be equitably adjusted to reflect stock dividends, stock splits, spin-offs, and other corporate changes having similar effect in a manner consistent with the calculation approach used by Standard & Poor’s Financial Services LLC (or its successor) in the calculation of total shareholder return.

 

TSR will be calculated for certain companies, initially included in the S&P MidCap 400 but subject to acquisitions, mergers, bankruptcy or other events (in come cases causing company securities to cease to be publicly traded) before the end of the Performance Period, in accordance with the policy and procedures adopted by the Committee.  Determinations of the Committee as to TSR and related matters will be final.

 

4.         Adjustments.

 

(a)        No adjustments may be made to the 162(m) Goal (excluding the pre-specified adjustments that are incorporated into the “adjusted operating income” metric).

 

(b)        Notwithstanding anything to the contrary contained herein, pursuant to Section 3.7 of the Equity Plan, the Committee shall adjust this Award to reflect any dividend (other than a regular quarterly cash dividend), stock split, reverse stock split, recapitalization, merger, consolidation, combination, exchange of shares or similar corporate change, or other event that constitutes an “equity restructuring” within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, in such manner as the Committee may deem appropriate, in its sole discretion, to prevent the enlargement or dilution of the Participant’s rights.

 

5.         Settlement of Award.  The Participant’s Earned Performance Shares shall be settled by delivery of shares of Common Stock, on a one-for-one basis, as soon as

 

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administratively possible following the Vesting Date, and in no event later than 74 days following the calendar year or fiscal year (whichever ends later) in which the Vesting Date occurred (or, if earlier, such year in which the substantial risk of forfeiture lapsed); provided that settlement shall be subject in all respects to Section 2 and no delivery of shares may occur before the Committee certifies whether the 162(m) Goal has been achieved, except as provided in Section 6.  Shares of Common Stock shall be issued by the Company in the name of the Participant (or if directed by the Participant jointly with a spouse or in the name of a trust established by Participant) by electronic book-entry transfer or credit of such shares to an account of the Participant maintained with a brokerage firm or other custodian as the Company determines. Alternatively, in the Company’s sole discretion, such issuance may be effected in such other manner (including through physical certificates) as the Company may determine.

 

6.         Termination of Employment; Change in Control.

 

(a)        Except as set forth in Sections 6(b), (c) and (d) or under the terms of an employment agreement between the Participant and the Company or an Affiliate in effect at the date of a Participant’s termination of employment (an “Applicable Employment Agreement”), if the Participant’s employment terminates for any reason prior to the Vesting Date, the Award shall be cancelled and the Participant shall have no rights with respect to the Award.

 

(b)        If the Participant’s employment is terminated by the Company without Cause or pursuant to the Participant’s resignation for Good Reason on or prior to the last day of the Performance Period in circumstances in which Section 6(d) would not apply, then the Earned Performance Shares shall equal the number of Performance Shares the Participant would have vested in if the Participant remained employed through the Vesting Date based on actual performance under Section 3 through the end of the Performance Period, as determined on the Vesting Date, prorated by multiplying that number of Earned Performance Shares by (1) the number of days during the Performance Period up to and including the date of termination and dividing by (2) the total number of scheduled days in the Performance Period without giving effect to this Section 6(b).  Following the Vesting Date, the prorated Earned Performance Shares shall be settled in accordance with Section 5, and any remaining Target Performance Shares (or other potentially earnable Performance Shares) shall be forfeited in accordance with Section 6(a).  The foregoing notwithstanding, the terms of an Applicable Employment Agreement (including defined terms), if they specify vesting terms in the circumstances generally covered by this Section 6(b) (including non-renewal of the employment agreement or retirement), will govern in place of this Section 6(b), but subject to Section 2 hereof (it being agreed that any provision of an Applicable Employment Agreement that could be interpreted to mean that Section 2 is inapplicable in the circumstances covered by this Section 6(b) is hereby amended so that Section 2 remains applicable and controlling).

 

(c)        If the Participant’s employment is terminated by the Company without Cause or pursuant to the Participant’s resignation for any reason after the last day of the Performance Period, but prior to the Vesting Date, then the Participant shall be entitled to the Earned Performance Shares as determined on the Vesting Date.  Following the Vesting Date, the Earned Performance Shares shall be settled in accordance with Section 5, and any remaining Target Performance Shares (or other potentially earnable Performance Shares) shall be forfeited in accordance with Section 6(a).  The foregoing notwithstanding, the terms of an Applicable Employment Agreement (including defined terms), if they specify vesting terms in the circumstances generally covered by this Section 6(c) (including non-renewal of the employment agreement or retirement at times relating to a change in control), will govern in place of this Section 6(c).

 

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(d)        Change in Control.  In the event the Participant’s employment is terminated by the Company (or its acquiror) without Cause or pursuant to the Participant’s resignation for Good Reason upon or within two years following a Change in Control, each Performance Period shall be deemed to have been completed, the date of termination shall become the Vesting Date, all unvested Target Performance Shares shall be deemed to be Earned Performance Shares, and the Participant shall vest in that number of Earned Performance Shares as of the date of such termination (or, if later, Change in Control), and such vesting shall occur without regard to compliance with the requirements of Section 2 to the extent permissible for a performance-based award under Treasury Regulation Section 1.162-27(e).  In the event that the Earned Performance Shares become vested in accordance with this Section 6(d), such shares shall be settled in accordance with Section 5.  Any potentially earnable Performance Shares in excess of the Earned Performance Shares shall be forfeited in accordance with Section 6(a).  The foregoing notwithstanding, the terms of an Applicable Employment Agreement (including defined terms), if they specify vesting terms in the circumstances generally covered by this Section 6(d), will govern in place of this Section 6(d); any accelerated vesting provided under such terms shall occur without regard to compliance with the requirements of Section 2 to the extent permissible for a performance-based award under Treasury Regulation Section 1.162-27(e).  The terms of this Section 6(d) replace the default provisions of Equity Plan Section 3.8(b)(ii), so that Section 3.8(b)(ii) is inapplicable.

 

7.         Nature of Performance Shares.  The Participant shall have no rights as a stockholder with respect to this Award unless and until Common Stock has been delivered to the Participant upon settlement of the Award.  The Performance Shares are mere bookkeeping entries and represent only an unfunded and unsecured obligation of the Company to issue or deliver Common Stock on a future date, subject to the terms and conditions hereof.  As a holder of Performance Shares, the Participant has no rights other than the rights of a general creditor of the Company.  The Performance Shares carry neither voting rights nor rights to cash or other dividends, and do not carry rights to dividend equivalents.

 

8.         Equity Plan Provisions to Prevail.  The Award is subject to all of the terms and provisions of the Equity Plan and is subject to all of the terms and provisions therein.  In the event of any inconsistency between the provisions of the Grant Certificate and the Equity Plan, the provisions of the Equity Plan shall govern.

 

9.         Withholding Taxes.  Shares of Common Stock delivered pursuant to this Award shall be subject to applicable withholding taxes and the Company shall withhold from the delivery of Common Stock pursuant hereto shares having a value equal to the minimum amount of federal, state and other governmental tax withholding requirements related thereto (subject to rounding to a number of whole shares, in such manner as the Company may determine).  If Participant fails to comply with his or her obligations in connection with the applicable withholding or other mandatory tax, the Company may refuse to deliver any shares of Common Stock pursuant to this Award; provided that, if delivery is to be made in such case, it shall be made within the short-term deferral period (this may be in escrow or through some other means that assures the Company will receive applicable withholding taxes).  Such shares shall be valued at their Fair Market Value as of the date on which the amount of tax to be withheld is determined.  Fractional share amounts shall be settled in cash.  In lieu of such withholding, the Participant may elect, at or before such deadline as the Company may specify, and the Company may require as a condition of delivery, that the Participant remit to the Company an amount in cash sufficient in the opinion of the Company to satisfy all or any portion of such tax withholding requirements.

 

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10.       Nature of Payments.  The grant of this Award is in consideration of services to be performed by the Participant for the Company and constitutes a special incentive payment.  The Award does not constitute salary, wages, regular compensation or contractual compensation for the year of grant or any subsequent year.  The parties agree that the Award is not to be included in or taken into account in computing the amount of salary or compensation of the Participant for the purposes of determining (1) any pension, retirement, profit-sharing, bonus, life insurance or other benefits under any pension, retirement, profit-sharing, bonus, life insurance or other benefit plan of the Company, (2) any severance or other amounts payable under any other agreement between the Company and the Participant, or (3) any other employment related rights or benefits under law or any plan, program or agreement. No claim or entitlement to compensation or damages shall arise from forfeiture of this Award resulting from termination of employment.  For purposes of clarity, the Participant’s right to vest in the Award terminates upon the date upon which he or she no longer actively provides services to the Company, except as expressly provided herein, and does not continue during any notice or severance period.  The Company is not responsible for any changes in the value of this Award due to foreign exchange rate fluctuations.

 

11.       Administration.  By accepting the grant of this Award, the Participant agrees that no member of the Committee shall be liable for any action or determination made in good faith with respect to the Equity Plan or any award thereunder or the Grant Certificate.  Any action taken or decision made by the Company, the Board or the Committee or its delegates arising out of or in connection with the construction, administration, interpretation or effect of the Award or the Grant Certificate shall lie within its sole and absolute discretion, shall not require the Participant’s consent and shall be final, conclusive and binding upon the Participant and all persons claiming under or through the Participant.  Any certifications by the Committee pursuant to the Award shall be determined in writing and may be in any form determined by the Committee (including as part of applicable meeting minutes).  By accepting this Award, the Participant and each person claiming under or through the Participant shall be conclusively deemed to have indicated acceptance and ratification of, and consent to, any action taken or decision made under the Award or the Grant Certificate by the Company, the Board or the Committee or its delegates.

 

12.       Notices.  Any notice to be given to the Company hereunder shall be in writing and shall be addressed to the Corporate Secretary, Kate Spade & Company, 5901 Westside Avenue, North Bergen, NJ 07047, or at such other address as the Company may hereafter designate to the Participant by notice as provided in this Section 12.  Any notice to be given to the Participant hereunder shall be addressed to the Participant’s home address of record, or at such other address as the Participant may hereafter designate to the Company by notice as provided herein.  A notice shall be deemed to have been duly given when personally delivered or mailed by registered or certified mail to the party entitled to receive it.

 

13.       Right of Discharge Preserved.  The grant of the Award and the terms set forth in the Grant Certificate shall not confer upon the Participant the right to continue in the employ or other service of the Company, and shall not affect any right which the Company may have to terminate such employment or service.

 

14.       Successors and Assigns.  The terms of the Grant Certificate shall be binding upon and inure to the benefit of the Company and the successors and assigns of the Company.  Except as otherwise determined by the Committee in its sole discretion, the Participant’s rights and interests under the Award and the Grant Certificate may not be sold, assigned, transferred, or

 

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otherwise disposed of, or made subject to any encumbrance, pledge, hypothecation or charge of any nature.  If the Participant (or those claiming under or through the Participant) attempts to violate this Section 14, such attempted violation shall be null and void and without effect, and the Company’s obligation to make any payment to the Participant (or those claiming under or through the Participant) hereunder shall terminate.

 

15.       No Right to Future Awards.  The Award is a discretionary award.  Neither the Grant Certificate or the Equity Plan, nor the grant of the Award confers on the Participant any right or entitlement to receive another award under the Equity Plan or any other plan at any time in the future or with respect to any future period.

 

16.       Governing Law.  The Award and the Grant Certificate shall be interpreted, construed and administered in accordance with the laws of the State of Delaware.

 

17.       Entire Agreement.  The Grant Certificate and the Equity Plan constitute the entire agreement between the parties hereto with regard to the subject matter hereof.  They supersede all other agreements, representations or understandings (whether oral or written and whether express or implied) that relate to the Award.  By accepting the Award, the Participant shall be deemed to accept all of the terms and conditions of the Grant Certificate and the Equity Plan.

 

18.       Amendments.  Notwithstanding any provision set forth in the Grant Certificate or the Equity Plan and subject to all applicable laws, rules and regulations, the Committee shall have the power to:  (1) alter or amend the terms and conditions of the Award in any manner consistent with the provisions of Section 3.1 of the Equity Plan; (2) without the Participant’s consent, alter or amend the terms and conditions of the Award in any manner that the Committee considers necessary or advisable, in its sole discretion, to comply with, or take into account changes in, or interpretations or rescissions of, applicable tax laws, securities laws, employment laws, accounting rules or standards and other applicable laws, rules, regulations, guidance, ruling, judicial decision or legal requirement; (3) ensure that the Awards are not subject to federal, state, local or foreign taxes prior to settlement or payment, as applicable; or (4) without the Participant’s consent, waive any terms and conditions that operate in favor of the Company.  Any alteration or amendment of the terms of the Awards by the Committee shall, upon adoption, become and be binding on all persons affected thereby without requirement for consent or other action with respect thereto by any such person.  The Committee shall give notice to the Participant of any such alteration or amendment as promptly as practicable after the adoption thereof.

 

19.       Transferability.  Before the issuance of shares of Common Stock in settlement of this Award, the Award shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by the Participant’s creditors or by the Participant’s beneficiary, except (1) transfer by will or by the laws of descent and distribution or (2) transfer by written designation of a beneficiary, in a form acceptable to the Company, with such designation taking effect upon the Participant’s death.  All rights with respect to this Award shall be exercisable during the Participant’s lifetime only by the Participant or the Participant’s guardian or legal representative.

 

20.       Clawback Policy; Right of Recapture.

 

(a)        Notwithstanding anything to the contrary in this Grant Certificate, all Performance Shares or shares of Common Stock issued in settlement of this Award shall be subject to any clawback policy adopted by the Company from time to time (including, but not

 

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limited to, any policy adopted in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law), regardless of whether the policy is adopted after the date on which the Performance Shares are granted, vest, or are settled by the issuance of shares of Common Stock.

 

(b)        Notwithstanding anything to the contrary in this Grant Certificate, all Performance Shares payable or shares of Common Stock issued in settlement of this Award or proceeds of any sale of such shares shall be subject to the right of recapture as set forth in Section 2.11 of the Equity Plan and to other Company policies governing insider trading and recoupment.

 

21.       Securities Law Compliance.  Notwithstanding anything to the contrary contained herein, no shares of Common Stock shall be issued to the Participant upon vesting of this Award unless the Common Stock is then registered under the Securities Act of 1933 or, if such Common Stock is not then so registered, the Company has determined that such vesting and issuance would be exempt from the registration requirements of the Securities Act.  By accepting this Award, the Participant agrees not to sell any of the shares of Common Stock received under this Award at a time when applicable laws or Company policies prohibit a sale.

 

22.       Section 409A.

 

(a)        This Award is intended to comply with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder (the “Code”) so as not to be subject to taxes, interest or penalties under Section 409A of the Code.  This Grant Certificate shall be interpreted and administered to give effect to such intention and understanding and to avoid the imposition on the Participant of any tax, interest or penalty under Section 409A of the Code in respect of the Award.

 

(b)        Notwithstanding anything else herein to the contrary, any payment scheduled to be made to the Participant after the Participant’s separation from service shall not be made until the date six months after the date of the Participant’s separation from service to the extent necessary to comply with Section 409A(a)(B)(i) and applicable Treasury Regulations.  Following any such six-month delay, all such delayed payments shall be paid in a single lump sum on the date six months after the Participant’s separation from service.  For purposes of the Award, “separation from service” with the Company means a separation from service as defined in Section 409A of the Code determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto.  In the case of an award subject to Section 409A, the date of termination of employment for distribution purposes will be upon the occurrence of the Participant’s separation from service (whether or not the six-month delay rule applies).  The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code.

 

(c)        If any provision of the Grant Certificate or the Equity Plan would, in the reasonable, good faith judgment of the Committee, result or likely result in the imposition on the Participant, a beneficiary or any other person of any additional tax, accelerated taxation, interest or penalties under Section 409A of the Code, the Company may modify the terms of the Grant Certificate, or may take any other such action, without the Participant’s consent, a beneficiary or such other person, in the manner that the Company may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such additional tax, accelerated taxation, interest, or penalties or otherwise comply with Section 409A of the Code.  This Section 22 does not create an obligation on the part of the Company to modify the Grant Certificate and does not

 

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guarantee that the Award shall not be subject to additional taxes, accelerated taxation, interest or penalties under Section 409A of the Code.

 

 

 

 

 

 

 

	
KATE   SPADE & COMPANY
    
	
By   the Compensation Committee
    
	
of   the Board of Directors:
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    
	
 
    	
Authorized   Signature
    
	
 
    	
 
    
	
 
    	
 
    
	
Name:
    	
[Name]
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Consented   and Agreed to:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
[by   physical signature]
    

 

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