Claiborne Liz

SECURITIES AND EXCHANGE COMMISSION

FORM 10-K405 Annual report pursuant to section 13 and 15(d), Regulation S-K Item 405

Filing Date: 1995-03-31 | Period of Report: 1994-12-31 SEC Accession No. 0000950123-95-000871

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FILER CLAIBORNE LIZ INC Mailing Address Business Address 1441 BROADWAY 1441 BROADWAY CIK:352363| IRS No.: 132842791 | State of Incorp.:DE | Fiscal Year End: 1231 NEW YORK NY 10018 NEW YORK NY 10018 Type: 10-K405 | Act: 34 | File No.: 001-10689 | Film No.: 95525921 2123544900 SIC: 2330 Women's, misses', and juniors outerwear

SECURITIES AND EXCHANGE COMMISSION Exhibit Index Washington, D.C. 20549 is on Page __

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1994 OR ------

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from to ------Commission File Number 0-9831 ------

LIZ CLAIBORNE, INC. ------(Exact name of registrant as specified in its charter)

Delaware 13-2842791 ------(State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number)

1441 Broadway, New York, New York 10018 ------(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 212-354-4900

Securities registered pursuant to Section 12(b) of the Act:

Title of class Name of each exchange on which registered ------

Common Stock, par value $1 per share New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No ------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Based upon the closing sale price on the New York Stock Exchange composite tape on March 1, 1995, the aggregate market value of the registrant's Common Stock, par value $1 per share, held by non-affiliates of the registrant on such date was approximately $1,194,724,797.

Number of shares of the registrant's Common Stock, par value $1 per share, outstanding as of March 1, 1995: 75,640,645 shares.

------Documents Incorporated by Reference:

Registrant's Proxy Statement relating to its Annual Meeting of Stockholders to be held on May 11, 1995 - Part III.

PART I

Item 1. Business.

Overview

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Liz Claiborne, Inc. designs, contracts for the manufacture of, and markets an extensive range of women's and men's apparel and related products, including accessories, shoes and jewelry. The Company believes that it is the largest "better" women's sportswear and dress company in the United States. Generally, the Company's sportswear products are conceived and marketed as "designer" items, but are priced in the "better" apparel range. Women's sportswear is offered under the Company's various trademarks, including LIZ CLAIBORNE, LIZ, COLLECTION, LIZSPORT, LIZWEAR, ELISABETH, LIZ & CO. and its triangular logo mark. The Company offers a higher priced "bridge" line of women's sportswear and dresses under the Company's DANA BUCHMAN label, collections of men's sportswear and furnishings under the CLAIBORNE trademark, and "moderate" women's apparel under RUSS, THE VILLAGER and CRAZY HORSE trademarks. The Company offers women's fragrance collections under the LIZ CLAIBORNE, REALITIES and VIVID trademarks and men's fragrance collections under the CLAIBORNE FOR MEN trademark. The Company also operates retail stores in a variety of formats and distributes its products in a number of international markets.

At March 1, 1995, the Company's order book reflected unfilled customer orders for approximately $443 million of merchandise, as compared to approximately $450 million at March 1, 1994. Order book data at any given date is materially affected by the timing of recording orders and of shipments. Accordingly, order book data should not be taken as indicative of eventual actual shipments or net sales, or as providing meaningful period-to-period comparisons.

As used herein, the term the "Company" refers to Liz Claiborne, Inc., a Delaware corporation, together with its consolidated subsidiaries, and its predecessor New York corporation (incorporated in 1976).

Narrative Description of Business

The Company's products are designed by in-house staffs. Apparel division personnel meet regularly with representatives of the Company's Accessories, Shoe and Jewelry Divisions and the Company's various licensees to ensure that Liz Claiborne items are coordinated with one another.

Substantially all items in each sportswear collection are sold as "separates" rather than as ensembles, such as suits. Each collection is structured, however, through the use of related styles, color schemes and fabrics, to enable the consumer to assemble outfits consisting of separate items which are designed to be worn together. By offering similar or related styles, color schemes and fabrics over an extended period, the Company intends to provide the consumer with a wardrobe which can be coordinated with other Company items from season to season.

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The following is a comparison of net sales by product/division for each of the five fiscal years ended December 31, 1994.

______* Partial Year Sales

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During the fourth quarter of 1994, the Company reconfigured its Misses and Petite sportswear business (formerly managed as one division, the Women's Sportswear Group) by creating separate divisions, each under its own management team, for each of the COLLECTION, LIZSPORT and LIZWEAR labels. This restructuring aims to align each of these product lines more closely with changing consumer needs and market conditions and to refine the distinctions among the three divisions in order to enhance product development, focus selling efforts and reduce product redundancy. Each of these Divisions offers its products in both the "misses" and petite ranges.

The COLLECTION Division offers polished and professional career dressing with desk-to-dinner versatility. The products are designed in groups of coordinated separates to offer consumers a rich variety of possibilities for creating personalized pulled-together looks.

The LIZSPORT Division offers all-American sportswear with enduring style and an eye to detail. The products are designed for less formal work settings and weekends.

The LIZWEAR Division offers casual fashion, featuring denim styles, a wide range of fashion tops and soft cotton twills.

The Dress Division offers career, office-to-evening and social occasion and career dresses, as well as suits, under the LIZ CLAIBORNE trademark in both the "misses" and petite size ranges. This Division commenced shipment of its LIZ NIGHT line (special occasions) in July 1994 and its LIZ NOW line (fashion forward) in January 1995.

The Menswear Division offers collection sportswear and furnishings (dress shirts and ties) which are modern classics under the CLAIBORNE trademark.

The DANA BUCHMAN Division offers collections for the women's "bridge" market, the price range between better sportswear and designer clothing. The Division offers products with distinctive fabrics and detailing, sophisticated design and value in the "misses" and petite sizes under the Company's DANA BUCHMAN trademark. During February 1994, this Division began shipping its first collection of large sizes.

The ELISABETH Division offers large-sized apparel under the Company's ELISABETH trademark, including classic career looks, weekend wear and basics. ELISABETH sportswear and dresses are offered in "misses" and petite proportions.

The LIZ & CO. Division offers sportswear collections of coordinated knit separates under the Company's LIZ & CO. trademark. During February 1994, this Division began shipping its first collection in petite sizes.

During 1994, each of the above Divisions presented four to six seasonal collections.

As part of its component dressing concept, the Company offers handbags, small leather goods, hats, scarves, belts, socks, and hair accessories -- primarily under the LIZ CLAIBORNE trademark - which mirror major fashion trends and complement the Company's sportswear. The Company also offers bodywear which features workout gear in high performance fabrics.

In 1994, the Company consolidated its Cosmetic and Jewelry Divisions under a single management. The Company's cosmetic offerings include fragrance and bath and body-care products under the LIZ CLAIBORNE, REALITIES, VIVID and CLAIBORNE FOR MEN trademarks. The Company's jewelry offerings include collections of fashion jewelry, such as earrings, necklaces, bracelets and pins, to complement the Company's women's apparel and accessories lines. During 1994, this Division introduced a line of fashion quartz watches under the LIZ CLAIBORNE trademark.

In December 1994, the Company announced that it is phasing out of its FIRST ISSUE retail business. To date, the Company has converted seven FIRST ISSUE stores to the ELISABETH format and four to the LIZ CLAIBORNE format. The Company currently plans to close or convert the remaining 66 FIRST ISSUE locations to ELISABETH stores or other Company-operated retail formats, with a majority of these closings or conversions planned for 1995. FIRST ISSUE stores average approximately 3,300 square feet.

The Shoe Division offers its customers dress and casual shoes which coordinate with its women's LIZ CLAIBORNE apparel collections and accessories. This Division's shoe offerings include fashion (career and casual) shoes and leather and canvas sport shoes.

The Moderate Sportswear Division offers updated career and casual clothing under the RUSS trademark; traditional mainstream sportswear under THE VILLAGER trademark; and fashion related separates with a jeanswear attitude under the CRAZY HORSE trademark. These product lines are sold in department stores, national chains and specialty stores. These product lines represent the Company's entry into a new market; such entry is accompanied by the risks inherent in any new business. The lower-priced apparel business requires methods of operations and marketing strategies different from those employed in the Company's other businesses. As this business is generally a lower margin business, the Company must achieve significant cost efficiencies, in part by using sources of supply different from the Company's sources for other products. In addition, the buyers and/or store customers for this Division are different from the Company's traditional buyers and customers. The Company's competition in this field includes firms with which the Company has not historically competed. During the fourth quarter of 1994, the Company consolidated its moderate business operation under a single management.

Sales and Marketing

The Company's wholesale sales are made primarily to department and specialty store customers throughout the United States. Retail sales are also made through the Company's retail stores and through outlet stores, as well as to international customers, direct-mail catalogue companies, military exchanges and other outlets. During 1994, the Company's international distribution was expanded to additional markets; at year end, LIZ CLAIBORNE products were being sold in over 50 markets outside of the United States. In addition, product offerings in the United Kingdom, Canada and other countries were further expanded. The Company expects to continue expansion to additional markets, primarily in Western Europe, Asia and Latin America.

The Company currently operates a total of 51 prototype and presentational specialty stores which carry exclusively Company products: 29 LIZ CLAIBORNE stores, 21 ELISABETH large-size apparel stores and one DANA BUCHMAN store. The specialty stores operated under the LIZ CLAIBORNE name are of two

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6 different types: an approximately 8,000 - 12,000 square foot store carrying the full line of LIZ CLAIBORNE women's apparel and related items, and an approximately 6,000 square foot store aimed at career dressing, carrying the Company's LIZ CLAIBORNE COLLECTION and LIZSPORT apparel and related items. ELISABETH stores are approximately 3,300 square feet and carry exclusively large-size sportswear and dresses under the ELISABETH label. The DANA BUCHMAN flagship store located in New York City is approximately 2,900 square feet and carries regular and petite women's apparel, specifically sportswear and dresses, as well as accessories, under the DANA BUCHMAN label. These stores enable the Company to closely track sales and other product data, obtain market information and experiment with new products, visual presentation and new ideas for enhancing customer service. This information is used to help the Company's retail store customers and to more quickly respond to consumer preferences.

In a number of international markets, the Company operates leased or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document licensed departments or concessions at leading specialty stores, enabling the Company to better control its image and obtain direct consumer feedback. Leased departments have developed into the Company's primary method of doing business in Western Europe. A number of LIZ CLAIBORNE stores and shops operate in international markets pursuant to retail licenses granted by the Company. During 1994, additional LIZ CLAIBORNE stores and shops opened in the Far East and in the Middle East. During 1995, the Company plans to grant additional store licenses covering new markets.

Approximately 84% of 1994 sales were made to the Company's 100 largest customers. Except for Dillard's Department Stores, Inc., which accounted for approximately 11% of 1994 and 1993 sales, no single customer accounted for more than 5% of 1994 or 1993 sales. However, certain of the Company's customers are under common ownership; when considered together as a group under common ownership, sales to the 11 department store customers which were owned at year-end 1994 by The May Department Stores Company accounted for approximately 17% of 1994 and 18% of 1993 sales, and sales to the three department store customers which were owned at year-end 1994 by R. H. Macy & Co., Inc. accounted for approximately 7% of 1994 sales and 8% of 1993 sales. Sales to the seven department store customers which were owned at year-end 1994 by Federated Stores, Inc. accounted for approximately 9% of 1994 and 8% of 1993 sales. Subsequent to December 31, 1994, R. H. Macy & Co., Inc. and Federated Stores, Inc. merged to become a single corporate group which would have accounted for 16% of 1994 and 1993 sales. See Note 7 of the Notes to Consolidated Financial Statements. Many major department store groups have centralized buying decisions; accordingly, any material change in the Company's relationship with any such group could have a material adverse effect on the Company's operations. The Company expects that its 100 largest customers will continue to account for a great majority of its sales.

Sales to the Company's department and specialty store customers are made primarily through the Company's New York City showrooms.

Orders from the Company's apparel and accessories customers generally precede the related shipping periods by several months. The Company has implemented and continues to expand a reorder business in several divisions to enable customers to reorder certain items for quick delivery. See "Manufacturing". The Company's largest customers discuss with the Company retail trends and their plans regarding their anticipated levels of total purchases of Company products for future seasons. These discussions are intended to assist the Company in planning the production and timely delivery of its products. The Company continually monitors retail sales in order to assess directly consumer response to its products.

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The Company maintains cooperative advertising programs under which it will generally share the costs of its customers' advertising and promotional expenditures, up to a stated percentage of a customer's purchases. The Company incurred costs under these cooperative advertising programs of approximately $43 million in respect of 1994 sales. In addition to cooperative advertising, the Company spent approximately $7 million in 1994 on institutional advertising including the Company's national advertising campaign covering all LIZ CLAIBORNE products and the Company's advertising campaigns for its various fragrances.

The Company currently operates 70 outlet stores in "outlet centers" comprised primarily of manufacturer-operated stores. These stores generally offer surplus and prior seasons' merchandise; certain stores offer only irregular merchandise. The Company anticipates opening additional outlet stores during 1995.

Manufacturing

The Company does not own any product manufacturing facilities; all of its products are manufactured in accordance with its specifications through arrangements with independent suppliers.

A very substantial portion of the Company's sales is represented by products produced abroad, primarily in the Far East. The Company does not itself own quota and therefore must obtain quota from its suppliers and vendors. During 1994, the Company's apparel and apparel related products were manufactured by over 700 suppliers, of which approximately 250 were domestic suppliers, and the balance of which were located in over 50 different countries, mainly in China, South Korea, Sri Lanka, Hong Kong and Indonesia. The Company continually seeks additional suppliers throughout the world for its sourcing needs. The Company's largest supplier of finished products manufactured less than 5% of the Company's purchases of finished products during 1994. Approximately 24% of the Company's 1994 purchases of finished products were manufactured by its ten largest suppliers, as compared to 22% of 1993 purchases. The Company's purchases from its suppliers are effected

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document through individual purchase orders specifying the price and quantity of the items to be produced. Generally, the Company does not have any long-term, formal arrangements with any of the suppliers which manufacture its products. The Company believes that it is the largest customer of many of its manufacturing suppliers and considers its relations with such suppliers to be satisfactory.

The Company obtains fabrics, trimmings and other materials used in its apparel and accessories products in bulk from various suppliers. During 1994, the raw materials used in Company products was purchased from approximately 800 suppliers, approximately 500 of which were located abroad, primarily in Hong Kong, Italy, South Korea and Japan. Approximately 25% of the Company's expenditures for raw materials during 1994 were accounted for by its five largest raw material suppliers, as compared to 29% of 1993 purchases, with no single raw material supplier accounting for more than 7% of 1994 raw material expenditures. Generally, the Company does not have any long-term, formal arrangements with any supplier of raw materials. The Company owns a 50% interest in a joint venture which supplies certain domestically dyed and finished fabrics and the Company is currently analyzing its options with respect to this venture. To date, the Company has experienced little difficulty in satisfying its raw material requirements and considers its sources of supply adequate.

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The Company operates under substantial time constraints in producing each of its collections. See "Sales and Marketing". In order to deliver, in a timely manner, merchandise which reflects current tastes, the Company attempts to schedule a substantial portion of its materials and manufacturing commitments relatively late in the production cycle, thereby favoring suppliers able to make quick adjustments in response to changing production needs. However, in order to secure necessary materials and manufacturing facilities, the Company must make substantial advance commitments, often as much as seven months prior to the receipt of firm orders from customers for the items to be produced. Many of these early commitments are made subject to changes in respect of colors, assortments, sizes and/or delivery dates. The Company has implemented a number of initiatives designed to reduce the time required to move a product from design to the sales floor.

The Company is planning forward merchandise commitments on a conservative basis, particularly for its COLLECTION, LIZSPORT and LIZWEAR Divisions. If the Company should misjudge its ability to sell its products, it could be faced with substantial outstanding fabric and/or manufacturing commitments, resulting in excess merchandise inventories. The Company was left with significant excess merchandise inventory positions during 1993 and into the first half of 1994 due to the Company's increased 1993 commitments compared to 1992 and the decreased demand for certain of the Company's apparel at retail.

The Company's arrangements with foreign suppliers are subject to the risks of doing business abroad, including currency fluctuations and revaluations, restrictions on the transfer of funds and in certain parts of the world, political instability. The Company's operations have not been materially affected by any of such factors to date. However, due to the large portion of the Company's products which are produced abroad, any substantial disruption of its relationships with its foreign suppliers could adversely affect the Company's operations.

Import and Import Restrictions

Virtually all of the Company's merchandise imported into the United States is subject to United States duties. In addition, bilateral agreements between the major exporting countries and the United States impose quotas that limit the amount of certain categories of merchandise that may be imported into the United States. The majority of such agreements contain "consultation" clauses which allow the United States, under certain circumstances, to impose unilateral restrictions on the importation of certain categories of merchandise that are not subject to specified limits under the terms of an agreement. These bilateral agreements have been negotiated under the framework of the Multi Fiber Arrangement ("MFA"), which has been in effect since 1974. The United States has recently concluded international negotiations known as the "Uruguay Round" in which a variety of trade matters were reviewed and modified. Legislation to enact and implement the various agreements of the Uruguay Round was ratified by Congress and became effective January 1, 1995. This includes the Uruguay Round Agreement on Textiles and Clothing which requires World Trade Organization Member countries to phase out textile and apparel quotas in three stages over a ten year period. In addition, it regulates trade in non-integrated textile and apparel quotas during the ten year transition period. However, even with respect to integrated textile and apparel quota categories, the United States remains free to establish numerical restraints in response to a particular product being imported in such increased quantities as

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document to cause (or threaten) serious damage to the relevant domestic industry. The U. S. legislation implementing the

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Uruguay Round also changes the rule of origin for many textiles and apparel products effective July 1, 1996, with certain minor exceptions. This change would determine country of origin based on "assembly" for most textile and apparel products. The Uruguay Round also incorporates modest duty reductions for textile and apparel products over a ten year staging schedule. This will likely result in a modification of current patterns of international trade with respect to apparel and textiles. In addition, there are various United States initiatives pending concerning the trading status of certain countries, which, if enacted, would likely increase the cost of doing business in such countries. (See "Item 7. -- Management's Discussion and Analysis of Financial Condition and Results of Operations".)

In addition, each of the countries in which the Company's products are sold have laws and regulations regarding import restrictions and quotas. Because the United States and other countries in which the Company's products are manufactured and sold may, from time to time, impose new quotas, duties, tariffs, surcharges or other import controls or restrictions, or adjust presently prevailing quota allocations or duty or tariff rates or levels, the Company maintains a program of intensive monitoring of import and quota-related developments. The Company seeks continually to minimize its potential exposure to import and quota-related risks through, among other measures, allocation of production to merchandise categories that are not subject to quota pressures, adjustments in product design and fabrication, shifts of production among countries and manufacturers, and otherwise, as well as through geographical diversification of its sources of supply.

In light of the very substantial portion of the Company's products which are manufactured by foreign suppliers, the enactment of new legislation or the administration of current international trade regulations, or executive action affecting textile agreements, could adversely affect the Company's operations.

Trademarks

The Company utilizes a variety of trademarks on its products, including LIZ CLAIBORNE, LIZ, CLAIBORNE, LIZWEAR, LIZSPORT, LIZ LIZ CLAIBORNE, LIZ LIZWEAR, LIZ LIZSPORT, LIZ CLAIBORNE COLLECTION, LIZ NOW, LIZ NIGHT, its triangular logomark, DANA BUCHMAN, ELISABETH, LIZ & CO., REALITIES, RUSS, THE VILLAGER, CRAZY HORSE, VIVID and FIRST ISSUE. The Company has registered or applied for registration of a multitude of trademarks for use on apparel and apparel-related products, including accessories, cosmetics, shoes and jewelry in the United States as well as a great many foreign territories. The Company also has a number of design patents. The Company regards its trademarks and other proprietary rights as valuable assets and believes that they have significant value in the marketing of its products. The Company vigorously protects its trademarks and other intellectual property rights against infringement.

Licensing

The Company has five license agreements pursuant to which third party licensees produce merchandise under the Company's trademarks in accordance with designs furnished or approved by the Company. The present terms of these agreements (exclusive of renewal terms) expire at various dates through 2000. Current licenses cover women's dress hosiery; women's and men's sunglasses and readers; women's and men's ophthalmic frames for prescription eyewear; home furnishing products (added in 1994, with the first collections shipped in the

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10 first quarter of 1995) and men's tailored clothing (added in 1994, with the first collections expected to be offered for the fall of 1995). Each of the licenses provides for the payment to the Company of a percentage of the licensee's net sales of the licensed products against a guaranteed minimum royalty which generally increases over the term of the agreement.

Competition

The apparel and related product markets are highly competitive, both within the United States and abroad.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company believes that an ability to effectively anticipate, gauge and respond to changing consumer demands and tastes relatively far in advance as well as an ability to operate within substantial production and delivery constraints (see "Manufacturing") are necessary to compete successfully in this field. Consumer and customer acceptance and support, which depend upon styling, quality (both in material and production), pricing and product identity, are also important aspects of competition. The Company believes that its continued success will depend upon its ability to remain competitive in these areas.

The Company believes that, based on sales, it is among the largest apparel companies operating in the United States. Although the Company is unaware of any comprehensive trade statistics, it believes, based on its knowledge of the market and available trade information, that measured by sales, it is the largest "better" women's sportswear and dress company in the United States.

Employees

At December 31, 1994, the Company had more than 8,000 full-time employees, as compared with approximately 7,900 full-time employees at December 25, 1993, representing an increase of approximately 500 employees in the Company's retail and outlet operations, offset by a decrease in other areas.

As a member of a manufacturers' association, the Company is bound by collective bargaining agreements with affiliates of the International Ladies' Garment Workers' Union ("ILGWU") covering, at December 31, 1994, approximately 1,912 of the Company's full-time United States and Canadian apparel, cosmetics and shoe employees. These collective bargaining agreements expire on various dates through 1997. The Company is also bound by a collective bargaining agreement with a unit of the Amalgamated Clothing and Textile Workers of America ("ACTWA") covering, at December 31, 1994, approximately 162 of the Company's full-time Accessories Division employees; this agreement expires in September 1997. The ILGWU and ACTWA have publicly announced that, subject to ratification by their membership, they will merge into a single union in 1995.

The Company considers its relations with its employees to be satisfactory and has not experienced any interruption of operations due to labor disputes.

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Item 2. Properties.

The Company's showrooms, sales, merchandising and design staffs, as well as its executive offices, are located at 1441 Broadway, New York, New York, where the Company leases approximately 276,000 square feet under a master lease which expires at the end of 2001 and contains certain renewal options and rights of first refusal for additional space. The Company currently leases office space at two other buildings in New York City covering approximately 92,000 and 24,000 square feet (with terms expiring in 1996 and 2003, respectively).

The Company owns its approximately 453,000 square foot principal New Jersey warehouse and distribution facility located at One Claiborne Avenue, North Bergen, New Jersey. This facility also houses the Company's production and certain other administrative personnel. The Company also owns an approximately 300,000 square foot office facility at this location which was completed in 1994. The Company presently leases approximately 1,210,000 square feet in 8 other New Jersey warehouse facilities, the current terms of which expire through 2008. The Company also owns an approximately 313,000 square foot warehouse and distribution facility located on approximately 80 acres in Mt. Pocono, Pennsylvania. The Company's approximately 270,000 square foot facility in Augusta, Georgia (located on a 98-acre site), has been leased to a joint venture comprised of a wholly-owned subsidiary of the Company and an unrelated third party. This facility is used as a dyeing and finishing operation. The Company occupies an approximately 290,000 square foot warehouse and distribution facility located on a 124 acre site in Montgomery, Alabama. The Company has options to purchase an additional 80 acres adjacent to the facility. The Company currently is planning to build additional facilities at this location. The Company is the lessee of the Georgia and Alabama facilities pursuant to industrial development financing. The Company also leases showroom, warehouse and office space in various other domestic and international locations.

The Company leases space for its 117 retail specialty stores (aggregating approximately 498,000 square feet in various malls) and for 69 of its outlet stores (aggregating approximately 643,000 square feet). In October 1994, the Company entered into a fifteen year lease for an approximately 14,000 square foot LIZ CLAIBORNE flagship store to be located at 650 Fifth Avenue, New York, New York. The Company anticipates that the store will open in August 1995.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document The Company believes that its existing facilities are well maintained, in good operating condition and are adequate for its present level of operations. See Note 7 of the Notes to Consolidated Financial Statements.

Item 3. Legal Proceedings.

The Company and certain of its officers and directors are parties to several pending legal proceedings and claims, including an action styled Ressler et al. vs. Liz Claiborne, Inc., et al., pending in the United States District Court for the Eastern District of New York. The plaintiffs seek compensatory damages on behalf of a class of purchasers of the Company's Common Stock during the period commencing September 21, 1992 through and including July 16, 1993, and allege that the defendants violated the federal securities laws by, among other things, making misrepresentations or omissions of material facts that artificially inflated the market price of the Common Stock during the class period. An earlier-filed lawsuit before the same court as Ressler, styled Fishbaum vs. Chazen, et. al., made allegations similar to the Ressler complaint and sought damages on behalf of a class of purchasers of the company's Common Stock for the period commencing March 30, 1993, through and including July 16,

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1993. An amended complaint was filed in the Ressler action in May 1994 to add Fishbaum as a plaintiff. In June 1994, the court granted the Company's motion to dismiss the Fishbaum complaint, with leave to amend, on the grounds that the complaint did not adequately set forth the requisite element of scienter. In July 1994, the Company moved to dismiss the Ressler complaint.

In April 1994, two stockholder derivative actions, which contain substantially similar allegations, styled Goldberg Family Trust vs. Chazen, et al. and Liz Claiborne, Inc., nominal defendant, and Laz Schneider vs. Chazen, et al. and Liz Claiborne, Inc., nominal defendant, were brought in the Court of Chancery of the State of Delaware against the Company's directors and two former Vice Chairmen. The complaints contain allegations of breach by the directors of their fiduciary obligations to the Company and its shareholders and corporate mismanagement, waste of corporate assets in connection with the Company's stock repurchase program and the defense of pending legal proceedings, and unjust enrichment in connection with the Company's stock repurchase program and the defense of pending legal proceedings, and unjust enrichment in connection with the sale of shares of the Company's Common Stock between September 1992 and July 1993 by certain of its present and former officers and directors. In July 1994, the Laz Schneider action was consolidated into the Goldberg action. In August 1994, the defendants moved to dismiss the consolidated complaint.

The Company believes that the litigations described in this Item are without merit and intends to vigorously defend these actions. Although the outcome of any such litigation or claim cannot be determined with certainty, management is of the opinion that the final outcome of these litigations should not have a material adverse effect on the Company's results of operations or financial position.

Item 4. Submission of Matters to a Vote of Security Holders.

No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise.

Executive Officers of the Registrant.

Information as to the executive officers of the Company is set forth below:

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Executive officers serve at the discretion of the Board of Directors.

Mr. Chazen has served in various senior executive positions and as a Director of the Company since 1977. In 1985, he was elected Co-Chairman of the Board of the Company, and became Vice Chairman of the Board in 1987. In 1989, Mr. Chazen became Chairman of the Board. Mr. Chazen also serves on the board of directors of Taubman Centers, Inc., an owner and operator of regional shopping centers.

Mr. Charron joined the Company as Vice Chairman and Chief Operating Officer, and became a Director, in May 1994. Effective May 1995, he will become President and Chief Executive Officer. Prior to joining the Company, he served as Executive Vice President of VF Corporation, an apparel manufacturer, from 1993, and as a Group Vice President of VF Corporation from 1988 to 1993.

Mr. Miller, a certified public accountant, joined the Company in 1988 as Senior Vice President - Finance (Chief Financial and Accounting Officer) after more than sixteen years in various senior financial positions within the apparel industry.

Mr. Thompson joined the Company in February 1995 as Senior Vice President of Service, Systems and Reengineering and Chief Information Officer. Prior to joining the Company, Mr. Thompson served as Executive Vice President for Business Systems/Logistics and Chief Information Officer of Goody's Family Clothing, Inc., an apparel retailer, from 1993 to 1995. From 1991 to 1993, Mr. Thompson was Vice President Business Systems and Management Information Systems for Lee Apparel Company, an apparel manufacturer. Mr. Thompson also served as Executive Vice President and Chief Information Officer of Quick Response Services, Inc., an information management services company, from 1987 to 1991.

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PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

The Company's Common Stock trades on the New York Stock Exchange ("NYSE") under the symbol LIZ. The table below sets forth the high and low closing sales prices of the Common Stock (based on the NYSE composite tape) for the periods indicated.

On March 24, 1995, the closing sale price of the Common Stock on the NYSE was $17 and the approximate number of record holders of Common Stock was 13,980.

The Company has paid regular quarterly cash dividends since May 1984. Quarterly dividends for the last two fiscal years were paid as follows:

The Company plans to continue paying quarterly cash dividends on its Common Stock. The amount of any such dividend will depend on the Company's earnings, financial position, capital requirements and other relevant factors.

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In December 1989, the Board of Directors first authorized the repurchase, as market and business conditions warranted, of the Company's Common Stock for cash in open market purchases and privately negotiated transactions. From time to time thereafter, the Board has authorized additional repurchases. As of March 6, 1995, the Company had expended or committed to expend approximately $429 million of the $450 million authorized under this stock repurchase program, covering an aggregate of 16,105,000 shares.

Item 6. Selected Financial Data.

The following table sets forth certain information regarding the Company's operating results and financial position and is qualified in its entirety by the consolidated financial statements and notes thereto which appear elsewhere herein:

(All dollar amounts in thousands except per common share data)

______* Includes the after tax effect of a restructuring charge of $18,900 ($30,000 pretax) or $.24 per common share in 1994.

** Includes a credit representing the cumulative effect of a change in the method of accounting for income taxes of $1,643 or $.02 per common share in 1993.

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following table sets forth items in the Consolidated Statements of Income as a percent of net sales and the percentage change of those items as compared to the prior year.

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RESULTS OF OPERATIONS continued

The Company's net sales for 1994 (53 weeks) were $2.16 billion, compared to $2.20 billion in 1993 (52 weeks) and $2.19 billion in 1992 (52 weeks). The 1994 decrease reflected a 12% decline in the net sales of Misses and Petite COLLECTION, LIZSPORT and LIZWEAR products (collectively, "Sportswear"), to $1.00 billion, primarily resulting from substantially lower average unit prices due to weakness in demand for Sportswear, the liquidation during the first half of significant prior year excess inventory at distressed prices and changes in product mix. The net sales result also reflected an 18% decline in LIZ & CO. sales, to $76 million, due primarily to lower unit volume. These decreases were partially offset by a 42% increase in the sales of the Moderate Division, to $112 million, a 26% increase in menswear sales, to $102 million, and a 25% increase in DANA BUCHMAN sales, to $113 million. These increases primarily reflected higher unit volume, although more than half of the menswear increase was due to higher average unit prices as a result of a higher proportion of regular price sales. In addition, sales of the Company's domestic retail stores and international retail operations (collectively, the "Retail Operations") increased 31%, to $150 million, due to the opening of new domestic retail stores (113 at 1994 year end compared with 78 at 1993 year end) as well as the conversion of most of the Company's European business from a wholesale to a leased department operation. The Company's FIRST ISSUE retail stores accounted for $64 million of the Retail Operations' 1994 sales, as

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document compared with $51 million in 1993; the Company has announced that it is phasing out of the FIRST ISSUE business and currently plans to close or convert these locations to ELISABETH or other Company- operated retail formats. Sales of the Company's outlet stores increased 14% to $140 million, due to the opening of new stores (70 at 1994 year end compared with 61 at 1993 year end). The 1994 and 1993 results also reflected the delay of certain shipments of 1994 Spring season merchandise into 1994. The 1993 net sales results primarily reflected the inclusion of full year results of the Moderate Division acquired in May 1992, higher unit volume within the Accessories and DANA BUCHMAN Divisions, as well as the introduction of the Company's third women's fragrance, VIVID, offset by decreases across the Company's remaining wholesale apparel operations. These decreases, primarily in Sportswear, reflected substantially lower average unit selling prices, as the Company was required to liquidate significant excess inventory positions and also continued to lower initial selling prices.

Gross profit expressed as a percentage of net sales was 34.9% in 1994, compared to 34.1% in 1993 and 37.8% in 1992. Gross profit dollars increased slightly in 1994, reflecting an improvement in the overall gross profit percentage from last year's depressed level, on a slightly lower sales base. Margins were negatively impacted throughout the year by the highly promotional retail environment. While Sportswear gross margins showed some improvement, notwithstanding the liquidation during the first half of significant excess prior year inventory, volume declines resulted in lower gross profit dollars. Margin percentages of the Menswear and Dress Divisions improved from depressed prior period levels, due to a higher proportion of regular price sales. Also contributing to the margin improvement were the higher proportion of the Company's net sales represented by the Retail Operations and the DANA BUCHMAN and Accessories Divisions (which are all generally higher margin businesses). These increases were offset by severely depressed margins within the Moderate Division (which is a lower margin business) due to a very low proportion of regular price sales, and the higher proportion of the Company's sales represented by this Division. In addition, margins declined in the Cosmetics Division, reflecting weak demand and changes in product mix, and in the ELISABETH Division, reflecting a lower proportion of regular price sales due primarily to the liquidation of

- 17 -

18 RESULTS OF OPERATIONS continued excess prior year inventory. The 1993 margin decline reflected margin erosion across substantially all wholesale apparel divisions, principally due to a lower proportion of regular price sales within Sportswear and the Dress Division. Also contributing to the margin decreases were higher markdowns within the outlets and Retail Operations, contributing to operating losses in these operations, as well as the higher proportion of net sales represented by the Moderate Division. The decrease in gross margin was partially offset by the higher proportion of net sales represented by, and higher margins within, the Accessories and Cosmetics Divisions (which are generally higher margin businesses).

Legislation which would further restrict the importation and/or increase the cost of textiles and apparel produced abroad has periodically been introduced in Congress. Although it is unclear whether any new legislation will be enacted into law, it appears likely that various new legislative or executive initiatives will be proposed. These initiatives may include a reevaluation of the trading status of certain countries, including Most Favored Nation ("MFN") treatment for the People's Republic of China ("PRC"), which, if enacted, would increase the cost of products purchased from suppliers in such countries. The PRC's MFN treatment was renewed in July 1994 for an additional year. In light of the very substantial portion of the Company's products which are manufactured by foreign suppliers, the enactment of new legislation or the administration of current international trade regulations, or executive action affecting international textile agreements, could adversely affect the Company's operations.

Selling, general and administrative expenses increased by $36 million (6%) in 1994 over 1993 and by $61 million (12%) in 1993 over 1992. These expenses represented 27.9% of net sales in 1994 as compared to 25.8% in 1993 and 23.1% in 1992. The continued expansion of the Retail Operations accounted for approximately three-quarters of the 1994 dollar increase. Also reflected in this dollar increase were the expansion of the Moderate and DANA BUCHMAN Divisions and outlet operations, partially offset by an overall expense reduction within the wholesale better-apparel businesses; however, the overall percentage decrease in the sales of these businesses slightly outpaced their percentage decrease in expense levels. The 1993 dollar increase in expenses resulted primarily from the inclusion and expansion of the operations of the Moderate Division, the continued expansion of the Company's retail and outlet operations, and increased costs associated with the introduction of the new VIVID fragrance.

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Operating income in 1994 reflected a $30 million charge which was provided to cover the estimated costs associated with the restructuring of the Retail Operations and Moderate Division, as well as the Company's strategic efforts to streamline operating and administrative functions. This charge included estimated losses on the phase out of the FIRST ISSUE retail business, the write-off of certain assets, and severance and contract termination costs (see Note 2 of the Notes to Consolidated Financial Statements). Operating income was also reduced by continuing losses within the Company's Moderate Division, Retail Operations and outlets. These losses are expected to continue into 1995, although at reduced levels.

Investment and other income-net decreased on a year-to-year basis by $5 million in 1994 and $3 million in 1993. These decreases were due to lower rates of return realized on the Company's investment portfolio as well as a decrease in the average portfolio of cash equivalents and marketable securities reflecting in part the Company's stock repurchase program.

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19 RESULTS OF OPERATIONS continued

As a result of the factors described above, the Company's income before provision for income taxes and cumulative effect of a change in accounting principle expressed as a percentage of net sales was 6.1% in 1994, compared to 9.0% in 1993 and 15.6% in 1992. The provision for income taxes expressed as a percentage of net sales was 2.3% in 1994, 3.3% in 1993 and 5.6% in 1992, reflecting the changes in pre-tax income and the 1993 increase in federal statutory rates.

The Company adopted the Financial Accounting Standards Board Statement No. 109 "Accounting for Income Taxes" and changed its method of accounting for income taxes as of the beginning of fiscal year 1993. The cumulative effect on prior years of this accounting change is reflected in the consolidated statements of income as a one-time increase in 1993 net income of $1.6 million, or $.02 per common share. The effects of this change are discussed in the accompanying Notes to Consolidated Financial Statements.

Net income expressed as a percentage of net sales was 3.8% in 1994, compared with 5.8% in 1993 and 10.0% in 1992. The 1994 and 1993 decreases were due primarily to lower operating margins and lower investment and other income-net, offset in part by a lower provision for income taxes. The 1994 decrease also reflected the restructuring charge discussed above, which reduced after tax net income by $19 million.

The earnings per common share computations reflected a lower number of outstanding shares on a period-to-period basis as a result of the Company's stock repurchase program.

The tone of business remains mixed, and the Company is continuing to plan forward merchandise commitments on a conservative basis, particularly for Sportswear.

FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY

Net cash provided by operating activities was $173 million in 1994, compared to $120 million in 1993 and $132 million in 1992. The 1994 increase was due primarily to a decrease in inventory levels in 1994 compared to an increase in 1993 and a larger increase in accrued expenses in 1994 (including accruals associated with the restructuring charge), offset in part by lower net income. The 1993 decrease was attributable to lower net income, offset by a decrease in accounts receivable. Net cash used in investing activities was $131 million in 1994, compared to net cash provided by investing activities of $1 million in 1993 and net cash used by investing activities of $55 million in 1992. The fluctuations of net cash used in or provided by investing activities is related to the increase or decrease in marketable securities and capital expenditures on a year-to-year basis. Net cash used in financing activities was $75 million in 1994, compared to $148 million in 1993 and $134 million in 1992. The decrease in 1994 reflected a $77 million reduction in the amount expended in the Company's stock repurchase program. The increase in 1993 reflected a $9 million reduction in proceeds from the exercise of common stock options. The decrease in 1994 year end inventory levels over the prior year end reflected a decrease in excess wholesale apparel inventories, offset in part by the expansion of an in-stock reorder program in several divisions. The existence of excess inventory, which takes additional time to liquidate, in the first half of 1994 had a negative impact on the Company's inventory turnover rate and gross profit margin during the year.

- 19 -

As of March 6, 1995, the Company had expended or committed to expend approximately $429 million of the $450 million authorized under its stock repurchase program, covering an aggregate of 16,105,000 shares.

The Company's anticipated capital expenditures for 1995 currently approximate $5O million. These expenditures consist primarily of certain building and equipment expenses, including expansion of the Company's Alabama distribution facility, leasehold improvements of new stores and leased departments for the Company's Retail Operations, and the upgrading of data processing systems. These expenditures will be financed through available capital and future earnings. Any increased working capital needs will be met by current funds. Bank lines of credit, which are available to finance import transactions and direct borrowings, were decreased by the Company from $440 million at December 25, 1993 to $282 million at December 31, 1994 to reduce excess lines. The Company expects to be able to adjust these lines as required.

INFLATION

The moderate rate of inflation over the past few years has not had a significant impact on the Company's sales and profitability.

Item 8. Financial Statements and Supplementary Data.

Information called for by this Item 8 is included following the "Index to Consolidated Financial Statement Schedules" appearing at the end of this Annual Report on Form 10-K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

- 20 -

21 PART III

Item 10. Directors and Executive Officers of the Registrant.

Information with respect to Executive Officers of the Company is set forth in Part I of this Annual Report on Form 10-K.

Information with respect to Directors of the Company which is called for by this Item 10 is incorporated by reference to the information set forth under the heading "Election of Directors" in the Company's Proxy Statement relating to its 1995 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A (the "Company's 1995 Proxy Statement").

Item 11. Executive Compensation.

Information called for by this Item 11 is incorporated by reference to the information set forth under the heading "Executive Compensation" in the Company's 1995 Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management.

Information called for by this Item 12 is incorporated by reference to the information set forth under the headings "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" in the Company's 1995 Proxy Statement.

Item 13. Certain Relationships and Related Transactions.

Information called for by this Item 13 is incorporated by reference to the information set forth under the headings "Election of Directors" and "Certain Relationships and Related Transactions" in the Company's 1995 Proxy Statement.

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22 PART IV

(a) 1. Financial Statements.

NOTE: Schedules other than those referred to above and parent company condensed financial statements have been omitted as inapplicable or not required under the instructions contained in Regulation S-X or the information is included elsewhere in the financial statements or the notes thereto.

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23 3. Exhibits.

------+ Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 23 -

------

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document + Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 24 -

------* Filed herewith. + Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 25 -

(b) Reports on Form 8-K.

Not applicable.

------* Filed herewith. + Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 26 -

27 SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on March 30, 1995.

LIZ CLAIBORNE, INC.

By /s/Samuel M. Miller ------Samuel M. Miller, Senior Vice President-Finance/ Principal Financial and Accounting Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities indicated, on March 30, 1995.

- 27 -

28 INDEX

LIZ CLAIBORNE, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES

NOTE: Schedules other than those referred to above and parent company condensed financial statements have been omitted as inapplicable or not required under the instructions contained

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document in Regulation S-X or the information is included elsewhere in the financial statements or the notes thereto.

F-1

29 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Liz Claiborne, Inc.:

We have audited the accompanying consolidated balance sheets of Liz Claiborne, Inc. (a Delaware corporation) and subsidiaries as of December 31, 1994 and December 25, 1993, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three fiscal years in the period ended December 31, 1994. These financial statements referred to below are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Liz Claiborne, Inc. and subsidiaries as of December 31, 1994 and December 25, 1993, and the results of their operations and their cash flows for each of the three fiscal years in the period ended December 31, 1994 in conformity with generally accepted accounting principles.

As explained in Note 1 to the consolidated financial statements, effective December 27, 1992, the Company changed its method of accounting for income taxes.

New York, New York February 20, 1995

F-2

30 CONSOLIDATED BALANCE SHEETS Liz Claiborne, Inc. and Subsidiaries

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

31 CONSOLIDATED STATEMENTS OF INCOME Liz Claiborne, Inc. and Subsidiaries

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

32 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Liz Claiborne, Inc. and Subsidiaries

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

33 CONSOLIDATED STATEMENTS OF CASH FLOWS Liz Claiborne, Inc. and Subsidiaries

THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE AN INTEGRAL PART OF THESE STATEMENTS.

34 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 1 SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Liz Claiborne, Inc. and its wholly-owned subsidiaries (the "Company"). All intercompany balances and transactions have been eliminated in consolidation. The Company

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document is primarily engaged in the design and marketing of a broad range of apparel, accessories, shoes and fragrances.

CASH EQUIVALENTS

All highly liquid investments with a remaining maturity of three months or less at the date of acquisition are classified as cash equivalents.

MARKETABLE SECURITIES

At December 31, 1994, investments are stated at market in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt and Equity Securities" which was adopted by the Company at the beginning of the 1994 fiscal year. Prior year's financial statements have not been restated to reflect the change in accounting method. At December 25, 1993, investments are stated at cost, which approximates market value. Gains and losses on investment transactions are recognized when realized based on settlement dates. Unrealized gains and losses are included in retained earnings until realized. Dividends on equity securities are recorded in income based on payment dates. Interest is recognized when earned.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out for wholesale operations and retail method for retail and outlet operations) or market.

PROPERTY AND EQUIPMENT - NET

Property and equipment is stated at cost less accumulated depreciation and amortization. Buildings and building improvements are depreciated using the straight-line method over their estimated useful lives of 20 to 39 1/2 years. Machinery and equipment and furniture and fixtures are depreciated using the straight-line method over their estimated useful lives of five to seven years. Leasehold improvements are amortized over the shorter of the lease term or the estimated useful lives of the assets.

FOREIGN CURRENCY TRANSLATION

Assets and liabilities of non-U.S. subsidiaries have been translated at year-end exchange rates. Revenues and expenses have been translated at average rates of exchange in effect during the year. Resulting translation adjustments have been recorded as a separate component of stockholders' equity. Gains and losses on translation of intercompany investments in foreign subsidiaries of a long-term nature are also included in this component of stockholders' equity.

35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

FOREIGN EXCHANGE CONTRACTS

The Company enters into foreign exchange contracts to hedge transactions denominated in foreign currencies for periods up to 18 months and to hedge expected payment of intercompany transactions with its non-U.S. subsidiaries. Gains and losses on contracts which hedge specific foreign currency denominated commitments are recognized in the period in which the transaction is completed. Transaction gains and losses included in income were not significant in fiscal 1994, 1993 and 1992. As of December 31, 1994, the Company had contracts maturing through May 1996 to purchase at contracted forward rates 1,977,485,000 Spanish pesetas and to sell 27,500,000 Canadian dollars and 9,700,000 British sterling. The aggregate U.S. dollar value of all foreign exchange contracts is approximately $50,000,000 at year end 1994, as compared with approximately $42,000,000 at year end 1993. Unrealized gains and losses for outstanding foreign exchange contracts were not material at December 31, 1994 and December 25, 1993.

REVENUE RECOGNITION

Revenue within wholesale operations is recognized at the time merchandise is shipped from the Company's distribution centers. Retail and outlet store revenues are recognized at the time of sale.

CHANGE IN ACCOUNTING PRINCIPLES - INCOME TAXES

The Company adopted the provisions of SFAS No. 109 "Accounting for Income Taxes" as of the beginning of fiscal 1993. The effect of this accounting change in fiscal 1993 was an increase in net income of $1,643,000, or $.02 per common share.

EARNINGS PER COMMON SHARE

Earnings per common share have been computed using the weighted average number of shares outstanding during each period. The inclusion of shares subject to unexercised stock options would not have a material dilutive effect.

In 1994, the Company changed its fiscal year to the Saturday closest to December 31 from the last Saturday in December. This change had no effect on the 1994 year end date. The 1994 fiscal year reflects a 53-week period, while the 1993 and 1992 fiscal years each reflect a 52-week period.

PRIOR YEARS' RECLASSIFICATION

Certain items previously reported in specific captions in the accompanying financial statements have been reclassified to conform with the current year's classifications.

36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 2 RESTRUCTURING CHARGE In December 1994, the Company recorded a $30.0 million restructuring charge. The amount includes $16.8 million related to the phase out of its First Issue business, $10.2 million for the streamlining of operating and administrative functions and $3.0 million for the restructuring of its Moderate Division. Principal items included in the charge are estimated contract termination costs, severance and related benefits for staff reductions, losses on contracts and the write-off of certain assets. This charge reduced net income by $18.9 million, or $.24 per common share. The remaining balance of the restructuring liability as of December 31, 1994 was $28,163,000. The majority of these liabilities should be paid or settled during the 1995 fiscal year.

NOTE 3 MARKETABLE SECURITIES The Company adopted the provisions of SFAS No. 115 as of the beginning of fiscal 1994. In accordance with SFAS No. 115, prior period financial statements have not been restated to reflect the change in accounting principle. The effect as of December 26, 1993 of adopting SFAS No. 115 was an increase in the opening balance of stockholders' equity of $2,848,000 (net of $1,673,000 in deferred income taxes) to reflect the net unrealized gains on securities classified as available-for-sale which were previously carried at amortized cost. This increase in stockholders' equity was included in retained earnings.

The following are summaries of available-for-sale marketable securities and maturities:

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

At December 31, 1994 the above investments include $64,422,000 of tax exempt notes and bonds which are classified as cash and cash equivalents and equity securities which are included in other long-term assets in the consolidated balance sheets. At December 25, 1993 the above investments include $92,282,000 of tax exempt notes and bonds which are classified as cash and cash equivalents.

For the year ended December 31, 1994, gross realized gains and (losses) on sales of available-for-sale securities totaled $674,000 and ($412,000), respectively. The net of tax adjustment to unrealized gains and losses on available-for-sale securities for the 1994 year was a charge of $6,787,000 (net of $3,986,000 in deferred income taxes) which was included in retained earnings. As of December 31, 1994, the fair value adjustment for available-for-sale securities was a charge of $3,939,000 (net of $2,313,000 in deferred income taxes) which reflects the net unrealized loss included in retained earnings.

NOTE 4 INVENTORIES

NOTE 5 PROPERTY AND EQUIPMENT

The Company's land and building located in Mount Pocono, Pennsylvania is pledged as collateral against long-term debt of $1,227,000.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 6 INCOME TAXES

Liz Claiborne, Inc. and its U.S. subsidiaries file a consolidated federal income tax return. Deferred income tax benefits and deferred income taxes represent the tax effects of revenues and expenses which are recognized for tax purposes in different periods from those used for financial statement purposes. The net deferred tax benefit primarily reflects the capitalization of certain overhead expenses in inventory for income tax purposes, taxes provided on unremitted earnings of foreign subsidiaries, the effects of different depreciation rates used for financial statement and tax purposes and, for the year ended December 31, 1994, a restructuring charge. The current income tax provisions have not been reduced by $15,000 in 1994, $1,171,000 in 1993 and $4,805,000 in 1992, of tax benefits arising from the exercise of nonqualified stock options. These amounts have been credited to capital in excess of par value.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

The effective income tax rate differs from the statutory federal income tax rate as follows:

The components of net deferred taxes arising from temporary differences as of December 31, 1994 and December 25, 1993 were as follows:

Management believes that the deferred tax benefits will be fully realized

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 7 COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

The Company leases office, showroom, warehouse/distribution and retail space, transportation equipment, computers and other equipment under various noncancellable operating lease agreements which expire through January 2009. Rental expense for 1994, 1993 and 1992 was approximately $67,208,000, $56,664,000 and $46,591,000, respectively.

At December 31, 1994, the minimum aggregate rental commitments were as follows:

Certain rental commitments have renewal options extending through the year 2027. Some of these renewals are subject to adjustments in future periods. Many of the leases call for additional charges, some of which are based upon various escalations and, in the case of outlet and retail leases, the gross sales of the individual stores above base levels.

At December 31, 1994, the Company had entered into commitments for the purchase of raw materials and for the production of finished goods totaling approximately $587,328,000.

In the normal course of business, the Company extends credit, on open account, to its retail store customers, after a credit analysis based on a number of financial and other criteria. In recent years, a number of corporate groups which include certain of the Company's largest department store customers have been involved in highly leveraged financial transactions and certain of these customers have filed for protection under Chapter 11 of the Federal Bankruptcy Code. In 1994, two corporate groups of department store customers accounted for 17% and 11%, respectively, of net sales. In 1993, two corporate groups of department store customers accounted for 18% and 11%, respectively, of net sales. In 1992, three corporate groups of department store customers accounted for 18%, 11% and 10%, respectively, of net sales. Subsequent to December 31, 1994, two corporate groups of department store customers merged to become a single corporate group which would have accounted for 16% of net sales in 1994. The Company does not believe that this concentration of sales and credit risks represents a material risk of loss with respect to its financial position as of December 31, 1994.

The Company is a party to several pending legal proceedings and claims. Although the outcome of such actions cannot be determined with certainty, management is of the opinion that the final outcome should not have a material adverse effect on the Company's results of operations or financial position.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 8 LINES OF CREDIT

As of December 31, 1994, the Company had bank lines of credit aggregating $282,000,000 which were available to cover letters of credit issued by the banks and direct borrowings. The Company has not used these facilities for direct borrowings.

At December 31, 1994 and December 25, 1993, the Company had outstanding letters of credit of $204,113,000 and $184,294,000, respectively.

NOTE 9 STOCK PLANS

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document In April 1981, February 1984 and March 1992, the Company adopted plans under which nonqualified options to acquire shares of common stock may be granted to officers, other key employees and directors selected by the plans' administrative committee. Payment by option holders upon exercise of an option may be made in cash or, with the consent of the committee, by delivering previously acquired shares of Company common stock. Stock appreciation rights may be granted in connection with all or any part of any option granted under the plans, and may also be granted without a grant of a stock option. The grantee of a stock appreciation right has the right, with the consent of the committee, to receive either in cash or in shares of common stock, an amount equal to the appreciation in the fair market value of the covered shares from the date of grant to the date of exercise. Options and rights are exercisable over a period of time designated by the committee (but not prior to one year from the date of grant) and are subject to such other terms and conditions as the committee determines. Vesting schedules will be accelerated upon merger of the Company or the happening of certain other events. Options and rights may not be transferred during the lifetime of a holder.

Awards under the 1992 plan may also be made in the form of incentive stock options, dividend equivalent rights, restricted stock, unrestricted stock and performance shares. To date, no stock appreciation rights, incentive stock options, dividend equivalent rights, unrestricted stock or performance shares have been granted under the plans. Exercise prices for awards under the plans are determined by the committee; to date, all stock options have been granted at an exercise price not less than the fair market value of the underlying shares on the date of grant.

The 1992 plan provides initially for the issuance of up to 2,500,000 shares of common stock with respect to options, stock appreciation rights and other awards granted under the plan, and provides that the Board of Directors may increase such number by an amount equal to 1% of the common stock outstanding as of January 1, 1994 and each January 1st thereafter. At December 31, 1994, there were available for future grant 1,955,609 shares under the 1992 plan. The 1992 plan expires in 2002. The 1984 and 1981 plans have expired. All awards made under the 1984 and 1981 plan prior to their respective termination dates remain in effect in accordance with the terms of their plans.

Since January 1990, the Company has delivered treasury shares upon the exercise of stock options. The difference between the cost of the treasury shares, on a first-in, first-out basis, and the exercise price of the options has been reflected in retained earnings.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

Changes in common shares under option for the three fiscal years in the period ended December 31, 1994 are summarized as follows:

On January 3, 1995, 1,025,975 nonqualified options to acquire shares of common stock were granted to officers and other key employees with an exercise price of $17.13.

In May 1994, the Compensation Committee of the Board of Directors granted

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 85,000 shares of common stock in connection with the hiring of a key executive. These shares are subject to restrictions on transfer and subject to risk of forfeiture until earned by continued employment. The restrictions expire on the last day of each of the Company's fiscal years, 1994 through 2001, at the rate of 10,000 shares of common stock per year through the year 2000 and 15,000 shares of common stock in the year 2001. The expiration of the restrictions may be accelerated if the market value of the common stock attains certain predetermined levels.

In 1992, options were granted to certain of the Company's senior officers at a price of $58.50 per share, representing 150% of the market price at the date of grant. At December 31, 1994, 100,000 of these options were outstanding; they will become exercisable on October 21, 1998 and expire on October 21, 2000, subject to certain exceptions.

In November 1991, the Company adopted an outside directors' stock ownership plan under which non-employee directors automatically receive, as part of their annual retainer, shares of common stock with a value of $10,000 on each January 1. The shares so issued are nontransferable for a period of three years following the grant date, subject to certain exceptions. In 1994, 3,087 shares of common stock were issued under this plan. Not more than one twentieth of one percent (0.05%) of the shares of common stock outstanding from time to time may be issued under the plan, which will expire in 2002.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 10 PROFIT-SHARING RETIREMENT, SAVINGS AND DEFERRED COMPENSATION PLANS

The Company adopted a noncontributory, defined contribution profit-sharing retirement plan in January 1983. The plan covers all eligible U.S. employees who are 21 years of age with one or more years of service and who are not covered by collective bargaining agreements. The plan pays benefits based on an employee's vested account balance in accordance with qualification rules set out in the plan. Vesting begins at 20% after two years of service, and from the 3rd through 6th years, vesting increases by 20% each year until full vesting occurs. Each year, profit-sharing contributions, if any, are determined by the Board of Directors. The Company's 1994, 1993 and 1992 plan contribution expenses, which are included in selling, general and administrative expenses, were $6,166,000, $5,646,000 and $5,431,000, respectively.

The Company adopted a 401(k) savings plan effective January 1985. The plan covers all eligible U.S. employees who are 21 years of age with one or more years of service and who are not covered by collective bargaining agreements. The plan pays benefits based on an employee's vested account balance. Participants may contribute from 1% to 15% of their salary on a before - tax basis. Such contributions are fully and immediately vested. Vesting of the Company's matching contribution is on the same basis as the profit sharing retirement plan. The Company's 1994, 1993 and 1992 plan contribution expenses, which are included in selling, general and administrative expenses, were $2,658,000, $2,352,000 and $1,944,000, respectively.

The Company has established an unfunded deferred compensation arrangement for a senior executive which will accrue for up to four years at the rate of $375,000 per year commencing on January 1, 1993. The accrued amount, plus interest, will be payable upon retirement.

The Company has adopted a supplemental retirement plan for executives whose benefits under the profit-sharing retirement plan and the savings plan are constrained by the operation of certain Internal Revenue Code limitations. The supplemental plan provides a benefit equal to the difference between the contribution that would be made for an executive under the two tax-qualified plans absent such limitations and the actual contribution under those plans. Supplemental benefits accrued vest on the same schedule applicable under the tax-qualified plans. The supplemental plan is not funded. Eligible executives employed on August 5, 1993 were credited with a retroactive supplemental plan benefit for the prior years in which the legal limitations had affected their tax-qualified plan benefits. The Company's plan expense, which are included in selling, general and administrative expenses, were $362,000 and $773,000 in 1994 and 1993, respectively.

NOTE 11 STOCKHOLDER RIGHTS PLAN

The Company has adopted a Stockholder Rights Plan under which one preferred stock purchase right is attached to each share of common stock outstanding. Pursuant to the Rights Agreement covering the Stockholder Rights Plan, the rights become exercisable ten days, subject to extension, after a party or

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document group acquires or makes a tender offer for 20% or more of the Company's common stock. Each right entitles its holder, under certain circumstances, to buy 1/100 share of a newly created Series A Junior Participating Preferred Stock for $85. If 20% of the Company's common stock is acquired by a party or group, each right not owned by a 20%-or-more stockholder will entitle the holder to purchase Company common stock having a market value of twice the exercise price of the right. In addition, if the Company is involved in a merger or certain other business combinations in which it is not the surviving corporation, each right not owned by a 20%-or-more stockholder will entitle the holder to purchase common stock of the surviving corporation having a market value of twice the exercise price of the right. The rights, which expire on December 21, 1998 and do not have voting rights, may be redeemed by the Company at $.01 per right prior to their becoming exercisable.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) LIZ CLAIBORNE, INC. AND SUBSIDIARIES

NOTE 12 CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTARY DISCLOSURES

During fiscal 1994, 1993 and 1992, the Company made income tax payments of $72,415,000, $84,689,000 and $127,230,000, respectively. Non-cash investing and financing activities which are not included in the cash flow statements for 1994 and 1993 include a direct financing lease receivable with a disposition of property and equipment of $1,177,000 and $4,348,000, respectively.

NOTE 13 ACCRUED EXPENSES

Accrued expenses at December 31, 1994 and December 25, 1993 consisted of the following:

UNAUDITED QUARTERLY RESULTS

Unaudited quarterly financial information for 1994 and 1993 is set forth in the table below:

* Includes the after tax effect of a restructuring charge of $18,900 ($30,000 pretax) or $.24 per common share in 1994.

** Includes a credit representing the cumulative effect of a change in the method of accounting for income taxes of $1,643 or $.02 per common share in 1993.

INDEX TO EXHIBITS ------

______+ Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 46 -

______+ Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 47 -

______* Filed herewith. + Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 48 -

______* Filed herewith. + Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 49 -

(b) Reports on Form 8-K.

Not applicable.

______* Filed herewith. + Compensation plan or arrangement required to be noted as provided in Item 14(a)(3).

- 50 -

[CHUBB LOGO] EXECUTIVE PROTECTION POLICY

EXECUTIVE PROTECTION POLICY FOR:

LIZ CLAIBORNE, INC.

FORM 14-02-0941 (Ed. 1-92) Page 1 of 5

2 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY

DECLARATIONS

EXECUTIVE PROTECTION POLICY

Policy Number 8103-53-79-F

Federal Insurance Company, a stock insurance company, incorporated under the laws of Indiana, herein called the Company.

Item 1. Parent Organization: LIZ CLAIBORNE, INC.

1 CLAIBORNE AVENUE NORTH BERGEN, NEW JERSEY 07047

Item 2. POLICY PERIOD: From 12:01 A.M. on AUGUST 11, 1994 To 12:01 A.M. AUGUST 11, 1995 Local time at the address shown in Item 1.

Item 3. Coverage Summary Description GENERAL TERMS AND CONDITIONS EXECUTIVE LIABILITY AND INDEMNIFICATION CRIME INSURANCE OUTSIDE DIRECTORSHIP LIABILITY

Item 4. Termination of Prior Policies: 81035379-E

THE EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY, OUTSIDE DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY COVERAGE SECTIONS (WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A CLAIMS MADE BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE COVERAGE SECTIONS COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING THE POLICY PERIOD. PLEASE READ CAREFULLY.

In witness whereof, the Company issuing this policy has caused this policy to be signed by its authorized officers, but it shall not be valid unless also signed by a duly authorized representative of the Company.

FEDERAL INSURANCE COMPANY

------Secretary President

/s/ John S. Bain

Form 14-02-0941 (Ed. 1-92) Page 2 OF 5

3 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY

GENERAL TERMS AND CONDITIONS

Territory 1 Coverage shall extend anywhere in the world.
Terms and Conditions 2. Except for the General Terms and Conditions or unless stated to the contrary in any coverage section, the terms and conditions of each coverage section of this policy apply only to that section and shall not be construed to apply to any other coverage section of this policy.
Limits of Liability and 3. Unless stated to the contrary in any coverage section, the limits of liability and Deductible Amounts deductible amounts shown for each coverage section of this policy are separate limits of liability and separate deductible amounts pertaining to the coverage section for which they are shown; the application of a deductible amount to a loss under one coverage section of this policy shall not reduce the deductible amount under any other coverage section of this policy.
Notice 4. Notice to the Company under this policy shall be given in writing addressed to:
Notice of Claim:
National Claims Department Chubb Group of Insurance Companies 15 Mountain View Road Warren, New Jersey 07059
All Other Notices:
Executive Protection Department Chubb Group of Insurance Companies 15 Mountain View Road Warren, New Jersey 07059
Such notice shall be effective on the date of receipt by the Company at such address.
Investigation 5. The Company may make any investigation it deems necessary and may, with and Settlement the written consent of the Insured, make any settlement of a claim it deems expedient. If the Insured withholds consent to such settlement, the Company's liability for all loss on account of such claim shall not exceed the amount for which the Company could have settled such claim plus costs, charges and expenses accrued as of the date such settlement was proposed in writing by the Company to the Insured.

~~Form 14-02-0941 (Ed. 1-92) Page 3 of 5~~

~~GENERAL TERMS AND CONDITIONS~~

Valuation and 6. All premiums, limits, retentions, loss and other amounts under this policy are Foreign Currency expressed and payable in the currency of the United States of America. Except as otherwise provided in any coverage section, if judgment is rendered, settlement is denominated or another element of loss under this policy is stated in a currency other than United States of America dollars, payment under this policy shall be made in United States dollars at the rate of exchange published in the Wall Street Journal on the date the final judgment is reached, the amount of the settlement is agreed upon or the other element of loss is due, respectively.
Subrogation 7. In the event of any payment under this policy, the Company shall be subrogated to the extent of such payment to all the Insured's rights of recovery, and the Insured shall execute all papers required and shall do everything necessary to secure and preserve such rights, including the execution of such documents necessary to enable the Company effectively to bring suit in the name of the Insured.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Action Against 8. No action shall lie against the Company unless, as a condition precedent thereto, the Company there shall have been full compliance with all the terms of this policy. No person or organization shall have any right under this policy to join the Company as a party to any action against the Insured to determine the Insured's liability nor shall the Company be impleaded by the Insured or his legal representatives. Bankruptcy or insolvency of an Insured or of the estate of an Insured shall not relieve the Company of its obligations nor deprive the Company of its rights under this policy.
Authorization Clause 9. By acceptance of this policy, the PARENT ORGANIZATION agrees to act on behalf of all Insureds with respect to the giving and receiving of notice of claim or termination, the payment of premiums and the receiving of any return premiums that may become due under this policy, the negotiation, agreement to and acceptance of endorsements, and the giving or receiving of any notice provided for in this policy (except the giving of notice to apply for the Extended Reporting Period), and the Insureds agree that the PARENT ORGANIZATION shall act on their behalf.
Alteration 10. No change in, modification of, or assignment of interest under this policy shall and Assignment be effective except when made by a written endorsement to this policy which is signed by an authorized employee of Chubb & Son Inc.
Termination of 11. This policy or any coverage section shall terminate at the earliest of the following Policy or times: Coverage Section (A) sixty days after the receipt by the PARENT ORGANIZATION of a written notice of termination from the Company,
(B) upon the receipt by the Company of written notice of termination from the PARENT ORGANIZATION,

~~FORM 14-02-0941 (Ed. 1-92) Page 4 of 5~~

~~5 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~GENERAL TERMS AND CONDITIONS~~

Termination of (C) upon expiration of the POLICY PERIOD as set forth in Item 2 of the Policy or Declarations of this policy, or Coverage Section (continued) (D) at such other time as may be agreed upon by the Company and the PARENT ORGANIZATION.
The Company shall refund the unearned premium computed at customary short rates if the policy or any coverage section is terminated by the PARENT ORGANIZATION. Under any other circumstances the refund shall be computed pro rata.
Termination of 12. Any bonds or policies issued by the Company or its affiliates and specified in Prior Bonds Item 4 of the Declarations of this policy shall terminate, if not already terminated, or Policies as of the inception date of this policy. Such prior bonds or policies shall not cover any loss under the Crime or Kidnap/Ransom & Extortion coverage sections not discovered and notified to the Company prior to the inception date of this policy.
Definitions 13. When used in this policy:
PARENT ORGANIZATION means the organization designated in Item 1 of the Declarations of this policy.
POLICY PERIOD means the period of time specified in Item 2 of the Declarations of this policy, subject to prior termination in accordance with Subsection 11 above. If this period is less than or greater than one year, then the Limits of Liability specified in the Declarations for each coverage section shall be the Company's maximum limit of liability under such coverage section for the entire period.

~~Form 14-02-0941 (Ed. 1-92) Page 5 of 5~~

~~[CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~Effective date of this endorsement: AUGUST 11, 1994~~

Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document To be attached to and form part of Company: FEDERAL INSURANCE COMPANY Policy No. 8103-53-79-F

~~Issued to: LIZ CLAIBORNE, INC.~~

~~The following is a schedule of endorsements issued with the policy at inception:~~

~~GENERAL TERMS AND CONDITIONS~~

~~ENDORSEMENT NUMBER FORM NUMBER~~

~~1 14-02-1323~~

~~CRIME INSURANCE~~

~~ENDORSEMENT NUMBER FORM NUMBER~~

~~1 14-02-0975 2 14-02-0976 3 14-02-0998~~

~~OUTSIDE DIRECTORSHIP LIABILITY~~

~~ENDORSEMENT NUMBER FORM NUMBER~~

~~1 14-02-0961 2 14-02-0961~~

~~Page 1 Last page Form 14-02-1252 (Ed. 12/92)~~

~~7 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~ENDORSEMENT~~

~~Coverage Section: GENERAL TERMS Company: FEDERAL INSURANCE COMPANY~~

~~Effective date of Endorsement No: 1 this endorsement: AUGUST 11, 1994 To be attached to and form part of Policy No. 8103-53-79-F~~

~~Issued to: LIZ CLAIBORNE, INC.~~

~~NEW JERSEY AMENDATORY ENDORSEMENT~~

~~It is agreed that the following shall be added to Subsection 11 of the General Terms and Conditions:~~

Pursuant to New Jersey law, this policy cannot be terminated or nonrenewed for any underwriting reason or guideline(s) which is arbitrary, capricious or unfairly discriminatory or without adequate prior notice to the PARENT ORGANIZATION. The underwriting reasons or guidelines that the Company can use to terminate or nonrenew this policy are maintained by the Company and/or the PARENT ORGANIZATION'S lawful representative upon written request.

~~This provision shall not apply to any policy which has been in effect for less than 60 days of the time notice of cancellation is mailed or delivered, unless the policy is a renewal policy.~~

~~ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.~~

~~/s/ JOHN S. BAIN ------Authorized Representative~~

~~September 7, 1994 ------Date~~

~~[CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~DECLARATIONS~~

~~EXECUTIVE LIABILITY AND INDEMNIFICATION COVERAGE SECTION~~

Item 1. PARENT ORGANIZATION: LIZ CLAIBORNE, INC.
Item 2. Limits of Liability:
(A) Each LOSS $ 15,000,000. (B) Each POLICY PERIOD $ 15,000,000.
Note that the limits of liability and any deductible or retention are reduced or exhausted by DEFENSE COSTS.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount:
Insuring Clause 2 $ 500,000.
Item 5. INSURED ORGANIZATION: LIZ CLAIBORNE,INC. AND ITS SUBSIDIARIES.
Item 6. INSURED PERSONS: Any person who has been, now is, or shall become a duly elected director or a duly elected or appointed officer of the Insured Organization.
Item 7. Extended Reporting Period:
(A) Additional Premium: $210,000. (B) Additional Period: ONE YEAR
Item 8. Pending or Prior Date: JUNE 8, 1981
Item 9. Continuity Date: JUNE 8, 1981

~~Form 14-02-0943 (Ed. 1/92) Page 1 of 10~~

~~9 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

EXECUTIVE LIABILITY In consideration of payment of the premium and subject to the Declarations, General AND INDEMNIFICATION Terms and Conditions, and the limitations, conditions, provisions and other terms of COVERAGE SECTION this coverage section, the Company agrees as follows:
INSURING CLAUSES
Executive 1. The Company shall pay on behalf of each of the INSURED PERSONS all LOSS for Liability Coverage which the INSURED PERSON is not indemnified by the INSURED ORGANIZATION and Insuring Clause 1 which the INSURED PERSON becomes legally obligated to pay on account of any CLAIM first made against him, individually or otherwise, during the POLICY PERIOD or, if exercised, during the Extended Reporting Period, for a WRONGFUL ACT committed, attempted, or allegedly committed or attempted by such INSURED PERSON before or during the POLICY PERIOD.
Executive 2. The Company shall pay on behalf of the INSURED ORGANIZATION all LOSS for Indemnification which the INSURED ORGANIZATION grants indemnification to each INSURED Coverage PERSON, as permitted or required by law, which the INSURED PERSON has Insuring Clause 2 become legally obligated to pay on account of any CLAIM first made against him, individually or otherwise, during the POLICY PERIOD or, if exercised, during the Extended Reporting Period, for a WRONGFUL ACT committed, attempted, or allegedly committed or attempted by such INSURED PERSON before or during THE POLICY PERIOD.
ESTATES AND LEGAL 3. Subject otherwise to the General Terms and Conditions and the limitations, REPRESENTATIVES conditions, provisions and other terms of this coverage section, coverage shall extend to CLAIMS for the WRONGFUL ACTS of INSURED PERSONS made against the
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document estates, heirs, legal representatives or assigns of INSURED PERSONS who are deceased or against the legal representatives or assigns of INSURED PERSONS who are incompetent, insolvent or bankrupt.
EXTENDED 4. If the Company terminates or refuses to renew this coverage section other than REPORTING PERIOD for nonpayment of premium, the PARENT ORGANIZATION and the INSURED PERSONS shall have the right, upon payment of the additional premium set forth in Item 7(A) of the Declarations for this coverage section, to an extension of the coverage granted by this coverage section for the period set forth in Item 7(B) of the Declarations for this coverage section (Extended Reporting Period) following the effective date of termination or nonrenewal, but only for any WRONGFUL ACT committed, attempted, or allegedly committed or attempted, prior to the effective date of termination or nonrenewal. This right of extension shall lapse unless written notice of such election, together with payment of the additional premium due, is received by the Company within 30 days following the effective date of termination or nonrenewal. Any CLAIM made during the Extended Reporting Period shall be deemed to have been made during the immediately preceding POLICY PERIOD.
If the PARENT ORGANIZATION terminates or declines to accept renewal, the Company may, if requested, at its sole option, grant an Extended Reporting Period. The offer of renewal terms and conditions or premiums different from those in effect prior to renewal shall not constitute refusal to renew.

~~Form 14-02-0943 (Ed. 1/92) Page 2 of 10~~

EXCLUSIONS
Exclusions Applicable 5. The Company shall not be liable for LOSS on account of any CLAIM made against to Insuring any INSURED PERSON: Clauses 1 and 2 (a) based upon, arising from, or in consequence of any circumstance if written notice of such circumstance has been given under any policy or coverage section of which this coverage section is a renewal or replacement and if such prior policy or coverage section affords coverage (or would afford such coverage except for the exhaustion of its limits of liability) for such LOSS, in whole or in part, as a result of such notice;
(b) based upon, arising from, or in consequence of any demand, suit or other proceeding pending, or order, decree or judgement entered against any INSURED on or prior to the Pending or Prior Date set forth in Item 8 of the Declarations for this coverage section, or the same or any substantially similar fact, circumstance or situation underlying or alleged therein;
(c) brought or maintained by or on behalf of any INSURED except: (i) a CLAIM that is a derivative action brought or maintained on behalf of an INSURED ORGANIZATION by one or more persons who are not INSURED PERSONS and who bring and maintain the CLAIM without the solicitation, assistance or participation of any INSURED, (ii) a CLAIM brought or maintained by an INSURED PERSON for the actual or alleged wrongful termination of the INSURED PERSON, or (iii) a CLAIM brought or maintained by an INSURED PERSON for contribution or indemnity, if the CLAIM directly results from another CLAIM covered under this coverage section;
(d) for an actual or alleged violation of the responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act of 1974 and amendments thereto or similar provisions of any federal, state or local statutory law or common law upon fiduciaries of any pension, profit sharing, health and welfare or other employee benefit plan or trust established or maintained for the purpose of providing benefits to employees of an INSURED ORGANIZATION;
(e) for bodily injury, mental or emotional distress, sickness, disease or death of any person or damage to or destruction of any tangible property including loss of use thereof; or
(f) based upon, arising from, or in consequence of (i) the actual, alleged or threatened discharge, release, escape or disposal of POLLUTANTS into or on real or personal property, water or the atmosphere; or (ii) any direction or request that the INSURED test for, monitor, clean up, remove, contain, treat, detoxify or neutralize POLLUTANTS, or any voluntary decision to do so; including but not limited to any CLAIM for financial loss to the INSURED ORGANIZATION, its security holders or its creditors based upon, arising from, or in consequence of the matters described in (i) or (ii) of this exclusion.

~~11 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~EXCLUSIONS (continued)~~

Exclusions Applicable 6. The Company shall not be liable under Insuring Clause 1 for LOSS on account to Insuring of any CLAIM made against any INSURED PERSON: Clause 1 Only (a) for an accounting of profits made from the purchase or sale by such INSURED PERSON of securities of the INSURED ORGANIZATION within the meaning of Section 16 (b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law or common law;
(b) based upon, arising from, or in consequence of any deliberately fraudulent act or omission or any willful violation of any statute or regulation by such INSURED PERSON, if a judgement or other final adjudication adverse to the INSURED PERSON establishes such a deliberately fraudulent act or omission or willful violation; or
(c) based upon, arising from, or in consequence of such INSURED PERSON having gained in fact any personal profit, remuneration or advantage to which such INSURED PERSON was not legally entitled.
Severability 7. With respect to the Exclusions in Subsections 5 and 6 of this coverage section, of Exclusions no fact pertaining to or knowledge possessed by any INSURED PERSON shall be imputed to any other INSURED PERSON to determine if coverage is available.
LIMIT OF LIABILITY, 8. For the purposes of this coverage section, all LOSS arising out of the same DEDUCTIBLE AND WRONGFUL ACT and all INTERRELATED WRONGFUL ACTS of any INSURED PERSON shall COINSURANCE be deemed one LOSS, and such LOSS shall be deemed to have originated in the earliest POLICY PERIOD in which a CLAIM is first made against any INSURED PERSON alleging any such WRONGFUL ACT or INTERRELATED WRONGFUL ACTS.
The Company's maximum liability for each LOSS, whether covered under Insuring Clause 1 or Insuring Clause 2 or both, shall be the Limit of Liability for each LOSS set forth in Item 2(A) of the Declarations for this coverage section. The Company's maximum aggregate liability for all LOSS on account of all CLAIMS first made during the same POLICY PERIOD, whether covered under Insuring Clause 1 or Insuring Clause 2 or both, shall be the Limit of Liability for each POLICY PERIOD set forth in Item 2(B) of the Declarations for this coverage section.
The Company's liability under Insuring Clause 2 shall apply only to that part of each LOSS which is excess of the Deductible Amount set forth in Item 4 of the Declarations for this coverage section and such Deductible Amount shall be borne by the INSUREDS uninsured and at their own risk.
If a single LOSS is covered in part under Insuring Clause 1 and in part under Insuring Clause 2, the Deductible Amount applicable to the LOSS shall be the Insuring Clause 2 deductible set forth in Item 4 of the Declarations for this coverage section.

~~Form 14-02-0943 (Ed. 1/92) Page 4 of 10~~

LIMIT OF LIABILITY, With respect to all LOSS (excess of the applicable Deductible Amount) originating DEDUCTIBLE AND in any one POLICY PERIOD, the INSUREDS shall bear uninsured and at their own COINSURANCE risk that percent of all such LOSS specified as the Coinsurance Percent in Item (continued) 3 of the Declarations for this coverage section, and the Company's liability hereunder shall apply only to the remaining percent of all such LOSS.
Any LOSS covered in whole or in part by this coverage section and the Employment Practices Liability coverage section of this policy (if purchased) shall be subject to the limits of liability, deductible and coinsurance percent applicable to such other coverage section; provided, however, if any limit of liability applicable to such other coverage section is exhausted with respect to such LOSS, any remaining portion of such LOSS otherwise covered by this coverage section shall be subject to the Limits of Liability and Coinsurance Percent applicable to this coverage section, as reduced by the amount of such LOSS otherwise covered by this coverage section which is paid by the Company pursuant to such other coverage section.
For purposes of this Subsection 8 only, the Extended Reporting Period, if exercised, shall be
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document part of and not in addition to the immediately preceding POLICY PERIOD.
PRESUMPTIVE 9. If the INSURED ORGANIZATION: INDEMNIFICATION (a) fails or refuses, other than for reason of FINANCIAL IMPAIRMENT, to indemnify the INSURED PERSON for LOSS; and
(b) is permitted or required to indemnify the INSURED PERSON for such LOSS pursuant to:
(i) the by-laws or certificate of incorporation of the INSURED ORGANIZATION in effect at the inception of this coverage section, or
(ii) any subsequently amended or superseding by-laws or certificate of incorporation of the INSURED ORGANIZATION provided, however, that such amended or superseding by-laws or certificate of incorporation expand or broaden, and do not restrict or in any way limit, the INSURED ORGANIZATION'S ability to indemnify the INSURED PERSON;
then, notwithstanding any other conditions, provisions or terms of this coverage section to the contrary, any payment by the Company of such LOSS shall be subject to (i) the Insuring Clause 2 Deductible Amount set forth in Item 4 of the Declarations for this coverage section, and (ii) all of the Exclusions set forth in Subsections 5 and 6 of this coverage section.
For purposes of this Subsection 9, the shareholder and board of director resolutions of the INSURED ORGANIZATION shall be deemed to provide indemnification for such LOSS to the fullest extent permitted by such by-laws or certificate of incorporation.

~~Form 14-02-0943 (Ed. 1/92) Page 5 of 10~~

~~13 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

REPORTING 10. The INSUREDS shall, as a condition precedent to exercising their rights under this AND NOTICE coverage section, give to the Company written notice as soon as practicable of any CLAIM made against any of them for a WRONGFUL ACT.
If during the POLICY PERIOD or Extended Reporting Period (if exercised) an INSURED becomes aware of circumstances which could give rise to a CLAIM and gives written notice of such circumstance(s) to the Company, then any CLAIMS subsequently arising from such circumstances shall be considered to have been made during the POLICY PERIOD or the Extended Reporting Period in which the circumstances were first reported to the Company.
The INSUREDS shall, as a condition precedent to exercising their rights under this coverage section, give to the Company such information and cooperation as it may reasonably require, including but not limited to a description of the CLAIM or circumstances, the nature of the alleged WRONGFUL ACT, the nature of the alleged or potential damage, the names of actual or potential claimants, and the manner in which the INSURED first became aware of the CLAIM or circumstances.
DEFENSE AND 11. Subject to this Subsection, it shall be the duty of the INSURED PERSONS and not SETTLEMENT the duty of the Company to defend CLAIMS made against the INSURED PERSONS.
The INSUREDS agree not to settle any CLAIM, incur any DEFENSE COSTS or otherwise assume any contractual obligation or admit any liability with respect to any CLAIM without the Company's written consent, which shall not be unreasonably withheld. The Company shall not be liable for any settlement, DEFENSE COSTS, assumed obligation or admission to which it has not consented.
The Company shall have the right and shall be given the opportunity to effectively associate with the INSUREDS in the investigation, defense and settlement, including but not limited to the negotiation of a settlement, of any CLAIM that appears reasonably likely to be covered in whole or in part by this coverage section.
The INSUREDS agree to provide the Company with all information, assistance and cooperation which the Company reasonably requests and agree that in the event of a CLAIM the INSUREDS will do nothing that may prejudice the Company's position or its potential or actual rights of recovery.
DEFENSE COSTS are part of and not in addition to the Limits of Liability set forth in Item 2 of the Declarations for this coverage section, and the payment by the Company of DEFENSE COSTS reduces such Limits of Liability.
ALLOCATION 12. If both LOSS covered by this coverage section and loss not covered by this coverage section are incurred, either because a CLAIM against the INSURED PERSONS includes both covered and uncovered matters or because a CLAIM is
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document made against both an INSURED PERSON and others, including the INSURED ORGANIZATION, the INSUREDS and the Company shall use their best efforts to agree upon a fair and proper allocation of such amount between covered LOSS and uncovered loss.

~~Form 14-02-0943 (Ed. 1/92) Page 6 of 10~~

ALLOCATION If the INSUREDS and the Company agree on an allocation of DEFENSE COSTS, the (continued) Company shall advance on a current basis DEFENSE COSTS allocated to the covered LOSS. If the INSUREDS and the Company cannot agree on an allocation:
(a) no presumption as to allocation shall exist in any arbitration, suit or other proceeding;
(b) the Company shall advance on a current basis DEFENSE COSTS which the Company believes to be covered under this coverage section until a different allocation is negotiated, arbitrated or judicially determined; and
(c) the Company, if requested by the INSUREDS, shall submit the dispute to binding arbitration. The rules of the American Arbitration Association shall apply except with respect to the selection of the arbitration panel, which shall consist of one arbitrator selected by the INSUREDS, one arbitrator selected by the Company, and a third independent arbitrator selected by the first two arbitrators.
Any negotiated, arbitrated or judicially determined allocation of DEFENSE COSTS on account of a CLAIM shall be applied retroactively to all DEFENSE COSTS on account of such CLAIM, notwithstanding any prior advancement to the contrary. Any allocation or advancement of DEFENSE COSTS on account of a CLAIM shall not apply to or create any presumption with respect to the allocation of other LOSS on account of such CLAIM.
OTHER 13. If any LOSS arising from any CLAIM made against any INSURED PERSONS is INSURANCE insured under any other valid policy(ies), prior or current, then this coverage section shall cover such LOSS, subject to its limitations, conditions, provisions and other terms, only to the extent that the amount of such LOSS is in excess of the amount of payment from such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limits of Liability provided in this coverage section.
CHANGES IN EXPOSURE
Acquisition or 14. If the INSURED ORGANIZATION (i) acquires securities or voting rights in another Creation of organization or creates another organization, which as a result of such Another Organization acquisition or creation becomes a SUBSIDIARY, or (ii) acquires any organization by merger into or consolidation with an INSURED ORGANIZATION, such organization and its INSURED PERSONS shall be INSUREDS under this coverage section but only with respect to WRONGFUL ACTS committed, attempted, or allegedly committed or attempted, after such acquisition or creation unless the Company agrees, after presentation of a complete application and all appropriate information, to provide coverage by endorsement for WRONGFUL ACTS committed, attempted, or allegedly committed or attempted, by such INSURED PERSONS prior to such acquisition or creation.

~~Form 14-02-0943 (Ed. 1/92) Page 7 of 10~~

~~15 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

CHANGES IN EXPOSURE
Acquisition or If the fair value of all cash, securities, assumed indebtedness and other Creation of consideration paid by the INSURED ORGANIZATION for any such acquisition or Another Organization creation exceeds 10% of the total assets of the PARENT ORGANIZATION as (continued) reflected in the PARENT ORGANIZATION'S most recent audited consolidated financial statements, the PARENT ORGANIZATION shall give written notice of such acquisition or creation to the Company as soon as practicable together with such information as the Company may require and shall pay any reasonable additional premium required by the Company.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Acquisition of Parent 15. If (i) the PARENT ORGANIZATION merges into or consolidates with another Organization by organization, or (ii) another organization or person or group of organizations Another Organization and/or persons acting in concert acquires securities or voting rights which result in ownership or voting control by the other organization(s) or person(s) of more than 50% of the outstanding securities representing the present right to vote for the election of directors of the PARENT ORGANIZATION, coverage under this coverage section shall continue until termination of this coverage section, but only with respect to CLAIMS for WRONGFUL ACTS committed, attempted, or allegedly committed or attempted, by INSURED PERSONS prior to such merger, consolidation or acquisition. The PARENT ORGANIZATION shall give written notice of such merger, consolidation or acquisition to the Company as soon as practicable together with such information as the Company may require.
Cessation of 16. In the event an organization ceases to be a SUBSIDIARY before or after the Subsidiaries Inception Date of this coverage section, coverage with respect to such SUBSIDIARY and its INSURED PERSONS shall continue until termination of this coverage section but only with respect to CLAIMS for WRONGFUL ACTS committed, attempted or allegedly committed or attempted prior to the date such organization ceased to be a SUBSIDIARY.
REPRESENTATIONS 17. In granting coverage to any one of the INSUREDS, the Company has relief upon AND SEVERABILITY the declarations and statements in the written application for this coverage section and upon any declarations and statements in the original written application submitted to another insurer in respect of the prior coverage incepting as of the Continuity Date set forth in Item 9 of the Declarations for this coverage section. All such declarations and statements are the basis of such coverage and shall be considered as incorporated in and constituting part of this coverage section.
Such written application(s) for coverage shall be construed as a separate application for coverage by each of the INSURED PERSONS. With respect to the declarations and statements contained in such written application(s) for coverage, no statement in the application or knowledge possessed by any INSURED PERSON shall be imputed to any other INSURED PERSON for the purpose of determining if coverage is available.

~~Form 14-02-0943 (Ed. 1/92) Page 8 of 10~~

DEFINITIONS 18. When used in this coverage section:
CLAIM means:
(i) a written demand for monetary damages,
(ii) a civil proceeding commenced by the service of a complaint or similar pleading,
(iii) a criminal proceeding commenced by a return of an indictment, or
(iv) a formal administrative or regulatory proceeding commenced by the filing of a notice of charges, formal investigative order or similar document,
against any INSURED PERSON for a WRONGFUL ACT, including any appeal therefrom.
DEFENSE COSTS means that part of LOSS consisting of reasonable costs, charges, fees (including but not limited to attorneys' fees and experts' fees) and expenses (other than regular or overtime wages, salaries or fees of the directors. officers or employees of the INSURED ORGANIZATION) incurred in defending or investigating CLAIMS and the premium for appeal, attachment or similar bonds.
FINANCIAL IMPAIRMENT means the status of the INSURED ORGANIZATION resulting from (i) the appointment by any state or federal official, agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take control of, supervise, manage or liquidate the INSURED ORGANIZATION, or (ii) THE INSURED ORGANIZATION becoming a debtor in possession.
INSURED, either in the singular or plural, means the INSURED ORGANIZATION and any INSURED PERSON.
INSURED CAPACITY means the position or capacity designated in Item 6 of the Declarations for this coverage section hold by any INSURED PERSON but shall not include any position or capacity in any organization other than the INSURED ORGANIZATION, even if the INSURED ORGANIZATION directed or requested THE INSURED PERSON to serve in such other position or capacity.
INSURED ORGANIZATION means, collectively, those organizations designated in Item 5 of the Declarations for this coverage section.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document INSURED PERSON, either in the singular or plural, means any one or more of those persons designated in Item 6 of the Declarations for this coverage section.
INTERRELATED WRONGFUL ACTS means all causally connected WRONGFUL ACTS.
LOSS means the total amount which any INSURED PERSON becomes legally obligated to pay on account of each CLAIM and for all CLAIMS in each POLICY PERIOD and the Extended Reporting Period, if exercised, made against them for WRONGFUL ACTS for which coverage applies, including, but not limited to, damages, judgements, settlements, costs and DEFENSE COSTS. LOSS does not include (i) any amount not indemnified by the INSURED ORGANIZATION for which the INSURED PERSON is absolved from payment by reason of any covenant, agreement or court order, (ii) any amount incurred by the INSURED ORGANIZATION (including its board of directors or any committee of the board of directors) in connection with the investigation or evaluation of any CLAIM or potential CLAIM by or on behalf of the INSURED ORGANIZATION, (iii) fines or penalties imposed by law or the multiple portion of any multiplied damage award, or (iv) matters uninsurable under the law pursuant to which this coverage section is construed.

~~Form 14-02-0943 (Ed. 1/92) Page 9 of 10~~

~~17 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

DEFINITIONS POLLUTANTS means any substance located anywhere in the world exhibiting any hazardous characteristics as defined by, or identified on a list of hazardous substances issued by, the United States Environmental Protection Agency or a state, county, municipality or locality counterpart thereof. Such substances shall include, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. POLLUTANTS shall also mean any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products and any noise.
SUBSIDIARY, either in the singular or plural, means any organization in which more than 50% of the outstanding securities or voting rights representing the present right to vote for election of directors is owned or controlled, directly or indirectly, in any combination, by one or more INSURED ORGANIZATIONS.
WRONGFUL ACT means any error, misstatement, misleading statement, act, omission, neglect, or breach of duty committed, attempted, or allegedly committed or attempted, by an INSURED PERSON, individually or otherwise, in his INSURED CAPACITY, or any matter claimed against him solely by reason of his serving in such INSURED CAPACITY.

~~Form 14-02-0943 (Ed. 1/92) Page 10 of 10~~

~~[CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~DECLARATIONS~~

~~OUTSIDE DIRECTORSHIP LIABILITY COVERAGE SECTION~~

Item 1. PARENT ORGANIZATION: LIZ CLAIBORNE, INC.
Item 2. Limits of Liability:
(A) Each LOSS $ 15,000,000. (B) Each POLICY PERIOD $ 15,000,000.
Note that the limits of liability and any deductible or retention are reduced or exhausted by DEFENSE COSTS.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount: Insuring Clause 2 $ 500,000.
Item 5. INSURED ORGANIZATION: LIZ CLAIBORNE, INC. AND ITS SUBSIDIARIES.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Item 6. INSURED PERSONS: With regard to A Non-Profit Outside Entity, any person who has been, now is or shall become a duly elected director, a duly elected or appointed officer, or an employee of the Insured Organization. With regard to any Scheduled Outside Entity, any individual listed on a Scheduled Outside Entity Endorsement.
Item 7. Extended Reporting Period:
(A) Additional Premium: $8,750. (B) Additional Period: ONE YEAR
Item 8. Pending or Prior Date: JUNE 8, 1981 Item 9. Continuity Date: JUNE 8, 1981

~~Form 14-02-0951 (ED. 1-92) Page 1 of 10~~

~~19 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

OUTSIDE DIRECTORSHIP In consideration of payment of the premium and subject to the Declarations, General LIABILITY COVERAGE Terms and Conditions, and the limitations, conditions, provisions and other terms of SECTION this coverage section, the Company agrees as follows:
INSURING CLAUSES
Outside Directorship 1. The Company shall pay on behalf of each of the INSURED PERSONS who serve Liability Coverage in an OUTSIDE DIRECTORSHIP all LOSS for which the INSURED PERSON is not Insuring Clause 1 indemnified by the INSURED ORGANIZATION or the OUTSIDE ENTITY and which the INSURED PERSON becomes legally obligated to pay on account of any CLAIM first made against him, individually or otherwise, during the POLICY PERIOD or, if exercised, during the Extended Reporting Period, for a WRONGFUL ACT committed, attempted, or allegedly committed or attempted by such INSURED PERSON before or during the POLICY PERIOD.
Outside Directorship 2. The Company shall pay on behalf of the INSURED ORGANIZATION all LOSS (i) for Indemnification Coverage which the INSURED ORGANIZATION grants indemnification, as permitted or Insuring Clause 2 required by law, to each INSURED PERSON who serves in an OUTSIDE DIRECTORSHIP, (ii) for which the INSURED PERSON is not indemnified by the OUTSIDE ENTITY, and (iii) which the INSURED PERSON has become legally obligated to pay on account of any CLAIM first made against him, individually or otherwise, during the POLICY PERIOD or, if exercised, during the Extended Reporting Period for a WRONGFUL ACT committed, attempted, or allegedly committed or attempted by such INSURED PERSON before or during the POLICY PERIOD.
ESTATES AND LEGAL 3. Subject otherwise to the General Terms and Conditions and the limitations, REPRESENTATIVES conditions, provisions and other terms of this coverage section, coverage shall extend to CLAIMS for the WRONGFUL ACTS of INSURED PERSONS made against the estates, heirs, legal representatives or assigns of INSURED PERSONS who are deceased or against the legal representatives or assigns of INSURED PERSONS who are incompetent, insolvent or bankrupt.
EXTENDED 4. If the Company terminates or refuses to renew this coverage section other than REPORTING PERIOD for nonpayment of premium, the PARENT ORGANIZATION and the INSURED PERSONS shall have the right, upon payment of the additional premium set forth in Item 7(A) of the Declarations for this coverage section, to an extension of the coverage granted by this coverage section for the period set forth in Item 7(B) of the Declarations for this coverage section (Extended Reporting Period) following the effective date of termination or nonrenewal, but only for any WRONGFUL ACT committed, attempted, or allegedly committed or attempted, prior to the effective date of termination or nonrenewal. This right of extension shall lapse unless written notice of such election, together with payment of the additional premium due, is received by the Company within 30 days following the effective date of termination or nonrenewal. Any CLAIM made during the Extended Reporting Period shall be deemed to have been made during the immediately preceding POLICY PERIOD.
If the PARENT ORGANIZATION terminates or declines to accept renewal, the Company may, if requested, at its sole option, grant an Extended Reporting Period. The offer of renewal terms and conditions or premiums different from those in effect prior to renewal shall not constitute refusal to renew.

~~Form 14-02-0951 (Ed. 1-92) Page 2 of 10~~

EXCLUSIONS
Exclusions 5. The Company shall not be liable for LOSS on account of any CLAIM made against
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Applicable to any INSURED PERSON: Insuring Clauses 1 and 2 (a) based upon, arising from, or in consequence of any circumstance if written notice of such circumstance has been given under any policy or coverage section of which this coverage section is a renewal or replacement and if such prior policy or coverage section affords coverage (or would afford such coverage except for the exhaustion of its limits of liability) for such LOSS, in whole or in part, as a result of such notice.
(b) based upon, arising from, or in consequence of any demand, suit or other proceeding pending, or order, decree or judgment entered against any INSURED PERSON on or prior to:
(i) the Pending or Prior Date set forth in Item 8 of the Declarations for this coverage section with respect to OUTSIDE DIRECTORSHIPS in a NON-PROFIT OUTSIDE ENTITY;
(ii) the Pending or Prior Date set forth in the Scheduled Outside Entity Endorsement hereto with respect to OUTSIDE DIRECTORSHIPS in a SCHEDULED OUTSIDE ENTITY,
or the same or any substantially similar fact, circumstance or situation underlying or alleged therein;
(c) brought or maintained by or on behalf of any INSURED, the OUTSIDE ENTITY, or one or more of the OUTSIDE ENTITY'S directors, officers, trustees, governors or equivalent executives, except:
(i) a CLAIM that is a derivative action brought and maintained on behalf of an INSURED ORGANIZATION by one or more persons who are not INSURED PERSONS and who bring and maintain the CLAIM without the solicitation, assistance or participation of any INSURED; or
(ii) a CLAIM that is a derivative action brought and maintained on behalf of the OUTSIDE ENTITY by one or more persons who are not directors, officers, trustees, governors or equivalent executives of the OUTSIDE ENTITY and who bring and maintain the CLAIM without the solicitation, assistance or participation of the OUTSIDE ENTITY or any director, officer, trustee, governor or equivalent executive thereof;
(d) for an actual or alleged violation of the responsibilities, obligations or duties imposed by the Employee Retirement Income Security Act of 1974 and amendments thereto or similar provisions of any federal, state or local statutory law or common law upon fiduciaries of any pension, profit sharing, health and welfare or other employee benefit plan or trust established or maintained for the purpose of providing benefits to employees of any OUTSIDE ENTITY;
(e) for bodily injury, mental or emotional distress, sickness, disease or death of any person or damage to or destruction of any tangible property including loss of use thereof;

~~Form 14-02-0951 (Ed. 1-92) Page 3 of 10~~

~~21 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

EXCLUSIONS
Exclusions (f) based upon, arising from, or in consequence of (i) the actual, alleged or Applicable to threatened discharge, release, escape or disposal of POLLUTANTS into or on Insuring Clauses 1 and 2 real or personal property, water or the atmosphere; or (ii) any direction or (continued) request that the INSURED or OUTSIDE ENTITY test for, monitor, clean up, remove, contain, treat, detoxify or neutralize POLLUTANTS, or any voluntary decision to do so; including but not limited to any CLAIM for financial loss to the INSURED ORGANIZATION, the OUTSIDE ENTITY, or any security holders or creditors thereof based upon, arising from, or in consequence of the matters described in (i) or (ii) of this Exclusion; or
(g) for WRONGFUL ACTS committed, attempted or allegedly committed or attempted after the date such INSURED PERSON ceases to serve in the OUTSIDE DIRECTORSHIP.
Exclusions 6. The Company shall not be liable under Insuring Clause 1 for LOSS on account Applicable to of any CLAIM made against any INSURED PERSON: Insuring Clause 1 Only (a) for an accounting of profits made from the purchase or sale by such INSURED PERSON of securities of the INSURED ORGANIZATION or the OUTSIDE ENTITY within the meaning of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law or common law;
(b) based upon, arising from, or in consequence of any deliberately fraudulent act or
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document omission or any willful violation of any statute or regulation by such INSURED PERSON, if a judgment or other final adjudication adverse to the INSURED PERSON establishes such a deliberately fraudulent act or omission or willful violation; or
(c) based upon, arising from, or in consequence of such INSURED PERSON having gained in fact any personal profit, remuneration or advantage to which such INSURED PERSON was not legally entitled.
Severability 7. With respect to the Exclusions in Subsections 5 and 6 of this coverage section, of Exclusions no fact pertaining to or knowledge possessed by any INSURED PERSON shall be imputed to any other INSURED PERSON to determine if coverage is available.
LIMIT OF LIABILITY, 8. For the purposes of this coverage section, all LOSS arising out of the same DEDUCTIBLE and WRONGFUL ACT and all INTERRELATED WRONGFUL ACTS of any INSURED PERSON shall COINSURANCE be deemed one LOSS, and such LOSS shall be deemed to have originated in the earliest POLICY PERIOD in which a CLAIM is first made against any INSURED PERSON alleging any such WRONGFUL ACTS or INTERRELATED WRONGFUL ACTS.
The Company's maximum liability for each LOSS, whether covered under Insuring Clause 1 or Insuring Clause 2 or both, shall be the Limit of Liability for Each Loss set forth in Item 2(A) of the Declarations for this coverage section. The Company's maximum aggregate liability for all LOSS on account of all CLAIMS first made during the same POLICY PERIOD, whether covered under Insuring Clause 1 or Insuring Clause 2 or both, shall be the Limit of Liability for each POLICY PERIOD set forth in Item 2(B) of the Declarations for this coverage section.

~~Form 14-02-0951 (Ed. 1-92) Page 4 of 10~~

LIMIT OF LIABILITY, The Company's liability under Insuring Clause 2 shall apply only to that part of DEDUCTIBLE AND each LOSS which is excess of the Deductible Amount set forth in Item 4 of the COINSURANCE Declarations for this coverage section and such Deductible Amount shall be (continued) borne by the INSUREDS uninsured and at their own risk.
If a single LOSS is covered in part under Insuring Clause 1 and in part under Insuring Clause 2, the Deductible Amount applicable to such LOSS shall be the Insuring Clause 2 deductible set forth in Item 4 of the Declarations for this coverage section.
With respect to all LOSS (excess of the applicable Deductible Amount) originating in any one POLICY PERIOD, the INSUREDS shall bear uninsured and at their own risk that percent of all such LOSS specified as the Coinsurance Percent in Item 3 of the Declarations for this coverage section and the Company's liability hereunder shall apply only to the remaining percent of all such LOSS.
For purposes of this Subsection 8 only, the Extended Reporting Period, if exercised, shall be part of and not in addition to the immediately preceding POLICY PERIOD.
If the Company or any of its subsidiaries or affiliated companies makes payment under another policy or another coverage section of this policy on account of any CLAIM also covered under this coverage section, the Limit of Liability for this coverage section with respect to such CLAIM shall be reduced by the amount of such payment.
PRESUMPTIVE 9. If the INSURED ORGANIZATION: INDEMNIFICATION (a) fails or refuses, other than for reason of FINANCIAL IMPAIRMENT, to indemnify the INSURED PERSON for LOSS; and
(b) is permitted or required to indemnify the INSURED PERSON for such LOSS to the fullest extent permitted or required by law,
then, notwithstanding any other conditions, provisions or terms of this coverage section to the contrary, any payment by the Company of such LOSS shall be subject to (i) the Insuring Clause 2 Deductible Amount set forth in item 4 of the Declarations for this coverage section and (ii) all of the Exclusions set forth in Subsections 5 and 6 of this coverage section.
For purposes of this Subsection 9, the shareholder and board of director resolutions of the INSURED ORGANIZATION shall be deemed to provide indemnification for such LOSS to the fullest extent permitted or required by law.
REPORTING 10. The INSUREDS shall, as a condition precedent to exercising their rights under this AND NOTICE coverage section, give to the Company written notice as soon as practicable of any CLAIM made against any of them for a WRONGFUL ACT.
If during the POLICY PERIOD or Extended Reporting Period (if exercised) an INSURED becomes aware of circumstances which could give rise to a CLAIM and gives written notice of such circumstance(s) to the Company, then any CLAIMS subsequently arising from such circumstances shall be considered to have been reported during the POLICY PERIOD or the Extended Reporting Period in which the circumstances were first reported to the Company.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document

~~Form 14-02-0951 (Ed. 1-92) Page 5 of 10~~

~~23 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

REPORTING The INSUREDS shall, as a condition precedent to exercising their rights under this AND NOTICE coverage section, give to the Company such information and cooperation as it (continued) may reasonably require, including but not limited to a description of the CLAIM or circumstances, the nature of the alleged potential damage, the names of actual or potential claimants, and the manner in which the INSURED first became aware of the CLAIMS or circumstances.
DEFENSE AND 11. Subject to this Subsection, it shall be the duty of the INSURED PERSONS and not SETTLEMENT the duty of the Company to defend CLAIMS made against the INSURED PERSONS.
The INSUREDS agree not to settle any CLAIM, incur any DEFENSE COSTS or otherwise assume any contractual obligation or admit any liability with respect to any CLAIM without the Company's consent, which shall not be unreasonably withhold. The Company shall not be liable for any settlement, DEFENSE COSTS, assumed obligation or admission to which it has not consented.
The Company shall have the right and shall be given the opportunity to effectively associate with the INSUREDS in the investigation, defense and settlement, including but not limited to the negotiation of a settlement, of any CLAIM that appears reasonably likely to be covered in whole or in part by this coverage section.
The INSUREDS agree to provide the Company with all information, assistance and cooperation which the Company reasonably requests and agree that in the event of a CLAIM the INSUREDS will do nothing that may prejudice the Company's position or its potential or actual rights of recovery.
DEFENSE COSTS shall be part of and not in addition to the Limits of Liability set forth in Item 2 of the Declarations for this coverage section, and the payment by the Company of DEFENSE COSTS reduces such Limits of Liability.
ALLOCATION 12. If both LOSS covered by this coverage section and loss not covered by this coverage section are incurred, either because a CLAIM against the INSURED PERSONS includes both covered and uncovered matters or because a claim is made against both an INSURED PERSON and others, including the INSURED ORGANIZATION, and/or the OUTSIDE ENTITY, the INSUREDS and the Company shall use their best efforts to agree upon a fair and proper allocation of such amount between covered LOSS and uncovered loss.
IF the INSUREDS and the Company agree on an allocation of DEFENSE COSTS, the Company shall advance on a current basis DEFENSE COSTS allocated to covered LOSS. If the INSUREDS and the Company cannot agree on an allocation:
(a) no presumption as to allocation shall exist in any arbitration, suit or other proceeding;
(b) the Company shall advance on a current basis DEFENSE COSTS which the Company believes to be covered under this coverage section until a different allocation is negotiated, arbitrated or judicially determined; and
(c) the Company, if requested by the INSUREDS, shall submit the dispute to binding arbitration. The rules of the American Arbitration Association shall apply except with respect to the selection of the arbitration panel, which shall consist of one arbitrator selected by the INSUREDS, one arbitrator selected by the Company, and a third independent arbitrator selected by the first two arbitrators.

~~Form 14-02-0951 (Ed. 1-92) Page 6 of 10~~

ALLOCATION Any negotiated, arbitrated or judicially determined allocation of DEFENSE COSTS (continued) on account of a CLAIM shall be applied retroactively to all DEFENSE COSTS on account of such CLAIM, notwithstanding any prior advancement to the contrary. Any allocation or advancement of DEFENSE COSTS on account of a CLAIM shall not apply to or create any presumption with respect to the allocation of other LOSS on account of such CLAIM.
OTHER INSURANCE 13. If the OUTSIDE ENTITY maintains one or more insurance policies during the period AND INDEMNITY a CLAIM otherwise covered by this coverage section is first made against an INSURED PERSON, then with respect to such CLAIM this coverage section shall be specifically excess of the amount of payment from such other insurance.
If any LOSS arising from any CLAIM made against any INSURED PERSONS is
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document insured under any other valid policy(ies), prior or current, or is indemnified by the OUTSIDE ENTITY or any other organization other than the INSURED ORGANIZATION, then this coverage section shall cover such LOSS, subject to its limitations, conditions, provisions and other terms, only to the extent that the amount of such LOSS is in excess of the amount of payment from such indemnity or other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the limits provided in this coverage section.
The INSUREDS agree that they will use their best efforts to promptly enforce any rights of the INSURED PERSONS to indemnification by the OUTSIDE ENTITY or any other organization.
CHANGES IN EXPOSURE
Acquisition or 14. If the INSURED ORGANIZATION (i) acquires securities or voting rights in another Creation of organization or creates another organization, which as a result of such Another Organization acquisition or creation becomes a SUBSIDIARY, or (ii) acquires any organization by merger into or consolidation with an INSURED ORGANIZATION, such organization and its INSURED PERSONS shall be INSUREDS under this coverage section but only with respect to WRONGFUL ACTS committed, attempted, or allegedly committed or attempted, after such acquisition or creation unless the Company agrees, after presentation of a complete application and all appropriate information, to provide coverage by endorsement for WRONGFUL ACTS committed or attempted, or allegedly committed or attempted, by such INSURED PERSONS prior to such acquisition or creation.
If the fair value of all cash, securities, assumed indebtedness and other consideration paid by the INSURED ORGANIZATION for any such acquisition or creation exceeds 10% of the total assets of the PARENT ORGANIZATION as reflected in the PARENT ORGANIZATION'S most recent audited consolidated financial statements, the PARENT ORGANIZATION shall give written notice of such acquisition to the Company as soon as practicable together with such information as the Company may require and shall pay any reasonable additional premium required by the Company.

~~Form 14-02-0951 (Ed. 1-92) Page 7 of 10~~

~~[CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~CHANGES IN EXPOSURE (continued)~~

Acquisition of 15. If (i) the PARENT ORGANIZATION merges into or consolidates with another Parent Organization organization, or (ii) another organization or person or group of organizations by Another and/or persons acting in concert acquires securities or voting rights which result Organization in ownership or voting control by the other organization(s) or person(s) of more than 50% of the outstanding securities representing the present right to vote for election of directors of the PARENT ORGANIZATION, coverage under this coverage section shall continue until termination of this coverage section, but only with respect to CLAIMS for WRONGFUL ACTS committed, attempted, or allegedly committed or attempted by INSURED PERSONS prior to such merger, consolidation or acquisition. The PARENT ORGANIZATION shall give written notice of such merger, consolidation or acquisition as soon as practicable, together with such information as the Company may require.
Cessation of 16. In the event an organization ceases to be a SUBSIDIARY before or after the Subsidiaries Inception Date of this coverage section, coverage with respect to such SUBSIDIARY and its INSURED PERSONS shall continue until termination of this coverage section, but only with respect to CLAIMS for WRONGFUL ACTS committed, attempted or allegedly committed or attempted prior to the date such organization ceased to be a SUBSIDIARY.
SCOPE OF 17. The coverage under this coverage section shall not be construed under any COVERAGE circumstance to extend to any OUTSIDE ENTITY or to any director, officer, trustee, governor or other executive or employee of any OUTSIDE ENTITY, other than the INSURED PERSON in his OUTSIDE DIRECTORSHIP.
REPRESENTATIONS 18. In granting coverage to any one of the INSUREDS, the Company has relied upon
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document AND SEVERABILITY the declarations and statements in the written application for this coverage section and upon any declarations and statements in the original written application submitted to another insurer in respect of the prior coverage incepting as of the Continuity Date set forth in Item 9 of the Declarations for this coverage section. All such declarations and statements are the basis of such coverage and shall be considered as incorporated in and constituting part of this coverage section.
Such written application(s) for coverage shall be construed as a separate application for coverage by each of the INSURED PERSONS. With respect to the declarations and statements contained in such written application(s) for coverage, no statement in the application or knowledge possessed by any INSURED PERSON shall be imputed to any other INSURED PERSON for the purpose of determining if coverage is available.

~~Form 14-02-0951 (Ed. 1-92) Page 8 of 10~~

DEFINITIONS 19. When used in this coverage section:
CLAIM means:
(i) a written demand for monetary damages,
(ii) a civil proceeding commenced by the service of a complaint or similar pleading,
(iii) a criminal proceeding commenced by a return of an indictment, or
(iv) a formal administrative or regulatory proceeding commenced by the filing of a notice of charges, formal investigative order or similar document,
against any INSURED PERSON for a WRONGFUL ACT, including any appeal therefrom.
DEFENSE COSTS means that part of LOSS consisting of reasonable costs, charges, fees (including but not limited to attorneys' fees and experts' fees) and expenses (other than regular or overtime wages, salaries or fees of the directors, officers or employees of the INSURED ORGANIZATION) incurred in defending or investigating CLAIMS, and the premium for appeal, attachment or similar bonds.
FINANCIAL IMPAIRMENT means the status of the INSURED ORGANIZATION resulting from (i) the appointment by any state or federal official, agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take control of, supervise, manage or liquidate the INSURED ORGANIZATION, or (ii) the INSURED ORGANIZATION becoming a debtor in possession.
INSUREDS, either in the singular or plural, means the INSURED ORGANIZATION and any INSURED PERSONS.
INSURED ORGANIZATION means, collectively, those organizations designated in Item 5 of the Declarations for this coverage section.
INSURED PERSONS, either in the singular or plural, means any one or more of those persons designated in Item 6 of the Declarations for this coverage section.
INTERRELATED WRONGFUL ACTS means all causally connected WRONGFUL ACTS.
LOSS means the total amount which any INSURED PERSON becomes legally obligated to pay on account of each CLAIM and for all CLAIMS in each POLICY PERIOD and the Extended Reporting Period, if exercised, made against them for WRONGFUL ACTS for which coverage applies, including, but not limited to, damages, judgments, settlements, costs and DEFENSE COSTS.
LOSS does not include (i) any amount not indemnified by the INSURED ORGANIZATION for which the INSURED PERSON is absolved from payment by reason of any covenant, agreement or court order, (ii) fines or penalties imposed by law or the multiple portion of any multiplied damage award, or (iii) matters uninsurable under the law pursuant to which this coverage section is construed.
NON-PROFIT OUTSIDE ENTITY means any non-profit corporation, community chest, fund or foundation that is not included in the definition of INSURED ORGANIZATION and that is exempt from federal income tax as an organization described in Section 501 (c) (3) of the Internal Revenue Code of 1986, as amended.

~~Form 14-02-0951 (Ed. 1-92) Page 9 of 10~~

DEFINITIONS OUTSIDE DIRECTORSHIP means the position of director, officer, trustee, governor (continued) or equivalent executive position held by any INSURED PERSON in an OUTSIDE ENTITY if service in such position was with the knowledge and consent or at the request of the INSURED ORGANIZATION.
OUTSIDE ENTITY means a NON-PROFIT OUTSIDE ENTITY or a SCHEDULED OUTSIDE ENTITY.
POLLUTANTS means any substance located anywhere in the world exhibiting any hazardous characteristics as defined by, or identified on a list of hazardous substances issued by, the United States Environmental Protection Agency or a state, county, municipality or locality counterpart thereof. Such substances shall include, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials. POLLUTANTS shall also mean any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products and any noise.
SCHEDULED OUTSIDE ENTITY means any organization listed in a Scheduled Outside Entity Endorsement to this policy.
SUBSIDIARY, either in the singular or plural, means any organization in which more than 50% of the outstanding securities or voting rights representing the present right to vote for election of directors is owned or controlled, directly or indirectly, in any combination, by one or more INSURED ORGANIZATIONS.
WRONGFUL ACT means any error, misstatement, misleading statement, act, omission, neglect, or breach of duty committed, attempted, or allegedly committed or attempted, by an INSURED PERSON, individually or otherwise, in an OUTSIDE DIRECTORSHIP, or any matter claimed against him solely by reason of his serving in an OUTSIDE DIRECTORSHIP.

~~Form 14-02-0951 (Ed. 1-92) Page 10 OF 10~~

~~28 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~ENDORSEMENT~~

~~Coverage Section: OUTSIDE DIRECTORSHIP Company: FEDERAL INSURANCE COMPANY~~

~~Effective date of Endorsement No: 1 this endorsement: AUGUST 11, 1994~~

~~To be attached to and form part of Policy No. 8103-53-79-F~~

~~Issued to: LIZ CLAIBORNE, INC.~~

~~With respect to the following INSURED PERSONS serving in an OUTSIDE DIRECTORSHIP in the following respective OUTSIDE ENTITIES:~~

~~It is agreed:~~

~~1. Insuring Clause 2 of this coverage section is deleted in its entirety.~~

~~2. The Company shall not be liable for LOSS:~~

~~(a) which is indemnified by the INSURED ORGANIZATION, or~~

~~(b) which but for this endorsement would be subject to the Insuring Clause 2 deductible pursuant to subsection 9 of this coverage section.~~

~~/s/ JOHN S. BAIN ------Authorized Representative~~

~~September 7, 1994 ------Date~~

~~Page 1 Last page Form 14-02-0961 (Rev. 1-92)~~

~~29 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY~~

~~ENDORSEMENT~~

~~Coverage Section: OUTSIDE DIRECTORSHIP Company: FEDERAL INSURANCE COMPANY~~

~~Effective date of Endorsement No: 2 this endorsement: AUGUST 11, 1994~~

~~To be attached to and form part of Policy No. 8103-53-79-F~~

~~Issued to: LIZ CLAIBORNE, INC.~~

~~With respect to the following INSURED PERSONS serving in an OUTSIDE DIRECTORSHIP in the following respective OUTSIDE ENTITIES:~~

it is agreed the Company shall not be liable for LOSS on account of any CLAIM made against any such INSURED PERSON based upon, arising from, or in consequence of any WRONGFUL ACT, including INTERRELATED WRONGFUL ACTS, committed, attempted or allegedly committed or attempted in whole or in part before the respective Prior Acts Date set forth above.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
/s/ JOHN S. BAIN ------Authorized Representative
September 7, 1994 ------Date
Page 1 Last page Form 14-02-0961 (Rev. 1-92)
30 [CHUBB LOGO] EXECUTIVE PROTECTION POLICY
ENDORSEMENT Coverage Section: General Terms Company: Federal Insurance Company
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Effective Date of Endorsement No.: 2 this endorsement: June 11, 1994 To be attached to and form part of Policy No.: 8103-53-79-E
Issued to: Liz Claiborne, Inc.
It is agreed that coverage is continued under this policy and that Item 2 of the Declarations is amended to in its entirety read as follows:
POLICY PERIOD: From 12:01 A.M. on June 11, 1993 To 12:01 A.M. August 11, 1994 Local time at the address shown in Item 1.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
By: ------Authorized Employee
Date: September 12, 1994 ------
kf-0912.13
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EXHIBIT 10(l)(i)
SUMMARY OF EXCESS COVERAGE DIRECTORS AND OFFICERS LIABILITY INSURANCE POLICY NO. ZKA9400406 ENTERED INTO BY AND BETWEEN LIZ CLAIBORNE, INC. (THE "COMPANY") AND LLOYDS OF LONDON
For the period August 11, 1994 to August 11, 1995, the Company maintains a $10,000,000.00 directors and officers liability policy with Lloyds of London, for liability claims in excess of the policy limits of policy number 81035379F, which policy has a term of August 11, 1994 to August 11, 1995, and is subject to a retention of $500,000 for each claim under the Company reimbursement section and contains certain exclusions from coverage. The premium for the excess policy is $95,000.
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EXHIBIT 10(m)
DESCRIPTION OF SALARIED EMPLOYEE INCENTIVE BONUS PLAN
For the 1994 fiscal year, Liz Claiborne, Inc. (the "Company") maintained a bonus plan for full time salaried employees under which bonuses were earned based on achievement of certain performance criteria, subject to certain terms and conditions. Under the bonus plan, the potential maximum bonus an employee could earn was established as a percentage of the employee's base salary ranging from 20% to 100%. Bonuses for the year were determined by reference to a combination of pre-established corporate, divisional (if applicable) and individual performance criteria. The corporate portion of the bonus was determined by reference to levels of corporate operating income and return on capital compared to specified targets. The corporate performance goals set for fiscal 1994 were not met, and, as a result, no bonus awards were earned under the corporate component of the bonus program. For the 1995 fiscal year, a bonus plan which will place increased emphasis on the achievement of specified target levels of objective divisional and departmental goals, as contrasted with corporate and/or subjective individual performance is anticipated.
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EXHIBIT 10(t)
DESCRIPTION OF SUPPLEMENTAL LIFE INSURANCE PLANS
Vice Presidents of the Liz Claiborne, Inc. (the "Company") receive universal life insurance policies which provide coverage equal to two times annual base salary. The Company pays the premiums on each policy during the employment period, enabling the employee to have a paid-up life insurance policy at retirement with a cash surrender value. Additionally, during 1994 the Chairman of the Board and former Vice Chairman of the Board and President were each covered under a $1 million term life insurance policy for which the Company paid the premium on the policies. Both of these policies terminated effective as of March 15, 1995.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1 Exhibit 10(v) 19200/0022
LIZ CLAIBORNE Section 162(m) CASH BONUS PLAN
I. Definitions.
The following terms have the meanings indicated unless a different meaning is clearly required by the context.
1.1 "Board of Directors" means the board of directors of the Company.
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
1.3 "Committee" means the Compensation Committee of the Board of Directors or a subcommittee thereof.
1.4 "Company" means Liz Claiborne, Inc.
1.5 "Executive Officer" has the meaning set forth in Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended.
1.6 "Participant" means an individual who participates in the Plan pursuant to Section 3.1.
II. Purpose.
The purpose of the Plan is to provide performance incentives to certain executives who are "covered employees" within the
2 meaning of Section 162(m) of the Code while securing, to the extent practicable, a tax deduction by the Company for payments of incentive compensation to such executives.
III. Participation.
3.1 An individual shall be a Participant in the Plan for a fiscal year of the Company if he or she (a) is an Executive Officer of the Company on the first day of such year or becomes an Executive Officer during such year by virtue of being hired or promoted and (b) has a base salary in excess of $500,000 per year or is reasonably expected by the Committee to have compensation for such year in excess of $1 million; provided, however, that if
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document the Committee determines, in its discretion, prior to the ninety first day (91st) day of such fiscal year, that it would be in the best interests of the Company and its shareholders for one or more otherwise eligible Executive Officers not to be a Participant for such year, such person shall not be a Participant for such year and the Committee may establish alternative incentive compensation arrangements for such person.
3.2 An individual who is a Participant in the Plan for a fiscal year shall not participate for such year in the Company's regular annual bonus program.
- 2 -
3 IV. Performance Goals.
4.1 Prior to the ninety first (91st) day of each fiscal year of the Company, the Committee shall set one or more objective performance goals for each Participant for such year. Such goals shall be expressed in terms of (a) one or more corporate or divisional earnings-based measures (which may be based on net income, operating income, cash flows, or any combination thereof) and/or (b) one or more corporate or divisional sales-based measures. Each such goal may be expresed on an absolute and/or relative basis, may employ comparisons with past performance of the Company (including one or more divisions) and/or the current or past performance of other companies, and in the case of earnings-based measures, may employ comparisons to capital, shareholders' equity and shares outstanding.
4.2 The measures used in performance goals set under the Plan shall be determined in accordance with generally accepted account principles ("GAAP") and in a manner consistent with the methods used in the Company's regular reports on Forms 10-K and 10-Q, without regard to changes in accounting principles or to extraordinary items as determined by the Company's independent public accountants in accordance with GAAP.
V. Bonus Awards 5.1 At the time that annual performance goals are set for Participants, the Committee shall establish a bonus opportunity
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4 for each Participant for the year that is related to the Participant's base salary at the start of the year by a formula that takes account of the degree of achievement of the goals set for the Participant; provided, however, that the Committee shall have absolute discretion to reduce the actual bonus payment that would otherwise be payable to any Participant on the basis of achievement of performance goals.
5.2 The annual bonus opportunity for a Participant shall in no event exceed $1.5 million.
5.3 Bonuses determined under the Plan shall be paid to Participants in cash at such time as bonuses are generally paid to other Executive Officers; provided, however, that no such payment shall be made until the Committee has certified (in the manner prescribed under applicable regulations) that the performance goals and any other material terms related to the award were in fact satisfied.
5.4 In the event of the death, disability, or retirement of a Participant during a fiscal year, the Committee shall, in its discretion, have the power to award to such Participant an equitably prorated portion of the bonus which otherwise would have been earned by such Participant.
- 4 -
5 VI. Administrative Provisions.
6.1 The Plan shall be administered by the Committee, which shall be comprised solely of two or more members of the Board of Directors who satisfy the requirements set forth in applicable regulations under Section 162(m) of the Code.
6.2 The Plan was adopted by the Board of Directors on March 9, 1994, subject to shareholder approval, and shall take effect beginning with the fiscal year of the Company that starts January 1, 1995. No payments shall be made under the Plan prior to the time such approval is obtained in accordance with applicable law. The Board of Directors may at any time amend the Plan in any fashion or terminate the Plan.
6.3 The Plan shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of choice of laws.
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EXHIBIT 10(w)
LIZ CLAIBORNE SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (EFFECTIVE AUGUST 5, 1993)
2
INDEX TO ARTICLES ------
ARTICLE Page ------ Preamble ...... 1 1 Definitions ...... 1 2 Eligibility ...... 3 3 Contributions and Deferrals ...... 4 4 Accounts ...... 9 5 Benefits ...... 12 6 Beneficiaries ...... 14 7 Administration ...... 15 8 Amendment and Termination ...... 17 9 Miscellaneous ...... 18
3
PREAMBLE
Effective August 5, 1993, Liz Claiborne, Inc. (the "Company") adopted this Liz Claiborne Supplemental Executive Retirement Plan (the "Plan"). The Plan provides benefits to certain employees of the Company and its subsidiaries for whom contributions under the Liz Claiborne Profit-Sharing Retirement Plan and the Liz Claiborne Savings Plan are limited by certain provisions of law. It is intended that benefits paid under the Plan shall be paid under an arrangement that is, for purposes of the Employee Retirement Income Security Act of 1974, unfunded and maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees. This document describes the benefits provided under the Plan and is intended to represent a binding obligation of Liz Claiborne, Inc. and participating subsidiaries to provide those benefits, subject to the terms and conditions of the Plan as from time to time in effect. The Plan reads as follows:
ARTICLE 1
DEFINITIONS
The following terms when used in this Plan have the designated meanings unless a different meaning is clearly required by the context.
1.1 Code, Committee, Company, Compensation, Disability, Eligible Employee, Employer, ERISA, Plan Year, Termination of Employment and Valuation
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Date have the meanings given them in the Profit-Sharing Plan.
1.2 Beneficiary means the person or persons designated pursuant to Article 6 to receive a benefit in the event of a SERP Member's death before his SERP Account has been closed pursuant to Section 5.2(c) or 8.1(c).
4
1.3 Company Stock means the common stock of the Company.
1.4 Compensation Limit means, with respect to any Plan Year, the limit established for such Year pursuant to section 401(a)(17) of the Code.
1.5 Earnings Percentage means, with respect to any Plan Year, the annual rate of earnings on assets of the Profit-Sharing Plan.
1.6 Fair Market Value of a share of Company Stock on any date means the closing price per share reported on the New York Stock Exchange for such date or, if no trading occurs on such date, for the last preceding day on which trading occurred.
1.7 Phantom Share means a bookkeeping entry made to a SERP Account pursuant to Section 3.2 or 3.4.
1.8 Plan means this Liz Claiborne Supplemental Executive Retirement Plan as in effect from time to time.
1.9 Plan Administrator means the individual serving pursuant to Section 7.1.
1.10 Profit-Sharing Plan means the Liz Claiborne Profit-Sharing Retirement Plan.
1.11 Savings Plan means the Liz Claiborne Savings Plan.
1.12 SERP Account means an account established by the Company pursuant to Section 4.1.
1.13 SERP Compensation means Compensation without regard to the Compensation Limit.
5
1.14 SERP Matching Accrual means an amount credited to a SERP Member's SERP Account pursuant to Section 3.3.
1.15 SERP Member means an individual who has a SERP Account that has not been terminated pursuant to Section 5.2(c) or 8.1(c).
1.16 SERP Profit-Sharing Accrual means an amount credited to a SERP Member's SERP Account pursuant to Section 3.1.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document ARTICLE 2
ELIGIBILITY
2.1 Eligibility. An Eligible Employee who is a Member of the Profit-Sharing Plan or the Savings Plan, and whose opportunity to share in contributions under one or both such Plans is limited in any Plan Year by the operation of the Compensation Limit, shall become a SERP Member; provided, however, that no person shall become a SERP Member if he is not in a select group of management or highly compensated employees within the meaning of Section 201(2) of ERISA. In the case of an Eligible Employee whose SERP Compensation is at a rate in excess of $250,000 per year, the Committee in its discretion may waive the requirement that such Eligible Employee must be a Member of the Profit-Sharing Plan or the Savings Plan in order to be a SERP Member. A SERP Member shall be eligible to be credited with a SERP Profit-Sharing Accrual and with a SERP Matching Accrual, pursuant to the provisions of Sections 3.1 and 3.3, and shall be eligible to direct his Employer to defer part of his SERP Compensation pursuant to the provisions of Section 3.5. An individual shall continue to be a SERP Member until his SERP Account is closed pursuant to Section 5.2(c) or 8.1(c). The Committee in its sole discretion may establish specific terms and conditions for the participation of any Eligible Employee.
6
ARTICLE 3
CONTRIBUTIONS AND DEFERRALS
3.1 SERP Profit-Sharing Accruals. As soon as practicable after the close of each Plan Year that begins on or after January 1, 1993, each Employer that makes a Profit-Sharing Contribution for such Plan Year determined pursuant to Section 3.1 of the Profit-Sharing Plan shall determine a SERP Profit-Sharing Accrual for such Plan Year for each SERP Member who is entitled to share in the allocation of such Profit-Sharing Contribution pursuant to Section 4.2 of the Profit-Sharing Plan. The SERP Profit-Sharing Accrual for each such SERP Member shall be equal to the product of (a) multiplied by (b), reduced by (c), where:
(a) is the ratio of (i) such Profit-Sharing Contribution to (ii) the total Compensation, during the Plan Year for which such Profit-Sharing Contribution is made, of all Profit-Sharing Plan Members entitled to share in the allocation of such Profit-Sharing Contribution;
(b) is the SERP Member's SERP Compensation during such Plan Year; provided, that if such SERP Compensation does not exceed the applicable Compensation Limit, the SERP Member shall be deemed to have no SERP Compensation for such Plan Year; and
(c) is the amount allocated for such Plan Year to the SERP Member's Profit-Sharing Plan Account.
Each SERP Member's SERP Profit-Sharing Accrual shall be credited to his SERP Account as of the last day of the Plan Year to which it relates.
3.2 Retroactive SERP Profit-Sharing Accruals. Each individual who on August 5, 1993 was both an Eligible Employee and a Member of the Profit-Sharing Plan, and whose SERP Compensation for the Plan Year 1992 exceeded the Compensation Limit, shall be credited with a retroactive SERP Profit-Sharing
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Accrual for each of the Plan Years 1985 through 1992 for which he was allocated a share of the Profit-Sharing Contribution pursuant to Section 4.2 of the Profit-Sharing Plan. The retroactive accrual for an individual for each such Year shall first be determined by the formula set forth in Section 3.1, and then increased by cumulative application of the Earnings Percentage for each subsequent Plan Year through 1992. The amount of each such retroactive accrual shall be converted to Phantom Shares using a price of $23.125 per Phantom Share, which is the Fair Market Value of a share of Company Stock on August 5, 1993. Such Phantom Shares shall be credited to the individual's SERP Account as of August 5, 1993.
3.3 SERP Matching Accruals. Each SERP Member who has in effect a Participation Agreement pursuant to Section 3.1 of the Savings Plan during any Plan Year beginning on or after January 1, 1993, and who is eligible to share in the allocation of the Profit-Sharing Contribution for such Year pursuant to Section 4.2 of the Profit-Sharing Plan, or any other Eligible Employee who may become a SERP Member pursuant to Section 2.1, shall be entitled to a SERP Matching Accrual for such Plan Year equal to (a) minus (b), where:
(a) is 2.5 percent (0.025) of the SERP Member's SERP Compensation during such Plan Year; provided, that if such SERP Compensation does not exceed the applicable Compensation Limit, the SERP Member shall be deemed to have no SERP Compensation for such Plan Year; and
(b) is the amount of Matching Contributions made under the Savings Plan for the SERP Member for such Plan Year.
A SERP Member's SERP Matching Accrual shall be credited to his SERP Account as of the last day of the Plan Year to which it relates.
3.4 Retroactive SERP Matching Accruals. Each individual who on August 5, 1993 was both an Eligible Employee and a Member of the Savings Plan,
8 and whose SERP Compensation for the Plan Year 1992 exceeded the Compensation Limit, shall be credited with a retroactive SERP Matching Accrual for each of the Plan Years 1985 through 1992 during which he had a Participation Agreement in effect under the Savings Plan. The retroactive accrual for an individual for each such Plan Year shall first be determined by the formula set forth in Section 3.3, and then increased by the cumulative application of the Earnings Percentage for each subsequent Plan Year through 1992. The amount of each such retroactive accrual shall be converted to Phantom Shares using a price of $23.125 per Phantom Share, which is the Fair Market Value of a share of Company Stock on August 5, 1993. Such Phantom Shares shall be credited to the individual's SERP Account as of August 5, 1993.
3.5 Deferral Election. (a) Effective January 1, 1995, or as soon as practicable thereafter, each SERP Member who is an Eligible Employee may direct the Employer that employs him to reduce his SERP Compensation for a Plan Year by an amount equal to any whole percentage thereof, provided that such percentage shall be not less than one percent (1%) and not more than fifteen percent (15%), and to pay such amount to such SERP Member in the future as deferred compensation. Any direction pursuant to this Section 3.5 shall be given in writing, at such time and in such manner as the Committee shall prescribe, and shall apply only to SERP Compensation that is remuneration for services rendered after the date such direction is given. No direction given pursuant to this Section 3.5 shall be changed with retroactive effect.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) A reduction of SERP Compensation elected pursuant to this Section 3.5 shall be effected by regular payroll deductions subsequent to the date the SERP Member directs an Employer to make such reduction. Each such
9 payroll deduction shall be equal to the amount determined for the applicable pay period in accordance with the SERP Member's direction given pursuant to paragraph (a) of this Section 3.5, reduced by the amount of any Tax-Saver Contribution made for such SERP Member for such pay period pursuant to Section 3.1 of the Savings Plan. The sum for any Plan Year of a SERP Member's SERP Compensation reduction pursuant to this Section 3.5 and Tax-Saver Contributions made for such SERP Member pursuant to Section 3.1 of the Savings Plan shall not exceed an amount equal to fifteen percent (15%) of the SERP Compensation paid to such SERP Member during such Plan Year. The reduction of SERP Compensation pursuant to this Section 3.5 shall be adjusted to the extent necessary to comply with the limitation set forth in the preceding sentence.
(c) Each payroll deduction described in paragraph (b) of this Section 3.5 shall be credited to the SERP Member's SERP Account as of the day on which such amount would otherwise have been paid to the SERP Member.
ARTICLE 4
ACCOUNTS
4.1 SERP Accounts. The Company shall establish a SERP Account for each SERP Member which shall be credited with the amounts determined pursuant to Sections 3.1, 3.3 and 3.5 and the number of Phantom Shares determined pursuant to Sections 3.2 and 3.4, and with earnings determined pursuant to Sections 4.2, and 4.3.
4.2 Imputed Earnings. (a) The balance standing credited to each SERP Account other than the portion expressed in Phantom Shares shall be credited with earnings as of the last day of each Plan Year as provided for in this Section 4.2.
10
(b) The amount of earnings for any Plan Year with respect to the balance of the SERP Account represented by the SERP Member's SERP Profit Sharing Accruals, SERP Matching Accruals and related earnings shall be equal to such balance as of the first day of such Plan Year multiplied by the Earnings Percentage for such Plan Year unless such Earnings Percentage is negative.
(c) The Committee may, in its discretion, permit SERP Members to elect the rate(s) of earnings applicable to the balance of the SERP Account represented by payroll deduction amounts credited to such SERP Account pursuant to Section 3.5 and related earnings. The Committee may also determine the number of times in each Plan Year a SERP Member may change any such election. The amount of earnings for any Plan Year with respect to the balance of the SERP Account representing payroll deduction amounts credit to such SERP Account pursuant to Section 3.5 and related earnings shall be the amount of such balance (including payroll deduction amounts for such Plan Year) multiplied by the applicable rate(s) of earnings elected by the SERP Member (or, in the absence of any such election, the Earnings Percentage for such Plan Year), prorated to reflect the portion of the Plan Year during which each payroll deduction amount for such Plan Year stood credited to such SERP Account.
4.3 Credits for Dividend Reinvestment. Whenever a cash dividend
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document is paid on Company Stock, the portion of each SERP Account expressed in Phantom Shares shall be credited as of the payment date with a number of Phantom Shares (including any fractional share) equal to the quotient of (a) an amount equal to the cash dividend payable on a number of shares of Company Stock equal to the number of Phantom Shares (excluding any fractional share) standing credited to such SERP Account at the record date divided by (b) the Fair Market Value of a
11 share of Company Stock on such payment date. In the event of a stock dividend or distribution, stock split, recapitalization or the like, each SERP Account shall be credited as of the payment date with a number of Phantom Shares (including any fractional share) equal to the number of shares (including any fractional share) of Company Stock payable in respect of shares of Company Stock equal in number to the number of Phantom Shares (excluding any fractional share) standing credited to such SERP Account at the record date.
4.4 Vesting of SERP Accounts. A SERP Member's interest in that portion of his SERP Account attributable to compensation deferrals elected pursuant to Section 3.5, and earnings credited thereon pursuant to Section 4.2, shall be fully vested and nonforfeitable at all times. A SERP Member's vested and nonforfeitable interest in the remaining portion of his SERP Account shall be fully vested and nonforfeitable upon the happening of any of the events set forth in Section 5.3 of the Savings Plan; in any other circumstances, a SERP Member's vested and nonforfeitable interest in such remaining portion shall be determined on the basis of the vested percentage provisions of Section 6.2 of the Profit-Sharing Plan.
4.5 Accounts Confer No Interest in Assets. The crediting of amounts and of shares of Phantom Stock to the SERP Account of a SERP Member is merely a bookkeeping record and shall not confer on such SERP Member any right, title or interest in or to any specific assets of any Employer.
4.6 Account Statements. The Plan Administrator shall furnish written statements to each SERP Member setting forth, at least as of the end of each calendar year, the amounts and the number of shares of Phantom Stock (including any fractional share) standing credited to his SERP Account.
12
ARTICLE 5
BENEFITS
5.1 SERP Benefit. A SERP Member's SERP benefit shall be a sum equal to the dollar value of his SERP Account at the time of payment pursuant to Section 5.2. Phantom Shares standing credited to a SERP Account shall be converted to a dollar value using the Fair Market Value of a share of Company Stock on the day in which the SERP Member's Termination of Employment occurs.
5.2 Time of Payment. (a) A SERP Member's vested SERP benefit shall be paid to him, or to his Beneficiary in the event of his death, as a single sum in cash. Payment shall be made as soon as practicable after the end of the year following Termination of Employment. The Plan Administrator may delay any payment, in whole or in part, if in his judgment such a delay is necessary in order to preserve tax deductibility of the amount paid.
(b) When all benefit payments provided for under Section 5.2 have been made in full, a SERP Member's SERP Account shall be closed.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5.3 Source of Payment. The SERP benefit of each SERP Member shall be the obligation of the Employer(s) by which such SERP Member was employed at the time SERP Accruals and SERP Compensation reductions in respect of him were made pursuant to Sections 3.1 through 3.5, and shall be the general liability of such Employer(s). The claim of a SERP Member or Beneficiary to a SERP benefit shall at all times be merely the claim of an unsecured creditor of the Employer(s) responsible therefor. No trust, security, escrow, or similar account need be established for the purpose of paying SERP benefits. However, the Company may in its discretion establish a custodial
13 account or "rabbi trust" (or other arrangement having equivalent taxation characteristics under the Code and applicable regulations or rulings) to hold assets of the Employers, subject to the claims of such Employers' creditors in the event of insolvency, for the purpose of paying SERP benefits. If the Company establishes such an account or trust, amounts paid therefrom shall discharge the obligations hereunder to the extent of the payments so made.
5.4 Withholding. All payments under the Plan shall be subject to any applicable withholding requirements imposed by any tax or other law. The Employer(s) responsible for payment of a SERP benefit shall have the right to require withholding from any payment in an amount sufficient in its or their opinion to satisfy all applicable withholding requirements.
ARTICLE 6
BENEFICIARIES
6.1 Beneficiary Designation. A SERP Member shall be deemed to have designated the same Beneficiary or Beneficiaries for his SERP benefit as those he has at the time of reference properly designated pursuant to Section 8.6 of the Profit-Sharing Plan unless he/she indicates otherwise. Any proper change in designation under the Profit-Sharing Plan shall be deemed a like change under this Plan. In the event that there is no properly designated Beneficiary or contingent Beneficiary living at the time of a SERP Member's death, any unpaid amount of his SERP benefit shall be paid in accordance with Section 8.6.4 of the Profit-Sharing Plan.
6.2 Payment to Incompetent. If any person entitled to benefits under this Plan shall be a minor or physically or mentally incompetent in the judgment of the Committee, such benefits may be paid to the person to whom benefits under the Profit-Sharing Plan are paid pursuant to Section 15.6 thereof.
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ARTICLE 7
ADMINISTRATION
7.1 Appointment of Plan Administrator. Except to the extent reserved to the Committee pursuant to a provision of the Plan, authority to administer the Plan shall be vested in the Plan Administrator, who shall be appointed by and serve at the pleasure of the Committee and shall have the power and discretion to:
(a) make and enforce rules and regulations and
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document prescribe the use of forms he deems appropriate for the administration of the Plan;
(b) construe all terms, provisions, conditions and limitations of the Plan and resolve ambiguities, inconsistencies and omissions;
(c) determine all questions arising out of or in connection with the provisions of the Plan or its administration in any and all cases in which he deems such a determination advisable, such determinations to be final and conclusive on all persons;
(d) delegate authority to agents and other persons to act on his behalf in carrying out the provisions and administration of the Plan, and to take or direct any action required or advisable with respect to the administration of the Plan.
15
7.2 Claims Procedure. The claims procedure in the event that the Plan Administrator denies any SERP Member's or Beneficiary's claim for benefits shall be that established pursuant to Section 15.1 of the Profit-Sharing Plan.
7.3 Service of Process. The Company or such other person as may from time to time be designated by the Company shall be the agent for service of process under the Plan.
7.4 No Bond Required. No bond or other security shall be required of the Plan Administrator or any member of the Committee or any person to whom the Plan Administrator or the Committee delegates authority except as may be required by law.
7.5 Limitation of Liability; Indemnity. Except to the extent otherwise provided by law, if any duty or responsibility of the Plan Administrator or the Committee has been allocated or delegated to any other person in accordance with any provision of this Plan, then the Plan Administrator or the Committee (as the case may be) shall not be liable for any act or omission of such person in carrying out such duty or responsibility. The Company shall indemnify and save the Plan Administrator and each person who is a member of the Committee, and each employee or director of an Employer who may be deemed a "fiduciary" under the Plan, harmless against any and all loss, liability, claim, damage, cost and expense which may arise by reason of, or be based upon, any matter connected with or related to the Plan or the administration of the Plan (including, but not limited to, any and all expenses reasonably incurred in investigating, preparing or defending against any litigation, commenced or threatened, or in settlement of any such claim) to the fullest extent permitted under applicable
16 law, except when the same is judicially determined to be due to the gross negligence or willful misconduct of the Plan Administrator or such Committee member, employee or director.
7.6 Payment of Expenses. The Plan Administrator and members of the Committee shall serve without special compensation. These expenses, and
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document all other expenses of Plan administration, shall be paid by the Company.
ARTICLE 8
AMENDMENT AND TERMINATION
8.1 Right Reserved. (a) Subject to Section 8.2, the Committee may at any time amend the Plan, retroactively or otherwise, any respect or terminate the Plan. However, no such amendment or termination shall reduce any SERP Member's SERP benefit determined as though the date of such amendment or termination were the date of his Termination of Employment. No amendment shall increase Plan benefits, or broaden Plan eligibility, without action by the Board of Directors of the Company.
(b) Notwithstanding a termination of the Plan, earnings shall continue to be credited to each SERP Account pursuant to Sections 4.2 and 4.3 until such time as such Account is terminated pursuant to Section 5.2(c) or 8.1(c).
(c) In its discretion, the Company may upon Plan termination or at any time thereafter pay to every SERP Member (or Beneficiary) in a single distribution a sum determined pursuant to Section 5.1, whereupon all SERP Accounts shall be terminated.
8.2 Action to Bind Company. Upon the execution of the Plan by the Company, each other Employer designates the Company as its agent to administer the Plan. Any amendment or termination of the Plan by the Company shall be binding upon each other Employer.
17
ARTICLE 9
MISCELLANEOUS
9.1 Doubt as to Right to Payment. If any doubt exists as to the right of any person to any benefits under this Plan or the amount or time of payment of such benefits (including, without limitation, any case of doubt as to identity, or any case in which any notice has been received from any other person claiming any interest in amounts payable hereunder, or any case in which a claim from other persons may exist by reason of community property or similar laws), the Plan Administrator may, in his discretion, direct that payment of such benefits be deferred until such right or amount or time is determined, or until a court of competent jurisdiction orders that such benefits by paid into court in accordance with appropriate rules of law, or the Plan Administrator may direct that payment be made only upon receipt of a bond or similar indemnification (in such amount and in such form as is satisfactory to him).
9.2 Spendthrift Clause. No benefit, distribution or payment under the Plan may be anticipated, assigned (either at law or in equity), alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process whether pursuant to a "qualified domestic relations order" as defined in section 414(p) of the Code or otherwise.
9.3 Usage. Whenever applicable, the masculine gender, when used in the Plan, includes the feminine gender, and the singular includes the plural.
9.4 Data. Any SERP Member or Beneficiary claiming a SERP benefit
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document under the Plan shall furnish to the Plan Administrator such documents,
18 evidence or information as the Plan Administrator shall consider necessary or desirable for the purpose of administering the Plan, or to protect the Plan Administrator. It is a condition of the Plan that each such SERP Member or Beneficiary shall furnish promptly true and complete data, evidence or information and sign such documents as the Plan Administrator may require before any benefits become payable under the Plan.
9.5 Separability. If any provision of the Plan is held invalid or unenforceable, its invalidity or unenforceability shall not affect any other provisions of the Plan, and the Plan shall be construed and enforced as if such provision had not been included therein. Without limiting the application of the preceding sentence, a provision shall be considered invalid if its operation would cause the Profit-Sharing Plan or Savings Plan to fail to qualify under section 401 of the Code.
9.6 Captions. The captions in this document and in the table of contents prefixed hereto are inserted only as a matter of convenience and for reference and in no way define, limit, enlarge or describe the scope or intent of the Plan and shall in no way affect the Plan or the construction of any provisions thereof.
9.7 Right of Discharge Reserved. The establishment of the Plan shall not be construed to confer upon any employee any legal right to be retained in the employ of an Employer or give any employee or any other person any right to benefits, except to the extent expressly provided for hereunder. All employees shall remain subject to discharge to the same extent as if the Plan had never been adopted, and may be treated without regard to the effect such treatment may have upon them under the Plan.
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9.8 Limitations on Liability. Notwithstanding any other provision of the Plan, no Employer nor any employee or agent of an Employer shall be liable to any SERP Member, Beneficiary or other person for any claim, loss, liability or expense incurred in connection with the Plan.
9.9 Governing Law. The Plan in intended to constitute an unfunded, nonqualified deferred compensation arrangement. All rights under the Plan shall be governed by and construed in accordance with the laws of the State of New York (except to the extent that ERISA is determined to apply) without regard to principles of choice of laws.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 1
EXHIBIT 10(y)
Liz Claiborne, Inc. 1441 Broadway New York City
as of January 2, 1995
Harvey L. Falk Buckingham Towers 800 Palisades Avenue Fort Lee, New Jersey 07024
Dear Harvey:
The undersigned Liz Claiborne, Inc. (the "Company") desires to engage you as a consultant, and you desire to be so engaged by the Company, in each case subject to the terms and conditions set forth in this letter agreement ("Agreement"). As used in this Agreement, the term the "Claiborne Group" means and includes the Company and each of its subsidiaries and affiliated companies and ventures from time to time.
Accordingly, in consideration of the mutual covenants hereinafter set forth and intending to be legally bound, the Company and you hereby agree as follows:
1. Engagement; Term. The Company hereby engages you, and you hereby accept such engagement and agree to serve as a consultant to the Claiborne Group, upon the terms and conditions hereinafter set forth, for a term commencing on January 2, 1995 and (unless sooner terminated as hereinafter provided) expiring on December 31, 1996 (such term being hereinafter referred to as the "Term").
2. Duties; Conduct.
(a) During the Term, you shall serve in the capacity of a Senior Advisor to the Company; as such, you shall render consulting services from time to time as hereinafter provided on such project or projects relating to the business, affairs and management of the Claiborne Group as may be reasonably selected and/or delegated to you by the Board of Directors of the Company ("Board of Directors") and/or the Company's Chief Executive Officer. The specific consulting services requested of you shall be limited to those of a senior executive nature.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (b) To the extent practicable, the services to be provided by you shall be performed at such times as are reasonably convenient to you. The Company acknowledges that you may have other activities, obligations and engagements which may command your time and attention and the Company will exercise its best efforts, in calling upon your services hereunder, to respect such other commitments. Your services may require travel; domestic travel shall be as reasonably required and foreign travel shall be as we shall mutually agree. Your services (including travel time) shall not require more than 20 days per fiscal quarter of the Company without your consent, although you shall not be entitled to any greater or lesser compensation for rendering services for a greater or lesser period of time.
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(c) During the Term, you agree to make yourself available to perform the consulting services referred above in accordance with the provisions hereof, and to apply your best efforts to perform such services faithfully and diligently, and to the best of your ability; and not take any action or conduct yourself in any manner which would tend to harm the reputation or goodwill of the Claiborne Group.
3. Compensation, Benefits and Expenses.
(a) As full compensation for all services to be provided by you hereunder during the Term, the Company will pay you and you shall accept the following: (i) Three Hundred Thousand Dollars ($300,000) on January 2, 1995; and (ii) additional consulting fees, at an annual rate of (A) Three Hundred Thousand Dollars ($300,000) during the first year of the Term; and (B) Two Hundred Ninety Thousand Dollars ($290,000) during the second year of the Term. Such consulting fees shall be paid in installments in accordance with the Company's standard practice regarding salary payments to its senior-most executives from time to time in effect.
(b) During the Term, you will continue to participate, on the same basis as heretofore, in accordance with and subject to the respective terms and conditions thereof as to eligibility and otherwise, in the Company's medical, dental, long-term disability and life insurance programs (subject to insurability at standard rates, it being understood and agreed that if insurance becomes unavailable at standard rates, the Company shall maintain the insurance provided that the difference in premiums between standard and actual rate is paid by you), provided that, (i) during the Term, the Company shall provide you with supplemental life insurance as heretofore in effect in the face amount of $1.2 million; and (ii) for a period of eighteen months subsequent to the expiration of the Term, the Company shall provide you with coverages substantially identical to those provided to its senior-most executives under its medical and dental insurance programs, such that your "COBRA" rights, under which you may continue your existing medical coverages for an additional 18 months at your own expense, shall be deemed to commence after the expiration of such initial eighteen month period.
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document (c) The Company will reimburse you, in accordance with its standard policies from time to time in effect, for such reasonable and necessary vouchered out-of-pocket business expenses as may be incurred by you during the Term in the performance of the duties and responsibilities assigned to you under this Agreement. The Company understands that you will be a Florida resident during the Term and that with respect to any projects requiring that you travel (to New York City or otherwise) in accordance with the terms hereof, you shall be entitled to reimbursement of business class airfare and first class hotel accommodations.
4. Termination.
(a) The Term will terminate at the election of the Company for Cause immediately upon notice from the Company to you. As used herein, the term "Cause" means:
(i) Your willful or intentional failure or refusal to perform or observe any of your material duties, responsibilities or obligations set forth in, or as contemplated under, this Agreement, if such breach is not cured, if curable, within 30 days after notice thereof to you by the Company;
3
(ii) Any willful or intentional act or failure to act involving fraud, misrepresentation, theft, embezzlement, dishonesty or moral turpitude (collectively, "Fraud") affecting the Claiborne Group or any customer, supplier or employee of the Claiborne Group;
(iii) 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, after exhaustion of all appeals taken therefrom;
(iv) Any willful or intentional act which could reasonably be expected to materially injure the reputation, business or business relationships of the Claiborne Group, or your reputation or business relationships, if such breach is not cured, if curable, within 30 days after notice thereof to you by the Company; or
(v) Your willful or intentional failure to comply with any reasonable request or direction of the Board of Directors or the Chief Executive Officer of the
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Company not contrary to the provisions of this Agreement, if such breach is not cured, if curable, within 30 days after notice thereof to you by the Company.
(b) For purposes of this Section 6, no act, or failure to act, on your part shall be deemed "willful" or "intentional" unless done, or omitted to be done, by you without reasonable belief on your part that your action or omission was in the best interests of the Claiborne Group.
(c) The Company shall provide you with a prompt hearing before the Board of Directors (at which you may be accompanied by counsel) prior to any termination for Cause hereunder.
(d) The Term will terminate forthwith upon your death or, at the Claiborne Group's option, upon your disability; provided that in the event that you shall die or become disabled during the Term, the Company shall continue to pay through the end of the Term your consulting fee provided in paragraph 3(a) to your estate or personal representative.
5. Confidential Information.
(a) The Claiborne Group owns and has developed and compiled, and will own, develop and compile, certain proprietary techniques and confidential information which have great value to its business (referred to in this Agreement, collectively, as "Proprietary Information"). Proprietary Information includes not only information disclosed by the Claiborne Group to you, but also information developed or learned by you during the course or as a result of your prior employment or your engagement hereunder, which information you acknowledge is and shall be the sole and exclusive property of the Claiborne Group. Proprietary Information includes all proprietary information that has or could have commercial value or other utility in the business in which the Claiborne Group is engaged or contemplates engaging, and all proprietary information of which the unauthorized disclosure could be detrimental to the interests of the Claiborne Group, whether or not such information is specifically labelled as Proprietary
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Information by the Claiborne Group. By way of example and without limitation, Proprietary Information includes any and all information developed, obtained or owned by the Claiborne Group concerning trade secrets, techniques, know-how (including designs, plans, procedures, merchandising know-how, processes and research records), software, computer programs, innovations, discoveries, improvements, research, development, test results, reports, specifications, data, formats, marketing data and plans, business plans, strategies, forecasts, unpublished financial information, orders, agreements and other forms of documents, price and cost information, merchandising opportunities, expansion plans, designs, store plans, budgets, projections, customer, supplier and
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document subcontractor identities, characteristics and agreements, and salary, staffing and employment information. Notwithstanding the foregoing, Proprietary Information shall not in any event include information which (i) was generally known or generally available to the public prior to its disclosure to you; (ii) becomes generally known or generally available to the public subsequent to disclosure to you through no wrongful act of any person or (iii) which you are required to disclose by applicable law or regulation (provided that you provide the Company with prior notice of the contemplated disclosure and reasonably cooperate with the Company at the Company's expense in seeking a protective order or other appropriate protection of such information).
(b) You acknowledge and agree that in the performance of your duties hereunder the Claiborne Group may from time to time disclose to you and entrust you with Proprietary Information. You also acknowledge and agree that the unauthorized disclosure of Proprietary Information, among other things, may be prejudicial to the Claiborne Group's interests, an invasion of privacy and an improper disclosure of trade secrets. You agree that you shall not, directly or indirectly, use, make available, sell, disclose or otherwise communicate to any corporation, partnership, individual or other third party, other than in the course of your assigned duties and for the benefit of the Claiborne Group, any Proprietary Information, either during your term of engagement or thereafter.
(c) You and the Company agree that you shall not disclose to the Claiborne Group or use for the Claiborne Group's benefit, any information which may constitute trade secrets or confidential information of third parties, to the extent you have any such secrets or information.
(d) The provisions of this Section 5 shall survive the termination or expiration of this Agreement and the Term.
6. Restrictive Covenants.
(a) You acknowledge and agree that you have and will continue to develop a personal acquaintance and relationship with one or more of the Claiborne Group's customers, employees, suppliers and independent contractors, and consequently, you agree that it is fair, reasonable and necessary for the protection of the business, operations, assets and reputation of the Claiborne Group that you make the covenants contained in this Section 6.
(b) You agree that, until the first anniversary of the Effective Date, without the prior express written consent of the Board of Directors, you shall not, directly or indirectly, own, manage, operate, join, control, participate in, invest in or otherwise be connected or associated with, in any manner, including as an officer, director, employee, partner, consultant, advisor, proprietor, trustee or investor, any Competing Business (as hereinafter defined); provided however that nothing contained in this Section 6(b) shall prevent you from owning less than 2% of the voting stock of
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 5 a publicly held corporation for investment purposes. For purposes of this Section 6(b), the term "Competing Business" shall mean a business engaged in the design, manufacture, distribution or marketing of better apparel or related products which competes with any business or line of business representing more than $75 million in sales of the Company and then being operated by the Company.
(c) You agree that, until the third anniversary of the Effective Date, you shall not, directly or indirectly,
(i) persuade or seek to persuade any customer of the Claiborne Group to cease to do business or to reduce the amount of business which any customer has customarily done or contemplates doing with the Claiborne Group, whether or not the relationship between the Claiborne Group and such customer was originally established in whole or in part through your efforts;
(ii) seek to employ or engage, or assist anyone else to seek to employ or engage, any Protected Person or Entity; or
(iii) knowingly interfere in any manner in the relationship of the Claiborne Group with any of its customers, suppliers or independent contractors, whether or not the relationship between the Claiborne Group and such customer, supplier or independent contractor was originally established in whole or in part by your efforts.
As used in this Section 6, (i) the terms "customer" and "supplier" shall mean and include any individual, proprietorship, partnership, corporation, joint venture, trust or any other form of business entity which is then a customer or supplier, as the case may be, of the Claiborne Group or which was such a customer or supplier at any time during the one-year period immediately preceding the date of termination of your engagement hereunder; and (ii) the term "Protected Person or Entity" shall mean and include (A) any person who was at any time during the period January 1, 1994 through the end of the Term hereof an employee of any entity within the Claiborne Group, (B) any person or entity who or which, at any time during the period January 1, 1994 through the date hereof was a contractor or supplier to the Company (1) who or which (x) provided material manufacturing marketing, sales, financial or management consulting services to any entity within the Claiborne Group, or (y) was a supplier of apparel or related goods or components thereof to the Claiborne Group, and (2) with whom you had regular or significant contact as an employee of the Company, and (C) any person or entity with whom you had substantive meetings or discussions at the direction of the Company hereunder during the Term hereof.
(d) You agree that, during the Term, and for a period of
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document 12 months thereafter, you will take no action which is intended, or would reasonably be expected, to harm the Claiborne Group or its reputation or which would reasonably be expected to lead to unwanted or unfavorable publicity to the Claiborne Group.
(e) The provisions of this Section 6 shall survive the termination or expiration of this Agreement and the Term.
7. Specific Performance. You acknowledge that the Company would sustain irreparable injury in the event of a violation by you of any of the provisions of Sections 5 or 6 hereof, and by reason thereof you consent and agree that if you violate any of the provisions of said Sections 5 or 6,
6 in addition to any other remedies available, the Company shall be entitled to a decree specifically enforcing such provisions, and shall be entitled to a temporary and permanent injunction restraining you from committing or continuing any such violation, from any arbitrator duly appointed in accordance with the terms of this Agreement or any court of competent jurisdiction, without the necessity of proving actual damages, posting any bond, or seeking arbitration in any forum. The provisions of this Section 7 shall survive the termination or expiration of this Agreement and the Term.
8. Stock Options.
By all necessary corporate action, which the Company represents has been taken, your existing option agreements dated December 13, 1993; December 14, 1992; December 17, 1991; and December 14, 1990 (collectively, the "Option Agreements") are hereby amended, with effect as of the day following the Effective Date, to provide as follows:
(a) that your "termination of employment" for all purposes under such Option Agreements shall be deemed to be the last day of your engagement as a consultant pursuant to this Agreement;
(b) Provided that you shall not have materially breached any provision of this Agreement entitling the Company to terminate the same in accordance with its terms, all options granted pursuant to the Option Agreements that shall not have theretofore vested in accordance with the terms of such Option Agreements shall vest in full on the date immediately preceding the last day of the Term; and
(c) Your use of so-called "cashless exercise" procedures permitted within the terms of the stock option plan of the Company under which your Option Agreements were issued, including your being deemed to tender "in the money" options as payment for your exercise price and/or tax withholding obligations in connection with your option exercises, are hereby approved with respect to any future exercises of your options granted under the Option
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document Agreements.
(d) In the event that the Company shall amend the relevant option plan, or adopt any policy thereunder, to generally provide, with effect prior to the end of the Term, that Company stock options issued prior to the date hereof to senior executive officers and vested prior to termination of employment may be exercised by the holder thereof during a period longer than three months after termination of employment, or to otherwise unconditionally provide an acceleration or other benefit under the Terms of such options to the holder thereof, then such amendment or policy shall apply to your options covered by the Option Agreements with equal force and effect.
9. Life Insurance.
(a) You agree that the Claiborne Group will have the right to obtain and maintain life insurance on your life, at its expense, and for its benefit. You agree to cooperate fully with the Claiborne Group in
7 obtaining such life insurance, to sign any necessary consents, applications and other related forms or documents and to take any required medical examinations.
(b) At the conclusion of the Term, you shall be entitled to take over ownership of any "portable" life insurance policies held by Company on your life, in accordance with the standard Company procedures with respect thereto.
10. Withholding. The parties understand and agree that all payments to be made by the Company pursuant to this Agreement shall be subject to all applicable tax withholding obligations of the Company.
11. No Conflict. You covenant that you shall not become party to or subject to any agreement, contract, understanding, covenant, judgment or decree or under any obligation, contractual or otherwise, in any way restricting or adversely affecting your ability to act for the Claiborne Group in all of the respects contemplated hereby.
12. Indemnification; Cooperation. (a) The Company hereby confirms to and agrees with you with respect to any and all matters arising out of or in connection with your prior employment by the Company or your engagement as a consultant hereunder, that you shall continue to be entitled to receive the benefits of all indemnification provisions contained in the Certificate of Incorporation and By-Laws of the Company, as in effect on the date hereof, notwithstanding any changes therein made after the date hereof, to the fullest extent permitted by applicable law at the time of the assertion of any liability against you. Without limiting the generality of the foregoing, the Company hereby covenants and agrees that you shall be entitled to receive
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document any and all indemnification to which you would have been entitled had you remained an officer or director of the Company after the date hereof, including, without limitation, such indemnification benefits as may hereafter be extended or otherwise made available by the Company to its senior executive officers.
(b) Consultant shall cooperate fully with the Company in the prosecution or defense, as the case may be, of any and all actions, governmental inquiries or other legal proceedings in which his assistance may be requested by the Company. Such cooperation shall include, among other things, making documents in his custody or control available to the Company or its counsel, making himself available for interviews by the Company or its counsel, and making himself available to appear as a witness, at deposition, trial or otherwise. Any reasonable and necessary vouchered out-of-pocket expenses incurred by Consultant in fulfilling his obligations under this paragraph 12(b) shall be the sole responsibility of the Company.
(c) The provisions of this Section 12 shall survive the termination or expiration of this Agreement and the Term.
13. Notices. All notices required or permitted hereunder will be given in writing by personal delivery; by confirmed facsimile transmission; by express delivery via any reputable express courier service; or by registered or certified mail, return receipt requested, postage prepaid, in each case addressed to the parties at the respective addresses set forth in Exhibit A or at such other address as may be designated in writing by either party to the other in the manner set forth herein. Notices which are delivered personally, by confirmed facsimile transmission, or by courier as aforesaid, will be effective on the date of delivery. Notices delivered by mail will be deemed effectively given upon the fifth calendar day subsequent to the postmark date thereof.
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14. Miscellaneous.
(a) The failure of either party at any time to require performance by the other party of any provision hereunder will in no way affect the right of that party thereafter to enforce the same, nor will it affect any other party's right to enforce the same, or to enforce any of the other provisions in this Agreement; nor will the waiver by either party of the breach of any provision hereof be taken or held to be a waiver of any prior or subsequent breach of such provision or as a waiver of the provision itself.
(b) This Agreement is a personal contract calling for the provision of unique services by you, and your rights and obligations hereunder may not be sold, transferred, assigned, pledged or hypothecated by you. In the event of any attempted assignment or transfer of rights hereunder by you
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document contrary to the provisions hereof (other than as may be required by law), the Company will have no further liability for payments hereunder. The rights and obligations of the Company hereunder will be binding upon and run in favor of the successors and assigns of the Company, but no assignment by the Company shall release the Company from its obligations hereunder, and the Company shall not assign this Agreement to any entity outside of the Claiborne Group except in connection with a sale of all or substantially all of the assets of the Company.
(c) Each of the covenants and agreements set forth in this Agreement are separate and independent covenants, each of which has been separately bargained for and the parties hereto intend that the provisions of each such covenant shall be enforced to the fullest extent permissible. Should the whole or any part or provision of any such separate covenant be held or declared invalid, such invalidity shall not in any way affect the validity of any other such covenant or of any part or provision of the same covenant not also held or declared invalid. If any covenant shall be found to be invalid but would be valid if some part thereof were deleted or the period or area of application reduced, then such covenant shall apply with such minimum modification as may be necessary to make it valid and effective.
(d) This Agreement has been made and will be governed in all respects by the laws of the State of New York applicable to contracts made and to be wholly performed within such state and the parties hereby irrevocably consent to the jurisdiction of the courts of the State of New York and federal courts located therein for the purpose of enforcing this Agreement.
(e) Any controversy arising out of or relating to this Agreement or the breach hereof shall be settled by arbitration in the City of New York in accordance with the rules then obtaining of the American Arbitration Association and judgment upon the award rendered may be entered in any court having jurisdiction thereof, except that in the event of any controversy relating to any violation or alleged violation of any provision of Section 5 or 6 hereof, the Company in its sole discretion shall be entitled to seek injunctive relief from a court of competent jurisdiction without any requirement to seek arbitration. The parties hereto agree that any arbitral award may be enforced against the parties to an arbitration proceeding or their assets wherever they may be found. In the event that (i) you make a claim against the Company under this Agreement, (ii) the Company disputes such claim, and (iii) you prevail with respect to such disputed claim, then the Company shall reimburse you for your reasonable costs and expenses (including reasonable attorney's fees) incurred by you in pursuing such disputed claim.
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(f) This Agreement, together with the letter agreement between us dated December 8, 1994 (which include any Exhibits and Annexes hereto or thereto), sets forth the entire understanding between the parties as to the subject matter of this Agreement and merges and supersedes all prior
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document agreements, commitments, representations, writings and discussions between the parties with respect to that subject matter. This Agreement may be terminated, altered, modified or changed only by a written instrument signed by both parties hereto.
(g) The Section headings contained herein are for purposes of convenience only and are not intended to define or list the contents of the Sections.
(h) The provisions of this Agreement which by their terms call for performance subsequent to termination of the Term, or of this Agreement, shall so survive such termination.
(i) In rendering the services to be rendered by you hereunder, you shall be an independent contractor, and you shall not, without the prior express direction of the Company, be authorized to bind the Company in any manner whatsoever.
Please confirm your agreement with the foregoing by signing and returning the enclosed copy of this letter, following which this will be a legally binding agreement between us as of the date first written above.
Very truly yours,
Liz Claiborne, Inc.
By: /s/ Jerome A. Chazen ------Name: Jerome A. Chazen Title: Chairman
Accepted and Agreed:
/s/ Harvey L. Falk ------Harvey L. Falk
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EXHIBIT A
Addresses for Notice
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document If to Liz Claiborne, Inc.:
Liz Claiborne, Inc. 1441 Broadway New York, NY 10018 Attention: Chairman Facsimile: (212) 626-1888 Confirm: (212) 626-3300
- and -
Liz Claiborne, Inc. 300 Lighting Way Secaucus, NJ 07094 Attention: General Counsel Facsimile: (201) 601-8650 Confirm: (201) 601-8501
If to You:
To your address set forth on the first page of this Agreement
Facsimile: Confirm:
With a copy to:
Donald D. Shack, Esq. Shack & Siegel, P.C. 530 Fifth Avenue New York, New York Facsimile: (212) 730-1964 Confirm: (212) 782-0700
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EXHIBIT 21
S U B S I D I A R I E S O F L I Z C L A I B O R N E, I N C. Claiborne Limited Hong Kong Liz Claiborne Cosmetics, Inc. Delaware Liz Claiborne Accessories, Inc. Delaware Liz Claiborne Accessories-Sales, Inc. Delaware Liz Claiborne Export, Inc. Delaware Liz Claiborne Foreign Holdings, Inc. Delaware Liz Claiborne International Limited Hong Kong Liz Claiborne (Israel) Ltd. Israel Liz Claiborne (Italy) Ltd. Delaware L. C. Licensing, Inc. Delaware Liz Claiborne Sales, Inc. Delaware Liz Claiborne-Texas, Inc. Delaware LCI Investments, Inc. Delaware LCI Holdings, Inc. Delaware Liz Claiborne (Canada) Limited Canada Liz Claiborne, S.A. Costa Rica L.C. Caribbean Holdings, Inc. Delaware Liz Claiborne Shoes, Inc. Delaware L. C. Service Company, Inc. Delaware Liz Claiborne (U.K.) Limited U.K. LCI - Claiborne Limited Partnership New Jersey Liz Claiborne do Brasil Ltda. Brazil LC/QL Investments, Inc. Delaware L.C. Dyeing, Inc. Delaware L.C. Augusta, Inc. Delaware Textiles Liz Claiborne Guatemala, S.A. Guatemala Liz Claiborne (Malaysia) SDN.BHD Malaysia Liz Claiborne B.V. Netherlands RTVCH Holdings, Inc. Delaware Liz Claiborne Foreign Sales Corporation US Virgin Islands Liz Claiborne Operations (Israel) 1993 Limited Israel Liz Claiborne Apparel (Shanghai), Co. Ltd. China Liz Claiborne Colombia Limitada Colombia Liz Claiborne De El Salvador, S.A., de C. V. El Salvador L. C. I. K. F. T. Hungary LCI Fragrances, Inc. Delaware
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EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our reports included in this Form 10-K, into the Company's previously filed Registration Statements File Nos. 2-77590, 2-95258, 2-33661 and 33-51257.
New York, New York March 30, 1995
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5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF LIZ CLAIBORNE, INC. FOR THE YEAR ENDED DECEMBER 31, 1994, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000
YEAR DEC-31-1994 DEC-31-1994 71,419 258,932 159,766 0 423,003 1,022,531 409,054 172,494 1,289,662 303,399 0 88,219 0 0 894,765 1,289,662 2,162,901 2,162,901 1,407,694 1,407,694 634,421 0 329 131,449 48,600 82,849 0 0 0 82,849 1.06 1.06
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~~EXHIBIT 28~~
~~To Be Incorporated By Reference Into Registration Statements on Forms S-8 (File Nos. 2-77590, 2-95258, 2-33661 and 33-51257)~~
~~UNDERTAKINGS~~
~~(a) The undersigned registrant hereby undertakes:~~
~~(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:~~
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
~~(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.~~
(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the 1934 Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the
Copyright © 2012 www.secdatabase.com. All Rights Reserved. Please Consider the Environment Before Printing This Document opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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