Amended and Restated Employment Agreement

Amendment to Employment Agreement

Second Amendment to Employment Agreement

Third Amendment to Employment Agreement

Fourth Amendment to Employment Agreement

Severance Plan

 

 

 

 

EXHIBIT 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

    AGREEMENT made as of March 11, 2002 by and between JONES APPAREL GROUP, INC., a Pennsylvania corporation (the "Company"), and WESLEY R. CARD (the "Executive").

W I T N E S S E T H:

    WHEREAS, the Executive is a party to the Employment Agreement dated as of July 1, 2000 with the Company (as amended or supplemented to date, the "Prior Employment Agreement").

    WHEREAS, the Company wishes to continue to employ the Executive, and the Executive wishes to continue employment with the Company, on the terms and conditions hereinafter set forth.

    NOW, THEREFORE, it is agreed as follows:

    1.    Employment. During the term of this Agreement, the Company shall employ the Executive as the Chief Operating and Financial Officer of the Company. During the Term, the Executive shall have such responsibilities, duties and authorities as are commensurate with chief operating officers and chief financial officers of public entities of similar size to the Company. The Executive shall report directly to the Chief Executive Officer of the Company. During the term of this Agreement, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive agrees to devote all of Executive's business time and attention to the business affairs of the Company, and to perform such responsibilities in a professional manner. Notwithstanding the foregoing, during the term of this Agreement, it shall not be a violation of this Agreement for the Executive to (a) serve on civic or charitable boards or committees; (b) deliver lectures, fulfill speaking engagements or teach at educational institutions; (c) serve as a non-employee member of a board of directors of a business entity which is not competitive with the Company and as to which the Board of Directors of the Company has given its consent; and (d) attend to personal business, so long as such activities do not interfere with the performance of the Executive's responsibilities as a senior executive of the Company in accordance with this Agreement.

    2.    Term. The Company shall employ the Executive for the period commencing as of March 11, 2002 and ending as of June 30, 2004 (the "Expiration Date"), as renewed in accordance with the following sentence (the "Term"). The Executive's employment with the Company will continue, and this Agreement will be automatically extended without limitation, for successive 12-month periods commencing July 1 and ending June 30 (a "Contract Year"),


 unless either party to this Agreement advises the other in writing, no later than June 30, 2002 and no later than each June 30 thereafter, that such party does not wish to extend (a "Non-extension Notice"). If this Agreement shall be so extended, the "Expiration Date" shall mean the then applicable extended "Expiration Date", and the "Term" shall mean the period commencing March 11, 2002 and ending on the then applicable extended "Expiration Date".

    For example, (i) if by June 30, 2002, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2005, and (ii) if the Term is so extended through June 30, 2005, then if by June 30, 2003, neither party has given a Non-extension Notice to the other, the Term will be automatically extended through June 30, 2006.

    3.    Salary, Retirement Plans, Fringe Benefits and Allowances.

        (a)    Throughout the Term, the Executive shall receive a salary at the annual rate of not less than $850,000. The Executive's salary shall be payable at such regular times and intervals as the Company customarily pays its senior executives from time to time, but no less frequently than once a month.

        (b)    During the Term, the Executive shall be eligible to participate in all savings and retirement plans, practices, policies and programs to the extent applicable generally to other senior executives of the Company.

        (c)    During the Term, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under welfare, fringe and other benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, prescription drug, dental, disability, accidental death and travel accident insurance plans and programs) to the extent applicable generally to other senior executives of the Company.

        (d)    The Executive shall be entitled to an aggregate of four (4) weeks paid vacation during each calendar year of the Term. The Executive shall also be entitled to the benefits of the Company's policies relating to sick leave and holidays.

        (e)    The Executive shall have all expenses reasonably incurred by Executive on behalf of the Company reimbursed by the Company in accordance with the Company's standard policies and practices. The Executive shall be entitled to first class seating for air travel on Company business.

        (f)    The Company shall make available to the Executive all perquisites that are made available to senior executives of the Company.

    4.    Bonus.

    Executive shall participate in the Company's Executive Annual Incentive Plan (the "Bonus Plan"), pursuant to which the Executive may be entitled to receive annual bonus payments for each full calendar year of employment which ends prior to the Expiration Date and 

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throughout which the Executive has been employed by the Company, conditioned upon the attainment of annual criteria and objectives established for participants in the Bonus Plan.

    5.    Stock Options.

        (a)    The Company agrees to submit to stockholders, at the Annual Meeting of Stockholders scheduled for May 22, 2002 (the "May 22 Meeting"), a proposal to amend the Company's 1999 Stock Incentive Plan (the "1999 Plan"), as follows: (i) to increase the number of shares reserved for issuance under Section 2 of the Plan from 15,000,000 shares to no fewer than 20,000,000 shares, and (ii) to increase the limitation on the number of options any Eligible Individual (as defined in the 1999 Plan) may be granted under Section 4(c) of the Plan during its ten-year term from 3,000,000 shares of Common Stock to 6,000,000 shares of Common Stock. As an alternative to the above proposal, the Company may, with the consent of the Executive, submit to stockholders, at the May 22 Meeting, a proposal to adopt a new stock incentive plan, upon terms and conditions substantially similar to the 1999 Plan, with a minimum of 2,000,000 shares reserved for issuance thereunder. The Company shall use its best efforts to obtain stockholder approval of any such proposal at the May 22 Meeting. Upon the approval of any proposal authorizing the grant of additional stock options, the Stock Option Committee of the Board (or the Board or other Committee with authority) will grant to the Executive an option to purchase 500,000 Common Shares on the terms and conditions consistent with the provisions of Section 5(f)(iii)-(v) below, provided, however, that notwithstanding the provision in the first clause of Section 5(f)(iv) below, such options shall vest ratably on March 11, 2003, March 11, 2004 and March 11, 2005 (the "Option Grant"). With respect to the vesting provisions of the Option Grant, and only by way of example, the options subject to the Option Grant shall vest, under the following circumstances, as follows: assuming the necessary proposals for the Option Grant are approved by stockholders at the May 22 Meeting, 166,667 options shall vest on March 11, 2002, 166,667 options shall vest on March 11, 2004 and 166,666 options shall vest on March 11, 2005; or, assuming the necessary proposals for the Option Grant are not approved by stockholders at the May 22 Meeting, but are approved at the subsequent annual meeting of the stockholders of the Company scheduled to be held in May 2003, 166,667 options shall be fully vested upon such grant, 166,667 options shall vest on March 11, 2004 and 166,666 options shall vest on March 11, 2005.

        (b)    In the event the stockholders do not approve any of the proposals set forth in Section 5(a) above at the May 22 Meeting, the Company agrees to resubmit the proposal to stockholders at the next Special or Annual Meeting of Stockholders held by the Company thereafter, and at subsequent Special or Annual Meetings of Stockholders, until such time as such proposal is approved by stockholders and the Executive has received the Option Grant. The Company shall use its best efforts to obtain stockholder approval of any such proposal. Upon the approval of such proposal, the Stock Option Committee of the Board (or the Board or other Committee with authority) will grant to the Executive the Option Grant.

        (c)    In the event that the exercise price per share of the Options granted to the Executive pursuant to Section 5(a) above (the "March 11 Exercise Price") is less than the fair market value of the Company's common stock on the date of grant of the Option Grant (i.e. the date of stockholder approval as provided in Sections 5(a) or 5(b) above), the number of options to 

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purchase Common Shares subject to the Option Grant shall be inreased based upon a Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company for its senior executives; in no event shall the number of options subject to the Option Grant be less than 500,000. For example, if the March 11 Exercise Price is $37 and the fair market value of the common stock of the Company on the date of stockholder approval is $47, the exercise price of the Option Grant shall be $47, and the number of options granted, and the Common Shares reserved for issuance, shall be increased so that the value of the Option Grant based upon the $47 exercise price shall represent a right to receive the same value that the Executive would have received had the Option Grant been made at the $37 price, as follows: the product of $10 (the difference between the $37 March 11 Exercise Price and the $47 exercise price for the Option Grant) multiplied by 500,000, divided by the Black-Scholes value.

        (d)    After first allocating shares for stock options required under that certain employment agreement dated March 11, 2002 between the Company and Peter Boneparth, the Company agrees to allocate to the Option Grant the next shares that are reserved for issuance pursuant to any of the proposals referred to in Sections 5(a) and 5(b) above or any other equity plan adopted by the Company. In the event that any of such proposals are not approved by stockholders and, in lieu thereof, the Company adopts a non-equity based incentive compensation plan or plans (in each case, a "Non-equity Plan") to achieve the same or similar goals that the Company would have hoped to achieve had the stockholders approved the proposals, the Executive shall receive, at his option, "equivalent value" in such non-equity based plan or plans as he would have received had the Option Grant been made on March 11, 2002. For purposes hereof, "equivalent value" shall mean the difference between the March 11 Market Price and the fair market value of the Company's common stock on the date of an award or vesting of an award under a Non-equity Plan. By way of example, if the March 11 Exercise Price is $37 and the fair market value of the common stock on the date of an award under a Non-equity Plan is $47, the "equivalent value" for such award shall be $10 multiplied by the number of options that would have been vested had the Option Grant been made on March 11, 2002. In the same example, if the fair market value of the common stock on the date of the award or the vesting thereof is less that the March 11 Exercise Price, no payments shall be made to the Executive. Notwithstanding anything contained herein, the Compensation Committee of the Board and the Board of Directors shall use its best efforts to provide to Executive "equivalent value."

        (e)    At all times, the Company shall maintain registrations on Form S-8 or another applicable form relating to the Common Shares issued in connection with the exercise of stock options granted pursuant to this Section 5.

        (f)    Subject to the absolute authority of the Stock Option Committee of the Board of Directors of the Company from time to time to grant (or not to grant) to eligible individuals options to purchase common stock of the Company ("Options"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options annually (in addition to those described in Section 5(a) hereof), beginning in calendar year 2003, on the following terms and conditions (and any Options so granted shall be subject to the following terms and conditions, which shall govern any conflicts in the terms hereof with any terms and conditions in any stock option agreement):

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            (i)    Target awards will be in an amount (plus or minus 25%) equal to 150% of Executive's salary;

            (ii)   For purposes of determining the number of shares subject to a given Option grant, the value of such Option shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is being used uniformly by the Company for its senior executives;

            (iii)  The exercise price per share of the Options shall be the fair market value of the common stock on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and

            (iv)  The Options shall vest ratably on the first three anniversaries of the date of grant; provided, however, that all such Options and all other options to purchase Common Shares then held by the Executive which are not then vested (in the aggregate being referred to herein as "Accelerated Options") shall become fully vested and immediately exercisable during the remaining original term of each such Accelerated Option, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement (as defined herein), death, Disability, a Change in Control (as defined herein), and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and

            (v)   The Options shall be granted on such other terms and conditions as are generally made applicable to Options granted to the other senior executives of the Company.

    6.    Termination of Employment.

        (a)    By the Company for Cause, or by the Executive without Good Reason. The Company may terminate the Executive's employment for Cause (as defined herein) before the Expiration Date. If the Executive's employment is terminated for Cause, or if Executive resigns during the Term without Good Reason (as defined below), the Company shall pay to the Executive any unpaid salary through the date of termination, as well as reimburse the Executive for any unpaid reimbursable expenses incurred on behalf of the Company, and thereafter the Company shall have no additional obligations to the Executive under this Agreement.

        (b)    Death or Disability; Retirement. (i) If the Executive's employment terminates before the Expiration Date because of Executive's death or Disability (as defined herein), the Company shall pay Executive or Executive's duly appointed personal representative, as the case may be, (i) any unpaid salary through the date of death or the Disability Termination Date (as defined herein), as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) an amount equal to Executive's monthly salary during each of the six (6) months following Executive's death or the Disability Termination Date, and (iii) the Target Bonus for the calendar year in which Executive dies or becomes Disabled, prorated for the portion of such year preceding Executive's death or the Disability Termination Date, which shall be paid not later than 120 days after the end of such year. Except as set forth in this Section

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 6(b), the Company shall have no additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Section 6(b).

            (ii)    In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the Executive's Retirement, death or the Disability Termination Date, shall become fully exercisable and shall remain exercisable by the Executive or by the Executive's estate or his representative, as the case may be, during the remaining original term of the Accelerated Option in the case of the Executive's Retirement or Disability, or during the 3-year period following the date of the Executive's death.

        (c)    By the Company without Cause, or by the Executive for Good Reason. (i) The Company may terminate the Executive's employment before the Expiration Date without Cause, and the Executive may terminate Executive's employment before the Expiration Date for Good Reason, upon 30-days written notice to the other party. If the Executive's employment is so terminated by the Company without Cause, or by the Executive for Good Reason, as the case may be, the Company shall pay and provide to the Executive (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination (payable no later than the 30th day immediately following termination of employment), (iii) during each month of the Severance Period (as defined below), an amount equal to the sum of (x) Executive's monthly salary at the rate in effect immediately preceding termination and (y) one-twelfth of the Executive's Target Bonus for the calendar year in which termination occurs, (iv) throughout the Severance Period, continuation of Executive's participation (including the Company's contributions thereto) in all benefit plans and practices in which Executive was participating immediately preceding termination, and (v) reimbursement to the Executive for up to $10,000 of executive outplacement services. Except as set forth in this Subsection 6(c), the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(c).

            (ii)    In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options which were held by the Executive at the time of the termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason (whether or not following a Change of Control), shall become fully exercisable and shall remain exercisable for the same period following termination as would apply if the Executive's employment had not terminated.

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        (d)    Change in Control. If, following a "Change in Control" (as defined herein) and prior to the Expiration Date, the Company terminates the Executive's employment without Cause, or the Executive terminates employment hereunder for Good Reason, the Company shall pay to the Executive, within 20 days following termination, (i) any unpaid salary through the date of termination, as well as reimbursement of any unpaid reimbursable expenses incurred on behalf of the Company, (ii) the Target Bonus for the calendar year in which termination occurs, prorated for the portion of such year preceding termination, (iii) a lump-sum payment equal to (x) 200% of Executive's yearly salary at the rate in effect immediately preceding termination, multiplied by (y) the Severance Multiple (as defined herein), (iv) reimbursement to the Executive for up to $10,000 of executive outplacement services, and (v) a lump-sum equal to the Company's cost for health insurance, life insurance and retirement benefits for the Severance Period.

        (e)    As used herein:

            (i)    the term "Cause" shall mean (v) the Executive's commission of an act of fraud or dishonesty or a crime involving money or other property of the Company; (w) the Executive's conviction of a felony or a plea of guilty or nolo contendere to an indictment for a felony; (x) if, in carrying out Executive's duties hereunder, the Executive engages in conduct which constitutes willful misconduct or gross negligence; (y) the Executive's failure to carry out a lawful order of the Board of Directors of the Company or its Chief Executive Officer; or (z) a material breach by the Executive of this Agreement. Any act or failure to act on the part of the Executive which is based upon authority given pursuant to a resolution duly adopted by the Board of Directors of the Company or authorized in writing by the Chief Executive Officer of the Company, or based upon the advice of counsel for the Company, shall not constitute Cause as used herein. For purposes of this provision only, a breach shall be "material" if it is demonstrably injurious to the Company, its affiliates or any of its respective business units, financially or otherwise.

                  Cause shall not exist unless and until the Company (i) has delivered to the Executive a written Notice of Termination that specifically identifies the events, actions, or non-actions, as applicable, that the Company believes constitute Cause hereunder, and, in the case of termination for Cause under clauses (x), (y) or (z) above, the Executive has been provided with an opportunity to cure the offending conduct (if curable) within 30 days after delivery of the written Notice of Termination, and has not so cured such conduct (if curable), and (ii) the Executive has been provided an opportunity to be heard (with counsel) within 30 days after delivery of the notice of Termination; provided, however, that in the case of termination for Cause under clauses (x), (y), and (z) above, the date of termination shall be no earlier than 35 days after delivery of the Notice of Termination.

        (ii)    the term "Good Reason" shall mean any one of the following:

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                (1)    a material breach of the Company's obligations under this Agreement, which breach has not been cured within 20 business days after the Company's receipt of written notice from the Executive of such breach;

                (2)    a reduction in the Executive's then annual base salary;

                (3)    the relocation of the Executive's office to a location more than 30 miles from Executive's present office;

                (4)    the failure to pay the Executive any undisputed portion of the Executive's compensation within 15 business days after the date of receipt of written notice that such compensation or payment is due;

                (5)    the failure to continue in effect any compensation or benefit plan in which the Executive is participating, unless either (i) an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan; or (ii) the failure to continue the Executive's participation therein (or in such substitute or alternative plan) does not discriminate against the Executive, both with respect to the amount of benefits provided and the level of the Executive's participation, relative to other similarly situated participants;

                (6)    a reduction in the Executive's title and status as Chief Operating and Financial Officer of the Company, or any change in the Executive's status as reporting directly to the Chief Executive Officer; or the assignment to the Executive of any duties materially inconsistent with the Executive's position (including, without limitation, status, office, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1 of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company no later than thirty (30) days after written notice by the Executive; or

                (7)    any purported termination by the Company of the Executive's employment otherwise than as expressly permitted in this Agreement.

            (iii)    the terms "Disabled" or "Disability" shall mean the Executive's physical or mental incapacity which renders the Executive incapable, even with a reasonable accommodation by the Company, of performing the essential functions of the duties required of Executive by this Agreement for one hundred twenty (120) or more consecutive days; the term "Disability Termination Date" shall mean the date as of which the Executive's employment with the Company is terminated, either by the Executive or by the Company, following the suffering of a Disability by the Executive.

            (iv)    the term "Severance Period" shall mean the period commencing with the termination of the Executive's employment and ending with the Expiration Date.

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            (v)    the term "Severance Multiple" shall mean 3 times.

            (vi)    the term "Change in Control" shall have the same meaning as in the Company's 1999 Stock Option Plan, as in effect on the date hereof.

            (vii)    the term "Target Bonus" shall mean 100% of Executive's annual salary for any given year during the Term.

            (viii)    the term "Retirement" shall mean voluntary retirement by the Executive after attaining age 55 with 10 years of service with the Company, or, if the Executive has not attained age 55 and/or has less than 10 years of service with the Company, the Company determines that circumstances exist that warrant the granting of Retirement status.

        (f)    The Executive shall have no obligation to seek other employment or otherwise mitigate the Company's obligations to make payments under this Section 6, and the Company's obligations shall not be reduced by the amount, if any, of other compensation or income earned or received by the Executive after the effective date of Executive's termination.

    7.    Effect of Section 280G of the Internal Revenue Code.

        (a)    Notwithstanding any other provision of this Agreement to the contrary, and except as provided in Section 7(b), to the extent that any payment or distribution of any type to or for the benefit of the Executive by the Company (or by any affiliate of the Company, any person or entity who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder), or any affiliate of such person or entity, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or will be subject to the excise tax imposed under Section 4999 of the Code (the "Excise Tax"), then the Total Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Total Payments would result in the Executive retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Executive received the entire amount of such Total Payments. Unless the Executive shall have given prior written notice specifying a different order to the Company to effectuate the foregoing, the Company shall reduce or eliminate the Total Payments, by first reducing or eliminating the portion of the Total Payments which are not payable in cash and then by reducing or eliminating cash payments, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as defined herein). Any notice given by the Executive pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing the Executive's rights and entitlements to any benefits or compensation.

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        (b)    The determination of whether the Total Payments shall be reduced as provided in this Section 7 and the amount of such reduction shall be made at the Company's expense by an accounting firm selected by the Company from among its independent auditors and the five (5) largest accounting firms (an "Eligible Accounting Firm") in the United States (the "Accounting Firm"). The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations and documentation to the Company and the Executive within ten (10) days of the last day of Executive's employment. If the Accounting Firm determines that no Excise Tax is payable by the Executive with respect to the Total Payments, it shall furnish the Executive with an opinion reasonably acceptable to the Executive that no Excise Tax will be imposed with respect to any such payments and, absent manifest error, such Determination shall be binding, final and conclusive upon the Company and the Executive. If the Accounting Firm determines that an Excise Tax would be payable, the Executive shall have the right to accept the Determination of the Accounting Firm as to the extent of the reduction, if any, pursuant to this Section 7, or to have such Determination reviewed by another Eligible Accounting Firm selected by the Executive, at the expense of the Company, in which case the determination of such second accounting firm shall be binding, final and conclusive upon the Company and Executive.

    8.    Company Property. Any trade name or mark, program, discovery, process, design, invention or improvement which the Executive makes or develops, which relates, directly or indirectly, to the business of the Company or its affiliates, or Executive's employment by the Company, shall be considered as "made for hire" and shall belong to the Company and shall be promptly disclosed to the Company. During the Executive's employment and thereafter, the Executive shall, without additional compensation, execute and deliver to or as requested by the Company, any instruments of transfer and take such other action as the Company may reasonably request to carry out the provisions hereof, including filing, at the Company's sole expense, trademark, patent or copyright applications for any trade name or mark, invention or writing covered hereby and assigning such applications to the Company.

    9.    Confidential Information. The Executive shall not, either during the term of Executive's employment by the Company or thereafter, disclose to anyone or use (except, in each case, in the performance of Executive's responsibilities hereunder and in the regular course of the Company's business), any information acquired by the Executive in connection with or during the period of Executive's employment by the Company, with respect to any confidential, proprietary or secret aspect of the affairs of the Company or any of its affiliates, including but not limited to the requirements and terms of dealings with existing or potential licensors, licensees, designers, suppliers and customers and methods of doing business, all of which the Executive acknowledges are confidential and proprietary to the Company, and any of its affiliates, as the case may be.

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    10.    Competition; Recruitment; Non-Disparagement.

        (a)    The Executive shall not, at any time during Executive's employment by the Company and during the Severance Period (provided that the Company is making the payments to Executive which may be required hereby during such Severance Period) (the "Non-Compete Period") and under the following circumstances, engage or become interested (as an owner, stockholder, partner, director, officer, employee, consultant or otherwise) in any business which then competes, directly or indirectly, with the business then conducted by the Company or any of its subsidiaries or affiliates. The ownership of less than 5% of the stock of a publicly owned company which competes with the Company, any of its subsidiaries or affiliates, in and of itself, shall not be considered a violation of the provisions of this Section 10.

        (b)    The Executive shall not, at any time during Executive's employment by the Company and thereafter until the second anniversary of the expiration of the Non-Compete Period, recruit, solicit for employment, hire or engage, or assist any person or entity in recruiting, soliciting for employment, hiring or engaging, any employee or consultant of the Company, any of its subsidiaries or affiliates, or any person who was an employee or consultant of the Company, any of its subsidiaries or affiliates within one year before the termination of the Executive's employment.

        (c)    For the longer of any period applicable under this Section 10 or a period of three years immediately following the date of termination, (i) the Company, and its respective affiliates and employees shall not disparage the Executive, and (ii) the Executive shall not disparage the Company, or its respective affiliates and employees.

        (d)    The Executive acknowledges that these provisions are necessary for the protection of the Company, and its subsidiaries and affiliates and are not unreasonable, because the Executive would be able to recruit and hire personnel other than employees of the Company, and any of their subsidiaries and affiliates. The Executive further agrees that a breach of Section 8, 9 or 10 of this Agreement shall result in the immediate cessation of any payments pursuant to this Section 10 and Section 6 hereof, if applicable. The duration and the scope of these restrictions on the Executive's activities are divisible, so that if any provision of this Section 10 is held or deemed to be invalid, that provision shall be automatically modified to the extent necessary to make it valid.

    11.    Notices. Any notice or other communication to the Company or to the Executive under this Agreement shall be in writing and shall be considered given when mailed by certified mail, return receipt requested, to such party at Executive's address below, or to the Company at 1411 Broadway, New York, New York 10018, Attention: General Counsel (or at such other address as such party may specify by written notice to the other party).

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    12.    Successors; Binding Agreement.

        (a)    Company's Successors. No rights or obligations of the Company under this Agreement may be assigned or transferred by the Company, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the business or assets of the Company, provided that the assignee or transferee is the successor to all or substantially all of the business or assets of the Company and such assignee or transferee assumes all of the liabilities, obligations and duties of the Company, as contained in this Agreement, either contractually or as a matter of law. The Company will require any such successor to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business or assets as aforesaid, which executes and delivers the agreement provided for in this Section 12 or which otherwise becomes bound by all the terms and provisions of this Agreement or by operation of law.

        (b)    Executive's Successors. This Agreement shall not be assignable by the Executive. This Agreement and all rights of the Executive hereunder shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. Upon the Executive's death, all amounts to which Executive is entitled hereunder, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate.

    13.    Indemnification. The Company shall indemnify Executive and hold the Executive harmless, to the maximum extent permitted by applicable law, from and against all claims, actions, suits, proceedings, loss, damage, liability, costs, charges and expenses, including reasonable attorneys' fees and costs arising in connection with the Executive's performance of Executive's duties hereunder or Executive's status as an employee, officer, director or agent of the Company or its affiliates, in accordance with the Company's indemnity policies for its senior executives.

    14.    Interest on Late Payments. "Undisputed Late Obligations" shall bear interest beginning on the Due Date until paid in full at an annual rate of one percent (1.0%) plus the prime rate as declared from time to time by The Chase Manhattan Bank. For purposes hereof, "Undisputed Late Obligations" shall mean any obligation which remains unpaid 5 days after written notice thereof is delivered to the other party in accordance with Section 11 (the "Due Date") for money under this Agreement owing from one party to another, which obligation (i) is not subject to any bona fide dispute or (ii) has been adjudicated by an arbitration panel or court of competent jurisdiction to be due and payable.

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    15.    Arbitration. Except as otherwise provided herein, all controversies, claims or disputes arising out of or related to this Agreement shall be settled under the rules of the American Arbitration Association then in effect in the State of New York, as the sole and exclusive remedy of either party, and judgment upon such award rendered by the arbitrator(s) may be entered in any court of competent jurisdiction.

    16.    Attorneys' Fees. The Company shall reimburse the Executive (or the Executive shall reimburse the Company) for all reasonable costs, including without limitation reasonable attorneys' fees, of the Executive or the Company, as the case may be, in any dispute, arbitration or proceeding arising under this Agreement (collectively, a "Proceeding"), so long as the Executive or the Company, as the case may be, "prevails in substantial part" with respect to Executive's or the Company's claims or defenses in such Proceeding. For purposes hereof, the Executive shall be deemed to have "prevailed in substantial part" if (i) the Executive is the party originally demanding a Proceeding, and the arbitrator(s) shall have awarded the Executive at least 75% of the amount originally demanded by the Executive, or (ii) the Company is the party originally demanding a Proceeding, and the arbitrator(s) shall have denied the Company the relief originally requested. The Company shall be deemed to have "prevailed in substantial part" if the Executive is the party originally demanding a Proceeding and the arbitrator(s) shall have awarded the Executive less than 25% of the amount originally demanded by the Executive.

    17.    Miscellaneous.

        (a)    Given that a breach of the provisions of this Agreement would injure the Company irreparably, the Company may, in addition to its other remedies, obtain an injunction or other comparable relief restraining any violation of this Agreement, and no bond, security or other undertaking shall be required of the Company in connection therewith.

        (b)    The provisions of this Agreement are separable, and if any provision of this Agreement is invalid or unenforceable, the remaining provisions shall continue in full force and effect.

        (c)    This Agreement constitutes the entire understanding and agreement between the parties, and supersedes the Prior Employment Agreement and all other existing agreements between them and cannot be amended, unless such amendment is in writing and signed by both parties to this Agreement.

        (d)    This Agreement shall be governed by and construed in accordance with the laws of the State of New York (other than its choice of laws rules), where it has been entered and where it is to be performed. The parties hereto consent to the exclusive jurisdiction of any federal or state court in the State of New York to resolve any dispute arising under this Agreement or otherwise.

13


        (e)    The headings in this Agreement are solely for convenience of reference and shall not affect its interpretation.

        (f)    The failure of either party to insist on strict adherence to any term of this Agreement on any occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. For any waiver of a provision of this Agreement to be effective, it must be in writing and signed by the party against whom the waiver is claimed.

        (g)    The obligations of the Executive and the Company hereunder shall survive the termination of the term of this Agreement and the Executive's employment hereunder, to the extent necessary to give full effect to the provisions of this Agreement.

    IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first above written.

 

JONES APPAREL GROUP, INC.

By: /s/ Peter Boneparth
President

/s/ Wesley R. Card
Executive

Address: 3 Toftrees Court
Princeton, NJ 08540

 

 

EX-10 6 exhibit10_22.htm EXHIBIT 10.22

EXHIBIT 10.22

February 28, 2003

Mr. Wesley R. Card
Chief Financial and Operating Officer
Jones Apparel Group, Inc.
1411 Broadway
New York, NY 10018

Re:

Amended and Restated Employment Agreement made March 11, 2002 between Wesley R. Card and Jones Apparel Group, Inc. (the "Company") (the "Employment Agreement")

Dear Mr. Card:

This will confirm our agreement to amend the terms and conditions of the Employment Agreement, as follows:

1.  

By unanimous written consent dated January 23, 2003 (the "Consent"), the Board of Directors of the Company authorized the issuance to you of 150,000 shares of common stock of the Company (the "Restricted Shares") on the terms and conditions set forth in the Consent (the "Restricted Stock Grant"), a copy of which is attached hereto as Attachment A.
 

2.  

The Restricted Stock Grant is evidenced by the Restricted Stock Agreement attached hereto as Attachment B and is being executed and delivered by the parties contemporaneously with the execution hereof.
 

3.  

In consideration of the Restricted Stock Grant, the Employment Agreement is hereby amended as follows:
 

 

(a)

Sections 5(a), 5(b), 5(c) and 5(d) of the Employment Agreement are hereby deleted in their entirety.
 

 

(b)

Section 5(f) of the Employment Agreement is hereby amended to read in its entirety as follows:

Subject to the absolute authority of the Compensation Committee of the Board of Directors of the Company from time to time (i) to grant (or not to grant) to eligible individuals options ("Options") to purchase common stock of the Company ("Common Shares") and (ii) to issue (or not to issue) Common Shares of the Company subject to vesting requirements ("Restricted Shares"), it is the intention of the Company and the expectation of the Executive that while the Executive is employed hereunder, the Executive will receive Options and/or Restricted Shares

1


 

 

annually beginning in calendar year 2003, on the following terms and conditions (and any Options or Restricted Shares so granted and issued shall be subject to the following terms and conditions, which shall govern any conflicts between the terms hereof and any terms and conditions in any stock option or restricted stock agreement):
 

 

 

(i)

Target awards will be in an amount (plus or minus 25%) equal to 150% of Executive's salary;
 

 

 

(ii)

For purposes of determining the number of shares subject to a given Option or of Restricted Shares, the value of such Option or Restricted Shares grant shall be determined using the Black-Scholes valuation method, or another generally recognized valuation method which is then being used uniformly by the Company for its senior executives;
 

 

 

(iii)

The exercise price per share of the Options shall be not less than the fair market value of a Common Share on the date of grant, and the Options shall expire on the tenth anniversary of the date of grant; and
 

 

 

(iv)

The Options or Restricted Shares shall vest ratably on the first three anniversaries of the date of grant and shall contain such other vesting restrictions as the Compensation Committee shall determine; provided however, that all such Options or Restricted Shares and all other options to purchase Common Shares and Restricted Shares then held by the Executive which are not then vested (in the aggregate being referred to as herein as "Accelerated Options/Restricted Shares") shall become fully vested and immediately exercisable during the remaining original term of each such Accelerated Option, and all such Restricted Shares shall be immediately free of restrictions, as the case may be, upon the occurrence of any of the following events ("Acceleration Events"): Executive's Retirement (as defined herein), death, Disability (as defined herein), a Change in Control (as defined herein), and termination of Executive's employment by the Company without Cause or by the Executive for Good Reason; and
 

 

 

(v)

The Options and/or Restricted Shares shall be granted on such other terms and conditions as are generally made applicable to Options and Restricted Shares granted to the other senior executives of the Company.

2


 

(c)

Section 6(b)(ii) of the Employment Agreement is hereby amended to read in its entirety as follows:

In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options/Restricted Shares which were held by the Executive at the time of the Executive's Retirement, death or the Disability Termination Date, shall become fully exercisable and shall remain exercisable by the Executive or by the Executive's estate or his representative during the remaining original term of the Accelerated Option in the case of the Executive's Retirement or Disability, or during the 3-year period following the date of the Executive's death, and all such Restricted Shares shall be free of restrictions, as the case may be.
  

 

(d)

Section 6(c)(ii) of the Employment Agreement is hereby amended to read in its entirety as follows:

In addition to the foregoing and notwithstanding any other agreement between the Executive and the Company, all Accelerated Options/Restricted Shares which were held by the Executive at the time of the termination of the Executive's employment by the Company without Cause or by the Executive for Good Reason (whether or not following a Change of Control), shall become fully exercisable and shall remain exercisable for the same period following termination as would apply if the Executive's employment had not terminated, and all such Restricted Shares shall be free of restrictions, as the case may be.

Please acknowledge your agreement with the foregoing by signing the enclosed copy of this letter agreement and by returning it to the Company.

Very truly yours,

JONES APPAREL GROUP, INC.

By: /s/ Ira M. Dansky
Executive Vice President

Agreed to in all respects:

/s/ Wesley R. Card
Wesley R. Card

 

EXHIBIT 10.1

March 8, 2006

Mr. Wesley R. Card
Jones Apparel Group, Inc.
1411 Broadway
New York, New York 10018

Re: Amendment No. 2 to Amended and Restated Employment Agreement

Dear Mr. Card:

Reference is made to the Amended and Restated Employment Agreement dated as of March 11, 2002 by and between you and Jones Apparel Group, Inc. (the "Company"), as amended by the letter agreement by and between you and the Company dated February 28, 2003 (the "Employment Agreement"). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Employment Agreement.

This will confirm our agreement to amend the terms and conditions of the Employment Agreement, effective as of the date hereof, as follows:

1. The first two sentences of Section 1 of the Employment Agreement are hereby amended to read as follows:

"During the term of this Agreement, the Company shall employ the Executive as the Chief Operating Officer of the Company. During the Term, the Executive shall have such responsibilities, duties and authorities as are commensurate with chief operating officers of public entities of similar size to the Company."

2. Subsection 6(e)(ii)(6) of the Employment Agreement is hereby amended to read as follows:

"a reduction in the Executive's title and status as Chief Operating Officer of the Company, or any change in the Executive's status as reporting directly to the Chief Executive Officer; or the assignment to the Executive of any duties materially inconsistent with the Executive's position (including, without limitation, status, office, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1 of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company no later than thirty (30) days after written notice by the Executive; or"

3. Except as otherwise set forth in this Amendment No. 2 to Amended and Restated Employment Agreement, the Employment Agreement is ratified and confirmed in all respects and remains in full force and effect.

Please acknowledge your agreement with the foregoing by signing the enclosed copy of this letter agreement and returning it to the Company.

Very truly yours,
JONES APPAREL GROUP, INC.

By: /s/ Peter Boneparth
Peter Boneparth, President and
Chief Executive Officer

Agreed to in all respects:

/s/ Wesley R. Card
Wesley R. Card

EX-10 2 exhibit10_1.htm EXHIBIT 10.1

EXHIBIT 10.1

April 17, 2007

Mr. Wesley R. Card
Jones Apparel Group, Inc.
1411 Broadway
New York, New York 10018

Re: Amendment No. 3 to Amended and Restated Employment Agreement

Dear Mr. Card:

Reference is made to the Amended and Restated Employment Agreement dated as of March 11, 2002 by and between you and Jones Apparel Group, Inc. (the "Company"), as amended by the letter agreements by and between you and the Company dated February 28, 2003 and March 8, 2006, respectively (the "Employment Agreement"). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Employment Agreement.

This will confirm our agreement to amend the terms and conditions of the Employment Agreement, effective as of the date hereof, as follows:

1. The first two sentences of Section 1 of the Employment Agreement are hereby amended to read as follows:

        "During the term of this Agreement, the Company shall employ the Executive as the Chief Operating and Financial Officer of the Company. During the Term, the Executive shall have such responsibilities, duties and authorities as are commensurate with chief operating officers and chief financial officers of public entities of similar size to the Company."

2. The last sentence of Subsection 6(b)(i) of the Employment Agreement is hereby amended to read as follows:

        "Except as set forth in this Section 6(b) and in Section 6(g) hereof, the Company shall have no additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Section 6(b)."

3. The last sentence of Subsection 6(c)(i) of the Employment Agreement is hereby amended to read as follows:

        "Except as set forth in this Subsection 6(c) and in Section 6(g) hereof, the Company shall not have any additional obligations to the Executive under this Agreement in the event of Executive's termination of employment under this Subsection 6(c)."

4. Subsection 6(e) (ii) (6) of the Employment Agreement is hereby amended to read as follows:


        "a reduction in the Executive's title and status as Chief Operating and Financial Officer of the Company, or any change in the Executive's status as reporting directly to the Chief Executive Officer; or the assignment to the Executive of any duties materially inconsistent with the Executive's position (including, without limitation, status, office, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1 of this Agreement, or any other action by the Company which results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company no later than thirty (30) days after written notice by the Executive; or"

5. A new Section 6(g) is hereby added to the Employment Agreement, to read as follows:

        "(g) Post-Retirement Benefits. In addition to any other compensation or benefits to which Executive is entitled under this Agreement, if (1) the Executive continues in employment through December 31, 2009 and the Executive's employment terminates thereafter for any reason, (2) prior to December 31, 2009, the Executive's employment terminates because of death or Disability or is terminated by the Company without Cause or by the Executive for Good Reason, or (3) on or after January 1, 2008, the Executive provides to the Board of Directors of the Company (the "Board") at least six months' written notice of his retirement from the Company, and the Board consents to such retirement which consent shall not be unreasonably withheld or delayed, then the Executive shall receive the following benefits from the Company in accordance with the provisions of this Section 6(g):
        (i) An annual retirement benefit of $500,000 payable in equal monthly installments to the Executive (or, in the event of his death, to his designated beneficiary), commencing on the first day of the month next following the Executive's termination of employment and continuing for a period of five years following his termination of employment (the "Retirement Benefit"). Notwithstanding the preceding sentence, if necessary to comply with Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), payment of the Retirement Benefit shall not commence prior to the earliest date permitted by Section 409A and the first payment shall include all other monthly payments which, but for this sentence, would have been paid prior to such earliest date; and
        (ii) Continued medical and dental coverage for Executive and his spouse, under the Company's group policy or otherwise, for their respective lives. Such coverage shall be consistent with the coverage in effect for the Executive immediately prior to his termination of employment; provided, that (1) if the Executive is entitled to similar coverage under Section 6(c)(iv), then coverage under this Section 6(g)(ii) shall commence at the end of the Severance Period; (2) the Company's annual cost of providing such coverage shall not exceed $7500 (such amount to be increased, effective January 1, 2008, at the rate of 10% per annum), and if the dollar limit in effect for a particular year exceeds the cost of providing such coverage for such year, the excess amount shall be paid to the Executive (or, after his death, to his spouse) no later than March 15 of the year 

2


following the year to which such excess relates; and (3) such coverage shall be secondary to any coverage to which the Executive and/or his spouse are then entitled under Medicare or similar legislation."

6. Except as otherwise set forth in this Amendment No. 3 to Amended and Restated Employment Agreement, the Employment Agreement is ratified and confirmed in all respects and remains in full force and effect.

Please acknowledge your agreement with the foregoing by signing the enclosed copy of this letter agreement and returning it to the Company.

Very truly yours,

JONES APPAREL GROUP, INC.

By /s/ Ira M. Dansky
     Ira M. Dansky
     Executive Vice President
     General Counsel & Secretary

Agreed to in all respects:

/s/ Wesley R. Card

Wesley R. Card

3





EX-10 2 exhibit10_1.htm EXHIBIT 10.1

EXHIBIT 10.1

July 12, 2007

Mr. Wesley R. Card
Jones Apparel Group, Inc.
1411 Broadway
New York, New York 10018

Re: Amendment No. 4 to Amended and Restated Employment Agreement

Dear Mr. Card:

Reference is made to the Amended and Restated Employment Agreement dated as of March 11, 2002 by and between you and Jones Apparel Group, Inc. (the "Company"), as amended by the letter agreements by and between you and the Company dated February 28, 2003, March 8, 2006, and April 17, 2007, respectively (the "Employment Agreement"). All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Employment Agreement.

This will confirm our agreement to amend the terms and conditions of the Employment Agreement, effective as of the date hereof, as follows:

1. The first three sentences of Section 1 of the Employment Agreement are hereby amended to read as follows:

"During the term of this Agreement, the Company shall employ the Executive as the President and Chief Executive Officer of the Company. During the Term, the Executive shall have such responsibilities, duties and authorities as are commensurate with chief executive officers of public entities of similar size to the Company. The Executive shall report directly to the Board of Directors of the Company."

2. The first sentence of Section 3(a) of the Employment Agreement is hereby amended to read as follows:

"Throughout the Term, the Executive shall receive a salary at the annual rate of not less than $1,600,000."

3. Subsection 6(e) (ii) (6) of the Employment Agreement is hereby amended to read as follows:

"a reduction in the Executive's title and status as President and Chief Executive Officer of the Company, or any change in the Executive's status as reporting directly to the Board of Directors of the Company; or the assignment to the Executive of any duties materially inconsistent with the Executive's position (including, without limitation, status, office, titles and reporting requirements), authority, duties or responsibilities as contemplated by Section 1 of this Agreement, or any other action by the Company which results in a material


diminution in such position, authority, duties or responsibilities, excluding for this purpose any action not taken in bad faith and which is remedied by the Company no later than thirty (30) days after written notice by the Executive; or"

4. Except as otherwise set forth in this Amendment No. 4 to Amended and Restated Employment Agreement, the Employment Agreement is ratified and confirmed in all respects and remains in full force and effect.

Please acknowledge your agreement with the foregoing by signing the enclosed copy of this letter agreement and returning it to the Company.

 

Very truly yours,

JONES APPAREL GROUP, INC.

By /s/ Ira M. Dansky
     Ira M. Dansky
     Executive Vice President
     General Counsel & Secretary

Agreed to in all respects:

/s/ Wesley R. Card

Wesley R. Card

2

 

EX-10 2 exhibit10_1.htm EXHIBIT 10.1

EXHIBIT 10.1

 

JONES APPAREL GROUP, INC.
SEVERANCE PLAN AND
SUMMARY PLAN DESCRIPTION

Effective May 31, 2006
(amended September 18, 2008)

PURPOSE OF THE PLAN

The purpose of the Jones Apparel Group, Inc. Severance Plan ("Plan") is to provide severance benefits to eligible employees whose employment with Jones Apparel Group, Inc. (the "Company") and all U.S. domestic Subsidiaries and Affiliates of the Company is terminated involuntarily under the conditions described below.

Except as otherwise provided herein or by the Company in writing after the effective date hereof, this Plan (i) is the sole arrangement of the Company regarding Severance-type benefits to eligible employees and (ii) replaces and supersedes all prior plans, programs, understandings and arrangements providing Severance-type benefits to eligible employees.

Notwithstanding anything to the contrary in this Plan, if an employee is eligible for Severance-type benefits under an employment or other written agreement with the Employer providing for Severance-type benefits ("Alternative Benefits"), such employee shall remain and be eligible for those benefits; provided, that if the amount of Severance-type benefits to which an employee may be entitled under such agreement providing for Alternative Benefits would be greater in the aggregate than the benefits which the Employee would otherwise be eligible to receive under this Plan, then the employee shall not receive benefits under this Plan but instead shall be entitled to receive such Alternative Benefits.

This document contains the official text of the Plan.

DEFINITIONS

Affiliate of any person means another person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person.

Company means Jones Apparel Group, Inc.

Designated Termination Date means the date specified by an Employer as an employee's last day of active work.
Employer means the Company and all U.S. domestic Subsidiaries and Affiliates of the Company.

Person means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization or other entity.

Plan Administrator means the Company or such other person or committee appointed from time to time by the Company to administer the Plan.


Severance-type benefits means post-termination compensation under any employment agreement or other written agreement between the Employer and the employee or other plan or arrangement maintained by the Employer, other than compensation that is paid solely as consideration for a covenant not to compete with the Employer.

Subsidiary of any person means another person, an amount of the voting securities, other voting rights or voting partnership interests of which is sufficient to elect at least a majority of its board of directors or other governing body or, if there are no such voting interests, more than 50% of the equity interest of which is owned directly or indirectly by such first person.

WARN means the Worker Adjustment and Retraining Notification Act.

ELIGIBLE EMPLOYEES

The benefits under this Plan are limited to corporate employees, as well as retail employees employed by Jones Retail Corporation at the level of District Sales Manager or above, in all instances who are classified by an Employer as regular full-time employees and whose regular place of employment is within the United States. Notwithstanding anything to the contrary, union employees are not eligible under this Plan.

INVOLUNTARY TERMINATION OF EMPLOYMENT

Involuntary Termination

An employee will be eligible for severance benefits under this Plan only if the Plan Administrator, in its sole discretion, determines that the employee's employment has been terminated involuntarily for any of the following reasons:

An employee who terminates employment for any reason prior to his or her Designated Termination Date will not be considered to have terminated employment involuntarily unless (i) his or her Employer provides otherwise in writing, or (ii) he or she has been notified that his or her employment is being terminated due to a reduction in staff or layoff requiring notice under federal or state WARN. Such an employee is, however, required to provide two (2) weeks' prior notice if electing to terminate employment on a date prior to his or her Designated Termination Date.

Termination of Employment Not Eligible for Severance Benefits

Unless the Company provides otherwise in writing, an employee will not be eligible for severance benefits if the Plan Administrator, in its sole discretion, determines that the employee's employment is terminated for any of the following reasons:

2


An employee who terminates employment for any reason prior to his or her Designated Termination Date will not be considered to have terminated employment involuntarily unless (i) his or her Employer provides otherwise in writing, or (ii) he or she has been notified that his or her employment is being terminated due to a reduction in staff or layoff requiring notice under federal or state WARN. Such an employee is, however, required to provide two (2) weeks' prior notice if electing to terminate employment on a date prior to his or her Designated Termination Date.

Other Employment Offer

Unless the Company provides otherwise in writing, or except as expressly provided in this Plan, an employee will not be eligible to receive benefits under this Plan if the Plan Administrator, in its sole discretion, determines that any of the following events has occurred prior to the employee's Designated Termination Date:

CONDITIONS FOR PAYMENT OF SEVERANCE BENEFITS

An employee who is involuntarily terminated will not receive severance benefits under this Plan unless the Plan Administrator, in its sole discretion, determines that the employee has satisfied all of the following conditions:

The employee must continue to be actively at work through his or her Designated Termination Date or such earlier date as may be specified by his or her Employer in writing, unless the employee is absent due to vacation, temporary layoff, or an approved absence from work (including leave under the Family and Medical Leave Act).
This section does not apply to employees whose employment is being terminated due to a reduction in force or layoff requiring notice under federal or state WARN. Such employees are required, however, to provide two (2) weeks' prior notice.

3


The employee must execute and deliver to the Company, within the period of time specified by the Company, an agreement in a form satisfactory to the Company containing a general release of claims in favor of the Company and such other terms and provisions as may be determined by the Company in its sole discretion.
The employee must return all company property and satisfactorily settle all expenses owed to the Company and any of its Subsidiaries or Affiliates.

SEVERANCE BENEFITS

The severance benefits to be provided to an eligible employee will be determined in accordance with the Severance Benefit Guidelines attached to this Plan subject to the reductions set forth below; provided, that the Company has the right, in its sole discretion, and on a case-by case basis, to determine the amount of severance benefits to be provided to an eligible employee.

 

In the event that an employee
then the severance benefits payable to the employee under this Plan will be reduced by the amount of Severance-type benefits payable to the employee under such other plan, arrangement or agreement, unless the Company provides otherwise in writing. For the avoidance of doubt, if the Severance-type benefits payable under such other plan, arrangement or agreement are greater in the aggregate than the severance benefits payable to the employee under this Plan, then the employee shall not receive benefits under this Plan, and shall instead receive the Severance-type benefits under such other plan, arrangement or agreement.

REEMPLOYMENT

The following rules apply if an employee is reemployed by the Company or any of its Subsidiaries, Affiliates or successors.

Notwithstanding anything in this Plan to the contrary, in the event that an employee is reemployed before the completion of the scheduled payment of severance benefits, then an Employer shall have the right to terminate the benefits payable under this Plan at any time.

4


In the event that an employee is offered reemployment within thirty (30) days after payment of his or her severance pay has commenced and subsequently accepts reemployment, then the employee shall repay to the Company the full amount of severance pay that he or she has received under this Plan.

RIGHT TO TERMINATE BENEFITS

Notwithstanding anything in this Plan to the contrary, in the event that the Plan Administrator determines that an employee has breached any of the terms and conditions set forth in any agreement executed by the employee as a condition to receiving benefits under this Plan, including, but not limited to, the general release of claims, then the Company shall have the right to terminate the benefits payable under this Plan at any time.

GENERAL RULES

The Company shall withhold such amounts from payments under this Plan as it determines necessary to fulfill any federal, state, or local wage or compensation withholding requirements.
Neither the Plan nor any action taken with respect to it shall confer upon any person the right to continue in the employ of the Company or any of its Subsidiaries or Affiliates.
Benefits under the Plan may not be anticipated, assigned or alienated.
The Company will make all payments under the Plan, and pay all expenses of the Plan, from its general assets. Nothing contained in this Plan shall give any eligible employee any right, title or interest in any property of the Company or any of its Affiliates nor shall it create any trust relationship.
The provisions of the Plan shall be construed, administered and enforced according to applicable federal law and, where appropriate, the laws of the State of New York without reference to its conflict of laws rules and without regard to any rule of any jurisdiction that would result in the application of the law of another jurisdiction.
No action relating to this Plan or any release or other agreement entered into with respect to this Plan may be brought later than the earlier of second anniversary of the termination of employment or other event giving rise to the claim.

5


The provisions of the Plan are severable. If any provision of the Plan is deemed legally or factually invalid or unenforceable to any extent or in any application, then the remainder of the provisions of the Plan, except to such extent or in such application, shall not be affected, and each and every provision of the Plan shall be valid and enforceable to the fullest extent and in the broadest application permitted by law.
Section headings are used herein for convenience of reference only and shall not affect the meaning of any provision of this Plan.

ADMINISTRATION OF THE PLAN

The Plan Administrator shall have sole authority and discretion to administer and construe the terms of this Plan, subject to applicable requirements of law. Without limiting the generality of the foregoing, the Plan Administrator shall have complete discretionary authority to carry out the following powers and duties:

CLAIMS PROCEDURE

The Plan Administrator reviews and authorizes payment of severance benefits for those employees who qualify under the provisions of the Plan. No claim forms need be submitted. Questions regarding payment of the severance benefits should be directed to Vice President, Benefits or the Plan Administrator.

If an employee feels he or she is not receiving severance benefits which are due, the employee should file a written claim for the benefits with a Vice President in the Human Resources Department. A decision on whether to grant or deny the claim will be made within 90 days following receipt of the claim. If more than 90 days is required to render a decision, the employee will be notified in writing of the reasons for delay. In any event, however, a decision to grant or deny a claim will be made by not later than 180 days following the initial receipt of the claim.

If the claim is denied in whole or in part, the employee will receive a written explanation of the specific reasons for the denial, including a reference to the Plan provisions on which the denial is based.

6


If the employee wishes to appeal this denial, the employee may write within 60 days after receipt of the notification of denial. The claim will then be reviewed by the Plan Administrator and the employee will receive written notice of the final decision within 60 days after the request for review. If more than 60 days is required to render a decision, the employee will be notified in writing of the reasons for delay before the end of the initial 60 day period. In any event, however, the employee will receive a written notice of the final decision within 120 days after the request for review.

AMENDMENT AND TERMINATION

The Company may amend, modify or terminate this Plan with respect to any employee or group of employees at any time pursuant to a writing executed by any duly authorized officer of the Company. Such amendment, modification or termination will be effective with respect to employees who have not received notice of a Designated Termination Date on the date such amendment is executed.

STATEMENT OF ERISA RIGHTS

As a participant in this Plan you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA provides that all plan participants shall be entitled to:

Examine, without charge, at the plan administrator's office and at other specified locations all documents governing the plan and a copy of the latest annual report (Form 5500 Series) required to be filed by the plan with the U.S. Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration.
Obtain, upon written request to the plan administrator, copies of documents governing the operation of the plan and copies of the latest annual report (Form 5500 Series), if any required, and updated summary plan description. The administrator may make a reasonable charge for the copies.
Receive a summary of the plan's annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report.
In addition to creating rights for plan participants ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your plan, called "fiduciaries" of the plan, have a duty to do so prudently and in the interest of you and other plan participants and beneficiaries. No one, including your employer, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a welfare benefit or exercising your rights under ERISA.
If your claim for a severance benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules.

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Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request a copy of plan documents or the latest annual report from the plan and do not receive them within thirty (30) days, you may file suit in a Federal court. In such a case, the court may require the plan administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or Federal court. If it should happen that plan fiduciaries misuse the plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.
If you have any questions about your plan, you should contact the plan administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the plan administrator, you should contact the nearest office of the Pension and Welfare Benefits Administration, U.S. Department of Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.

ADDITIONAL INFORMATION

 

Plan Sponsor:

Jones Apparel Group, Inc.
180 Rittenhouse Circle
Keystone Park
Bristol, Pennsylvania 19007
(215) 785-4000
 

Employer Identification Number (EIN):

06-0935166
 

Plan Name:

Jones Apparel Group, Inc. Severance Plan
 

Type of Plan:

Welfare benefit plan - severance pay
 

Plan Year:

Calendar year
 

Plan Number:

550
 

Plan Administrator:

Executive Vice President of Human Resources
Jones Apparel Group, Inc.
180 Rittenhouse Circle
Keystone Park
Bristol, Pennsylvania 19007
 

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Agent for Service of Legal Process:

Plan Administrator

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JONES APPAREL GROUP, INC. SEVERANCE PLAN
SEVERANCE BENEFIT GUIDELINES

Effective as of May 31, 2006

EMPLOYEES BELOW VICE PRESIDENT

An employee may elect to receive either the severance benefits described in OPTION ONE or OPTION TWO below. The election must be made within the time period, and in accordance with the procedures, specified by the Plan Administrator.

2 weeks of Base Pay for each Year of Service
The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.
If the employee elects to continue coverage under the Company's group health benefits plan in accordance with the COBRA continuation coverage requirements, the employee will be required to pay only a portion of the full cost for COBRA coverage during the period equal to the number of weeks used in calculating the amount of the employee's severance pay under this Plan.
After the end of the severance period, the employee, if eligible, will be required to pay the full cost of COBRA coverage in order to continue COBRA coverage for the remainder of the COBRA coverage period.
2 weeks of Base Pay for each Year of Service

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The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.
For purposes of determining the amount of severance pay -

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JONES APPAREL GROUP, INC. SEVERANCE PLAN
SEVERANCE BENEFIT GUIDELINES

Effective as of May 31, 2006

VICE PRESIDENTS AND ABOVE BUT BELOW
THE LEVEL OF EXECUTIVE VICE PRESIDENT

Years of Service

Amount of Severance Pay

Less than 5 years

3 months of Base Pay

5 to 9 years

6 months of Base Pay

10 or more years

12 months of Base Pay

 
For purposes of determining the amount of severance pay -
The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.
If the employee elects to continue coverage under the Company's group health benefits plan in accordance with the COBRA continuation coverage requirements, the employee will be required to pay only a portion of the full cost for COBRA coverage during the period equal to the number of weeks used in calculating the amount of the employee's severance pay under this Plan.

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After the end of the severance period, the employee, if eligible, will be required to pay the full cost of COBRA coverage in order to continue COBRA coverage for the remainder of the COBRA coverage period.

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JONES APPAREL GROUP, INC. SEVERANCE PLAN
SEVERANCE BENEFIT GUIDELINES

Effective as of May 31, 2006

EXECUTIVE VICE PRESIDENTS AND ABOVE

Years of Service

Amount of Severance Pay

Less than 5 years

3 months of Base Pay

5 to 9 years

6 months of Base Pay

10 to 19 years

12 months of Base Pay

20 or more years

18 months of Base Pay

For purposes of determining the amount of severance pay -
The Company shall pay the severance pay in a single lump sum as soon as practicable after the later of the employee's last day of employment or the date on which the employee's separation agreement and general release becomes effective, provided that if the employee satisfies all of the conditions for payment, then in no event will payment be made later than the March 15th of the calendar year following the calendar year in which the employee's last day of employment occurred.
If the employee elects to continue coverage under the Company's group health benefits plan in accordance with the COBRA continuation coverage requirements, the employee will be required to pay only a portion of the full cost for COBRA coverage during the period equal to the number of weeks used in calculating the amount of the employee's severance pay under this Plan, or, if earlier, until the expiration of COBRA coverage.

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After the end of the severance period, the employee, if eligible, will be required to pay the full cost of COBRA coverage in order to continue COBRA coverage for the remainder of the COBRA coverage period.
As determined by the Company.

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