EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") is
entered into as of August 15, 2005, by and between Abercrombie & Fitch Co., a
Delaware corporation (the "Company"), and Xxxxxxx X. Xxxxxxxx (the "Executive")
(hereinafter collectively referred to as "the parties").
W I T N E S S E T H :
WHEREAS, the Executive has been employed by the Company as the Chairman
of the Board of the Company since May 1998 and as Chief Executive Officer of the
Company since February 1992 and served as President of the Company from February
1992 until May 1998; and
WHEREAS, the Executive is experienced in all phases of the Company's
business and possesses an intimate knowledge of the business and affairs of the
Company and its policies, procedures, methods and personnel; and
WHEREAS, the Company has determined that it is essential and in its
best interests to retain the services of its key management personnel and to
ensure their continued dedication and efforts; and
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interest of the Company to secure the
continued services and employment of the Executive for the balance of the
Executive's career and the Executive is willing to render such services on the
terms and conditions set forth herein; and
WHEREAS, the Board has determined that it is in the best interest of
the Company to incentivize the Executive to train and develop management who
will be able to conduct the business of the Company successfully following the
retirement of the Executive; and
WHEREAS, the parties entered into a written Employment Agreement on May
13, 1997 (the "1997 Employment Agreement"), which the parties amended and
restated in its entirety pursuant to a written Amended and Restated Employment
Agreement (the "2003 Employment Agreement") between the parties with an
effective date of January 30, 2003 (the "Effective Date"); and
WHEREAS, the Court of Chancery of the State of Delaware granted
approval on June 14, 2005 to a settlement agreement in the action titled In Re
Abercrombie & Fitch Co. Shareholder Derivative Litigation (the "Settlement
Agreement"); and
WHEREAS, the terms of the Settlement Agreement provide that the
Executive and the Company shall amend the 2003 Employment Agreement in certain
respects; and
WHEREAS, the parties wish to amend and restate in its entirety the 2003
Employment Agreement to reflect the terms contained in the Settlement Agreement
in respect of the changes to be made to the 2003 Employment Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises of the parties contained herein, the parties, intending
to be legally bound, hereby agree as follows:
1. Term. The term of employment under this Agreement shall be for the
period commencing on May 13, 1997 (the "Commencement Date") and ending on
December 31, 2008 (the "Term"). Notwithstanding the foregoing, the Term shall
end on the date on which the Executive's employment is earlier terminated by
either party in accordance with the provisions of Section 9 of this Agreement.
2. Employment.
(a) Position. The Executive shall be employed by the Company
as the Chairman of the Board and Chief Executive Officer of the Company. The
Executive shall perform the duties, undertake the responsibilities and exercise
the authority customarily performed, undertaken and exercised by persons
employed in a similar executive capacity. The Executive shall report only to the
Board.
(b) Obligations. The Executive agrees to devote his full
business time and attention to the business and affairs of the Company. The
foregoing, however, shall not preclude the Executive from serving on corporate,
civic or charitable boards or committees or managing personal investments, so
long as such activities do not interfere with the performance of the Executive's
responsibilities hereunder.
3. Base Salary. The Company agrees to pay or cause to be paid to the
Executive commencing no later than the Effective Date and during the Term a base
salary at the rate of $1,000,000 per year or such larger amount as the Board may
from time to time determine (the "Base Salary"). Such Base Salary shall be
payable in accordance with the Company's customary practices applicable to its
executive officers.
4. Equity Compensation.
(a) The Executive shall be entitled to participate in the
stock-based employee benefit plans, including, without limitation, the 1998
Restatement of the Abercrombie & Fitch Co. Stock Option and Performance
Incentive Plan (the "Stock Incentive Plan") and the Abercrombie & Fitch Co. 2002
Stock Option Plan for Associates (the "2002 Stock Option Plan") maintained by
the Company, on such terms and conditions as may be determined from time to time
in the discretion of the Compensation Committee of the Board; provided, however,
that the Executive shall not receive any award of Company stock options during
the 2005 and 2006 calendar years.
(b) In exchange for the Executive agreeing to forego
participation, in respect of each fiscal year of the Company ending after
February 3, 2003, in the Company's program
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pursuant to which executive officers of the Company are eligible to receive
annual grants of restricted shares under the Stock Incentive Plan (or any other
stock-based employee benefit plan maintained by the Company), on January 30,
2003, the Executive was granted a career share award representing the right to
receive 1,000,000 shares of Class A Common Stock, par value $0.01 per share (the
"Class A Common Stock"), of the Company (the "Career Share Award") in accordance
with the terms of this Agreement.
(i) The Career Share Award was granted under the
Stock Incentive Plan and shall be adjusted in respect of the number of
shares of Class A Common Stock which may be received by the Executive
thereunder to prevent dilution or enlargement of the Executive's
rights, in the event of certain changes in the capitalization of the
Company, in a manner consistent with the provisions of Article 16 of
the Stock Incentive Plan.
(ii) Subject to the provisions of Subsections
10(b)(vi), 10(d)(iv) and 10(e)(iv) of this Agreement, the Career Share
Award shall become vested on December 31, 2008 as to all 1,000,000 of
the shares of Class A Common Stock, provided that the Executive remains
continuously employed by the Company through such date. A stock
certificate or other appropriate documentation evidencing the shares
shall be delivered to the Executive on March 31st of the calendar year
immediately following the calendar year in which the Executive's
employment is terminated and the Executive shall thereupon become the
holder of those shares of Class A Common Stock. Until such time as the
stock certificate or other appropriate documentation evidencing such
shares shall have been issued, the Executive shall have no rights in
respect of such shares.
(iii) Notwithstanding the foregoing, upon the
occurrence of a Change of Control (as defined in Subsection 10(i) of
this Agreement), the Career Share Award shall become vested as to all
1,000,000 of the shares of Class A Common Stock, and a stock
certificate or other appropriate documentation evidencing such shares
shall be delivered to the Executive upon such Change of Control or as
soon thereafter as practicable.
(iv) The Executive may not transfer, sell, pledge,
hypothecate, or otherwise dispose of the shares underlying the Career
Share Award until the first trading day on the New York Stock Exchange
immediately following the first anniversary of the date he ceases to be
an executive officer of the Company (the "Career Share Award Holding
Period") and any share certificates representing such shares shall be
appropriately legended to reflect this restriction.
(c) In the event the Executive is found by a court of
competent jurisdiction to have materially breached any of the material terms of
Section 11 of this Agreement during the period the Executive was employed by the
Company or during the one year period thereafter, the Career Share Award granted
to the Executive pursuant to Subsection 4(b) of this Agreement shall be
immediately forfeited by the Executive effective as of the date on which the
breach occurred, unless forfeited sooner by operation of any other provision of
this Agreement, and the Executive shall have no further rights in respect
thereof. If any of the shares of Class A
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Common Stock of the Company which the Executive shall have the right to receive
in accordance with the terms of the Career Share Award shall have been delivered
to the Executive as a result of the vesting of the Career Share Award or any
portion thereof in accordance with the terms of this Agreement prior to the date
on which the breach occurred, such shares of Class A Common Stock shall be
forfeited by the Executive effective the date on which the breach occurred and
such shares shall be transferred and delivered by the Executive to the Company
without any payment therefor by the Company. Notwithstanding the foregoing, the
provisions of this Subsection 4(c) shall not apply if a Change of Control (as
defined in Subsection 10(i) of this Agreement) has occurred or if the
Executive's employment has been terminated by the Company without Cause (as
defined in Subsection 9(c) of this Agreement) or by the Executive with Good
Reason (as defined in Subsection 9(d) of this Agreement).
(d) The Executive hereby agrees that, until the expiration of
the Career Share Award Holding Period, the Executive shall at all times continue
to hold and shall not transfer, sell, pledge, hypothecate or otherwise dispose
of one half of the "Profit Shares" (as defined below) received from the first
one million (1,000,000) Company stock options exercised by the Executive
following April 8, 2005. "Profit Shares" shall mean the number of shares
determined by dividing (i) the excess of (A) the aggregate market value of the
shares of Class A Common Stock acquired upon such exercise over (B) the
aggregate purchase price of the shares of Class A Common Stock plus applicable
tax withholding by (ii) the market value of one share of Class A Common Stock on
the date of exercise.
5. Employee Benefits. Except as provided in Subsections 4(a) and 4(b)
of this Agreement, the Executive shall be entitled to participate in all
employee benefit plans, practices and programs maintained by the Company and
made available to executive officers generally and as may be in effect from time
to time. Except as provided in Subsections 4(a) and 4(b) of this Agreement, the
Executive's participation in such plans, practices and programs shall be on the
same basis and terms as are applicable to executive officers of the Company
generally.
6. Bonus.
(a) The Executive shall be entitled to participate in the
Abercrombie & Fitch Co. Incentive Compensation Performance Plan (the "Bonus
Plan") or any successor to the Bonus Plan on such terms and conditions as may be
determined from time to time by the Compensation Committee of the Board,
provided that the Executive's annual target bonus opportunity shall be at least
120% of Base Salary upon attainment of target, subject to a maximum bonus
opportunity of 240% of Base Salary.
(b) Subject to the provisions of Subsections 10(a),
10(b)(vii), 10 (c)(vi), 10(d)(v) and 10(e)(v) of this Agreement, if the
Executive shall remain employed by the Company in the capacity of Chairman and
Chief Executive Officer through December 31, 2008, the Executive shall also be
entitled to receive a bonus of up to $6 million (the "Stay Bonus"), provided,
however, that the actual amount of the Stay Bonus, if any, earned by the
Executive shall be determined as follows:
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(i) 100% of the Stay Bonus if and only if the Company
achieves cumulative growth in earnings per share ("EPS") from February
1, 2005 through January 31, 2009 (the "Performance Period") of 13.5%,
which equates to $12.70 over the entire Performance Period (the
"Earnings Target");
(ii) 50% of the Stay Bonus if and only if the Company
achieves cumulative growth in EPS during the Performance Period of at
least 10.5%, which equates to $11.83 over the entire Performance Period
(the "Earnings Threshold Target");
(iii) Between 50% and 100% of the Stay Bonus if the
Company achieves cumulative growth in EPS during the Performance Period
between the Earnings Threshold Target and the Earnings Target, with the
actual amount equal to $3,000,000 plus the product of (A) the fraction
obtained by dividing (1) the excess of (x) actual cumulative growth in
EPS during the Performance Period over (y) the Earnings Threshold
Target by (2) the excess of (x) the Earnings Target over (y) the
Earnings Threshold Target, and (B) $3,000,000; or
(iv) 0% of the Stay Bonus (except pursuant to Section
10) if the Company's actual cumulative growth in EPS during the
Performance Period is less than the Earnings Threshold Target.
(c) In determining whether the Company meets the Earnings
Target and/or the Earnings Threshold Target, the following considerations shall
apply:
(i) appropriate adjustments shall be made to account
for any increases or decreases in the number of outstanding shares of
the Company's Class A Common Stock during the Performance Period;
(ii) the Company's EPS during the Performance Period
shall be calculated without including the effects of any one-time or
extraordinary charges; and
(iii) appropriate adjustments shall be made to
account for the effects on the Company's EPS of Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 123
(revised 2004), Share-Based Payment (Statement No. 123R).
7. Other Benefits.
(a) Life Insurance.
(i) The Company shall maintain term life insurance
coverage on the life of the Executive in the amount of $10,000,000, the proceeds
of which shall be payable to the beneficiary or beneficiaries designated by the
Executive. The Company shall pay the premiums with respect to such term life
insurance policy for the period commencing on the Commencement Date and ending
on the later to occur of December 31, 2008 and the last day of the period during
which welfare benefits are continued pursuant to Subsection 10(g) of this
Agreement; provided, however, that the Company shall no longer be obligated to
maintain such
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coverage and pay such premiums in the event that the Executive's employment is
or was terminated by the Company for Cause (as defined in Subsection 9(c) of
this Agreement) or by the Executive without Good Reason (as defined in
Subsection 9(d) of this Agreement). Such policy shall provide for its conversion
to an individual policy owned by the Executive subsequent to termination of his
employment. The Executive agrees to undergo any reasonable physical examination
and other procedures as may be necessary to maintain such policy.
(ii) During the term of this Agreement, the Company
shall be entitled to maintain a "key man" term life insurance policy on the life
of the Executive, the proceeds of which shall be payable to the Company or its
designees. The Executive agrees to undergo any reasonable physical examination
and other procedures as may be necessary to maintain such policy.
(b) Expenses. The Executive shall be entitled to receive
prompt reimbursement of all expenses reasonably incurred by him in connection
with the performance of his duties hereunder or for promoting, pursuing or
otherwise furthering the business or interests of the Company, in each case in
accordance with policies established by the Board from time to time and upon
receipt of appropriate documentation.
(c) Office and Facilities. The Executive shall be provided
with an appropriate office and with such secretarial and other support
facilities as are commensurate with the Executive's status with the Company and
adequate for the performance of his duties hereunder.
(d) Vacation. The Executive shall be entitled to annual
vacation in accordance with the policies periodically established by the Board
for similarly situated executive officers of the Company.
(e) Retirement Benefit. The Executive shall be provided with a
retirement benefit in accordance with the Abercrombie & Fitch Co. Supplemental
Executive Retirement Plan (Xxxxxxx X. Xxxxxxxx) in the form in effect from time
to time (the "SERP") which is attached hereto as Exhibit A.
(f) Perquisites. The Executive shall be entitled to
perquisites on the same basis as provided to other senior level executive
officers.
8. Aircraft Travel. For security purposes, the Executive shall be
provided, at the expense of the Company, with use of a private aircraft for
business and personal travel in North America. Outside North America, the
Executive shall be entitled to first class air travel.
9. Termination.
(a) Death. The Executive's employment hereunder shall
terminate upon the Executive's death.
(b) Disability. Either the Executive or the Company shall be
entitled to terminate the Executive's employment for "Disability" by giving the
other party a Notice of Termination (as defined below). For purposes of this
Agreement, "Disability" shall mean the
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Executive's inability to perform his duties for a period of 180 consecutive days
as a result of physical or mental impairment, illness or injury, and such
condition, in the opinion of a medical doctor selected by the Company and
reasonably acceptable to the Executive or his legal representative, is total and
permanent.
(c) Cause. The Company shall be entitled to terminate the
Executive's employment for "Cause." For purposes of this Agreement, "Cause"
shall mean that the Executive (i) pleads "guilty" or "no contest" to or is
convicted of an act which is defined as a felony under federal or state law, or
(ii) engages in willful misconduct which could reasonably be expected to harm
the Company's business or its reputation. For this purpose, an act or failure to
act shall be considered "willful misconduct" only if done, or omitted to be
done, by the Executive in bad faith and without a reasonable belief that such
act or failure to act was in the best interests of the Company.
The Executive's employment with the Company shall not be
terminated for Cause unless he has been given written notice by the Board of its
intention to so terminate his employment (a "Preliminary Notice of Cause"), such
notice (i) to state in detail the particular act or acts or failure or failures
to act that constitute the grounds on which the proposed termination for Cause
is based and (ii) to be given within six months of the Board's learning of such
acts or failures to act. The Executive shall have ten days after the date that
the Preliminary Notice of Cause is given in which to cure such conduct, to the
extent such cure is possible. If the Executive fails to cure such conduct, the
Executive shall be entitled to a hearing before the Board, and to be accompanied
by his counsel, at which he shall be entitled to contest the Board's findings.
Such hearing shall be held within 15 days of notice to the Company by the
Executive, provided he requests such hearing within 30 days of the Preliminary
Notice of Cause. If the Executive fails to request such hearing within the
30-day period specified in the preceding sentence, his employment shall be
terminated for Cause effective upon the expiration of such period, and the
Preliminary Notice of Cause shall be deemed to constitute a Notice of
Termination. If the Executive requests such hearing and, within 10 days
following such hearing, the Executive is furnished with a copy of a resolution,
duly adopted by the affirmative vote of a majority of the members of the Board,
finding that in the good-faith opinion of the Board, the Executive was guilty of
the conduct constituting Cause as specified in the Preliminary Notice of Cause,
the Executive's employment shall be terminated for Cause upon his receipt of
such resolution, and such resolution shall be deemed to constitute a Notice of
Termination. Any such resolution shall be accompanied by a certificate of the
Secretary or another appropriate officer of the Company which shall state that
such resolution was duly adopted by the affirmative vote of a majority of the
members of the Board at a duly convened meeting called for such purpose.
(d) Good Reason. The Executive may terminate his employment
hereunder for "Good Reason" by delivering to the Company (i) a Preliminary
Notice of Good Reason (as defined below), and (ii) not earlier than 30 days from
the delivery of such Preliminary Notice of Good Reason, a Notice of Termination.
For purposes of this Agreement, "Good Reason" shall mean the occurrence of any
of the following without the Executive's prior written consent: (A) the failure
to continue the Executive as Chairman of the Board and Chief Executive Officer
of the Company; (B) the failure of the Board to nominate the Executive for
election to the Board at the Company's annual meeting of stockholders; (C) a
material diminution in the Executive's
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duties, or the assignment to the Executive of duties materially inconsistent
with, or the failure to assign to the Executive duties which are materially
consistent with, his duties, positions, authority, responsibilities and
reporting requirements as set forth in Section 2 of this Agreement, or the
assignment of duties which materially impair the Executive's ability to function
as the Chairman and Chief Executive Officer of the Company; (D) a reduction in
or a material delay in payment of the Executive's total cash compensation and
benefits from those required to be provided in accordance with the provisions of
this Agreement; (E) the failure of the Company to implement the SERP, a material
reduction in the benefits to be provided under the SERP or an adverse change in
the terms and conditions of the SERP; (F) the Company, the Board or any person
controlling the Company requires the Executive to be based outside of the United
States, other than on travel reasonably required to carry out the Executive's
obligations under this Agreement; or (G) the failure of the Company to obtain
the assumption in writing of its obligation to perform this Agreement by any
successor to all or substantially all of the assets of the Company not later
than the effective date of a merger, consolidation, sale or similar transaction;
provided, however, that "Good Reason" shall not include (X) acts not taken in
bad faith which are cured by the Company in all respects not later than 30 days
from the date of receipt by the Company of a written notice from the Executive
identifying in reasonable detail the act or acts constituting "Good Reason" (a
"Preliminary Notice of Good Reason") or (Y) acts taken by the Company to
reassign the Executive's duties and/or titles to another person or persons if
the Executive has suffered a physical or mental infirmity which renders him
unable to substantially perform his duties under this Agreement, provided that
any such acts may be taken by the Company only after receiving an opinion of a
physician reasonably acceptable to the Executive or his legal representative
stating that there is no reasonable likelihood that the Executive will be able
to return to full-time employment with the Company performing his duties
hereunder within 180 days. A Preliminary Notice of Good Reason shall not, by
itself, constitute a Notice of Termination.
(e) Without Cause. The Company may terminate the Executive's
employment hereunder, without Cause, at any time and for any reason (or for no
reason) by giving the Executive a Notice of Termination.
(f) Voluntary; Retirement. The Executive may terminate his
employment hereunder at any time and for any reason other than Good Reason or
Disability (or for no reason) by giving the Company a Notice of Termination.
Such voluntary termination shall be a "Retirement" and such termination shall
not be deemed a breach of this Agreement.
(g) Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which indicates the specific
termination provision in this Agreement relied upon and which sets forth in
reasonable detail, if applicable, the facts and circumstances claimed to provide
a basis for termination of the Executive's employment under the provision so
indicated. For purposes of this Agreement, no purported termination of
employment which requires a Notice of Termination shall be effective without
such Notice of Termination. The Termination Date (as defined below) specified in
such Notice of Termination shall be no less than two weeks from the date the
Notice of Termination is given; provided, however, that (i) if the Executive's
employment is terminated by the Company due to Disability, the date specified in
the Notice of Termination shall be at least 30 days from the date the Notice
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of Termination is given to the Executive and (ii) if the Executive terminates
his employment in accordance with Subsection 9(f) of this Agreement, the date
specified in the Notice of Termination shall be at least 30 days from the date
the Notice of Termination is given to the Company.
(i) Termination Date. "Termination Date" shall mean the date
of the termination of the Executive's employment with the Company and
specifically (i) in the case of the Executive's death, his date of death; (ii)
in the case of a termination of the Executive's employment for Cause, the
relevant date specified in Subsection 9(c) of this Agreement; (iii) in the case
of the expiration of the Term of this Agreement in accordance with Section 1,
the date of such expiration; and (iv) in all other cases, the date specified in
the Notice of Termination.
10. Compensation Upon Termination of Employment.
(a) For Cause; Without Good Reason; Retirement. If during the
term of this Agreement, the Executive's employment under this Agreement is
terminated by the Company for Cause, by the Executive other than for Good Reason
and other than by reason of the Executive's death or Disability or by the
Executive on account of his Retirement, (i) the Company's sole obligation
hereunder shall be to pay the Executive the following amounts earned hereunder
but not paid as of the Termination Date (collectively, "Accrued Compensation"):
(A) Base Salary through the Termination Date;
(B) any other compensation which has been earned, accrued or is
owing, under the terms of the applicable plan, program or
practice, to the Executive as of the Termination Date but not
paid, including, without limitation, any incentive awards
under the Bonus Plan;
(C) any amounts which the Executive had previously deferred
(including any interest earned or credited thereon);
(D) reimbursement of any and all reasonable expenses incurred in
connection with the Executive's duties and responsibilities
under this Agreement in accordance with policies established
by the Board from time to time and upon receipt of appropriate
documentation; and
(E) other or additional benefits and entitlements in accordance
with applicable plans, programs and arrangements of the
Company; and
(ii) subject to the provisions of Subsection 4(b) of this Agreement, the Career
Share Award granted to the Executive pursuant to Subsection 4(b) of this
Agreement shall be immediately forfeited by the Executive effective on the
Termination Date and the Executive shall have no further rights in respect
thereof. Notwithstanding the foregoing, if the Executive terminates his
employment with the Company in accordance with Subsection 9(f) of this Agreement
after a Change of Control (as defined in Subsection 10(i) of this Agreement),
the Company shall also be obligated to pay to the Executive a Stay Bonus in an
amount equal to (A) $6 million if the Termination Date is on or after January 1,
2007 or (B) the product of (1) $1.5 million and (2) the
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number of completed years of service by the Executive to the Company during the
period commencing on the Effective Date and ending on the Termination Date, if
the Termination Date is on or before December 31, 2006.
(b) Without Cause or for Good Reason Prior to a Change of
Control. If the Executive's employment hereunder is terminated by the Company
without Cause and other than due to Disability or by the Executive for Good
Reason prior to a Change of Control (as defined in Subsection 10(i) of this
Agreement), the Company's sole obligation hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued Compensation;
(ii) the Company shall continue to pay the Executive Base Salary
for a period of two years following the Termination Date in
accordance with the Company's customary practices applicable
to its executive officers;
(iii) the Company shall continue to pay the premiums provided for in
Subsection 7(a) of this Agreement for the time period set
forth therein;
(iv) the Company shall pay the Executive, in accordance with its
customary practices applicable to executive officers, any
compensation in the form of incentive awards under the Stock
Incentive Plan (or any successor plan) earned (as to both
satisfaction of performance-based criteria and vesting) in
respect of periods prior to and including the Termination
Date, but not paid as of the Termination Date, provided that
the Career Share Award shall vest and be delivered in
accordance with Section 10(b)(vi) of this Agreement;
(v) the Company shall pay the Executive, at such time as other
participants in the Bonus Plan are paid their respective
bonuses in respect of that fiscal year, a bonus (a "Pro-Rata
Bonus") with respect to the fiscal year in which the
Termination Date occurs equal to the product of (A) the
Executive's target bonus opportunity for that fiscal year and
(B) the fraction obtained by dividing (1) the number of days
in the period beginning on the first day of that fiscal year
and ending on the Termination Date by (2) 365, but only to the
extent that such Pro-Rata Bonus is not payable as part of the
Accrued Compensation;
(vi) the Career Share Award shall become vested as to that number
of shares of Class A Common Stock of the Company equal to the
product of (A) 1,000,000 (one million) and (B) the fraction
obtained by dividing (1) the number of completed years of
service by the Executive to the Company during the period
commencing on the Effective Date and ending on the Termination
Date by (2) six. A stock certificate or other appropriate
documentation evidencing the number of shares of Class A
Common Stock of the Company which become vested in accordance
with the terms of this Subsection 10(b)(vi), shall be
delivered to the Executive on March 31st of the calendar year
immediately following the calendar year in which
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the Termination Date occurs and the Executive shall thereupon
become the holder of such number of shares of Class A Common
Stock; and
(vii) A Stay Bonus shall be payable to the Executive on March 31st
immediately following the Termination Date or as soon as
administratively practicable thereafter, but not later than
March 31, 2009, and the actual amount of the Stay Bonus shall
be equal to the product of (A) $6 million and (B) the fraction
obtained by dividing (1) the number of months of service
completed by the Executive during the period commencing on
January 1, 2005 and ending on the Termination Date by (2) 48;
provided, however, that if the Executive's employment is
terminated by the Company without Cause under this Section
10(b) after December 31, 2006, the Executive shall be
entitled, in the alternative and at his option, to that
portion of the full Stay Bonus that he would receive under
Section 6(b) if he had remained employed through December 31,
2008 and if the Company's cumulative growth in EPS at the end
of the Performance Period bore the same relationship to the
Earnings Target at the end of the Performance Period as the
relationship between its cumulative growth in EPS and the
Earnings Target as of the end of the completed fiscal quarter
closest to the Termination Date.
(c) Without Cause or for Good Reason Within Two Years after a
Change of Control. If the Executive's employment hereunder is terminated by the
Company other than for Cause or by the Executive for Good Reason within two
years after a Change of Control, the Company's sole obligation hereunder shall
be as follows:
(i) the Company shall pay the Executive the Accrued Compensation;
(ii) the Company shall pay to the Executive, in a lump sum in cash
within five business days after the Termination Date, the
amount of Base Salary which would have been paid to the
Executive for a period of two years following the Termination
Date;
(iii) the Company shall continue to pay the premiums provided for in
Subsection 7(a) of this Agreement for the time period set
forth therein;
(iv) the Company shall pay the Executive, in a lump sum within five
business days after the Termination Date, any compensation in
the form of incentive awards (other than the Career Share
Award) under the Stock Incentive Plan (or any successor plan)
earned (as to satisfaction of performance-based criteria) in
respect of periods prior to and including the Termination
Date, but not paid as of the Termination Date;
(v) the Company shall pay the Executive, within five business days
after the end of that fiscal year, a Pro-Rata Bonus with
respect to the fiscal year in which the Termination Date
occurs, but only to the extent that such Pro-Rata Bonus is not
payable as part of the Accrued Compensation; and
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(vi) the Company shall pay the Executive a Stay Bonus in an amount
equal to $6 million. The Stay Bonus shall be paid to the
Executive as promptly as practicable following the Termination
Date.
(d) Disability. If the Executive's employment hereunder is
terminated by either party by reason of the Executive's Disability, the
Company's sole obligation hereunder shall be as follows:
(i) the Company shall pay the Executive the Accrued Compensation;
(ii) the Company shall continue to pay the Executive, in accordance
with the Company's customary practices applicable to its
executive officers, 100% of Base Salary for the first 24
months following the Termination Date and 80% of Base Salary
for the third 12 months following the Termination Date;
provided, however, that such Base Salary shall be reduced by
the amount of any benefits the Executive receives by reason of
his Disability under the Company's relevant disability plan or
plans;
(iii) the Company shall continue to pay the premiums provided for in
Subsection 7(a) of this Agreement for the time period set
forth therein;
(iv) the Career Share Award shall become vested as to that number
of shares of Class A Common Stock of the Company equal to the
product of (A) 1,000,000 (one million) and (B) the fraction
obtained by dividing (1) the number of completed years of
service by the Executive to the Company during the period
commencing on the Effective Date and ending on the Termination
Date by (2) six. A stock certificate or other appropriate
documentation evidencing the number of shares of Class A
Common Stock of the Company which become vested in accordance
with the terms of this Subsection 10(d)(iv), shall be
delivered to the Executive on March 31st of the calendar year
immediately following the calendar year in which the
Termination Date occurs and the Executive shall thereupon
become the holder of such number of shares of Class A Common
Stock; and
(v) the Company shall pay the Executive a Stay Bonus in an amount
equal to $6 million. The Stay Bonus shall be payable to the
Executive on March 31st immediately following the Termination
Date or as soon as administratively practicable thereafter,
but not later than March 31, 2009.
(e) Death. If the Executive's employment hereunder is
terminated due to his death, the Company's sole obligation hereunder shall be as
follows:
(i) the Company shall pay the Executive's estate or his
beneficiaries (as the case may be) the Accrued Compensation;
(ii) the Company shall pay the Executive's estate or beneficiaries
(as the case may be), at such time as other participants in
the Bonus Plan are paid their respective bonuses in respect of
that fiscal year, a Pro-Rata Bonus with respect to the fiscal
12
year in which the Termination Date occurs, but only to the
extent that such Pro-Rata Bonus is not payable as part of the
Accrued Compensation;
(iii) the Company shall provide such assistance as is necessary to
facilitate the payment of the life insurance proceeds provided
for in Subsection 7(a) of this Agreement to the Executive's
beneficiary or beneficiaries;
(iv) the Career Share Award shall become vested as to that number
of shares of Class A Common Stock of the Company equal to the
product of (A) 1,000,000 (one million) and (B) the fraction
obtained by dividing (1) the number of completed years of
service by the Executive to the Company during the period
commencing on the Effective Date and ending on the Termination
Date by (2) six. A stock certificate or other appropriate
documentation evidencing the number of shares of Class A
Common Stock of the Company which become vested in accordance
with the terms of this Subsection 10(e)(iv), shall be
delivered to the Executive's estate or his beneficiaries (as
the case may be) on March 31st of the calendar year
immediately following the calendar year in which the
Termination Date occurs and the Executive's estate or his
beneficiaries (as the case may be) shall thereupon become the
holder(s) of such number of shares of Class A Common Stock;
and
(v) the Company shall pay the Executive's estate or his
beneficiaries (as the case may be) a Stay Bonus in an amount
equal to $6 million. The Stay Bonus shall be paid to the
Executive's estate or his beneficiaries as promptly as
practicable following the Executive's death.
(f) Determination of Base Salary. For purposes of this Section
10, Base Salary shall be determined by the Base Salary at the annualized rate in
effect on the Termination Date.
(g) Continuation of Employee Welfare Benefits. The Company
shall, at its expense, provide to the Executive and his beneficiaries continued
participation in all medical, dental, vision, prescription drug, hospitalization
and life insurance coverages and in all other employee welfare benefit plans,
programs and arrangements in which the Executive was participating immediately
prior to the Termination Date, on terms and conditions that are no less
favorable than those that applied on the Termination Date, during the following
periods:
(i) The period during which the Executive is receiving continued
payment of Base Salary pursuant to Subsection 10(b)(ii) or
10(d)(ii) of this Agreement; or
(ii) For a period of two years following the Termination Date, if
the Executive's employment is terminated by the Company other
than for Cause or by the Executive for Good Reason within two
years after a Change of Control.
In each case, COBRA benefits will commence after the applicable period has been
completed. Notwithstanding the foregoing, the Company's obligation under this
Subsection 10(g) shall be
13
reduced to the extent that equivalent coverages and benefits (determined on a
coverage-by-coverage and benefit-by-benefit basis) are provided under the plans,
programs or arrangements of a subsequent employer.
In the event that the Executive is precluded from continuing
full participation in any employee benefit plan, program or arrangement as
contemplated by this Subsection 10(g), the Executive shall be provided with the
after-tax economic equivalent of any benefit or coverage foregone. For this
purpose, the economic equivalent of any benefit or coverage foregone shall be
deemed to be the total cost to the Executive of obtaining such benefit or
coverage himself on an individual basis. Payment of such after-tax economic
equivalent shall be made quarterly.
(h) No Mitigation; No Offset. In the event of any termination
of his employment hereunder, the Executive shall not be required to mitigate the
amount of any payment provided for in this Agreement by seeking other employment
or otherwise and no such payment shall be offset or reduced by the amount of any
compensation provided to the Executive in any subsequent employment, except as
provided in Subsection 10(g) of this Agreement.
(i) Change of Control. For purposes of this Agreement, the
term "Change of Control" shall mean an occurrence of a nature that would be
required to be reported by the Company in response to Item 6(e) of Schedule 14A
of Regulation 14A issued under the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx"). Without limiting the inclusiveness of the definition in the
preceding sentence, a Change of Control of the Company shall be deemed to have
occurred as of the first day that any one or more of the following conditions is
satisfied:
(i) Any person is or becomes the "beneficial owner" (as that term
is defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities and such person would be deemed an
"Acquiring Person" for purposes of the Rights Agreement dated
as of July 16, 1998, as amended, between the Company and
National City Bank, as successor Rights Agent (the "Rights
Agreement"); or
(ii) any of the following occur: (A) any merger or consolidation of
the Company, other than a merger or consolidation in which the
voting securities of the Company immediately prior to the
merger or consolidation continue to represent (either by
remaining outstanding or being converted into securities of
the surviving entity) 80% or more of the combined voting power
of the Company or surviving entity immediately after the
merger or consolidation with another entity; (B) any sale,
exchange, lease, mortgage, pledge, transfer, or other
disposition (in a single transaction or a series of related
transactions) of assets or earning power aggregating more than
50% of the assets or earning power of the Company on a
consolidated basis; (C) any complete liquidation or
dissolution of the Company; (D) any reorganization, reverse
stock split or recapitalization of the Company that would
result in a Change of Control as otherwise defined herein; or
(E) any
14
transaction or series of related transactions having, directly
or indirectly, the same effect as any of the foregoing.
(j) Release. In exchange for the payment by the Company of the
amounts contemplated by Subsections 10(b) or 10(c) of this Agreement, the
Executive agrees to execute such form of release as is mutually acceptable to
the Company and the Executive.
11. Employee Covenants.
(a) Unauthorized Disclosure. The Executive shall not, during
the term of this Agreement and thereafter, make any Unauthorized Disclosure. For
purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by
the Executive without the prior written consent of the Board to any person,
other than an employee of the Company or a person to whom disclosure is
reasonably necessary or appropriate in connection with the performance by the
Executive of his duties as an executive officer of the Company, of any
confidential information relating to the business or prospects of the Company
including, but not limited to, any confidential information with respect to any
of the Company's customers, products, methods of distribution, strategies,
business and marketing plans and business policies and practices, except (i) to
the extent disclosure is or may be required by law, by a court of law or by any
governmental agency or other person or entity with apparent jurisdiction to
require him to divulge, disclose or make available such information or (ii) in
confidence to an attorney or other advisor for the purpose of securing
professional advice concerning the Executive's personal matters provided such
attorney or other advisor agrees to observe these confidentiality provisions.
Unauthorized Disclosure shall not include the use or disclosure by the
Executive, without consent, of any information known generally to the public or
known within the Company's trade or industry (other than as a result of
disclosure by him in violation of this Subsection 11(a)). This confidentiality
covenant has no temporal, geographical or territorial restriction.
(b) Non-Competition. During the Non-Competition/No-Raid Period
described below, the Executive shall not, directly or indirectly, without the
prior written consent of the Company, own, manage, operate, join, control, be
employed by, consult with or participate in the ownership, management, operation
or control of, or be connected with (as a stockholder, partner, or otherwise),
any business, individual, partner, firm, corporation or other entity that
competes, directly or indirectly, with the Company or any affiliate of the
Company; provided, however, that the "beneficial ownership" (as that term is
defined in Rule 13d-3 under the Exchange Act) by the Executive after his
termination of employment with the Company, either individually or as a member
of a "group" for purposes of Section 13(d)(3) under the Exchange Act and the
regulations promulgated thereunder, of not more than two percent (2%) of the
voting stock of any publicly-held corporation shall not be a violation of this
Agreement.
(c) Non-Solicitation. During the Non-Competition/No-Raid
Period described below, the Executive shall not, either directly or indirectly,
alone or in conjunction with another person, interfere with or harm, or attempt
to interfere with or harm, the relationship of the Company, its subsidiaries
and/or affiliates, with any person who at any time was an employee,
15
customer or supplier of the Company, its subsidiaries and/or affiliates or
otherwise had a business relationship with the Company, its subsidiaries and/or
affiliates.
For purposes of this Agreement, the "Non-Competition/No-Raid
Period" means the period the Executive is employed by the Company plus one year
thereafter.
(d) Remedies. The Executive agrees that any breach of the
terms of this Section 11 would result in irreparable injury and damage to the
Company for which the Company would have no adequate remedy at law; the
Executive therefore also agrees that in the event of said breach or any threat
of breach, the Company shall be entitled to an immediate injunction and
restraining order to prevent such breach and/or threatened breach and/or
continued breach by the Executive and/or any and all persons and/or entities
acting for and/or with the Executive, without having to prove damages, in
addition to any other remedies to which the Company may be entitled at law or in
equity. The terms of this Subsection 11(d) shall not prevent the Company from
pursuing any other available remedies for any breach or threatened breach
hereof, including but not limited to the recovery of damages from the Executive.
The Executive and the Company further agree that the provisions of the covenants
not to compete and solicit are reasonable and that the Company would not have
entered into this Agreement but for the inclusion of such covenants herein.
Should a court or arbitrator determine, however, that any provision of the
covenants is unreasonable, either in period of time, geographical area, or
otherwise, the parties hereto agree that the covenants should be interpreted and
enforced to the maximum extent which such court or arbitrator deems reasonable.
The provisions of this Section 11 shall survive any
termination of this Agreement, and the existence of any claim or cause of action
by the Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants and agreements of this Section 11; provided, however, that this
paragraph shall not, in and of itself, preclude the Executive from defending
himself against the enforceability of the covenants and agreements of this
Section 11.
12. Certain Additional Payments.
(a) In the event it shall be determined that any payment,
benefit or distribution of any type to or for the benefit of the Executive by
the Company, any of its affiliates, or any person 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, whether paid or payable, received or receivable, or
distributed or distributable pursuant to the terms of this Agreement or
otherwise (the "Total Payments"), is subject to the excise tax imposed by
Section 4999 of the Code or any similar successor provision or any interest or
penalties with respect to such excise tax (such excise tax, together with any
such interest and penalties, are collectively referred to as the "Excise Tax"),
then the Executive shall be entitled to receive an additional payment (the
"Gross-Up Payment") in an amount such that after payment by the Executive of all
taxes (including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the
16
Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Total Payments (not including the Gross-Up Payment).
(b) All determinations as to whether any of the Total Payments
are "parachute payments" (within the meaning of Section 280G of the Code),
whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and
any amounts relevant to the last sentence of Subsection 12(a), shall be made by
an independent accounting firm selected by the Company from among the largest
five accounting firms in the United States (the "Accounting Firm"). Unless the
Executive agrees otherwise in writing, the Accounting Firm cannot during the two
years preceding the date of its selection have acted in any way on behalf of the
Company or any of its affiliates. The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations, regarding the amount of any Gross-Up Payment and any other
relevant matter, both to the Company and the Executive, within five days of the
Termination Date, if applicable, or such earlier time as is requested by the
Company or the Executive (if the Executive reasonably believes that any of the
Total Payments may be subject to the Excise Tax). Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of uncertainty in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it may be determined
that the Company should have made Gross-Up Payments ("Underpayment"), or that
Gross-Up Payments will have been made by the Company which should not have been
made ("Overpayments"). In either such event, the Accounting Firm shall determine
the amount of the Underpayment or Overpayment that has occurred. In the case of
an Underpayment, the amount of such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. In the case of an Overpayment,
the Executive shall, at the direction and expense of the Company, take such
steps as are reasonably necessary (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by,
the Company, and otherwise reasonably cooperate with the Company to correct such
Overpayment. The Executive and the Company shall each reasonably cooperate with
the other in connection with any administrative or judicial proceedings
concerning the existence or amount of liability for Excise Tax with respect to
the Total Payments.
13. Indemnification.
(a) The Company agrees that if the Executive is made a party,
or is threatened to be made a party, to any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "Proceeding"), by reason of
the fact that he is or was a director, officer or employee of the Company or is
or was serving at the request of the Company as a director, officer, member,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, including service with respect to employee benefit plans,
whether or not the basis of the Proceeding is the Executive's alleged action in
an official capacity while serving as a director, officer, member, employee or
agent, the Executive shall be indemnified and held harmless by the Company to
the fullest extent legally permitted or authorized by the Company's certificate
of incorporation or bylaws or resolutions of the Company's Board of Directors
or, if greater, by the laws of the State of Delaware, against all cost, expense,
liability and loss (including, without limitation, attorneys' fees, judgments,
fines, ERISA excise taxes or other liabilities or penalties and amounts paid or
to be paid in settlement) reasonably incurred or
17
suffered by the Executive in connection therewith, and such indemnification
shall continue as to the Executive even if he has ceased to be a director,
member, employee or agent of the Company or other entity and shall inure to the
benefit of the Executive's heirs, executors and administrators. The Company
shall advance to the Executive all reasonable costs and expenses incurred by him
in connection with a Proceeding within 20 calendar days after receipt by the
Company of a written request for such advance. Such request shall include an
undertaking by the Executive to repay the amount of such advance if it shall
ultimately be determined that he is not entitled to be indemnified against such
costs and expenses; provided that the amount of such obligation to repay shall
be limited to the after-tax amount of any such advance except to the extent the
Executive is able to offset such taxes incurred on the advance by the tax
benefit, if any, attributable to a deduction realized by him for the repayment.
(b) Neither the failure of the Company (including its Board of
Directors, independent legal counsel or stockholders) to have made a
determination prior to the commencement of any Proceeding concerning payment of
amounts claimed by the Executive under Section 13(a) above that indemnification
of the Executive is proper because he has met the applicable standard of
conduct, nor a determination by the Company (including its Board of Directors,
independent legal counsel or stockholders) that the Executive has not met such
applicable standard of conduct, shall create a presumption in any judicial
proceeding that the Executive has not met the applicable standard of conduct.
(c) The Company agrees to continue and maintain a directors'
and officers' liability insurance policy covering the Executive, until such time
as actions against the Executive are no longer permitted by law, with terms and
conditions no less favorable than the most favorable coverage then applying to
any other senior level executive officer or director of the Company.
14. Successors and Assigns.
(a) This Agreement shall be binding upon and shall inure to
the benefit of the Company, its successors and assigns and the Company shall
require any successor or assign 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 or assignment had taken place. The
term "the Company" as used herein shall include any such successors and assigns.
The term "successors and assigns" as used herein shall mean a corporation or
other entity acquiring or otherwise succeeding to, directly or indirectly, all
or substantially all the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.
(b) Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive, his beneficiaries or legal
representatives, except by will or by the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal personal representative.
15. Arbitration. Except with respect to the remedies set forth in
Subsection 11(d) hereof, if in the event of any controversy or claim between the
Company or any of its affiliates
18
and the Executive arising out of or relating to this Agreement, either party
delivers to the other party a written demand for arbitration of a controversy or
claim, then such claim or controversy shall be submitted to binding arbitration.
The binding arbitration shall be administered by the American Arbitration
Association under its Commercial Arbitration Rules. The arbitration shall take
place in Columbus, Ohio. Each of the Company and the Executive shall appoint one
person to act as an arbitrator, and a third arbitrator shall be chosen by the
first two arbitrators (such three arbitrators, the "Panel"). The Panel shall
have no authority to award punitive damages against the Company or the
Executive. The arbitrator shall have no authority to add to, alter, amend or
refuse to enforce any portion of the disputed agreements. The Company and the
Executive each waive any right to a jury trial or to petition for stay in any
action or proceeding of any kind arising out of or relating to this Agreement.
Pending the resolution of any claim under this Section 15, the Executive (and
his beneficiaries) shall continue to receive all payments and benefits due under
this Agreement, except to the extent that the arbitrator(s) otherwise provide.
16. Fees and Expenses. The Company agrees to pay promptly upon
presentation of an invoice from the Executive, to the full extent permitted by
law, all legal fees and expenses which the Executive may reasonably incur as a
result of (a) any contest by the Company of the validity or enforceability of,
or liability under, any provision of this Agreement, (b) any effort to enforce
the Executive's rights hereunder or (c) any dispute between the Executive and
the Company relating to this Agreement; provided that Executive also undertakes
in writing to repay such legal fees and expenses if such contest, effort or
dispute does not result in a judgment, award or settlement in Executive's favor
in any material respect.
17. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by registered or certified mail, return
receipt requested, postage prepaid, or upon receipt if overnight delivery
service or facsimile is used, addressed as follows:
To the Executive:
Xxxxxxx X. Xxxxxxxx
xxxxxxxxxx
xxxxxxxxxx
To the Company:
Abercrombie & Fitch Co.
0000 Xxxxx Xxxx
Xxx Xxxxxx, Xxxx 00000
Attn: President and Chief Operating Officer
18. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
19
19. Survivorship. Except as otherwise set forth in this Agreement, the
respective rights and obligations of the Executive and the Company hereunder
shall survive any termination of the Executive's employment.
20. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
21. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Ohio without giving
effect to the conflict of law principles thereof.
22. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.
23. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof. This Agreement may be executed in one
or more counterparts.
24. Company Representation. The Company represents and warrants that it
has obtained or will obtain any corporate approvals which are necessary for the
Company to enter into and implement this Agreement.
25. SERP Amendment. The Company and the Executive agree that the SERP
shall be amended by replacing the phrase "the Amended and Restated Employment
Agreement entered into as of January 30, 2003" in Section 2.07[4] with the
phrase "the Amended and Restated Employment Agreement entered into as of August
15, 2005".
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
SIGNATURES ON FOLLOWING PAGE.]
20
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
THE COMPANY:
ABERCROMBIE & FITCH CO.
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, its President
and Chief Operating Officer
THE EXECUTIVE:
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
21
EXHIBIT A
ABERCROMBIE & FITCH CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(Xxxxxxx X. Xxxxxxxx)
Effective February 2, 2003
ABERCROMBIE & FITCH CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
(XXXXXXX X. XXXXXXXX)
1.00 Purpose
Effective February 2, 2003, Abercrombie & Fitch Co. establishes the
Abercrombie & Fitch Co. Supplemental Executive Retirement Plan ("Plan") to
provide additional retirement income to Xxxxxxx X. Xxxxxxxx, one of its select
management and highly compensated employees. This Plan is intended to be an
unfunded, nonqualified deferred compensation plan within the meaning of Title I
of ERISA.
2.00 Definitions
Whenever used in this Plan, the following words and phrases will have
the meanings given below. Also, the singular form of any term will include the
plural, the plural form will include the singular, the masculine pronoun will
include the feminine and the feminine pronoun will include the masculine. Other
words and phrases also may be defined in the Plan text.
2.01 Affiliate: Any entity that is related, through common control with the
Company.
2.02 Board: The Company's board of directors.
2.03 Cause: That the Participant [1] pleads "guilty" or "no contest" to or is
convicted of an act which is defined as a felony under federal or state law, or
[2] engages in willful misconduct which could reasonably be expected to harm the
Company's business or its reputation. For this purpose, an act or failure to act
shall be considered "willful misconduct" only if done, or omitted to be done, by
the Participant in bad faith and without a reasonable belief that such act or
failure to act was in the best interests of the Company.
The Participant shall not be terminated for Cause unless he has been given
written notice by the Board of its intention to so terminate his employment (a
"Preliminary Notice of Cause"), such notice [3] to state in detail the
particular act or acts or failure or failures to act that constitute the grounds
on which the proposed termination for Cause is based and [4] to be given within
six months of the Board's learning of such acts or failures to act. The
Participant shall have ten days after the date that the Preliminary Notice of
Cause is given in which to cure such conduct, to the extent that such cure is
possible. If the Participant fails to cure such conduct, the Participant shall
be entitled to a hearing before the Board, and to be accompanied by his counsel,
at which he shall be entitled to contest the Board's findings. Such hearing
shall be held within 15 days of notice to the Company by the Participant,
provided he requests such hearing within 30 days of the Preliminary Notice of
Cause. If the Participant fails to request such hearing within the 30-day period
specified in the preceding sentence, his employment shall be terminated for
Cause effective upon the expiration of such period. If the Participant requests
such hearing and, within ten days following such hearing, the Participant is
furnished with a copy of a resolution, duly adopted by the affirmative vote of a
majority of the members of the Board, finding that in the good-faith opinion of
the Board, the Participant was guilty of conduct constituting Cause as
specified in the Preliminary Notice of Cause, the Participant's employment shall
be terminated for Cause upon receipt of such resolution. Any such resolution
shall be accompanied by a certificate of the Secretary or another appropriate
officer of the Company which shall state that such resolution was duly adopted
by the affirmative vote of a majority of the members of the Board at a duly
convened meeting called for such purpose.
2.04 Code: The Internal Revenue Code of 1986, as amended.
2.05 Committee: The Company's Compensation Committee.
2.06 Company: Abercrombie & Fitch Co., a Delaware corporation, and any successor
to it.
2.07 Compensation: The base salary and cash bonus payable by the Company and
each Affiliate to the Participant in respect of services performed during the
period under consideration, plus all amounts earned that the Participant defers
to a later period, including, without limitation, deferrals under a plan or
program described in Code (S)(S) 125 or 401(k) or under any nonqualified plan of
deferred compensation. Compensation shall include the pro-rata portion of any
cash bonus (based on the number of days that the Participant was employed during
the period with respect to which such cash bonus would have been payable) that
the Participant would have received had his employment continued until such cash
bonus was paid. However, Compensation does not include [1] Company contributions
(or contributions by an Affiliate) to, or benefits derived from those
contributions under, this Plan or any other plan of deferred compensation,
whether or not tax-qualified; or [2] the value of any welfare or fringe
benefits, expense reimbursement or similar payments, whether or not deductible
by the Company or any Affiliate or taxable to the Participant; or [3] the value
of any stock options, restricted shares or performance based equity
compensation, regardless of the form in which (or the time at which) it is paid;
or [4] the amount of any "Stay Bonus" as defined and payable in accordance with
the terms of the Amended and Restated Employment Agreement entered into as of
January 30, 2003 by the Company and the Participant.
2.08 Effective Date: February 2, 2003.
2.09 Enrollment Form: The form described in Article 3.00 which the Participant
must complete before he may begin to accrue a Plan benefit. Although a copy of
this form is attached to the Plan, it is not a part of the Plan and may be
modified by the Committee without separate action by the Board and without
regard to the restrictions described in Article 7.00.
2.10 Final Average Compensation: The Participant's Compensation averaged over
the last 36 consecutive full calendar months ending before his Retirement.
2.11 Participant: Xxxxxxx X. Xxxxxxxx.
2.12 Plan: The Abercrombie & Fitch Co. Supplemental Executive Retirement Plan,
as described in this document and any amendments to it.
2.13 Retirement or Retire: The Participant's Termination of Employment for any
reason other than death or for Cause at or after age 62.
2
2.14 Termination of Employment: Discontinuance of the Participant's status as a
common law employee of the Company and all Affiliates. For purposes of this
Plan, the Participant will have Terminated Employment even if he continues to
serve as a consultant to or as an independent contractor with respect to the
Company or any Affiliate (including as a member of the Board or an Affiliate's
board of directors) after severing his common law employment relationship with
the Company and each Affiliate.
3.00 Participation
The Participant may enter the Plan on the Effective Date but only after
completing an Enrollment Form.
4.00 Plan Benefit
4.01 Amount of Benefit
Subject to the conditions described in this section and elsewhere in
the Plan, the Participant will receive the benefit described in this section
payable in the form described in Section 4.02.
[1] Retirement On or After December 31, 2008. If the Participant
Retires on or after December 31, 2008, he will receive a monthly
benefit for life equal to 50 percent of his Final Average Compensation.
The amount of this benefit will not be actuarially adjusted to reflect
the value of any payments not made to the Participant because he
Retires after December 31, 2008 although changes in the Participant's
Compensation occurring after December 31, 2008 will be taken into
account in calculating the Participant's benefit.
[2] Retirement at or After Age 62, But Before December 31, 2008. If the
Participant Retires at or after age 62, but before December 31, 2008,
he will receive a monthly benefit for life equal to the amount
determined under the following table:
Attained Age Monthly Benefit
------------ ---------------
64 46.66% of his Final Average Compensation
63 43.33% of his Final Average Compensation
62 40% of his Final Average Compensation
In the event that the Participant's Retirement occurs at least one full
calendar month after one of his birthdays set forth in the above table
and before the next birthday, the above percentages of Final Average
Compensation shall be determined by interpolation based on the number
of full calendar months that have elapsed since the Participant's last
birthday.
[3] Other Termination of Employment. The Participant will receive no
Plan benefit if he:
[a] Terminates Employment for any reason before reaching
age 62;
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[b] Dies while actively employed, regardless of his age
at the time of death; or
[c] Is terminated for Cause, regardless of his age at the
time Termination of Employment for Cause occurs.
4.02 Form of Payment
Any benefit payable under Section 4.01 will be paid in monthly
installments beginning on the first day of the month following the Participant's
Retirement and ending on the first day of the month during which the Participant
dies. No payment will be made (and no Plan benefit will be due) to any person
after the Participant's death.
5.00 Taxes
5.01 Withholding for Taxes Due on Plan Payments
Regardless of any other provision of this Plan, any payment due under
Article 4.00 will be reduced by the amount of any federal, state and local
income and employment taxes the Company is required to withhold under any
applicable law or regulation from any payment made under Article 4.00.
5.02 Withholding for Taxes Due Before Payments Begin
The Committee and the Participant will agree on the method to be
applied to pay the Participant's portion of any employment, wage and other taxes
imposed under any applicable law or regulation on any Plan benefit before that
benefit is paid to the Participant. If the Committee and Participant fail to
agree on the method to be applied, the Company will withhold the amount of the
Participant's liability from his other Compensation.
5.03 Special Distribution
If any taxing authority finally establishes that the Participant is
constructively in receipt of any Plan benefit that has not actually been
distributed and that the Participant is immediately liable for any income or
other taxes (other than any taxes within the scope of Section 5.02) that
normally would not be imposed until the Plan benefit is actually paid to the
Participant, the Committee will immediately distribute to the Participant a lump
sum amount equal to that which the taxing authority has deemed the Participant
to have constructively received.
6.00 Administration
6.01 Appointment of Committee
The Plan will be administered by the Committee.
6.02 Powers and Duties
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The Committee is fully empowered to exercise complete discretion to
administer the Plan and to construe and apply all of its provisions. These
powers and duties include:
[1] Resolving disputes that may arise with regard to the rights of the
Participant and his legal representatives under the terms of the Plan.
Subject to Section 6.07, the Committee's decisions in these matters
will be final in each case;
[2] Obtaining from the Company, each Affiliate and the Participant
information that the Committee needs to determine the Participant's
rights and benefits under the Plan. The Committee may rely conclusively
upon any information furnished by the Company or the Participant;
[3] Compiling and maintaining all records it needs to administer the
Plan;
[4] Upon request, furnishing the Company with reasonable and
appropriate reports of its administration of the Plan;
[5] Authorizing the distribution of all benefits that are payable under
the Plan;
[6] Engaging legal, administrative, actuarial, investment, accounting,
consulting and other professional services that the Committee believes
are necessary and appropriate;
[7] Adopting rules and regulations for the administration of the Plan
that are not inconsistent with the terms of the Plan; and
[8] Doing and performing any other acts provided for in the Plan.
Also, the Committee may delegate any of the powers and duties described in
subsections 6.02[2] through [4] to any other person or organization, as it deems
appropriate.
6.03 Actions by the Committee
The Committee may act at a meeting by the vote or assent of a majority
of its members or in writing without a meeting by the written assent of all its
Members. The Committee will appoint one of its members to act as secretary to
record all Committee actions. The Committee also may authorize one or more if
its members to execute papers and perform other ministerial duties on behalf of
the Committee.
6.04 Indemnification
The Committee will be indemnified by the Company to the fullest extent
permitted by the Company's certificate of incorporation and by-laws.
6.05 Conclusiveness of Action
5
Subject to Section 6.07, any action on matters within the discretion of
the Committee will be conclusive, final and binding upon the Participant and
upon all persons claiming any rights under the Plan.
6.06 Payment of Expenses
[1] Committee members will not be separately compensated for their
services as Committee members. However, the Company will reimburse
Committee members for all appropriate expenses they incur while
carrying out their Plan duties.
[2] The compensation or fees of accountants, counsel and other
specialists and any other costs of administering the Plan will be paid
by the Company.
6.07 Resolution of Disputes
If, in the event of any controversy or claim between the Company or any
of its Affiliates and the Participant arising out of or relating to this Plan,
either party delivers to the other party a written demand for arbitration of a
controversy or claim, then such claim or controversy shall be submitted to
binding arbitration. The binding arbitration shall be administered by the
American Arbitration Association under its Commercial Arbitration Rules. The
arbitration shall take place in Columbus, Ohio. Each of the Company and the
Participant shall appoint one person to act as an arbitrator, and a third
arbitrator shall be chosen by the first two arbitrators (such three arbitrators,
the "Panel"). The Panel shall have no authority to award punitive damages
against the Company or the Participant. The Panel shall have no authority to add
to, alter, amend or refuse to enforce any portion of the disputed agreements.
The Company and the Participant each waive any right to a jury trial or to
petition for stay in any action or proceeding of any kind arising out or
relating to this Plan. Pending the resolution of any claim under this Section
6.07, the Participant shall continue to receive all undisputed payments and
benefits due under this Plan, except to the extent that the Panel otherwise
provides.
7.00 Plan Amendment
The Company, by action of the Board, may modify, alter or amend the
Plan at any time. However, no such amendment may affect, directly or indirectly,
the Participant's rights under the Plan unless the Participant agrees to such
amendment either in a separate written agreement or by voting, as a member of
the Board, for such amendment.
8.00 Merger of Plan; Successor Employer
8.01 Merger and Consolidation
If the Plan is merged into or consolidated with any other plan, the
Participant will be entitled to rights and benefits immediately after the merger
or consolidation at least equal to his rights and benefits under this Plan.
8.02 Successor Employer
6
If the Company dissolves, reorganizes, merges into or consolidates with
another business entity, provision may be made by which the successor will
continue the Plan, in which case the successor will be substituted for the
Company under the terms and provisions of this Plan. The substitution of the
successor for the Company will constitute an assumption by the successor of all
Plan liabilities and the successor will have all of the powers, duties and
responsibilities of the Company under the Plan.
9.00 Funding
This Plan constitutes an unfunded, unsecured promise by the Company and
each Affiliate to pay only those benefits that are accrued by the Participant
under the terms of the Plan. Neither the Company nor any Affiliate will
segregate any assets into a fund established exclusively to pay Plan benefits
unless the Company, in its sole discretion, establishes a trust for this
purpose. Neither the Company nor any Affiliate is liable for the payment of Plan
benefits that are actually paid from a trust established for that purpose. Also,
the Participant has only the rights of a general unsecured creditor and does not
have any interest in or right to any specific asset of the Company or any
Affiliate. Nothing in this Plan constitutes a guaranty by the Company, any
Affiliate or any other entity or person that the assets of the Company, any
Affiliate or any other entity will be sufficient to pay Plan benefits.
10.00 Miscellaneous
10.01 Voluntary Plan
The Plan is purely voluntary on the part of the Company; neither the
establishment of the Plan nor any amendment to it nor the creation of any fund
or account nor the payment of any benefits may be construed as giving any person
[1] a legal or equitable right against the Company, any Affiliate or the
Committee other than those specifically granted under the Plan or conferred by
affirmative action of the Committee or the Company or any Affiliate in a manner
that is consistent with the terms and provisions of this Plan or [2] the right
to be retained as an employee.
10.02 Nonalienation of Benefits
The Participant's right to receive Plan benefits may not be assigned,
transferred, pledged or encumbered, including by will or by applicable laws of
descent and distribution. Any attempt to assign, transfer, pledge, encumber or
devise a Plan benefit will be null and void and of no legal effect.
10.03 Inability to Receive Benefits
Any Plan benefit payable to the Participant after he is declared
incompetent will be paid to the guardian, conservator or other person legally
charged with the care of his person or estate. Also, if the Committee, in its
sole discretion, concludes that the Participant is unable to manage his
financial affairs, the Committee may, but is not required to, direct the Company
to distribute Plan benefits to any one or more of his spouse, lineal ascendants
or descendants or other close living relatives of the Participant or any other
person then contributing toward or providing the
7
care and maintenance of the Participant who demonstrates to the satisfaction of
the Committee the propriety of those distributions. Any payment made under this
Section 10.03 will completely discharge the Plan's liability with respect to
that payment. The Committee is not required to see to the application of any
distribution made to any person.
10.04 Lost Participant
The Participant is obliged to keep the Committee apprised of his
current mailing address. The Committee's obligation to search for the
Participant is limited to sending a registered or certified letter to the
Participant's last known address. If the Participant does not file a claim for
benefits with the Committee within 12 months after benefits are otherwise
payable, benefits will be forfeited. However, this forfeited benefit will be
restored and paid if the Committee subsequently approves a claim for benefits.
10.05 Limitation of Rights
Nothing in the Plan, expressed or implied, is intended or may be
construed as conferring upon or giving to any person, firm or association (other
than the Company, the Affiliates and the Participant) any right, remedy or claim
under or by reason of this Plan.
10.06 Invalid Provision
If any provision of this Plan is held to be illegal or invalid for any
reason, the Plan will be construed and enforced as if the offending provision
had not been included in the Plan. However, that determination will not affect
the legality or validity of the remaining parts of this Plan.
10.07 One Plan
This Plan may be executed in any number of counterparts, each of which
will be deemed to be an original.
10.08 Governing Law
The Plan will be governed by and construed in accordance with the laws
of the United States and, to the extent applicable, the laws of Ohio.
10.09 Coordination With Other Programs
The Participant's right to any benefits accrued or payable under this
Plan will be determined solely by reference to the terms of this Plan document
and will be unaffected by any other document or agreement between the
Participant and the Company.
8
IN WITNESS WHEREOF, the undersigned authorized officer of the Company
has executed this Plan to be effective as of February 2, 2003.
ABERCROMBIE & FITCH CO.
By: /s/ Xxxx X. Xxxxxxx
-----------------------------
Print Name: Xxxx X. Xxxxxxx
---------------------
Title: Ex. VP/COO
--------------------------
Date: 1/30/03
---------------------------
9
ABERCROMBIE & FITCH CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ENROLLMENT FORM
Name: Xxxxxxx Xxxxxxxx
----------------------------------------
Soc. Sec. No.: XXXXXXX
----------------------------------------
Date of Birth: XXXXXXX
----------------------------------------
Address: XXXXXXX
----------------------------------------
XXXXXXX
----------------------------------------
By signing this form, I acknowledge that [1] I have read and understand
the Plan and the terms and conditions I must meet to receive a Plan benefit, [2]
the Plan is unfunded, [3] I am solely responsible for ensuring that the
Committee's files contain my current mailing address and [4] by signing this
form, I agree to be bound by all terms and conditions imposed by the Plan.
Signature: /s/ Xxxxxxx Xxxxxxxx
------------------------------
Name (please print): Xxxxxxx Xxxxxxxx
--------------------
Date signed: 1/30/03
----------------------------
Received by Committee on: 1/30/03
---------------
By: Xxxx X. Xxxxxxx
-------------------------------------
