EMPLOYMENT SEPARATION AGREEMENT
Exhibit 10.1
This Agreement (“Agreement”) is made by and between Xxxxxx Xxxxxxxxxx (hereinafter “Employee”)
and ABERCROMBIE & FITCH MANAGEMENT CO.a Delaware corporation (the “Company”) (hereinafter
collectively “the parties”).
WHEREAS, Employee has been employed by the Company as an officer since in or about November of
2004;
WHEREAS, the parties acknowledge it is in their individual and mutual best interests for
Employee to separate from employment as an officer of the Company; and
WHEREAS, the parties wish to define the terms and conditions of Employee’s separation from
employment with the Company;
NOW, THEREFORE, in exchange for and in consideration of the following mutual covenants and
promises, the undersigned parties, intending to be legally bound, hereby agree as follows:
1. Separation from Employment. The Company and Employee agree that Employee shall
separate from service with the Company effective September 7, 2006 (“Separation Date”).
2. Effective Date. For purposes of this Agreement, the Effective Date of this
Agreement shall be the eighth (8th) day after Employee signs this Agreement (“Effective
Date”), unless Employee has revoked the Agreement prior to that time in the manner discussed in
Paragraph 10(d) below. On the Effective Date, Employee’s employment with the Company and all
further compensation, remuneration, bonuses, and eligibility of Employee under Company benefit
plans shall terminate, and Employee shall not be entitled to receive any further payments or
benefits of any kind from the Company, except as otherwise provided in this Agreement or by
applicable law.
3. Consideration. The Company will provide to Employee the following (all hereinafter
referred to collectively as the “Consideration”):
| x. | Xxxxxxxxx. The equivalent of twelve (12) months base salary in the amount of Seven Hundred Seventy Five Thousand and 00/100 dollars ($775,000.00), less applicable taxes, payable in one lump sum upon the next regularly scheduled pay period after the Effective Date of this Agreement; | ||
| b. | Incentive Compensation Bonus. The Company shall pay Employee an amount equal to the Incentive Compensation bonus for the period August 1, 2006 through January 31, 2007, determined on the same basis as other similarly situated executives of the Company based on the Company’s performance for the applicable six month period (but no less than par), less applicable taxes. Said Incentive Compensation Bonus shall be paid at such time as Incentive Compensation bonuses are paid to executives, but no later than March 15, 2007; |
| c. | Medical Insurance. The Company shall pay Employee the equivalent of twelve (12) months of COBRA health care continuation costs for associate plus one coverage in the amount of Six Thousand Seven Hundred Twenty Two and 28/100 dollars ($6,722.28), less applicable taxes. Said amount is the cost of associate plus one coverage as of the Effective Date of this Agreement and will be paid in one lump sum upon the next regularly scheduled pay period after the Effective Date of this Agreement. In the event that the monthly cost of COBRA coverage should increase during the twelve month period following the Effective Date of this Agreement, Employee is responsible for any additional premiums required to purchase coverage during this period. Employee shall be responsible for the actual election and payment of any health care continuation costs subsequent to the Effective Date and shall maintain all of his rights pursuant to COBRA for continued election of coverage; | ||
| d. | Payment of any accrued but unused vacation; | ||
| e. | Subject to the Company’s Travel and Expense Policy, payment of any unreimbursed employment related expenses incurred by Employee prior to the Separation Date; | ||
| f. | Outplacement services through an executive placement firm, or reimbursement of expenses in seeking new employment, not to exceed $5,500 in cost to the Company, use of which may begin no earlier than the Effective Date of this Agreement; and | ||
| g. | Maintenance of a voicemail box at Employee’s currently assigned telephone number for a period of three months from the Separation Date. | ||
| h. | Employee shall be entitled to determine the desired treatment of the balance contained in his tax-qualified Savings and Retirement Plan according to the terms and conditions set forth in the plan. |
4. Equity Compensation. The Company shall take such action as is necessary and
advisable to accelerate the vesting of certain of the Employee’s outstanding stock options and
restricted shares as of the Effective Date, as follows:
| a. | 23,750 stock options shall fully vest as of the Effective Date; all vested stock options held by Employee shall be exercisable for a period of three (3) months following the Effective Date by broker assisted cashless exercise; and | ||
| b. | 5,658 restricted shares pursuant to which restrictions shall lapse as of the Effective Date and shall be deposited in Employee’s brokerage account, net of tax withholding, as soon as practicable following the Effective Date. |
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Except as set forth in this Paragraph 4, Employee’s outstanding stock options and restricted shares
shall continue to be governed by the terms and conditions of the Abercrombie & Fitch Co.
1998 Restatement of the 1996 Stock Option and Performance Incentive Plan, 2002 Stock Plan for
Associates and the Abercrombie & Fitch Co. 2005 Long-Term Incentive Plan and any agreements
evidencing Employee’s grants of stock options and restricted shares. The sale of shares pursuant
to the exercise of options shall be registered on a Form S-8 or other registration statement to the
same extent as such sales to similarly-situated senior executives of the Company are then subject
to an effective registration statement.
5. No Mitigation. None of the benefits provided in Paragraphs 3 and 4 will be
terminated or diminished if Employee should accept or commence other employment following the
Separation Date, so long as Employee has otherwise fully complied with the terms of this Agreement.
6. Employee Covenants.
a. Non-Disclosure and Non-Use. Employee shall not, without the written authorization
of the Chairman and Chief Executive Officer (“CEO”) of the Company, use (except for the benefit of
the Company) any Confidential and Trade Secret Information relating to the Company. Employee shall
hold in strictest confidence and shall not, without the written authorization of the Chairman and
CEO of the Company, disclose to anyone, other than directors, officers, employees and counsel of
the Company in furtherance of the business of the Company, any Confidential and Trade Secret
Information relating to the Company. For purposes of this Agreement, Confidential and Trade Secret
information includes: the general or specific nature of any concept in development, the business
plan or development schedule of any concept, vendor, merchant or customer lists or other processes,
know-how, designs, formulas, methods, software, improvements, technology, new products, marketing
and selling plans, business plans, development schedules, budgets and unpublished financial
statements, licenses, prices and costs, suppliers, and information regarding the skills,
compensation or duties of employees, independent contractors or consultants of the Company and any
other information about the Company that is proprietary or confidential. Confidential and Trade
Secret Information specifically includes, but is not limited to, the general and specific nature
of, and information related to, the development of Concept 5 and Project P.
The restrictions set forth in this Section shall not apply to information that is or becomes
generally available to the public or known within the Company’s trade or industry (other than as a
result of its wrongful disclosure by Employee), or information received on a non-confidential basis
from sources other than the Company who are not in violation of a confidentiality agreement with
the Company. This confidentiality covenant has no temporal, geographical or territorial
restriction.
Employee further represents and agrees that at and after the Separation Date he is obligated
to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”)
regarding trading shares and/or exercising options related to the Company’s stock. Employee
acknowledges that the Company has not provided opinions or legal advice to him regarding his
obligations in this respect and that it is Employee’s responsibility to seek independent legal
advice with respect to any stock or option transaction.
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Notwithstanding the foregoing, the
Company agrees: (i) to cooperate as reasonably necessary and appropriate with respect to equity
compensation instructions issued by Employee’s broker or
authorized representative, subject in all respects to applicable federal, state, local or self regulatory
entity securities laws, rules and/or regulations; and (ii) to notify Employee promptly of the
removal or lifting of the restrictions on trading in the Company’s stock imposed as a result of
Project P.
b. Non-Disparagement and Cooperation. Neither Employee nor any officer, director or
other authorized spokesperson of the Company shall state or otherwise publish anything about the
other party which would adversely affect the reputation, image or business relationships and
goodwill of the other party in its/his market and community at large. Employee shall fully
cooperate with the Company in defense of legal claims asserted against the Company and other
matters requiring the testimony or input and knowledge of Employee. If at any time Employee should
be required to cooperate with the Company pursuant to this Section, the Company agrees to reimburse
Employee for reasonable costs and expenses incurred as a result thereof. Employee agrees that he
will not speak or communicate with any party or representative of any party, who is known to
Employee to be either adverse to the Company in litigation or administrative proceedings or to have
threatened to commence litigation or administrative proceedings against the Company, with respect
to the pending or threatened legal action, unless Employee receives the written consent of the
Company to do so, or is otherwise compelled by law to do so, and then only after advance notice to
the Company.
c. Non-Competition. During the twelve (12) month period following the Separation Date
(the “Restricted Period”), Employee shall not, directly or indirectly, without the prior written
consent of the CEO, 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 entity listed on Appendix A attached to this Agreement,
and any of their subsidiaries and affiliates engaged in a business that is competitive with the
Company (“Competing Entity”); provided, however, that the “beneficial ownership” by Employee after
the Separation Date, either individually or by a “group” of which Employee is a member as such
terms are used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), of less than two percent (2%) of the voting stock of any
publicly held corporation shall not be a violation of this Paragraph 6(c).
d. Non-Solicitation. During the Restricted Period, Employee shall not, either directly
or indirectly, alone or in conjunction with another party, interfere with or harm, or attempt to
interfere with or harm, the relationship of the Company with any person who at any time was a
customer or supplier of the Company or otherwise had a business relationship with the Company.
During the Restricted Period, Employee shall not hire, solicit for hire, aid in the hire, or cause
to be hired, either as an employee, contractor or consultant, any person who is currently employed,
or was employed at any time during the six (6) month period prior thereto, as an employee,
contractor or consultant of the Company.
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e. Remedies. Employee agrees that any breach of the terms of Paragraphs 6(a) through
6(d) of this Agreement would result in irreparable injury and damage to the Company for which the
Company would have no adequate remedy at law. Employee 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 threatened breach and/or continued breach by Employee and/or any
and all persons and/or entities acting for and/or with Employee,
and without having to prove damages and to all costs and expenses incurred by the Company in
seeking to enforce its rights under this Agreement. These remedies are in addition to any other
remedies to which the Company may be entitled at law or in equity. Employee agrees that the
covenants of Employee contained herein are reasonable and the Company would not have entered into
this Agreement but for the inclusion of such covenants. Without limitation on the foregoing, the
Company may cancel or recover from Employee, and Employee shall repay promptly and forfeit, the
payments and consideration provided Employee in Paragraph 3 and 4 in the event that he violates the
covenants contained herein. The existence of any claim or cause of action by Employee 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 Agreement; provided, however
that this Paragraph shall not, in and of itself, preclude Employee from defending himself against
the enforceability of the covenants and agreements of this Agreement.
7. Confidentiality. Employee agrees not to at any time talk about, write about, or
otherwise publicize or disclose to any third party the terms of this Agreement or any fact
concerning its negotiation, execution or implementation, except with: (1) an attorney, accountant,
or other advisor engaged by Employee to advise him; (2) the Internal Revenue Service or other
governmental agency upon proper request; and (3) his immediate family, including a domestic
partner, providing that all such persons agree in advance to keep said information confidential and
not to disclose it to others.
8. Release of All Claims. Employee does hereby for himself and for each of his past,
present and future heirs, administrators, executors, representatives, agents, attorneys, assigns
and all others claiming by or through him or them, forever release and discharge the Company, and
its past, present and future shareholders, representatives, agents, servants, parents,
subsidiaries, affiliates, divisions, officers, directors, employees, insurers, successors,
predecessors, administrators, attorneys, assigns and all others claiming by or through them
(hereinafter “the Released Parties”) from any and all charges, claims, demands, judgments, actions,
causes of action, damages, debts, agreements, remedies, promises, suits, losses, obligations,
expenses, costs, attorneys’ fees, liabilities and claims for relief of every kind and nature,
whether matured or unmatured, known or unknown, direct or indirect, foreseen or unforeseen, vested
or contingent, in law, equity or otherwise, under any federal or state statute or common law, which
Employee has ever had, now has, or may have in the future, against any of the Released Parties for
or on account of any matter, cause or thing whatsoever that was or could have been asserted or that
occurred prior to the date of Employee signing this Agreement. This release shall include without
limitation all claims arising under Title VII of the Civil Rights Act of 1964, as amended, the Age
Discrimination in Employment Act, the Americans with Disabilities Act, the Family and Medical Leave
Act of 1993, the Ohio Civil Rights Act, any claim for unpaid wages, and any other federal and state
civil rights laws or laws relating to employment. The parties exclude from Employee’s release all
obligations expressly created or preserved by this Agreement, any statutory or common law rights
Employee may have with respect to indemnification as an employee and officer of the Company (and
any deductible with respect to any applicable directors and officers liability insurance maintained
by the Company), all rights Employee would have absent this Agreement in restricted shares or stock
options he currently owns, including all rights to exercise such options subsequent to the
Effective Date of this Agreement, and all funds and rights Employee has in any pension, 401 (K),
non-qualified plan or similar plan (collectively
referred to as “unreleased rights”). Any unreleased rights of Employee shall be subject to the
procedures, requirements, limitations, conditions and/or prerequisites set forth in any plan
governing said rights.
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9. Release of Employee by Company. The Company does hereby, on behalf of itself and
its agents, parents, subsidiaries, affiliates, divisions, officers, directors, employees,
predecessors, successors and assigns, forever release, requite, and discharge Employee and his
heirs, administrators, executors, agents and assigns, from any and all charges, claims, demands,
judgments, actions, causes of action, damages expenses, costs, attorneys’ fees and liabilities of
any kind whatsoever, whether known or unknown, vested or contingent, in law, equity or otherwise,
which the Company ever had, now has, or may hereafter have against Employee for or on
account of any matter, cause or thing whatsoever which has occurred prior to the date of Employee’s
signing this Agreement.
10. Age Discrimination Claims and Older Worker’s Benefit Protection Act Terms.
Employee specifically acknowledges that the release of his claims under this Agreement includes,
without limitation, waiver and release of all claims against the Company and Released Parties under
the federal Age Discrimination in Employment Act (“ADEA”), and Employee further acknowledges and
agrees that:
| a. | Employee waives his claims under ADEA knowingly and voluntarily in exchange for the commitments made herein by the Company, and that certain of the benefits provided thereby constitute consideration of value to which the Employee would not otherwise have been entitled; | ||
| b. | Employee was and is hereby advised to consult an attorney in connection with this Agreement; | ||
| c. | Employee has been given a period of 21 days within which to consider the terms of this Agreement; | ||
| d. | Employee may revoke his signature on this Agreement for a period of 7 days following his execution of this Agreement, rendering the Agreement null and void; | ||
| e. | this Agreement is written in plain and understandable language which Employee fully understands; | ||
| f. | this Agreement complies in all respects with Section 7(f) of ADEA and the waiver provisions of the federal Older Worker Benefit Protection Act; and | ||
| g. | Employee does not waive any rights or claims that may arise after the date the waiver is executed. |
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11. Complete and Absolute Defense. This Agreement constitutes, among other things, a
full and complete release of any and all claims released by either party, and it is the intention
of the parties hereto that this Agreement is and shall be a complete and absolute defense to
anything released hereunder. The parties expressly and knowingly waive their respective rights to
assert any claims against the other which are released hereunder, and covenant not to xxx the other
party or Released Parties based upon any claims released hereunder. The parties further represent
and warrant that no charges, claims or suits of any kind have been filed by either against the
other as of the date of this Agreement.
12. Non-Admission. It is understood that this Agreement is, among other things, an
accommodation of the desires of each party, and the above-mentioned payments and covenants are not,
and should not be construed as, an admission or acknowledgment by either party of any liability
whatsoever to the other party or any other person or entity.
13. Return of Property. Employee agrees that in connection with his resignation from
employment, he shall promptly return to the Company all Company documents and property in his
possession or control including, but not limited to, Personal Computer(s) and all Software,
Security Keys and Badges, Price Lists, Supplier and Customer Lists, Employee Lists, including
compensation, salary and benefit information, Files, Reports, all correspondence both internal and
external (memo’s, letters, quotes, etc.), Business Plans, Budgets, Designs, and any and all other
property of the Company; and the Company shall promptly return to Employee his personal property
and files.
14. Tax Matters. Employee agrees that he shall be exclusively liable for payment of
any and all taxes due by him in connection with the Severance and agrees to indemnify the Company
for any liability incurred because of Employee’s failure to pay such taxes, assessments,
reimbursements, or penalties, which may be assessed by any taxing authority in connection with any
payments made pursuant to this Agreement. Notwithstanding anything in this Agreement to the
contrary, the parties hereby agree that it is the intention that any payments or benefits provided
under this Agreement comply in all respects with Section 409A of the Internal Revenue Code of 1986,
as amended and any guidance issued thereunder, and this Agreement shall be interpreted accordingly.
15. Knowing and Voluntary Execution. Each of the parties hereto further states and
represents that he or it has carefully read the foregoing Agreement, consisting of eleven (11)
pages, and knows the contents thereof, and that he or it has executed the same as his or its own
free act and deed. Employee further acknowledges that he has been and is hereby advised to consult
with an attorney concerning this Agreement and that he had adequate opportunity to seek the advice
of legal counsel in connection with this Agreement. Employee also acknowledges that he has had the
opportunity to ask questions about each and every provision of this Agreement and that he fully
understands the effect of the provisions contained herein upon his legal rights.
16. Executed Counterparts. This Agreement may be executed in one or more counterparts,
and any executed copy of this Agreement shall be valid and have the same force and effect as the
originally-executed Agreement.
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17. Governing Law. The validity, construction and interpretation of this Agreement and
the rights and duties of the parties hereto shall be governed by the laws of Ohio. Any actions or
proceedings instituted under this Agreement with respect to any matters arising under or related to
this Agreement, shall be brought and tried only in the Court of Common Pleas, Franklin County,
Ohio.
18. Modification. 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 Employee
and the Company.
19. Assignability. Employee’s obligations and agreements under this Agreement shall be
binding on the Employee’s heirs, executors, legal representatives and assigns and shall inure to
the benefit of any successors and assigns of the Company. The Company may, at any time, assign this
Agreement or any of its rights or obligations arising hereunder to any party.
20. Entire Agreement. This Agreement constitutes the entire agreement between the
parties hereto in respect of the subject matter hereof and this Agreement supersedes all prior and
contemporaneous agreements between the parties hereto in connection with the subject matter hereof.
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IN
WITNESS WHEREOF, the undersigned has hereto set his hand this 12th
day of October, 2006.
WITNESSED:
/s/
Xxxxxxxx Xxxxxxx
/s/
Xxxxx Xxxxxxx
| /s/ Xxxxxx Xxxxxxxxxx | ||
| Xxxxxx Xxxxxxxxxx |
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IN
WITNESS WHEREOF, the undersigned has hereto set its hand this 16th day of
October, 2006.
WITNESSED:
WITNESSED:
|
ABERCROMBIE & FITCH MANAGEMENT CO. | |
/s/
Xxxxxxxx Xxxxxx
|
By: /s/ Xxxxx X. Xxxx | |
/s/
Xxxx Xxxxxxx
|
Its: SVP and General Counsel |
Appendix A
Aeropostale
|
J. Crew | |
American Eagle
|
Limited (all divisions) | |
Victoria’s Secret
|
Xxxxx Lauren | |
Gap (all divisions)
|
Pacific Sun | |
/s/
Xxxxxx Xxxxxxxxxx
|
/s/ Xxxxx X. Xxxx | |
Xxxxxx Xxxxxxxxxx
|
ABERCROMBIE & FITCH MANAGEMENT CO. |
