EXHIBIT 10.10
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of May 17,
2004 (the "Commencement Date"), by and between Abercrombie & Fitch Co., a
Delaware corporation (the "Company"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive")
(hereinafter collectively referred to as "the Parties").
W I T N E S S E T H:
WHEREAS, the Company desires to employ the Executive and to enter into an
agreement embodying the terms of such employment (together with its Exhibit,
this "Agreement") and the Executive desires to enter into this Agreement and to
accept such employment, subject to the terms and provisions of this 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 beginning on the Commencement Date and ending on the third anniversary of
the Commencement Date (the "Initial Term"); provided, however, that the Initial
Term shall thereafter be automatically extended for additional one-year periods
(together with the Initial Term, the "Term") unless either the Company or the
Executive gives the other written notice at least 180 days prior to the
then-scheduled expiration of the Term that such Party is electing not to so
extend 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 11 of this Agreement.
2. Employment.
(a) Position. The Executive shall be employed by the Company as the
President of the Company on the Commencement Date and Chief Operating Officer as
of the first meeting of the Board of Directors of the Company (the "Board")
following the Commencement Date. The Executive shall be the second highest
ranking executive in the Company. The Executive shall be responsible for the
day-to-day operations of the Company and exercise the authority customarily
performed, undertaken and exercised by persons employed in a similar executive
capacity. Without limiting the foregoing, the following areas of the business of
the Company and its subsidiaries will report solely to the Executive: finance,
logistics, and human resources. Store operations will report jointly to the
Executive and the Chief Executive Officer. The Executive shall report to the
Chief Executive Officer only. The Executive's principal place of employment
shall be in Columbus, Ohio and the Executive shall perform his duties
principally in Columbus and New York City.
(b) Board Membership. The Company shall cause the Executive to be
appointed to the Board at the first Board meeting following the Commencement
Date and shall
cause the Executive to be nominated for election to the Board during the Term,
subject at all times to the Company's obligations under applicable laws and
regulations.
(c) Obligations. The Executive agrees to devote his full business
time and attention to the business and affairs of the Company provided that, in
order to permit the Executive sufficient time to transition from his current
situation to the United States, during the period from the Commencement Date to
June 21, 2004, the Executive shall not be required to render full-time services
to the Company. Anything herein to the contrary notwithstanding, nothing shall
preclude the Executive from (i) serving on up to two boards of other companies,
presently Fairmont Hotel Corp., and Axalto N.V., with future board service at
other companies subject to the reasonable approval of the Board based on the
nature of the companies, which approval shall not be unreasonably withheld, (ii)
serving on the boards of directors of trade associations and/or charitable
organizations, (iii) engaging in charitable activities and community affairs,
and (iv) managing his personal investments and affairs, provided that the
activities described in the preceding clauses (i) through (iv) do not materially
interfere with the proper performance of his duties and responsibilities
hereunder.
3. Base Salary. The Company agrees to pay or cause to be paid to the
Executive commencing no later than the Commencement Date and during the Term a
base salary at the rate of $886,000 per year or such larger amount as the Board
may from time to time determine (the "Base Salary"). The Executive's Base Salary
shall be reviewed annually by the Compensation Committee of the Board, with the
first review to occur in or around January 2005, and shall be subject to
increase from time to time as approved by the Compensation Committee of the
Board. Such Base Salary shall be payable in accordance with the Company's
customary practices applicable to its executive officers.
4. 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
100% of Base Salary upon attainment of target, subject to a maximum bonus
opportunity of 200% of Base Salary, and shall be at a level commensurate with
his position.
(b) The Bonus for 2004 will be prorated based on achievement of
targets and actual commencement of employment, but will be guaranteed to be no
less than $475,000. The Bonus for 2004 will be payable at the time bonuses are
paid to the Company's executive officers in February 2005.
5. Equity Compensation.
(a) The Executive shall be entitled to participate in the Company's
equity based incentive programs, including, without limitation, the stock option
and restricted share programs, maintained by the Company, on such terms and
conditions as may be determined from time to time by the Compensation Committee
of the Board, consistent with this Agreement, and commensurate with his
position.
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(b) Commencing with 2004, the Executive shall participate in the
annual performance-based segment of the Company's 2002 Stock Plan for
Associates, as amended and restated (the "2002 Stock Plan"), or successor plan,
at a level commensurate with his position. The shares earned can vary from zero
to a maximum of double PAR value based on the Company's specific annual
financial goals and vest over four years (with 10% vesting on the first
anniversary of the grant date, 20% vesting on the second anniversary of the
grant date, 30% vesting on the third anniversary of the grant date and 40%
vesting on the fourth anniversary of the grant date) from the date they are
earned and subject to earlier vesting as provided herein.
6. Sign-on Arrangements.
(a) As soon as practicable following the Commencement Date, the
Company shall pay the Executive a signing bonus of $100,000.
(b) On the Commencement Date the Company shall grant the Executive
an option to purchase 150,000 shares of the Company's common stock pursuant to
the 2002 Stock Plan, vesting in four equal annual installments on the first four
anniversaries of the grant date at a price per share exercise price equal to the
closing price of a share of stock of the Company on the New York Stock Exchange
on the Commencement Date and subject to earlier vesting as provided herein.
(c) On the Commencement Date, the Company shall grant the Executive
20,000 restricted shares, pursuant to the 2002 Stock Plan, vesting 10% on the
grant date, 20% on the first anniversary of grant, 30% on the second anniversary
and 40% on the third anniversary, and subject to earlier vesting as provided
herein.
7. Employee Benefits. The Executive shall be entitled to participate in
all employee benefit plans, practices and programs maintained by the Company and
made available to senior level executive officers generally and as may be in
effect from time to time. The Executive's participation in such plans, practices
and programs shall be on the same basis and terms as are applicable to senior
level executive officers of the Company generally. Such level of benefits shall
be at a level commensurate with his position.
8. Other Benefits.
(a) Life Insurance.
(i) The Company shall maintain term life insurance coverage on
the life of the Executive in the amount of $8,000,000, 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 the last day of the Term and the
last day of the period during which welfare benefits are continued
pursuant to Section 12(f) of this Agreement; provided, however, that the
Company shall no longer be obligated to maintain such 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 Section 11(c) of this
Agreement) or by the Executive without Good Reason (as defined in Section
11(d) of this Agreement). Such policy shall provide for its conversion to
an
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individual policy owned by the Executive subsequent to termination of his
employment for any reason or the end of the period during which benefits
are continued pursuant to Section 12(f) of this Agreement, whichever is
later. The Executive agrees to undergo any reasonable physical examination
and other procedures as may be requested in connection with the issuance
of such policy. The policy shall be structured so that the proceeds of the
policy upon his death shall be excluded from the income of the Executive,
his estate and his beneficiaries; the Company will cooperate with the
Executive, if the Executive elects to transfer ownership of the policy to
a life insurance trust or otherwise for estate planning purposes.
(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) 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.
(c) Vacation. The Executive shall be entitled to annual paid
vacation of six weeks, in accordance with the policies periodically established
by the Board for similarly situated executive officers of the Company.
(d) Retirement Benefit. The Executive shall be provided with a
retirement benefit in accordance with the Supplemental Executive Retirement
Plan, which is attached hereto as Exhibit A. In addition, the Executive shall be
entitled to participate in all retirement benefit plans, practices and programs
maintained by the Company and made available to senior level executive officers
generally and as may be in effect from time to time. The Executive's
participation in such plans, practices and programs shall be at a level
commensurate with his position.
(e) Perquisites. The Executive shall be entitled to perquisites on
the same basis as provided to other senior level executive officers at a level
commensurate with his position. In addition, the Executive shall be provided, at
Company expense, up to two round trips to Italy per year (first class air
travel) for himself, up to four round trips to Italy per year (first class air
travel) for his spouse, and up to two round trips from Italy to Ohio per year
(economy class air travel) for each of his two children, all grossed-up for
taxes.
9. Expenses.
(a) 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.
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(b) In lieu of benefits under the Company's relocation plan, the
Executive shall be entitled to the following:
(i) In addition to the benefits provided in Section 8(e), the
Executive and his spouse shall be entitled to one "househunting trip" (as
described in the Company's relocation plan), including one round trip
(first class air travel) from Italy to the United States, for the purpose
of house hunting in New York and Columbus, with such expenses to be
grossed-up for taxes.
(ii) Reimbursed for relocation expenses, including any
applicable broker's expenses, incurred by Executive and his family,
including expenses incurred in relocating from Milan, Italy to Columbus,
Ohio and/or New York, NY, with such expenses to be grossed-up for taxes;
in the event Executive voluntarily leaves employment (without Good Reason
or due to Disability) within 12 months, Executive must repay Company for
relocation expenses on a pro-rata basis.
(iii) To compensate Executive for miscellaneous expenses
incurred in connection with his relocation, a fixed payment of $75,000,
grossed-up for taxes, which shall be paid within 60 days after the
Commencement Date;
(iv) Reimbursement for expenses of temporary housing for a
period commencing on the Commencement Date and ending not later than the
six-month anniversary of the Commencement Date, thereafter $3,000 per
month for temporary housing in Columbus, Ohio, for the next 12 months and
$10,000 per month, for housing in New York City for the Initial Term, all
such reimbursements to be grossed-up for taxes.
10. Aircraft Travel. For security purposes, the Executive shall be
provided, at the expense of the Company, with use of a private aircraft
(currently Netjets) for business and personal travel in North America,
grossed-up for taxes. Outside North America, the Executive shall be entitled to
first class air travel.
11. 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 Executive's failure 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
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felony under federal or state law, or (ii) in carrying out his duties, engages
in conduct that constitutes willful gross neglect or willful gross misconduct;
provided such plea, conviction, neglect or misconduct results in material
economic harm to the Company. 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 6 months after the Board knew or should have known
of such acts or failures to act. The Executive shall have 10 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.
The Executive may give such notices with or without conditions, including the
right to withdraw such notice if the Company does not agree there are facts
which constitute Good Reason. The Company shall have 60 days in which to cure
except in the case of (K) or (L) below. 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 appoint or continue the
Executive as President and Chief Operating 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) the failure of the Executive to be
elected or re-elected to the Board; (D) a material diminution in the Executive's
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 President and Chief Operating Officer
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of the Company; (E) a change in the reporting structure so that Executive no
longer reports directly to the CEO; (F) 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; (G)
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; (H) the Company, the Board or any person controlling the
Company requires the Executive to relocate his principal place of employment to
a location other than the Columbus, Ohio, other than on travel reasonably
required to carry out the Executive's obligations under this Agreement; (I) a
material breach of the Company of any of the provisions of this Agreement; (J)
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; (K) any termination by Executive of
his employment for any reason other than death or Disability within one-year of
a Change in Control of the Company (as defined in Section 12(h) of this
Agreement), (L) the Company's election not to renew the Term in accordance with
Section 1, (M) the representations made by the Company in Sections 16(b)(iv),
(v), (vi), or (vii) of this Agreement shall be inaccurate in any material
respect as of the date made or (N) the Company's organizational documents do not
accord that the Executive has the maximum limitation of liability as a director
of the Company, as permitted by law; 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 temporarily reassign the Executive's duties and/or
titles to another person or persons during the period 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.
Notwithstanding the foregoing, a Good Reason based on clause (M) above may only
be asserted by Executive prior to the date the Company files with the SEC its
Annual Report on form 10-K for the last fiscal year ending within the Initial
Term. 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. 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 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
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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 of Termination is given to the Executive and (ii) if the
Executive terminates his employment in accordance with Section 11(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.
(h) 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 Section 11(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.
12. Compensation Upon Termination of Employment.
(a) For Cause; Without Good Reason; Executive's Non-renewal. If
during the term of this Agreement, the Executive's employment under this
Agreement is terminated by the Company for Cause, by the Executive without Good
Reason (and other than by reason of the Executive's death or Disability) or by
the Executive's Non-renewal, 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 ((i) through (v) collectively, "Accrued Compensation"):
(i) Base Salary through the Termination Date;
(ii) 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;
(iii) any amounts which the Executive had previously deferred
(including any interest earned or credited thereon);
(iv) 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;
(v) other or additional benefits and entitlements in
accordance with applicable plans, programs and arrangements of the
Company; and
(vi) the vesting of stock options and restricted stock shall
be treated in accordance with the terms of the relevant plan; stock
options shall be exercisable for 90 days following the Termination Date or
such longer period as provided in the applicable plan.
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(vii) In addition to the foregoing, if the Executive's
employment is terminated because of the Executive's Non-renewal, 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 pro-rata bonus with respect to the fiscal year in which the
Termination Date occurs equal to the product of (A) the greater of (1) the
Executive's target bonus opportunity for that fiscal year or (2) the
actual bonus received by the Executive in any preceding 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 ("Pro-rata
Bonus");
(b) Without Cause or for Good Reason; Company Non-renewal. If the
Executive's employment hereunder is terminated by the Company without Cause
including the Company's Non-renewal or by the Executive for Good Reason, 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 the Executive a Pro-rata Bonus, at
such time as other participants in the Bonus Plan are paid their
respective bonuses in respect of that fiscal year, but only to the extent
that such Pro-rata Bonus is not payable as part of the Accrued
Compensation;
(iii) the Company shall continue to pay the Executive Base
Salary and target bonus for the remainder of the Term, but in no event
less than 18 months, based on Executive's annual Base Salary and his
target bonus for the year of his termination, in equal installments, in
accordance with the Company's customary payroll practices to its executive
officers;
(iv) the Company shall continue to pay the premiums provided
for in Section 8(a) of this Agreement for the time period set forth
therein;
(v) 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 2002 Stock 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;
(vi) all stock options granted in the Initial Term shall vest
on the Termination Date and remain exercisable for their full term, and
future grants shall be treated in accordance with their terms; and
(vii) all restricted shares and any other equity grants
granted in the Initial Term shall vest on the Termination Date, and future
grants shall be treated in accordance with their terms;
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(viii) In the event the Executive terminates his employment
for Good Reason following a Change of Control as provided in Section
11(d), the Company shall pay the benefits described in Sections 12(b)(i),
(ii) and (iii) in a lump sum.
(c) 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 12 months following
the Termination Date and 80% of Base Salary for the second 12 months
following the Termination Date; provided, however, that such Base Salary
shall be reduced by the amount of any benefits the Executive receives
during such 12 month periods under the Company's relevant long-term
disability plan or plans or under Section 12(c)(iii);
(iii) the Executive shall be entitled to benefits under the
Company's long-term disability plan or plans in an amount at least equal
to $20,000 per month during the period of his Disability and ending at age
65;
(iv) the Company shall pay the Executive a Pro-rata Bonus, at
such time as other participants in the Bonus Plan are paid their
respective bonuses in respect of that fiscal year, but only to the extent
that such Pro-rata Bonus is not payable as part of the Accrued
Compensation;
(v) the Company shall continue to pay the premiums provided
for in Section 8(a) of this Agreement for the time period set forth
therein;
(vi) stock options shall vest on the Termination Date and
remain exercisable for a period equal to the greater of (X) nine months
after the date on which the Executive receives benefits under the
Company's long-term disability program and (Y) the period specified in the
terms of the grant; and
(vii) restricted stock and other equity awards shall vest on
the Termination Date.
(d) 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
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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;
(iii) the Company shall provide such assistance as is
necessary to facilitate the payment of the life insurance proceeds
provided for in Section 8(a) of this Agreement to the Executive's
beneficiary or beneficiaries;
(iv) stock options shall vest on the Termination Date and
shall remain exercisable for a period equal to the greater of (X) one year
thereafter and (Y) the period specified in the terms of the grant; and
(v) restricted stock and other equity awards shall vest on the
Termination Date.
(e) Determination of Base Salary. For purposes of this Section 12,
Base Salary shall be determined by the Base Salary at the annualized rate in
effect on the Termination Date.
(f) Continuation of Employee Benefits. Notwithstanding anything to
the contrary, in addition to any amounts payable above, 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 and pension
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 or for which the Executive is receiving
payment of Base Salary pursuant to Section 12(b) or Section 12(c) or
benefits under Section 12(c)(iii) of this Agreement; or
(ii) For a period of one year following the Termination Date
if the Executive's employment terminates due to his death.
In each case, COBRA benefits will commence after the applicable period provided
above has completed. Notwithstanding the foregoing, the Company's obligation to
provide welfare benefits under this Section 12(f) shall be 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 (and/or his family members who are
participating in the applicable welfare plans immediately prior to the
Termination Date) is precluded from continuing full participation in any
employee benefit plan, program or arrangement as contemplated by this Section
12(f), the Executive (and/or his family members who are participating in the
applicable welfare plans immediately prior to the Termination Date) 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.
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(g) 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 Section 12(f) of this Agreement.
(h) 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 ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇
▇▇▇"). 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 transaction or series of related
transactions having, directly or indirectly, the same effect as any of the
foregoing.
(i) Notwithstanding anything to the contrary, in addition to any
amounts payable above, Executive shall be entitled to the benefits provided
under the Supplemental Executive Retirement Plan.
(j) Release. In exchange for the payment by the Company of the
amounts contemplated by Section 12(b) of this Agreement, the Executive agrees to
execute such form of release with respect to claims for such payment as is
mutually acceptable to the Company and the Executive.
12
13. 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 Section 13(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)
the following companies: American Eagle Outfitters, Gap Inc., J Crew, Aero
Postale or Limited Brands, or any of their affiliates in substantially the same
markets and market segments as the foregoing companies; 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 of these corporations
which are publicly held 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, 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.
(d) 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.
(e) Remedies. The Executive agrees that any breach of the terms of
this Section 13 would result in irreparable injury and damage to the Company for
which the
13
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 Section 13(e)
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 13 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 13; 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 13.
The Company hereby waives any right it might have to claim that the
Executive should be precluded from accepting employment or otherwise providing
services on the basis that such employment or performance of services will
inevitably result in unauthorized disclosure in violation of Section 13(a); this
waiver shall not preclude the Company from asserting any claim for damages it
may have for a violation of Section 13(a), nor from seeking equitable relief to
enjoin Executive from making actual disclosures in violation of Section 13(a).
14. 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 or would be 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 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).
14
(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 Section 14(a), shall be made by an
independent accounting firm selected by the Company from among the largest four
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 ("Overpayment"). 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.
15. Indemnification; Insurance; Limitation of Liability.
(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 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 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 costs and
expenses incurred by him in connection with a Proceeding
15
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 by law 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,
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 15(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, 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.
16. Representations.
(a) The Executive represents and warrants that he has the free and
unfettered right to enter into this Agreement and to perform his obligations
under it and that he knows of no agreement between him and any other person,
firm or organization, or any law or regulation, that would be violated by the
performance of his obligations under this Agreement. The Executive agrees that
he will not use or disclose any confidential or proprietary information of any
prior employer in the course of performing his duties for the Company or any of
its affiliates.
(b) The Company represents that (i) the execution of this agreement
and the provision of all benefits and grants provided herein have been duly
authorized by the Company, including, where necessary, by the Board and
Compensation Committee, (ii) the execution, delivery and performance of this
Agreement does not violate any law, regulation, order, decree, agreement, plan
or corporate governance document of the Company, (iii) upon the execution and
delivery of this agreement, it shall be the valid and binding obligation of the
Company enforceable in accordance with its terms, (iv) there are no material
investigations by any governmental authority of the Company or its affiliates
pending, or to the actual knowledge of the Company, threatened, and Company
senior management knows of no facts that would warrant such investigation, (v)
there are no facts or circumstances that may result in a material financial
restatement, (vi) there are no significant deficiencies in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize, and report financial data and there is no
weakness in internal financial controls that would be required by Section 302 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act to be reported to the Company's
16
auditors, and (vii) there is no fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls.
17. 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.
18. Arbitration. Except with respect to the remedies set forth in Section
13(e) hereof, if in the event of any controversy or claim between the Company or
any of its affiliates 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 18, 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.
19. Fees and Expenses. The Company shall pay the legal fees reasonably
incurred by the Executive in connection with the negotiation and execution of
this Agreement up to a maximum of $25,000, payable upon submission of the
billing statement or paid receipt for such services rendered by the Executive's
counsel. In addition, 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 the claim by the Executive is made in
good faith.
17
20. 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:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o A. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
A. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Cleary, Gottlieb, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
To the Company:
Abercrombie & Fitch Co.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
21. 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.
22. 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.
23. 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.
18
24. 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.
25. 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.
26. 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.
19
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/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Executive Officer
THE EXECUTIVE:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
20
EXHIBIT A
ABERCROMBIE & FITCH CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
EFFECTIVE MAY 17, 2004
ABERCROMBIE & FITCH CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ARTICLE 1.00
PURPOSE
Effective May 17, 2004, Abercrombie & Fitch Co. establishes the
Abercrombie & Fitch Co. Supplemental Executive Retirement Plan II ("Plan") to
provide additional retirement income to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 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.
ARTICLE 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.
SECTION 2.01 ACTUARIAL EQUIVALENT: The determination of one benefit as
being equal to another benefit payable at a different time and/or in a different
form using actuarial assumptions in accordance with the requirements of Code
Section 417(e)(3)(A), as amended, and any implementing regulations, and based on
the following: the applicable mortality table set forth in Rev. Rul. 95-6 or
such other regulations as the IRS may issue and the composite corporate bond
rate for the month preceding the commencement of payments under this Plan, as
published by the IRS pursuant to the requirements of the Pension Funding Equity
Act, enacted on April 10, 2004.
SECTION 2.02 AFFILIATE: Any entity that is related, through common control
with the Company.
SECTION 2.03 BASE RETIREMENT BENEFIT: A monthly annuity of $8,333.33
commencing at age 57 and payable for the life of the Participant.
SECTION 2.04 BOARD: The Company's board of directors.
SECTION 2.05 CAUSE: As defined in and determined pursuant to the
employment agreement between the Participant and the Company dated May 17, 2004
(the "Employment Agreement").
SECTION 2.06 CODE: The Internal Revenue Code of 1986, as amended.
SECTION 2.07 COMMITTEE: The Company's Compensation Committee.
1
SECTION 2.08 COMPANY: Abercrombie & Fitch Co., a Delaware corporation, and
any successor to it.
SECTION 2.09 EFFECTIVE DATE: Commencement Date as defined in the
Employment Agreement.
SECTION 2.10 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.
SECTION 2.11 PARTICIPANT: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 2.12 PLAN: The Abercrombie & Fitch Co. Supplemental Executive
Retirement Plan II, as described in this document and any amendments to it.
SECTION 2.13 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 a Termination of 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.
ARTICLE 3.00
PARTICIPATION
The Participant may enter the Plan on the Effective Date but only after
completing an Enrollment Form.
ARTICLE 4.00
PLAN BENEFIT
SECTION 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] TERMINATION OF EMPLOYMENT AT OR AFTER AGE 57. If the Participant
has a Termination of Employment other than due to death or Cause at or after age
57, he will receive a monthly benefit commencing on Termination of Employment
for life equal to the Actuarial Equivalent of the Base Retirement Benefit.
[2] TERMINATION OF EMPLOYMENT BEFORE ATTAINING AGE 57. If the
Participant has a Termination of Employment other than due to death or Cause
prior to age 57, he will receive a monthly benefit commencing on Termination of
Employment for life equal to the Actuarial Equivalent of the Base Retirement
Benefit on his Termination of Employment
2
multiplied by a percentage based on his age upon Termination of Employment equal
to the percentage under the following table:
Termination of Employment on or After Age Percentage
----------------------------------------- ----------
53 20%
54 40%
55 60%
56 80%
57 100%
Notwithstanding the foregoing, if the Executive is terminated by the Company
without Cause, by the Executive for Good Reason, or as a result of the Company's
Non-renewal, or a result of a Termination of Employment by reason of Disability
or there is a Change in Control (as such terms are defined in the Employment
Agreement) the percentage shall be 100%.
[3] PRE-RETIREMENT BENEFIT. If the Participant dies prior to the
date his retirement benefits commence hereunder, his surviving spouse, if any,
shall receive a monthly benefit for her life equal to the amount that she would
have received had the Participant had a Termination of Employment on the day
prior to the day of his death, commenced receiving benefits hereunder in the
form of a joint and 100% survivor annuity with his surviving spouse, and then
died.
[4] OTHER TERMINATION OF EMPLOYMENT. The Participant will receive no
Plan benefit if he is terminated for Cause prior to a Change in Control,
regardless of his age at the time Termination of Employment for Cause occurs.
SECTION 4.02 FORM OF PAYMENT. Any benefit payable under Section 4.01 will
be paid in monthly installments beginning on the date of Termination of
Employment and ending on the last 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. Notwithstanding the foregoing, the Participant
may elect an optional form of benefit that is the Actuarial Equivalent of the
Base Retirement Benefit, including a joint and survivor annuity, a life annuity
with a term certain, and other forms generally provided under insurance
contracts, and may, in lieu of the commencement date of the benefits prescribed
herein, elect a later commencement date, not past age 65.
ARTICLE 5.00
TAXES
SECTION 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
3
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.
SECTION 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.
SECTION 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.
ARTICLE 6.00
ADMINISTRATION
SECTION 6.01 APPOINTMENT OF COMMITTEE. The Plan will be administered by
the Committee.
SECTION 6.02 POWERS AND DUTIES. 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;
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[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.
SECTION 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.
SECTION 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.
SECTION 6.05 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.
SECTION 6.06 RESOLUTION OF DISPUTES. If, in the event of any controversy
or claim between the Company or any of its Affiliates and the Participant as to
the benefits due hereunder, the dispute shall be resolved in the manner provided
for and as determined under the Employment Agreement.
ARTICLE 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.
ARTICLE 8.00
MERGER OF PLAN; SUCCESSOR EMPLOYER
SECTION 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.
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SECTION 8.02 SUCCESSOR EMPLOYER. If the Company dissolves, reorganizes,
merges into or consolidates with another business entity, provision will 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.
ARTICLE 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.
ARTICLE 10.00
MISCELLANEOUS
SECTION 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.
SECTION 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.
SECTION 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, reasonably 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 care and maintenance of the Participant who demonstrates to the
satisfaction of the Committee the propriety of those
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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.
SECTION 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.
SECTION 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.
SECTION 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.
SECTION 10.07 ONE PLAN. This Plan may be executed in any number of
counterparts, each of which will be deemed to be an original.
SECTION 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.
SECTION 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.
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IN WITNESS WHEREOF, the undersigned authorized officer of the Company has
executed this Plan to be effective as of May 17, 2004.
ABERCROMBIE & FITCH CO.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chairman & CEO
Date: May 17, 2004
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ABERCROMBIE & FITCH CO.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ENROLLMENT FORM
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Soc. Sec. No.: XXX XX XXXX
Date of Birth: 01-30-1952
Address:________________________________________________________________________
________________________________________________________________________________
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/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
__________________________________________
Name (please print): ▇▇▇▇▇▇ ▇▇▇▇▇▇
Date signed: May 17, 2004
Received by Committee on:____________________________
By:__________________________________________________
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