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EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement")
is
entered into as of August 15, 2005, by and
between Abercrombie & Fitch Co., a
Delaware corporation (the "Company"), and
Michael S. Jeffries (the "Executive")
(hereinafter collectively referred to as
"the parties").
W I T N E S S E T H :
WHEREAS, the Executive has been employed by the Company as the
Chairman
of the Board of the Company since May 1998
and as Chief Executive Officer of the
Company since February 1992 and served as
President of the Company from February
1992 until May 1998; and
WHEREAS, the Executive is experienced in all phases of the
Company's
business and possesses an intimate
knowledge of the business and affairs of the
Company and its policies, procedures,
methods and personnel; and
WHEREAS, the Company has determined that it is essential and in
its
best interests to retain the services of
its key management personnel and to
ensure their continued dedication and
efforts; and
WHEREAS, the Board of Directors of the Company (the "Board")
has
determined that it is in the best interest
of the Company to secure the
continued services and employment of the
Executive for the balance of the
Executive's career and the Executive is
willing to render such services on the
terms and conditions set forth herein;
and
WHEREAS, the Board has determined that it is in the best interest
of
the Company to incentivize the Executive to
train and develop management who
will be able to conduct the business of the
Company successfully following the
retirement of the Executive; and
WHEREAS, the parties entered into a written Employment Agreement on
May
13, 1997 (the "1997 Employment Agreement"),
which the parties amended and
restated in its entirety pursuant to a
written Amended and Restated Employment
Agreement (the "2003 Employment Agreement")
between the parties with an
effective date of January 30, 2003 (the
"Effective Date"); and
WHEREAS, the Court of Chancery of the State of Delaware granted
approval on June 14, 2005 to a settlement
agreement in the action titled In Re
Abercrombie & Fitch Co. Shareholder
Derivative Litigation (the "Settlement
Agreement"); and
WHEREAS, the terms of the Settlement Agreement provide that the
Executive and the Company shall amend the
2003 Employment Agreement in certain
respects; and
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WHEREAS, the parties wish to amend and restate in its entirety the
2003
Employment Agreement to reflect the terms
contained in the Settlement Agreement
in respect of the changes to be made to the
2003 Employment Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and promises of the parties
contained herein, the parties, intending
to be legally bound, hereby agree as
follows:
1. Term. The term of employment under this Agreement shall be for
the
period commencing on May 13, 1997 (the
"Commencement Date") and ending on
December 31, 2008 (the "Term").
Notwithstanding the foregoing, the Term shall
end on the date on which the Executive's
employment is earlier terminated by
either party in accordance with the
provisions of Section 9 of this Agreement.
2. Employment.
(a) Position. The Executive shall be employed by the Company
as the Chairman of the Board and Chief
Executive Officer of the Company. The
Executive shall perform the duties,
undertake the responsibilities and exercise
the authority customarily performed,
undertaken and exercised by persons
employed in a similar executive capacity.
The Executive shall report only to the
Board.
(b) Obligations. The Executive agrees to devote his full
business time and attention to the business
and affairs of the Company. The
foregoing, however, shall not preclude the
Executive from serving on corporate,
civic or charitable boards or committees or
managing personal investments, so
long as such activities do not interfere
with the performance of the Executive's
responsibilities hereunder.
3. Base Salary. The Company agrees to pay or cause to be paid to
the
Executive commencing no later than the
Effective Date and during the Term a base
salary at the rate of $1,000,000 per year
or such larger amount as the Board may
from time to time determine (the "Base
Salary"). Such Base Salary shall be
payable in accordance with the Company's
customary practices applicable to its
executive officers.
4. Equity Compensation.
(a) The Executive shall be entitled to participate in the
stock-based employee benefit plans,
including, without limitation, the 1998
Restatement of the Abercrombie & Fitch
Co. Stock Option and Performance
Incentive Plan (the "Stock Incentive Plan")
and the Abercrombie & Fitch Co. 2002
Stock Option Plan for Associates (the "2002
Stock Option Plan") maintained by
the Company, on such terms and conditions
as may be determined from time to time
in the discretion of the Compensation
Committee of the Board; provided, however,
that the Executive shall not receive any
award of Company stock options during
the 2005 and 2006 calendar years.
(b) In exchange for the Executive agreeing to forego
participation, in respect of each fiscal
year of the Company ending after
February 3, 2003, in the Company's
program
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pursuant to which executive officers of the
Company are eligible to receive
annual grants of restricted shares under
the Stock Incentive Plan (or any other
stock-based employee benefit plan
maintained by the Company), on January 30,
2003, the Executive was granted a career
share award representing the right to
receive 1,000,000 shares of Class A Common
Stock, par value $0.01 per share (the
"Class A Common Stock"), of the Company
(the "Career Share Award") in accordance
with the terms of this Agreement.
(i) The
Career Share Award was granted under the
Stock Incentive Plan and shall be adjusted in respect of the number
of
shares of Class A Common Stock which may be received by the
Executive
thereunder to prevent dilution or enlargement of the
Executive's
rights, in the event of certain changes in the capitalization of
the
Company, in a manner consistent with the provisions of Article 16
of
the Stock Incentive Plan.
(ii) Subject to the provisions of Subsections
10(b)(vi), 10(d)(iv) and 10(e)(iv) of this Agreement, the Career
Share
Award shall become vested on December 31, 2008 as to all 1,000,000
of
the shares of Class A Common Stock, provided that the Executive
remains
continuously employed by the Company through such date. A stock
certificate or other appropriate documentation evidencing the
shares
shall be delivered to the Executive on March 31st of the calendar
year
immediately following the calendar year in which the
Executive's
employment is terminated and the Executive shall thereupon become
the
holder of those shares of Class A Common Stock. Until such time as
the
stock certificate or other appropriate documentation evidencing
such
shares shall have been issued, the Executive shall have no rights
in
respect of such shares.
(iii) Notwithstanding the foregoing, upon the
occurrence of a Change of Control (as defined in Subsection 10(i)
of
this Agreement), the Career Share Award shall become vested as to
all
1,000,000 of the shares of Class A Common Stock, and a stock
certificate or other appropriate documentation evidencing such
shares
shall be delivered to the Executive upon such Change of Control or
as
soon thereafter as practicable.
(iv) The Executive may not transfer, sell, pledge,
hypothecate, or otherwise dispose of the shares underlying the
Career
Share Award until the first trading day on the New York Stock
Exchange
immediately following the first anniversary of the date he ceases
to be
an executive officer of the Company (the "Career Share Award
Holding
Period") and any share certificates representing such shares shall
be
appropriately legended to reflect this restriction.
(c) In the event the Executive is found by a court of
competent jurisdiction to have materially
breached any of the material terms of
Section 11 of this Agreement during the
period the Executive was employed by the
Company or during the one year period
thereafter, the Career Share Award granted
to the Executive pursuant to Subsection
4(b) of this Agreement shall be
immediately forfeited by the Executive
effective as of the date on which the
breach occurred, unless forfeited sooner by
operation of any other provision of
this Agreement, and the Executive shall
have no further rights in respect
thereof. If any of the shares of Class
A
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Common Stock of the Company which the
Executive shall have the right to receive
in accordance with the terms of the Career
Share Award shall have been delivered
to the Executive as a result of the vesting
of the Career Share Award or any
portion thereof in accordance with the
terms of this Agreement prior to the date
on which the breach occurred, such shares
of Class A Common Stock shall be
forfeited by the Executive effective the
date on which the breach occurred and
such shares shall be transferred and
delivered by the Executive to the Company
without any payment therefor by the
Company. Notwithstanding the foregoing, the
provisions of this Subsection 4(c) shall
not apply if a Change of Control (as
defined in Subsection 10(i) of this
Agreement) has occurred or if the
Executive's employment has been terminated
by the Company without Cause (as
defined in Subsection 9(c) of this
Agreement) or by the Executive with Good
Reason (as defined in Subsection 9(d) of
this Agreement).
(d) The Executive hereby agrees that, until the expiration of
the Career Share Award Holding Period, the
Executive shall at all times continue
to hold and shall not transfer, sell,
pledge, hypothecate or otherwise dispose
of one half of the "Profit Shares" (as
defined below) received from the first
one million (1,000,000) Company stock
options exercised by the Executive
following April 8, 2005. "Profit Shares"
shall mean the number of shares
determined by dividing (i) the excess of
(A) the aggregate market value of the
shares of Class A Common Stock acquired
upon such exercise over (B) the
aggregate purchase price of the shares of
Class A Common Stock plus applicable
tax withholding by (ii) the market value of
one share of Class A Common Stock on
the date of exercise.
5. Employee Benefits. Except as provided in Subsections 4(a) and
4(b)
of this Agreement, the Executive shall be
entitled to participate in all
employee benefit plans, practices and
programs maintained by the Company and
made available to executive officers
generally and as may be in effect from time
to time. Except as provided in Subsections
4(a) and 4(b) of this Agreement, the
Executive's participation in such plans,
practices and programs shall be on the
same basis and terms as are applicable to
executive officers of the Company
generally.
6. Bonus.
(a) The Executive shall be entitled to participate in the
Abercrombie & Fitch Co. Incentive
Compensation Performance Plan (the "Bonus
Plan") or any successor to the Bonus Plan
on such terms and conditions as may be
determined from time to time by the
Compensation Committee of the Board,
provided that the Executive's annual target
bonus opportunity shall be at least
120% of Base Salary upon attainment of
target, subject to a maximum bonus
opportunity of 240% of Base Salary.
(b) Subject to the provisions of Subsections 10(a),
10(b)(vii), 10 (c)(vi), 10(d)(v) and
10(e)(v) of this Agreement, if the
Executive shall remain employed by the
Company in the capacity of Chairman and
Chief Executive Officer through December
31, 2008, the Executive shall also be
entitled to receive a bonus of up to $6
million (the "Stay Bonus"), provided,
however, that the actual amount of the Stay
Bonus, if any, earned by the
Executive shall be determined as
follows:
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(i) 100% of the Stay Bonus if and only if the Company
achieves cumulative growth in earnings per share ("EPS") from
February
1, 2005 through January 31, 2009 (the "Performance Period") of
13.5%,
which equates to $12.70 over the entire Performance Period (the
"Earnings Target");
(ii) 50% of the Stay Bonus if and only if the Company
achieves cumulative growth in EPS during the Performance Period of
at
least 10.5%, which equates to $11.83 over the entire Performance
Period
(the "Earnings Threshold Target");
(iii) Between 50% and 100% of the Stay Bonus if the
Company achieves cumulative growth in EPS during the Performance
Period
between the Earnings Threshold Target and the Earnings Target, with
the
actual amount equal to $3,000,000 plus the product of (A) the
fraction
obtained by dividing (1) the excess of (x) actual cumulative growth
in
EPS during the Performance Period over (y) the Earnings
Threshold
Target by (2) the excess of (x) the Earnings Target over (y)
the
Earnings Threshold Target, and (B) $3,000,000; or
(iv) 0% of the Stay Bonus (except pursuant to Section
10) if the Company's actual cumulative growth in EPS during the
Performance Period is less than the Earnings Threshold Target.
(c) In determining whether the Company meets the Earnings
Target and/or the Earnings Threshold
Target, the following considerations shall
apply:
(i) appropriate adjustments shall be made to account
for any increases or decreases in the number of outstanding shares
of
the Company's Class A Common Stock during the Performance
Period;
(ii) the Company's EPS during the Performance Period
shall be calculated without including the effects of any one-time
or
extraordinary charges; and
(iii) appropriate adjustments shall be made to
account for the effects on the Company's EPS of Financial
Accounting
Standards Board's Statement of Financial Accounting Standards No.
123
(revised 2004), Share-Based Payment (Statement No. 123R).
7. Other Benefits.
(a) Life Insurance.
(i) The Company shall maintain term life insurance
coverage on the life of the Executive in
the amount of $10,000,000, the proceeds
of which shall be payable to the
beneficiary or beneficiaries designated by the
Executive. The Company shall pay the
premiums with respect to such term life
insurance policy for the period commencing
on the Commencement Date and ending
on the later to occur of December 31, 2008
and the last day of the period during
which welfare benefits are continued
pursuant to Subsection 10(g) of this
Agreement; provided, however, that the
Company shall no longer be obligated to
maintain such
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coverage and pay such premiums in the event
that the Executive's employment is
or was terminated by the Company for Cause
(as defined in Subsection 9(c) of
this Agreement) or by the Executive without
Good Reason (as defined in
Subsection 9(d) of this Agreement). Such
policy shall provide for its conversion
to an individual policy owned by the
Executive subsequent to termination of his
employment. The Executive agrees to undergo
any reasonable physical examination
and other procedures as may be necessary to
maintain such policy.
(ii) During the term of this Agreement, the Company
shall be entitled to maintain a "key man"
term life insurance policy on the life
of the Executive, the proceeds of which
shall be payable to the Company or its
designees. The Executive agrees to undergo
any reasonable physical examination
and other procedures as may be necessary to
maintain such policy.
(b) Expenses. The Executive shall be entitled to receive
prompt reimbursement of all expenses
reasonably incurred by him in connection
with the performance of his duties
hereunder or for promoting, pursuing or
otherwise furthering the business or
interests of the Company, in each case in
accordance with policies established by the
Board from time to time and upon
receipt of appropriate documentation.
(c) Office and Facilities. The Executive shall be provided
with an appropriate office and with such
secretarial and other support
facilities as are commensurate with the
Executive's status with the Company and
adequate for the performance of his duties
hereunder.
(d) Vacation. The Executive shall be entitled to annual
vacation in accordance with the policies
periodically established by the Board
for similarly situated executive officers
of the Company.
(e) Retirement Benefit. The Executive shall be provided with a
retirement benefit in accordance with the
Abercrombie & Fitch Co. Supplemental
Executive Retirement Plan (Michael S.
Jeffries) in the form in effect from time
to time (the "SERP") which is attached
hereto as Exhibit A.
(f) Perquisites. The Executive shall be entitled to
perquisites on the same basis as provided
to other senior level executive
officers.
8. Aircraft Travel. For security purposes, the Executive shall
be
provided, at the expense of the Company,
with use of a private aircraft for
business and personal travel in North
America. Outside North America, the
Executive shall be entitled to first class
air travel.
9. Termination.
(a) Death. The Executive's employment hereunder shall
terminate upon the Executive's death.
(b) Disability. Either the Executive or the Company shall be
entitled to terminate the Executive's
employment for "Disability" by giving the
other party a Notice of Termination (as
defined below). For purposes of this
Agreement, "Disability" shall mean the
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Executive's inability to perform his duties
for a period of 180 consecutive days
as a result of physical or mental
impairment, illness or injury, and such
condition, in the opinion of a medical
doctor selected by the Company and
reasonably acceptable to the Executive or
his legal representative, is total and
permanent.
(c) Cause. The Company shall be entitled to terminate the
Executive's employment for "Cause." For
purposes of this Agreement, "Cause"
shall mean that the Executive (i) pleads
"guilty" or "no contest" to or is
convicted of an act which is defined as a
felony under federal or state law, or
(ii) engages in willful misconduct which
could reasonably be expected to harm
the Company's business or its reputation.
For this purpose, an act or failure to
act shall be considered "willful
misconduct" only if done, or omitted to be
done, by the Executive in bad faith and
without a reasonable belief that such
act or failure to act was in the best
interests of the Company.
The Executive's employment with the Company shall not be
terminated for Cause unless he has been
given written notice by the Board of its
intention to so terminate his employment (a
"Preliminary Notice of Cause"), such
notice (i) to state in detail the
particular act or acts or failure or failures
to act that constitute the grounds on which
the proposed termination for Cause
is based and (ii) to be given within six
months of the Board's learning of such
acts or failures to act. The Executive
shall have ten days after the date that
the Preliminary Notice of Cause is given in
which to cure such conduct, to the
extent such cure is possible. If the
Executive fails to cure such conduct, the
Executive shall be entitled to a hearing
before the Board, and to be accompanied
by his counsel, at which he shall be
entitled to contest the Board's findings.
Such hearing shall be held within 15 days
of notice to the Company by the
Executive, provided he requests such
hearing within 30 days of the Preliminary
Notice of Cause. If the Executive fails to
request such hearing within the
30-day period specified in the preceding
sentence, his employment shall be
terminated for Cause effective upon the
expiration of such period, and the
Preliminary Notice of Cause shall be deemed
to constitute a Notice of
Termination. If the Executive requests such
hearing and, within 10 days
following such hearing, the Executive is
furnished with a copy of a resolution,
duly adopted by the affirmative vote of a
majority of the members of the Board,
finding that in the good-faith opinion of
the Board, the Executive was guilty of
the conduct constituting Cause as specified
in the Preliminary Notice of Cause,
the Executive's employment shall be
terminated for Cause upon his receipt of
such resolution, and such resolution shall
be deemed to constitute a Notice of
Termination. Any such resolution shall be
accompanied by a certificate of the
Secretary or another appropriate officer of
the Company which shall state that
such resolution was duly adopted by the
affirmative vote of a majority of the
members of the Board at a duly convened
meeting called for such purpose.
(d) Good Reason. The Executive may terminate his employment
hereunder for "Good Reason" by delivering
to the Company (i) a Preliminary
Notice of Good Reason (as defined below),
and (ii) not earlier than 30 days from
the delivery of such Preliminary Notice of
Good Reason, a Notice of Termination.
For purposes of this Agreement, "Good
Reason" shall mean the occurrence of any
of the following without the Executive's
prior written consent: (A) the failure
to continue the Executive as Chairman of
the Board and Chief Executive Officer
of the Company; (B) the failure of the
Board to nominate the Executive for
election to the Board at the Company's
annual meeting of stockholders; (C) a
material diminution in the Executive's
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duties, or the assignment to the Executive
of duties materially inconsistent
with, or the failure to assign to the
Executive duties which are materially
consistent with, his duties, positions,
authority, responsibilities and
reporting requirements as set forth in
Section 2 of this Agreement, or the
assignment of duties which materially
impair the Executive's ability to function
as the Chairman and Chief Executive Officer
of the Company; (D) a reduction in
or a material delay in payment of the
Executive's total cash compensation and
benefits from those required to be provided
in accordance with the provisions of
this Agreement; (E) the failure of the
Company to implement the SERP, a material
reduction in the benefits to be provided
under the SERP or an adverse change in
the terms and conditions of the SERP; (F)
the Company, the Board or any person
controlling the Company requires the
Executive to be based outside of the United
States, other than on travel reasonably
required to carry out the Executive's
obligations under this Agreement; or (G)
the failure of the Company to obtain
the assumption in writing of its obligation
to perform this Agreement by any
successor to all or substantially all of
the assets of the Company not later
than the effective date of a merger,
consolidation, sale or similar transaction;
provided, however, that "Good Reason" shall
not include (X) acts not taken in
bad faith which are cured by the Company in
all respects not later than 30 days
from the date of receipt by the Company of
a written notice from the Executive
identifying in reasonable detail the act or
acts constituting "Good Reason" (a
"Preliminary Notice of Good Reason") or (Y)
acts taken by the Company to
reassign the Executive's duties and/or
titles to another person or persons if
the Executive has suffered a physical or
mental infirmity which renders him
unable to substantially perform his duties
under this Agreement, provided that
any such acts may be taken by the Company
only after receiving an opinion of a
physician reasonably acceptable to the
Executive or his legal representative
stating that there is no reasonable
likelihood that the Executive will be able
to return to full-time employment with the
Company performing his duties
hereunder within 180 days. A Preliminary
Notice of Good Reason shall not, by
itself, constitute a Notice of
Termination.
(e) Without Cause. The Company may terminate the Executive's
employment hereunder, without Cause, at any
time and for any reason (or for no
reason) by giving the Executive a Notice of
Termination.
(f) Voluntary; Retirement. The Executive may terminate his
employment hereunder at any time and for
any reason other than Good Reason or
Disability (or for no reason) by giving the
Company a Notice of Termination.
Such voluntary termination shall be a
"Retirement" and such termination shall
not be deemed a breach of this
Agreement.
(g) Notice of Termination. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice
which indicates the specific
termination provision in this Agreement
relied upon and which sets forth in
reasonable detail, if applicable, the facts
and circumstances claimed to provide
a basis for termination of the Executive's
employment under the provision so
indicated. For purposes of this Agreement,
no purported termination of
employment which requires a Notice of
Termination shall be effective without
such Notice of Termination. The Termination
Date (as defined below) specified in
such Notice of Termination shall be no less
than two weeks from the date the
Notice of Termination is given; provided,
however, that (i) if the Executive's
employment is terminated by the Company due
to Disability, the date specified in
the Notice of Termination shall be at least
30 days from the date the Notice
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of Termination is given to the Executive
and (ii) if the Executive terminates
his employment in accordance with
Subsection 9(f) of this Agreement, the date
specified in the Notice of Termination
shall be at least 30 days from the date
the Notice of Termination is given to the
Company.
(i) Termination Date. "Termination Date" shall mean the date
of the termination of the Executive's
employment with the Company and
specifically (i) in the case of the
Executive's death, his date of death; (ii)
in the case of a termination of the
Executive's employment for Cause, the
relevant date specified in Subsection 9(c)
of this Agreement; (iii) in the case
of the expiration of the Term of this
Agreement in accordance with Section 1,
the date of such expiration; and (iv) in
all other cases, the date specified in
the Notice of Termination.
10. Compensation Upon Termination of Employment.
(a) For Cause; Without Good Reason; Retirement. If during the
term of this Agreement, the Executive's
employment under this Agreement is
terminated by the Company for Cause, by the
Executive other than for Good Reason
and other than by reason of the Executive's
death or Disability or by the
Executive on account of his Retirement, (i)
the Company's sole obligation
hereunder shall be to pay the Executive the
following amounts earned hereunder
but not paid as of the Termination Date
(collectively, "Accrued Compensation"):
(A) Base
Salary through the Termination Date;
(B) any other
compensation which has been earned, accrued or is
owing, under the terms of the applicable plan, program or
practice, to the Executive as of the Termination Date but not
paid, including, without limitation, any incentive awards
under the Bonus
Plan;
(C) any
amounts which the Executive had previously deferred
(including any interest earned or credited thereon);
(D)
reimbursement of any and all reasonable expenses incurred in
connection with the Executive's duties and responsibilities
under this Agreement in accordance with policies established
by the Board from time to time and upon receipt of appropriate
documentation; and
(E) other or
additional benefits and entitlements in accordance
with applicable plans, programs and arrangements of the
Company; and
(ii) subject to the provisions of
Subsection 4(b) of this Agreement, the Career
Share Award granted to the Executive
pursuant to Subsection 4(b) of this
Agreement shall be immediately forfeited by
the Executive effective on the
Termination Date and the Executive shall
have no further rights in respect
thereof. Notwithstanding the foregoing, if
the Executive terminates his
employment with the Company in accordance
with Subsection 9(f) of this Agreement
after a Change of Control (as defined in
Subsection 10(i) of this Agreement),
the Company shall also be obligated to pay
to the Executive a Stay Bonus in an
amount equal to (A) $6 million if the
Termination Date is on or after January 1,
2007 or (B) the product of (1) $1.5 million
and (2) the
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number of completed years of service by the
Executive to the Company during the
period commencing on the Effective Date and
ending on the Termination Date, if
the Termination Date is on or before
December 31, 2006.
(b) Without Cause or for Good Reason Prior to a Change of
Control. If the Executive's employment
hereunder is terminated by the Company
without Cause and other than due to
Disability or by the Executive for Good
Reason prior to a Change of Control (as
defined in Subsection 10(i) of this
Agreement), the Company's sole obligation
hereunder shall be as follows:
(i) the
Company shall pay the Executive the Accrued Compensation;
(ii)
the Company shall continue to pay the Executive Base Salary
for a period of two years following the Termination Date in
accordance with the Company's customary practices applicable
to its executive officers;
(iii) the
Company shall continue to pay the premiums provided for in
Subsection 7(a) of this Agreement for the time period set
forth therein;
(iv)
the Company shall pay the Executive, in accordance with its
customary practices applicable to executive officers, any
compensation in the form of incentive awards under the Stock
Incentive Plan (or any successor plan) earned (as to both
satisfaction of performance-based criteria and vesting) in
respect of periods prior to and including the Termination
Date, but not paid as of the Termination Date, provided that
the Career Share Award shall vest and be delivered in
accordance with Section 10(b)(vi) of this Agreement;
(v) the
Company shall pay the Executive, at such time as other
participants in the Bonus Plan are paid their respective
bonuses in respect of that fiscal year, a bonus (a "Pro-Rata
Bonus") with respect to the fiscal year in which the
Termination Date occurs equal to the product of (A) the
Executive's target bonus opportunity for that fiscal year and
(B) the fraction obtained by dividing (1) the number of days
in the period beginning on the first day of that fiscal year
and ending on the Termination Date by (2) 365, but only to the
extent that such Pro-Rata Bonus is not payable as part of the
Accrued Compensation;
(vi)
the Career Share Award shall become vested as to that number
of shares of Class A Common Stock of the Company equal to the
product of (A) 1,000,000 (one million) and (B) the fraction
obtained by dividing (1) the number of completed years of
service by the Executive to the Company during the period
commencing on the Effective Date and ending on the Termination
Date by (2) six. A stock certificate or other appropriate
documentation evidencing the number of shares of Class A
Common Stock of the Company which become vested in accordance
with the terms of this Subsection 10(b)(vi), shall be
delivered to the Executive on March 31st of the calendar year
immediately following the calendar year in which
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the Termination Date occurs and the Executive shall thereupon
become the holder of such number of shares of Class A Common
Stock; and
(vii) A
Stay Bonus shall be payable to the Executive on March 31st
immediately following the Termination Date or as soon as
administratively practicable thereafter, but not later than
March 31, 2009, and the actual amount of the Stay Bonus shall
be equal to the product of (A) $6 million and (B) the fraction
obtained by dividing (1) the number of months of service
completed by the Executive during the period commencing on
January 1, 2005 and
ending on the Termination Date by (2) 48;
provided, however, that if the Executive's employment is
terminated by the Company without Cause under this Section
10(b) after December 31, 2006, the Executive shall be
entitled, in the alternative and at his option, to that
portion of the full Stay Bonus that he would receive under
Section 6(b) if he had remained employed through December 31,
2008 and if the Company's cumulative growth in EPS at the end
of the Performance Period bore the same relationship to the
Earnings Target at the end of the Performance Period as the
relationship between its cumulative growth in EPS and the
Earnings Target as of the end of the completed fiscal quarter
closest to the Termination Date.
(c) Without Cause or for Good Reason Within Two Years after a
Change of Control. If the Executive's
employment hereunder is terminated by the
Company other than for Cause or by the
Executive for Good Reason within two
years after a Change of Control, the
Company's sole obligation hereunder shall
be as follows:
(i) the
Company shall pay the Executive the Accrued Compensation;
(ii)
the Company shall pay to the Executive, in a lump sum in cash
within five business days after the Termination Date, the
amount of Base Salary which would have been paid to the
Executive for a period of two years following the Termination
Date;
(iii) the
Company shall continue to pay the premiums provided for in
Subsection 7(a) of this Agreement for the time period set
forth therein;
(iv)
the Company shall pay the Executive, in a lump sum within five
business days after the Termination Date, any compensation in
the form of incentive awards (other than the Career Share
Award) under the Stock Incentive Plan (or any successor plan)
earned (as to satisfaction of performance-based criteria) in
respect of periods prior to and including the Termination
Date, but not paid as of the Termination Date;
(v) the
Company shall pay the Executive, within five business days
after the end of that fiscal year, a Pro-Rata Bonus with
respect to the fiscal year in which the Termination Date
occurs, but only to the extent that such Pro-Rata Bonus is not
payable as part of the Accrued Compensation; and
11
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(vi)
the Company shall pay the Executive a Sta
