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EXHIBIT 10.21
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
PARTIES
This
Employment Agreement (this "Agreement") dated as of February 1,
2004
(the "Effective Date"), is entered into by
and between Aeropostale, Inc., a
Delaware corporation (the "Company"), and
John S. Mills ("Executive") and amends
and restates the Employment Agreement,
dated and effective as of February 1,
2002, between the Company and
Executive.
TERMS OF AGREEMENT
In
consideration of the mutual covenants in this Agreement, the
parties
agree as follows:
1.
Definitions.
For
purposes of this Agreement, the terms listed below shall be defined
as
indicated.
Affiliate:
A domestic or foreign business entity controlled by,
controlling, under common control with, the
Company, including The Bear Stearns
Companies, Inc. and its affiliates.
Annual
Bonus: See Section 3.2.
Base
Salary: See Section 3.1.
Bear
Entity: The Bear Stearns Companies Inc., Bear Stearns MB
1998-1999
Pre-Fund, LLC, and any and all Subsidiaries
or Affiliates of any such entities.
Board: The
Board of Directors of the Company.
Cause: See
Section 5.1.
Change of
Control: A Change of Control" shall mean (i) the acquisition by
any person or entity other than a Bear
Entity of, directly or indirectly,
Beneficial Ownership (as defined in Rule
13d-3 of the Securities Exchange Act of
1934, as amended) of securities of the
Company representing 33-1/3% (or more) of
the total voting power of all of the
Company's then outstanding voting
securities, (ii) a merger or consolidation
of the Company in which the Company's
voting securities immediately prior to the
merger or consolidation do not
represent, or are not converted into
securities (owned by stockholders in
substantially the same proportions as their
ownership immediately prior to such
merger or consolidation) that represent, a
majority of the voting power of all
of the voting securities of the surviving
entity immediately after the merger or
consolidation, (iii) a sale of
substantially all of the assets of the Company or
a liquidation
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or dissolution of the Company, or (iv)
individuals, who, as of the Effective
Date, constitute the Board (the "Incumbent
Board") cease for any reason to
constitute at least a majority of such
Board; provided that any individual who
becomes a director of the Company
subsequent to the Effective Date whose
election or nomination for election by the
Company's stockholders was approved
by the vote of at least a majority of the
directors then in office shall be
deemed a member of the Incumbent Board.
Common
Stock: The $.01 par value common stock of the Company.
Confidential Information: All secret proprietary information of
the
Company and its Subsidiaries, not otherwise
publicly disclosed (except if
disclosed by the Executive in violation of
this Agreement), whether or not
discovered or developed by Executive, known
by Executive as a consequence of
Executive's employment with the Company at
any time (including prior to the
commencement of this Agreement) as an
employee or agent. Without limiting the
generality of the foregoing, such
proprietary information shall include (a)
customer lists; (b) acquisition, expansion,
marketing, financial and other
business information and plans; (c)
research and development; (d) computer
programs; (e) sources of supply; (f)
identity of specialized consultants and
contractors and confidential information
developed by them for the Company and
its Subsidiaries; (g) purchasing, operating
and other cost data; (h) special
customer needs, cost and pricing data; (i)
manufacturing methods; (j) quality
control information; (k) inventory
techniques; (l) employee information; any of
which information is not generally known in
the industries in which the Company
and its Subsidiaries are conducting
business or shall at any time during
Executive's Employment conduct business
including (without limitation) the
apparel retailing industry. Confidential
Information also includes the overall
business, financial, expansion and
acquisition plans of the Company and its
Subsidiaries, and includes information
contained in manuals, memoranda,
projections, minutes, plans, drawings,
designs, formula books, specifications,
computer programs and records, whether or
not legended or otherwise identified
by the Company and its Subsidiaries as
Confidential Information, as well as
information which is the subject of
meetings and discussions and not so
recorded.
Consolidated Net Income: For any period the net income (or loss) of
the
Company for such period determined on a
consolidated basis in accordance with
generally accepted accounting principles;
provided, however, that (i) there
shall be excluded therefrom (to the extent
included and without duplication) (A)
all extraordinary gains and extraordinary
losses (as defined by generally
accepted accounting principles) and (B) any
effect that any change (after the
Effective Date) in any law or in generally
accepted accounting principles
relating to the Company's recognition of
compensation expense for employee stock
options has on the net income (or loss) of
the Company determined on a
consolidated basis in accordance with
generally accepted accounting principles;
and (ii) that neither Annual Bonus nor any
annual bonus based upon Percentage
Increase in Consolidated Net Income payable
to any employee (other than
Executive) of the Company shall be
considered in the computation thereof.
Disability: The absence of the Executive from the Executive's
duties to
the Company on a full-time basis for a
total of 120 days during any 12-month
period as a
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result of incapacity due to mental or
physical illness which is determined to be
permanent by a physician selected by the
Company and acceptable to the Executive
or the Executive's legal representative
(such agreement as to acceptability not
to be withheld unreasonably).
Effective
Date: February 1, 2002.
Employment
Period: Unless earlier terminated as provided in Section 5
hereof, the Employment Period shall be the
period commencing on the Effective
Date and terminating on July 31, 2004.
Fiscal
Year: The 52 or 53 week period ending on the Saturday closest
to
January 31 of each calendar year. Fiscal
Years shall be referred to herein on
the basis of the calendar year which
contains 11 months of such Fiscal Year.
(For example, "1998 Fiscal Year" means the
twelve-month period ending January
30, 1999).
Inventions: Those discoveries, developments, concepts and ideas,
whether
or not patentable, relating to the present,
future and prospective activities
and Products and Services of the Company
and its Subsidiaries, which such
activities and Products and Services are
known to Executive by virtue of
Executive's employment with the Company and
its Subsidiaries.
Percentage
Increase in Consolidated Net Income: Percentage Increase in
Consolidated Net Income shall mean, with
respect to any Fiscal Year of the
Company, the percentage increase, if any,
in Consolidated Net Income of the
Company in such Fiscal Year over the
Consolidated Net Income of the Company in
the immediately preceding Fiscal Year. By
way of example, in the event that the
Consolidated Net Income of the Company in
the 2002 Fiscal Year is $20 million
and the Consolidated Net Income of the
Company in the 2003 Fiscal Year is $25
million, the Percentage Increase in
Consolidated Net Income in the 2003 Fiscal
Year shall be equal to 25%.
Prior
Employment Agreement: shall mean that certain Employment
Agreement,
effective as of August 3, 1998, between the
Company and Executive.
Products
and Services: All products or services sold, rented, leased,
rendered or otherwise made available to its
customers by the Company and its
Subsidiaries, or otherwise the subject of
the business of the Company and its
Subsidiaries.
Restricted
Period: The period beginning on the Effective Date and ending
on the later of the termination of
Executive's employment or the date all
payments to Executive under Section 6.1(a)
shall have been required to have been
made.
Sponsor:
MSS Acquisition Corp. II, a wholly owned subsidiary of The Bear
Stearns Companies Inc.
Stock
Option Plan: The 1998 Stock Option Plan of MSS - Delaware, Inc.
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Stockholders Agreement: shall mean that certain "Stockholders
Agreement"
dated August 3, 1998, to which the Company,
MSS Acquisition Corp. II, FSS and
the Executive Group are parties.
Subsidiary: Any entity of which the Company owns, directly or
indirectly,
50% or more of the aggregate voting power
of the voting securities.
2.
Employment.
(a)
Subject to the terms and conditions of this Agreement, the
Company hereby agrees to employ and the
Executive hereby accepts employment in
the position of President and Chief
Operating Officer of the Company and agrees
during the Employment Period to perform to
the best of Executive's ability,
experience and talent those acts and duties
and to furnish those services to the
Company and its Subsidiaries in connection
with and related to such positions as
the Board shall from time to time direct,
provided such acts and directives are
consistent with the duties of President and
Chief Operating Officer. Executive
shall, during the Employment Period, use
Executive's best efforts to promote the
interests of the Company and its
Subsidiaries.
(b) During the Employment Period, subject to Section 5.2(c)
hereof,
Executive's principal place of employment
shall be located at one of the
Company's principal places of business or
principal executive office, wherever
located as designated from time to time by
the Board, and Executive shall be
provided with secretarial services, an
office and similar support services and
facilities as appropriate to Executive's
position and responsibilities and of at
least substantially the same quality as
provided to Executive on the Effective
Date.
(c) During the Employment Period, Executive shall devote his
full
business time and best efforts to the
business affairs of the Company; however,
the Executive may devote reasonable time
and attention to:
(i) serving as a director of, or member of a committee of the
directors
of, any not-for-profit organization or engaging in other
charitable
or community activities; and
(ii) serving as a director of, or member of a committee of the
directors
of, the corporations or organizations for which the Executive
presently
serves in such capacity, and such other corporations and
organizations that the Board may from time to time approve in the
future,
(iii) seeking alternative employment so long as such time and
attention
do not unreasonably detract from his duties hereunder,
provided that, except as specified above,
the Executive may not accept
employment with any other individual or
other entity, or engage in any other
venture which is indirectly or directly in
conflict or competition with the then
existing business of the Company.
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3.
Compensation and Benefits; Disability.
3.1.
Base Salary.
During the
Employment Period, the Company shall pay Executive a Base
Salary for the 2002 Fiscal Year in the
amount of $300,000 and a Base Salary for
the 2003 Fiscal Year and the portion of
2004 Fiscal Year through the end of the
Employment Period in the amount of
$400,000. The Base Salary shall be payable in
equal installments pursuant to the
Company's customary payroll policies in force
at the time of payment (but in no event
less frequently than monthly), less
required payroll deductions. The Base
Salary shall be subject to increase from
time to time, including, without
limitation, for cost of living, in the sole
discretion of the Board.
3.2. Annual Bonus.
(a) In addition to Executive's Base Salary, during the
Employment
Period the Company shall pay Executive, as
soon as reasonably practicable but in
no event later than 30 days following the
Company's receipt of its audited
financial statements for the applicable
Fiscal Year, an Annual Bonus in cash for
each Fiscal Year commencing with the 2002
Fiscal Year as follows: With respect
to the 2002 Fiscal Year, the Company shall
pay to Executive the Annual Bonus (as
defined in the Prior Employment Agreement)
which he would have received under
the terms of the Prior Employment Agreement
had the Prior Employment Agreement
not been superceded by this Agreement and
all references in this Agreement to
the term "Annual Bonus" that are applicable
to the 2002 Fiscal Year shall, to
the extent applicable to the 2002 Fiscal
Year, be deemed references to the
Annual Bonus as such term is defined in the
Prior Employment Agreement. With
respect to the 2003 and 2004 Fiscal Years,
the Company shall pay to Executive an
Annual Bonus which is
the
product of
(A)
Percentage
Increase in Consolidated Net Income for such
Fiscal Year times 100;
(B) 4%; and
(C) Executive's
Base Salary.
; provided, however, that with respect to
the 2004 Fiscal Year such product
shall be based upon one-half of Executive's
Base Salary.
By way of
example, in the event that the Percentage Increase in
Consolidated Net Income of the Company in
the 2003 Fiscal Year is 25%, Executive
shall be entitled to an Annual Bonus in an
amount equal to $400,000 (i.e., 25 x
.04 x $400,000). In the event that there is
no Percentage Increase in
Consolidated Net Income in the 2003 Fiscal
Year (either by reason of the
Consolidated Net Income declining or
remaining unchanged between successive
Fiscal Years), Executive shall not be
entitled to an Annual Bonus pursuant to
this Section 3.2(a) for such Fiscal
Year.
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(b) In the event that in the 2003 Fiscal Year Executive is not
entitled to an Annual Bonus pursuant to
Section 3.2(a) or the Executive's Bonus
in such Fiscal Year is less than his then
applicable Base Salary but the
Company's Consolidated Net Income for such
Fiscal Year shall be greater than $51
Million, Executive shall be entitled to an
Annual Bonus equal to one (1) times
his then applicable Base Salary. Such bonus
shall be payable in cash as soon as
reasonably practicable but in no event
later than 30 days following the
Company's receipt of its audited financial
statements for the applicable Fiscal
Year.
(c) Notwithstanding anything to the contrary in this Section 3.2,
in
no event shall Executive be entitled to
receive an Annual Bonus in excess of (x)
one and one-quarter (1-1/4) times his then
applicable Base Salary in respect of
the 2003 Fiscal Year, and (y) five-eighths
(5/8) times his then applicable Base
Salary in respect of the 2004 Fiscal
Year.
3.3. Intentionally omitted.
3.4. Other Benefits.
Executive shall be entitled, during the Employment Period, to
participate, on the same basis and to the
same extent as other executive
employees of the Company, in any pension,
life insurance, health insurance,
short-term disability and hospital plans
and other fringe benefits or benefit
plans presently in effect and hereafter
maintained or created by the Company. In
addition, Executive shall receive an
automobile allowance at the annual rate of
$8,500 per year, payable monthly which, at
Executive's election, may be applied
towards the Company's expense on the lease
of the automobile currently being
driven by Executive, for the duration of
such lease, so long as Executive
reimburses the Company for any costs
related thereto in excess of $10,000.
During the Employment Period, Company
agrees not to reduce the benefits provided
to Executive. Service with the Company, any
Subsidiary, or Federated Department
Stores, Inc. ("Federated") or any affiliate
of Federated shall be recognized for
vesting purposes under any benefit plan of
the Company.
3.5. Vacation.
Executive may take such vacation period or periods during each
year
a
