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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
PARTIES
This
Employment Agreement (this "Agreement") dated and effective as
of
February 1, 2004 (the "Effective Date"), is
entered into by and between
Aeropostale, Inc., a Delaware corporation
(the "Company"), and Julian R. Geiger
("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 or under common control with
the Company.
Annual
Bonus: See Section 3.2.
Base
Salary: See Section 3.1.
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 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 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.
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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 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).
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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 the last day of the
2006 Fiscal Year.
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, "2003 Fiscal Year" means the
twelve-month period ending January
31, 2004).
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 2001 Fiscal Year is $20 million
and the Consolidated Net Income of the
Company in the 2002 Fiscal Year is $26.5
million, the Percentage Increase in
Consolidated Net Income in the 2002 Fiscal
Year shall be equal to 32.5%.
Prior
Employment Agreement: shall mean that certain Employment
Agreement,
effective as of February 1, 2002, 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.
Stock
Option Plan: The 1998 Stock Option Plan of MSS - Delaware, Inc.
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
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position of Chief Executive Officer and
Chairman of the Board 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 Chief Executive Officer and
Chairman of the Board. 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 commencing October 1,
2006 so
long as such time and attention do not unreasonably detract
from
his duties
hereunder if this Agreement shall not have been extended by the
parties on
or prior to October 1, 2006, and
(iv) the ownership and management of a family-owned inn in
Massachusetts and related or comparable properties and
enterprises,
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.
3.
Compensation and Benefits; Disability.
3.1. Base Salary.
The
Company shall pay Executive a Base Salary in the amount of
$800,000
for the 2004 Fiscal Year, and an amount of
not less than $800,000 for each of
the 2005 and
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2006 Fiscal Years. The Base Salary shall be
reviewed annually by the
Compensation Committee of the Board for
increase, based upon merit or upon
increases in the cost of living, and 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.
3.2. Annual Bonus.
(a) Subject to Section 11.10 hereof, 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 2004
Fiscal Year which is
the
product of
(A) Percentage Increase in Consolidated Net Income for such
Fiscal
Year times 100;
(B) 7 1/2%; and
(C) Executive's Base Salary.
By way of
example, in the event that the Percentage Increase in
Consolidated Net Income of the Company in
the 2004 Fiscal Year is 32.5%,
Executive shall be entitled to an Annual
Bonus in an amount equal to $1,950,000
(i.e., 32.5 x .075 x $800,000). In the
event that there is no Percentage
Increase in Consolidated Net Income (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).
(b) Intentionally Omitted.
(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
three (3) times his then applicable Base
Salary in respect of any Fiscal Year.
However, if, for any Fiscal Year, the
Annual Bonus computed under subsection (a)
of this Section (or the corresponding
section of the Prior Employment Agreement)
exceeds the amount permitted by this
subsection (c) and there is a Percentage
Increase in Consolidated Net Income for the
succeeding Fiscal Year, then the
amount of such excess shall be added to and
payable with the Annual Bonus for
such succeeding Fiscal Year, subject to the
first sentence of this subsection
(c).
(d) With respect to the 2003 Fiscal Year, notwithstanding that
this
Agreement supersedes the Prior Employment
Agreement, 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 in
accordance with the terms thereof.
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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 in the amount of
$8,500 per year, payable monthly and
reimbursement for actual housing expenses
incurred by Executive up to $3,000 per
month, payable monthly. 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
as shall be consonant with Executive's
responsibilities and (in the Company's
judgment) with the Company's vacation
schedule and policies for senior officers,
which vacation shall be at least four weeks
per calendar year.
3.6. Expenses.
Pursuant to the Company's customary policies in force at the time
of
payment, Executive shall be promptly
reimbursed, against presentation of
vouchers or receipts therefor, for all
authorized expenses properly incurred by
Executive on the Company's behalf in the
performance of Executive's duties
hereunder.
3.7. Exclusive Compensation.
In respect of services rendered to the Company, Executive shall
receive only the compensation set forth in
this Section 3 and Sections 5 and 6.
4. Termination of Employment
Period.
The
Employment Period shall continue as described in Section 1
unless
earlier terminated by reason of (a)
Executive's discharge for Cause pursuant to
Section 5.1, (b) Executive's discharge
without Cause pursuant to Section 5.4,
(c) Executive's death or Disability
pursuant to Section 5.3 or (d) termination
of this Agreement by Executive pursuant to
Section 5.2. In all events, the post
employment provisions of Section 7 shall
survive termination of the Employment
Period for the periods provided
therein.
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5.
Termination.
5.1. By Company for Cause.
The Compa
