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EXHIBIT 10.23
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 Thomas Johnson
("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.
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,
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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).
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, "2002 Fiscal Year" means the
twelve-month period ending February
1, 2003).
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
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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%.
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 first anniversary of the date of
termination of Executive's employment;
provided, however, that in the event that
the termination of Executive's
employment occurs during the 2006 Fiscal
Year, then the Restricted Period shall
terminate on the earlier of (I) the first
anniversary of such termination date,
and (II) July 31, 2007.
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 Executive Vice 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 Chief
Executive Officer or the Board shall from
time to time direct, provided such acts and
directives are consistent with the
duties of Executive Vice 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. Executive agrees to devote all of
his business time to the business affairs
of the Company, and to perform all
duties and fulfill all responsibilities
incident to his employment in a manner
reasonably expected of senior executives in
similar positions. Executive further
agrees that he will not, directly or
indirectly, engage or participate in any
activities at any time during such
employment which conflict with the interests
of the Company.
(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 Chief Executive Officer or the
Board, and Executive shall be provided with
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.
3.
Compensation and Benefits; Disability.
3.1. Base Salary.
The
Company shall pay Executive a Base Salary in the amount of
$375,000
for the 2004 Fiscal Year, and an amount of
not less than $375,000 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) 3.75%; and
(C) Executive's Base Salary in effect during such Fiscal
Year.
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 $457,031
(i.e., 32.5 x .0375 x $375,000). 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.
(b) 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 one
and one-half (1-1/2) 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 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).
3.3. 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,
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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. 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.
3.4. Vacation.
Executive shall be entitled to four (4) weeks of paid vacation
per
calendar year, such vacation to be taken
during period or periods during each
such 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.
3.5. 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.
3.6. 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, (d) termination of
this Agreement by Executive pursuant to
Section 5.2, or (e) termination of this
Agreement by Executive pursuant to Section
5.5. In all events, the post
employment provisions of Section 7 shall
survive termination of the Employment
Period for the periods provided
therein.
5.
Termination.
5.1. By Company for Cause.
The Company may discharge Executive and terminate the
Employment
Period for Cause. As used in this Section
5.1, "Cause" shall mean any one or
more than one of the following:
(a) Gross negligence or gross or willful misconduct of Executive
in
the performance of his duties hereunder
during the Employment Period;
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(b) Executive's conviction of a felony, any crime of moral
turpitude
during the Employment Period or any act of
fraud or dishonesty;
(c) Willful failure to follow instructions of the Chief
Executive
Officer or the Board which instructions are
material, legal, and not
inconsistent with the duties assigned to
Executive hereunder and which failure
is not cured within fifteen (15) business
days after written notice of such
failure is delivered to Executive by the
Company with respect to failures which
are curable, provided, however, that if
such failure is not capable of being
cured within fifteen (15) business days,
the Company may terminate Executive
immediately; or
(d) Any breach of any of the material terms of this Agreement
by
Executive which is not cured within fifteen
(15) business days after written
notice of breach is delivered to Executive
by the Company with respect to
breaches which are curable, provided,
however, that if such breach is not
capable of being cured within fifteen (15)
business days, the Company may
terminate Executive immediately.
Upon discharge of Executive for Cause, the Company shall be
relieved
and discharged of all obligati
