EMPLOYMENT SEPARATION
AGREEMENT
This
Agreement (“Agreement”) is made by and between Thomas
Mendenhall (hereinafter “Employee”) and ABERCROMBIE
& FITCH MANAGEMENT CO.a Delaware corporation (the
“Company”) (hereinafter collectively “the
parties”).
WHEREAS,
Employee has been employed by the Company as an officer since in or
about November of 2004;
WHEREAS,
the parties acknowledge it is in their individual and mutual best
interests for Employee to separate from employment as an officer of
the Company; and
WHEREAS,
the parties wish to define the terms and conditions of
Employee’s separation from employment with the
Company;
NOW,
THEREFORE, in exchange for and in consideration of the following
mutual covenants and promises, the undersigned parties, intending
to be legally bound, hereby agree as follows:
1.
Separation from Employment . The Company and Employee agree
that Employee shall separate from service with the Company
effective September 7, 2006 (“Separation
Date”).
2.
Effective Date . For purposes of this Agreement, the
Effective Date of this Agreement shall be the eighth (8
th ) day after Employee signs this Agreement
(“Effective Date”), unless Employee has revoked the
Agreement prior to that time in the manner discussed in Paragraph
10(d) below. On the Effective Date, Employee’s employment
with the Company and all further compensation, remuneration,
bonuses, and eligibility of Employee under Company benefit plans
shall terminate, and Employee shall not be entitled to receive any
further payments or benefits of any kind from the Company, except
as otherwise provided in this Agreement or by applicable
law.
3.
Consideration . The Company will provide to Employee the
following (all hereinafter referred to collectively as the
“Consideration”):
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a.
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Severance . The equivalent of twelve
(12) months base salary in the amount of Seven Hundred Seventy
Five Thousand and 00/100 dollars ($775,000.00), less applicable
taxes, payable in one lump sum upon the next regularly scheduled
pay period after the Effective Date of this Agreement;
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b.
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Incentive Compensation
Bonus . The
Company shall pay Employee an amount equal to the Incentive
Compensation bonus for the period August 1, 2006 through
January 31, 2007, determined on the same basis as other
similarly situated executives of the Company based on the
Company’s performance for the applicable six month period
(but no less than par), less applicable taxes. Said Incentive
Compensation Bonus shall be paid at such time as Incentive
Compensation bonuses are paid to executives, but no later than
March 15, 2007;
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c.
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Medical Insurance
. The Company shall pay
Employee the equivalent of twelve (12) months of COBRA health
care continuation costs for associate plus one coverage in the
amount of Six Thousand Seven Hundred Twenty Two and 28/100 dollars
($6,722.28), less applicable taxes. Said amount is the cost of
associate plus one coverage as of the Effective Date of this
Agreement and will be paid in one lump sum upon the next regularly
scheduled pay period after the Effective Date of this Agreement. In
the event that the monthly cost of COBRA coverage should increase
during the twelve month period following the Effective Date of this
Agreement, Employee is responsible for any additional premiums
required to purchase coverage during this period. Employee shall be
responsible for the actual election and payment of any health care
continuation costs subsequent to the Effective Date and shall
maintain all of his rights pursuant to COBRA for continued election
of coverage;
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d.
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Payment of any accrued but unused
vacation;
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e.
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Subject to the Company’s
Travel and Expense Policy, payment of any unreimbursed employment
related expenses incurred by Employee prior to the Separation
Date;
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f.
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Outplacement services through an
executive placement firm, or reimbursement of expenses in seeking
new employment, not to exceed $5,500 in cost to the Company, use of
which may begin no earlier than the Effective Date of this
Agreement; and
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g.
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Maintenance of a voicemail box at
Employee’s currently assigned telephone number for a period
of three months from the Separation Date.
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h.
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Employee shall be entitled to
determine the desired treatment of the balance contained in his
tax-qualified Savings and Retirement Plan according to the terms
and conditions set forth in the plan.
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4. Equity
Compensation . The Company shall take such action as is
necessary and advisable to accelerate the vesting of certain of the
Employee’s outstanding stock options and restricted shares as
of the Effective Date, as follows:
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a.
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23,750 stock options shall fully
vest as of the Effective Date; all vested stock options held by
Employee shall be exercisable for a period of three (3) months
following the Effective Date by broker assisted cashless exercise;
and
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b.
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5,658 restricted shares pursuant to
which restrictions shall lapse as of the Effective Date and shall
be deposited in Employee’s brokerage account, net of tax
withholding, as soon as practicable following the Effective
Date.
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Except as set
forth in this Paragraph 4, Employee’s outstanding stock
options and restricted shares shall continue to be governed by the
terms and conditions of the Abercrombie & Fitch Co. 1998
Restatement of the 1996 Stock Option and Performance Incentive
Plan, 2002 Stock Plan for Associates and the Abercrombie &
Fitch Co. 2005 Long-Term Incentive Plan and any agreements
evidencing Employee’s grants of stock options and restricted
shares. The sale of shares pursuant to the exercise of options
shall be registered on a Form S-8 or other registration statement
to the same extent as such sales to similarly-situated senior
executives of the Company are then subject to an effective
registration statement.
5. No
Mitigation . None of the benefits provided in Paragraphs 3 and
4 will be terminated or diminished if Employee should accept or
commence other employment following the Separation Date, so long as
Employee has otherwise fully complied with the terms of this
Agreement.
a.
Non-Disclosure and Non-Use . Employee shall not, without the
written authorization of the Chairman and Chief Executive Officer
(“CEO”) of the Company, use (except for the benefit of
the Company) any Confidential and Trade Secret Information relating
to the Company. Employee shall hold in strictest confidence and
shall not, without the written authorization of the Chairman and
CEO of the Company, disclose to anyone, other than directors,
officers, employees and counsel of the Company in furtherance of
the business of the Company, any Confidential and Trade Secret
Information relating to the Company. For purposes of this
Agreement, Confidential and Trade Secret information includes: the
general or specific nature of any concept in development, the
business plan or development schedule of any concept, vendor,
merchant or customer lists or other processes, know-how, designs,
formulas, methods, software, improvements, technology, new
products, marketing and selling plans, business plans, development
schedules, budgets and unpublished financial statements, licenses,
prices and costs, suppliers, and information regarding the skills,
compensation or duties of employees, independent contractors or
consultants of the Company and any other information about the
Company that is proprietary or confidential. Confidential and Trade
Secret Information specifically includes, but is not limited to,
the general and specific nature of, and information related to, the
development of Concept 5 and Project P.
The
restrictions set forth in this Section shall not apply to
information that is or becomes generally available to the public or
known within the Company’s trade or industry (other than as a
result of its wrongful disclosure by Employee), or information
received on a non-confidential basis from sources other than the
Company who are not in violation of a confidentiality agreement
with the Company. This confidentiality covenant has no temporal,
geographical or territorial restriction.
Employee
further represents and agrees that at and after the Separation Date
he is obligated to comply with the rules and regulations of the
Securities and Exchange Commission (“SEC”) regarding
trading shares and/or exercising options related to the
Company’s stock. Employee acknowledges that the Company has
not provided opinions or legal advice to him regarding his
obligations in this respect and that it is Employee’s
responsibility to seek independent legal advice with respect to any
stock or option transaction.
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Notwithstanding
the foregoing, the Company agrees: (i) to cooperate as
reasonably necessary and appropriate with respect to equity
compensation instructions issued by Employee’s broker or
authorized representative, subject in all respects to applicable
federal, state, local or self regulatory entity securities laws,
rules and/or regulations; and (ii) to notify Employee promptly
of the removal or lifting of the restrictions on trading in the
Company’s stock imposed as a result of Project P.
b.
Non-Disparagement and Cooperation . Neither Employee nor any
officer, director or other authorized spokesperson of the Company
shall state or otherwise publish anything about the other party
which would adversely affect the reputation, image or business
relationships and goodwill of the other party in its/his market and
community at large. Employee shall fully cooperate with the Company
in defense of legal claims asserted against the Company and other
matters requiring the testimony or input and knowledge of Employee.
If at any time Employee should be required to cooperate with the
Company pursuant to this Section, the Company agrees to reimburse
Empl
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