Employment Agreement - Hanson

Employment Agreement – O’Donnell

Change in Control Agreement

 

 

EX-10 2 ceoagreement.htm EXHIBIT 10.1

Exhibit 10.1

CHIEF EXECUTIVE OFFICER EMPLOYMENT AGREEMENT

Between Robert L. Hanson and American Eagle Outfitters, Inc.

This Chief Executive Officer Employment Agreement ("Agreement") is entered into as of November 14, 2011 by and between American Eagle Outfitters, Inc. (the "Company"), and Robert L. Hanson (the "Executive") and effective as of January 30, 2012 (the "Start Date"), which shall be Executive's first date of employment hereunder. The parties believe it to be in their best interest to document the terms of the Executive's employment with the Company, as follows:

In consideration of the employment of the Executive by the Company and the mutual agreements in this Agreement, the Executive and the Company agree as follows:

  1. Term of Agreement: This Agreement shall become effective on the Start Date and the initial term of employment under this Agreement shall end on January 31, 2015, the last day of the Company's 2014 fiscal year. This Agreement will automatically renew at the end of the initial term and at the end of each subsequent term, for an additional one (1) fiscal year term unless either party gives written notice of non-renewal to the other at least ninety (90) days prior to the expiration of the then current term. The initial term of this Agreement and any subsequent one fiscal year extension(s) will be referred to as the "Term". The Term may be extended or renewed only by written agreement signed by the Executive and an expressly authorized representative of the Company's Board of Directors (the "Board"). 
     
  2. Employment Position and Duties:
    1. During the Term, the Company agrees to employ the Executive and the Executive hereby accepts employment with the Company as its Chief Executive Officer subject to the general supervision, advice and direction of the Company's Chairman of the Board ("Chairman") and the Board, and subject to the terms and conditions of this Agreement. The Executive's authority, duties and responsibilities shall be consistent with such authority, duties and responsibilities as are customary for this position, including, without limitation: supervising and managing all aspects of the Company's businesses; direct responsibility for each of the Company's brands; further developing, refining and implementing the Company's strategic growth plans; and overall responsibility for the Company's domestic and international operations. Executive shall also perform such other services and duties as the Chairman or Board may from time-to-time designate in his or its sole discretion. 
       
    2. During the Term, the Company agrees that Executive will be nominated for election by its shareholders to the Board. 
       
    3. Executive shall faithfully, honestly and diligently serve the Company, devote his full working time and attention to his duties, use his best efforts to promote the interests of the Company and follow the reasonable and lawful instructions of the Chairman or the Board. Executive shall carry out his duties in a manner consistent with and in compliance with all present and future requirements and limitations of all applicable federal and state laws and regulations. Executive acknowledges and fully understands that by entering into this Agreement, he undertakes a fiduciary relationship with the Company and, as a fiduciary, is under an obligation to use due care and act in the best interest of the Company at all times. 
       
    4. Executive agrees that he shall at all times observe and be bound by all rules, policies, procedures, practices, and resolutions adopted, or to be adopted, by the Company which are generally applicable to the Company's officers and employees and which do not otherwise conflict with this Agreement. 
       
    5. Executive shall not engage in any other business that would interfere with his duties, provided that nothing contained herein is intended to limit Executive's right to make passive investments in the securities of publicly-owned companies or other businesses which will not interfere or conflict with his duties. Executive may, with the prior written consent of the Chairman, sit on the board of directors of one other company, provided that it is not a direct competitor or vendor of the Company. 
       
    6. The Company shall indemnify Executive in the performance of his duties and responsibilities and advance expenses in connection with such indemnification to the same extent as the Company's other senior executives and officers. 
       
    7. Executive shall be required to relocate and establish primary residence in reasonable proximity to the Company's headquarters in Pittsburgh, Pennsylvania, or the Company's offices in New York, New York, no later than one hundred eighty (180) days following the Start Date. 
       
  3. Sign-on Compensation:
    1. Signing Bonus: Executive shall receive a signing bonus (the "Signing Bonus") of Three Million Three Hundred and Thirty-Nine Thousand Dollars ($3,339,000.00), less applicable withholding taxes, payable in a lump sum within 60 days after the execution and delivery of this Agreement; provided that, notwithstanding the foregoing clause of this sentence, in no event shall the Signing Bonus be paid to Executive prior to January 1, 2012. If, prior to the one year anniversary of his Start Date, Executive voluntarily terminates his employment, other than for Good Reason (as defined in Appendix A, attached), if the Company terminates him for Cause (as defined in Appendix A), or if Executive does not commence employment with the Company on the Start Date for any reason, in any case following the payment of the Signing Bonus Executive or his estate shall repay the Company the gross amount of the Signing Bonus, within 30 days of his Termination Date (as defined in Appendix A) or the Start Date, whichever is later. In that event, to the extent permissible under applicable law, the Company may offset the amount of the Signing Bonus owed by Executive from any compensation due to the Executive upon his termination of employment. 
       
    2. Deferred Compensation: Effective as of the Start Date, Executive shall receive, pursuant to the Company's Deferred Compensation Plan (the "Deferred Compensation Plan"), a $300,000 credit to his "Annual Account" (as defined in the Deferred Compensation Plan) as a "Company Contribution Amount" (as defined in the Deferred Compensation Plan) (the "Sign-On DCP Contribution"). The Sign-On DCP Contribution shall be credited to a sub-account under Executive's Annual Account and tracked separately from any other amounts credited to Executive's Annual Account. The sub-account representing the Sign-On DCP Contribution shall vest and become non-forfeitable at a rate of one-third on each of the first three anniversaries of the Start Date, subject to Executive's continued employment with the Company on each such date and further subject to Section 3.6 of the Deferred Compensation Plan. 
       
    3. Restricted Stock Unit Award: Executive shall receive a Restricted Stock Unit ("RSU") award on the Start Date. The RSU award will have a value of Two Million Five Hundred Thousand Dollars ($2,500,000.00). The number of units subject to this RSU award will be calculated by dividing $2,500,000.00 by the closing price of AEO common stock on the Start Date rounded to the nearest whole share. The RSU award will be made by the Compensation Committee of the Board of Directors of the Company (the "Committee") pursuant to and subject to all terms and conditions set forth in the Company's 2005 Stock Award and Incentive Plan, as amended (the "2005 Plan") and the related award agreement. Vesting of the RSU award will be subject to both continued employment and achievement of pre-determined objective performance goals set forth in writing established by the Committee. If the performance goals are not met, then the entire RSU award will forfeit. The Committee must verify that the performance goals are met prior to vesting. If the performance goals are met, then the grant will vest in equal annual installments over three years from the grant date based solely on Executive's continued service to the Company over that period.
       
    4. Stock Options: Executive shall receive a stock option grant on the Start Date. The grant shall be for the number of option shares of Company's common stock with a grant date value equal to Two Million Five Hundred Thousand Dollars ($2,500,000.00). The exercise price will be the closing price of AEO common stock on the grant date. The number of option shares subject to this stock option will be determined as of the grant date using a valuation methodology consistent with that used to compute the value of the Company's stock options in its financial statements. The option grant will be made by the Committee pursuant to and subject to all the terms and conditions set forth in the 2005 Plan and related award agreement; provided that (i) Executive shall be allowed a period of no less than three (3) months following termination of employment to exercise the portion of this stock option which is vested on his termination date, other than in the event of a termination by the Company for Cause in accordance with Section 5.e., and (ii) Executive may exercise this stock option by means of a "net exercise," pursuant to which a number of shares subject to such exercise having a fair market value equal to the applicable exercise price will be withheld by the Company in satisfaction of such exercise price.
       
    5. Relocation Assistance: Executive shall be eligible for relocation benefits that, at minimum, will be consistent with the relocation benefits provided to the Company's other senior executives. Such benefits will include (i) travel expenses for up to six (6) house hunting trips for Executive and a companion and (ii) household goods moving expenses, relocation allowances, temporary living expenses, and other relocation costs or expenses to which the parties agree. If, prior to the one year anniversary of his Start Date, Executive voluntarily terminates his employment, other than for Good Reason, or if the Company terminates him for Cause, Executive shall repay the Company the gross amount of the relocation benefits within 30 days of his Termination Date. In that event, to the extent permissible under applicable law, the Company may offset the amount of the relocation benefits owed by Executive from any compensation due to the Executive upon his termination of employment. 
       
    6. Legal Fees: The Company shall pay the reasonable legal fees incurred by Executive to review and negotiate this Agreement in an amount not to exceed Fifteen Thousand Dollars ($15,000.00). 
       
  4. Ongoing Compensation and Benefits:
    1. Base Salary: The Executive shall receive an annual base salary of One Million Thirty Thousand Dollars ($1,030,000.00) payable in accordance with the Company's regular payroll practices, as established from time to time. Executive agrees to defer pursuant to Company's Deferred Compensation Plan the amount of base salary for each calendar year that is greater than $1,000,000. During the Term, the Committee shall review the Executive's base salary on an annual basis taking into consideration such factors as market trends, internal considerations and job performance, and may (but is not obligated to) increase, but not decrease, the annual base salary upon such review. 
       
    2. Annual Incentive Cash Bonus: Executive will be eligible to receive an annual incentive cash bonus under the 2005 Plan for each full fiscal year ending during the Term beginning with the 2012 fiscal year with a maximum incentive bonus of 130% of his base salary and, beginning with the 2013 fiscal year, the target incentive bonus shall be 130% of his base salary and the maximum incentive bonus shall be 260% of his base salary. The 2005 Plan conditions the payment of the bonus on achievement of pre-determined objective performance goals set forth in writing established by the Committee. It is the Company's intention that Executive's annual incentive bonus be determined and awarded in a manner that enables the Company to deduct the amount of any such annual incentive bonus for federal income tax purposes to the maximum extent possible. The incentive bonus determined to be due, if any, will be paid within 120 calendar days after the close of the Company's fiscal year and completion of an outside audit by the Company's then current outside audit firm. 
       
    3. Long-Term Equity Compensation. Executive shall receive long term equity incentive compensation under the Plan for each fiscal year during the Term of the agreement. Award values will be determined under Company policies established by the Committee annually taking into consideration market practice, affordability, performance, as well as other factors determined by the Committee to be relevant. For fiscal year 2012 only, Executive will receive long term equity incentive compensation with a value of Three Million Two Hundred Thousand Dollars ($3,200,000) on terms similar to those used for other senior executives at the Company. 
       
    4. Employee Benefits: The Executive may participate in the Company's employee welfare, benefit, retirement and deferred compensation plans, programs or policies that are in effect and generally available to the other senior executives of the Company, including any profit sharing or 401(k) plans; employee stock purchase, group life, health, hospitalization and disability insurance plans; paid time off; and discount privileges (the "Benefit Plans"). The Executive's participation in the Benefit Plans will be subject to the terms and conditions of each such Benefit Plan, including eligibility and compliance requirements. Notwithstanding the foregoing, the Company shall have the right to change, alter or terminate any Benefit Plan in its sole discretion.
       
    5. Reimbursement of Business Expenses: The Company shall pay, advance or reimburse Executive for all normal and reasonable business-related expenses incurred by Executive in the performance of his duties, including travel expenses, in accordance with the Company's policies and on the same basis as paid, advanced or reimbursed to the Company's other senior executives.
       
    6. Car and Commuting Expenses. During the Term, the Company will provide Executive with a single luxury automobile for both business and personal use. Any amount included in Executive's W-2 wages relative to such automobile shall be not be grossed up for tax purposes. 
       
  5. Termination of Employment: Executive acknowledges and understands that employment with the Company is at will and can be terminated by either party for no reason or for any reason not otherwise specifically prohibited by law. Nothing in this Agreement is intended to alter Executive's at-will employment status or obligate the Company to continue to employ Executive for any specific period of time, or in any specific role or geographic location. Except as expressly provided for in this Agreement, upon any termination of employment, Executive shall not be entitled to receive any payments or benefits under this Agreement other than accrued, but unpaid or unused: (i) base salary; (ii) PTO; and (iii) business expenses. For purposes of this Section 5, these amounts shall be collectively referred to as the "Accrued Obligations." Except as otherwise provided for in this Agreement, upon any termination of employment, Executive shall forfeit all unvested equity awards.
    1. Voluntary Termination. The Executive may voluntarily terminate his employment at any time without Good Reason by providing 90 days prior written notice to an expressly authorized representative of the Board. If the Executive voluntarily terminates his employment with the Company, the Company shall pay to the Executive the Accrued Obligations. Such amount shall be paid in a lump sum payment, less applicable withholdings and deductions, within 10 days of the Termination Date, or in the case of business expenses, within 10 days after Executive submits a properly documented request for reimbursement. 
       
    2. Termination of Employment Without Cause or for Good Reason, Other Than in Connection with a Change in Control. If the Executive's employment is involuntarily terminated by the Company for any reason other than for Cause, or the Executive terminates his employment for Good Reason, in each case pursuant to a Notice of Termination (as defined in Appendix A), the Company shall pay to the Executive the following compensation and benefits in addition to the Accrued Obligations:
      1. An amount equal to twenty-four (24) months of the Executive's annual base salary paid in a lump sum payment, less applicable withholdings and deductions, on the first regular payroll date following the Termination Date. 
         
      2. Provided that the Executive and his eligible dependents, if any, are participating in the Company's group health, dental and vision plans on the Termination Date and elect on a timely basis to continue that participation in some or all of the offered plans through the federal law commonly known as "COBRA," the Company will reimburse Executive for Executive's actual COBRA premiums, excluding any administrative fees or costs associated with the processing of Executive's payment by the Company's third-party vendor (the "Company-Subsidized Health Coverage"). The Executive shall continue to be eligible for the Company-Subsidized Health Coverage until the earlier to occur of: (a) twelve (12) months after his Termination Date, (b) the date he is eligible to enroll in the health, dental and/or vision plans of another employer or (c) if the Company in good faith determines that payments under this paragraph (ii) would result in a discriminatory health plan pursuant to the Patient Protection and Affordable Care Act of 2010, as amended, and any guidance or regulations promulgated thereunder (collectively, "PPACA"); provided, however, that the Executive's participation is dependent on him and his dependents continuing to be eligible to participate in the Company's offered plans through COBRA and paying the applicable employee contribution toward the premium cost along with any co-payments or other fees. The Executive agrees to notify the Company promptly if he becomes eligible to enroll in the plans of another employer or if he or any of his dependents cease to be eligible to continue participation in the Company's plans through COBRA. Notwithstanding the foregoing, if the Company's payment of a portion of the Executive's COBRA continuation coverage will be considered discriminatory under the PPACA, the Company shall not pay for or reimburse any portion of the Executive's COBRA continuation coverage upon his termination of employment.
         
      3. A pro-rata annual incentive cash bonus to the extent that the Company's performance goals established at the time of the grant are met for the fiscal year in which the Termination Date occurs, even though Executive was not employed for the entire fiscal year. Executive's bonus, if any, will be based on a percentage of his actual wages earned during the fiscal year in which the Termination Date occurs and the bonus, if any, will paid at the same time as bonuses to other senior executives are paid.
         
      4. The vesting of any stock option which remains unvested on the Termination Date shall accelerate as of the Termination Date as to that number of shares subject to such stock option equal to the product of (i) the number of shares as to which such stock option would have become vested on the vesting date next following the Termination Date (the "Next Option Vesting Tranche"), multiplied by (ii) a fraction, the numerator of which is the number of days elapsed in the vesting period applicable to the Next Option Vesting Tranche through the Termination Date, and the denominator of which is the total number of days in such vesting period. [By way of example, if a stock option vests at a rate of 1/3 of the shares subject thereto on each of the first three anniversaries of grant, the Next Option Vesting Tranche would be that 1/3 of the shares subject to such stock option which would vest on the vesting date next following the Termination Date, and the number of days in the vesting period applicable to the Next Option Vesting Tranche would be 365.] Outstanding vested stock options held by Executive shall remain exercisable until the earlier of (i) the expiration date set forth in the stock option award agreement, or (ii) for three (3) months after the Termination Date. Any stock options unvested as of the Termination Date after application of the first sentence of this Section 5(b)(iv) shall forfeit. Notwithstanding the above, this Section 5(b)(iv) shall not apply to any unvested stock option which is capable of vesting only if a performance condition (other than the continued performance of services) is attained. 
         
      5. The vesting of any RSU award which remains unvested on the Termination Date shall accelerate as of the Termination Date as to that number of shares subject to the RSU award equal to the product of (i) the number of shares as to which such RSU award would have become vested on the vesting date next following the Termination Date, without regard to any acceleration of vesting which could occur on account of the attainment of performance conditions (the "Next RSU Award Vesting Tranche"), multiplied by (ii) a fraction, the numerator of which is the number of days elapsed in the vesting period applicable to the Next RSU Award Vesting Tranche through the Termination Date, and the denominator of which is the total number of days in such vesting period. [By way of example, if an RSU award vests at a rate of 1/3 of the shares subject thereto on each of the first three anniversaries of grant, the Next RSU Award Vesting Tranche would be that 1/3 of the shares subject to such RSU award which would vest on the vesting date next following the Termination Date, and the number of days in the vesting period applicable to the Next RSU Award Vesting Tranche would be 365.] Notwithstanding the above, this Section 5(b)(v) shall not apply to any unvested RSU award which is capable of vesting only if a performance condition (other than the continued performance of services) is attained.
         
      6. All LTPRSU awards that have not been paid by delivery of stock prior to the Termination Date shall continue to vest and be paid on the same schedule as if Executive's employment had not terminated by delivery of stock in the same manner upon vesting, if and to the extent the performance goals for the awards are achieved and subject to proration based on the number of days of Executive's full time employment during the performance period covered by the award. 
         
      7. Provided, however, that there will be no duplication of benefits, and that compensation and benefits provided hereunder is in lieu of any compensation or benefits for which the Executive might otherwise have been eligible under any plan, program, or practice of the Company or any related entity. To the extent necessary to avoid duplication of benefits, payments and benefits under this Agreement will be reduced to offset payments or benefits under any other plan, program, or policy.
         
      8. Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the compensation and benefits payable to Executive under this Section 5(b). 
         
    3. Termination Due to Death or Disability. The Executive's employment shall terminate automatically upon his death, with the date of death being Executive's Termination Date. If the Executive has a Disability (as defined in Appendix A), the Company shall give the Executive written notice of its intention to terminate his employment. In such event, the Executive's Termination Date shall be the 15th day after the date of such written notice. In the event of Executive's death or Disability, the Company shall pay the following:
      1. All RSU awards that have not been paid by delivery of stock prior to the Termination Date by reason of Executive's death or disability shall vest with the number of units subject to proration based on the number of days of Executive's full-time employment during the either one-year vesting period (if performance goals are achieved) or the three-year vesting period. 
         
      2. All LTPRSU awards that have not been paid by delivery of stock prior to the Termination Date by reason of Executive's death or disability shall continue to vest and be paid on the same schedule as if Executive's employment had not terminated by delivery of stock in the same manner upon vesting, to the extent that the performance goals established at the time of the grant are met, even though Executive was not employed for the entire applicable performance period. 
         
      3. All unvested stock options shall immediately vest in full as of the Termination Date. Options shall be exercisable until the earlier of (i) the expiration date set forth in the stock option award agreement; or (ii) 1 year after the Termination Date.
         
      4. The Company shall pay the Executive's estate any declared but unpaid annual incentive cash bonus that, but for Executive's death, would otherwise have been payable to Executive. Payment of the bonus, if any, to the Estate will be made at the same time as the Company pays annual incentive cash bonuses, if any, to its other senior executives.
         
    4. Change in Control: The Company believes that it is in the best interest of the Company and its stockholders for Executive to be in a position to be able to assess objectively and pursue aggressively the interests of the Company's stockholders in making evaluations and carrying on negotiations regarding offers, proposals or other transactions which could result in a change in control (as "change in control" is defined in the separate Change in Control Agreement). To achieve these interests, the Company believes it is essential to provide Executive with compensation arrangements upon a change in control that provide Executive with some financial security. Accordingly, the Company agrees to enter into a separate Change in Control Agreement with Executive at the time the Company and Executive execute this Agreement. The parties agree that, notwithstanding the terms of the Change in Control Agreement entered into between the Executive and the Company, the definitions of "Cause" and "Good Reason" set forth in Appendix A shall apply for all purposes of a voluntary or involuntary termination of Executive's employment under this Agreement other than with respect to a Change in Control. On and following a Change in Control, "cause" and "good reason" will be defined in accordance with the terms of the Change in Control Agreement. 
       
    5. Termination by the Company for Cause. The Company may involuntarily terminate the Executive's employment for Cause at any time. If the Executive's employment is involuntarily terminated by the Company for Cause, this Agreement shall terminate without further obligations to Executive, other than payment of the Accrued Obligations. All unvested RSU awards, LTPRSU awards, and stock options shall forfeit. The Executive's involuntary termination by the Company for Cause shall be communicated by Notice of Termination given to the Executive in accordance with this Agreement. The Company's failure to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause shall not waive any right of the Company under this Agreement or preclude the Company from asserting such fact or circumstance in enforcing the Company's rights under this Agreement. 
       
    6. Resignation from the Board. Notwithstanding any provision of this Agreement, all payments and benefits described in this Agreement, except for payment of the Accrued Obligations, are conditioned upon the Executive's resignation from the Board immediately upon the Termination Date regardless of the reason for his voluntary or involuntary separation.
       
    7. General Release of Claims. Notwithstanding any provision of this Agreement, all payments and benefits described in this Agreement, except for payment of the Accrued Obligations, are conditioned upon the execution, delivery to the Company, and expiration of any applicable revocation period without a notice of revocation having been given by Executive, all by the 30th day following the Termination Date of a General Release of Claims by and between Executive (or the Executive's estate) and the Company in the form attached as Appendix B to this Agreement. (In the event of Executive's death or incapacity due to disability, the form attached as Appendix B will be revised for signature accordingly.) If the timing requirements described in the first sentence of this Section 5(g) have been met, the payments and benefits will begin to be paid or provided to Executive as soon as administratively practicable following the date Executive signs and delivers the General Release to the Company and any applicable revocation period has expired without a notice of revocation having been given, provided that if the 30-day period begins in one taxable year and ends in a second taxable year such payments or benefits shall not commence until the second taxable year.
       
  6. Intellectual Property and Confidential Information. Executive acknowledges that he will be employed by the Company during the Term in a position of special trust and confidence and will be granted access to or may develop trade secrets, intellectual property, and other confidential or proprietary information of the Company. Accordingly, in recognition of the highly competitive nature of the Company's business, Executive understands and agrees as follows.
    1. Intellectual Property. Executive agrees that all inventions, designs and ideas conceived, produced, created, or reduced to practice, either solely or jointly with others, during his employment with the Company, including those developed on my own time, which relate to or are useful in the Company's business (collectively, "Intellectual Property") shall be owned solely by the Company. Executive understands that whether in preliminary or final form, such Intellectual Property includes, for example, all ideas, inventions, discoveries, designs, innovations, improvements, trade secrets, and other intellectual property. All Intellectual Property is either work made for hire for the company within the meaning of the U.S. Copyright Act, or, if such Intellectual Property is determined not to be work made for hire, then Executive irrevocably assigns all right, title and interest in and to the Intellectual Property to the Company, including all copyrights, patents, and/or trademarks. Executive will, without any additional consideration, execute all documents and take all other actions needed to convey his complete ownership of the Intellectual Property to the Company so that the Company may own and protect such Intellectual Property and obtain patent, copyright and trademark registrations for it. Executive agrees that the Company may alter or modify the Intellectual Property at the Company's sole discretion, and Executive waives all right to claim or disclaim authorship. Executive represents and warrants that any Intellectual Property that he assigns to the Company, except as otherwise disclosed in writing at the time of assignment, will be his sole, exclusive, original work. 
       
    2. Confidential Information. Executive understands that, by virtue of Executive's employment with the Company, Executive will acquire and be exposed to Confidential Information of the Company. "Confidential Information" includes all ideas, information and materials, tangible or intangible, not generally known to the public, relating in any manner to the business of the Company, its products and services (including all trade secrets), its competitive strengths and weaknesses, its personnel (including its officers, directors, employees, and contractors), its clients, vendors and suppliers and all others with whom it does business that Executive learns or acquires during Executive's employment with the Company. Confidential Information includes, but is not limited to, manuals, documents, computer programs and software used by the Company, all formulas or processes, users manuals, compilations of technical, financial, legal or other data, salary information, client or prospective client lists, names of suppliers or vendors, client, supplier or vendor contact information, customer contact information, business referral sources, specifications, Intellectual Property, designs, devices, inventions, processes, business or marketing plans or strategies, pricing information, information regarding the identity of the Company's designs, mock-ups, prototypes, and works in progress, all other research and development information, forecasts, financial information, and all other technical or business information. Confidential Information does not include publicly available information or information that is generally known and used within the industry or industries in which the Company engages in business. Executive agrees to hold in trust and confidence all Confidential Information during and after the period of Executive's employment with the Company. Executive shall not disclose any Confidential Information to anyone outside the Company or use any Confidential Information for any purpose other than for the benefit of the Company as required by Executive's authorized duties for the Company. Upon termination of Executive's employment with the Company, (A) Executive shall not use Confidential Information, or disclose Confidential Information to anyone, for any purpose, unless expressly requested to do so in writing by an authorized officer of the Company, (B) Executive shall not retain or take with Executive any Confidential Information and (C) Executive shall immediately deliver to the Company any Confidential Information that Executive may then or thereafter hold or control, as well as all other property, equipment, documents or things that Executive was issued or otherwise received or obtained during Executive's employment with the Company. Executive is not authorized to retain any copies or duplicates of the Company's property, equipment or Confidential Information that Executive obtained or received as a result of Executive's employment with the Company. 
       
    3. Executive understands that the various terms and conditions of this Agreement shall survive and continue after Executive's employment with the Company terminates. To further protect the Company's Confidential Information and to protect against unauthorized disclosure, Executive hereby expressly agrees that the Company may inform Executive's new employer regarding Executive's duties and obligations under this Section 6. 
       
  7. Restricted Activities. In exchange for good and valuable consideration, the Executive agrees that some restrictions on his activities during and after his employment are necessary to protect the goodwill, Confidential Information and other legitimate interests of the Company and its affiliates. Accordingly, in recognition of the highly competitive nature of the Company's business, Executive understands and agrees as follows.
    1. During Executive's employment and for a period of twenty-four (24) months immediately following the Termination Date, regardless of the reason for such termination, Executive agrees that he shall not, either directly or indirectly, accept employment with, act as a consultant to, or otherwise perform the same services (which shall be determined regardless of job title) for any business that directly competes with the Company's business, which is understood to be the design, manufacture and retail sale (including Internet sales) of specialty clothing, accessories, shoes, and related items or any other line of business the Company becomes involved in prospectively by virtue of expansion, acquisition and/or joint venture; provided, however, nothing in this Agreement shall be construed as limiting Executive's ability to engage in any lawful off-duty conduct. 
       
    2. During Executive's employment and for a period of twenty-four (24) months immediately following the Termination Date, regardless of the reason for such termination, Executive agrees that he shall not, directly or indirectly, solicit, induce, or attempt to (a) solicit or induce, any person known to Executive to be an employee, contractor or consultant of the Company (each such person, a "Company Person"), to terminate his or her employment or other relationship with the Company for the purpose of associating with (i) any entity of which Executive is or becomes an officer, director, member, partner, principal, agent, Executive or consultant, or (ii) any competitor of the Company, or (b) otherwise encourage any Company Person to terminate his or her employment or other relationship with the Company for any other purpose or no purpose.
       
    3. During Executive's employment and for a period of 12 months immediately following the Termination Date, regardless of the reason for such termination, Executive agrees that he shall not, directly or indirectly, solicit, induce or encourage, or attempt to solicit, induce or encourage any strategic partners, franchisees, joint venturers, customer or vendor of the Company or any of its affiliates to terminate its relationship with them or to conduct with any person any business or activity which such customer conducts or could conduct with the Company or any of its affiliates. 
       
    4. Executive further agrees that, while he is employed by the Company and thereafter, he will not willfully make false, misleading or disparaging statements about the Company or any of its affiliates including, without limitation, its products, services, management, employees and customers. 
       
    5. Executive shall not breach any lawful, enforceable agreement to keep in confidence, or to refrain from using, the nonpublic ideas, information or materials of a third party, including, but not limited to, a former employer or present or former customer or client. Executive shall not bring any such ideas, information or materials to the Company, or use any such ideas, information or materials in connection with Executive's employment by the Company. 
       
    6. Executive acknowledges that he has carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed upon him pursuant to Sections 6 and 7 of this Agreement. The Executive agrees without reservation that each of the restraints contained in this Agreement is reasonable and necessary for the protection of the goodwill, confidential information and other legitimate interests of the Company and its affiliates; that each and every one of the restraints is reasonable in respect to subject matter, and that the restraints, individually or in the aggregate, will not prevent him from obtaining other suitable employment during the period in which he is bound by the restraints. The Executive further agrees that he will never assert, or permit to be asserted on his own behalf, in any forum, any position contrary to the foregoing. Executive further acknowledges that, were he to breach any of the covenants contained in Sections 6 an 7 hereof, the damage to the Company would be irreparable. Executive therefore agrees that the Company, in addition to any other remedies available to it, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by him of any of said covenants, without having to post bond. The parties further agree that, in the event that any provision of Section 6 and 7 of this Agreement shall be determined by any court of competent jurisdiction to be unenforceable, such provision shall be deemed to be modified to permit its enforcement to the maximum extent permitted by law.
       
    7. Executive acknowledges and agrees that any violation of the terms and conditions of Sections 6 or 7 of this Agreement will constitute an "Event Triggering Forfeiture" as defined in Section 10(b) of the 2005 Plan and will trigger the forfeiture and repayment provisions of Section 10(a) of the 2005 Plan. 
       
  8. Cooperation.
    1. With Company. Executive agrees to cooperate with Company during the course of all third-party proceedings arising out of Company's business about which Executive has knowledge or information, both before and following the Termination Date. Such proceedings may include, but are not limited to, internal investigations, administrative investigations or proceedings, and lawsuits (including pre-trial discovery). For purposes of this paragraph, cooperation includes, but is not limited to, Executive's making himself available for interviews, meetings, depositions, hearings, and/or trials without the need for subpoena or assurances by Company, providing any and all documents in his possession that relate to the proceeding, and providing assistance in locating any and all relevant notes and/or documents. 
       
    2. With Third Parties. Executive agrees to communicate with, or give statements to, third parties relating to any matter about which Executive has knowledge or information as a result of his employment only to the extent that it is Executive's good faith belief that such communication or statement is in Company's business interests, or as otherwise required by law. 
       
    3. With Media. Executive agrees to communicate with, or give statements to, any member of the media (print, television, radio, or other) relating to any matter about which Executive has knowledge or information as a result of his employment only to the extent that it is Executive's good faith belief that such communication or statement is in Company's business interests. 
       
  9. Taxation & Section 409A.
    1. The Company makes no representations or warranties to Executive with respect to tax, economic or legal consequences of the Agreement or any payments or other benefits provided hereunder, including without limitation under Internal Revenue Code Section 409A ("Section 409A"), and no provision of this Agreement shall be interested or construed to transfer any liability for tax penalties, accelerated taxation or interest on account of Section 409A from Executive or any other individual to the Company or any of its affiliates. Executive, by executing this Agreement, shall be deemed to have waived any claim against the Company and its affiliates with respect to any such tax, economic or legal consequences.
       
    2. The parties intend that this Agreement and the payments and benefits provided hereunder be exempt from the application of Section 409A, and the rules and regulations issued thereunder, to the maximum extent possible, whether pursuant to the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise. To the extent Section 409A is applicable to this Agreement, the parties intend that this Agreement and any payments and benefits hereunder comply with the deferral, payout and other limitations and restrictions imposed under Section 409A so as to avoid the imputation of any tax, penalties, accelerated taxation or interest under Section 409A. Notwithstanding anything herein to the contrary, this Agreement shall be construed, interpreted, operated and administered in a manner consistent with such intentions. Without limiting the generality of the foregoing, and notwithstanding any other provision of this Agreement to the contrary:
      1. If (i) Executive is a "specified employee" within the meaning of Section 409A upon his Termination Date, and (ii) some or any portion of the amounts payable to Executive, if any, when considered together with any other severance payments or separation benefits which may be considered deferred compensation under Section 409A (together, the "Deferred Compensation Separation Benefits") would result in the imposition of the penalty tax under Section 409A if paid to Executive on or within the six (6) month period following the Termination Date, then to the extent such portion of the Deferred Compensation Separation Benefits resulting in the imposition of additional tax would otherwise have been payable on or within the first six (6) months following the Termination Date, it will instead become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the Termination Date (or such longer period as is required to avoid the imposition of additional tax under Section 409A). All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit.
         
      2. The Company's obligation to make any reimbursements or provide in-kind benefits to the Executive will be subject to the following restrictions: (1) the expenses paid or reimbursed by the Company in one calendar year will not affect the expenses paid or reimbursed in another calendar year; and (2) reimbursement for any expenses will be made within a reasonable period of time following the date on which the Company receives written documentation of the expense, provided that all expenses will be reimbursed on or before the last day of the calendar year following the calendar year in which the expense was incurred. 
         
  10. Representations and Warranties: The Executive represents and warrants that he is not a party to, or otherwise subject to, any covenant not to compete, or other agreement with any person or entity that would restrict or limit his ability to perform his responsibilities under this Agreement, and that his performance of his obligations under this Agreement will not violate the terms and conditions of any contract or obligation, written or oral, between him and any other person or entity. The Executive is not under any contractual agreement that would conflict with or in any way prevent the Executive from entering into this Agreement or from performing any and all of the Executives' duties hereunder. Executive will not utilize any proprietary or confidential materials or information of any third party while performing duties for the Company. 
     
  11. Assignment and Successors: This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by him. This Agreement shall inure to the benefit of and be enforceable by the Company and its successors and assigns. 
     
  12. Notices: Any notices required to be given to the Executive shall be sent to his address as shown in the Company's records, which he is responsible for keeping up-to-date. Notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by registered mail, postage pre-paid, addressed as follows:

If to the Executive, to:

An address provided by the Executive to the Company as promptly as practicable following the execution of this Agreement.

With a copy to:

Said Kordestani
Farella Braun + Martel LLP
Russ Building
235 Montgomery Street
San Francisco, CA 94104

If to the Company, to:

Jay L. Schottenstein,
Chairman of the Board of Directors
American Eagle Outfitters, Inc.
77 Hot Metal Street
Pittsburgh, PA 15228

With a copy to:

American Eagle Outfitters, Inc.
77 Hot Metal Street
Pittsburgh, PA 15228
Attention: Vice President & General Counsel

or to such other address as either party may have furnished to the other in writing, except that notices of change of address shall be effective only upon receipt.
 

  1. Severability and Construction: If any provision of this Agreement is determined to be invalid, unenforceable, or unlawful by a court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect, and the provisions that are determined to be invalid, unenforceable, or unlawful will either be limited or reformed so that they will remain in effect to the fullest extent allowed by law. 
     
  2. Waiver of Breach: Except as otherwise specifically provided for in this Agreement, no failure by any party to give notice of any breach of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver or relinquishment of that party's rights, and no waiver or relinquishment of rights by any party at any one or more times will be deemed to be a waiver or relinquishment of such right or power at any other time or times. 
     
  3. Entire Agreement/Modification in Writing: This Agreement, together with the Company's plan or policy documents and governing policies of the Company (each as amended from time to time), constitute the entire understanding relating to the matters addressed in this Agreement and supersede any other prior agreement, whether written or oral. No addition to, or modification of, this Agreement shall be effective unless in writing and signed by both the Executive and an authorized representative of the Company. 
     
  4. Arbitration: The Company and the Executive mutually agree to resolve all legal claims that either party may have (including, without limitation, claims related to service under this Agreement, application or candidacy for service, or cessation of service under this Agreement with the Company) through binding arbitration subject to the terms and conditions provided below.

Notwithstanding the foregoing, (a) either party may pursue a temporary restraining order and/or preliminary injunctive relief, with expedited discovery where necessary, in a court of law to protect common law or contractual trade-secret or confidential-information rights and to prevent unfair competition, until such time as an arbitration of all issues of final relief regarding same can be conducted, and (b) insured workers compensation claims (other than wrongful discharge claims) and claims for unemployment insurance are excluded from arbitration under this agreement.

Claims covered by this arbitration agreement will be pursued in an individual claimant proceeding and not as part of a representative, collective, or class action. This Agreement does not prevent the filing of charges with administrative agencies such as the Equal Employment Opportunity Commission, the National Labor Relations Board, or equivalent state agencies. Nothing in this Agreement prevents a party from participating in any investigation or proceeding conducted by such an agency. However, the Executive agrees not to pursue or accept any legal remedies against the Company through any procedure or forum other than arbitration provided for in this agreement. This agreement will be controlled by the Federal Arbitration Act (FAA) and enforced pursuant to the FAA, except that state law may be applied where necessary to make this agreement enforceable if the FAA does not apply.

The arbitration will be conducted in Pittsburgh, Pennsylvania by a retired judge as selected through a mutually agreeable arbitration service or the American Arbitration Association (AAA) if no other service is agreed upon. The arbitrator will be selected from a panel of no less than seven alternatives through mutual agreement or a process of alternating strikes. To initiate a claim, the complaining party will send a written demand to the opposing party explaining the basis for the claim and the relief sought under a heading "Demand for Arbitration." Any Demand for Arbitration on the part of the Executive should be directed to the Board. Each party will be allowed at least one deposition. Upon request of either party, and at the expense of the requesting party(s), the arbitrator shall be required to state in a written opinion all facts and conclusions of law relied upon to support any decision rendered.

No arbitrator will have authority to apply a cause of action or remedy that could not be applied by a court of law in the jurisdiction where the dispute arises under the same facts and circumstances. Upon motion of either party, the arbitrator shall dismiss any claim that would be subject to dismissal under the federal summary judgment standard for that claim. Either party may bring an action in any court of competent jurisdiction to compel arbitration under this agreement, to enforce an arbitration award, or to vacate an arbitration award. A record created by non-stenographic means (e.g., tape recording) can be used with the cost of any certified transcription of same used for appeal borne by the appealing party. In all other respects, the arbitration procedure will be conducted in accordance with the American Arbitration Association's employment dispute resolution rules.

The Company will pay the arbitration fees and expenses less any filing fee amount that the Executive otherwise would have to pay to pursue a comparable lawsuit in a United States district court or state court (whichever is less) in Pennsylvania. Except for those costs otherwise provided for above, each party will bear its own attorney's fees and costs.

The Executive and the Company expressly waive trial by jury for all claims covered by this Agreement. All other rights, remedies, exhaustion requirements, statutes of limitation and defenses applicable to claims asserted in a court of law will apply in the arbitration.
 

  1. Construction: Each party and his or its counsel have reviewed this Agreement and have been provided the opportunity to revise this Agreement, and, accordingly, the normal rule of construction providing for any ambiguities to be resolved against the drafting party shall not be employed in the interpretation of this Agreement. Instead, the language of all parts of this Agreement shall be construed as a whole and according to its fair meaning, not strictly for or against either party. Nothing in this Agreement is intended to or constitutes a guarantee of employment for a fixed or specific term, and the Company reserves the right to adopt, amend, discontinue, or otherwise alter its compensation, benefit, and human resources practices, policies, and programs at its discretion. 
     
  2. Controlling Law: Except where otherwise provided for herein, this Agreement, and any clams subject to arbitration under this Agreement, shall be governed in all respects by the laws of the Commonwealth of Pennsylvania, excluding any conflict-of-law rule that might refer the construction of this Agreement to the laws of another state or country. 
     
  3. Counterparts: This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. 
     
  4. Independent Legal Advice: The Executive acknowledges having the opportunity to obtain independent legal advice in connection with this Agreement.

IN WITNESS WHEREOF the Company and the Executive have executed this Agreement as of the date and year first above written.

THIS AGREEMENT CONTAINS AN ARBITRATION CLAUSE.

EXECUTIVE:                                                                AMERICAN EAGLE OUTFITTERS, INC.:

/s/ Robert L. Hanson                                                By: /s/ Jay L. Schottenstein

Robert L. Hanson                                                        Jay L. Schottenstein

                                                                                      Chairman of the Board of Directors

 

 

CHIEF EXECUTIVE OFFICER EMPLOYMENT AGREEMENT

APPENDIX A - DEFINITIONS

As used in the Agreement, the following terms will have the definitions set forth in this Appendix A:

  1. "Cause" shall mean one or more of the following:
    1. A material breach by Executive of any term of the Agreement, or the Company's policies, Executive's fiduciary duties to the Company, or of any law, statute, or regulation;
    2. Misconduct which is injurious to the Company or any of its affiliates, either monetarily of otherwise, or which impairs Executive's ability to effectively perform Executive's duties or responsibilities;
    3. Personal conduct which reflects poorly on the Company or Executive or which impairs Executive's ability to perform his duties or manage subordinate employees, including but not limited to the abuse of alcohol or controlled substances;
    4. Habitual or repeated neglect of Executive's duties or responsibilities;
    5. The appropriation of (or attempted appropriation of) a business opportunity of the Company or its affiliates, including attempting to secure or securing any personal profit in connection with any transaction by the Company or its affiliates;
    6. The commission or conviction for (or the procedural equivalent or conviction for), or entering of a guilty plea or plea of no contest with respect to a crime, which in the Company's reasonable judgment, involves moral turpitude;
    7. Intentional injury of another employee or any person in the course of performing services for the Company; or
    8. Any conflict of interest, including, but not limited to solicitation of business on behalf of a competitor or potential competitor. 
       
  2. "Good Reason" shall mean one or more of the following:
    1. Material reduction, without Executive's consent, of Executive's base salary, unless the reduction is generally applicable to substantially all senior executives of the Company;
    2. Failure to pay Executive the compensation described in Sections 3 and 4.
    3. Material reduction on an aggregate basis of the benefits provided to Executive under Company benefits plans, unless the reduction is generally applicable to substantially all senior executives of the Company;
    4. A substantial diminution in Executive's authority or duties that is materially inconsistent with Executive's position of Chief Executive Officer without Executive's consent; or
    5. Relocation of more than 50 miles from the Company's Headquarters that also increases the commute from Executive's principal residence by more than 50 miles;

provided however, that for purposes of "Good Reason", nothing described above shall constitute Good Reason unless Executive has notified the Company in writing describing the event which constitutes Good Reason within 30 days after the occurrence of such event and then only if the Company shall have failed to cure such event within 30 days after the Company's receipt of such written notice and Executive elects to terminate his employment as a result at the end of such 30 day cure period.
 

  1. "Disability" means Executive's inability to perform the essential functions of his regular duties and responsibilities as the Company's Chief Executive Officer, with or without reasonable accommodation, due to a physical or mental injury, illness or impairment for a period of (1) six consecutive months or (ii) an aggregate of nine months (whether or not consecutive) in any 12-month period. The Company reserves the right to make the determination of disability under this Agreement in good faith based upon information supplied by Executive and/or his medical personnel, as well as information from medical personnel (or others) selected by the Company or its insurers. Executive shall not unreasonably withhold his consent to release relevant medical information or records to the medical personnel selected by the Company or its insurers. Executive and the Company acknowledge that Executive's ability to perform Executive's duties and responsibilities, with or without reasonable accommodation, is the essence of this Agreement.
     
  2. "Termination Date" means the effective date of Executive's "separation from service" from the Company as defined in Section 409A and Treasury Regulations promulgated thereunder. 
     
  3. "Notice of Termination" means a written notice of termination of this Agreement which (i) indicates the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated, and (iii) specifies the Termination Date.

   

EXECUTIVE EMPLOYMENT AGREEMENT

Between Robert L. Hanson and American Eagle Outfitters, Inc.

APPENDIX B - GENERAL RELEASE OF CLAIMS

In exchange for the promises and benefits set forth in the Agreement, and to be provided to me following the Effective Date of this General Release, I, _____________________, on behalf of myself, my heirs, executors and assigns, hereby acknowledge, understand and agree as follows:

1. On behalf of myself and my family, heirs, executors, administrators, personal representatives, agents, employees, assigns, legal representatives, accountants, affiliates and for any partnerships, corporations, sole proprietorships, or other entities owned or controlled by me, I fully release, acquit, and forever discharge American Eagle Outfitters, Inc., its past, present and future officers, directors, shareholders, agents, representatives, insurers, employees, attorneys, subsidiaries, affiliated corporations, and assigns (collectively, the "Releasees"), from any and all charges, actions, causes of action, claims, grievances, damages, obligations, suits, agreements, costs, expenses, attorneys' fees, or any other liability of any kind whatsoever, suspected or unsuspected, known or unknown, which have or could have arisen out of my employment with the Company and/or termination of my employment with the Company (collectively, "Claims"), including:

a. Claims arising under Title VII of the Civil Rights Act of 1964 (as amended); the Civil Rights Acts of 1866 and 1991; the Americans With Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act; the Occupational Health and Safety Act; the Sarbanes-Oxley Act; the Pennsylvania Human Relations Act, and/or any other laws of the Commonwealth of Pennsylvania related to employment or the separation from employment;

b. Claims for age discrimination arising under the Age Discrimination in Employment Act of 1967 (as amended) ("ADEA") and the Older Workers Benefits Protection Act, except ADEA claims that may arise after the execution of this General Release;

c. Claims arising out of any other federal, state, local or municipal statute, law, constitution, ordinance or regulation; and/or

d. Any other employment related claim whatsoever, whether in contract, tort or any other legal theory, arising out of or relating to my employment with the Company and/or my separation of employment from the Company. I also agree that I have been properly paid for all hours worked, have not suffered any on-the-job injury for which I have not already filed a claim and I have been properly provided any leaves of absence because of my own health condition or a family member's health condition.

e. Excluded from this General Release are any claims that cannot be released or waived by law. This includes, but is not limited to, my right to file a charge with or participate in an investigation conducted by certain government agencies, such as the EEOC or NLRB. I acknowledge and agree, however, that I am releasing and waiving my right to any monetary recovery should any government agency pursue any claims on my behalf that arose prior to the effective date of this General Release.

f. I waive all rights to re-employment with the Company. If I do apply for employment with the Company, the Company and I agree that the Company need not employ me, and that if the Company declines to employ me for any reason, it shall not be liable to me for any cause of action or damages whatsoever. I further agree that if I am re-hired by the Company or engaged by the Company in any capacity within the 6-month period immediately following my date of separation, I will repay the Company an amount equal to one-half of the net of any severance or separation pay I received. I agree to repay this amount within 30 days following the date I am re-hired or engaged by the Company.

2. Release of Other Claims. I fully release, acquit, and forever discharge the Company from any and all other charges, actions, causes of action, claims, grievances, damages, obligations, suits, agreements, costs, expenses, attorneys' fees or any other liability of any kind whatsoever of which I have knowledge as of the time I sign this General Release.

3. Restrictive Covenants. I acknowledge and agree that all of my obligations under the restrictive covenants in Sections 6 and 7 of my Chief Executive Officer Employment Agreement remain in full force and effect and shall survive the termination of my employment with the Company and the execution of this General Release.

4. Consultation with Attorney.  I am advised and encouraged to consult with an attorney prior to executing this General Release. I acknowledge that if I have executed this General Release without consulting an attorney, I have done so knowingly and voluntarily.

5. Period for Review. I acknowledge that I have been given at least 21 days from the date I first received this General Release, or at least 45 days from the date I first received this General Release if my termination is part of a group reduction in force, which date was on or before _______________, during which to consider signing it.

6. Revocation of General Release. I acknowledge and agree that I have the right to revoke my acceptance of this General Release if I notify the Company in writing within 7 calendar days following the date I sign it. Any revocation, to be effective, must be in writing, signed by me, and either: a) postmarked within 7 calendar days of the date I signed it and addressed to Tom DiDonato, Executive Vice President, Human Resources, American Eagle Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, Pennsylvania, 15203; or b) hand delivered within 7 days of execution of this General Release to Mr. DiDonato. This General Release will become effective on the 8th day after I sign it (the "Effective Date"); provided that I have not timely revoked it.

I ACKNOWLEDGE AND AGREE THAT I HAVE BEEN ADVISED THAT THE GENERAL RELEASE IS A LEGAL DOCUMENT, AND I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY CONCERNING THIS GENERAL RELEASE. I ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ AND FULLY UNDERSTAND ALL PROVISIONS OF THIS GENERAL RELEASE AND I AM VOLUNTARILY AND KNOWINGLY SIGNING IT.

By: ________________________________________ _______________________________

SIGNATURE DATE

 

 

 

EX-10 2 odonnellempfinal.htm EXHIBIT 10.1

EMPLOYMENT AGREEMENT
As amended and restated January 2010
(James V. O'Donnell)


THIS AGREEMENT is made by and between American Eagle Outfitters, Inc. ("Company") and James V. O'Donnell ("Executive"), and is effective as of the date it has been fully executed by both parties.

Company agrees to continue to employ Executive as Chief Executive Officer ("CEO") through fiscal 2012, and Executive hereby accepts this offer and agrees to serve Company subject to the general supervision, advice and direction of Company's Chairman ("Chairman") and Board of Directors ("Board"), and upon the following terms and conditions:

1. Position and Duties.

1.1.1. Executive shall be employed as Company's CEO through fiscal 2012, with such authority and duties as are customary for this position, including, without limitation: supervising and managing all aspects of the Company's businesses; direct responsibility for each of the Company's brands; further developing, refining and implementing the Company's strategic growth plans; and assisting the Board in its plans for a CEO successor. Executive shall have overall responsibility for Company's domestic and international operations and shall perform such other services and duties as the Chairman or Board may from time to time designate.

1.1.2. Executive agrees to devote his full business time, best efforts, and undivided attention to the business and affairs of Company through fiscal 2012, except for any vacations, illness, or disability. Executive shall not engage in any other businesses that would interfere with his duties, provided that nothing contained herein is intended to limit Executive's right to make passive investments in the securities of publicly-owned companies or other businesses which will not interfere or conflict with his duties hereunder. Executive may, with the prior written consent of the Chairman, sit on the boards of other businesses, provided that they are not direct competitors or vendors.

1.2. Executive agrees that he shall at all times observe and be bound by all rules, policies, practices, and resolutions heretofore or hereafter adopted in writing by the Company which are generally applicable and provided to Company's officers and employees and which do not otherwise conflict with this Agreement.

1.3. Company shall indemnify Executive in the performance of his duties and responsibilities and advance expenses in connection therewith to the same extent as other senior executives and officers. Such rights shall not be subject to arbitration under paragraph 6.

2. Term. This Agreement shall terminate at the end of the Company's 2012 fiscal year on February 1, 2013, unless sooner terminated as provided herein or unless otherwise extended by the mutual written agreement of both parties.

3. Compensation.

3.1. Base Salary. Company shall increase Executive's annual base salary from its current level of $1,600,000 per year to $1,700,000 per year effective for the next fiscal year ended January 29, 2011 ("fiscal 2010"), payable in equal installments in accordance with Company's payroll practices for executive employees. Executive agrees to defer pursuant to Company's Deferred Compensation Plan the amount of base salary for each calendar year that is greater than $1,000,000. The Compensation and Stock Option Committee (the "Committee") of the Board will establish Executive's base salary and other compensation for fiscal 2011 and fiscal 2012 by notice to Executive prior to the end of the prior fiscal year, and base salary shall be not less than the amount for the immediately preceding fiscal year.

3.2. Cash Bonus.

3.2.1. Incentive Bonus. Executive will be eligible to receive an annual incentive bonus targeted at 130% of his base salary with a maximum bonus of 260% of base salary under the Company's 2005 Stock Award and Incentive Plan, as amended ("the Plan"). The Plan conditions the payment of this annual performance bonus based on achievement of pre-determined performance goals set forth in writing and based on objective measurements all established by the Committee. The Committee must verify that the performance goals and other material terms are met prior to payment. It is the parties' intention that the Plan be adopted and administered in a manner that enables Company to deduct for federal income tax purposes to the maximum extent possible the amount of any annual incentive bonus. The incentive bonus determined to be due, if any, will be paid within 120 calendar days after the close of Company's fiscal year and completion of an outside audit by Company's then current outside audit firm.

3.2.2. Long Term Incentive Cash Plan. Executive is eligible to receive a long term incentive bonus under the Company Long Term Incentive Cash Plan, which has been established under the Plan (the "LTI Plan"), for fiscal 2009 and has an account balance for prior years under the LTI Plan (the "LTI Account"). Executive will receive payment of: (a) one-half of the amount in the LTI Account on the day in spring 2010 when the other executives of the Company receive their fiscal 2010 payment; and (b) the entire remaining amount in the LTI Account on the day in spring 2011 when the other executives of the Company receive their fiscal 2011 payment. It is the Company's intention that the LTI Plan be adopted and administered in a manner that enables Company to deduct for federal income tax purposes all amounts paid pursuant to the LTI Plan.

3.3. Long Term Equity Compensation. Executive shall receive long term equity incentive compensation under the Plan for each fiscal year on terms similar to those of other senior executives at the Company as set forth below.

3.3.1. Restricted Stock Unit Awards. The Chairman shall recommend to the Committee that Executive receive three annual grants of restricted stock unit awards during the term of this Agreement, one for each of fiscal years 2010, 2011 and 2012, with each grant made pursuant to and subject to all terms and conditions set forth in the Plan. For fiscal 2010 the size of the award shall be equal to the number of shares of Company's common stock equal to $3,990,000 divided by the closing sale price on the grant date. The amount of the award for fiscal years 2011 and 2012 shall be fixed by the Committee. Pursuant to the terms of the Plan, each restricted stock unit award will vest and be paid in three equal annual installments. Either the grant or the vesting of the awards will be subject to achievement of pre-determined performance goals set forth in writing and based on objective measurements all established by the Committee. The Committee must verify that the performance goals and other material terms are met prior to any vesting or payment. It is the parties' intention that the Plan be adopted and administered in a manner that enables the Company to deduct for federal income tax purposes to the maximum extent possible the value of all restricted stock unit awards. The delivery of restricted stock earned will be made on the business day closest to the anniversary of the grant date as set forth in the award agreement. Any restricted stock unit awards unvested at the time of termination of Executive's employment shall (subject to achievement of any applicable performance goals) continue to vest without pro-ration; provided, however, that if employment is terminated by Executive's disability (as that term is defined in Treasury Regulation Section 1.409A-3(i)(4)) or death all such awards shall immediately vest in full and shall be paid within 30 days after such disability or death, and; provided, further, if employment is terminated "for cause," all such unvested awards shall lapse.

3.3.2 Long-term Performance Restricted Stock Unit Awards. The Chairman shall recommend to the Committee that Executive receive three annual grants of long-term performance restricted stock unit awards during the term of this Agreement, one for each of fiscal years 2010, 2011 and 2012, with each grant made pursuant to and subject to all terms and conditions set forth in the Plan. For fiscal 2010 the size of the award shall be equal to the number of shares of Company's common stock equal to $2,850,000 divided by the closing sale price on the grant date. The amount of the award for fiscal years 2011 and 2012 shall be fixed by the Committee. Pursuant to the terms of the Plan, the Committee will condition the vesting of this restricted stock based on achievement of pre-determined performance goals set forth in writing and based on objective measurements all established by the Committee. The Committee must verify that the performance goals and other material terms are met prior to vesting (as certified by an outside audit by Company's then current outside audit firm for the fiscal year applicable to the respective performance goal). It is the parties' intention that the Plan be adopted and administered in a manner that enables Company to deduct for federal income tax purposes to the maximum extent possible the value of all long-term performance restricted stock unit awards. The delivery of restricted stock earned, if any, will be made within 120 calendar days after the close of Company's fiscal year. Any long-term performance restricted stock unit awards unvested at the time of termination of Executive's employment shall (subject to achievement of the applicable performance goals) continue to vest without pro-ration and shall be paid within 30 days after such vesting; provided, however, if employment is terminated "for cause," all such unvested awards shall lapse.

3.3.3. Stock Options. The Chairman shall recommend to the Committee that Executive receive three grants of stock options during the term of this Agreement, the first for fiscal 2010, the second in fiscal 2011 and the third in fiscal 2012, with each grant made pursuant to and subject to all terms and conditions set forth in the Plan. The fiscal 2010 grant shall be made the date this Agreement is executed and shall be for the number of shares of Company's common stock with a grant date value equal to $4,560,000 based on the method used by the Company for computing stock option expense for financial statement purposes and with an exercise price equal to the fair market value of the common stock on the grant date as defined in the Plan. The fiscal 2011 and 2012 grants shall be made on the dates that other executive officers of Company receive their annual stock option grants and shall be for the number of shares of Company's common stock with a grant date value to be determined by the Committee. Each option shall vest and be exercisable as to one third of the amount of the grant on each of the first three anniversaries of the grant date. Any stock options unvested at the time of termination of Executive's employment shall continue to vest without pro-ration; provided, however, that if employment is terminated by Executive's disability (as that term is defined in Treasury Regulation Section 1.409A-3(i)(4)) or death, all such options shall immediately vest in full and; provided, further, if employment is terminated "for cause," all such unvested options shall lapse. Options will be exercisable until the earlier of (a) seven years from the grant date, or (b) (i) for options that are or become exercisable upon the termination of Executive's employment (including those accelerated on death or disability), for one year after the termination of employment and (ii) for options that are not exercisable upon the termination of Executive's employment, the options shall continue to vest and shall be exercisable for one year after the vesting date when such options first become exercisable.

3.4. Vacation. During the term of this Agreement, Executive shall be entitled to vacation commensurate with other senior executives. The dates of said vacations shall be mutually agreed upon by Company's Chairman and Executive.

3.5. Car and Commuting Expenses. During the term of this Agreement, Company will provide Executive with a luxury automobile for both business and personal use. Company will make available charter air and car services to Executive for business purposes and for commuting to and from work. Company shall pay Executive's reasonable car and train commuting expenses and Executive will reimburse the Company for charter air services used for commuting. Any amount included in Executive's W-2 wages relative to the car or commuting expenses shall be not be grossed up for tax purposes.

3.6. Business Expenses. Company shall pay, advance or reimburse Executive for all normal and reasonable business-related expenses incurred by Executive during the term of this Agreement, including travel expenses, incurred in the performance of his duties on the same basis as paid to other senior executives. Company shall furnish Executive with company credit cards provided to other senior executives for use solely in the performance of his duties. The amount of expenses eligible for reimbursement during a taxable year of the Executive shall not affect the expenses eligible for reimbursement in any other taxable year.

3.7. Taxes. The compensation provided to Executive hereunder shall be subject to any withholdings and deductions required by any applicable tax laws.

3.8. Benefit Plans. During the term of this Agreement, Executive is entitled to participate in any deferred compensation or other employee benefit plans, including any profit sharing or 401(k) plans; group life, health, hospitalization and disability insurance plans; discount privileges; and other employee welfare benefits made available generally to, and under the same terms as, Company's other executives.

4. Executive's Obligations.

4.1. Confidential Information. Executive agrees that during and after his employment, any "confidential information" as defined below shall be held in confidence and treated as proprietary to Company. Executive agrees not to use or disclose any confidential information except to promote and advance the business interests of Company. Executive agrees that upon his separation from employment, for any reason whatsoever, he shall not take or copy, and shall immediately return to Company, any documents that constitute or contain confidential information. "Confidential information" includes, but is not limited to, any confidential data, figures, projections, estimates, pricing data, customer lists, buying manuals or procedures, distribution manuals or procedures, other policy and procedure manuals or handbooks, supplier information, tax records, personnel histories and records, information regarding sales, information regarding properties and any other confidential information regarding the business, operations, properties or personnel of Company which are disclosed to or learned by Executive as a result of his employment, but shall not include his personal personnel records. Confidential information shall not include any information that (i) Executive possessed prior to his first performing services for Company; (ii) becomes a matter of public knowledge thereafter through sources independent of Executive; (iii) is disclosed by Company without restriction on its use; or (iv) is required to be disclosed by law or governmental order or regulation.

4.2. Solicitation.

4.2.1. Employees. Executive agrees that during his employment and for two years after the end of his employment, for any reason, he shall not, directly or indirectly, solicit Company's employees to leave their employment; he shall not employ or seek to employ them; and, he shall not cause or induce any of Company's competitors to solicit or employ Company's employees.

4.2.2. Third Parties. Executive agrees that during his employment and for two years following the end of his employment, for any reason, he shall not, either directly or indirectly, recruit, solicit or otherwise induce or influence any customer, supplier, sales representative, lender, landlord or any other person having a business relationship with Company to discontinue or reduce the extent of such relationship except in the course of his duties pursuant to this Agreement and with the good faith objective of advancing Company's business interests.

4.3. Noncompetition. Executive agrees that for a period of two years following the end of his employment, for any reason, he shall not, either directly or indirectly, accept employment with, act as a consultant to, or otherwise perform the same services (which shall be determined regardless of job title) for any business that directly competes with Company's business, which is understood to be the design, manufacture and retail sale (including Internet sales) of specialty clothing, accessories, shoes, and related items or any other line of business the Company becomes involved in prospectively by virtue expansion, acquisition and/or joint venture.

4.4. Cooperation.

4.4.1. With Company. Executive agrees to cooperate with Company during the course of all third-party proceedings arising out of Company's business about which Executive has knowledge or information. Such proceedings may include, but are not limited to, internal investigations, administrative investigations or proceedings, and lawsuits (including pre-trial discovery). For purposes of this paragraph, cooperation includes, but is not limited to, Executive's making himself available for interviews, meetings, depositions, hearings, and/or trials without the need for subpoena or assurances by Company, providing any and all documents in his possession that relate to the proceeding, and providing assistance in locating any and all relevant notes and/or documents.

4.4.2. With Third Parties. Executive agrees to communicate with, or give statements to, third parties relating to any matter about which Executive has knowledge or information as a result of his employment only to the extent that it is Executive's good faith belief that such communication or statement is in Company's business interests.

4.4.3. With Media. Executive agrees to communicate with, or give statements to, any member of the media (print, television or radio) relating to any matter about which Executive has knowledge or information as a result of his employment only to the extent that it is Executive's good faith belief that such communication or statement is in Company's business interests.

4.5. Remedies. Executive agrees that any disputes under this paragraph shall not be subject to arbitration. If Executive breaches this paragraph, the damage will be substantial, although difficult to quantify, and money damages may not afford Company an adequate remedy; therefore, if Employee breaches or threatens to breach this paragraph, Company shall be entitled, in addition to other rights and remedies, to specific performance, injunctive relief and other equitable relief to prevent or restrain such conduct.

5. Termination and Related Benefits.

5.1. Death. This Agreement shall terminate automatically upon Executive's death, and Company shall pay his estate, any base salary earned by Executive, and any rights or benefits that have vested, including: (a) the Retirement Benefit (as hereinafter defined); (b) the LTI Account; (c) restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment by reason of death shall immediately vest in full and be paid by delivery of stock within 30 days after Executive's death ; (d) long-term performance restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment by reason of death shall (subject to achievement of the applicable performance goals) continue to vest in full, and be paid, without pro-ration, by delivery of stock within 30 days of vesting if the performance goal is met; and (e) all stock options immediately vest in full and will be exercisable until the earlier of (i) the expiration date set forth in the stock option award agreement, or (ii) one year after the termination of employment. In addition, Company shall pay Executive's estate, any declared but unpaid annual incentive cash bonus that, but for Executive's death, would otherwise have been payable to Executive. Such payments shall be made in the time and manner specified in Section 5.7 of this Agreement.

5.2. Permanent Disability. Upon Executive's permanent disability, Company shall have the right to terminate this Agreement immediately with written notice. For these purposes, permanent disability shall mean that Executive fails to perform his duties on a full-time basis for a period of more than 90 calendar days during any 12-month period, due to a physical or mental disability or infirmity. If this Agreement is terminated due to Executive's permanent disability, Company shall pay Executive any base salary earned and any rights or benefits that have vested, including: (a) the Retirement Benefit (as hereinafter defined); (b) the LTI Account; (c) restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment by reason of disability shall immediately vest in full and be paid by delivery of stock within 30 days after Executive's disability; (d) long-term performance restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment by reason of disability shall (subject to achievement of the applicable performance goals) continue to vest in full, and be paid, without pro-ration, by delivery of stock within 30 days after vesting if the performance goal is met; and (e) all stock options shall immediately vest in full and will be exercisable until the earlier of (i) the expiration date set forth in the stock option award agreement, or (ii) one year after the termination of employment. In addition, Company shall pay Executive any declared but unpaid annual incentive cash bonus that, but for Executive's disability, would otherwise have been payable to Executive. Such payments shall be made in the time and manner specified in Section 5.7 of this Agreement.

5.3. Retirement.

5.3.1. Retirement Benefit. Upon termination of Executive's employment with the Company for any reason, other than "for cause" as specified in paragraph 5.5 of this Agreement, Company shall pay to Executive, or in the event of Executive's death to his estate, a retirement benefit in an amount equal to Executive's total cash compensation (base salary plus any annual incentive bonus) for the highest compensated fiscal year of the prior seven fiscal years (the "Retirement Benefit"). Because Executive has earned a retirement benefit under his prior employment agreement, upon any termination of Executive's employment for any reason, other than "for cause" as specified in paragraph 5.5 of this Agreement, the Retirement Benefit will be at least $3,419,231.00. If Executive retires on or after February 1, 2013, then, subject to Section 5.8 of this Agreement, the Retirement Benefit shall be payable over five years in one hundred and thirty (130) equal bi-weekly installments on the same schedule as the Company's payroll beginning with the first pay period after termination of Executive's employment. If Executive retires before February 1, 2013, the Retirement Benefit shall be paid in the manner provided under Section 5.7 of this Agreement.

5.3.2. Retirement Health Insurance. Upon termination of Executive's employment with the Company for any reason, Company shall make available to Executive retirement health insurance for Executive and his dependents for his lifetime. Executive will pay all associated premiums for coverage.

5.4. Termination By Company Without Cause. The Company shall have the right, in addition to its rights set forth below in paragraph 5.5, to terminate this Agreement during its term, for any reason, upon 30 days' written notice to Executive. Company may, in its sole discretion, require Executive to cease active employment immediately. In the event of such a termination, Company shall have only the following obligations:

  1. Pay Executive his earned but unpaid base salary, and all deferred compensation as provided in paragraph 5.8.
  2. Pay Executive severance in an amount equal to one year of Executive's then current base salary (the "Severance Payment") in the manner provided under Section 5.7 of this Agreement.
  3. Pay Executive the Retirement Benefit in the manner provided under Section 5.7 of this Agreement.
  4. Pay Executive any annual cash incentive bonus to the extent that the performance goals established at the time of grant are met for the fiscal year during which termination occurred, even though Executive was not employed for the entire fiscal year.
  5. Outstanding stock options held by Executive shall remain exercisable until the earlier of (i) the expiration date set forth in the stock option award agreement, or (ii) (A) for options that are vested as of the termination of Executive's employment, for one year after the termination of employment and (B) for options that are not vested as of the termination of Executive's employment, the options shall continue to vest and shall be exercisable for one year after the vesting date when such options first become exercisable.
  6. Restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment shall continue to vest, without pro-ration, and be paid on the same schedule as if Executive's employment had not terminated.
  7. Long-term performance restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment shall continue to vest, without pro-ration, and be paid on the same schedule as if Executive's employment had not terminated by delivery of stock in the same manner upon vesting, to the extent that the performance goals established at the time of grant are met, even though Executive was not employed for the entire applicable performance period.
  8. Pay Executive the LTI Account in the manner provided under Section 5.7 of this Agreement.

5.5. Termination by Company For Cause. Company may terminate this Agreement during its term if it has "cause" to do so. For purposes of this paragraph, the term "cause" means the following:

(i) willful violation of laws and regulations governing Company;

(ii) willful failure to substantially comply with any material terms of this Agreement, provided Company shall make a written demand for substantial compliance setting forth the specific reason(s) for same and Executive shall have 60 days to cure, if possible;

(iii) willful breach of fiduciary duties; or

(iv) conviction of or plea of guilty or no contest to a felony, involving fraud, bribery or embezzlement;

in each case only where Company reasonably determines the event has had or is likely to have a material adverse effect upon Company's operations or financial condition.

Failure to meet performance targets and measures shall not constitute "cause" as that term is used herein. Executive may have an opportunity to be heard by the Board prior to a termination for cause. For purposes of this paragraph, Executive's acts or omissions shall be considered "willful" if done without a good faith, reasonable belief that such act or omission was in Company's best interest. In the event of termination for cause, Company shall pay Executive any base salary earned and any rights or benefits that have vested, including any declared but unpaid annual incentive cash bonus, the LTI Account, all deferred compensation, and any vested equity awards but excluding the Retirement Benefit, which shall be forfeited in its entirety as will all unvested equity awards.

5.6. Early Retirement. Executive may terminate this Agreement by electing early retirement at any time by giving at least 60 calendar days' written notice of his intention to retire to Company's Chairman, which Company may accept immediately. In the event of Executive's early retirement, Company will have no further obligations or liability hereunder to Executive, except Company shall pay Executive any base salary earned, and declared but unpaid bonuses, and any rights or benefits that have vested, including: (a) the Retirement Benefit; (b) the LTI Account; (c) restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment by reason of retirement shall continue to be paid, without pro-ration, by delivery of stock in the same manner on the anniversary of the grant on the same schedule as if Executive's employment had not terminated; (d) long-term performance restricted stock unit awards that have not been paid by delivery of stock prior to the termination of Executive's employment by reason of retirement shall continue to vest, without pro-ration, and be paid on the same schedule as if Executive's employment had not terminated by delivery of stock in the same manner upon vesting, to the extent that the performance goals established at the time of grant are met, even though Executive was not employed for the entire applicable performance period; and (e) stock options shall remain exercisable until the earlier of (i) the expiration date set forth in the stock option award agreement, or (ii) (A) for options that are vested as of the termination of Executive's employment, for one year after the termination of employment and (B) for options that are not vested as of the termination of Executive's employment, for one year after the vesting date when such options first become exercisable. Provided, however, that notwithstanding the forgoing and anything in this Agreement to the contrary, all restricted stock unit awards, long-term performance restricted stock unit awards, and stock option awards that were made or granted within six months prior to Executive's retirement shall terminate and shall never vest or become exercisable.

5.7. Payments Due Upon a Termination Before February 1, 2013. In the event of any termination of Executive's employment under this Agreement prior to February 1, 2013, Executive (or his estate) shall be paid any unpaid portion of his salary that has accrued by virtue of his employment during the period prior to termination, and any unpaid, declared bonus, together with any unpaid business expenses properly incurred under this Agreement prior to termination. Such amounts shall be paid within 15 days of the date of termination, unless otherwise provided herein. Executive (or his estate) shall also have the right to exercise stock options in accordance with the terms of this Agreement, and Executive shall receive payout of the LTI Account, any Severance Payment owed to Executive, and the Retirement Benefit in a lump sum within 30 days of the termination, except as otherwise provided under Section 5.8 of this Agreement.

5.8. Timing of Payments. Notwithstanding anything in any subsection of this Section 5 to the contrary, if, when Executive's employment with Company terminates, Company believes that any payments under this Agreement will result in additional tax or interest to Executive under Internal Revenue Code Section 409A and the guidance promulgated there under ("Code Section 409A"), Company may suspend the payments to Executive under this Section 5 of amounts due within the first six months after the termination date. If Company suspends any payments, it will aggregate and pay these amounts to Executive on the earliest of (a) the date that is six months and one day after the termination date, (b) the date of the Executive's death, or (c) any earlier date that does not result in such additional tax or interest under Code Section 409A. In addition, any compensation deferred under the Company's Deferred Compensation Plan or otherwise in accordance with this Agreement shall be paid to Executive following the date of his termination of employment for any reason in accordance with Executive's payment elections on file.

6. Arbitration. Unless stated otherwise herein, the parties agree that arbitration shall be the sole and exclusive remedy to redress any dispute, claim or controversy involving the interpretation of this Agreement or the terms, conditions or termination of this Agreement or the terms, conditions or termination of Executive's employment with Company. The parties intend that any arbitration award shall be final and binding and that a judgment on the award may be entered in any court of competent jurisdiction and enforcement may be had according to its terms. This paragraph shall survive the termination or expiration of this Agreement.

6.1. Arbitration shall be held in Pittsburgh, PA, and shall be conducted by a retired federal judge or other qualified arbitrator mutually agreed upon by the parties in accordance with the Voluntary Arbitration Rules of the American Arbitration Association then in effect. The parties shall have the right to conduct discovery pursuant the Federal Rules of Civil Procedure; provided, however, that the Arbitrator shall have the authority to establish an expedited discovery schedule and cutoff and to resolve any discovery disputes. The Arbitrator shall not have jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms hereof. The Arbitrator's sole authority in this regard shall be to interpret or apply any provision(s) of this Agreement. The Arbitrator shall be limited to awarding compensatory damages, including unpaid wages or benefits, but shall have no authority to award punitive, exemplary or similar-type damages.

6.2. Any claim or controversy not sought to be submitted to arbitration, in writing, within 120 days of when it arose shall be deemed waived and the moving party shall have no further right to seek arbitration or recovery with respect to such claim or controversy.

6.3. The arbitrator shall be entitled to award expenses, including the costs of the proceeding, and reasonable counsel fees.

6.4. The parties hereby acknowledge that since arbitration is the exclusive remedy, neither party has the right to resort to any federal, state or local court or administrative agency concerning breaches of this Agreement, except as otherwise provided herein in paragraph 6, and that the decision of the Arbitrator shall be a complete defense to any suit, action or proceeding instituted in any federal, state or local court before any administrative agency with respect to any arbitrable claim or controversy.

7. General Provisions.

7.1. The parties agree that the covenants and promises set forth in paragraphs 4, 5 and 6 shall survive the termination of this Agreement and continue in full force and effect for the time periods set forth therein.

7.2. Except as otherwise provided in paragraph 6.2 above, failure to insist upon strict compliance with any term hereof shall not be considered a waiver of any such term.

7.3. This Agreement, along with any other document or policy or practice referenced herein (which are collectively referred to as "Agreement" herein), contain the entire agreement of the parties regarding Executive's employment and supersede any prior written or oral agreements or understandings relating to the same. No modification or amendment of this Agreement shall be valid unless in writing and signed by or on behalf of both parties.

7.4. If Executive's employment terminates, for any reason whatsoever, he shall immediately tender his written resignation from the Board, if applicable, which resignation the Chairman may or may not accept.

7.5. Executive represents and warrants to Company that he is not now under, or bound to be under in the future, any obligation to any person, firm or corporation which is or would be inconsistent or in conflict with this Agreement, or that would prevent, limit, or impair in any way the performance of his obligations hereunder.

7.6. Once signed by both parties, this Agreement shall be binding upon and shall inure to the benefit of the heirs, successors, and assigns of the parties.

7.7. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provisions of this Agreement, or the application thereof to any person or circumstance, shall, for any reason and to any extent, be held invalid or unenforceable, such invalidity and unenforceability shall not affect the remaining provisions hereof and the application of such provisions to other persons or circumstances, all of which shall be enforced to the greatest extent permitted by law.

7.8. The validity, construction, and interpretation of this Agreement and the rights and duties of the parties hereto shall be governed by the laws of the Commonwealth of Pennsylvania, without reference to the Pennsylvania choice of law rules.

7.9. Any written notice required or permitted hereunder shall be mailed, certified mail (return receipt requested) or hand-delivered, addressed to Company's Chairman at Company's then principal office, or to Executive at the most recent home address. Notices are effective upon receipt.

7.10. The rights of Executive under this Agreement shall be solely those of an unsecured general creditor of Company.

7.11. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of any provision hereof.

7.12. To the extent that any provisions of this Agreement do not comply with Code Section 409A, which would cause Executive to incur any additional tax or interest under Code Section 409A, such terms of the Agreement shall be deemed to be modified, to the extent reasonably possible to do so, and applied by Company in a manner to be consistent with Code Section 409A.

 

IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement consisting of 12 pages.

EXECUTIVE

/s/ James V. O'Donnell

James V. O'Donnell

Dated: January 11, 2010

 

AMERICAN EAGLE OUTFITTERS, INC.

By: /s/ Jay L. Schottenstein

Jay L. Schottenstein

Chairman

Dated: January 11, 2010

 

 

EX-10 3 ceocicagreement.htm EXHIBIT 10.2

Exhibit 10.2

CHANGE IN CONTROL AGREEMENT

 

THIS AGREEMENT, dated as of the 14th day of November, 2011, is made by and between American Eagle Outfitters, Inc., a Delaware corporation (the "Company") and the executive listed on the signature page (the "Executive").

WHEREAS, the Company desires to assure continuity of management and fair treatment of its executives in the event of a possible Change in Control (as defined below) transaction; and

WHEREAS, the Company recognizes that its executives may be involved in evaluating or negotiating any offers, proposals or other transactions which could result in a Change in Control of the Company and believes that it is in the best interest of the Company and its stockholders for such executives to be in a position to be able to assess objectively and pursue aggressively the interests of the Company's stockholders in making these evaluations and carrying on such negotiations; and

WHEREAS, the Board of Directors (the "Board") of the Company believes it is essential to provide Executive with compensation arrangements upon a Change in Control that provide Executive with some financial security and that are competitive with those of other corporations, and in order to accomplish these objectives, the Board has authorized the Company to enter into this Agreement.

NOW THEREFORE, the parties, for good and valuable consideration and intending to be legally bound, agree as follows:

1.             Operation and Term of Agreement.  This Agreement shall be effective as of the date first set forth above.  This Agreement may be terminated by the Company upon 12 months' advance written notice to Executive; provided, however, that after a Change in Control Date during the term of this Agreement, including during the 12 month period following any notice of termination, this Agreement shall remain in effect until all of the obligations of the parties under the Agreement are satisfied and the Protection Period has expired.  Prior to a Change in Control Date, this Agreement shall immediately terminate upon termination of Executive's employment or upon Executive's ceasing to be an officer of the Company.

2.             Certain Definitions.  For purposes of this Agreement, the following words and phrases shall have the following meanings:

(a)           "Cause" means: (i) the Executive's willful and continued failure substantially to perform the duties of his or her position after notice and opportunity to cure; (ii) any willful act or omission by the Executive constituting dishonesty, fraud or other malfeasance, which in any such case is demonstrably injurious to the financial condition or business reputation of the Company or any of its subsidiaries or affiliates; (iii) an act that constitutes misconduct resulting in a restatement of the Company's financial statements due to material non-compliance with any financial reporting requirement within the meaning of Section 304 of The Sarbanes-Oxley Act of 2002; or (iv) a plea of guilty or no contest or a felony conviction in a court of law under the laws of the United States or any state thereof or any other jurisdiction in which the Company or a subsidiary or affiliate conducts business which materially impairs the value of the Executive's service to the Company or any of its subsidiaries or affiliates; provided, however, that for purposes of this definition, no act or failure to act shall be deemed "willful" unless effected by the Executive not in good faith and without a reasonable belief that such action or failure to act was in or not opposed to the Company's best interests, and no act or failure to act shall be deemed "willful" if it results from any incapacity of the Executive due to physical or mental illness.

(b)           "Change in Control" shall mean and be deemed to have occurred if there shall occur any of the following:

(i)            The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, or successor provisions (a "Person")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act, or successor provisions ("beneficial ownership")) of more than 50% or more of either (1) the then-outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (2) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with subsections (v)(A), (B) and (C) below;

(ii)           During the twelve (12) month period ending on the date of the most recent acquisition, the acquisition by a Person of beneficial ownership of 30% or more of the Outstanding Company Voting Securities; provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with subsections (v)(A), (B) and (C) below;

(iii)           During the twelve (12) month period ending on the date of the most recent acquisition, the acquisition by a Person of assets of the Company having a total gross fair value equal to or more than 40% of the total gross fair market value of the Company's assets immediately before such acquisition; provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control: (A) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any affiliate of the Company or a successor, or (B) any acquisition by any entity pursuant to a transaction that complies with subsections (v)(A), (B) and (C) below;

(iv)           A majority of the individuals who serve on the Board as of the date hereof (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

(v)          Consummation of a reorganization, merger, recapitalization, reverse stock split, statutory share exchange or consolidation or similar corporate transaction involving the Company or any of its Subsidiaries, or the acquisition of assets or stock of another entity by the Company or any of its Subsidiaries (each, a "Business Combination"), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets directly or through one or more subsidiaries (a "Parent")) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any entity resulting from such Business Combination or a Parent or any employee benefit plan (or related trust) of the Company or such entity resulting from such Business Combination or Parent) beneficially owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock of the ultimate parent entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of more than 50% existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination or a Parent were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(vi)          Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

(c)           "Change in Control Date" shall be any date during the term of this Agreement on which a Change in Control occurs.  Anything in this Agreement to the contrary notwithstanding, if Executive's employment or status as an officer with the Company is terminated within twelve (12) months before the date on which a Change in Control occurs, and it is reasonably demonstrated that such termination (i) was at the request of a third party who has taken steps reasonably calculated or intended to effect a Change in Control or (ii) otherwise arose in connection with or anticipation of a Change in Control, then for all purposes of this Agreement the "Change in Control Date" shall mean the date immediately before the date of such termination.

(d)           "Code" shall mean the Internal Revenue Code of 1986, as amended.

(e)           "Disability" means a "permanent and total disability" within the meaning of Section 409A(a)(2)(c) of the Code and underlying regulations.  The Company reserves the right, in good faith, to make the determination of disability under this Agreement based upon information supplied by Executive and/or his medical personnel, as well as information from medical personnel (or others) selected by the Company or its insurers.

(f)            "Good Reason" means the occurrence of any of the following after the applicable Change in Control: (i) a change in duties or responsibilities (including reporting responsibilities) that are inconsistent in any material and adverse respect with Executive's position, duties or responsibilities; (ii) a reduction in Executive's annual base salary or target annual bonus opportunity as in effect immediately prior to such Change in Control or as the same may be increased from time to time thereafter, other than up to a 10% across the board reduction for all executives; (iii) relocation of more than 50 miles from office location on date of such Change in Control that also increases the commute from Executive's principal residence by more than 50 miles; (iv) reduction of more than 5% in aggregate value of benefits under employee benefit plans, welfare benefit plans and fringe benefit plans in which the Executive is participating immediately prior to such Change in Control; or (v) the failure of a successor to the Company (in any transaction that constitutes a Change of Control) to assume in writing the Company's obligations to Executive under this Agreement, if the same is not assumed by such successor by operation of law.

(g)           "Protection Period" means the period beginning on the Change in Control Date and ending on the last day of the 18-month period following the Change in Control Date.

(h)           "Subsidiary" means an entity 50 percent or more of the voting securities or interests of which are owned, directly or indirectly, by the Company or which is otherwise controlled directly or indirectly by the Company.

3.             Vesting Upon Change in Control.  In the event of a Change in Control,  any and all Common Shares (as defined in Section 4(c)), options, restricted shares, performance shares, or other forms of securities issued by the Company and beneficially owned by Executive (whether granted before or after the date of this Agreement) that are unvested, restricted, or subject to any similar restriction that would otherwise require continued employment by Executive beyond the Change in Control Date in order to be vested in the hands of Executive shall vest and become exercisable, or such restrictions shall lapse only to the extent and in the manner specified in the respective award agreements.

4.             Benefits Upon Termination Within a Protection Period.  During the Protection Period, if Executive's employment is terminated by the Company, other than for Cause, Disability or other than as a result of Executive's death, or if Executive terminates his employment for Good Reason, then the Company shall, subject to Sections 7 and 8, make the following payments to Executive:

(a)           All earned and determinable, but unpaid, current salary (other than amounts previously deferred under the Company's deferred compensation plans) and all earned and determinable, but unused, paid time off through the date of Executive's termination shall be paid to Executive in a lump sum in cash within ten (10) business days after the termination of Executive's employment;

(b)           A severance amount equal to two times Executive's "Annual Compensation" shall be paid to Executive within thirty (30) days after the termination of Executive's employment, to the extent such amount is less than or equal to two times the lesser of (i) the sum of Executive's Annual Compensation during the year prior to the year that includes the effective date of termination, or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code ("Initial Amount") except to the extent that a delay of such payments may be required by Section 8(a) below.  To the extent that the severance amount pursuant to this Section 4(b) exceeds the Initial Amount, the severance amount in excess of the Initial Amount shall be paid to Executive on the date that is the earliest of 6 months after Executive's "separation from service" within the meaning of IRC Section 409A (a "Separation from Service"), Executive's death, or such other date as will not result in such payment being subject to additional tax under Section 409A of the Code.  For purposes of this Section 4, "Annual Compensation" shall be an amount equal to the sum of (i) Executive's annual base salary from the Company and its Subsidiaries, annualized for any partial year, in effect immediately prior to the Change in Control Date; and (ii) Executive's annual incentive cash bonus amount at target in effect immediately prior to the Change in Control Date;

(c)           A bonus amount equal to the amount of Executive's then current annual incentive cash bonus at target prorated based on the portion of the Company's fiscal year elapsed as of the Change in Control Date shall be paid to Executive within thirty (30)  days after the termination of Executive's employment;

(d)           Upon Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), the Company shall pay, on Executive's behalf, the portion of premiums of Executive's group health insurance, including coverage for eligible dependents, that the Company paid immediately prior to the date of termination ("COBRA Payments") for the period that Executive is entitled to coverage under COBRA, but not to exceed eighteen months ("COBRA Period").  Upon becoming eligible to receive comparable coverage from a new employer, the Company will no longer be required to pay such COBRA Payments and Executive will promptly notify the Company.

5.             Non-exclusivity of Rights.  Nothing in this Agreement shall prevent or limit Executive's continuing or future participation in any benefit, bonus, incentive, or other plans, practices, policies, or programs provided by the Company or any of its Subsidiaries and for which Executive may qualify, nor shall anything in this Agreement limit or otherwise affect such rights as Executive may have under any stock option or other agreements with the Company or any of its Subsidiaries.  Amounts that are vested benefits or that Executive is otherwise entitled to receive under any plan, practice, policy, or program of the Company or any of its Subsidiaries at or subsequent to the date of termination shall be payable in accordance with such plan, practice, policy, or program; provided, however, that Executive shall not be entitled to severance pay, or benefits similar to severance pay, under any plan, practice, policy, or program generally applicable to employees of the Company or any of its Subsidiaries above or in addition to that provided for in this Agreement.

6.             Full Settlement; No Obligation to Seek Other Employment; Legal Expenses.  The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations under this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right, or action that the Company may have against Executive or others.  Executive shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement.  The Company agrees to pay, within five business days following timely written demand by Executive, all legal fees and expenses Executive may reasonably incur as a result of any dispute or contest, in which Executive prevails on at least one material item, by or with the Company or others regarding the validity or enforceability of, or liability under, any provision of this Agreement.  In any such action brought by Executive for damages or to enforce any provisions of this Agreement, Executive shall be entitled to seek both legal and equitable relief and remedies, including, without limitation, specific performance of the Company's obligations under this Agreement, in Executive's sole discretion.

7.             Tax-Related Adjustment.

(a)         Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that (i) any payment or distribution by the Company to or for the benefit of Executive (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Agreement) (a "Payment") would be subject to the excise tax imposed by Code Section 4999 or any interest or penalties are incurred by Executive with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), and (ii) the reduction of the amounts payable to Executive under this Agreement to the maximum amount that could be paid to Executive without giving rise to the Excise Tax (the "Safe Harbor Cap") would provide Executive with a greater after-tax amount than if such amounts were not reduced, then the amounts payable to Executive under this Agreement shall be reduced (but not below zero) to the Safe Harbor Cap. If the Payments are required to be reduced, they shall be reduced in the following order: (1) amounts (if any) other than those provided under Section 4(e) above payable immediately upon the Change in Control Event that may not be valued under Treas. Reg. Section 1.280G-1, Q&A-24(c) ("24(c)"), (2) amounts (other than those provided under Section 4(e) above) payable after the Change in Control Event that may not be valued under 24(c), in chronological order, beginning with Payments scheduled to occur soonest, (3) amounts provided under Section 4(e) above, in chronological order, beginning with Payments scheduled to occur soonest, and (4) amounts that may be valued under 24(c). If the reduction of the amounts payable hereunder would not result in a greater after-tax result to Executive, no amounts payable under this Agreement shall be reduced pursuant to this provision. Subject to the provisions of Section 7(b) below, all other determinations required to be made under this Section 7, including whether and when a reduction in Payments is required and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm designated by the Board (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and Executive. If the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control Event, the Board shall appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company.

(b)           Executive shall take any position reasonably requested by the Company on Executive's federal income tax returns with respect to the treatment of the Payment from the Company, the payment of any Reimbursement Amount (as defined below), and the receipt of any refund or interest paid by the government to Executive as a result of a Contest (as defined below) (such position, a "Requested Position"), provided that: (i) the Company shall provide Executive with an opinion from nationally recognized accounting firm that there is "substantial authority" for the Requested Position within the meaning of Code Section 6662, and (ii) the general long term or senior unsecured corporate credit rating of the Company or its successor is at least BBB- as rated by Standard & Poors and Baa3 as rated by Moody's Investor Services at the time Executive would be required to take a Requested Position or the Company places in an escrow account or otherwise provides security reasonably requested by Executive to ensure payment to Executive of the indemnity amount that could become due to Executive pursuant to the following sentence.  The Company shall indemnify Executive for any tax, penalty and interest incurred by Executive as a result of taking the Requested Position.  The amount for which Executive is indemnified under the preceding sentence (the "Reimbursement Amount") shall be computed on an after-tax basis, taking into account any income, Excise or other taxes, including interest and penalties.  Executive shall keep the Company informed of all developments in any audit with respect to a Requested Position.  Upon payment of the Reimbursement Amount, or (if the Reimbursement Amount is not yet payable) upon the Company's written affirmation, in form and substance reasonably satisfactory to Executive, of the Company's obligation to indemnify Executive with respect to the Requested Position, and provided part (ii) of the first sentence of this Section 7(b) is satisfied at such time, the Company shall be entitled, at its sole expense, to control the contest of any disallowance or proposed disallowance of a Requested Position (a "Contest"), and Executive agrees to cooperate in connection with a Contest, including, without limitation, executing powers of attorney and other documents at the reasonable request of the Company.  The Reimbursement Amount shall be paid to Executive on or before the date that is ten (10) days prior to the date when Executive is legally required to remit such payment as a result of the disallowance of a Requested Position.  Following payment by the Company of the Reimbursement Amount, if the Requested Position is sustained by the Internal Revenue Service or the courts, the Company shall be entitled to any resulting receipt of interest or refund of taxes, interest and penalties that were properly attributable to the Reimbursement Amount.  If a Requested Position is sustained in whole or in part in a final resolution of a Contest, and if the Reimbursement Amount therefore exceeds the amount of taxes, penalties and interest payable by Executive as a result of the Requested Position (determined on an after-tax basis after taking into account payments made pursuant to the preceding sentence and this sentence), any such excess portion of the Reimbursement Amount shall be treated as a loan by the Company to Executive, which loan Executive must repay to the Company together with interest at the applicable federal rate under Code Section 7872(f)(2); provided, however, that if at the time the Company is to make such payment, a loan to Executive would not be permitted under the Sarbanes-Oxley Act of 2002, as amended, because Executive continues to be an officer or director of the Company, the Company shall pursue such appeal in a manner that does not require Executive to make such excess payment to the applicable taxing authority.

8.             Code Section 409A Savings Provision.  Notwithstanding anything in this Agreement to the contrary, the following provisions shall apply to payments treated as deferred compensation under Code Section 409A:

(a)           If, on the date of Executive's Separation from Service, Executive is a "specified employee," within the meaning of Sections 409A(a)(2)(A)(i) and 409A(a)(2)(B)(i) of the Code, and as a result of such Separation from Service Executive would receive any payment that, absent the application of these provisions, would be subject to the constructive receipt, interest, and additional tax provisions of Code Section 409A(a), then any such payment shall be made on the date that is the earliest of: (i) six (6) months after Executive's Separation from Service, (ii) Executive's date of death, or (iii) such other earliest date for which such payment will not be subject to such constructive receipt, interest, and additional tax.

(b)           If Executive would not have a Separation from Service and, as a result of Executive's termination of employment, would receive any payment that, absent the application of this Section 8(b), would be subject to additional tax imposed pursuant to Section 409A of the Code, then such payment shall instead be payable on the date that is the earliest of (i) Executive's Separation from Service, (ii) the date Executive becomes disabled (within the meaning of Section 409A(a)(2)(C) of the Code), (iii) Executive's death, or (iv) such other earliest date for which such payment will not be subject to such constructive receipt, interest, and additional tax.

(c)           It is the intention of the parties that all amounts payable under this Agreement not be subject to the constructive receipt, interest, and additional tax resulting from the application of Code Section 409A.  To the extent such amounts could become subject to such constructive receipt, interest, and additional tax, the parties shall cooperate to amend this Agreement with the goal of giving Executive the same or equivalent value of the benefits described in this Agreement in a manner that does not result in such constructive receipt, interest, and additional tax.

9.             Confidentiality Non-solicitation and Non-disparagement Provisions.

(a)           Confidentiality.  Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge, or data relating to the Company or any of its Subsidiaries, and their respective businesses, obtained by Executive during Executive's employment by the Company or any of its Subsidiaries and that has not become public knowledge (other than by acts of Executive or Executive's representatives in violation of this Agreement).  After the date of termination of Executive's employment with the Company, Executive shall not, without the prior written consent of the Company, communicate or divulge any such information, knowledge, or data to anyone other than the Company and those designated by it.  In no event shall an asserted violation of the provisions of this Section constitute a basis for deferring or withholding any amounts otherwise payable to Executive under this Agreement.

(b)           Non-Solicitation. Executive, for the twenty-four (24) month period immediately following the date of termination of Executive's employment, shall not, either on his own account or jointly with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or shareholder or otherwise on behalf of any other person, firm or corporation, directly or indirectly solicit or attempt to solicit away from the Company any of its officers or employees or offer employment to any person who, on or during the six (6) months immediately preceding the date of such solicitation or offer, is or was an officer or employee of the Company; provided, however, that a general solicitation or advertisement to which an employee of the Company responds shall in no event be deemed to result in a breach of this Section 9(b).

(c)             Non-Disparagement. Executive agrees to not disparage or denigrate the Company or its directors, officers or employees orally or in writing. The Company agrees to use its reasonable best efforts to cause its directors, officers and managers to not disparage Executive orally or in writing. Notwithstanding this mutual, non-disparagement provision, it shall not be a violation of this provision for any person to make truthful statements when required by court order or as otherwise required by law.

(d)           Survival; Reformation. The provisions of this Section 9 shall survive the termination or expiration of this Agreement and Executive's employment with the Company and shall be fully enforceable thereafter.  If it shall be finally determined that any restriction in this Section 9 is excessive in duration or scope or is unreasonable or unenforceable under the laws of any state or jurisdiction, it is the intention of the parties that such restriction may be modified or amended to render it enforceable to the maximum extent permitted by the law of that state or jurisdiction.

(e)           Remedies; Equitable Relief.  Should Executive violate the non-solicitation provisions of Section 9(b), Executive will be obligated to pay back to the Company all payments received pursuant to this Agreement and the Company will have no further obligation to pay Executive any payments that may be remaining due under this Agreement.  In the event that Executive breaches or threatens to breach any of the provisions of this Section 9, in addition to and without limiting or waiving any other remedies available to the Company under this Agreement, in law or in equity, the Company shall be entitled to immediate injunctive relief in any court, domestic or foreign, having the capacity to grant such relief, to restrain such breach or threatened breach and to enforce the provisions of this Section 9.

10.           Successors.

(a)           This Agreement is personal to Executive and without the prior written consent of the Company shall not be assignable by Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and be enforceable by Executive's legal representatives or successor(s) in interest.  Executive may designate a successor (or successors) in interest to receive any and all amounts due Executive in accordance with this Agreement should Executive be deceased at any time of payment.  Such designation of successor(s) in interest shall be made in writing and signed by Executive, and delivered to the Company pursuant to Section 15(b).  This Section 10(a) shall not supersede any designation of beneficiary or successor in interest made by Executive, or separately covered, under any other plan, practice, policy, or program of the Company.

(b)           This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

(c)           The Company will require the ultimate parent of any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company or any successor and without regard to the form of transaction utilized to acquire the business or assets of the Company, to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession or parentage had taken place.  As used in this Agreement, "Company" shall mean the Company as defined above and any successor to its business or assets as aforesaid (and any Parent of the Company or any successor) that is required by this clause to assume and agree to perform this Agreement or which otherwise assumes and agrees to perform this Agreement.

11.           Notice of Termination.  Any termination of Executive's employment by the Company for Cause or by Executive for Good Reason shall be communicated by Notice of Termination to the other party given in accordance with Section 15(b) of this Agreement.  For purposes of this Agreement, a "Notice of Termination" means a written notice that (i) indicates the specific termination provision in this Agreement relied upon, (ii) sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated, and (iii) if the date of termination is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than 15 days after the giving of such notice).

12.           Requirements and Benefits if Executive Is Employee of Subsidiary of Company.  If Executive is an employee of any Subsidiary of the Company, Executive shall be entitled to all of the rights and benefits of this Agreement as though Executive were an employee of the Company and the term "Company" shall be deemed to include the Subsidiary by whom Executive is employed.  The Company guarantees the performance of its Subsidiary under this Agreement.

13.           General Release of Claims. Notwithstanding any provision of this Agreement, all payments and benefits described in this Agreement, except for those paid or delivered pursuant to Section 4(a), are conditioned upon the execution and delivery to the Company by the 30th day following the Termination Date of a General Release of Claims by and between Executive (or the Executive's estate) and the Company in the form attached as Appendix A to this Agreement. (In the event of Executive's death or incapacity due to disability, the form attached as Appendix A will be revised for signature accordingly.) The payments and benefits will begin to be paid or provided to Executive as soon as administratively practicable following the date Executive signs and delivers the General Release to the Company, provided that if the 30-day period begins in one taxable year and ends in a second taxable year, such payments or benefits shall not commence until the second taxable year.

14.          Dispute Resolution. All disputes, claims or controversies arising out of or in connection with this Agreement, Executive's employment by the Company or its termination, including but not limited to those concerning workplace discrimination and all other statutory claims shall be submitted exclusively to and determined by final and binding arbitration before a single arbitrator ("Arbitrator") of the American Arbitration Association ("AAA") in accordance with the Association's then current rules for the resolution of employment disputes. The parties consent to the authority of the Arbitrator, if the Arbitrator so determines, to award fees and expenses (including reasonable attorneys' fees) in the arbitration to the Executive if the Executive prevails on at least one material item. Excluded from this agreement to arbitrate are claims Executive may have for workers' compensation and unemployment compensation benefits, as well as claims the Company may have for injunctive relief to enforce Section 9 of this Agreement.

15.         Miscellaneous.

(a)           This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws.  The captions of this Agreement are not part of the provisions hereof and shall have no force or effect.  In the event of any conflict between this Agreement and the Company's various equity and other incentive plans pursuant to which Executive has awards outstanding as of the date of this Agreement or any other equity or incentive plan that is adopted by the Company following the date of this Agreement, the agreement or plan with the more favorable terms to Executive shall control for purposes of such conflict.  This Agreement supersedes all prior oral or written promises or agreements between the parties related to the subject matter hereof.  This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties or their respective successors and legal representatives.

(b)           All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, in the case of the Company at 77 Hot Metal Street, Pittsburgh, PA 15203, Attention: CEO and in the case of the Executive to the last address of record at the Company for the Executive or to such other address as either party shall have furnished to the other in writing in accordance with this Section.  Notice and communications shall be effective when actually received by the addressee.

(c)           Whenever reference is made in this Agreement to any specific plan or program of the Company, to the extent that Executive is not a participant in the plan or program or has no benefit accrued under it, whether vested or contingent, as of the Change in Control Date, then such reference shall be null and void, and Executive shall acquire no additional benefit as a result of such reference.

(d)           The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement.

(e)           The Company may withhold from any amounts payable under this Agreement such Federal, state, or local taxes as shall be required to be withheld pursuant to any applicable law or regulation.

(f)            Executive's failure to insist upon strict compliance with any provision of this Agreement shall not be deemed to be a waiver of such provision or any other provision.

IN WITNESS WHEREOF, Executive has executed this Agreement and, pursuant to the authorization from the Board, the Company has caused this Agreement to be executed effective as of the day and year first above written.

 

 

AMERICAN EAGLE OUTFITTERS, INC.

 

 

 

By:

 /s/ Neil Bulman, Jr.

 

Name: Neil Bulman, Jr.

 

Title: Vice President and General Counsel

 

 

 

EXECUTIVE

 

 

 

 /s/ Robert L. Hanson


 

Robert L. Hanson

 

 

CHANGE IN CONTROL AGREEMENT

Between Robert L. Hanson and American Eagle Outfitters, Inc.

APPENDIX A - GENERAL RELEASE

In exchange for the promises and benefits set forth in the Agreement, and to be provided to me following the Effective Date of this General Release, I, Robert L. Hanson, on behalf of myself, my heirs, executors and assigns, hereby acknowledge, understand and agree as follows:

1. On behalf of myself and my family, heirs, executors, administrators, personal representatives, agents, employees, assigns, legal representatives, accountants, affiliates and for any partnerships, corporations, sole proprietorships, or other entities owned or controlled by me, I fully release, acquit, and forever discharge American Eagle Outfitters, Inc., its past, present and future officers, directors, shareholders, agents, representatives, insurers, employees, attorneys, subsidiaries, affiliated corporations, and assigns (collectively, the "Releasees"), from any and all charges, actions, causes of action, claims, grievances, damages, obligations, suits, agreements, costs, expenses, attorneys' fees, or any other liability of any kind whatsoever, suspected or unsuspected, known or unknown, which have or could have arisen out of my employment with the Company and/or termination of my employment with the Company (collectively, "Claims"), including:

a. Claims arising under Title VII of the Civil Rights Act of 1964 (as amended); the Civil Rights Acts of 1866 and 1991; the Americans With Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act; the Occupational Health and Safety Act; the Sarbanes-Oxley Act; the Pennsylvania Human Relations Act, and/or any other laws of the Commonwealth of Pennsylvania related to employment or the separation from employment;

b. Claims for age discrimination arising under the Age Discrimination in Employment Act of 1967 (as amended) ("ADEA") and the Older Workers Benefits Protection Act, except ADEA claims that may arise after the execution of this General Release; and/or

c. Claims arising out of any other federal, state, local or municipal statute, law, constitution, ordinance or regulation; and/or

d. Any other employment related claim whatsoever, whether in contract, tort or any other legal theory, arising out of or relating to my employment with the Company and/or my separation of employment from the Company. I also agree that I have been properly paid for all hours worked, have not suffered any on-the-job injury for which I have not already filed a claim and I have been properly provided any leaves of absence because of my own health condition or a family member's health condition.

e. Excluded from this General Release are any claims that cannot be released or waived by law. This includes, but is not limited to, my right to file a charge with or participate in an investigation conducted by certain government agencies, such as the EEOC or NLRB. I acknowledge and agree, however, that I am releasing and waiving my right to any monetary recovery should any government agency pursue any claims on my behalf that arose prior to the effective date of this General Release.

f. I waive all rights to re-employment with the Company. If I do apply for employment with the Company, the Company and I agree that the Company need not employ me, and that if the Company declines to employ me for any reason, it shall not be liable to me for any cause of action or damages whatsoever. I further agree that if I am re-hired by the Company or engaged by the Company in any capacity within the 6-month period immediately following my date of separation, I will repay the Company an amount equal to one-half of the net of any severance or separation pay I received. I agree to repay this amount within 30 days following the date I am re-hired or engaged by the Company.

2. Release of Other Claims. I fully release, acquit, and forever discharge the Company from any and all other charges, actions, causes of action, claims, grievances, damages, obligations, suits, agreements, costs, expenses, attorneys' fees or any other liability of any kind whatsoever of which I have knowledge as of the time I sign this General Release.

3. Restrictive Covenants. I acknowledge and agree that all of my obligations under the restrictive covenants in Sections 6 and 7 of my Chief Executive Officer Employment Agreement remain in full force and effect and shall survive the termination of my employment with the Company and the execution of this General Release.

4. Consultation with Attorney.  I am advised and encouraged to consult with an attorney prior to executing this General Release. I acknowledge that if I have executed this General Release without consulting an attorney, I have done so knowingly and voluntarily.

5. Period for Review. I acknowledge that I have been given at least 21 days from the date I first received this General Release, or at least 45 days from the date I first received this General Release if my termination is part of a group reduction in force, which date was on or before _______________, during which to consider signing it.

6. Revocation of General Release. I acknowledge and agree that I have the right to revoke my acceptance of this General Release if I notify the Company in writing within 7 calendar days following the date I sign it. Any revocation, to be effective, must be in writing, signed by me, and either: a) postmarked within 7 calendar days of the date I signed it and addressed to Tom DiDonato, Executive Vice President, Human Resources, American Eagle Outfitters, Inc., 77 Hot Metal Street, Pittsburgh, Pennsylvania, 15203; or b) hand delivered within 7 days of execution of this General Release to Mr. DiDonato. This General Release will become effective on the 8th day after I sign it (the "Effective Date"); provided that I have not timely revoked it.

I ACKNOWLEDGE AND AGREE THAT I HAVE BEEN ADVISED THAT THE GENERAL RELEASE IS A LEGAL DOCUMENT, AND I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY CONCERNING THIS GENERAL RELEASE. I ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ AND FULLY UNDERSTAND ALL PROVISIONS OF THIS GENERAL RELEASE AND I AM VOLUNTARILY AND KNOWINGLY SIGNING IT.

By: ________________________________________ _______________________________

SIGNATURE DATE