-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BqZFRQeAe9Oex/4jm7JsqxMlYRu0EVBrf+Bm6KAd8Mhv7kC1c6IMR7I/73buydLb T+OFPJMg0hQia2hyHk0OzQ== 0000950152-04-004563.txt : 20040609 0000950152-04-004563.hdr.sgml : 20040609 20040609171147 ACCESSION NUMBER: 0000950152-04-004563 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20040501 FILED AS OF DATE: 20040609 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ABERCROMBIE & FITCH CO /DE/ CENTRAL INDEX KEY: 0001018840 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-FAMILY CLOTHING STORES [5651] IRS NUMBER: 311469076 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12107 FILM NUMBER: 04856536 BUSINESS ADDRESS: STREET 1: 6301 FITCH PATH CITY: NEW ALBANY STATE: OH ZIP: 43054 BUSINESS PHONE: 6145776500 MAIL ADDRESS: STREET 1: 6301 FITCH PATH CITY: NEW ALBANY STATE: OH ZIP: 43054 10-Q 1 l07902ae10vq.txt ABERCROMBIE & FITCH CO. 10-Q/QTR END 5-1-04 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------------- FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 1, 2004 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _________________ Commission file number 1-12107 ABERCROMBIE & FITCH CO. -------------------------------------- (Exact name of registrant as specified in its charter) Delaware 31-1469076 - ---------------------------------- ------------------------------------ (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 6301 Fitch Path, New Albany, OH 43054 --------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (614) 283-6500 Not Applicable --------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class A Common Stock Outstanding at June 4, 2004 -------------------- --------------------------- $.01 Par Value 94,893,462 Shares ABERCROMBIE & FITCH CO. TABLE OF CONTENTS
Page No. -------- Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Statements of Income Thirteen Weeks Ended May 1, 2004 and May 3, 2003...................................................... 3 Condensed Consolidated Balance Sheets May 1, 2004 and January 31, 2004................................................. 4 Condensed Consolidated Statements of Cash Flows Thirteen Weeks Ended May 1, 2004 and May 3, 2003...................................................... 5 Notes to Condensed Consolidated Financial Statements...................................... 6 Report of Independent Registered Public Accounting Firm................................... 12 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk.......................... 24 Item 4. Controls and Procedures............................................................. 25 Part II. Other Information Item 1. Legal Proceedings................................................................... 26 Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities............................................................. 28 Item 4. Submission of Matters to a Vote of Security Holders................................. 29 Item 6. Exhibits and Reports on Form 8-K.................................................... 30
2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ABERCROMBIE & FITCH CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Thousands except per share amounts) (Unaudited)
Thirteen Weeks Ended ---------------------------- May 1, 2004 May 3, 2003 ----------- ----------- NET SALES $ 411,930 $ 346,722 Cost of Goods Sold, Occupancy and Buying Costs 246,340 218,534 ----------- ----------- GROSS INCOME 165,590 128,188 General, Administrative and Store Operating Expenses 118,269 87,898 ----------- ----------- OPERATING INCOME 47,321 40,290 Interest Income, Net (985) (991) ----------- ----------- INCOME BEFORE INCOME TAXES 48,306 41,281 Provision for Income Taxes 18,630 15,730 ----------- ----------- NET INCOME $ 29,676 $ 25,551 =========== =========== NET INCOME PER SHARE: BASIC $ 0.31 $ 0.26 =========== =========== DILUTED $ 0.31 $ 0.26 =========== =========== WEIGHTED-AVERAGE SHARES OUTSTANDING: BASIC 94,709 97,634 =========== =========== DILUTED 96,872 99,835 =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 ABERCROMBIE & FITCH CONDENSED CONSOLIDATED BALANCE SHEETS (Thousands) (Unaudited)
May 1, January 31, 2004 2004 ----------- ----------- ASSETS CURRENT ASSETS: Cash and Equivalents $ 527,355 $ 511,073 Marketable Securities 10,000 10,000 Receivables 13,286 7,197 Inventories 132,268 170,703 Store Supplies 30,370 29,993 Other 24,612 23,689 ----------- ----------- TOTAL CURRENT ASSETS 737,891 752,655 PROPERTY AND EQUIPMENT, NET 450,154 445,956 OTHER ASSETS 496 552 ----------- ----------- TOTAL ASSETS $ 1,188,541 $ 1,199,163 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts Payable & Outstanding Checks $ 67,764 $ 91,364 Accrued Expenses 157,165 138,232 Income Taxes Payable 25,581 50,406 ----------- ----------- TOTAL CURRENT LIABILITIES 250,510 280,002 DEFERRED INCOME TAXES 22,717 19,516 OTHER LONG-TERM LIABILITIES 27,034 28,388 SHAREHOLDERS' EQUITY: Class A Common Stock - $.01 par value: 150,000,000 shares authorized, 94,788,337 and 94,607,499 shares outstanding at May 1, 2004 and January 31, 2004, respectively 1,033 1,033 Paid-In Capital 138,144 139,139 Retained Earnings 937,389 919,577 ----------- ----------- 1,076,566 1,059,749 Less: Treasury Stock, at Average Cost (188,286) (188,492) ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 888,280 871,257 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,188,541 $ 1,199,163 =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 ABERCROMBIE & FITCH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Thousands) (Unaudited)
Thirteen Weeks Ended -------------------------- May 1, May 3, 2004 2003 ---------- ---------- OPERATING ACTIVITIES: Net Income $ 29,676 $ 25,551 Impact of Other Operating Activities on Cash Flows: Depreciation and Amortization 19,285 15,896 Noncash Charge for Deferred Compensation 1,893 1,282 Deferred Taxes (929) 7,529 Changes in Assets and Liabilities: Inventories 38,435 (2,413) Accounts Payable and Accrued Expenses 8,808 (6,139) Income Taxes (15,695) (24,466) Other Assets and Liabilities (11,246) (1,624) ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 70,227 15,616 ---------- ---------- INVESTING ACTIVITIES: Capital Expenditures (32,801) (16,374) Purchases of Marketable Securities (10,000) - Proceeds from Maturities of Marketable Securities 10,000 10,000 ---------- ---------- NET CASH USED FOR INVESTING ACTIVITIES (32,801) (6,374) ---------- ---------- FINANCING ACTIVITIES: Change in Cash Overdraft (1,918) (7,249) Purchases of Treasury Stock (18,634) - Dividends Paid (11,865) - Stock Option Exercises and Other 11,273 9,647 ---------- ---------- NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES (21,144) 2,398 NET INCREASE IN CASH AND EQUIVALENTS 16,282 11,640 Cash and Equivalents, Beginning of Year 511,073 420,063 ---------- ---------- CASH AND EQUIVALENTS, END OF PERIOD $ 527,355 $ 431,703 ========== ========== SIGNIFICANT NONCASH INVESTING ACTIVITIES: Change in Construction Allowance Receivables $ 3,799 $ 4,512 ========== ========== Change in Accrual for Construction in Progress ($ 11,877) $ 10,829 ========== ==========
The accompanying notes are an integral part of these condensed consolidated financial statements. 5 ABERCROMBIE & FITCH NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION Abercrombie & Fitch Co. ("A&F"), through its subsidiaries (collectively, A&F and its subsidiaries are referred to as "Abercrombie & Fitch" or the "Company"), is a specialty retailer of high quality, casual apparel for men, women and kids with an active, youthful lifestyle. The condensed consolidated financial statements include the accounts of A&F and all significant subsidiaries that are more than 50 percent owned and controlled. All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified to conform with current year presentation. The amounts reclassified did not have an effect on the Company's results of operations or shareholders' equity. The condensed consolidated financial statements as of May 1, 2004 and for the thirteen week periods ended May 1, 2004 and May 3, 2003 are unaudited and are presented pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in A&F's Annual Report on Form 10-K for the fiscal year ended January 31, 2004 (the "2003 fiscal year"). In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments (which are of a normal recurring nature) necessary to present fairly the financial position and results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations for a full fiscal year. The condensed consolidated financial statements as of May 1, 2004 and for the thirteen week periods ended May 1, 2004 and May 3, 2003 included herein have been reviewed by the independent registered public accounting firm of PricewaterhouseCoopers LLP and the report of such firm follows the notes to the condensed consolidated financial statements. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 (the "Act") for its report on the condensed consolidated financial statements because that report is not a "report" within the meaning of Sections 7 and 11 of the Act. 6 2. STOCK-BASED COMPENSATION The Company reports stock-based compensation through the disclosure-only requirements of Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," as amended by SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure -an Amendment of FASB Statement No. 123," but elects to measure compensation expense using the intrinsic value method in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." Accordingly, no compensation expense for options has been recognized as all options are granted at fair market value at the grant date. The Company does recognize compensation expense related to restricted share awards. If compensation expense related to options for the thirteen week periods ended May 1, 2004, and May 3, 2003 had been determined based on the estimated fair value of options granted, consistent with the methodology in SFAS No. 123, the pro forma effect on net income and net income per basic and diluted share would have been as follows: (Thousands except per share amounts)
Thirteen Weeks Ended ---------------------------- May 1, 2004 May 3, 2003 ----------- ----------- Net income: As reported $ 29,676 $ 25,551 Stock-based compensation expense included in reported net income, net of tax 1,162 794 Stock-based compensation expense determined under fair value based method, net of tax(1) (6,171) (6,885) ----------- ----------- Pro forma $ 24,667 $ 19,460 =========== =========== Basic earnings per share: As reported $ 0.31 $ 0.26 Pro forma $ 0.26 $ 0.20 Diluted earnings per share: As reported $ 0.31 $ 0.26 Pro forma $ 0.26 $ 0.20
(1) Includes stock-based compensation expense related to restricted share awards actually recognized in earnings in each period presented. The weighted-average fair value of all options granted during the first quarter of fiscal 2004 and fiscal 2003 were $12.64 and $13.91, respectively. The fair value of each option, which is included in the pro forma results above, was estimated using the Black-Scholes option-pricing model. For purposes of the valuation, the following weighted-average assumptions were used: a 1.43% dividend yield in 2004 and no expected dividends in 2003; price volatility of 60% in 2004 and 63% in 2003; risk-free interest rates of 2.6% in 2004 and 2.9% in 2003; assumed forfeiture rates of 23% in 2004 and 2003, and expected lives of 4 years in 2004 and 2003. 7 3. EARNINGS PER SHARE Weighted-Average Shares Outstanding (in thousands):
May 1, 2004 May 3, 2003 ----------- ----------- Shares of Class A Common Stock issued 103,300 103,300 Treasury shares (8,591) (5,666) ----------- ----------- Basic shares 94,709 97,634 Dilutive effect of options and restricted shares 2,163 2,201 ----------- ----------- Diluted shares 96,872 99,835 =========== ===========
Options to purchase 5,580,000 and 5,762,000 shares of Class A Common Stock during the thirteen week periods ended May 1, 2004 and May 3, 2003, respectively, were outstanding but were not included in the computation of net income per diluted share because the options' exercise prices were greater than the average market price of the underlying shares. 4. INVENTORIES Inventories are principally valued at the lower of average cost or market, on a first-in-first-out basis, utilizing the retail method. An initial markup is applied to inventory at cost in order to establish a cost-to-retail ratio. Permanent markdowns, when taken, reduce both the retail and cost components of inventory on hand so as to maintain the already established cost-to-retail relationship. The fiscal year is comprised of two principal selling seasons: spring (the first and second quarters) and fall (the third and fourth quarters). The Company further reduces inventory at season end by recording an additional markdown reserve using the retail carrying value of inventory from the season just passed. Markdowns on this carryover inventory represent estimated future anticipated selling price declines. Additionally, inventory valuation at the end of the first and third quarters reflects adjustments for inventory markdowns for the total season. Further, as part of inventory valuation, inventory shrinkage estimates are made, based on historical trends, that reduce the inventory value for lost or stolen items. The inventory reserve for markdowns and valuations was $18.2 million, $4.7 million, and $16.8 million at May 1, 2004, January 31, 2004, and May 3, 2003, respectively. The shrink reserve was $10.9 million, $3.3 million, and $11.7 million at May 1, 2004, January 31, 2004, and May 3, 2003, respectively. These inventory valuations are seasonal and the amounts at the end of the first quarter of 2004 and 2003 reflect adjustments for inventory markdowns for the total selling season. The inventory valuations at January 31, 2004 reflect adjustments for inventory markdowns for the end of the fall season. 8 5. PROPERTY AND EQUIPMENT, NET Property and equipment, net, consisted of (in thousands):
May 1, January 31, 2004 2004 ----------- ----------- Property and equipment, at cost $ 686,941 $ 676,172 Accumulated depreciation and amortization (236,787) (230,216) ----------- ----------- Property and equipment, net $ 450,154 $ 445,956 =========== ===========
6. INCOME TAXES The provision for income taxes is based on the current estimate of the annual effective tax rate. Income taxes paid during the thirteen weeks ended May 1, 2004 and May 3, 2003, approximated $35.1 million and $33.0 million, respectively. 7. LONG-TERM DEBT The Company entered into a $250 million syndicated unsecured credit agreement (the "Credit Agreement") on November 14, 2002. The primary purposes of the Credit Agreement are for trade and stand-by letters of credit and working capital. The Credit Agreement is due to expire on November 14, 2005. The Credit Agreement has several borrowing options, including interest rates that are based on the agent bank's "Alternate Base Rate," or a LIBO Rate. Facility fees payable under the Credit Agreement are based on the Company's ratio (the "leverage ratio") of the sum of total debt plus 800% of forward minimum rent commitments to consolidated EBITDAR for the trailing four-fiscal-quarter period and currently accrues at .225% of the committed amounts per annum. The Credit Agreement contains limitations on indebtedness, liens, sale-leaseback transactions, significant corporate changes including mergers and acquisitions with third parties, investments, restricted payments (including dividends and stock repurchases), hedging transactions and transactions with affiliates. The Credit Agreement also contains financial covenants requiring a minimum ratio, on a consolidated basis, of EBITDAR for the trailing four-fiscal-quarter period to the sum of interest expense and minimum rent for such period, as well as a maximum leverage ratio. Letters of credit totaling approximately $31.7 million and $39.1 million were outstanding under the Credit Agreement at May 1, 2004 and at May 3, 2003, respectively. No borrowings were outstanding under the Credit Agreement at May 1, 2004 and at May 3, 2003. 9 8. RELATED PARTY TRANSACTIONS Shahid & Company, Inc. has provided advertising and design services for the Company since 1995. Sam N. Shahid, Jr., who serves on A&F's Board of Directors, has been President and Creative Director of Shahid & Company, Inc. since 1993. Fees paid to Shahid & Company, Inc. for services provided during the thirteen week periods ended May 1, 2004 and May 3, 2003 were approximately $0.6 million and $0.5 million, respectively. The amounts do not include reimbursements to Shahid & Company, Inc. for expenses incurred while performing these services. 9. CONTINGENCIES The Company is involved in a number of legal proceedings that arise out of, and are incidental to, the conduct of its business. In 2003, five actions were filed under various states' laws on behalf of purported classes of employees and former employees of the Company alleging that the Company required its associates to wear and pay for a "uniform" in violation of applicable law. Two of the actions have been ordered coordinated. In each case, the plaintiff, on behalf of his or her purported class, seeks injunctive relief and unspecified amounts of economic and liquidated damages. For certain of the cases, the parties are in the process of discovery. In one case, the Company has filed a motion to dismiss; while in all other cases, answers have been filed. In 2003, an action was filed in which the plaintiff alleges that the "uniform," when purchased, drove associates' wages below the federal minimum wage. The complaint purports to state a collective action on behalf of all part-time associates nationwide under the Fair Labor Standards Act. The parties are in the process of discovery. In each of 2003 and 2002, one action was filed against the Company involving overtime compensation. In each action, the plaintiffs, on behalf of their respective purported class, seek injunctive relief and unspecified amounts of economic and liquidated damages. The Company has filed a motion to dismiss in one of the cases. In the other case, the parties are in the process of discovery. The Company does not believe it is feasible to predict the outcome of the legal proceedings described above and intends to vigorously defend against each of them. The timing of the final resolution of each of these proceedings is also uncertain. Accordingly, the Company cannot estimate a range of potential loss, if any, for any of these legal proceedings. In 2003, one action was filed on behalf of a purported class alleged to be discriminated against in hiring or employment decisions due to race and/or national origin. The plaintiffs in the action seek, on behalf of their purported class, injunctive relief and unspecified amounts of economic, compensatory and punitive damages. The parties are in the process of discovery. Additionally, the EEOC is conducting nationwide investigations relating to allegations of discrimination based on race, national origin and gender. 10 The Company accrues amounts related to legal matters if reasonably estimable and reviews these amounts at least quarterly. During the first quarter of fiscal 2004, the Company recorded an $8.0 million charge (net of expected proceeds of $10 million from insurance) resulting from an increase in expected defense costs related to the purported class action employment discrimination suit. The Company does not believe it is feasible to predict the outcome of this proceeding and intends to vigorously defend against it. However, if judgment is rendered in this proceeding which is unfavorable to the Company, the amount could potentially be material to the financial statements. The Company has standby letters of credit in the amount of $4.7 million that are set to expire during the third quarter of fiscal 2004. The beneficiary, a merchandise supplier, has the right to draw upon the standby letters of credit if the Company has authorized or filed a voluntary petition in bankruptcy. To date, the beneficiary has not drawn upon the standby letters of credit. The Company enters into agreements with professional services firms, in the ordinary course of business and, in most agreements, indemnifies these firms from any harm. There is no financial impact on the Company related to these indemnification agreements. 10. SUBSEQUENT EVENTS A&F announced on May 18, 2004, that Seth R. Johnson, Executive Vice President and Chief Operating Officer of A&F, will retire from the Company effective June 18, 2004. Under the terms of the Retirement Agreement (the "Agreement"), the Company will provide retirement benefits equal to his base salary immediately prior to his retirement date, less ordinary and necessary withholding taxes, in weekly installments over the two year period commencing on June 18, 2004 and ending June 18, 2006. In addition to the retirement benefits, the Agreement provides additional consideration in the form of: (a) a pro rata portion of Mr. Johnson's 2004 Incentive Compensation Performance Plan (the "Plan") incentive payment attributable to the period commencing on the first day of fiscal 2004 through June 18, 2004 (to be paid in normal course after calculations are finalized in accordance with the terms of the Plan); (b) a cash payment equal to the market value (at the close of the market on June 18, 2004) of Mr. Johnson's unvested restricted shares; (c) an additional cash payment to be paid on June 20, 2005 equal to the market value as of the close of the market on June 17, 2005 of 25,000 shares of Class A Common Stock of A&F appropriately adjusted for any stock splits or dividends; and (d) an additional cash payment to be paid on June 19, 2006 equal to the market value as of the close of the market on June 16, 2006, of 45,000 shares of Class A Common Stock of A&F appropriately adjusted for any stock splits or dividends. The Company anticipates the aggregate cost of the Agreement will be approximately $5.0 to $5.5 million. On May 28, 2004, the Company announced that Mr. Johnson resigned from the Board of Directors effective July 26, 2004. On May 20, 2004 the Company announced the declaration of a quarterly dividend, of $0.125 per share of Class A Common Stock, which will be paid on June 22, 2004 to stockholders of record as of June 1, 2004. 11 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders of Abercrombie & Fitch Co.: We have reviewed the accompanying condensed consolidated balance sheet of Abercrombie & Fitch Co. and its subsidiaries as of May 1, 2004, and the related condensed consolidated statements of income for each of the thirteen week periods ended May 1, 2004 and May 3, 2003 and the condensed consolidated statements of cash flows for the thirteen week periods ended May 1, 2004 and May 3, 2003. These interim financial statements are the responsibility of the Company's management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying condensed consolidated interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. We previously audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of January 31, 2004, and the related consolidated statements of income, of shareholder's equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 17, 2004, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 31, 2004, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived. /s/ PricewaterhouseCoopers LLP Columbus, Ohio May 11, 2004 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company operates three brands: Abercrombie & Fitch, a fashion-oriented casual apparel business directed at men and women with a youthful lifestyle, targeted at 18 to 22 year-old college students; abercrombie, fashion-oriented casual apparel in the tradition of Abercrombie & Fitch style and quality, targeted at 7 to 14 year-old boys and girls; and Hollister, a West Coast oriented lifestyle brand targeted at 14 to 17 year-old high school guys and girls, at lower price points than Abercrombie & Fitch. All three brands also offer Web sites where products comparable to those carried at the corresponding stores can be purchased. RESULTS OF OPERATIONS During the first quarter of the 2004 fiscal year, net sales increased 19% to $411.9 million from $346.7 million in the first quarter of 2003. Operating income improved to $47.3 million in the first quarter of 2004 from $40.3 million in the first quarter of 2003. Net income increased to $29.7 million in the first quarter of 2004 compared to $25.6 million in the first quarter of 2003. Net income per diluted share was $.31 in the first quarter of 2004 compared to $.26 in the first quarter of 2003. The following data represent the amounts shown in the Company's condensed consolidated statements of income for the thirteen week periods ended May 1, 2004, and May 3, 2003, expressed as a percentage of net sales:
May 1, 2004 May 3, 2003 ----------- ----------- NET SALES 100.0% 100.0% Cost of Goods Sold, Occupancy and Buying Costs 59.8 63.0 ----------- ----------- GROSS INCOME 40.2 37.0 General, Administrative and Store Operating Expenses 28.7 25.4 ----------- ----------- OPERATING INCOME 11.5 11.6 Interest Income, Net (0.2) (0.3) ----------- ----------- INCOME BEFORE INCOME TAXES 11.7 11.9 Provision for Income Taxes 4.5 4.5 ----------- ----------- NET INCOME 7.2% 7.4% =========== ===========
13 Financial Summary The following summarized financial and statistical data compares the thirteen week period ended May 1, 2004 to the comparable period of fiscal 2003:
Thirteen Weeks Ended ----------------------------- May 1, 2004 May 3, 2003 % Change ----------- ----------- -------- Net sales (millions) $ 412 $ 347 19% Increase/(decrease) in comparable store sales - (6)% Retail sales increase attributable to new and remodeled stores, magazine, catalogue and Web sites 19% 17% Retail sales per average gross $ 76 $ 76 - square foot Retail sales per average store $ 549 $ 551 - (thousands) Average store size at period-end 7,174 7,296 (2)% (gross square feet) Gross square feet at period-end 5,065 4,392 15% (thousands) Number of stores and gross square feet by brands Abercrombie & Fitch: Stores at beginning of period 357 340 Opened 4 3 Closed (2) (1) ----------- ----------- Stores at end of period 359 342 =========== =========== Gross square feet (thousands) 3,169 3,053 =========== =========== abercrombie: Stores at beginning of period 171 164 Opened 1 1 Closed (2) - ----------- ----------- Stores at end of period 170 165 =========== =========== Gross square feet (thousands) 750 731 =========== =========== Hollister: Stores at beginning of period 172 93 Opened 5 2 Closed - - ----------- ----------- Stores at end of period 177 95 =========== =========== Gross square feet (thousands) 1,146 608 =========== ===========
14 Net Sales Net sales for the first quarter of 2004 were $411.9 million, an increase of 19% over last year's first quarter net sales of $346.7 million. Comparable store sales, defined as sales in stores that have been open for at least one year, were flat for the quarter. By merchandise brand, comparable store sales for the quarter versus the same quarter last year were as follows: Abercrombie & Fitch declined 2% with both mens and womens comparable store sales declining by a low single-digit percentage. In abercrombie, comparable store sales decreased 1% with girls comparable store sales achieving a mid-single digit positive increase and boys declining in the mid-teens. In Hollister, comparable store sales increased by 9% with both girls and guys achieving a positive high-single digit increase for the quarter. On a regional basis, comparable store sales results were strongest in the West and Southeast and weakest in the Midwest. Stores located in Florida, Southern California and the New York metropolitan area had the best comparable store sales performance. In Abercrombie & Fitch, womens had comparable store sales increases in the first quarter versus the comparable quarter last year in skirts and denim, which were offset by decreases in shorts and graphic knits. The men's business improved during the first quarter compared to the fiscal 2003 first quarter. Woven shirts and polos had strong comparable store sales increases while graphic t-shirts and shorts declined. In the kids' business, girls comparable store sales increased during the first quarter of 2004 compared to the same quarter last year in knits, skirts and denim. These increases were somewhat offset by weak sales in graphic tees and shorts. Boys had comparable store sales increases in denim, woven shirts, and accessories, but these increases were not sufficient to offset other weaker performing categories. In Hollister, girls also achieved slightly stronger comparable store sales than guys. In girls, tees, skirts and denim had significant comparable store sales increases during the quarter, while comparable store sales in the graphic knits and pants declined. In guys, sports shirts and denim had significant positive comparable store sales increases; however, knit tops and shorts declined. Sales in the e-commerce business grew by approximately 73% during the first quarter of the 2004 fiscal year compared to the same period during the 2003 fiscal year. The direct to consumer business (which includes the Company's catalogue and the Company's Web sites) accounted for 6.4% of net sales in the first quarter of the 2004 fiscal year compared to 4.7% in the first quarter of fiscal 2003. The first quarter 2004 results include sales from the Hollister Web site that was launched during the 2003 back-to-school period. Current Trends and Outlook Although the Company is planning for comparable store sales to continue to improve in the future, it cannot predict whether this will occur in the 2004 fiscal year or any subsequent year due to the uncertain competitive and economic environment. 15 The Company entered fiscal 2004 with a focus on driving top line revenue. In order to offer customers more new items more frequently and achieve high margins, inventory levels were kept tight in order to turn the inventory faster. The Company also continued to have a less promotional look in the stores. Markdowns were cleared in the normal course of business. During the first quarter, the Company utilized its lifestyle-only direct mail, national magazine ads, and billboards to promote the Abercrombie & Fitch brand. In addition to emphasizing top line growth, management will continue to focus on operational controls which have been an important factor in the Company's success. Gross Income The Company's gross income may not be comparable to those of other retailers since all significant costs related to the Company's distribution network, excluding direct shipping costs related to the e-commerce and catalogue sales, are included in general, administrative and store operating expenses (see "General, Administrative and Store Operating Expenses" section below). Gross income for the first quarter of the 2004 fiscal year was $165.6 million compared to $128.2 million in the comparable period during the 2003 fiscal year. The gross income rate (gross income divided by net sales) for the first quarter of the 2004 fiscal year was 40.2%, up 320 basis points from last year's rate of 37.0%. The increase in gross income rate resulted largely from an increase in initial markup (IMU), partially offset by a higher markdown rate as a percent of net sales. Continued progress in sourcing efficiency has been an important factor in improving IMU. All three brands had IMU improvements in excess of 300 basis points and are operating at similar margins. The markdown rate, as a percentage of net sales, exceeded last year's rate reflecting the Company's strategy to turn merchandise quickly enabling the addition of more new items to the sales floor. Due to a combination of the reduced cost in ending inventory from successful sourcing efforts and a shift in the timing of the deliveries, the Company ended the first quarter of the 2004 fiscal year with inventories, at cost, down 21% per gross square foot versus the first quarter of the 2003 fiscal year. 16 General, Administrative and Store Operating Expenses General, administrative and store operating expenses during the first quarter of the 2004 fiscal year were $118.3 million compared to $87.9 million during the same period in the 2003 fiscal year. The first quarter of the 2004 fiscal year general, administrative and store operating expense rate (general, administrative and store operating expenses divided by net sales) was 28.7% compared to 25.4% in the first quarter of the 2003 fiscal year. The increase in rate versus the 2003 comparable period is primarily due to the following: higher legal expense due to a charge of $ 8.0 million related to expected defense costs in a legal proceeding (see Note 9 of the Notes to Condensed Consolidated Financial Statements); higher home office expenses, largely due to higher bonus accruals resulting from improved financial performance; and higher store expenses due to an increase in aggregate payroll. Wage levels, in all three brands, were held relatively flat compared to first quarter of 2003. The distribution center achieved record level productivity during the first quarter of the 2004 fiscal year. Productivity, as measured in units processed per labor hour, was 12% higher than the first quarter of the 2003 fiscal year. Costs related to the distribution center, excluding direct shipping costs related to the e-commerce and catalogue sales, included in general, administrative and store operating expenses were $4.5 million for the first quarter of the 2004 fiscal year compared to $4.3 million for the first quarter of the 2003 fiscal year. Operating Income Operating income for the first quarter of the 2004 fiscal year increased to $47.3 million from $40.3 million in the 2003 fiscal year first quarter, an increase of 17.4%. The increase was primarily due to sales increases due to new stores and higher gross margin, partially offset by higher home office expenses and store expenses. The operating income rate (operating income divided by net sales) was 11.5% for the first quarter of the 2004 fiscal year compared to 11.6% for the first quarter of the 2003 fiscal year. Higher general, administrative and store operating expenses, expressed as a percentage of net sales, reduced the operating income rate in the first quarter of 2004. This decline was partially offset by higher merchandise margins during the quarter. Interest Income and Income Tax Expense First quarter net interest income was $1.0 million in 2004 which was flat versus last year. The Company continued to invest in tax-free securities. The effective tax rate for the first quarter was 38.6% compared to 38.1% for the 2003 comparable period. Off-Balance Sheet Arrangements and Contractual Obligations The Company does not have any off-balance sheet arrangements or debt obligations. The contractual obligations of the Company as of May 1, 2004 have not significantly changed from the ones disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2004. There have been changes in the ordinary course of the Company's business during the quarterly period ended May 1, 2004 in the Company's contractual obligations included within both the "operating leases" category and the "purchase obligations and other" category. 17 FINANCIAL CONDITION Liquidity and Capital Resources Cash provided by operating activities provides the resources to support operations, including projected growth, seasonal requirements and capital expenditures. A summary of the Company's working capital position and capitalization follows (in thousands):
January 31, May 1, 2004 2004 ----------- ----------- Working capital $ 487,381 $ 472,653 =========== =========== Capitalization: Shareholders' equity $ 888,280 $ 871,257 =========== ===========
Net cash provided by operating activities, the Company's primary source of liquidity, totaled $70.2 million for the thirteen weeks ended May 1, 2004 versus $15.6 million in the comparable period of 2003. Cash was provided primarily by current year net income adjusted for depreciation and amortization and by decreases in inventories and increases in accrued expenses. Uses of cash primarily consisted of increased cash outflows in income taxes payable, accounts payable and other assets and liabilities. Inventories decreased as a result of the reduced cost in ending inventory from successful sourcing efforts and a shift in the timing of the deliveries which caused more delivery flow in May versus April compared with last year. As a result, the Company ended the first quarter of 2004 with inventories down 21% per gross square foot compared to last year's first quarter. Accrued expenses also increased for items such as payroll and property taxes, related primarily to the growth in the store base and accrued expenses resulting from an increase in expected defense costs related to pending litigation. Income taxes payable decreased as a result of payments made during the first quarter and accounts payable decreased as a result of the decrease in inventories. Other assets and liabilities increased primarily as a result of an increase in accounts receivables related to expected proceeds from an insurance claim pertaining to legal expenses. The Company's operations are seasonal in nature and typically peak during the back-to-school and Christmas selling periods. Accordingly, cash requirements for inventory expenditures are highest during these periods. Cash outflows for investing activities were for capital expenditures (see the discussion in the "Capital Expenditures" section below) related primarily to new stores and construction in process. Cash inflows from investing activities consisted of maturities of marketable securities. As of May 1, 2004, the Company held $10.0 million of marketable securities with original maturities of greater than 90 days. 18 Financing activities for the first quarter of 2004 consisted of the repurchase of 599 thousand shares of A&F's Class A Common Stock at an average cost of $31.11 for a total of $18.6 million pursuant to a previously authorized stock repurchase program. The repurchase during the first quarter completed the 5 million share repurchase authorized by the Board of Directors on August 8, 2002. In addition to stock repurchases, financing activities in the first quarter of 2004 included $11.9 million for the payment of the first quarterly $0.125 dividend on March 30, 2004, $11.3 million received in connection with stock option exercises and $1.9 million for cash overdrafts which are outstanding checks reclassified from cash to accounts payable. The Company expects that substantially all future capital expenditures will be funded with cash from operations. In addition, the Company has $250 million available (less outstanding letters of credit) under its Credit Agreement to support operations. Letters of credit totaling approximately $31.7 million and $39.1 million were outstanding under the Credit Agreement at May 1, 2004 and May 3, 2003, respectively. No borrowings were outstanding under the Credit Agreement at May 1, 2004 and May 3, 2003. The Company has standby letters of credit in the amount of $4.7 million that are set to expire during the third quarter of fiscal 2004. The beneficiary, a merchandise supplier, has the right to draw upon the standby letters of credit if the Company has authorized or filed a voluntary petition in bankruptcy. To date, the beneficiary has not drawn upon the standby letters of credit. Store Count and Gross Square Feet Store count and gross square footage by brand were as follows:
May 1, 2004 May 3, 2003 ------------------------------- ------------------------------- Number Gross Square Number Gross Square of Stores Feet (thousands) of Stores Feet (thousands) --------- ---------------- --------- ---------------- Abercrombie & Fitch 359 3,169 342 3,053 abercrombie 170 750 165 731 Hollister 177 1,146 95 608 --------- ---------------- --------- ---------------- Total 706 5,065 602 4,392 ========= ================ ========= ================
19 Capital Expenditures Capital expenditures, net of construction allowances, totaled $32.8 million and $16.4 million for the thirteen weeks ended May 1, 2004 and May 3, 2003, respectively. Additionally, the non-cash accrual for construction in progress decreased $11.9 million in the first quarter of the 2004 and increased $10.8 million in the first quarter of 2003. Capital expenditures related primarily to new store construction, including the non-cash accrual for construction in progress. The balance of capital expenditures related primarily to miscellaneous store remodeling projects. The Company anticipates spending $115.0 million to $125.0 million in the 2004 fiscal year for capital expenditures, of which $85.0 million to $95.0 million will be for new/remodel store construction. The balance of the capital expenditures will primarily relate to home office and distribution center projects and other miscellaneous projects. The Company intends to add approximately 700,000 gross square feet of store space in the 2004 fiscal year, which will represent a 14% increase over year-end 2003. It is anticipated the increase will result from the addition of approximately 11 new Abercrombie & Fitch stores, 8 new abercrombie stores and 85 new Hollister stores. In addition, the Company recently announced plans for a new lifestyle brand that will target an older customer than its current brands. The Company expects to open four test stores in August 2004. Additionally, the Company plans to remodel 10 to 15 Abercrombie & Fitch stores. The Company estimates that the average cost for leasehold improvements and furniture and fixtures for Abercrombie & Fitch stores opened during the 2004 fiscal year will approximate $635,000 per store, net of landlord allowances. In addition, initial inventory purchases are expected to average approximately $300,000 per store. The Company estimates that the average cost for leasehold improvements and furniture and fixtures for abercrombie stores opened during the 2004 fiscal year will approximate $510,000 per store, net of landlord allowances. In addition, initial inventory purchases are expected to average approximately $115,000 per store. The Company estimates that the average cost for leasehold improvements and furniture and fixtures for Hollister stores opened during the 2004 fiscal year will approximate $615,000 per store, net of landlord allowances. In addition, initial inventory purchases are expected to average approximately $215,000 per store. The Company expects that substantially all future capital expenditures will be funded with cash from operations. In addition, the Company has $250 million available (less outstanding letters of credit) under its Credit Agreement to support operations. 20 Critical Accounting Policies and Estimates The Company's significant and critical accounting policies and estimates can be found in the Notes to Consolidated Financial Statements contained in Item 8 of A&F's Annual Report on Form 10-K for the fiscal year ended January 31, 2004 (Note 2). Additionally, the Company believes that the following policies are critical to the portrayal of the Company's financial condition and results of operations for interim periods. Revenue Recognition - The Company recognizes retail sales at the time the customer takes possession of the merchandise and purchases are paid for, primarily with either cash or credit card. Catalogue and e-commerce sales are recorded upon customer receipt of merchandise. Amounts relating to shipping and handling billed to customers in a sale transaction are classified as revenue and the direct shipping costs are classified as cost of goods sold. Employee discounts are classified as a reduction of revenue. The Company reserves for sales returns through estimates based on historical experience and various other assumptions that management believes to be reasonable. Inventory Valuation - Inventories are principally valued at the lower of average cost or market, on a first-in first-out basis, utilizing the retail method. The retail method of inventory valuation is an averaging technique applied to different categories of inventory. At the Company, the averaging is determined at the stock keeping unit ("SKU") level by averaging all costs for each SKU. An initial markup is applied to inventory at cost in order to establish a cost-to-retail ratio. Permanent markdowns, when taken, reduce both the retail and cost components of inventory on hand so as to maintain the already established cost-to-retail relationship. The use of the retail method and the recording of markdowns effectively values inventory at the lower of cost or market. The Company further reduces inventory by recording an additional markdown reserve using the retail carrying value of inventory from the season just passed. Markdowns on this carryover inventory represent estimated future anticipated selling price declines. Additionally, as part of inventory valuation, an inventory shrinkage estimate is made each period that reduces the value of inventory for lost or stolen items. Inherent in the retail method calculation are certain significant judgments and estimates including, among others, initial markup, markdowns and shrinkage, which could significantly impact the ending inventory valuation at cost as well as the resulting gross margins. Management believes that this inventory valuation method is appropriate since it preserves the cost-to-retail relationship in ending inventory. 21 Income Taxes - Income taxes are calculated in accordance with SFAS No. 109, "Accounting for Income Taxes," which requires the use of the liability method. Deferred tax assets and liabilities are recognized based on the difference between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Inherent in the measurement of deferred balances are certain judgments and interpretations of enacted tax law and published guidance with respect to applicability to the Company's operations. Significant examples of this concept include capitalization policies for various tangible and intangible costs, income and expense recognition and inventory valuation methods. No valuation allowance has been provided for deferred tax assets because management believes the full amount of the net deferred tax assets will be realized in the future. The effective tax rate utilized by the Company reflects management's judgment of the expected tax liabilities within the various taxing jurisdictions. Contingencies - In the normal course of business, the Company must make continuing estimates of potential future legal obligations and liabilities, which requires the use of management's judgment on the outcome of various issues. Management may also use outside legal advice to assist in the estimating process. However, the ultimate outcome of various legal issues could be different than management estimates, and adjustments may be required. 22 Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 A&F cautions that any forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) contained in this Form 10-Q or made by management of A&F involve risks and uncertainties and are subject to change based on various important factors, many of which may be beyond the Company's control. Words such as "estimate," "project," "plan," "believe," "expect," "anticipate," "intend," and similar expressions may identify forward-looking statements. The following factors, in addition to those included in the disclosure under the heading "RISK FACTORS" in "ITEM 1. BUSINESS" of A&F's Annual Report on Form 10-K for the fiscal year ended January 31, 2004, in some cases have affected and in the future could affect the Company's financial performance and could cause actual results for the 2004 fiscal year and beyond to differ materially from those expressed or implied in any of the forward-looking statements included in this Quarterly Report on Form 10-Q or otherwise made by management: - changes in consumer spending patterns and consumer preferences; - the effects of political and economic events and conditions domestically and in foreign jurisdictions in which the Company operates, including, but not limited to, acts of terrorism or war; - the impact of competition and pricing; - changes in weather patterns; - postal rate increases and changes; - paper and printing costs; - market price of key raw materials; - ability to source product from its global supplier base; - political stability; - currency and exchange risks and changes in existing or potential duties, tariffs or quotas; - availability of suitable store locations at appropriate terms; - ability to develop new merchandise; and - ability to hire, train and retain associates. Future economic and industry trends that could potentially impact revenue and profitability are difficult to predict. Therefore, there can be no assurance that the forward-looking statements included in this Quarterly Report on Form 10-Q will prove to be accurate. In light of the significant uncertainties in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company, or any other person, that the objectives of the Company will be achieved. The forward-looking statements herein are based on information presently available to the management of the Company. Except as may be required by applicable law, the Company assumes no obligation to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. 23 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The market risk of the Company's financial instruments as of May 1, 2004 has not significantly changed since January 31, 2004. The Company's market risk profile as of January 31, 2004 is disclosed in "Item 7A - Quantitative and Qualitative Disclosures about Market Risk" of A&F's Annual Report on Form 10-K for the fiscal year ended January 31, 2004. 24 ITEM 4. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures With the participation of the Chairman and Chief Executive Officer (the principal executive officer) and the Senior Vice President - Chief Financial Officer (the principal financial officer) of Abercrombie & Fitch Co. ("A&F"), A&F's management has evaluated the effectiveness of A&F's disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, A&F's Chairman and Chief Executive Officer and A&F's Senior Vice President - Chief Financial Officer have concluded that: - information required to be disclosed by A&F in this Quarterly Report on Form 10-Q would be accumulated and communicated to A&F's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure; - information required to be disclosed by A&F in this Quarterly Report on Form 10-Q would be recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms; and - A&F's disclosure controls and procedures are effective as of the end of the quarterly period covered by this Quarterly Report on Form 10-Q to ensure that material information relating to A&F and its consolidated subsidiaries is made known to them, particularly during the period for which the periodic reports of A&F, including this Quarterly Report on Form 10-Q, are being prepared. Changes in Internal Control over Financial Reporting There were no changes in A&F's internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during A&F's fiscal quarter ended May 1, 2004, that have materially affected, or are reasonably likely to materially affect, A&F's internal control over financial reporting. 25 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is a defendant in lawsuits arising in the ordinary course of business. A&F is aware of 20 actions that have been filed against A&F and certain of its officers and directors on behalf of a purported, but as yet uncertified, class of shareholders who purchased A&F's Class A Common Stock between October 8, 1999 and October 13, 1999. These 20 actions have been filed in the United States District Courts for the Southern District of New York and the Southern District of Ohio, Eastern Division, alleging violations of the federal securities laws and seeking unspecified damages. On April 12, 2000, the Judicial Panel on Multidistrict Litigation issued a Transfer Order transferring the 20 pending actions to the Southern District of New York for consolidated pretrial proceedings under the caption In re Abercrombie & Fitch Securities Litigation. On November 16, 2000, the Court signed an Order appointing the Hicks Group, a group of seven unrelated investors in A&F's securities, as lead plaintiff, and appointing lead counsel in the consolidated action. On December 14, 2000, plaintiffs filed a Consolidated Amended Class Action Complaint (the "Amended Complaint") in which they did not name as defendants Lazard Freres & Co. and Todd Slater, who had formerly been named as defendants in certain of the 20 complaints. A&F and other defendants filed motions to dismiss the Amended Complaint on February 14, 2001. On November 14, 2003, the motions to dismiss the Amended Complaint were denied. On December 2, 2003, A&F moved for reconsideration or reargument of the November 14, 2003 order denying the motions to dismiss. The motions for reconsideration or reargument were fully briefed and submitted to the Court on January 9, 2004. The motions were denied on February 23, 2004. A&F is aware of six actions that have been filed on behalf of purported classes of employees and former employees of the Company alleging that the Company required its associates to wear and pay for a "uniform" in violation of applicable law. In each case, the plaintiff, on behalf of his or her purported class, seeks injunctive relief and unspecified amounts of economic and liquidated damages. Two of these cases, Jennifer M. Solis v. Abercrombie & Fitch Stores, Inc. and A&F California, LLC and Sarah Stevenson v. Abercrombie & Fitch Co., allege violations of California law and were filed on February 10, 2003 and February 4, 2003 in the California Superior Courts for Los Angeles County and San Francisco County, respectively. An answer was filed in the Solis case on March 26, 2003. Pursuant to a Petition for Coordination, the Solis and the Stevenson cases were coordinated by order issued November 17, 2003. Jadii Mohme v. Abercrombie & Fitch, which alleges violations of Illinois law, was filed on July 18, 2003 in the Illinois Circuit Court of St. Clair County. A first amended complaint was filed in the Mohme case on September 10, 2003 to change the defendant to "Abercrombie & Fitch Stores, Inc." from "Abercrombie & Fitch." An answer to the first amended complaint was filed in the Mohme case on September 26, 2003. The parties are in the process of discovery. Shelby Port v. Abercrombie & Fitch Stores, Inc., which alleges violations of Washington law, was filed on or about July 18, 2003 in the Washington Superior Court of King County. The defendant filed a motion to dismiss the complaint in the Port case on September 5, 2003. Holly Zemany v. Abercrombie & Fitch, which alleges violations of Pennsylvania law, was filed on July 18, 2003 in the Pennsylvania Court of Common Pleas of Allegheny County. A first amended complaint was filed in the Zemany case on September 9, 2003 to change the defendant to "Abercrombie & Fitch Stores, Inc." from "Abercrombie & Fitch." A second amended complaint was filed November 10, 2003, adding some factual allegations. Defendant filed an answer to the second amended complaint on January 22, 2004. 26 In Michael Gualano v. Abercrombie & Fitch, which was filed in the United States District Court for the Western District of Pennsylvania on March 14, 2003, the plaintiff alleges that the "uniform," when purchased, drove associates' wages below the federal minimum wage. The complaint purports to state a collective action on behalf of all part-time associates nationwide under the Fair Labor Standards Act. A first amended complaint was filed in the Gualano case on September 9, 2003, to change the defendant to "Abercrombie & Fitch Stores, Inc." from "Abercrombie & Fitch." An answer to the first amended complaint was filed in the Gualano case on or about September 24, 2003, and the parties are in the process of discovery. A&F is aware of two actions that have been filed against the Company involving overtime compensation. In each action, the plaintiffs, on behalf of their respective purported class, seek injunctive relief and unspecified amounts of economic and liquidated damages. In Bryan T. Kimbell, Individually and on Behalf of All Others Similarly Situated and on Behalf of the Public v. Abercrombie & Fitch Stores, Inc., which was filed on July 10, 2002 in the California Superior Court for Los Angeles County, the plaintiffs allege that California general and store managers were entitled to receive overtime pay as "non-exempt" employees under California wage and hour laws. An answer was filed in the Kimbell case on September 4, 2002 and the parties are in the process of discovery. In Melissa Mitchell, et al. v. Abercrombie & Fitch Co. and Abercrombie & Fitch Stores, Inc., which was filed on June 13, 2003 in the United States District Court for the Southern District of Ohio, the plaintiffs allege that assistant managers and store managers were not paid overtime compensation in violation of the Fair Labor Standards Act and Ohio law. A&F filed a motion to dismiss the Mitchell case on July 28, 2003. The case was transferred from the Western Division to the Eastern Division of the Southern District of Ohio on April 21, 2004. A&F subsequently renewed its motion to dismiss, which is pending. The Company does not believe it is feasible to predict the outcome of the legal proceedings described above and intends to defend vigorously against them. The timing of the final resolution of each of these proceedings is also uncertain. Accordingly, the Company cannot estimate a range of potential loss, if any, for any of these legal proceedings. A&F is aware of one action that has been filed on behalf of a purported class alleged to be discriminated against in hiring or employment decisions due to race and/or national origin. Eduardo Gonzalez, et al. v. Abercrombie & Fitch Co. was filed on June 16, 2003 in the United States District Court for the Northern District of California. The plaintiffs subsequently amended their complaint to add A&F California, LLC, Abercrombie & Fitch Stores, Inc. and A&F Ohio, Inc. as defendants. The plaintiffs allege, on behalf of their purported class, that they were discriminated against in hiring and employment decisions due to their race and/or national origin. The plaintiffs seek, on behalf of their purported class, injunctive relief and unspecified amounts of economic, compensatory and punitive damages. A second amended complaint, which added two additional plaintiffs, was filed on or about January 9, 2004. Defendant filed an answer to the second amended complaint on or about January 26, 2004. During the first quarter of fiscal 2004, the Company recorded an $8.0 million charge (net of expected proceeds of $10 million from insurance) resulting from an increase in expected defense costs related to this purported class action employment discrimination suit. The Company does not believe it is feasible to predict the outcome of this proceeding and intends to vigorously defend against it. However, if judgment is rendered in this proceeding which is unfavorable to the Company, the amount could potentially be material to the Company's financial statements. The parties are in the process of discovery. In addition, the EEOC is conducting nationwide investigations relating to allegations of discrimination based on race, national origin and gender. 27 ITEM 2. CHANGES IN SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES OF EQUITY SECURITIES (a) Not applicable (b) Not applicable (c) Not applicable (d) Not applicable (e) The following table provides information regarding A&F's purchase of its Class A Common Stock during each fiscal month of the quarterly period ended May 1, 2004:
Total Number of Total Shares Purchased Maximum Number Number of Average as Part of Publicly of Shares that May Shares Price Paid Announced Yet be Purchased Period Purchased per Share Program under the Program(1) - ----------------------- --------- ---------- ------------------- -------------------- February 1 through 28, 2004 11,804(2) $ 27.18 - 599,000 February 29, 2004 through April 3, 2004 599,000 $ 31.11 599,000 - April 4 through May 1, 2004 - $ - - - --------- ---------- ------------------- -------------------- Total 610,804 $ 31.03 599,000 - ========= ========== =================== ====================
(1) The number shown represents, as of the end of each period, the maximum number of shares of Class A Common Stock that may be yet repurchased under A&F's publicly announced stock repurchase authorization. A&F announced the authorization of the repurchase of 5,000,000 shares of Class A Common Stock, in addition to the 850,000 shares then remaining available under the authorization to repurchase 6,000,000 shares announced on February 14, 2000, for a total of 5,850,000 shares authorized for repurchase as of August 8, 2002. By January 31, 2004, the Company had repurchased 5,251,000 of the total shares authorized for repurchase as of August 8, 2002. During the quarterly period ended May 1, 2004, A&F repurchased the 599,000 shares of Class A Common Stock which remained available under this stock repurchase authorization and, as a result, the authorization has expired. (2) Reflects shares of Class A Common Stock withheld from employees for payment of taxes due upon the vesting of restricted share awards. 28 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On May 20, 2004, A&F held its annual meeting of shareholders at Abercrombie & Fitch executive offices locates at 6301 Fitch Path, New Albany, Ohio. At the close of business on the March 26, 2004 record date, 94,445,669 shares of Class A Common Stock of A&F were outstanding and entitled to vote. At the Annual Meeting, 87,410,124 or 92.55% of the outstanding shares of Class A Common Stock entitled to vote were represented by proxy or in person. At the Annual Meeting, Messrs. John A. Golden, Seth R. Johnson and Edward F. Limato were re-elected to A&F's Board of Directors, each to serve for a three-year term expiring in 2007. The vote on the election of directors was as follows:
Votes Broker Non- Votes For Withheld Votes ---------- ---------- ----------- John A. Golden 78,696,917 8,713,207 - Seth R. Johnson 59,626,443 27,783,681 - Edward F. Limato 84,308,567 3,101,557 -
The following individuals also continue to serve on the Board of Directors: Messrs. James B. Bachmann, Russell M. Gertmenian, Archie M. Griffin, Michael S. Jeffries, John W. Kessler, and Sam N. Shahid, Jr. and Ms. Lauren J. Brisky. 29 Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 3. Certificate of Incorporation and Bylaws. 3.1 Amended and Restated Certificate of Incorporation of A&F as filed with the Delaware Secretary of State on August 27, 1996, incorporated herein by reference to Exhibit 3.1 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended November 2, 1996. (File No. 1-12107) 3.2 Certificate of Designation of Series A Participating Cumulative Preferred Stock of A&F as filed with the Delaware Secretary of State on July 21, 1998, incorporated herein by reference to Exhibit 3.2 to A&F's Annual Report on Form 10-K for the fiscal year ended January 30, 1999. (File No. 1-12107) 3.3 Certificate of Decrease of Shares Designated as Class B Common Stock of A&F as filed with the Delaware Secretary of State on July 30, 1999, incorporated herein by reference to Exhibit 3.3 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended July 31, 1999. (File No. 1-12107) 3.4 Amended and Restated Bylaws of A&F, effective January 31, 2002, incorporated herein by reference to Exhibit 3.4 to A&F's Annual Report on Form 10-K for the fiscal year ended February 2, 2002. (File No. 1-12107) 3.5 Certificate regarding adoption of amendment to Section 2.02 of Amended and Restated Bylaws of A&F by Board of Directors on July 10, 2003, incorporated herein by reference to Exhibit 3.5 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended November 1, 2003 (File No. 1-12107) 3.6 Certificate regarding adoption of amendments to Sections 1.02, 1.06, 3.01, 3.05, 4.02, 4.03, 4.04, 4.05, 4.06, 6.01 and 6.02 of Amended and Restated Bylaws of A&F by Board of Directors on May 20, 2004 3.7 Amended and Restated Bylaws of A&F (reflecting amendments through May 20, 2004) [for SEC reporting compliance purposes only] 4. Instruments Defining the Rights of Security Holders. 4.1 Credit Agreement, dated as of November 14, 2002, among Abercrombie & Fitch Management Co., as Borrower, A&F, as Guarantor, the Lenders party thereto, and National City Bank, as Administrative Agent and Lead Arranger (the "Credit Agreement"), incorporated herein by reference to Exhibit 4.1 to A&F's Current Report on Form 8-K dated November 26, 2002. (File No. 1-12107) 4.2 Guarantee Agreement, dated as of November 14, 2002, among A&F, each direct and indirect domestic subsidiary of A&F other than Abercrombie & Fitch Management Co., and National City Bank, as Administrative Agent for the Lenders party to the Credit Agreement, incorporated herein by reference to Exhibit 4.2 to A&F's Current Report on Form 8-K dated 30 November 26, 2002. (File No. 1-12107) 4.3 First Amendment and Waiver, dated as of January 26, 2004, to the Credit Agreement, dated as of November 14, 2002, among Abercrombie & Fitch Management Co., A&F, the Lenders party thereto and National City Bank, as Administrative Agent, incorporated herein by reference to Exhibit 4.3 to A&F's Annual Report on Form 10-K for the fiscal year ended January 31, 2004 (File No. 1-12107) 4.4 Rights Agreement, dated as of July 16, 1998, between A&F and First Chicago Trust Company of New York, as Rights Agent, incorporated herein by reference to Exhibit 1 to A&F's Registration Statement on Form 8-A dated July 21, 1998. (File No. 1-12107) 4.5 Amendment No. 1 to Rights Agreement, dated as of April 21, 1999, between A&F and First Chicago Trust Company of New York, as Rights Agent, incorporated herein by reference to Exhibit 2 to A&F's Amendment No. 1 to Form 8-A dated April 23, 1999. (File No. 1-12107) 4.6 Certificate of adjustment of number of Rights associated with each share of Class A Common Stock, dated May 27, 1999, incorporated herein by reference to Exhibit 4.6 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended July 31, 1999. (File No. 1-12107) 4.7 Appointment and Acceptance of Successor Rights Agent, effective as of the opening of business on October 8, 2001, between A&F and National City Bank, incorporated herein by reference to Exhibit 4.6 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended August 4, 2001. (File No. 1-12107) 31 10. Material Contracts. 10.1 Abercrombie & Fitch Co. Incentive Compensation Performance Plan, incorporated herein by reference to Exhibit 10.1 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended May 4, 2002. (File No. 1-12107) 10.2 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock Option and Performance Incentive Plan (reflects amendments through December 7, 1999 and the two-for-one stock split distributed June 15, 1999 to stockholders of record on May 25, 1999), incorporated herein by reference to Exhibit 10.2 to A&F's Annual Report on Form 10-K for the fiscal year ended January 29, 2000. (File No. 1-12107) 10.3 1998 Restatement of the Abercrombie & Fitch Co. 1996 Stock Plan for Non-Associate Directors (reflects amendments through January 30, 2003 and the two-for-one stock split distributed June 15, 1999 to stockholders of record on May 25, 1999), incorporated herein by reference to Exhibit 10.3 to A&F's Annual Report on Form 10-K for the fiscal year ended February 1, 2003. (File No. 1-12107) 10.4 Abercrombie & Fitch Co. 2002 Stock Plan for Associates (as amended and restated May 22, 2003), incorporated herein by reference to Exhibit 10.4 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended May 3, 2003. (File No. 1-12107) 10.5 Amended and Restated Employment Agreement, dated as of January 30, 2003, by and between A&F and Michael S. Jeffries, including as Exhibit A thereto the Supplemental Executive Retirement Plan (Michael S. Jeffries), effective February 2, 2003, incorporated herein by reference to Exhibit 10.1 to A&F's Current Report on Form 8-K dated February 11, 2003. (File No. 1-12107) 10.6 Abercrombie & Fitch Co. Directors' Deferred Compensation Plan (as amended and restated May 22, 2003), incorporated herein by reference to Exhibit 10.7 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended May 3, 2003. (File No. 1-12107) 10.7 Abercrombie & Fitch Nonqualified Savings and Supplemental Retirement Plan (formerly known as the Abercrombie & Fitch Co. Supplemental Retirement Plan), as amended and restated effective January 1, 2001, incorporated herein by reference to Exhibit 10.9 to A&F's Annual Report on Form 10-K for the fiscal year ended February 1, 2003. (File No. 1-12107) 10.8 Abercrombie & Fitch Co. 2003 Stock Plan for Non-Associate Directors, incorporated herein by reference to Exhibit 10.9 to A&F's Quarterly Report on Form 10-Q for the quarterly period ended May 3, 2003. (File No. 1-12107) 10.9 Retirement Agreement, executed on May 20, 2004, by and between Seth R. Johnson and A&F 32 10.10 Employment Agreement, entered into as of May 17, 2004, by and between A&F and Robert S. Singer, including as Exhibit A thereto the Supplemental Executive Retirement Plan II (Robert S. Singer), effective May 17, 2004 15. Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Inclusion of Report of Independent Registered Public Accounting Firm. 31.1 Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer) 31.2 Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer) 32 Section 1350 Certifications (Principal Executive Officer and Principal Financial Officer) (b) Reports on Form 8-K. On February 23, 2004, A&F filed a Current Report on Form 8-K to report under "Item 5. Other Events and Regulation FD Disclosure," the issuance of a news release announcing that Susan J. Riley had been named Senior Vice President - Chief Financial Officer of A&F. 33 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ABERCROMBIE & FITCH CO. Date: June 9, 2004 By /s/ SUSAN J. RILEY ----------------------------------------------- Susan J. Riley, Senior Vice President - Chief Financial Officer * Ms. Riley has been duly authorized to sign on behalf of the Registrant as its principal financial officer. 34 EXHIBIT INDEX Exhibit No. Document 3.6 Certificate regarding adoption of amendments to Sections 1.02, 1.06, 3.01, 3.05, 4.02, 4.03, 4.04, 4.05, 4.06, 6.01 and 6.02 of Amended and Restated Bylaws of A&F by Board of Directors on May 20, 2004 3.7 Amended and Restated Bylaws of A&F (reflecting amendments through May 20, 2004) [for SEC reporting compliance purposes only] 10.9 Retirement Agreement, executed on May 20, 2004, by and between Seth R. Johnson and A&F 10.10 Employment Agreement, entered into as of May 17, 2004, by and between A&F and Robert S. Singer, including as Exhibit A thereto the Supplemental Executive Retirement Plan II (Robert S. Singer), effective May 17, 2004 15 Letter re: Unaudited Interim Financial Information to Securities and Exchange Commission re: Inclusion of Report of Independent Registered Public Accounting Firm 31.1 Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer) 31.2 Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer) 32 Section 1350 Certifications (Principal Executive Officer and Principal Financial Officer) 35 EX-3.6 2 l07902aexv3w6.txt EXHIBIT 3.6 EXHIBIT 3.6 Certificate regarding adoption of amendments to Sections 1.02, 1.06, 3.01, 3.05 4.02, 4.03, 4.04, 4.05, 4.06, 6.01 and 6.02 of Amended and Restated Bylaws of Abercrombie & Fitch Co. by Board of Directors on May 20, 2004 The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of Abercrombie & Fitch Co. (the "Corporation"); and that the resolutions set forth below were duly adopted by the Board of Directors of the Corporation at a meeting duly called and held on May 20, 2004: Amendment of Amended and Restated Bylaws to Separate the Roles of President and Chief Executive Officer WHEREAS, pursuant to Section 1 of Article FIFTH of the Corporation's Amended and Restated Certificate of Incorporation, the Board of Directors is expressly authorized to make, repeal, alter, amend and rescind the bylaws of the Corporation; and WHEREAS, Section 3.01 of the Amended and Restated Bylaws of the Corporation currently provides that the principal officers of the Corporation shall be the chairman of the board (who must be a director), a president (who must be a director), such number of vice-presidents as the Board of Directors may determine, a secretary and a treasurer; and WHEREAS, Section 4.02 of the Amended and Restated Bylaws of the Corporation currently provides that the president of the Corporation is to the chief executive officer of the Corporation; and WHEREAS, the Compensation Committee has recommended that the roles of the president and the chief executive officer be separated; and WHEREAS, the Board of Directors believes it would be in the best interest of the Corporation to amend the Amended and Restated Bylaws of the Corporation to separate the roles of the president and the chief executive officer; NOW, THEREFORE, BE IT: RESOLVED, that Section 3.01 of the Amended and Restated Bylaws of the Corporation be, and it hereby is, amended by deleting the same in its entirety and substituting therefor the following new Section 3.01: Section 3.01. General Provisions. The principal officers of the corporation shall be the chairman of the board (who shall be a director), the chief executive officer (who shall be a director), a president (who shall be a director), such number of vice-presidents as the Board of Directors may from time to time determine, a secretary and a treasurer. Any person may hold any two or more offices and perform the duties thereof, except the offices of president and vice-president or the offices of president and secretary. FURTHER RESOLVED, that Sections 4.02, 4.03, 4.04 and 4.05 of the Amended and Restated Bylaws of the Corporation be, and they hereby are, amended by deleting the same in their entirety and substituting therefor the following new Sections 4.02, 4.03, 4.04, 4.05 and 4.06: Section 4.02. The Chief Executive Officer. The chief executive officer shall be the principal executive officer of the corporation and shall perform such duties as are conferred upon him by these Bylaws or as may from time to time be assigned to him by the chairman of the board or the Board of Directors. The chief executive officer shall have the same power as the president to sign, execute and deliver in the name of the corporation all deeds, mortgages, bonds, leases, contracts and other instruments either when specially authorized by the Board of Directors or when required or deemed necessary or advisable by him in the ordinary course of the corporation's normal business, except in cases where the signing and execution thereof shall be expressly delegated by these Bylaws to some other officer or agent of the corporation or shall be required by law or otherwise to be signed or executed by some other officer or agent, and the chief executive officer may cause the seal of the corporation, if any, to be affixed to any instrument requiring the same. During the absence or disability of the president, the chief executive officer shall exercise all of the powers and perform all of the duties of the president except as otherwise provided by law. The chief executive officer shall, during the absence or disability of the chairman of the board, preside at meetings of the stockholders and of the Board of Directors. Section 4.03. The President. The president shall be the principal operating and administrative officer of the -2- corporation. If there is no chief executive officer, the president shall exercise all of the powers and perform all of the duties of the chief executive officer. The president shall perform such duties as are conferred upon him by these Bylaws or as may from time to time be assigned to him by the chairman of the board, the chief executive officer or the Board of Directors. The president may sign, with the secretary, treasurer or other proper officer of the corporation thereunto authorized by the Board of Directors, certificates for shares in the corporation. The president may also sign, execute and deliver in the name of the corporation all deeds, mortgages, bonds, leases, contracts or other instruments either when specially authorized by the Board of Directors or when required or deemed necessary or advisable by him in the ordinary conduct of the corporation's normal business, except in cases where the signing and execution thereof shall be expressly delegated by these Bylaws to some other officer or agent of the corporation or shall be required by law or otherwise to be signed or executed by some other officer or agent, and the president may cause the seal of the corporation, if any, to be affixed to any instrument requiring the same. The president shall, in the absence or disability of each of the chairman of the board and the chief executive officer, preside at meetings of the stockholders and of the Board of Directors. Section 4.04. Vice-Presidents. The vice-presidents shall perform such duties as are conferred upon them by these Bylaws or as may from time to time be assigned to them by the Board of Directors, the chairman of the board, the chief executive officer or the president. At the request of the chairman of the board or the chief executive officer, in the absence or disability of the president, the vice-president designated by the chairman of the board or the chief executive officer, as appropriate, shall perform the duties of the president, and when so acting, shall have all of the powers of the president. Section 4.05. The Treasurer. The treasurer shall be the custodian of all funds and securities of the corporation. Whenever so directed by the Board of Directors, the treasurer shall render a statement of the cash and other accounts of the corporation, and the treasurer shall cause to be entered regularly in the books and records of the corporation to be kept for such purpose full and accurate accounts of the corporation's receipts and disbursements. -3- The treasurer shall have such other powers and shall perform such other duties as may from time to time be assigned to him by the Board of Directors, the chairman of the board, the chief executive officer or the president. Section 4.06. The Secretary. The secretary shall record and keep the minutes of all meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose. The secretary shall be the custodian of, and shall make or cause to be made the proper entries in, the minute book of the corporation and such other books and records as the Board of Directors may direct. The secretary shall be the custodian of the seal of the corporation, if any, and shall affix such seal to such contracts, instruments and other documents as the Board of Directors or any committee thereof may direct. The secretary shall have such other powers and shall perform such other duties as may from time to time be assigned to him by the Board of Directors, the chairman of the board, the chief executive officer or the president. FURTHER RESOLVED, that Section 1.02 of the Amended and Restated Bylaws of the Corporation be, and it hereby is, amended by deleting the same in its entirety and substituting therefor the following new Section 1.02: Section 1.02. Special Meetings. Special meetings of the stockholders may be called at any time by the chairman of the board, the chief executive officer, the president, or in case of the president's death, absence or disability, the vice president, if any, authorized to exercise the authority of the president, or a majority of the Board of Directors acting with or without a meeting; provided, that if and to the extent that any special meeting of stockholders may be called by any other person or persons specified in any provision of the certificate of incorporation or any amendment thereto or any certificate filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time), then such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified. FURTHER RESOLVED, that Section 1.06 of the Amended and Restated Bylaws of the Corporation be, and it hereby is, amended by deleting the same in its entirety and substituting therefor the following new Section 1.06: -4- Section 1.06. Organization. At each meeting of the stockholders, the chairman of the board, or in his absence or disability, the chief executive officer, or in the absence or disability of the chief executive officer, the president, or, in the absence or disability of the president, any vice-president, or, in the absence of the chairman of the board, the chief executive officer, the president and any vice-president, a chairman chosen by a majority in interest of the stockholders present in person or by proxy and entitled to vote, shall act as chairman of the meeting; and the secretary of the corporation, or, if the secretary of the corporation not be present, the assistant secretary, or if the secretary and the assistant secretary not be present, any person whom the chairman of the meeting shall appoint, shall act as secretary of the meeting. FURTHER RESOLVED, that Section 3.05 of the Amended and Restated Bylaws of the Corporation be, and it hereby is, amended by deleting the same in its entirety and substituting therefor the following Section 3.05: Section 3.05. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors, or to the chairman of the board, the chief executive officer, the president or the secretary of the corporation. Any such resignation shall take effect at the time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. FURTHER RESOLVED, that Section 6.01 of the Amended and Restated Bylaws of the Corporation be, and it hereby is, amended by deleting the same in its entirety and substituting therefor the following Section 6.01: Section 6.01. Depositories. The chairman of the board, the chief executive officer, the president, the treasurer and any vice-president of the corporation whom the Board of Directors authorizes to designate depositories for the funds of the corporation are each authorized to designate depositories for the funds of the corporation deposited in its name and the signatories and conditions with respect thereto in each case, and from time to time, to change such depositories, signatories and conditions, with the same force and effect as if each such depository, the signatories and conditions with respect thereto and changes therein had been specifically designated or authorized by the Board of Directors; and each depository designated by the Board of Directors or by the chairman of the board, the chief executive officer, the president, the treasurer or any such -5- vice-president of the corporation, shall be entitled to rely upon the certificate of the secretary or any assistant secretary of the corporation setting forth the fact of such designation and of the appointment of the officers of the corporation or of other persons who are to be signatories with respect to the withdrawal of funds deposited with such depository, or from time to time the fact of any change in any depository or in the signatories with respect thereto. FURTHER RESOLVED, that Section 6.02 of the Amended and Restated Bylaws of the Corporation be, and its hereby is, amended by deleting the same in its entirety and substituting therefor the following Section 6.02: Section 6.02. Execution of Instruments Generally. In addition to the powers conferred upon the chairman of the board in Section 4.01 of these Bylaws and except as otherwise provided in Section 6.01 of this Article VI or required by law, all contracts and other instruments entered into in the ordinary course of business requiring execution by the corporation may be executed and delivered by the chief executive officer, the president, the treasurer or any vice president and authority to sign any such contracts or instruments, which may be general or confined to specific instances, may be conferred by the Board of Directors upon any other person or persons. Any person having authority to sign on behalf of the corporation may delegate, from time to time, by instrument in writing, all or any part of such authority to any person or persons if authorized so to do by the Board of Directors. IN WITNESS WHEREOF, the undersigned has signed this Certificate this 8th day of June, 2004. /s/ John K. Shubitowski -------------------------------------------- John K. Shubitowski, Secretary of Abercrombie & Fitch Co. -6- EX-3.7 3 l07902aexv3w7.txt EXHIBIT 3.7 EXHIBIT 3.7 AMENDED AND RESTATED BYLAWS OF ABERCROMBIE & FITCH CO. (Reflecting amendments through May 20, 2004) [(For SEC reporting compliance purposes only)] ARTICLE I STOCKHOLDERS Section 1.01. Annual Meeting. The annual meeting of the stockholders of this corporation, for the purpose of fixing or changing the number of directors of the corporation, electing directors and transacting such other business as may come before the meeting, shall be held on such date, at such time and at such place as may be designated by the Board of Directors. Section 1.02. Special Meetings. Special meetings of the stockholders may be called at any time by the chairman of the board, the chief executive officer, the president, or in case of the president's death, absence or disability, the vice president, if any, authorized to exercise the authority of the president, or a majority of the Board of Directors acting with or without a meeting; provided, that if and to the extent that any special meeting of stockholders may be called by any other person or persons specified in any provision of the certificate of incorporation or any amendment thereto or any certificate filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time), then such special meeting may also be called by the person or persons, in the manner, at the times and for the purposes so specified. Section 1.03. Place of Meetings. Meetings of stockholders shall be held at the principal office of the corporation in the State of Ohio, unless the Board of Directors decides that a meeting shall be held at some other place and causes the notice thereof to so state. The Board of Directors may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place but may instead be held solely by means of remote communication satisfying the applicable provisions of the Delaware General Corporation Law (or its successor statute as in effect from time to time). Section 1.04. Notice of Meetings. (a) Unless waived, a written notice of each annual or special meeting, stating the place, if any, date, hour and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting as well as the purpose or purposes of such meeting shall be given to each stockholder of record entitled to vote or entitled to notice, not more than 60 days nor less than 10 days before any such meeting. If mailed, such notice shall be directed to a stockholder at his or her address as the same appears on the records of the corporation. Notice to a stockholder shall also be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given in the manner provided for in the applicable provisions of the Delaware General Corporation Law (or its successor statute as in effect from time to time). If a meeting is adjourned to another time or place and such adjournment is for 30 days or less and no new record date is fixed for the adjourned meeting, no further notice as to such adjourned meeting need be given if the time and place, if any, to which it is adjourned and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are fixed and announced at such meeting. In the event of a transfer of shares after notice has been given and prior to the holding of the meeting, it shall not be necessary to serve notice on the transferee. If the adjournment is for more than 30 days, or after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. (b) A written waiver of any such notice signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to any such notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 1.05. Fixing Date for Determination of Stockholders of Record. In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any other change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If the Board shall not fix such a record date, (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and (ii) in any case involving the determination of stockholders for any purpose other than notice of or voting at a meeting of stockholders, the record date for determining stockholders for such purpose shall be the close of business on the day on which the Board of Directors shall adopt the resolution relating thereto. Determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of such meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 1.06. Organization. At each meeting of the stockholders, the chairman of the board, or in his absence or disability, the chief executive officer, or in the absence or disability of the chief executive officer, the president, or, in the absence or disability of the president, any vice-president, or, in the absence of the chairman of the board, the chief executive officer, the president and any vice-president, a chairman chosen by a majority in interest of the stockholders present in person or by proxy and entitled to vote, shall act as chairman of the meeting; and the secretary of the corporation, or, if the secretary of the corporation not be present, the assistant secretary, or if the secretary and the assistant secretary not be present, any person whom the chairman of the meeting shall appoint, shall act as secretary of the meeting. Section 1.07. Quorum. A stockholders' meeting duly called shall not be organized for the transaction of business unless a quorum is present. Except as otherwise expressly provided -2- by law, the certificate of incorporation, these Bylaws, or any certificate filed under Section 151(g) of the Delaware General Corporation Law (or its successor statute as in effect from time to time), (i) at any meeting called by the Board of Directors, the presence in person or by proxy of holders of record entitling them to exercise at least one-third of the voting power of the corporation shall constitute a quorum for such meeting and (ii) at any meeting called other than by the Board of Directors, the presence in person or by proxy of holders of record entitling them to exercise at least a majority of the voting power of the corporation shall constitute a quorum for such meeting. The stockholders present at a duly organized meeting can continue to do business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. If a meeting cannot be organized because a quorum has not attended, a majority in voting interest of the stockholders present may adjourn, or, in the absence of a decision by the majority, any officer entitled to preside at such meeting may adjourn, the meeting from time to time to such time (not more than 30 days after the previously adjourned meeting) and place as they (or he) may determine, without notice other than by announcement at the meeting of the time and place, if any, of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting. At any such adjourned meeting at which a quorum is present, any business may be transacted which might have been transacted at the meeting as originally called. Section 1.08. Order of Business and Procedure. The order of business at all meetings of the stockholders and all matters relating to the manner of conducting the meeting shall be determined by the chairman of the meeting. Meetings shall be conducted in a manner designed to accomplish the business of the meeting in a prompt and orderly fashion and to be fair and equitable to all stockholders, but it shall not be necessary to follow any manual of parliamentary procedure. Section 1.09. Advance Notice of Stockholder Proposals. In order to properly submit any business to an annual meeting of stockholders, a stockholder must give timely notice in writing to the secretary of the corporation. To be considered timely, a stockholder's notice must be delivered either in person or by United States certified mail, postage prepaid, and received at the principal executive offices of the corporation (a) not less than 120 days nor more than 150 days before the first anniversary date of the corporation's proxy statement in connection with the last annual meeting of stockholders or (b) if no annual meeting was held in the previous year or the date of the applicable annual meeting has been changed by more than 30 days from the date contemplated at the time of the previous year's proxy statement, not less than a reasonable time, as determined by the Board of Directors, prior to the date of the applicable annual meeting. Nomination of persons for election to the Board of Directors may be made by the Board of Directors or any committee designated by the Board of Directors or by any stockholder entitled to vote for the election of directors at the applicable meeting of stockholders. However, nominations other than those made by the Board of Directors or its designated committee must comply with the procedures set forth in this Section 1.09, and no person shall be eligible for election as a director unless nominated in accordance with the terms of this Section 1.09. A stockholder may nominate a person or persons for election to the Board of Directors by giving written notice to the secretary of the corporation in accordance with the procedures set forth above. In addition to the timeliness requirements set forth above for notice to the -3- corporation by a stockholder of business to be submitted at an annual meeting of stockholders, with respect to any special meeting of stockholders called for the election of directors, written notice must be delivered in the manner specified above and not later than the close of business on the seventh day following the date on which notice of such meeting is first given to stockholders. The secretary of the corporation shall deliver any stockholder proposals and nominations received in a timely manner for review by the Board of Directors or a committee designated by the Board of Directors. A stockholder's notice to submit business to an annual meeting of stockholders shall set forth (i) the name and address of the stockholder, (ii) the class and number of shares of stock beneficially owned by such stockholder, (iii) the name in which such shares are registered on the stock transfer books of the corporation, (iv) a representation that the stockholder intends to appear at the meeting in person or by proxy to submit the business specified in such notice, (v) any material interest of the stockholder in the business to be submitted and (vi) a brief description of the business desired to be submitted to the annual meeting, including the complete text of any resolutions to be presented at the annual meeting, and the reasons for conducting such business at the annual meeting. In addition, the stockholder making such proposal shall promptly provide any other information reasonably requested by the corporation. In addition to the information required above to be given by a stockholder who intends to submit business to a meeting of stockholders, if the business to be submitted is the nomination of a person or persons for election to the Board of Directors, then such stockholder's notice must also set forth, as to each person whom the stockholder proposes to nominate for election as a director, (a) the name, age, business address and, if known, residence address of such person, (b) the principal occupation or employment of such person, (c) the class and number of shares of stock of the corporation which are beneficially owned by such person, (d) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors or is otherwise required by the rules and regulations of the Securities and Exchange Commission promulgated under the Securities Exchange Act of 1934, as amended, (e) the written consent of such person to be named in the proxy statement as a nominee and to serve as a director if elected and (f) a description of all arrangements or understandings between such stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such stockholder. Any person nominated for election as director by the Board of Directors or any committee designated by the Board of Directors shall, upon the request of the Board of Directors or such committee, furnish to the secretary of the corporation all such information pertaining to such person that is required to be set forth in a stockholder's notice of nomination. Notwithstanding the foregoing provisions of this Section 1.09, a stockholder who seeks to have any proposal included in the corporation's proxy statement shall comply with the requirements of Regulation 14A under the Securities Exchange Act of 1934, as amended. -4- Section 1.10. Voting. (a) Each stockholder shall, at each meeting of the stockholders, be entitled to vote in person or by proxy each share or fractional share of the stock of the corporation having voting rights on the matter in question and which shall have been held by him and registered in his name on the books of the corporation on the date fixed pursuant to Section 1.05 of these Bylaws as the record date for the determination of stockholders entitled to notice of and to vote at such meeting. (b) Shares of its own stock belonging to the corporation or to another corporation, if a majority of the shares entitled to vote in the election of directors in such other corporation is held, directly or indirectly, by the corporation, shall neither be entitled to vote nor be counted for quorum purposes. (c) Any such voting rights may be exercised by the stockholder entitled thereto in person or by his proxy appointed by an instrument in writing signed by such stockholder or by his attorney thereunto authorized or appointed in any other manner permitted by the law of Delaware. Any such instrument in writing or record of any such appointment shall be filed with or received by the secretary of the meeting in sufficient time to permit the necessary examination and tabulation thereof before the vote is taken. No appointment of a proxy shall be valid after the expiration of three years after it is made unless the writing or other communication or transmission which appoints such proxy specifies the length of time it is to continue in force. At any meeting of the stockholders all matters, except as otherwise provided in the certificate of incorporation, in these Bylaws or by law, shall be decided by the vote of a majority in voting interest of the stockholders present in person or by proxy and voting thereon, a quorum being present. The vote at any meeting of the stockholders on any question need not be by ballot, unless so directed by the chairman of the meeting or required by the certificate of incorporation. On a vote by ballot, each ballot shall be signed by the stockholder voting, or by his proxy, if there be such proxy, and shall state the number of shares voted. Section 1.11. Inspectors. The Board of Directors, in advance of any meeting of the stockholders, shall appoint one or more inspectors to act at the meeting and make a written report thereof. If any person so appointed fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding thereat. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at the meeting with strict impartiality and according to the best of his ability. The inspectors so appointed shall (a) ascertain the number of shares outstanding and the voting power of each; (b) determine the shares represented at the meeting and the validity of proxies and ballots; (c) count all votes and ballots; (d) determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors; and (e) certify their determination of the number of shares represented at the meeting and their count of all votes and ballots. Any report or certificate made by the inspectors shall be prima facie evidence of the facts stated and of the vote as certified by them. Section 1.12. List of Stockholders. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, -5- and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Nothing contained in this Section shall require the corporation to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least 10 days prior to the meeting: (a) on a reasonably accessible electronic network, provided that the information to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of the corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. ARTICLE II BOARD OF DIRECTORS Section 2.01. General Powers of Board. The powers of the corporation shall be exercised, its business and affairs conducted, and its property controlled by or under the direction of the Board of Directors, except as otherwise provided by the law of Delaware or in the certificate of incorporation. Section 2.02. Number of Directors. The number of directors of the corporation (exclusive of directors to be elected by the holders of any one or more series of Preferred Stock voting separately as a class or classes) shall not be less than four nor more than thirteen, the exact number of directors to be such number as may be set from time to time within the limits set forth above by resolution adopted by affirmative vote of a majority of the whole Board. As used in these Bylaws, the term "whole Board" means the total number of directors which the corporation would have if there were no vacancies. Section 2.03. Election of Directors. At each meeting of the stockholders for the election of directors, the persons receiving the greatest number of votes shall be the directors. Directors need not be stockholders. Section 2.04. Nominations. 2.04.1. Nominations for the election of directors may be made by the Board of Directors or any committee designated by the Board of Directors or by any stockholder entitled to vote for the election of directors at the applicable meeting of stockholders. 2.04.2. Such nominations, if not made by the Board of Directors or its designated committee, shall be made in accordance with the procedures set forth in Section 1.09 of these Bylaws. -6- 2.04.3. Notice of nominations which are proposed by the Board of Directors or its designated committee shall be given on behalf of the Board or such committee by the chairman of the meeting. 2.04.4. The chairman of the meeting may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the required procedures, and if the chairman should so determine, the chairman shall so declare to the meeting and the defective nomination shall be disregarded. Section 2.05. Resignations. Any director of the corporation may resign at any time by giving written notice or notice by electronic transmission to the chairman of the board or the secretary of the corporation. Such resignation shall take effect at the time specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 2.06. Vacancies. In the event that any vacancy shall occur in the Board of Directors, whether because of death, resignation, removal, newly created directorships resulting from any increase in the authorized number of directors, the failure of the stockholders to elect the whole authorized number of directors, or any other reason, such vacancy may be filled by the vote of a majority of the directors then in office, although less than a quorum. A director elected to fill a vacancy, other than a newly created directorship, shall hold office for the unexpired term of his predecessor. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. Section 2.07. Removal of Directors. Directors may be removed only as provided in the certificate of incorporation. Section 2.08. Place of Meeting, etc. The Board of Directors may hold any of its meetings at the principal office of the corporation or at such other place or places as the Board of Directors (or the chairman in the absence of a determination by the Board of Directors) may from time to time designate. Directors may participate in any regular or special meeting of the Board of Directors by means of conference telephone or other communications equipment pursuant to which all persons participating in the meeting of the Board of Directors can hear each other and such participation shall constitute presence in person at such meeting. Section 2.09. Annual Meeting. A regular annual meeting of the Board of Directors shall be held each year at the same place as and immediately after the annual meeting of stockholders, or at such other place and time as shall theretofore have been determined by the Board of Directors and notice thereof need not be given. At its regular annual meeting, the Board of Directors shall organize itself and elect the officers of the corporation for the ensuing year, and may transact any other business. -7- Section 2.10. Regular Meetings. Regular meetings of the Board of Directors may be held at such intervals at such time as shall from time to time be determined by the Board of Directors. After such determination and notice thereof has been once given to each person then a member of the Board of Directors, regular meetings may be held at such intervals and time and place without further notice being given. Section 2.11. Special Meetings. Special meetings of the Board of Directors may be called at any time by the Board of Directors or by the chairman of the board or by a majority of directors then in office to be held on such day and at such time as shall be specified by the person or persons calling the meeting. Section 2.12. Notice of Meetings. Notice of each special meeting or, where required, each regular meeting, of the Board of Directors shall be given to each director either by being mailed on at least the third day prior to the date of the meeting or by being telegraphed, faxed or given personally or by telephone on at least 24 hours notice prior to the date of meeting. Such notice shall specify the place, date and hour of the meeting and, if it is for a special meeting, the purpose or purposes for which the meeting is called. At any meeting of the Board of Directors at which every director shall be present, even though without such notice, any business may be transacted. Any acts or proceedings taken at a meeting of the Board of Directors not validly called or constituted may be made valid and fully effective by ratification at a subsequent meeting which shall be legally and validly called or constituted. Notice of any regular meeting of the Board of Directors need not state the purpose of the meeting and, at any regular meeting duly held, any business may be transacted. If the notice of a special meeting shall state as a purpose of the meeting the transaction of any business that may come before the meeting, then at the meeting any business may be transacted, whether or not referred to in the notice thereof. A written waiver of notice of a special or regular meeting, signed by the person or persons entitled to such notice, whether before or after the time stated therein shall be deemed the equivalent of such notice, and attendance of a director at a meeting shall constitute a waiver of notice of such meeting except when the director attends the meeting and prior to or at the commencement of such meeting protests the lack of proper notice. Section 2.13. Quorum and Voting. At all meetings of the Board of Directors, the presence of a majority of the directors then in office shall constitute a quorum for the transaction of business. Except as otherwise required by law, the certificate of incorporation, or these Bylaws, the vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. At all meetings of the Board of Directors, each director shall have one vote. Section 2.14. Committees. The Board of Directors may appoint an executive committee and any other committee of the Board of Directors, to consist of one or more directors of the corporation, and may delegate to any such committee any of the authority of the Board of Directors, however conferred, other than the power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the Bylaws of the corporation. No committee shall -8- have the power or authority to declare a dividend or to authorize the issuance of stock unless the resolution creating such committee expressly so provides. Each such committee shall serve at the pleasure of the Board of Directors, shall act only in the intervals between meetings of the Board of Directors and shall be subject to the control and direction of the Board of Directors. Any such committee may act by a majority of its members at a meeting or without a meeting if all members of the committee consent to the action in writing or by electronic transmission. Any such committee shall keep written minutes of its meetings and report the same to the Board of Directors at the next regular meeting of the Board of Directors. Section 2.15. Compensation. The Board of Directors may, by resolution passed by a majority of those in office, fix the compensation of directors for service in any capacity and may fix fees for attendance at meetings and may authorize the corporation to pay the traveling and other expenses of directors incident to their attendance at meetings, or may delegate such authority to a committee of the Board of Directors. Section 2.16. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or of such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing(s) or electronic transmission(s) are filed with the minutes of proceedings of the Board or such committee. ARTICLE III OFFICERS Section 3.01. General Provisions. The principal officers of the corporation shall be the chairman of the board (who shall be a director), the chief executive officer (who shall be a director), a president (who shall be a director), such number of vice-presidents as the Board of Directors may from time to time determine, a secretary and a treasurer. Any person may hold any two or more offices and perform the duties thereof, except the offices of president and vice-president or the offices of president and secretary. Section 3.02. Election, Terms of Office, and Qualification. The officers of the corporation named in Section 3.01 of this Article III shall be elected by the Board of Directors for an indeterminate term and shall hold office at the pleasure of the Board of Directors. Section 3.03. Additional Officers, Agents, etc. In addition to the officers mentioned in Section 3.01 of this Article III, the corporation may have such other officers or agents as the Board of Directors may deem necessary and may appoint, each of whom shall hold office for such period, have such authority and perform such duties as the Board of Directors may from time to time determine. The Board of Directors may delegate to any officer the power to appoint any subordinate officers or agents. In the absence of any officer of the corporation, or for any other reason the Board of Directors may deem sufficient, the Board of Directors may delegate, for the time being, the powers and duties, or any of them, of such officer to any other officer, or to any director. -9- Section 3.04. Removal. Except as set forth below, any officer of the corporation may be removed, either with or without cause, at any time, by resolution adopted by the Board of Directors at any meeting, the notice (or waivers of notice) of which shall have specified that such removal action was to be considered. Any officer appointed not by the Board of Directors but by an officer or committee to which the Board of Directors shall have delegated the power of appointment may be removed, with or without cause, by the committee or superior officer (including successors) who made the appointment, or by any committee or officer upon whom such power of removal may be conferred by the Board of Directors. Section 3.05. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors, or to the chairman of the board, the chief executive officer, the president or the secretary of the corporation. Any such resignation shall take effect at the time specified therein, and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. Section 3.06. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise, shall be filled in the manner prescribed in these Bylaws for regular appointments or elections to such office. ARTICLE IV DUTIES OF THE OFFICERS Section 4.01. The Chairman of the Board. The chairman of the board shall have general supervision over the property, business and affairs of the corporation and over its several officers, subject, however, to the control of the Board of Directors. The chairman of the board shall, if present, preside at all meetings of the stockholders and of the Board of Directors. The chairman of the board may sign, with the secretary, treasurer or any other proper officer of the corporation thereunto authorized by the Board of Directors, certificates for shares in the corporation. The chairman of the board may also sign, execute and deliver in the name of the corporation all deeds, mortgages, bonds, leases, contracts or other instruments either when specially authorized by the Board of Directors or when required or deemed necessary or advisable by him in the conduct of the corporation's normal business, except in cases where the signing and execution thereof shall be expressly delegated by these Bylaws or the Board of Directors to some other officer or agent of the corporation or shall be required by law or otherwise to be signed or executed by some other officer or agent, and the chairman of the board may cause the seal of the corporation, if any, to be affixed to any instrument requiring the same. Section 4.02. The Chief Executive Officer. The chief executive officer shall be the principal executive officer of the corporation and shall perform such duties as are conferred upon him by these Bylaws or as may from time to time be assigned to him by the chairman of the board or the Board of Directors. The chief executive officer shall have the same power as the president to sign, execute and deliver in the name of the corporation all deeds, mortgages, bonds, leases, contracts and other instruments either when specially authorized by the Board of Directors or when required or deemed necessary or advisable by him in the ordinary course of the corporation's normal business, except in cases where the signing and execution thereof shall -10- be expressly delegated by these Bylaws to some other officer or agent of the corporation or shall be required by law or otherwise to be signed or executed by some other officer or agent, and the chief executive officer may cause the seal of the corporation, if any, to be affixed to any instrument requiring the same. During the absence or disability of the president, the chief executive officer shall exercise all of the powers and perform all of the duties of the president except as otherwise provided by law. The chief executive officer shall, during the absence or disability of the chairman of the board, preside at meetings of the stockholders and of the Board of Directors. Section 4.03. The President. The president shall be the principal operating and administrative officer of the corporation. If there is no chief executive officer, the president shall exercise all of the powers and perform all of the duties of the chief executive officer. The president shall perform such duties as are conferred upon him by these Bylaws or as may from time to time be assigned to him by the chairman of the board, the chief executive officer or the Board of Directors. The president may sign, with the secretary, treasurer or other proper officer of the corporation thereunto authorized by the Board of Directors, certificates for shares in the corporation. The president may also sign, execute and deliver in the name of the corporation all deeds, mortgages, bonds, leases, contracts or other instruments either when specially authorized by the Board of Directors or when required or deemed necessary or advisable by him in the ordinary conduct of the corporation's normal business, except in cases where the signing and execution thereof shall be expressly delegated by these Bylaws to some other officer or agent of the corporation or shall be required by law or otherwise to be signed or executed by some other officer or agent, and the president may cause the seal of the corporation, if any, to be affixed to any instrument requiring the same. The president shall, in the absence or disability of each of the chairman of the board and the chief executive officer, preside at meetings of the stockholders and of the Board of Directors. Section 4.04. Vice-Presidents. The vice-presidents shall perform such duties as are conferred upon them by these Bylaws or as may from time to time be assigned to them by the Board of Directors, the chairman of the board, the chief executive officer or the president. At the request of the chairman of the board or the chief executive officer, in the absence or disability of the president, the vice-president designated by the chairman of the board or the chief executive officer, as appropriate, shall perform the duties of the president, and when so acting, shall have all of the powers of the president. Section 4.05. The Treasurer. The treasurer shall be the custodian of all funds and securities of the corporation. Whenever so directed by the Board of Directors, the treasurer shall render a statement of the cash and other accounts of the corporation, and the treasurer shall cause to be entered regularly in the books and records of the corporation to be kept for such purpose full and accurate accounts of the corporation's receipts and disbursements. The treasurer shall have such other powers and shall perform such other duties as may from time to time be assigned to him by the Board of Directors, the chairman of the board, the chief executive officer or the president. Section 4.06. The Secretary. The secretary shall record and keep the minutes of all meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose. The secretary shall be the custodian of, and shall make or cause to be made the proper entries in, -11- the minute book of the corporation and such other books and records as the Board of Directors may direct. The secretary shall be the custodian of the seal of the corporation, if any, and shall affix such seal to such contracts, instruments and other documents as the Board of Directors or any committee thereof may direct. The secretary shall have such other powers and shall perform such other duties as may from time to time be assigned to him by the Board of Directors, the chairman of the board, the chief executive officer or the president. ARTICLE V INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 5.01. Indemnification. (a) The corporation shall indemnify and hold harmless any person (and the heirs, executors or administrators of such person) who was or is a party or is threatened to be made a party to, or is involved in, any threatened, pending, or completed action, suit, or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, his testator, or intestate is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation, partnership, joint venture, trust or other enterprise, or as a member of any committee or similar body, to the fullest extent permitted by the laws of Delaware as they may exist from time to time. The right to indemnification conferred in this Article V shall also include the right to be paid by the corporation the expenses incurred in connection with any such proceeding in advance of its final disposition to the fullest extent permitted by the laws of Delaware as they may exist from time to time. (b) The corporation may, by action of its Board of Directors, provide indemnification to such of the employees and agents of the corporation to such extent and to such effect as the Board of Directors shall determine to be appropriate and authorized by the laws of Delaware as they may exist from time to time. Section 5.02. Insurance. The proper officers of the corporation, without further authorization by the Board of Directors, may in their discretion purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent for another corporation, partnership, joint venture, trust or other enterprise, against any liability. Section 5.03. ERISA. To assure indemnification under this Article V of all such persons who are or were "fiduciaries" of an employee benefit plan governed by the Act of Congress entitled "Employee Retirement Income Security Act of 1974", as amended from time to time, the provisions of this Article V shall, for the purposes hereof, be interpreted as follows: an "other enterprise" shall be deemed to include an employee benefit plan; the corporation shall be deemed to have requested a person to serve as an employee of an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to said Act of Congress shall be deemed "fines"; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such person's duties for a purpose reasonably -12- believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation. Section 5.04. Contractual Nature. The foregoing provisions of this Article V shall be deemed to be a contract between the corporation and each director and officer who serves in such capacity at any time while this Article V is in effect. Neither any repeal or modification of this Article V or, to the fullest extent permitted by the laws of Delaware, any repeal or modification of laws, shall affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts. Section 5.05. Construction. For the purposes of this Article V, references to "the corporation" include in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers and employees or agents, so that any person who is or was a director or officer of such constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise or as a member of any committee or similar body shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. ARTICLE VI DEPOSITORIES, CONTRACTS AND OTHER INSTRUMENTS Section 6.01. Depositories. The chairman of the board, the chief executive officer, the president, the treasurer and any vice-president of the corporation whom the Board of Directors authorizes to designate depositories for the funds of the corporation are each authorized to designate depositories for the funds of the corporation deposited in its name and the signatories and conditions with respect thereto in each case, and from time to time, to change such depositories, signatories and conditions, with the same force and effect as if each such depository, the signatories and conditions with respect thereto and changes therein had been specifically designated or authorized by the Board of Directors; and each depository designated by the Board of Directors or by the chairman of the board, the chief executive officer, the president, the treasurer or any such vice-president of the corporation, shall be entitled to rely upon the certificate of the secretary or any assistant secretary of the corporation setting forth the fact of such designation and of the appointment of the officers of the corporation or of other persons who are to be signatories with respect to the withdrawal of funds deposited with such depository, or from time to time the fact of any change in any depository or in the signatories with respect thereto. Section 6.02. Execution of Instruments Generally. In addition to the powers conferred upon the chairman of the board in Section 4.01 of these Bylaws and except as otherwise provided in Section 6.01 of this Article VI or required by law, all contracts and other instruments -13- entered into in the ordinary course of business requiring execution by the corporation may be executed and delivered by the chief executive officer, the president, the treasurer or any vice president and authority to sign any such contracts or instruments, which may be general or confined to specific instances, may be conferred by the Board of Directors upon any other person or persons. Any person having authority to sign on behalf of the corporation may delegate, from time to time, by instrument in writing, all or any part of such authority to any person or persons if authorized so to do by the Board of Directors. ARTICLE VII SHARES AND THEIR TRANSFER Section 7.01. Certificate for Shares. Every owner of one or more shares in the corporation shall be entitled to a certificate, which shall be in such form as the Board of Directors shall prescribe, certifying the number and class of shares in the corporation owned by him. The certificates for the respective classes of such shares shall be numbered in the order in which they shall be issued and shall be signed in the name of the corporation by the chairman of the board, the president or a vice president, and by the secretary or an assistant secretary or the treasurer or an assistant treasurer. Any or all signatures on the certificate may be a facsimile. A record shall be kept of the name of the person, firm, or corporation owning the shares represented by each such certificate and the number of shares represented thereby, the date thereof, and in case of cancellation, the date of cancellation. Every certificate surrendered to the corporation for exchange or transfer shall be cancelled and no new certificate or certificates shall be issued in exchange for any existing certificates until such existing certificates shall have been so cancelled. Section 7.02. Lost, Destroyed and Mutilated Certificates. If any certificates for shares in the corporation become worn, defaced, or mutilated but are still substantially intact and recognizable, the directors or authorized officers, upon production and surrender thereof, shall order the same cancelled and shall issue a new certificate in lieu of same. The holder of any shares in the corporation shall immediately notify the corporation if a certificate therefor shall be lost, destroyed, or mutilated beyond recognition, and the corporation may issue a new certificate in the place of any certificate theretofore issued by it which is alleged to have been lost or destroyed or mutilated beyond recognition, and the Board of Directors may, in its discretion, require the owner of the certificate which has been lost, destroyed, or mutilated beyond recognition, or his legal representative, to give the corporation a bond in such sum and with such surety or sureties as it may direct, not exceeding double the value of the stock, to indemnify the corporation against any claim that may be made against it on account of the alleged loss, destruction, or mutilation of any such certificate. The Board of Directors may, however, in its discretion, refuse to issue any such new certificate except pursuant to legal proceedings, under the laws of the State of Delaware in such case made and provided. Section 7.03. Transfers of Shares. Transfers of shares in the corporation shall be made only on the books of the corporation by the registered holder thereof, his legal guardian, executor, or administrator, or by his attorney thereunto authorized by power of attorney duly executed and filed with the secretary of the corporation or with a transfer agent appointed by the -14- Board of Directors, and on surrender of the certificate or certificates for such shares properly endorsed or accompanied by properly executed stock powers and evidence of the payment of all taxes imposed upon such transfer. The person in whose name shares stand on the books of the corporation shall, to the full extent permitted by law, be deemed the owner thereof for all purposes as regards the corporation. Section 7.04. Regulations. The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws concerning the issue, transfer, and registration of certificates for shares in the corporation. It may appoint one or more transfer agents or one or more registrars, or both, and may require all certificates for shares to bear the signature of either or both. ARTICLE VIII SEAL The Board of Directors may provide a corporate seal, which shall be circular and contain the name of the corporation engraved around the margin and the words "corporate seal", the year of its organization, and the word "Delaware." -15- EX-10.9 4 l07902aexv10w9.txt EXHIBIT 10.9 EXHIBIT 10.9 RETIREMENT AGREEMENT This Agreement ("Agreement") is made by and between Seth R. Johnson ("Employee") and ABERCROMBIE & FITCH CO., a Delaware corporation (the "Company") (hereinafter collectively "the parties"). WHEREAS, Employee has been employed by the Company in various capacities and is currently an officer and director of the Company holding the position of Executive Vice President; WHEREAS, the parties acknowledge it is in their individual and mutual best interests for Employee to retire as an officer and employee of the Company effective June 18, 2004 and to resign from the Company's Board of Directors prior to July 26, 2004; WHEREAS, the parties wish to define the terms and conditions of Employee's retirement and separation from employment with the Company; NOW, THEREFORE, in exchange for and in consideration of the following mutual covenants and promises, the undersigned parties, intending to be legally bound, hereby agree as follows: 1. Retirement. Employee agrees to retire from, and thereby terminate, his employment with the Company effective June 18, 2004 ("Retirement Date"). On the Retirement Date, Employee's employment with the Company and all further compensation, remuneration, and eligibility of Employee under Company benefit plans shall terminate, except as otherwise provided in this Agreement or by applicable law. 2. Resignation from Board of Directors. Employee further agrees to resign from any position he may hold on the Company's Board of Directors no later than July 26, 2004. 3. Employment Prior to Retirement Date. Until the Retirement Date, Employee shall continue to be employed by the Company in the position of Executive Vice President, and shall receive 110% of his current ($825,000 per year) base salary, adjusted retroactively to March 1, 2004, plus his current benefits. Any retroactive payment in connection with the adjustment of base salary provided in this Paragraph 3 shall be paid to Employee on or before June 18, 2004. 4. Severance Benefits Following Retirement Date. For the two year period commencing on the Retirement Date and ending June 18, 2006, the Company will pay to Employee, in 104 normal weekly payroll installments, a total sum equal to two (2) years of his base salary immediately prior to the Retirement Date, less ordinary and necessary withholding taxes (i.e., 104 weekly payments of $17,451.93 each, less withholding). The Company further agrees to reimburse the Employee's cost of continuing medical and dental insurance benefits for Employee and Employee's eligible dependents, if any, under the Comprehensive Budget Reconciliation Act of 1986 ("COBRA") for so long as Employee is eligible for and elects such continuation of benefits under COBRA, up to a maximum period of eighteen (18) months following the Retirement Date. 5. Additional Consideration. In addition to the severance payments under Paragraph 3, the Company shall also pay to Employee the following: (a) A pro rata portion of Employee's 2004 Incentive Compensation program bonus attributable to the period commencing on the first day of fiscal 2004 through June 18, 2004 (to be paid in normal course after calculations are finalized per program); 2 (b) After the Effective Date of this Agreement or June 21, 2004, whichever is later, a cash payment equal to the market value (at the close of the market on June 18, 2004) of Employee's unvested restricted stock shares; (c) Two additional cash payments to be paid on June 20, 2005, and on June 19, 2006, the first of which (on June 20, 2005) shall equal the market value as of the close of the market on June 17, 2005, of 25,000 common stock shares of the Company, and the second of which (on June 19, 2006) shall equal the market value as of the close of the market on June 16, 2006, of 45,000 common stock shares of the Company, both of which payments shall be adjusted as appropriate for any stock splits or dividends; (d) Accrued but unused vacation for 2004 and any unreimbursed employment related expenses incurred by Employee prior to the Retirement Date to be paid on or before June 18, 2004. 6. Use of Company Aircraft. Employee shall be entitled to the use of aircraft owned or leased by the Company for the period of two (2) years following the Retirement Date for no more than 35 total hours of aircraft time and under same rules of priority as Employee's personal use of such aircraft prior to his retirement; provided that Employee's rights to use of such aircraft shall cease in the event the Company sells or otherwise discontinues its ownership or leasing of, access to, and use of private aircraft. The Company further agrees to annually reimburse Employee for his increased income taxes incurred as a result of the use of such aircraft, and as a result of all payments made pursuant to this sentence. 7. No Mitigation. With the sole exception of the reimbursement for COBRA premium costs (which will terminate upon Employee's acceptance of new employment which provides health insurance coverage), none of the foregoing benefits provided in Paragraphs 3, 4, 3 5 or 6 will: (a) be subject to any mitigation obligation on Employee's part; or (b) be terminated or diminished if Employee should accept other employment prior to June 18, 2006, otherwise in accordance with this Agreement. 8. Employee Covenants. (a) Unauthorized Disclosure. The Employee shall not, during his employment with the Company and thereafter, make any Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by the Employee without the prior written consent of the Company to any person, other than an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Employee of duties as an employee or director of the Company or as may be legally required, of any confidential information with respect to any of the Company's customers, products, methods of distribution, strategies, business and marketing plans, business policies and practices, litigation strategies or defenses, and plans for new business concepts; provided, however, that such term shall not include the use or disclosure by the Employee, without consent, of any information known generally to the public (other than as a result of disclosure by the Employee in violation of this Paragraph 8(a)). This confidentiality covenant has no temporal, geographical or territorial restriction. (b) Non-Solicitation. During the No-Raid Period described below, the Employee shall not, either directly or indirectly, alone, or in conjunction with another party, intentionally interfere with or harm, or intentionally attempt to interfere with or harm, the relationship of the Company, its subsidiaries and/or affiliates, with any person who at any time was an employee, customer or supplier of the Company, its subsidiaries and/or affiliates or 4 otherwise had a business relationship with the Company, its subsidiaries and/or affiliates, nor shall Employee knowingly hire or cause to be hired any person who is employed by Company. The "No-Raid Period" means the one year period following the Retirement Date. (c) Non-Competition. During the one (1) year period following the Retirement Date, the Employee shall not, directly or indirectly, without the prior written consent of the Company, own, manage, operate, join, control, be employed by, consult with or participate in the ownership, management, operation or control of, or be connected with (as a stockholder, partner, or otherwise), any business, individual, partner, firm, corporation, or other entity that competes, directly or indirectly, with the Company or any division, subsidiary or affiliate of the Company ("Competing Entity"); provided, however, that the "beneficial ownership" by the Employee after termination of employment with the Company, either individually or as a member of a "group," as such terms are used in Rule 13d of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of not more than two percent (2%) of the voting stock of any publicly held corporation shall not be a violation of Paragraph 8 of this Agreement. For purposes of this Agreement, Competing Entity includes: (1) any entity listed on Appendix A attached to this Agreement; (2) any entity which, in the future, shall plan, attempt or engage in any activities with the object, goal or purpose of competing with the Company or any of the entities listed on Appendix A. Employee shall provide advance written notice to Company of any proposed or contemplated employment, consulting or similar activities during the Non-Competition Period. (d) Remedies. The Employee agrees that any breach of the terms of this Paragraph 8 or of Paragraph 9 of this Agreement would result in irreparable injury and damage to the Company for which the Company would have no adequate remedy at law. The Employee 5 therefore also agrees that in the event of Employee violating Paragraph 8(c) of this Agreement, the Company shall be entitled to immediately cease further payments to Employee under this Agreement. Furthermore, the Company shall be entitled to an immediate injunction and restraining order to prevent breach and/or threatened breach and/or continued breach by the Employee and/or any and all persons and/or entities acting for and/or with the Employee, of said Paragraphs 8 or 9, without having to prove damages, and to all costs and expenses, including reasonable attorneys' fees and costs, in addition to any other remedies to which the Company may be entitled at law or in equity. The terms of this subparagraph shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof including but not limited to the recovery of damages from the Employee. The Employee and the Company further agree that the provisions of the covenants not to compete and solicit are reasonable and that the Company would not have entered into this Agreement but for the inclusion of such covenants herein. Should a court or arbitrator determine, however, that any provision of the covenants is unreasonable, either in period of time, geographical area, or otherwise, the parties hereto agree that the covenant should be interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable. 9. Cooperation, Non-Disparagement, and Indemnity. Neither the Employee nor the officers of the Company shall state or otherwise publish anything about the other party which would adversely affect the reputation, image or business relationships and goodwill of the other party in its/his market and community at large. Employee shall fully cooperate with the Company in defense of legal claims asserted against the Company and other matters requiring the testimony or input and knowledge of Employee, and the Company agrees to reimburse Employee for reasonable costs and expenses incurred as a result thereof. Employee agrees that he will not 6 speak or communicate with any party or representative of any party, who is known to Employee to be either adverse to the Company in litigation or administrative proceedings or to have threatened to commence litigation or administrative proceedings against the Company, with respect to the pending or threatened legal action, unless given express permission to do so by the Company, or is otherwise compelled by law to do so, and then only after advance notice to the Company. Additionally, for a period of one year following the Retirement Date, Employee agrees to be bound by and follow the same standards and duty of loyalty to the Company as are required of the Company's employees and officers, except that Employee may engage in other employment and related activities so long as such activities do not violate paragraph 8 of this Agreement. The Company agrees to indemnify Employee for liabilities and costs incurred by Employee by reason of his employment with the Company, on the same basis as it does in similar circumstances with other employees and officers. 10. Confidentiality. Employee agrees not to at any time talk about, write about, or otherwise publicize or disclose to any third party the terms of this Agreement or any fact concerning its negotiation, execution or implementation, except with (1) an attorney, accountant, or other advisor engaged by Employee to advise him; (2) the Internal Revenue Service or other governmental agency upon proper request and as required by law; and (3) his immediate family, providing that all such persons agree in advance to keep said information confidential and not to disclose it to others. Nothing in this paragraph shall be construed to prohibit Employee from disclosing to potential employers the existence of Paragraph 8 of this Agreement. 7 11. Release of All Claims. (a) Release of Company by Employee. In consideration of the receipt of the sums and covenants stated herein, Employee does hereby, on behalf of himself, his heirs, administrators, executors, agents, and assigns, forever release, requite, and discharge the Company and its agents, parents, subsidiaries, affiliates, divisions, officers, directors, employees, predecessors, successors, and assigns ("Released Parties"), from any and all charges, claims, demands, judgments, actions, causes of action, damages, expenses, costs, attorneys' fees, and liabilities of any kind whatsoever, whether known or unknown, vested or contingent, in law, equity or otherwise, which Employee has ever had, now has, or may hereafter have against said Released Parties for or on account of any matter, cause or thing whatsoever which has occurred prior to the date of his signing this Agreement. This release of claims includes, without limitation of the generality of the foregoing, any and all claims which are related to Employee's employment with the Company and his retirement from his officer position and his employment on June 18, 2004, and his resignation from the Board of Directors on or before July 26, 2004; and any and all rights which Employee has or may have had under the following laws: Title VII of the Civil Rights Act of 1964, as amended by the Equal Employment Opportunity Act of 1972, the Civil Rights Act of 1991; the Employee Retirement Income Security Act, 29 U.S.C. Section. 1001 et seq.; the Americans With Disabilities Act; the Age Discrimination in Employment Act, as amended; Ohio Revised Code Section 4112.01 et seq.; and all other federal, state, and local statutes, regulations or public policies, as well as the laws of contract, torts, and all other subjects; provided, however, that nothing herein shall be deemed to affect any rights of Employee under this Agreement or to any pension, employee welfare benefits, stock options, or restricted shares which were vested prior to the Termination Date; and provided further that 8 nothing herein shall be deemed to affect any rights of Employee to indemnity for liabilities incurred for acts taken in good faith in the course and scope of employment with the Company which acts are otherwise covered under the terms and conditions of Directors and Officers liability insurance maintained by Company during the employment of Employee. (B) Age Discrimination Claims and Older Worker's Benefit Protection Act Terms. Employee specifically acknowledges that the release of his claims under this Agreement includes, without limitation, waiver and release of all claims against the Company and Released Parties under the federal Age Discrimination in Employment Act ("ADEA"), and Employee further acknowledges and agrees that: i. the Employee waives his claims under ADEA knowingly and voluntarily in exchange for the commitments made herein by the Company, and that certain of the benefits provided thereby constitute consideration of value to which the Employee would not otherwise have been entitled; ii. the Employee was and is hereby advised to consult an attorney in connection with this Agreement; iii. the Employee has been given a period of 21 days within which to consider the terms of this Agreement; iv. the Employee may revoke his signature on this Agreement for a period of 7 days following his execution of this Agreement, rendering the Agreement null and void; v. this Agreement is written in plain and understandable language which Employee fully understands; and vi. this Agreement complies in all respects with Section 7(f) of ADEA and the waiver provisions of the federal Older Worker Benefit Protection Act. (c) Release of Employee by Company. The Company does hereby, on behalf of itself and its agents, parents, subsidiaries, affiliates, divisions, 9 officers, directors, employees, predecessors, successors and assigns, forever release, requite, and discharge the Employee and his heirs, administrators, executors, agents and assigns, from any and all charges, claims, demands, judgments, actions, causes of action, damages, expenses, costs, attorneys' fees, and liabilities of any kind whatsoever, whether known or unknown, vested or contingent, in law, equity or otherwise, which the Company ever had, now has, or may hereafter have against Employee for or on account of any matter, cause or thing whatsoever which has occurred prior to the date of Employee's signing this Agreement; provided, however, that nothing herein shall be deemed to release or affect any rights of the Company pursuant to this Agreement. 12. Complete and Absolute Defense. This Agreement constitutes, among other things, a full and complete release of any and all claims released by either party, and it is the intention of the parties hereto that this Agreement is and shall be a complete and absolute defense to anything released hereunder. The parties expressly and knowingly waive their respective rights to assert any claims against the other which are released hereunder, and covenant not to sue the other party or Released Parties based upon any claims released hereunder. The parties further represent and warrant that no charges, claims or suits of any kind have been filed by either against the other as of the date of this Agreement. 13. Non-Admission. It is understood that this Agreement is, among other things, an accommodation of the desires of each party, and the above-mentioned payments and covenants are not, and should not be construed as, an admission or acknowledgment by either party of any liability whatsoever to the other party or any other person or entity. 14. Return of Property. Employee agrees that on or before his Retirement Date, he shall promptly return to the Company all Company documents and property in his 10 possession or control including, but not limited to, Personal Computer(s) and all Software, Security Keys and Badges, Price Lists, Supplier and Customer Lists, Files, Reports, all correspondence both internal and external (memo's, letters, quotes, etc.), Business Plans, Budgets, Designs, and any and all other property of the Company. 15. Knowing and Voluntary Execution. Each of the parties hereto further states and represents that he or it has carefully read the foregoing Agreement, consisting of 12 pages, and knows the contents thereof, and that he or it has executed the same as his or its own free act and deed. Employee further acknowledges that he has been and is hereby advised to consult with an attorney concerning this Agreement and that he had adequate opportunity to seek the advice of legal counsel in connection with this Agreement. Employee also acknowledges that he has had the opportunity to ask questions about each and every provision of this Agreement and that he fully understands the effect of the provisions contained herein upon his legal rights. 16. Executed Counterparts. This Agreement may be executed in one or more counterparts, and any executed copy of this Agreement shall be valid and have the same force and effect as the originally-executed Agreement. 17. Governing Law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Ohio. 18. Modification. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Employee and the Company. 19. Assignability. Employee's obligations and agreements under this Agreement shall be binding on the Employee's heirs, executors, legal representatives and assigns and shall inure to the benefit of any successors and assigns of the Company. The Company may 11 assign this Agreement or any of its rights or obligations arising hereunder to any party, as part of a sale of its assets or other similar change of control. 20. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto in respect of the subject matter hereof, and this Agreement supersedes all prior and contemporaneous agreements between the parties hereto in connection with the subject matter hereof. 21. Effective Date. This Agreement will become effective on the eighth day following signature by Employee, unless sooner revoked by Employee by written revocation delivered to the Company's Chief Executive Officer. IN WITNESS WHEREOF, the undersigned has hereto set his hand this 20th day of May, 2004. WITNESSED: /s/ John Fiske /s/ Seth R. Johnson - -------------------------------- ------------------------------------------ EMPLOYEE /s/ Dana H. Acock - -------------------------------- IN WITNESS WHEREOF, the undersigned has hereto set its hand this 20th day of May, 2004. WITNESSED: ABERCROMBIE & FITCH CO. /s/ Mary Ann Painter By: /s/ Michael Jeffries - -------------------------------- ------------------------------------------ Its: Chairman and Chief Executive Officer - -------------------------------- 12 Appendix A Aeropostale J. Crew American Eagle J. Jill Ann Taylor Limited (all divisions) Chico's Limited Too Delias Pacific Sunwear Galyon's (sic) Urban Outfitter/Anthropologie Gap (all divisions) Wet Seal
EX-10.10 5 l07902aexv10w10.txt EXHIBIT 10.10 EXHIBIT 10.10 EMPLOYMENT AGREEMENT This EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of May 17, 2004 (the "Commencement Date"), by and between Abercrombie & Fitch Co., a Delaware corporation (the "Company"), and Robert S. Singer (the "Executive") (hereinafter collectively referred to as "the Parties"). W I T N E S S E T H: WHEREAS, the Company desires to employ the Executive and to enter into an agreement embodying the terms of such employment (together with its Exhibit, this "Agreement") and the Executive desires to enter into this Agreement and to accept such employment, subject to the terms and provisions of this Agreement; NOW, THEREFORE, in consideration of the premises and the mutual covenants and promises of the parties contained herein, the parties, intending to be legally bound, hereby agree as follows: 1. Term. The term of employment under this Agreement shall be for the period beginning on the Commencement Date and ending on the third anniversary of the Commencement Date (the "Initial Term"); provided, however, that the Initial Term shall thereafter be automatically extended for additional one-year periods (together with the Initial Term, the "Term") unless either the Company or the Executive gives the other written notice at least 180 days prior to the then-scheduled expiration of the Term that such Party is electing not to so extend the Term. Notwithstanding the foregoing, the Term shall end on the date on which the Executive's employment is earlier terminated by either party in accordance with the provisions of Section 11 of this Agreement. 2. Employment. (a) Position. The Executive shall be employed by the Company as the President of the Company on the Commencement Date and Chief Operating Officer as of the first meeting of the Board of Directors of the Company (the "Board") following the Commencement Date. The Executive shall be the second highest ranking executive in the Company. The Executive shall be responsible for the day-to-day operations of the Company and exercise the authority customarily performed, undertaken and exercised by persons employed in a similar executive capacity. Without limiting the foregoing, the following areas of the business of the Company and its subsidiaries will report solely to the Executive: finance, logistics, and human resources. Store operations will report jointly to the Executive and the Chief Executive Officer. The Executive shall report to the Chief Executive Officer only. The Executive's principal place of employment shall be in Columbus, Ohio and the Executive shall perform his duties principally in Columbus and New York City. (b) Board Membership. The Company shall cause the Executive to be appointed to the Board at the first Board meeting following the Commencement Date and shall cause the Executive to be nominated for election to the Board during the Term, subject at all times to the Company's obligations under applicable laws and regulations. (c) Obligations. The Executive agrees to devote his full business time and attention to the business and affairs of the Company provided that, in order to permit the Executive sufficient time to transition from his current situation to the United States, during the period from the Commencement Date to June 21, 2004, the Executive shall not be required to render full-time services to the Company. Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from (i) serving on up to two boards of other companies, presently Fairmont Hotel Corp., and Axalto N.V., with future board service at other companies subject to the reasonable approval of the Board based on the nature of the companies, which approval shall not be unreasonably withheld, (ii) serving on the boards of directors of trade associations and/or charitable organizations, (iii) engaging in charitable activities and community affairs, and (iv) managing his personal investments and affairs, provided that the activities described in the preceding clauses (i) through (iv) do not materially interfere with the proper performance of his duties and responsibilities hereunder. 3. Base Salary. The Company agrees to pay or cause to be paid to the Executive commencing no later than the Commencement Date and during the Term a base salary at the rate of $886,000 per year or such larger amount as the Board may from time to time determine (the "Base Salary"). The Executive's Base Salary shall be reviewed annually by the Compensation Committee of the Board, with the first review to occur in or around January 2005, and shall be subject to increase from time to time as approved by the Compensation Committee of the Board. Such Base Salary shall be payable in accordance with the Company's customary practices applicable to its executive officers. 4. Bonus. (a) The Executive shall be entitled to participate in the Abercrombie & Fitch Co. Incentive Compensation Performance Plan (the "Bonus Plan") or any successor to the Bonus Plan on such terms and conditions as may be determined from time to time by the Compensation Committee of the Board, provided that the Executive's annual target bonus opportunity shall be at least 100% of Base Salary upon attainment of target, subject to a maximum bonus opportunity of 200% of Base Salary, and shall be at a level commensurate with his position. (b) The Bonus for 2004 will be prorated based on achievement of targets and actual commencement of employment, but will be guaranteed to be no less than $475,000. The Bonus for 2004 will be payable at the time bonuses are paid to the Company's executive officers in February 2005. 5. Equity Compensation. (a) The Executive shall be entitled to participate in the Company's equity based incentive programs, including, without limitation, the stock option and restricted share programs, maintained by the Company, on such terms and conditions as may be determined from time to time by the Compensation Committee of the Board, consistent with this Agreement, and commensurate with his position. 2 (b) Commencing with 2004, the Executive shall participate in the annual performance-based segment of the Company's 2002 Stock Plan for Associates, as amended and restated (the "2002 Stock Plan"), or successor plan, at a level commensurate with his position. The shares earned can vary from zero to a maximum of double PAR value based on the Company's specific annual financial goals and vest over four years (with 10% vesting on the first anniversary of the grant date, 20% vesting on the second anniversary of the grant date, 30% vesting on the third anniversary of the grant date and 40% vesting on the fourth anniversary of the grant date) from the date they are earned and subject to earlier vesting as provided herein. 6. Sign-on Arrangements. (a) As soon as practicable following the Commencement Date, the Company shall pay the Executive a signing bonus of $100,000. (b) On the Commencement Date the Company shall grant the Executive an option to purchase 150,000 shares of the Company's common stock pursuant to the 2002 Stock Plan, vesting in four equal annual installments on the first four anniversaries of the grant date at a price per share exercise price equal to the closing price of a share of stock of the Company on the New York Stock Exchange on the Commencement Date and subject to earlier vesting as provided herein. (c) On the Commencement Date, the Company shall grant the Executive 20,000 restricted shares, pursuant to the 2002 Stock Plan, vesting 10% on the grant date, 20% on the first anniversary of grant, 30% on the second anniversary and 40% on the third anniversary, and subject to earlier vesting as provided herein. 7. Employee Benefits. The Executive shall be entitled to participate in all employee benefit plans, practices and programs maintained by the Company and made available to senior level executive officers generally and as may be in effect from time to time. The Executive's participation in such plans, practices and programs shall be on the same basis and terms as are applicable to senior level executive officers of the Company generally. Such level of benefits shall be at a level commensurate with his position. 8. Other Benefits. (a) Life Insurance. (i) The Company shall maintain term life insurance coverage on the life of the Executive in the amount of $8,000,000, the proceeds of which shall be payable to the beneficiary or beneficiaries designated by the Executive. The Company shall pay the premiums with respect to such term life insurance policy for the period commencing on the Commencement Date and ending on the later to occur of the last day of the Term and the last day of the period during which welfare benefits are continued pursuant to Section 12(f) of this Agreement; provided, however, that the Company shall no longer be obligated to maintain such coverage and pay such premiums in the event that the Executive's employment is or was terminated by the Company for Cause (as defined in Section 11(c) of this Agreement) or by the Executive without Good Reason (as defined in Section 11(d) of this Agreement). Such policy shall provide for its conversion to an 3 individual policy owned by the Executive subsequent to termination of his employment for any reason or the end of the period during which benefits are continued pursuant to Section 12(f) of this Agreement, whichever is later. The Executive agrees to undergo any reasonable physical examination and other procedures as may be requested in connection with the issuance of such policy. The policy shall be structured so that the proceeds of the policy upon his death shall be excluded from the income of the Executive, his estate and his beneficiaries; the Company will cooperate with the Executive, if the Executive elects to transfer ownership of the policy to a life insurance trust or otherwise for estate planning purposes. (ii) During the term of this Agreement, the Company shall be entitled to maintain a "key man" term life insurance policy on the life of the Executive, the proceeds of which shall be payable to the Company or its designees. The Executive agrees to undergo any reasonable physical examination and other procedures as may be necessary to maintain such policy. (b) Office and Facilities. The Executive shall be provided with an appropriate office and with such secretarial and other support facilities as are commensurate with the Executive's status with the Company and adequate for the performance of his duties hereunder. (c) Vacation. The Executive shall be entitled to annual paid vacation of six weeks, in accordance with the policies periodically established by the Board for similarly situated executive officers of the Company. (d) Retirement Benefit. The Executive shall be provided with a retirement benefit in accordance with the Supplemental Executive Retirement Plan, which is attached hereto as Exhibit A. In addition, the Executive shall be entitled to participate in all retirement benefit plans, practices and programs maintained by the Company and made available to senior level executive officers generally and as may be in effect from time to time. The Executive's participation in such plans, practices and programs shall be at a level commensurate with his position. (e) Perquisites. The Executive shall be entitled to perquisites on the same basis as provided to other senior level executive officers at a level commensurate with his position. In addition, the Executive shall be provided, at Company expense, up to two round trips to Italy per year (first class air travel) for himself, up to four round trips to Italy per year (first class air travel) for his spouse, and up to two round trips from Italy to Ohio per year (economy class air travel) for each of his two children, all grossed-up for taxes. 9. Expenses. (a) The Executive shall be entitled to receive prompt reimbursement of all expenses reasonably incurred by him in connection with the performance of his duties hereunder or for promoting, pursuing or otherwise furthering the business or interests of the Company, in each case in accordance with policies established by the Board from time to time and upon receipt of appropriate documentation. 4 (b) In lieu of benefits under the Company's relocation plan, the Executive shall be entitled to the following: (i) In addition to the benefits provided in Section 8(e), the Executive and his spouse shall be entitled to one "househunting trip" (as described in the Company's relocation plan), including one round trip (first class air travel) from Italy to the United States, for the purpose of house hunting in New York and Columbus, with such expenses to be grossed-up for taxes. (ii) Reimbursed for relocation expenses, including any applicable broker's expenses, incurred by Executive and his family, including expenses incurred in relocating from Milan, Italy to Columbus, Ohio and/or New York, NY, with such expenses to be grossed-up for taxes; in the event Executive voluntarily leaves employment (without Good Reason or due to Disability) within 12 months, Executive must repay Company for relocation expenses on a pro-rata basis. (iii) To compensate Executive for miscellaneous expenses incurred in connection with his relocation, a fixed payment of $75,000, grossed-up for taxes, which shall be paid within 60 days after the Commencement Date; (iv) Reimbursement for expenses of temporary housing for a period commencing on the Commencement Date and ending not later than the six-month anniversary of the Commencement Date, thereafter $3,000 per month for temporary housing in Columbus, Ohio, for the next 12 months and $10,000 per month, for housing in New York City for the Initial Term, all such reimbursements to be grossed-up for taxes. 10. Aircraft Travel. For security purposes, the Executive shall be provided, at the expense of the Company, with use of a private aircraft (currently Netjets) for business and personal travel in North America, grossed-up for taxes. Outside North America, the Executive shall be entitled to first class air travel. 11. Termination. (a) Death. The Executive's employment hereunder shall terminate upon the Executive's death. (b) Disability. Either the Executive or the Company shall be entitled to terminate the Executive's employment for "Disability" by giving the other party a Notice of Termination (as defined below). For purposes of this Agreement, "Disability" shall mean the Executive's failure to perform his duties for a period of 180 consecutive days as a result of physical or mental impairment, illness or injury, and such condition, in the opinion of a medical doctor selected by the Company and reasonably acceptable to the Executive or his legal representative, is total and permanent. (c) Cause. The Company shall be entitled to terminate the Executive's employment for "Cause." For purposes of this Agreement, "Cause" shall mean that the Executive (i) pleads "guilty" or "no contest" to or is convicted of an act which is defined as a 5 felony under federal or state law, or (ii) in carrying out his duties, engages in conduct that constitutes willful gross neglect or willful gross misconduct; provided such plea, conviction, neglect or misconduct results in material economic harm to the Company. For this purpose, an act or failure to act shall be considered "willful misconduct" only if done, or omitted to be done, by the Executive in bad faith and without a reasonable belief that such act or failure to act was in the best interests of the Company. The Executive's employment with the Company shall not be terminated for Cause unless he has been given written notice by the Board of its intention to so terminate his employment (a "Preliminary Notice of Cause"), such notice (i) to state in detail the particular act or acts or failure or failures to act that constitute the grounds on which the proposed termination for Cause is based and (ii) to be given within 6 months after the Board knew or should have known of such acts or failures to act. The Executive shall have 10 days after the date that the Preliminary Notice of Cause is given in which to cure such conduct, to the extent such cure is possible. If the Executive fails to cure such conduct, the Executive shall be entitled to a hearing before the Board, and to be accompanied by his counsel, at which he shall be entitled to contest the Board's findings. Such hearing shall be held within 15 days of notice to the Company by the Executive, provided he requests such hearing within 30 days of the Preliminary Notice of Cause. If the Executive fails to request such hearing within the 30-day period specified in the preceding sentence, his employment shall be terminated for Cause effective upon the expiration of such period, and the Preliminary Notice of Cause shall be deemed to constitute a Notice of Termination. If the Executive requests such hearing and, within 10 days following such hearing, the Executive is furnished with a copy of a resolution, duly adopted by the affirmative vote of a majority of the members of the Board, finding that in the good-faith opinion of the Board, the Executive was guilty of the conduct constituting Cause as specified in the Preliminary Notice of Cause, the Executive's employment shall be terminated for Cause upon his receipt of such resolution, and such resolution shall be deemed to constitute a Notice of Termination. Any such resolution shall be accompanied by a certificate of the Secretary or another appropriate officer of the Company which shall state that such resolution was duly adopted by the affirmative vote of a majority of the members of the Board at a duly convened meeting called for such purpose. (d) Good Reason. The Executive may terminate his employment hereunder for "Good Reason" by delivering to the Company (i) a Preliminary Notice of Good Reason (as defined below), and (ii) not earlier than 30 days from the delivery of such Preliminary Notice of Good Reason, a Notice of Termination. The Executive may give such notices with or without conditions, including the right to withdraw such notice if the Company does not agree there are facts which constitute Good Reason. The Company shall have 60 days in which to cure except in the case of (K) or (L) below. For purposes of this Agreement, "Good Reason" shall mean the occurrence of any of the following without the Executive's prior written consent: (A) the failure to appoint or continue the Executive as President and Chief Operating Officer of the Company; (B) the failure of the Board to nominate the Executive for election to the Board at the Company's annual meeting of stockholders; (C) the failure of the Executive to be elected or re-elected to the Board; (D) a material diminution in the Executive's duties, or the assignment to the Executive of duties materially inconsistent with, or the failure to assign to the Executive duties which are materially consistent with, his duties, positions, authority, responsibilities and reporting requirements as set forth in Section 2 of this Agreement, or the assignment of duties which materially impair the Executive's ability to function as the President and Chief Operating Officer 6 of the Company; (E) a change in the reporting structure so that Executive no longer reports directly to the CEO; (F) a reduction in or a material delay in payment of the Executive's total cash compensation and benefits from those required to be provided in accordance with the provisions of this Agreement; (G) the failure of the Company to implement the SERP, a material reduction in the benefits to be provided under the SERP or an adverse change in the terms and conditions of the SERP; (H) the Company, the Board or any person controlling the Company requires the Executive to relocate his principal place of employment to a location other than the Columbus, Ohio, other than on travel reasonably required to carry out the Executive's obligations under this Agreement; (I) a material breach of the Company of any of the provisions of this Agreement; (J) the failure of the Company to obtain the assumption in writing of its obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company not later than the effective date of a merger, consolidation, sale or similar transaction; (K) any termination by Executive of his employment for any reason other than death or Disability within one-year of a Change in Control of the Company (as defined in Section 12(h) of this Agreement), (L) the Company's election not to renew the Term in accordance with Section 1, (M) the representations made by the Company in Sections 16(b)(iv), (v), (vi), or (vii) of this Agreement shall be inaccurate in any material respect as of the date made or (N) the Company's organizational documents do not accord that the Executive has the maximum limitation of liability as a director of the Company, as permitted by law; provided, however, that "Good Reason" shall not include (X) acts not taken in bad faith which are cured by the Company in all respects not later than 30 days from the date of receipt by the Company of a written notice from the Executive identifying in reasonable detail the act or acts constituting "Good Reason" (a "Preliminary Notice of Good Reason") or (Y) acts taken by the Company to temporarily reassign the Executive's duties and/or titles to another person or persons during the period the Executive has suffered a physical or mental infirmity which renders him unable to substantially perform his duties under this Agreement, provided that any such acts may be taken by the Company only after receiving an opinion of a physician reasonably acceptable to the Executive or his legal representative stating that there is no reasonable likelihood that the Executive will be able to return to full-time employment with the Company performing his duties hereunder within 180 days. Notwithstanding the foregoing, a Good Reason based on clause (M) above may only be asserted by Executive prior to the date the Company files with the SEC its Annual Report on form 10-K for the last fiscal year ending within the Initial Term. A Preliminary Notice of Good Reason shall not, by itself, constitute a Notice of Termination. (e) Without Cause. The Company may terminate the Executive's employment hereunder, without Cause, at any time and for any reason (or for no reason) by giving the Executive a Notice of Termination. (f) Voluntary. The Executive may terminate his employment hereunder at any time and for any reason other than Good Reason or Disability (or for no reason) by giving the Company a Notice of Termination. Such voluntary termination shall not be deemed a breach of this Agreement (g) Notice of Termination. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which indicates the specific termination provision in this Agreement relied upon and which sets forth in reasonable detail, if applicable, the facts and circumstances claimed to provide a basis for termination of the Executive's employment under 7 the provision so indicated. For purposes of this Agreement, no purported termination of employment which requires a Notice of Termination shall be effective without such Notice of Termination. The Termination Date (as defined below) specified in such Notice of Termination shall be no less than two weeks from the date the Notice of Termination is given; provided, however, that (i) if the Executive's employment is terminated by the Company due to Disability, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Executive and (ii) if the Executive terminates his employment in accordance with Section 11(f) of this Agreement, the date specified in the Notice of Termination shall be at least 30 days from the date the Notice of Termination is given to the Company. (h) Termination Date. "Termination Date" shall mean the date of the termination of the Executive's employment with the Company and specifically (i) in the case of the Executive's death, his date of death; (ii) in the case of a termination of the Executive's employment for Cause, the relevant date specified in Section 11(c) of this Agreement; (iii) in the case of the expiration of the Term of this Agreement in accordance with Section 1, the date of such expiration; and (iv) in all other cases, the date specified in the Notice of Termination. 12. Compensation Upon Termination of Employment. (a) For Cause; Without Good Reason; Executive's Non-renewal. If during the term of this Agreement, the Executive's employment under this Agreement is terminated by the Company for Cause, by the Executive without Good Reason (and other than by reason of the Executive's death or Disability) or by the Executive's Non-renewal, the Company's sole obligation hereunder shall be to pay the Executive the following amounts earned hereunder but not paid as of the Termination Date ((i) through (v) collectively, "Accrued Compensation"): (i) Base Salary through the Termination Date; (ii) any other compensation which has been earned, accrued or is owing, under the terms of the applicable plan, program or practice, to the Executive as of the Termination Date but not paid, including, without limitation, any incentive awards under the Bonus Plan; (iii) any amounts which the Executive had previously deferred (including any interest earned or credited thereon); (iv) reimbursement of any and all reasonable expenses incurred in connection with the Executive's duties and responsibilities under this Agreement in accordance with policies established by the Board from time to time and upon receipt of appropriate documentation; (v) other or additional benefits and entitlements in accordance with applicable plans, programs and arrangements of the Company; and (vi) the vesting of stock options and restricted stock shall be treated in accordance with the terms of the relevant plan; stock options shall be exercisable for 90 days following the Termination Date or such longer period as provided in the applicable plan. 8 (vii) In addition to the foregoing, if the Executive's employment is terminated because of the Executive's Non-renewal, the Company shall pay the Executive, at such time as other participants in the Bonus Plan are paid their respective bonuses in respect of that fiscal year, a pro-rata bonus with respect to the fiscal year in which the Termination Date occurs equal to the product of (A) the greater of (1) the Executive's target bonus opportunity for that fiscal year or (2) the actual bonus received by the Executive in any preceding fiscal year, and (B) the fraction obtained by dividing (1) the number of days in the period beginning on the first day of that fiscal year and ending on the Termination Date by (2) 365, but only to the extent that such pro-rata bonus is not payable as part of the Accrued Compensation ("Pro-rata Bonus"); (b) Without Cause or for Good Reason; Company Non-renewal. If the Executive's employment hereunder is terminated by the Company without Cause including the Company's Non-renewal or by the Executive for Good Reason, the Company's sole obligation hereunder shall be as follows: (i) the Company shall pay the Executive the Accrued Compensation; (ii) the Company shall pay the Executive a Pro-rata Bonus, at such time as other participants in the Bonus Plan are paid their respective bonuses in respect of that fiscal year, but only to the extent that such Pro-rata Bonus is not payable as part of the Accrued Compensation; (iii) the Company shall continue to pay the Executive Base Salary and target bonus for the remainder of the Term, but in no event less than 18 months, based on Executive's annual Base Salary and his target bonus for the year of his termination, in equal installments, in accordance with the Company's customary payroll practices to its executive officers; (iv) the Company shall continue to pay the premiums provided for in Section 8(a) of this Agreement for the time period set forth therein; (v) the Company shall pay the Executive, in accordance with its customary practices applicable to executive officers, any compensation in the form of incentive awards under the 2002 Stock Plan (or any successor plan) earned (as to both satisfaction of performance-based criteria and vesting) in respect of periods prior to and including the Termination Date, but not paid as of the Termination Date; (vi) all stock options granted in the Initial Term shall vest on the Termination Date and remain exercisable for their full term, and future grants shall be treated in accordance with their terms; and (vii) all restricted shares and any other equity grants granted in the Initial Term shall vest on the Termination Date, and future grants shall be treated in accordance with their terms; 9 (viii) In the event the Executive terminates his employment for Good Reason following a Change of Control as provided in Section 11(d), the Company shall pay the benefits described in Sections 12(b)(i), (ii) and (iii) in a lump sum. (c) Disability. If the Executive's employment hereunder is terminated by either Party by reason of the Executive's Disability, the Company's sole obligation hereunder shall be as follows: (i) the Company shall pay the Executive the Accrued Compensation; (ii) the Company shall continue to pay the Executive, in accordance with the Company's customary practices applicable to its executive officers, 100% of Base Salary for the first 12 months following the Termination Date and 80% of Base Salary for the second 12 months following the Termination Date; provided, however, that such Base Salary shall be reduced by the amount of any benefits the Executive receives during such 12 month periods under the Company's relevant long-term disability plan or plans or under Section 12(c)(iii); (iii) the Executive shall be entitled to benefits under the Company's long-term disability plan or plans in an amount at least equal to $20,000 per month during the period of his Disability and ending at age 65; (iv) the Company shall pay the Executive a Pro-rata Bonus, at such time as other participants in the Bonus Plan are paid their respective bonuses in respect of that fiscal year, but only to the extent that such Pro-rata Bonus is not payable as part of the Accrued Compensation; (v) the Company shall continue to pay the premiums provided for in Section 8(a) of this Agreement for the time period set forth therein; (vi) stock options shall vest on the Termination Date and remain exercisable for a period equal to the greater of (X) nine months after the date on which the Executive receives benefits under the Company's long-term disability program and (Y) the period specified in the terms of the grant; and (vii) restricted stock and other equity awards shall vest on the Termination Date. (d) Death. If the Executive's employment hereunder is terminated due to his death, the Company's sole obligation hereunder shall be as follows: (i) the Company shall pay the Executive's estate or his beneficiaries (as the case may be) the Accrued Compensation; (ii) the Company shall pay the Executive's estate or beneficiaries (as the case may be), at such time as other participants in the Bonus Plan are paid their respective bonuses in respect of that fiscal year, a Pro-Rata Bonus with respect to the 10 fiscal year in which the Termination Date occurs, but only to the extent that such Pro-Rata Bonus is not payable as part of the Accrued Compensation; (iii) the Company shall provide such assistance as is necessary to facilitate the payment of the life insurance proceeds provided for in Section 8(a) of this Agreement to the Executive's beneficiary or beneficiaries; (iv) stock options shall vest on the Termination Date and shall remain exercisable for a period equal to the greater of (X) one year thereafter and (Y) the period specified in the terms of the grant; and (v) restricted stock and other equity awards shall vest on the Termination Date. (e) Determination of Base Salary. For purposes of this Section 12, Base Salary shall be determined by the Base Salary at the annualized rate in effect on the Termination Date. (f) Continuation of Employee Benefits. Notwithstanding anything to the contrary, in addition to any amounts payable above, the Company shall, at its expense, provide to the Executive and his beneficiaries continued participation in all medical, dental, vision, prescription drug, hospitalization and life insurance coverages and in all other employee welfare and pension benefit plans, programs and arrangements in which the Executive was participating immediately prior to the Termination Date, on terms and conditions that are no less favorable than those that applied on the Termination Date, during the following periods: (i) The period during or for which the Executive is receiving payment of Base Salary pursuant to Section 12(b) or Section 12(c) or benefits under Section 12(c)(iii) of this Agreement; or (ii) For a period of one year following the Termination Date if the Executive's employment terminates due to his death. In each case, COBRA benefits will commence after the applicable period provided above has completed. Notwithstanding the foregoing, the Company's obligation to provide welfare benefits under this Section 12(f) shall be reduced to the extent that equivalent coverages and benefits (determined on a coverage-by-coverage and benefit-by-benefit basis) are provided under the plans, programs or arrangements of a subsequent employer. In the event that the Executive (and/or his family members who are participating in the applicable welfare plans immediately prior to the Termination Date) is precluded from continuing full participation in any employee benefit plan, program or arrangement as contemplated by this Section 12(f), the Executive (and/or his family members who are participating in the applicable welfare plans immediately prior to the Termination Date) shall be provided with the after-tax economic equivalent of any benefit or coverage foregone. For this purpose, the economic equivalent of any benefit or coverage foregone shall be deemed to be the total cost to the Executive of obtaining such benefit or coverage himself on an individual basis. Payment of such after-tax economic equivalent shall be made quarterly. 11 (g) No Mitigation; No Offset. In the event of any termination of his employment hereunder, the Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise and no such payment shall be offset or reduced by the amount of any compensation provided to the Executive in any subsequent employment, except as provided in Section 12(f) of this Agreement. (h) Change of Control. For purposes of this Agreement, the term "Change of Control" shall mean an occurrence of a nature that would be required to be reported by the Company in response to Item 6(e) of Schedule 14A of Regulation 14A issued under the Securities Exchange Act of 1934 (the "Exchange Act"). Without limiting the inclusiveness of the definition in the preceding sentence, a Change of Control of the Company shall be deemed to have occurred as of the first day that any one or more of the following conditions is satisfied: (i) Any person is or becomes the "beneficial owner" (as that term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company's then outstanding securities and such person would be deemed an "Acquiring Person" for purposes of the Rights Agreement dated as of July 16, 1998, as amended, between the Company and National City Bank, as successor Rights Agent (the "Rights Agreement"); or (ii) Any of the following occur: (A) any merger or consolidation of the Company, other than a merger or consolidation in which the voting securities of the Company immediately prior to the merger or consolidation continue to represent (either by remaining outstanding or being converted into securities of the surviving entity) 80% or more of the combined voting power of the Company or surviving entity immediately after the merger or consolidation with another entity; (B) any sale, exchange, lease, mortgage, pledge, transfer, or other disposition (in a single transaction or a series of related transactions) of assets or earning power aggregating more than 50% of the assets or earning power of the Company on a consolidated basis; (C) any complete liquidation or dissolution of the Company; (D) any reorganization, reverse stock split or recapitalization of the Company that would result in a Change of Control as otherwise defined herein; or (E) any transaction or series of related transactions having, directly or indirectly, the same effect as any of the foregoing. (i) Notwithstanding anything to the contrary, in addition to any amounts payable above, Executive shall be entitled to the benefits provided under the Supplemental Executive Retirement Plan. (j) Release. In exchange for the payment by the Company of the amounts contemplated by Section 12(b) of this Agreement, the Executive agrees to execute such form of release with respect to claims for such payment as is mutually acceptable to the Company and the Executive. 12 13. Employee Covenants. (a) Unauthorized Disclosure. The Executive shall not, during the term of this Agreement and thereafter, make any Unauthorized Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean disclosure by the Executive without the prior written consent of the Board to any person, other than an employee of the Company or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Executive of his duties as an executive officer of the Company, of any confidential information relating to the business or prospects of the Company including, but not limited to, any confidential information with respect to any of the Company's customers, products, methods of distribution, strategies, business and marketing plans and business policies and practices, except (i) to the extent disclosure is or may be required by law, by a court of law or by any governmental agency or other person or entity with apparent jurisdiction to require him to divulge, disclose or make available such information or (ii) in confidence to an attorney or other advisor for the purpose of securing professional advice concerning the Executive's personal matters provided such attorney or other advisor agrees to observe these confidentiality provisions. Unauthorized Disclosure shall not include the use or disclosure by the Executive, without consent, of any information known generally to the public or known within the Company's trade or industry (other than as a result of disclosure by him in violation of this Section 13(a)). This confidentiality covenant has no temporal, geographical or territorial restriction. (b) Non-Competition. During the Non-Competition/No-Raid Period described below, the Executive shall not, directly or indirectly, without the prior written consent of the Company, own, manage, operate, join, control, be employed by, consult with or participate in the ownership, management, operation or control of, or be connected with (as a stockholder, partner, or otherwise) the following companies: American Eagle Outfitters, Gap Inc., J Crew, Aero Postale or Limited Brands, or any of their affiliates in substantially the same markets and market segments as the foregoing companies; provided, however, that the "beneficial ownership" (as that term is defined in Rule 13d-3 under the Exchange Act) by the Executive after his termination of employment with the Company, either individually or as a member of a "group" for purposes of Section 13(d)(3) under the Exchange Act and the regulations promulgated thereunder, of not more than two percent (2%) of the voting stock of any of these corporations which are publicly held shall not be a violation of this Agreement. (c) Non-Solicitation. During the Non-Competition/No-Raid Period described below, the Executive shall not, either directly or indirectly, alone or in conjunction with another person, interfere with or harm, or attempt to interfere with or harm, the relationship of the Company, its subsidiaries and/or affiliates, with any person who at any time was an employee, customer or supplier of the Company, its subsidiaries and/or affiliates or otherwise had a business relationship with the Company, its subsidiaries and/or affiliates. (d) For purposes of this Agreement, the "Non-Competition/No-Raid Period" means the period the Executive is employed by the Company plus one year thereafter. (e) Remedies. The Executive agrees that any breach of the terms of this Section 13 would result in irreparable injury and damage to the Company for which the 13 Company would have no adequate remedy at law; the Executive therefore also agrees that in the event of said breach or any threat of breach, the Company shall be entitled to an immediate injunction and restraining order to prevent such breach and/or threatened breach and/or continued breach by the Executive and/or any and all persons and/or entities acting for and/or with the Executive, without having to prove damages, in addition to any other remedies to which the Company may be entitled at law or in equity. The terms of this Section 13(e) shall not prevent the Company from pursuing any other available remedies for any breach or threatened breach hereof, including but not limited to the recovery of damages from the Executive. The Executive and the Company further agree that the provisions of the covenants not to compete and solicit are reasonable and that the Company would not have entered into this Agreement but for the inclusion of such covenants herein. Should a court or arbitrator determine, however, that any provision of the covenants is unreasonable, either in period of time, geographical area, or otherwise, the parties hereto agree that the covenants should be interpreted and enforced to the maximum extent which such court or arbitrator deems reasonable. The provisions of this Section 13 shall survive any termination of this Agreement, and the existence of any claim or cause of action by the Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of the covenants and agreements of this Section 13; provided, however, that this paragraph shall not, in and of itself, preclude the Executive from defending himself against the enforceability of the covenants and agreements of this Section 13. The Company hereby waives any right it might have to claim that the Executive should be precluded from accepting employment or otherwise providing services on the basis that such employment or performance of services will inevitably result in unauthorized disclosure in violation of Section 13(a); this waiver shall not preclude the Company from asserting any claim for damages it may have for a violation of Section 13(a), nor from seeking equitable relief to enjoin Executive from making actual disclosures in violation of Section 13(a). 14. Certain Additional Payments. (a) In the event it shall be determined that any payment, benefit or distribution of any type to or for the benefit of the Executive by the Company, any of its affiliates, or any person who acquires ownership or effective control of the Company or ownership of a substantial portion of the Company's assets (within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations thereunder) or any affiliate of such person, whether paid or payable, received or receivable, or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "Total Payments"), is or would be subject to the excise tax imposed by Section 4999 of the Code or any similar successor provision or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are collectively referred to as the "Excise Tax"), then the Executive shall be entitled to receive an additional payment (the "Gross-Up Payment") in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments (not including the Gross-Up Payment). 14 (b) All determinations as to whether any of the Total Payments are "parachute payments" (within the meaning of Section 280G of the Code), whether a Gross-Up Payment is required, the amount of such Gross-Up Payment and any amounts relevant to the last sentence of Section 14(a), shall be made by an independent accounting firm selected by the Company from among the largest four accounting firms in the United States (the "Accounting Firm"). Unless the Executive agrees otherwise in writing, the Accounting Firm cannot during the two years preceding the date of its selection have acted in any way on behalf of the Company or any of its affiliates. The Accounting Firm shall provide its determination (the "Determination"), together with detailed supporting calculations, regarding the amount of any Gross-Up Payment and any other relevant matter, both to the Company and the Executive, within five days of the Termination Date, if applicable, or such earlier time as is requested by the Company or the Executive (if the Executive reasonably believes that any of the Total Payments may be subject to the Excise Tax). Any determination by the Accounting Firm shall be binding upon the Company and the Executive. As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it may be determined that the Company should have made Gross-Up Payments ("Underpayment"), or that Gross-Up Payments will have been made by the Company which should not have been made ("Overpayment"). In either such event, the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has occurred. In the case of an Underpayment, the amount of such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive. In the case of an Overpayment, the Executive shall, at the direction and expense of the Company, take such steps as are reasonably necessary (including the filing of returns and claims for refund), follow reasonable instructions from, and procedures established by, the Company, and otherwise reasonably cooperate with the Company to correct such Overpayment. The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments. 15. Indemnification; Insurance; Limitation of Liability. (a) The Company agrees that if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding"), by reason of the fact that he is or was a director, officer or employee of the Company or is or was serving at the request of the Company as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of the Proceeding is the Executive's alleged action in an official capacity while serving as a director, officer, member, employee or agent, the Executive shall be indemnified and held harmless by the Company to the fullest extent legally permitted or authorized by the Company's certificate of incorporation or bylaws or resolutions of the Company's Board or, if greater, by the laws of the State of Delaware, against all cost, expense, liability and loss (including, without limitation, attorneys' fees, judgments, fines, ERISA excise taxes or other liabilities or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such indemnification shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Company or other entity and shall inure to the benefit of the Executive's heirs, executors and administrators. The Company shall advance to the Executive all costs and expenses incurred by him in connection with a Proceeding 15 within 20 calendar days after receipt by the Company of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled by law to be indemnified against such costs and expenses; provided that the amount of such obligation to repay shall be limited to the after-tax amount of any such advance except to the extent the Executive is able to offset such taxes incurred on the advance by the tax benefit, if any, attributable to a deduction realized by him for the repayment. (b) Neither the failure of the Company (including its Board, independent legal counsel or stockholders) to have made a determination prior to the commencement of any Proceeding concerning payment of amounts claimed by the Executive under Section 15(a) above that indemnification of the Executive is proper because he has met the applicable standard of conduct, nor a determination by the Company (including its Board, independent legal counsel or stockholders) that the Executive has not met such applicable standard of conduct, shall create a presumption in any judicial proceeding that the Executive has not met the applicable standard of conduct. (c) The Company agrees to continue and maintain a directors' and officers' liability insurance policy covering the Executive, until such time as actions against the Executive are no longer permitted by law, with terms and conditions no less favorable than the most favorable coverage then applying to any other senior level executive officer or director of the Company. 16. Representations. (a) The Executive represents and warrants that he has the free and unfettered right to enter into this Agreement and to perform his obligations under it and that he knows of no agreement between him and any other person, firm or organization, or any law or regulation, that would be violated by the performance of his obligations under this Agreement. The Executive agrees that he will not use or disclose any confidential or proprietary information of any prior employer in the course of performing his duties for the Company or any of its affiliates. (b) The Company represents that (i) the execution of this agreement and the provision of all benefits and grants provided herein have been duly authorized by the Company, including, where necessary, by the Board and Compensation Committee, (ii) the execution, delivery and performance of this Agreement does not violate any law, regulation, order, decree, agreement, plan or corporate governance document of the Company, (iii) upon the execution and delivery of this agreement, it shall be the valid and binding obligation of the Company enforceable in accordance with its terms, (iv) there are no material investigations by any governmental authority of the Company or its affiliates pending, or to the actual knowledge of the Company, threatened, and Company senior management knows of no facts that would warrant such investigation, (v) there are no facts or circumstances that may result in a material financial restatement, (vi) there are no significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize, and report financial data and there is no weakness in internal financial controls that would be required by Section 302 of the Sarbanes-Oxley Act to be reported to the Company's 16 auditors, and (vii) there is no fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls. 17. Successors and Assigns. (a) This Agreement shall be binding upon and shall inure to the benefit of the Company, its successors and assigns and the Company shall require any successor or assign to expressly assume 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 assignment had taken place. The term "the Company" as used herein shall include any such successors and assigns. The term "successors and assigns" as used herein shall mean a corporation or other entity acquiring or otherwise succeeding to, directly or indirectly, all or substantially all the assets and business of the Company (including this Agreement) whether by operation of law or otherwise. (b) Neither this Agreement nor any right or interest hereunder shall be assignable or transferable by the Executive, his beneficiaries or legal representatives, except by will or by the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal personal representative. 18. Arbitration. Except with respect to the remedies set forth in Section 13(e) hereof, if in the event of any controversy or claim between the Company or any of its affiliates and the Executive arising out of or relating to this Agreement, either party delivers to the other party a written demand for arbitration of a controversy or claim, then such claim or controversy shall be submitted to binding arbitration. The binding arbitration shall be administered by the American Arbitration Association under its Commercial Arbitration Rules. The arbitration shall take place in Columbus, Ohio. Each of the Company and the Executive shall appoint one person to act as an arbitrator, and a third arbitrator shall be chosen by the first two arbitrators (such three arbitrators, the "Panel"). The Panel shall have no authority to award punitive damages against the Company or the Executive. The arbitrator shall have no authority to add to, alter, amend or refuse to enforce any portion of the disputed agreements. The Company and the Executive each waive any right to a jury trial or to petition for stay in any action or proceeding of any kind arising out of or relating to this Agreement. Pending the resolution of any claim under this Section 18, the Executive (and his beneficiaries) shall continue to receive all payments and benefits due under this Agreement, except to the extent that the arbitrator(s) otherwise provide. 19. Fees and Expenses. The Company shall pay the legal fees reasonably incurred by the Executive in connection with the negotiation and execution of this Agreement up to a maximum of $25,000, payable upon submission of the billing statement or paid receipt for such services rendered by the Executive's counsel. In addition, the Company agrees to pay promptly upon presentation of an invoice from the Executive, to the full extent permitted by law, all legal fees and expenses which the Executive may reasonably incur as a result of (a) any contest by the Company of the validity or enforceability of, or liability under, any provision of this Agreement, (b) any effort to enforce the Executive's rights hereunder or (c) any dispute between the Executive and the Company relating to this Agreement; provided that the claim by the Executive is made in good faith. 17 20. Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement (including the Notice of Termination) shall be in writing and shall be deemed to have been duly given when personally delivered or sent by registered or certified mail, return receipt requested, postage prepaid, or upon receipt if overnight delivery service or facsimile is used, addressed as follows: To the Executive: Robert S. Singer c/o A. Richard Susko Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, NY 10006 with a copy to: A. Richard Susko Cleary, Gottlieb, Steen & Hamilton One Liberty Plaza New York, NY 10006 To the Company: Abercrombie & Fitch Co. 6301 Fitch Path New Albany, Ohio 43054 Attn: Chief Executive Officer 21. Settlement of Claims. The Company's obligation to make the payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company may have against the Executive or others. 22. Survivorship. Except as otherwise set forth in this Agreement, the respective rights and obligations of the Executive and the Company hereunder shall survive any termination of the Executive's employment. 23. Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreement or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement. 18 24. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Ohio without giving effect to the conflict of law principles thereof. 25. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 26. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto and supersedes all prior agreements, if any, understandings and arrangements, oral or written, between the parties hereto with respect to the subject matter hereof. This Agreement may be executed in one or more counterparts. 19 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and the Executive has executed this Agreement as of the day and year first above written. THE COMPANY: ABERCROMBIE & FITCH CO. By: /s/ Michael Jeffries -------------------------------------- Michael Jeffries, Chief Executive Officer THE EXECUTIVE: /s/ Robert S. Singer ------------------------------------------ Robert S. Singer 20 EXHIBIT A ABERCROMBIE & FITCH CO. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN II ROBERT S. SINGER EFFECTIVE MAY 17, 2004 ABERCROMBIE & FITCH CO. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ROBERT S. SINGER ARTICLE 1.00 PURPOSE Effective May 17, 2004, Abercrombie & Fitch Co. establishes the Abercrombie & Fitch Co. Supplemental Executive Retirement Plan II ("Plan") to provide additional retirement income to Robert S. Singer, one of its select management and highly compensated employees. This Plan is intended to be an unfunded, nonqualified deferred compensation plan within the meaning of Title I of ERISA. ARTICLE 2.00 DEFINITIONS Whenever used in this Plan, the following words and phrases will have the meanings given below. Also, the singular form of any term will include the plural, the plural form will include the singular, the masculine pronoun will include the feminine and the feminine pronoun will include the masculine. Other words and phrases also may be defined in the Plan text. SECTION 2.01 ACTUARIAL EQUIVALENT: The determination of one benefit as being equal to another benefit payable at a different time and/or in a different form using actuarial assumptions in accordance with the requirements of Code Section 417(e)(3)(A), as amended, and any implementing regulations, and based on the following: the applicable mortality table set forth in Rev. Rul. 95-6 or such other regulations as the IRS may issue and the composite corporate bond rate for the month preceding the commencement of payments under this Plan, as published by the IRS pursuant to the requirements of the Pension Funding Equity Act, enacted on April 10, 2004. SECTION 2.02 AFFILIATE: Any entity that is related, through common control with the Company. SECTION 2.03 BASE RETIREMENT BENEFIT: A monthly annuity of $8,333.33 commencing at age 57 and payable for the life of the Participant. SECTION 2.04 BOARD: The Company's board of directors. SECTION 2.05 CAUSE: As defined in and determined pursuant to the employment agreement between the Participant and the Company dated May 17, 2004 (the "Employment Agreement"). SECTION 2.06 CODE: The Internal Revenue Code of 1986, as amended. SECTION 2.07 COMMITTEE: The Company's Compensation Committee. 1 SECTION 2.08 COMPANY: Abercrombie & Fitch Co., a Delaware corporation, and any successor to it. SECTION 2.09 EFFECTIVE DATE: Commencement Date as defined in the Employment Agreement. SECTION 2.10 ENROLLMENT FORM: The form described in Article 3.00 which the Participant must complete before he may begin to accrue a Plan benefit. Although a copy of this form is attached to the Plan, it is not a part of the Plan and may be modified by the Committee without separate action by the Board and without regard to the restrictions described in Article 7.00. SECTION 2.11 PARTICIPANT: Robert S. Singer. SECTION 2.12 PLAN: The Abercrombie & Fitch Co. Supplemental Executive Retirement Plan II, as described in this document and any amendments to it. SECTION 2.13 TERMINATION OF EMPLOYMENT: Discontinuance of the Participant's status as a common law employee of the Company and all Affiliates. For purposes of this Plan, the Participant will have a Termination of Employment even if he continues to serve as a consultant to or as an independent contractor with respect to the Company or any Affiliate (including as a member of the Board or an Affiliate's board of directors) after severing his common law employment relationship with the Company and each Affiliate. ARTICLE 3.00 PARTICIPATION The Participant may enter the Plan on the Effective Date but only after completing an Enrollment Form. ARTICLE 4.00 PLAN BENEFIT SECTION 4.01 AMOUNT OF BENEFIT. Subject to the conditions described in this section and elsewhere in the Plan, the Participant will receive the benefit described in this section payable in the form described in Section 4.02. [1] TERMINATION OF EMPLOYMENT AT OR AFTER AGE 57. If the Participant has a Termination of Employment other than due to death or Cause at or after age 57, he will receive a monthly benefit commencing on Termination of Employment for life equal to the Actuarial Equivalent of the Base Retirement Benefit. [2] TERMINATION OF EMPLOYMENT BEFORE ATTAINING AGE 57. If the Participant has a Termination of Employment other than due to death or Cause prior to age 57, he will receive a monthly benefit commencing on Termination of Employment for life equal to the Actuarial Equivalent of the Base Retirement Benefit on his Termination of Employment 2 multiplied by a percentage based on his age upon Termination of Employment equal to the percentage under the following table:
Termination of Employment on or After Age Percentage - ----------------------------------------- ---------- 53 20% 54 40% 55 60% 56 80% 57 100%
Notwithstanding the foregoing, if the Executive is terminated by the Company without Cause, by the Executive for Good Reason, or as a result of the Company's Non-renewal, or a result of a Termination of Employment by reason of Disability or there is a Change in Control (as such terms are defined in the Employment Agreement) the percentage shall be 100%. [3] PRE-RETIREMENT BENEFIT. If the Participant dies prior to the date his retirement benefits commence hereunder, his surviving spouse, if any, shall receive a monthly benefit for her life equal to the amount that she would have received had the Participant had a Termination of Employment on the day prior to the day of his death, commenced receiving benefits hereunder in the form of a joint and 100% survivor annuity with his surviving spouse, and then died. [4] OTHER TERMINATION OF EMPLOYMENT. The Participant will receive no Plan benefit if he is terminated for Cause prior to a Change in Control, regardless of his age at the time Termination of Employment for Cause occurs. SECTION 4.02 FORM OF PAYMENT. Any benefit payable under Section 4.01 will be paid in monthly installments beginning on the date of Termination of Employment and ending on the last day of the month during which the Participant dies. No payment will be made (and no Plan benefit will be due) to any person after the Participant's death. Notwithstanding the foregoing, the Participant may elect an optional form of benefit that is the Actuarial Equivalent of the Base Retirement Benefit, including a joint and survivor annuity, a life annuity with a term certain, and other forms generally provided under insurance contracts, and may, in lieu of the commencement date of the benefits prescribed herein, elect a later commencement date, not past age 65. ARTICLE 5.00 TAXES SECTION 5.01 WITHHOLDING FOR TAXES DUE ON PLAN PAYMENTS. Regardless of any other provision of this Plan, any payment due under Article 4.00 will be reduced by the amount of any 3 federal, state and local income and employment taxes the Company is required to withhold under any applicable law or regulation from any payment made under Article 4.00. SECTION 5.02 WITHHOLDING FOR TAXES DUE BEFORE PAYMENTS BEGIN. The Committee and the Participant will agree on the method to be applied to pay the Participant's portion of any employment, wage and other taxes imposed under any applicable law or regulation on any Plan benefit before that benefit is paid to the Participant. If the Committee and Participant fail to agree on the method to be applied, the Company will withhold the amount of the Participant's liability from his other Compensation. SECTION 5.03 SPECIAL DISTRIBUTION. If any taxing authority finally establishes that the Participant is constructively in receipt of any Plan benefit that has not actually been distributed and that the Participant is immediately liable for any income or other taxes (other than any taxes within the scope of Section 5.02) that normally would not be imposed until the Plan benefit is actually paid to the Participant, the Committee will immediately distribute to the Participant a lump sum amount equal to that which the taxing authority has deemed the Participant to have constructively received. ARTICLE 6.00 ADMINISTRATION SECTION 6.01 APPOINTMENT OF COMMITTEE. The Plan will be administered by the Committee. SECTION 6.02 POWERS AND DUTIES. The Committee is fully empowered to exercise complete discretion to administer the Plan and to construe and apply all of its provisions. These powers and duties include: [1] Resolving disputes that may arise with regard to the rights of the Participant and his legal representatives under the terms of the Plan. Subject to Section 6.07, the Committee's decisions in these matters will be final in each case; [2] Obtaining from the Company, each Affiliate and the Participant information that the Committee needs to determine the Participant's rights and benefits under the Plan. The Committee may rely conclusively upon any information furnished by the Company or the Participant; [3] Compiling and maintaining all records it needs to administer the Plan; [4] Upon request, furnishing the Company with reasonable and appropriate reports of its administration of the Plan; [5] Authorizing the distribution of all benefits that are payable under the Plan; [6] Engaging legal, administrative, actuarial, investment, accounting, consulting and other professional services that the Committee believes are necessary and appropriate; 4 [7] Adopting rules and regulations for the administration of the Plan that are not inconsistent with the terms of the Plan; and [8] Doing and performing any other acts provided for in the Plan. Also, the Committee may delegate any of the powers and duties described in subsections 6.02[2] through [4] to any other person or organization, as it deems appropriate. SECTION 6.03 ACTIONS BY THE COMMITTEE. The Committee may act at a meeting by the vote or assent of a majority of its members or in writing without a meeting by the written assent of all its Members. The Committee will appoint one of its members to act as secretary to record all Committee actions. The Committee also may authorize one or more if its members to execute papers and perform other ministerial duties on behalf of the Committee. SECTION 6.04 INDEMNIFICATION. The Committee will be indemnified by the Company to the fullest extent permitted by the Company's certificate of incorporation and by-laws. SECTION 6.05 Payment of Expenses. [1] Committee members will not be separately compensated for their services as Committee members. However, the Company will reimburse Committee members for all appropriate expenses they incur while carrying out their Plan duties. [2] The compensation or fees of accountants, counsel and other specialists and any other costs of administering the Plan will be paid by the Company. SECTION 6.06 RESOLUTION OF DISPUTES. If, in the event of any controversy or claim between the Company or any of its Affiliates and the Participant as to the benefits due hereunder, the dispute shall be resolved in the manner provided for and as determined under the Employment Agreement. ARTICLE 7.00 PLAN AMENDMENT The Company, by action of the Board, may modify, alter or amend the Plan at any time. However, no such amendment may affect, directly or indirectly, the Participant's rights under the Plan unless the Participant agrees to such amendment either in a separate written agreement or by voting, as a member of the Board, for such amendment. ARTICLE 8.00 MERGER OF PLAN; SUCCESSOR EMPLOYER SECTION 8.01 MERGER AND CONSOLIDATION. If the Plan is merged into or consolidated with any other plan, the Participant will be entitled to rights and benefits immediately after the merger or consolidation at least equal to his rights and benefits under this Plan. 5 SECTION 8.02 SUCCESSOR EMPLOYER. If the Company dissolves, reorganizes, merges into or consolidates with another business entity, provision will be made by which the successor will continue the Plan, in which case the successor will be substituted for the Company under the terms and provisions of this Plan. The substitution of the successor for the Company will constitute an assumption by the successor of all Plan liabilities and the successor will have all of the powers, duties and responsibilities of the Company under the Plan. ARTICLE 9.00 FUNDING This Plan constitutes an unfunded, unsecured promise by the Company and each Affiliate to pay only those benefits that are accrued by the Participant under the terms of the Plan. Neither the Company nor any Affiliate will segregate any assets into a fund established exclusively to pay Plan benefits unless the Company, in its sole discretion, establishes a trust for this purpose. Neither the Company nor any Affiliate is liable for the payment of Plan benefits that are actually paid from a trust established for that purpose. Also, the Participant has only the rights of a general unsecured creditor and does not have any interest in or right to any specific asset of the Company or any Affiliate. Nothing in this Plan constitutes a guaranty by the Company, any Affiliate or any other entity or person that the assets of the Company, any Affiliate or any other entity will be sufficient to pay Plan benefits. ARTICLE 10.00 MISCELLANEOUS SECTION 10.01 VOLUNTARY PLAN. The Plan is purely voluntary on the part of the Company; neither the establishment of the Plan nor any amendment to it nor the creation of any fund or account nor the payment of any benefits may be construed as giving any person [1] a legal or equitable right against the Company, any Affiliate or the Committee other than those specifically granted under the Plan or conferred by affirmative action of the Committee or the Company or any Affiliate in a manner that is consistent with the terms and provisions of this Plan or [2] the right to be retained as an employee. SECTION 10.02 NONALIENATION OF BENEFITS. The Participant's right to receive Plan benefits may not be assigned, transferred, pledged or encumbered, including by will or by applicable laws of descent and distribution. Any attempt to assign, transfer, pledge, encumber or devise a Plan benefit will be null and void and of no legal effect. SECTION 10.03 INABILITY TO RECEIVE BENEFITS. Any Plan benefit payable to the Participant after he is declared incompetent will be paid to the guardian, conservator or other person legally charged with the care of his person or estate. Also, if the Committee, in its sole discretion, reasonably concludes that the Participant is unable to manage his financial affairs, the Committee may, but is not required to, direct the Company to distribute Plan benefits to any one or more of his spouse, lineal ascendants or descendants or other close living relatives of the Participant or any other person then contributing toward or providing the care and maintenance of the Participant who demonstrates to the satisfaction of the Committee the propriety of those 6 distributions. Any payment made under this Section 10.03 will completely discharge the Plan's liability with respect to that payment. The Committee is not required to see to the application of any distribution made to any person. SECTION 10.04 LOST PARTICIPANT. The Participant is obliged to keep the Committee apprised of his current mailing address. The Committee's obligation to search for the Participant is limited to sending a registered or certified letter to the Participant's last known address. If the Participant does not file a claim for benefits with the Committee within 12 months after benefits are otherwise payable, benefits will be forfeited. However, this forfeited benefit will be restored and paid if the Committee subsequently approves a claim for benefits. SECTION 10.05 LIMITATION OF RIGHTS. Nothing in the Plan, expressed or implied, is intended or may be construed as conferring upon or giving to any person, firm or association (other than the Company, the Affiliates and the Participant) any right, remedy or claim under or by reason of this Plan. SECTION 10.06 INVALID PROVISION. If any provision of this Plan is held to be illegal or invalid for any reason, the Plan will be construed and enforced as if the offending provision had not been included in the Plan. However, that determination will not affect the legality or validity of the remaining parts of this Plan. SECTION 10.07 ONE PLAN. This Plan may be executed in any number of counterparts, each of which will be deemed to be an original. SECTION 10.08 GOVERNING LAW. The Plan will be governed by and construed in accordance with the laws of the United States and, to the extent applicable, the laws of Ohio. SECTION 10.09 COORDINATION WITH OTHER PROGRAMS. The Participant's right to any benefits accrued or payable under this Plan will be determined solely by reference to the terms of this Plan document and will be unaffected by any other document or agreement between the Participant and the Company. 7 IN WITNESS WHEREOF, the undersigned authorized officer of the Company has executed this Plan to be effective as of May 17, 2004. ABERCROMBIE & FITCH CO. By: /s/ Michael Jeffries --------------------------------------- Print Name: Michael Jeffries Title: Chairman & CEO Date: May 17, 2004 8 ABERCROMBIE & FITCH CO. SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN ENROLLMENT FORM Name: Robert Singer Soc. Sec. No.: XXX XX XXXX Date of Birth: 01-30-1952 Address:________________________________________________________________________ ________________________________________________________________________________ By signing this form, I acknowledge that [1] I have read and understand the Plan and the terms and conditions I must meet to receive a Plan benefit, [2] the Plan is unfunded, [3] I am solely responsible for ensuring that the Committee's files contain my current mailing address and [4] by signing this form, I agree to be bound by all terms and conditions imposed by the Plan. Signature: /s/ Robert Singer __________________________________________ Name (please print): Robert Singer Date signed: May 17, 2004 Received by Committee on:____________________________ By:__________________________________________________ 9 EX-15 6 l07902aexv15.txt EXHIBIT 15 EXHIBIT 15 June 8, 2004 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Commissioners: We are aware that our report dated May 11, 2004 on our review of interim financial information of Abercrombie & Fitch Co. (the "Company") for the thirteen week periods ended May 1, 2004 and May 3, 2003 and included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended May 1, 2004 is incorporated by reference in its Registration Statements on Form S-8 (Registration Nos. 333-15941, 333-15945, 333-60189, 333-81373, 333-60203, 333-100079, 333-107646 and 333-107648). Very truly yours, /s/ PricewaterhouseCoopers LLP Columbus, Ohio EX-31.1 7 l07902aexv31w1.txt EXHIBIT 31.1 EXHIBIT 31.1 RULE 13a-14(a)/15d-14(a) CERTIFICATION (PRINCIPAL EXECUTIVE OFFICER) I, Michael S. Jeffries, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Abercrombie & Fitch Co. for the quarterly period ended May 1, 2004; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that has occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: June 9, 2004 By: /s/ Michael S. Jeffries ------------------------------------ Michael S. Jeffries Chairman and Chief Executive Officer (Principal Executive Officer) EX-31.2 8 l07902aexv31w2.txt EXHIBIT 31.2 EXHIBIT 31.2 RULE 13a-14(a)/15d-14(a) CERTIFICATION (PRINCIPAL FINANCIAL OFFICER) I, Susan J. Riley, certify that: 1. I have reviewed this Quarterly Report on Form 10-Q of Abercrombie & Fitch Co. for the quarterly period ended May 1, 2004; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that has occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Dated: June 9, 2004 By: /s/ Susan J. Riley ----------------------------------------------- Susan J. Riley Senior Vice President - Chief Financial Officer (Principal Financial Officer) EX-32 9 l07902aexv32.txt EXHIBIT 32 EXHIBIT 32 SECTION 1350 CERTIFICATION* In connection with the Quarterly Report of Abercrombie & Fitch Co. (the "Corporation") on Form 10-Q for the quarterly period ended May 1, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned Michael S. Jeffries, Chairman and Chief Executive Officer of the Corporation, and Susan J. Riley, Senior Vice President - Chief Financial Officer of the Corporation, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of their knowledge: (1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. /s/ Michael S. Jeffries /s/ Susan J. Riley - ------------------------------------ --------------------------------------- Michael S. Jeffries Susan J. Riley Chairman and Chief Executive Senior Vice President - Chief Financial Officer Officer Dated: June 9, 2004 Dated: June 9, 2004 * This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing. -----END PRIVACY-ENHANCED MESSAGE-----