Exhibit 10.1

 

June 29, 2005

 

Mr. Thomas DiDonato

605 Grandview Drive

Gibsonia, PA 15044

Dear Tom,

I am pleased to offer you the position of Executive Vice President-Human
Resources for American Eagle Outfitters, Inc. or its designated subsidiary (the
"Company"). The following summarizes the terms and conditions of your
employment.

Position and Duties

: You will be employed as Executive Vice President-Human Resources, with such
authority and duties as are customary for the position, and shall perform such
other services and duties as the President, CEO or Board may from time to time
designate.

Annual Base Salary

: For our 2005 fiscal year, your base salary will be at an annual rate of
$400,000.00 payable in accordance with Company's payroll practices for executive
employees.

Start Date

: Monday, July 25, 2005

Annual Incentive Bonus

: For fiscal years after 2005, you will be eligible to receive an annual
incentive bonus targeted at 50% of your annual base salary in each fiscal year
or other performance period established under Company's Management Incentive
Plan ("the Bonus Plan"), with a maximum annual incentive bonus equal to 100% of
your annual base salary. The Bonus Plan conditions the payment of this annual
performance bonus based on achievement of pre-determined performance goals set
forth in writing and based on objective measurements all established by the
Compensation Committee of the Board of Directors (the "Committee"). The
Committee must verify that the performance goals and other material terms are
met prior to payment. It is the parties' intention that the Bonus Plan be
adopted and administered in a manner that enables Company to deduct for federal
income tax purposes the amount of any annual incentive bonus. Notwithstanding
the forgoing, your annual incentive bonus for fiscal 2005 will be a guaranteed
fixed amount of $200,000 not based on performance goals and conditioned on your
continuous employment with the Company through the date in 2006 when executive
fiscal 2005 annual incentive bonuses are paid. You are not eligible for an
annual incentive bonus above target for fiscal 2005 even if performance goals
are achieved. No annual incentive bonus is guaranteed for any subsequent period.

Long Term Incentive Cash Plan

. You will be eligible to receive a long term incentive bonus under the Bonus
Plan (the "LTI Plan"), where an amount targeted at 25% of annual base salary and
a maximum of 50% of base salary will be contributed to your LTI bonus account,
conditioned on achievement of pre-determined performance goals set forth in
writing and based on objective measurements all established by the Committee.
The Committee must verify that the performance goals and other material terms
have been met prior to crediting the LTI bonus account. You will receive payment
of: (a) one-third of the amount in your LTI bonus account in each fiscal year
beginning in fiscal 2008; (b) the entire amount in your LTI bonus account on
death, disability or retirement; and (c) no amount of your LTI bonus account,
which will be forfeited, on any voluntary termination of employment. It is the
parties' intention that the LTI Plan be adopted and administered in a manner
that enables the Company to deduct for federal income tax purposes all amounts
paid pursuant to the LTI Plan. Your LTI bonus calculation for fiscal 2005 will
be based on your full year base salary of $400,000 and not a prorated portion of
your base salary. No amount of your LTI bonus is guaranteed and the entire
amount will depend on whether applicable performance goals are achieved.

Restricted Stock:

You will receive 25,000 shares of restricted stock in a grant made by the
Committee pursuant to and subject to all terms and conditions set forth in
Company's 2005 Stock Award and Incentive Plan ("the 2005 Plan"). Pursuant to the
terms of the 2005 Plan, the Committee will condition the vesting of this
restricted stock based on achievement of pre-determined performance goals set
forth in writing and based on objective measurements all established by the
Committee. The Committee must verify that the performance goals and other
material terms are met prior to vesting. If the performance goals are not met
then the restricted stock will be forfeited. It is the parties' intention that
the 2005 Plan be adopted and administered in a manner that enables the Company
to deduct for federal income tax purposes the full value of all restricted stock
grants.

Stock Options:

You will receive options to purchase 30,000 shares of the Company's common stock
in a grant made by the Committee pursuant to and subject to all terms and
conditions set forth in the 2005 Plan. The option exercise price will be the
fair market value on the grant date and the options will become exercisable
based on an equal three-year vesting schedule.

Auto Allowance

: You will receive an automobile allowance of $750.00 per month, with the amount
grossed up for tax purposes.

Benefit Plans

: You will be entitled to participate in employee benefit plans, including any
profit sharing or 401(k) plans; group life, health, hospitalization and
disability insurance plans; deferred compensation plans; discount privileges;
and other employee welfare benefits made available generally to, and under the
same terms as, the Company's other executives. The Company will pay any COBRA
premiums for continued coverage under your existing health plan until you are
eligible for coverage under the Company's group health insurance.

At Will Employment

: The Company is an "at will" employer. This means that you can terminate your
employment at anytime and for any reason and the Company can also terminate your
employment at any time and for any reason.

Confidentiality, Non-competition and Intellectual Property Agreement

: Your employment is conditioned upon your execution of the form of
Confidentiality, Non-Competition and Intellectual Property Agreement in the form
attached to this letter.

References/Drug Screen:

Your employment is contingent upon successful completion of your references and
you passing a pre-hire drug screen.

We very much look forward to you becoming a member of the American Eagle
Outfitters team. Please sign and date one copy of this letter and the attached
agreement and return them to me to indicate you understand and accept the terms;
the additional copy is for your records. Please let me know if you have any
questions.

Sincerely,

/s/ Jim O'Donnell

Jim O'Donnell

Chief Executive Officer

 

Agreed and accepted as outlined above:

/s/ Thomas A. DiDonato July 5, 2005 Thomas DiDonato Date

                     

ATTACHMENT

OFFER OF EMPLOYMENT

AMERICAN EAGLE OUTFITTERS, INC.

 

Confidentiality, Non- Competition And

Intellectual Property Agreement

As a new executive officer of American Eagle Outfitters, Inc. or one of its
subsidiaries or affiliates (collectively, the "Company"), I will have access to
or may develop trade secrets, intellectual property, and other confidential or
proprietary information ("Confidential Information") of the Company.

THEREFORE, in consideration of both my employment with the Company and in
recognition of the highly competitive nature of the business conducted by the
Company, I agree as follows:

1. I will at all times during and after my employment with the Company
faithfully hold the Company's Confidential Information in the strictest
confidence, and I will use my best efforts and diligence to guard against its
disclosure to anyone other than as required in the performance of my duties to
the Company. I will not use Confidential Information for my own personal benefit
or for the benefit of any competitor or other person. I understand that
Confidential Information includes all information and materials relating to
Intellectual Property, as defined below, the Company's trade secrets and all
information relating to the Company that the Company does not make available to
the public. By way of example, Confidential Information includes information
about the Company's products, designs, processes, systems, marketing,
promotional plans, technical procedures, strategies, costs, financial
information, and many other types of information and materials. Upon termination
of my employment with the Company, regardless of the reason for such
termination, I will return to the Company all computers, data storage devices,
documents and other materials of any kind that contain Confidential Information.
I will not use any confidential information of any third party, including any
prior employer, in breach of a legal obligation to that third party in the
course of my work for the Company.

2. If I decide to resign my employment with the Company, I will provide the
Company with thirty (30) days prior written notice.

3. If I leave the Company for any reason whatsoever, then for a period of twelve
(12) months after my separation from the Company, I will not directly or
indirectly solicit, induce or attempt to influence any associate to leave the
employment of the Company, nor will I in any way assist anyone else in doing so.

4. I agree that all inventions, designs and ideas conceived, produced, created,
or reduced to practice, either solely or jointly with others, during my
employment with the Company, including those developed on my own time, which
relate to or are useful in the Company's business ("Intellectual Property")
shall be owned solely by the Company. I understand that whether in preliminary
or final form, such Intellectual Property includes, for example, all ideas,
inventions, discoveries, designs, innovations, improvements, trade secrets, and
other intellectual property. All Intellectual Property is either work made for
hire for the Company within the meaning of the U. S. Copyright Act, or, if such
Intellectual Property is determined not to be work made for hire, then I
irrevocably assign all right, title and interest in and to the Intellectual
Property to the Company, including all copyrights, patents, and/or trademarks. I
will, without any additional consideration, execute all documents and take all
other actions needed to convey my complete ownership of the Intellectual
Property to the Company so that the Company may own and protect such
Intellectual Property and obtain patent, copyright and trademark registrations
for it. I agree that the Company may alter or modify the Intellectual Property
at the Company's sole discretion, and I waive all right to claim or disclaim
authorship. I represent and warrant that any Intellectual Property that I assign
to the Company, except as otherwise disclosed in writing at the time of
assignment, will be my sole, exclusive, original work. I have not previously
invented any Intellectual Property or I have advised the Company in writing of
any prior inventions or ideas.

5. If I leave the Company for any reason whatsoever, then for a period of twelve
(12) months after my separation from the Company, I will not, directly or
indirectly, work for or contribute to the efforts of any business organization
or entity that competes, or plans to compete, with the Company or its products
and services. I understand that the Company at its discretion may waive this
provision or shorten the twelve month period by giving me a written waiver. I
also understand that the Company shall continue to pay me my base salary during
the period I am required not to work for a competitor, except that in no case
will the Company pay me my base salary for any portion of the period that I am
employed or work for someone other than a competitor.

6. I understand that the Company is entitled, in addition to other remedies, to
obtain an injunction against any potential or actual violation of this
Agreement.

7. This Agreement cannot be changed in any way unless the Company agrees in
writing and this Agreement will be governed by and interpreted in accordance
with Pennsylvania law.

Date: July 5, 2005 Thomas A. DiDonato

Print Name

      /s/ Thomas A. DiDonato Signature