Document:

ex103-8k_052016.htm

EXHIBIT 10.3

LAKE SHORE SAVINGS BANK

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE

RETIREMENT PLAN

              

              Effective May 18, 2016

  

  

  

           LAKE SHORE SAVINGS BANK

AMENDED AND RESTATED

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

This Amended and Restated Supplemental Executive Retirement Plan (the “Plan”), is made and entered into as of May 18, 2016, by and between Lake Shore Savings Bank, a federally-chartered savings bank (the “Bank”), and Daniel P. Reininga, President and Chief Executive Officer of Lake Shore Bancorp, Inc., a federally-chartered corporation and a mid-tier stock holding company (the “Company”) and the Bank (the “Executive”).  The Plan was originally entered into as of June 30, 2012 and initially amended and restated as of November 1, 2015.

The purpose of the Plan is to provide additional retirement benefits to the Executive, who has contributed significantly to the success and growth of the Company and the Bank, and whose services are vital to the Company and Bank’s continued growth and success.

W I T N E S S E T H :

WHEREAS, the Executive is the President and Chief Executive Officer of the Company and the Bank; and

WHEREAS, the Company and the Bank recognize the valuable services performed for it by the Executive and wishes to encourage his continued employment and to provide him with additional incentive to achieve corporate objectives; and

WHEREAS, the Bank intends this Plan to be considered an unfunded arrangement, maintained primarily to provide supplemental retirement income for the Executive, and to be considered a non-qualified benefit plan for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

NOW, THEREFORE, effective as of May 18, 2016, except as otherwise provided herein, the Bank and Executive hereby amend and restate the Plan as follows:

ARTICLE I

DEFINITIONS

When used herein, the following words and phrases shall have the meanings below unless the context clearly indicates otherwise:

	
1.1  

	
“Accrued Benefit” means that portion of the Normal Retirement Benefit which is expensed and accrued under generally accepted accounting principles (GAAP).

	
1.2  

	
“Beneficiary” means the person(s) designated by the Executive as the beneficiary to whom the deceased Executive’s benefits are payable. Such beneficiary designation shall be made on the form attached hereto as Exhibit A and filed with the Bank.  If no Beneficiary is so designated, then the beneficiary will be the Executive’s estate.

 

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1.3  

	
“Board” shall mean the Board of Directors of the Bank, unless specifically noted otherwise.

	
1.4  

	
“Cause” shall mean that the Board of Directors of the Bank, by majority vote of their entire membership, determines that the Executive should be discharged because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order, or any material breach of this Plan.  A termination of employment due to Cause under this shall be effected by  notice of termination given to the Executive by the Bank and shall take effect on the later of the effective date of termination specified in such notice or the date on which the notice of termination is deemed given to the Executive.

	
1.5  

	
A “Change in Control” of the Company or the Bank shall mean:

 

	
  

	
(a)

	
A change in the ownership of the Company or the Bank, a change in the effective control of the Company or the Bank or a change in the ownership of a substantial portion of the assets of the Company or the Bank, in each case as provided under Section 409A of the Code and the regulations thereunder.

 

	
  

	
(b)

	
In no event, however, shall a Change in Control be deemed to have occurred as a result of (i) any acquisition of securities or assets of the Company, the Bank, or a subsidiary of either of them, by the Company, the Bank, or any subsidiary of either of them, or by any employee benefit plan maintained by any of them or (ii) the conversion of Lake Shore, MHC to a stock form company and the issuance of additional shares of the Company in connection therewith.

 

	
1.6  

	
“Disability” means, with respect to the Executive, that, in the good faith determination of the Board:

	
(a)  

	
the Executive is unable to fulfill his employment responsibilities hereunder by reason of any medically determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than 12 months;

	
(b)  

	
the Executive is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank.

 

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1.7  

	
“Early Retirement Age” means the Executive Termination of Employment (other than due to death, Disability or a Change in Control) on or after December 31, 2021 (e.g., age 63 and 1 month) and prior to Normal Retirement Age.

	
1.8  

	
“Effective Date” of this Plan was originally June 30, 2012.  The Effective Date of this amended and restated Plan is May 18, 2016.

           1.9 “Good Reason” means the occurrence of any of the following conditions:

	
(i)  

	
any material change in the Executive's duties, functions, and responsibilities with the Bank;

 

	
(ii)  

	
any material reduction of the Executive’s rate of base salary in effect from time to time, or any failure (other than due to reasonable administrative error that is cured promptly upon notice) to pay any portion of the Executive’s compensation as and when due;

 

	
(iii)  

	
any material breach by the Bank of any material term, condition or covenant contained in this Agreement; or

 

	
(iv)  

	
a change in the Executive’s principal place of employment to a place that is not the principal executive office of the Bank, or a relocation of the Bank’s principal executive office to a location that is both more than fifty (50) miles from the Executive’s principal residence and more than fifty (50) miles from the location of the Bank’s principal executive office on the date of this Agreement;

 

provided, however, that prior to any termination of employment for Good Reason, the Executive must first provide written notice to the Bank within ninety (90) days of the initial existence of the condition, describing the existence of such condition, and the Bank shall thereafter have the right to remedy the condition within thirty (30) days of the date the Bank received the written notice from the Executive.  If the Bank remedies the condition within such thirty (30) day cure period, then no Good Reason shall be deemed to exist with respect to such condition.  If the Bank does not remedy the condition within such thirty (30) day cure period, then the Executive may deliver a notice of termination for Good Reason at any time within sixty (60) days following the expiration of such cure period.”

	
1.10  

	
“Normal Retirement Age” means age sixty-seven (67).

	
1.11  

	
“Termination of Employment” means a “Separation from Service” as such term is defined in Section 409A of the Code and the final regulations issued thereunder, provided that whether a Separation from Service has occurred shall be determined based on whether the facts and circumstances indicate that the Bank and the Executive reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to less than fifty percent (50%) of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been providing services to the Bank less than thirty-six (36) months).

 

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ARTICLE II

ESTABLISHMENT OF RABBI TRUST

The Bank may establish a rabbi trust into which the Bank may contribute assets which shall be held therein, subject to the claims of the Bank’s creditors in the event of the Bank’s “insolvency,” as defined in the trust agreement, until the contributed assets are paid to Executive in such manner and at such times as specified in this Plan. It is the intention of the Bank to make contributions to the rabbi trust to provide the Bank with a source of funds to assist it in meeting the liabilities of this Plan.

ARTICLE III

BENEFITS

	
3.1  

	
Normal Retirement Benefit.  Upon the attainment of Normal Retirement Age, without regard to whether there is a Termination of Employment, the Bank shall pay to the Executive the benefit described in this Section 3.1 instead of any other benefit under this Plan.

	
(a)  

	
Amount of Benefit.  The annual benefit under this Section 3.1 is $152,011.

	
(b)  

	
Payment of Benefit.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments payable on the first day of each month, beginning in the month immediately after the Executive’s attainment of Normal Retirement Age.  The Normal Retirement annual benefit shall be paid to the Executive for 15 years (180 monthly payments).

	
3.2  

	
Early Termination Benefit.  For Termination of Employment on or after the Early Retirement Age for reasons other than death, disability, Cause or after a Change in Control and before Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 3.2 instead of any other benefit under this Plan.

	
(a)  

	
Amount of Benefit.  The benefit under this Section 3.2 is the vested portion of the Normal Retirement annual benefit as set forth on Schedule A, which is attached to this Plan.

	
(b)  

	
Payment of Benefit.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments payable on the first day of each month, beginning in the month immediately after the Executive’s Termination of Employment.  The Early Retirement annual benefit shall be paid to the Executive for 15 years (180 monthly payments).

 

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3.3  

	
Termination of Employment Prior to Early Retirement Age.  For Termination of Employment prior to the Early Retirement Age for reasons other than death, disability,  Cause or after a Change in Control, the Bank shall pay to the Executive the benefit described in this Section 3.3 instead of any other benefit under this Plan.

	
(a)  

	
Amount of Benefit.  The benefit under this Section 3.3 is the vested portion of the Normal Retirement annual benefit as set forth on Schedule A, which is attached to this Plan.

	
(b)  

	
Payment of Benefit.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments payable on the first day of each month, beginning in the month immediately after the Executive’s Normal Retirement Age.  This annual benefit shall be paid to the Executive for 15 years (180 monthly payments).

	
3.4  

	
Disability Benefit.  In the event the Executive incurs a Disability before Normal Retirement Age, the Bank shall pay to the Executive the benefit described in this Section 3.4 instead of any other benefit under this Plan.

	
(a)  

	
Amount of Benefit.  The benefit under this Section 3.4 is the greater of the (i) Accrued Benefit, or (ii) the vested portion of the Normal Retirement annual benefit as set forth on Schedule A.

	
(b)  

	
Payment of Benefit.  The Bank shall pay the annual benefit to the Executive in 12 equal monthly installments payable on the first day of each month, beginning in the month immediately after the Executive incurs a Disability.  The annual benefit shall be paid to the Executive for 15 years (180 monthly payments).

	
3.5  

	
Change in Control Benefit.  If the Executive’s employment with the Bank terminates involuntarily within 24 months after a Change in Control, or if the Executive terminates employment voluntarily for Good Reason within 24 months after a Change in Control, the Bank shall pay to the Executive the benefit described in this Section 3.5 instead of any other benefit under this Plan.

	
(a)  

	
Amount of Benefit if the Executive has not attained age 58.  The lump sum benefit under this Section 3.5 is $1,140,082.50 ( $76,005.50 times 15).

 

	
(b)  

	
Amount of Benefit if the Executive is age 58 or older.  The lump sum benefit under this Section 3.5 is $2,280,165 ($152,011 times 15).

	
(c)  

	
Payment of Benefit.  The Bank shall pay the benefit to the Executive in a single lump sum within three days after the Executive’s Termination of Employment.

 

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(d)  

	
Change in Control Payout of Normal Retirement Benefit or Early Retirement Benefit.  If a Change in Control occurs at any time during the payment period and if at the time of that Change in Control the Executive is receiving a benefit provided by this Plan, or entitled to a benefit pursuant to Section 3.3 of this Plan, the Bank shall pay the full amount of the remaining payments (or the full amount of the payments the Executive is entitled to pursuant to Section 3.3 of this Plan) to the Executive in a single lump sum within three days after the Change in Control.

ARTICLE IV

DEATH BENEFITS

	
4.1  

	
Death During Active Service.  If the Executive dies while in active service to the Bank and before a Termination of Employment, the Bank shall pay to the Executive’s Beneficiary a lump sum cash payment equal to the Accrued Benefit.  The lump sum cash payment will be made no later than sixty (60) days following the date of death.

	
4.2  

	
Death after Termination of Employment.  If the Executive dies after Termination of Employment and while receiving payments (or entitled to receive payments) under this Plan, the Bank shall pay to the Executive’s Beneficiary a lump sum cash payment equal to the remaining payments to be made.  The lump sum cash payment will be made no later than sixty (60) days following the date of death.

ARTICLE V

BENEFICIARY DESIGNATION

	
5.1  

	
Beneficiary Designations.  The Executive shall have the right to designate at any time a Beneficiary to receive any benefits payable under this Plan upon the death of the Executive.  The Beneficiary designated under this Plan may be the same as or different from the beneficiary designation under any other benefit plan of the Bank in which the Executive participates.

	
5.2  

	
Beneficiary Designation:  Change.  The Executive shall designate a Beneficiary by completing and signing the a beneficiary designation form and delivering it to the Bank or its designated agent.  The Executive’s Beneficiary designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse as Beneficiary and the marriage is subsequently dissolved.  The Executive shall have the right to change a Beneficiary by completing, signing, and otherwise complying with the terms of the beneficiary designation form and the Bank’s rules and procedures, as in effect from time to time.  Upon the acceptance by the Bank of a new beneficiary designation form, all Beneficiary designations previously filed shall be cancelled.  The Bank shall be entitled to rely on the last beneficiary form filed by the Executive and accepted by the Bank before the Executive’s death.

	
5.3  

	
Acknowledgment.  No designation or change in designation of a Beneficiary shall be effective until received, accepted, and acknowledged in writing by the Bank or its designated agent.

 

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5.4  

	
No Beneficiary Designation.  If the Executive dies without a valid beneficiary designation, or if all designated Beneficiaries predecease the Executive, then the benefits shall be paid to the Executive’s estate.

	
5.5  

	
Facility of Payment.  If a benefit is payable to a minor, to a person declared incapacitated, or to a person incapable of handling the disposition of his or her property, the Bank may pay such benefit to the guardian, legal representative, or person having the care or custody of the minor, incapacitated person, or incapable person.  The Bank may require proof of incapacity, minority, or guardianship as it may deem appropriate before distribution of the benefit.  Distribution shall completely discharge the Bank form all liability for the benefit.

ARTICLE VI

GENERAL LIMITATIONS

	
6.1

	
Termination for Cause.  Notwithstanding any provision of this Plan to the contrary, the Bank shall not pay any benefit under this Plan and this Plan shall terminate if Termination of Employment is a result of Termination of Employment for Cause.

	
6.2

	
12 U.S.C. § 1828(k).  Notwithstanding anything herein contained to the contrary, any payments made to the Executive by the Bank, whether pursuant to this Plan or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (“FDI Act”), 12 U.S.C. § 1828(k), and any regulations promulgated thereunder, including FDIC regulation 12 C.F.R. Part 359, Golden Parachute and Indemnification Payments.

	
6.3

	
Restriction on Commencement of Distributions.  Notwithstanding any provision of this Plan to the contrary, if the Executive is considered a Specified Employee (within the meaning of Treasury Regulation 1.409A-1(i)), the provisions of this Section 6.3 shall govern the timing of all distributions under this Plan.  In the event the Executive is a Specified Employee, and to the extent necessary to avoid penalties under Section 409A of the Code, payments to the Executive shall not commerce until the lapse of six months after the date of the Termination of Employment.  Any distribution which would otherwise be paid to the Executive during such period shall be accumulated and paid to the Executive in a lump sum on the first day of the month following the lapse of six months after the date of the Termination of Employment.  All subsequent distributions shall be paid in the manner specified.

	
6.4

	
Covenant Not To Compete.  The Executive hereby covenants and agrees that, in the event he is entitled to any benefits under this Plan, for a period of three (3) years following the date of his Termination of Employment, he shall not, without the written consent of the Bank, become an officer, employee, consultant, director or trustee of any savings bank, savings and loan association, savings and loan holding company, bank or bank holding company, credit union or any other entity engaged in the business of accepting deposits or making loans or any direct or indirect subsidiary or affiliate of any such entity (collectively a “Financial Institution”), that entails working within 35 miles of an area in which the Company or the Bank maintains an office; provided, however, that this section shall not apply if the Executive’s Termination of Employment occurs on or after a Change in Control.

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ARTICLE VII

EXECUTIVE’S RIGHT TO ASSETS:

ALIENABILITY AND ASSIGNMENT PROHIBITION

At no time shall Executive be deemed to have any lien, right, title or interest in or to any specific investment or asset of the Bank. Neither Executive nor any Beneficiary under this Plan shall have any power or right to transfer, assign, anticipate, hypothecate, mortgage, commute, modify or otherwise encumber in advance any of the benefits payable hereunder, nor shall any of said benefits be subject to seizure for the payment of any debts, judgments, alimony or separate maintenance owed by Executive or his Beneficiary, nor be transferable by operation of law in the event of bankruptcy, insolvency or otherwise.

ARTICLE VIII

ERISA PROVISIONS

	
8.1  

	
Administrator.  The Bank shall be the administrator of this Plan. As administrator, the Bank shall be responsible for the management, control and administration of the Plan as established herein. The Bank may delegate to others certain aspects of the management and operational responsibilities of the Plan.

	
8.2  

	
Claims Procedure and Arbitration.  In the event that benefits under this Plan are not paid to  Executive (or to his Beneficiary in the case of Executive’s death) and such claimants feel they are entitled to receive such benefits, then a written claim must be made to the administrator within sixty (60) days from the date payments are refused. The administrator shall review the written claim and, if the claim is denied, in whole or in part, it shall provide in writing, within thirty (30) days of receipt of such claim, its specific reasons for such denial, reference to the provisions of this Plan, and any additional material or information necessary for such claimants to perfect the claim. Such writing by the administrator shall further indicate the additional steps which must be undertaken by claimants if an additional review of the claim denial is desired.

If claimants desire a second review, they shall notify the administrator in writing within thirty (30) days of the first claim denial. Claimants may review this Plan or any documents relating thereto and submit any issues and comments, in writing, they may feel appropriate. In its sole discretion, the administrator shall then review the second claim and provide a written decision within thirty (30) days of receipt of such claim. This decision shall state the specific reasons for the decision and shall include reference to specific provisions of this Plan upon which the decision is based.

 

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No claimant shall institute any action or proceeding in any state or federal court of law or equity or before any administrative tribunal or arbitrator for a claim for benefits under the Plan until the claimant has first exhausted the provisions set forth in this Section.

 

ARTICLE IX

MISCELLANEOUS

	
9.1  

	
No Effect on Employment Rights.  Nothing contained herein will confer upon Executive the right to be retained in the service of the Bank nor limit the right of the Bank to discharge or otherwise deal with Executive without regard to the existence of the Plan.

	
9.2  

	
State Law.  The Plan is established under, and will be construed according to, the laws of the State of New York, to the extent such laws are not preempted by ERISA and valid regulations published thereunder.

	
9.3

	
Severability and Interpretation of Provisions.  In the event that any of the provisions of this Plan or portion hereof are held to be inoperative or invalid by any court of competent jurisdiction, or in the event that any provision is found to violate Code Section 409A and would subject Executive to additional taxes and interest on the amounts deferred hereunder, or in the event that any legislation adopted by any governmental body having jurisdiction over the Bank would be retroactively applied to invalidate this Plan or any provision hereof or cause the benefits hereunder to be taxable, then: (1) insofar as is reasonable, effect will be given to the intent manifested in the provisions held invalid or inoperative, and (2) the validity and enforceability of the remaining provisions will not be affected thereby.  In the event that the intent of any provision shall need to be construed in a manner to avoid taxability, such construction shall be made by the administrator in a manner that would manifest to the maximum extent possible the original meaning of such provisions.

	
9.4

	
Effect on Other Corporate Benefit Plans.  Nothing contained in this Plan shall affect the right of Executive to participate in or be covered by any qualified or nonqualified pension, profit sharing, group, bonus or other supplemental compensation or fringe benefit Plan constituting a part of the Bank’s existing or future compensation structure.

	
9.5

	
Inurement.  This Plan shall be binding upon and shall inure to the benefit of the Bank, its successors and assigns, and Executive, his successors, heirs, executors, administrators, and Beneficiaries.

	
9.6  

	
Successors to the Company and/or the Bank.  The Company or the Bank, as applicable, will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company or the Bank to assume expressly and agree to perform the duties and obligations under this Plan in the same manner and to the same extent as the Company or the Bank would be required to perform it if no such succession had taken place.

	
9.7

	
Legal Fees.  In the event that Executive retains legal counsel to enforce any of the terms of the Plan, the Bank will pay his legal fees and related expenses reasonably incurred by him, but only if the Executive prevails in an action seeking legal and/or equitable relief against the Bank.

 

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9.8.

	
Withholding.  To the extent required by the law in effect at the time payment under the Plan is made, the Bank shall withhold from such payment any taxes or other amounts required by law to be withheld.

 

ARTICLE X

AMENDMENT/TERMINATION

	
10.1

	
Amendment of Plan.  Subject to Section 10.2 of this Plan, (a) this Plan may be amended solely by a written Plan signed by the Bank and by the Executive, and (b) except for termination occurring under Section 10.2, this Plan may be terminated solely by a written Plan signed by the Bank and by the Executive.  Except as provided in Section 10.2, the termination of this Plan shall not cause a distribution of benefits under this Plan.  Notwithstanding anything to the contrary herein, the Plan may be amended to the extent necessary to comply with existing tax laws or changes to existing tax laws.

	
10.2  

	
       Termination of Plan.

Notwithstanding anything to the contrary in Section 10.1 of this Plan, the Bank may irrevocably terminate this Plan without the Executive’s consent in the following circumstances:

 

	
(a)

	
Within thirty (30) days before a Change in Control, provided that all distributions are made no later than twelve (12) months following such irrevocable termination of this Plan and further provided that all of the arrangements sponsored by the Bank that would be aggregated with this Plan under Treasury Regulation §1.409A-1(c)(2) are terminated so the Executive and all Executives under the other aggregated arrangements are required to receive all amounts of compensation deferred under the terminated arrangements within twelve (12) months of the date the Bank irrevocably takes all necessary action to terminate such arrangements;

	  	  
	
(b)

	
With twelve (12) months of a dissolution of the Bank taxed under Section 331 of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts deferred under this Plan are included in the Executive's gross income in the latest of (i) the calendar year in which this Plan terminates; (ii) the calendar year in which the amount is no longer subject to a substantial risk of forfeiture; or (iii) the first calendar year in which the distribution is administratively practicable; or

	  	  
	
(c)

	
Upon the Bank’s termination of this and all other arrangements that would be aggregated with this Plan pursuant to Treasury Regulation §1.409A-1(c) if the Executive participated in such arrangements (“Similar Arrangements”), provided that (i) the termination and liquidation does not occur proximate to a downturn in the financial health of the Bank, (ii) no payments are made within twelve (12) months of the termination of the arrangements other than payments that would be payable under the terms of the arrangements if the termination had not occurred, (iii) all termination distributions are made no later than twenty-four (24) months following such termination, and (iv) the Bank does not adopt any new arrangement that would be a Similar Arrangement for a minimum of three (3) years following the date the Bank takes all necessary action to irrevocably terminate and liquidate the Plan;

 

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the Bank may distribute the vested benefit under the Plan, determined as of the date of the termination of this Plan to the Executive in a lump sum subject to the above terms.

ARTICLE XI

EXECUTION

	
11.1

	
This Plan sets forth the entire understanding of the Bank and the Executive with respect to the transactions contemplated hereby, and any previous Plans or understandings between them regarding the subject matter hereof are merged into and superseded by this Plan.

	
11.2

	
This Plan shall be executed in duplicate, each copy of which, when so executive and delivered, shall be an original, but both copies shall together constitute one and the same instrument.

 

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IN WITNESS WHEREOF, the Bank has caused this Plan to be executed as of the day and year first written above.

	
ATTEST:

	
LAKE SHORE SAVINGS BANK

	  	  
	  	
By:

	
Secretary

	
Title:

	  	  
	
ATTEST:

	
EXECUTIVE

	  	  
	  	
By:

	
Secretary

	
Title:

  

  

  

SCHEDULE A

EARLY RETIREMENT BENEFIT

	
Year

	
Vesting % - Beginning of Year

	
Vesting % - End of Year

	
2010 – 2014

	
0%

	
0%

	
2015

	
0%

	
20%

	
2016

	
20%

	
30%

	
2017

	
30%

	
40%

	
2018

	
40%

	
50%

	
2019

	
50%

	
60%

	
2020

	
60%

	
70%

	
2021

	
70%

	
80%

	
2022

	
80%

	
85%

	
2023

	
85%

	
90%

	
2024

	
90%

	
95%

	
2025

	
95%

	
100%*

 

 

For purposes of clarification of this Schedule A, the vested benefit will be determined only by using the applicable beginning of year or end of year vesting percentage.  For example, if a Termination of Employment occurs on June 30, 2024, the vested percentage will be 90% (and not 92.5% to reflect the six months worked in 2024).

Example:                      If a Termination of Employment occurs on June 30, 2022, for reasons other than death, disability, Cause or after a Change in Control, the annual Early Retirement Benefit will be $121,608.80 ($152,011 times 80%), which will be payable in monthly installments for 180 months.

*The Executive will be 100% vested upon the attainment of age sixty-seven (67).SEC Exhibit

Exhibit 10.1

May 9, 2016                                            

                    
Stacia Andersen
517 Ferndale Rd N
Wayzata, MN  55391

Dear Stacia:                                                                                                   

We are thrilled that you are considering joining Abercrombie & Fitch (A&F), and we are pleased to extend the following offer of employment:

	
			
	Position
	 
	Brand President, A&F / Kids

	Start Date
	 
	To be determined

	Base Salary
	 
	$750,000 annually; paid bi-weekly

Annual salary adjustments based on:

(1) Your performance
(2) Economic factors (i.e. business conditions, inflation, job market, etc.)

Any increase for your first review period may be pro-rated depending on your start date.

	Bonus Program
	 
	You will be eligible to participate in A&F’s Annual Leadership Team Incentive Compensation (IC) Program at a target payout level of 100% of your annual base earnings and a maximum payout of 200% of your annual base earnings.  At the base salary quoted in this offer, your target annual payout is $750,000, and your maximum annual payout is $1,500,000.

IC for you and other Leadership Team members will be based on annual financial and strategic results, and if earned will be paid in March following conclusion of the prior Fiscal Year, subject to participants’ being actively employed on the payout date.

Ÿ For 2016, your IC, if earned, will be pro-rated based on your start date.

Ÿ For 2016, the financial-results component of your IC determination will be based on overall Company financial results; in subsequent years, the financial-results component of your IC determination will be based on your Brand results.  (Please note that the Annual Leadership Team IC Program is subject to change each year in the discretion of the Compensation Committee of the A&F Board of Directors (the “Compensation Committee”)).

	
			
	Inducement Equity Grant:  Performance Share Awards (PSAs) and Restricted Stock Units (RSUs)
	 
	Subject to approval of the Compensation Committee or its designee and subject to the terms and conditions of the grant, you will receive an inducement equity grant with an approximate total value of $1,500,000. 50% of the grant value will be in the form of A&F Performance Share Awards (PSAs), and 50% will be in the form of A&F Restricted Stock Units (RSUs). The actual number of PSAs and RSUs granted will be based on the 20-day average share closing price up to and including the date of the grant, which will occur (subject to Compensation Committee approval) at the next regularly scheduled meeting of the Compensation Committee following your Start Date or as soon as practicable thereafter. 

Upon vesting, one PSA converts to one share of A&F stock.  PSAs vest after a three-year performance period to the extent that specified performance targets are achieved.  

Upon vesting, one RSU converts to one share of A&F stock.  Subject to continued employment with A&F, these RSUs will vest on each anniversary of the grant date in accordance with the following 4-year vesting schedule:
Year 1      Year 2       Year 3    Year 4
  25%        25%          25%          25%

	Supplemental Inducement Equity Grant:  Restricted Stock Units (RSUs)
	 
	Subject to approval of the Compensation Committee or its designee and subject to the terms and conditions of the grant, you will receive a supplemental inducement equity grant with an approximate total value of $750,000, in the form of A&F Restricted Stock Units (RSUs). The actual number of RSUs granted will be based on the 20-day average share closing price up to and including the date of the grant, which will occur (subject to Compensation Committee approval) at the next regularly scheduled meeting of the Compensation Committee following your Start Date or as soon as practicable thereafter.  

Upon vesting, one RSU converts to one share of A&F stock.  Subject to continued employment with A&F, these RSUs will vest on the second anniversary of the grant date.  

	2017 Annual Equity Grant
	 
	Subject to satisfactory performance and continued employment, Management will recommend to the Compensation Committee that an equity grant equal in value to approximately $1,500,000 be awarded to you as part of A&F’s Fiscal Year 2017 annual equity grant process. The vesting schedule, types of awards, and other terms and conditions will be consistent with grants made during the 2017 annual grant process to other Leadership Team members.  

	Executive Severance Agreement (ESA)
	 
	In consideration of (and as a condition of) this offer of employment and your continued employment following hire, you agree to enter into an Executive Severance Agreement (ESA) in the form attached as Exhibit B to this offer letter.  The ESA includes severance protection and other benefits for you, as well as protections for the company such as non-competition and non-solicitation provisions.

	Relocation/Commuting
	 
	A&F will provide you with the following relocation and commuting-assistance benefits:

Ÿ A&F will provide you with a one-time bonus payment of $100,000 to assist with relocation and commuting costs during your transition to the Central Ohio area (the “Relocation and Commuting Bonus”). This Relocation and Commuting Bonus (less applicable taxes and other withholdings) will be made along with your first regular paycheck. In order to obtain this payment, you will be required to sign an agreement (in the form attached as Exhibit A) to repay the bonus in full if you resign or are terminated for gross misconduct within twenty-four (24) months of your start date.

Ÿ You will be provided with temporary housing for up to three months.

Ÿ You will be eligible for reimbursement of relocation expenses as follows:

Ÿ Reasonable and customary movement of household goods and of up to two automobiles.

Ÿ Reasonable and customary closing costs toward the sale of your current residence (up to $20,000)

Ÿ Reasonable and customary closing costs toward the purchase of a new primary residence in Central Ohio (up to $20,000)

Ÿ Reimbursement of relocation expenses is subject to the following terms and conditions:

Ÿ All relocation benefits must be used within one year of your start date.

Ÿ Relocation expenses will not be “grossed up” to offset Federal and State taxes.

Ÿ If you wish to have A&F pay your relocation expenses, you must sign an agreement (in the form attached as Exhibit A) to repay those expenses in full if you resign or are terminated for gross misconduct within twenty-four (24) months of your start date.

	
			
	Benefits
	 
	You will be eligible to participate in various A&F benefit programs as set forth in this letter and other relevant documents.  All benefit programs are subject to change in accordance with A&F’s policies and procedures.

	A&F Qualified Savings
	 
	As of the first of the following month of your start date, you will be eligible to participate in the Abercrombie & Fitch Co. Savings and Retirement Plan.  As a participant in this plan, you will be eligible to defer up to 50% of your base salary and bonus payouts, or up to the IRS maximum annual deferral limit ($18,000 for 2016), whichever is less.  After one year of employment, the first 5% of your base salary and bonus payouts that you defer into this plan will be matched by A&F at 100%. The maximum level of pensionable compensation allowed by the IRS is $265,000 for 2016. Company matching contributions and earnings are always 100% vested.

	A&F Non-Qualified Savings Plan
	 
	After 30 days of employment, you will be eligible to participate in the Abercrombie & Fitch Co. Non-Qualified Savings Plan. This plan allows you to defer up to 75% of your base salary each year, and up to 75% of your Bonus payouts.  The company will match the first 3% that you defer on a dollar-for-dollar basis.  Company contributions and earnings vest 100% after 5 years of continuous service on the anniversary date of employment.

	
					
	Healthcare Coverage
	 
	After one month of employment, you will be eligible to participate in our Healthcare Benefit plans. For 2016, the associate contribution required for these benefits is as follows: 

	 
	 
	                      
	Medical/Dental
	Vision

	 
	 
	Single Coverage
	$ 39.50 bi-weekly
	$ 2.08 bi-weekly

	 
	 
	Single (+) Spouse
	$ 90.00 bi-weekly
	$ 3.68 bi-weekly

	 
	 
	Single (+) Child(ren)
	$ 74.00 bi-weekly
	$ 4.34 bi-weekly

	 
	 
	Family Coverage     
	$ 125.00 bi-weekly
	$ 6.75 bi-weekly

	
			
	Life & Disability Insurance
	 
	After one month of employment, you will automatically be enrolled in A&F’s Life & Disability Insurance plans.

	Flexible Spending Account
(FSA)
	 
	After one month of employment, you will be eligible to participate in A&F’s Flexible Spending Account (FSA) plan.  FSAs allow you to save money by paying for certain healthcare and childcare expenses with pre-tax dollars via automatic payroll deductions.

	Associate Assistance
Program (AAP)
	 
	After one month of employment, you will automatically be enrolled in A&F’s Associate Assistance Program (AAP).  The AAP gives you or any covered dependents access to free, confidential psychological, financial or legal counseling through our AAP provider.  Up to 8 free visits, per specific issue, are available through the AAP.

	A&F Gym
	 
	Effective upon hire, you will be eligible to join The A&F Gym, our state of the art 8,000 square foot on-site fitness facility.  The cost of membership can be paid via automatic payroll deduction after you enroll.

	Merchandise Discount
	 
	You will receive a discount of 40% on qualifying purchases at all Abercrombie & Fitch and abercrombie stores.  You will also receive a discount of 30% on qualifying purchases at all Hollister Co. stores.  (Please note that this benefit is subject to the terms of the Associate Discount Policy as set forth in our Associate Handbook.)

	Paid Time Off (PTO) /Holidays
	 
	You will be eligible for 33 paid time off (PTO) days per fiscal year.  PTO will be pro-rated during the first year based on your start date.  Unused PTO days do not carry over into subsequent fiscal years.  A&F also grants 8 paid holidays to all home office associates annually.

	
			
	Additional A&F Perks
	 
	In addition to benefits listed above, you will be eligible for the following A&F Perks:
Ÿ Volunteer day
Ÿ Summer Hours
Ÿ On-Site Café
Ÿ Varsity Field and Equipment
Ÿ Stock Purchase Plan

Please see the Home Office Associate Handbook or your Associate Relations Representative for more information on these programs.

	Background/Reference Inquiry and Work Authorization
	 
	This offer of employment is contingent on successful completion of background and reference checks, and on successful demonstration of your authorization to work in the United States. Please complete the enclosed Fair Credit Reporting Act Disclosure and Authorization Form (attached as Exhibit C) and return it along with your signed copy of this employment offer letter.

	Approval of the Board of Directors
	 
	This offer of employment is contingent on approval by the Board of Directors of A&F and the Board’s appointment of you to this position.

This offer, if accepted, is for employment with the Company that is at-will, and nothing in this offer letter is to be construed as altering that at-will status or promising employment for a definite term.  

Stacia, we look forward to working with you and are convinced that you will be an outstanding addition to the A&F team.  To indicate your acceptance of this offer, please sign below and return this letter to Human Resources.

Sincerely,                

	
	
	/s/ John Gabrielli

	John Gabrielli
Senior Vice President, Human Resources

I represent that I am not subject to any restriction, covenant or limitation with any prior employer which could prevent me from working for Abercrombie & Fitch in the capacity described in this offer letter.  I further represent that to the extent I am subject to an agreement that allows me to work for Abercrombie & Fitch, but that forbids me to solicit employees of another company or to share another company's confidential information, I agree that I will not breach any such agreement while employed by Abercrombie & Fitch.  I accept Abercrombie & Fitch's offer of employment as outlined in this letter, and I am returning a signed copy to Human Resources.

	
			
	/s/ Stacia Andersen
	 
	May 11, 2016

	Stacia Andersen
	 
	Date

EXHIBIT A

AGREEMENT TO REPAY RELOCATION EXPENSES AND RELOCATION AND COMMUTING BONUS, 
AND AUTHORIZATION TO WITHHOLD WAGES

I, Stacia Andersen, hereby authorize and request that Abercrombie & Fitch (“The Company”) incur expenses on my behalf to relocate my personal possessions, goods and car(s) (all “relocation expenses”), and I also acknowledge my intent to receive a relocation and commuting bonus of $100,000 (the “Relocation and Commuting  Bonus”).  I authorize the Company to choose the relocation method and service provider to be used in the relocation of my personal possessions and goods.  I understand and agree that I will repay the Company in full for the Relocation and Commuting Bonus and for all relocation expenses incurred by the Company if I resign my employment with the Company within 24 MONTHS of my start date, or if I am terminated for committing a major violation of Company policy, for gross neglect of duties, or for willful misconduct within 24 MONTHS of my start date.  For the purposes of this Agreement, my start date shall be my date of hire, as listed in the Company’s associate database.  

I understand that at any time during my employment with the Company, my job title or responsibilities may be changed, and that any such change to my job title or responsibilities does not alter or affect my obligation to repay the Company for the Relocation and Commuting Bonus and for all relocation expenses incurred by the Company as required by this Agreement. 

In the event that I resign my employment with the Company within 24 MONTHS from my start date, or I am terminated for committing a major violation of Company policy, for gross neglect of duties, or for willful misconduct within 24 MONTHS of my start date, I authorize and agree that the Relocation and Commuting Bonus and all relocation expenses paid by the Company on my behalf shall become immediately due and payable to the Company or a third party as designated by the Company.  I further authorize the Company to deduct from any wages, salary or other benefits or monies otherwise owed to me any such sum necessary to repay the Relocation and Commuting Bonus and any relocation expenses incurred by the Company.  I understand and agree that I will be responsible and obligated to repay to the Company, within thirty (30) days, for the Relocation and Commuting Bonus and any remaining relocation expenses that are not repaid through the deductions provided for in this Agreement.  Regardless of the reason, should my employment with the Company never commence, any relocation expenses incurred on my behalf by the Company will be immediately due and payable by me.

I understand that this Agreement will be governed and interpreted by the laws of Ohio.  I hereby consent to jurisdiction over this Agreement in the Court of Common Pleas, Franklin County, Ohio or any other jurisdiction in which the Company has the right to bring suit and I expressly waive any right to obtain jurisdiction over this Agreement elsewhere.

	
			
	Date: May 11, 2016
	 
	Stacia Andersen

	 
	 
	Name (Printed)

	 
	 
	 

	 
	 
	 

	 
	 
	/s/ Stacia Andersen

	 
	 
	Signature

	
			
	Approved by:
	 
	/s/ John Gabrielli

	 
	 
	John Gabrielli

	 
	 
	Senior Vice President, Human Resources

	 
	 
	Abercrombie & Fitch

EXHIBIT B

AGREEMENT

This AGREEMENT (this "Agreement"), is entered into between Abercrombie & Fitch Management Co., a Delaware corporation (the "Company"), and Stacia Andersen (the "Executive") as of the execution date by the Company below (the "Effective Date").

WHEREAS, the Company and the Executive desire to enter into this Agreement to set forth the terms under which the Executive may be entitled to severance benefits from the Company during the Term of this Agreement. 

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the Company and the Executive hereby agree as follows:

1.    Term of Agreement; Termination of Employment

(a) Term. The term of this Agreement shall be from the Effective Date and for a period of two years thereafter (the “Original Term”); provided, that, if a Change in Control (as defined below) occurs during the Original Term, the term of this Agreement shall extend until the later of the Original Term or the expiration of the one-year period following such Change in Control (together with the Original Term, the “Term”). 

(b) At-Will Nature of Employment. The Executive acknowledges and agrees that the Executive's employment with the Company is and shall remain "at-will" and the Executive's employment with the Company may be terminated at any time and for any reason (or no reason) by the Company, with or without notice, or the Executive, subject to the terms of this Agreement. During the period of the Executive's employment with the Company, the Executive shall perform such duties and fulfill such responsibilities as reasonably requested by the Company from time to time commensurate with the Executive's position with the Company.

(c) Termination of Employment by the Company. During the Term, the Company may terminate the Executive's employment at any time with or without Cause (as defined below) pursuant to the Notice of Termination provision below. 

(d) Termination of Employment by the Executive. During the Term, the Executive may terminate employment with the Company with or without Good Reason (as defined below) by delivering to the Company, not less than thirty (30) days prior to the Termination Date, a written notice of termination; provided, that, if such termination of employment is by the Executive with Good Reason, such notice shall state in reasonable detail the facts and circumstances that constitute Good Reason. This provision does not change the at-will nature of Executive's employment, and the Company may end Executive's employment, pursuant to Executive's notice, prior to the expiration of the thirty (30) days' notice.  

 (e) Notice of Termination. Any termination of the Executive's employment by the Company or by the Executive shall be communicated by a written Notice of Termination addressed to the Executive or the Company, as applicable. A “Notice of Termination” shall mean a notice stating that the Executive's employment with the Company has been or will be terminated and the specific provisions of this Section 1 under which such termination is being effected.

(f)  Termination Date.  Subject to Section 4(a) hereof, “Termination Date” as used in this Agreement shall mean in the case of the Executive's death or Disability (as defined below), the date of death or Disability, or in all other cases of termination by the Company or the Executive, the date specified in writing by the Company or the Executive as the Termination Date in accordance with Section 1(e).

2.    Compensation Upon Certain Terminations by the Company.

(a) Termination Without Cause, or for Good Reason. If the Executive's employment is terminated during the Term (i) by the Company without Cause (other than as a result of the Executive’s death or Disability), or (ii) by the Executive for Good Reason, in each case, other than during the one-year period following a Change of Control, the Company shall (a) pay to the Executive any portion of Executive’s accrued but unpaid base salary earned through the Termination Date; (b) reimburse the Executive for any and all amounts advanced in connection with Executive’s employment with the Company for reasonable and necessary expenses incurred by Executive through the Termination Date in accordance with the Company’s policies and procedures on reimbursement of expenses; (c) pay to the Executive any earned vacation pay not theretofore used or paid in accordance with the Company’s policy for payment of earned and unused vacation time; and (d) provide to the Executive all other accrued but unpaid payments and benefits to which Executive may be entitled under the terms of any applicable compensation arrangement or benefit plan or 

program of the Company (excluding any severance plan or policy of the Company) (collectively, the "Accrued Compensation").  In addition, provided that the Executive executes a release of claims in a form acceptable to the Company (a “Release”), returns such Release to the Company by no later than the applicable deadline set forth in such Release (the “Release Deadline”) and does not revoke such Release prior to the expiration of the applicable revocation period (the date on which such Release becomes effective, the “Release Effective Date”), then subject to the further provisions of Sections 3, 4, and 6 below, the Company shall have the following obligations with respect to the Executive (or the Executive’s estate, if applicable):

		
	(1)
	The Company will continue to pay the Executive’s Base Salary (as defined below) during the period beginning on the Executive’s Termination Date and continuing for eighteen months thereafter (“Salary Continuation”).  This Salary Continuation payment shall be paid in bi-weekly installments, consistent with the Company’s payroll practices.  Subject to Section 4(c) hereof, the first such payment shall be made on the first payroll date following the Release Effective Date, such payment to include all payments that would have otherwise been payable between the Termination Date and the date of such payment.

		
	(2)
	The Company will pay to the Executive, at such time as those executives who are actively employed with the Company would receive payments under the Company’s short-term cash bonus plan in which the Executive was eligible to participate immediately prior to the Termination Date (but in no event later than the 15th day of the third month of the fiscal year following the fiscal year in which the Termination Date occurred), a pro-rated amount of the Executive’s bonus under such plan, based on the  actual performance during the applicable period, determined in accordance with the terms of the Plan and subject to the approval of the Compensation and Organization Committee of the Board of Directors. The pro-rated amount shall be calculated using a fraction where the numerator is the number of days from the beginning of the applicable bonus period through the Termination Date and the denominator is the total number of days in the applicable bonus period.  

		
	(3)
	Subject to the Executive's timely election of continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), during the period in which Salary Continuation is in effect, the Company shall reimburse the Executive for 100% of the monthly premium costs of COBRA coverage, less applicable withholding taxes on such reimbursement; provided, however, that the Company's obligation to provide such benefits shall cease upon the earlier of (i) the Executive's becoming eligible for such benefits as the result of employment with another employer and (ii) the expiration of the Executive's right to continue such medical and dental benefits under applicable law (such as COBRA); provided, further, that notwithstanding the foregoing, the Company shall not be obligated to provide the continuation coverage contemplated by this Section 2(a)(3) if it would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable).

(b) Termination for Cause, without Good Reason, or Death. If the Executive's employment is terminated during the Term by the Company for Cause, by the Executive without Good Reason or by reason of the Executive's death, the Company shall provide the Executive (or the Executive’s estate, if applicable) with only the Accrued Compensation.

(c) Termination due to Disability. If the Executive's employment is terminated by the Company by reason of the Executive's Disability, the Company shall have the following obligations with respect to the Executive (or the Executive’s estate, if applicable):  (i) the Company shall provide the Executive with the Accrued Compensation; and (ii) the Executive shall be entitled to receive any disability benefits available under the Company's Long-Term Disability Plan (if any). For purposes of this Agreement, “Disability” means a physical or mental infirmity which impairs the Executive's ability to substantially perform the Executive's duties with the Company or its subsidiaries for a period of at least six (6) months in any twelve (12)-month calendar period as determined in accordance with the Company's long-term disability plan or, in the absence of such plan, as determined by the Company's Board of Directors (the “Board”).

(d) Change of Control.  If the Executive’s employment is terminated during the Term (i) by the Company other than for Cause, or due to the Executive’s death or Disability or (ii) by the Executive for Good Reason, in each case, during the one-year period following a Change of Control, then, subject to the Executive executing a Release, returning such Release to the Company by no later than the Release Deadline, and not revoking such Release prior to the expiration of the applicable revocation period, and subject to the further provisions of Sections 2(j), 3, 4 and 6 below, the Company shall have the following obligations with respect to the Executive (or the Executive’s estate, if applicable):

		
	(1)
	The Company will pay Executive, in one lump sum payment, an amount equal to  eighteen months of the Executive's Base Salary in effect on the Termination Date, payable in a lump sum on the sixtieth (60th) day following the Termination Date 

		
	(2)
	The Company will pay Executive a lump sum payment, less taxes and withholdings, of an amount equal to the Executive's Target Bonus, payable in a lump sum on the sixtieth (60th) day following the Termination Date. 

		
	(3)
	Subject to the Executive's timely election of continuation coverage under COBRA for a period of  eighteen months following the Termination Date, the Company shall reimburse the Executive for 100% of the monthly premium costs of COBRA coverage, less applicable withholding taxes on such reimbursement; provided, however, that the Company's obligation to provide such benefits shall cease upon the earlier of (i) the Executive's becoming eligible for such benefits as the result of employment with another employer and (ii) the expiration of the Executive's right to continue such medical and dental benefits under applicable law (such as COBRA); provided, further, that notwithstanding the foregoing, the Company shall not be obligated to provide the continuation coverage contemplated by this Section 2(d)(3) if it would result in the imposition of excise taxes on the Company for failure to comply with the nondiscrimination requirements of the Patient Protection and Affordable Care Act of 2010, as amended, and the Health Care and Education Reconciliation Act of 2010, as amended (to the extent applicable).

(e) Definitions.

		
	(1)
	Base Salary. For the purpose of this Agreement, “Base Salary” shall mean the Executive’s annual rate of base salary as in effect on the applicable date; provided, however, that if the Executive’s employment with the Company is being terminated by the Executive for Good Reason as a result of a reduction in the Executive’s Base Salary, then “Base Salary” shall, for purposes of the definition of “Good Reason” and Section 3 of this Agreement, constitute the Executive’s Base Salary as in effect prior to such reduction.

		
	(2)
	Cause. For purposes of this Agreement, "Cause" shall mean: (i) the Executive’s conviction of, or entrance of a plea of guilty or nolo contendere to, a felony under federal or state law; (ii) fraudulent conduct by the Executive in connection with the business affairs of the Company; (iii) the Executive’s willful refusal to materially perform the Executive’s duties hereunder; (iv) the Executive’s willful misconduct which has, or would have if generally known, a materially adverse effect on the business or reputation of the company; or (v) the Executive’s material breach of a covenant, representation, warranty or obligation of the Executive to the Company.  With respect to the circumstances in subsections (iii), (iv), and (v), above, such circumstances will only constitute “Cause” once the Company has provided the Executive written notice and the Executive has failed to cure such issue within 30 days.  No act or failure to act on the Executive’s part shall be considered “willful” unless done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive’s action or omission was in the best interest of the Company.

		
	(3)
	Change of Control. For purposes of this Agreement, "Change of Control" shall have the same meaning as such term is defined in the Amended and Restated A&F Long-Term Incentive Plan as in effect on the date of this Agreement; provided, however, that for purposes of this Agreement, such definition shall only apply to the extent that the event that constitutes such a “Change of Control” also constitutes a “change in ownership or control” as such term is defined in Section 409A of the United States Internal Revenue Code of 1986, as amended (the “Code”), and the regulations and guidance issued thereunder (“Section 409A of the Code”). 

		
	(4)
	Good Reason. For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s written consent: (i) a reduction in the Executive’s Base Salary or Target Bonus as in effect from time to time; (ii) the Company materially reduces (including as a result of any co-sharing of responsibilities arrangement) the Executive’s authority, responsibilities, or duties, (iii) the Company requires the Executive to be based at a location in excess of 50 miles from the location of its principal executive office as of the date of this Agreement; (iv) the Company fails to obtain the written assumption of its obligations to the Executive under this Agreement by a successor no later than the consummation of a Change in Control; (v) a material breach by the Company of its obligations to the Executive under this Agreement; or (vi) on or following a Change in Control, as defined above, a material adverse change in the Executive’s reporting structure; which in each of the circumstances described above, is not remedied by the Company within 30 days of receipt of written notice by the Executive to the Company; so long as the Executive provides such written notice to the Company no later than 90 days following the first date the event giving rise to a claim of Good Reason exists; 

		
	(5)
	Target Bonus. “Target Bonus” shall mean the percentage of the Executive’s Base Salary equal to the Executive’s short-term cash bonus opportunity under the terms of the applicable short-term cash bonus program in which the Executive is entitled to participate in respect of the fiscal year of the Company in which the Termination Date occurs (if any); provided, however, that if the Executive’s employment with the Company is terminated by the Executive for Good Reason as a result of a reduction in the Executive’s Target Bonus, then “Target Bonus” shall mean the Executive’s Target Bonus as in effect immediately prior to such reduction.

(f) Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for in this Section 2 by seeking other employment or otherwise and no such payment or benefit shall be eliminated, offset or reduced by the amount of any compensation provided to the Executive in any subsequent employment, except as provided in Section 2(a)(3) or Section 2(d)(3).

(g) Resignation from Office.  The Executive's termination of employment with the Company for any reason shall be deemed to automatically remove the Executive, without further action, from any and all offices held by the Executive with the Company or its affiliates. The Executive shall execute such additional documents as requested by the Company from time to time to evidence the foregoing.

(h) Exclusivity. This Agreement is intended to provide severance payments and/or benefits only under the circumstances expressly enumerated under Section 2 hereof. Unless otherwise determined by the Company in its sole discretion, in the event of a termination of the Executive's employment with the Company for any reason (or no reason) or at any time other than as expressly contemplated by Section 2 hereof, the Executive shall not be entitled to receive any severance payments and/or benefits or other further compensation from the Company hereunder whatsoever, except for the Accrued Compensation and any other rights or benefits to which the Executive is otherwise entitled pursuant to the requirements of applicable law. Except as otherwise expressly provided in this Section 2, all of the Executive's rights to salary, bonuses, fringe benefits and other compensation hereunder (if any) which accrue or become payable after the Termination Date will cease upon the Termination Date.

 (i) Set-Off. The Executive agrees that, to the extent permitted by applicable law, the Company may deduct from and set-off against any amounts otherwise payable to the Executive under this Agreement such amounts as may be owed by the Executive to the Company.  The Executive shall remain liable for any part of the Executive’s payment obligation not satisfied through such deduction and setoff.

(j) Exclusive Remedies.  The Executive agrees and acknowledges that the payments and benefits set forth in this Section 2 shall be the only payments and benefits to which the Executive is entitled from the Company in connection with the termination of the Executive’s employment with the Company, and that neither the Company nor its subsidiaries shall have any liability to the Executive or the Executive’s estate, whether under this Agreement or otherwise, in connection with the termination of the Executive’s employment.

3.    Limitations on Certain Payments. Notwithstanding any provision of this Agreement to the contrary, if any amount or benefit to be paid or provided under this Agreement or otherwise would be an “excess parachute payment,” within the meaning of Section 280G of the Code, or any successor provision thereto, but for the application of this sentence, then the payments and benefits identified in the last sentence of this Section 3 to be paid or provided will be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes an excess parachute payment; provided, however, that the foregoing reduction will be made only if and to the extent that such reduction would result in an increase in the aggregate payment and benefits to be provided to the Executive, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income and employment taxes).  Whether requested by the Executive or the Company, the determination of whether any reduction in such payments or benefits to be provided under this Agreement or otherwise is required pursuant to the preceding sentence will be made at the expense of the Company by a certified accounting firm that is independent from the Company.  In the event that any payment or benefit intended to be provided under this Agreement or otherwise is required to be reduced pursuant to this Section 3, the Company will reduce the Executive’s payments and/or benefits, to the extent required, in the following order: (a) the payments due under Section 2(d)(3) (beginning with the payment farthest out in time that would otherwise be paid); (b) the payments due under Section 2(d)(1) (beginning with the payment farthest out in time that would otherwise be paid); (c) the payment due under Section 2(d)(2).  The assessment of whether or not such payments or benefits constitute or would include excess parachute payments shall take into account a reasonable compensation analysis of the value of services provided or to be provided by the Executive, including any agreement by the Executive (if applicable) to refrain from performing services pursuant to a covenant not to compete or similar covenant applicable to you that may then be in effect.

4.    Section 409A of the Code; Withholding.  

		
	(a)
	This Agreement is intended to avoid the imposition of taxes and/or penalties under Section 409A of the Code.  The parties agree that this Agreement shall at all times be interpreted, construed and operated in a manner to avoid the imposition of taxes and/or penalties under with Section 409A of the Code.  All references to a termination of employment and separation from service shall mean “separation from service” as defined in Section 409A of the Code, and the date of such “separation from service” shall be referred to as the “Termination Date”.

		
	(b)
	All reimbursements provided under this Agreement shall comply with Section 409A of the Code and shall be subject to the following requirement:  (i) the amount of expenses eligible for reimbursement, during the Executive’s taxable year may not affect the expenses eligible for reimbursement to be provided in another taxable year; and (ii) the reimbursement of an eligible expense must be made by December 31 following the taxable year in which the expense was incurred.  The right to reimbursement is not subject to liquidation or exchange for another benefit.

		
	(c)
	Notwithstanding anything in this Agreement to the contrary, for purposes of the period specified in this Agreement relating to the timing of the Executive’s execution of the Release as a condition of the Company’s obligation to provide any severance payments or benefits, if such period would begin in one taxable year and end in a second taxable year, any payment otherwise due to the Executive upon execution of the Release shall be made in the second taxable year and without regard to when the Release was executed or became irrevocable.

		
	(d)
	If the Executive is a “specified employee” (as defined under Section 409A of the Code) on the Executive’s Termination Date, to the extent that any amount payable under this Agreement constitutes “non-qualified deferred compensation” under Section 409A of the Code (and is not otherwise excepted from Section 409A of the Code coverage by virtue of being considered “separation pay” or a “short term deferral” or otherwise) and is payable to Executive based upon a separation from service, such amount shall not be paid until the first day following the six (6) month anniversary of the Executive’s Termination Date.  

		
	(e)
	To the maximum extent permitted under Section 409A of the Code, the payments and benefits under this Agreement are intended to meet the requirements of the short-term deferral exemption under Section 409A of the Code and the “separation pay exception” under Treasury Regulation §1.409A-1(b)(9)(iii).  Any right to a series of installment payments shall be treated as a right to a series of separate payments for purposes of Section 409A of the Code.    

		
	(f)
	All amounts due and payable under this Agreement shall be paid less all amounts required to be withheld by law, including all applicable federal, state and local withholding taxes and deductions.

5.    Indemnification.  The Company shall indemnify, defend, and hold the Executive harmless to the maximum extent permitted by law and the Company by-laws against all judgments, fines, amounts paid in settlement and all reasonable expenses, including attorneys’ fees incurred by the Executive, in connection with the defense of or as a result of any action or proceeding (or any appeal from any action or proceeding) in which the Executive is made or is threatened to be made a party by reason of the fact that the Executive is or was an officer or director of the Company. Subject to the terms of the Company’s director and officer indemnification policies then in effect, the Company acknowledges that the Executive will be covered and insured up to the full limits provided by all directors’ and officers’ insurance which the Company then maintains to indemnify its directors and officers.

6.    Executive Covenants.

		
	(a)
	For the purposes of this Section 6, the term “Company” shall include Abercrombie & Fitch Management Co. and all of its subsidiaries, parent companies and affiliates thereof

		
	(b)
	Non-Disclosure and Non-Use. The Executive shall not, during the Term and at all times thereafter, without the written authorization of the Chief Executive Officer (“CEO”) of the Company or such other executive governing body as may exist in lieu of the CEO, (hereinafter referred to as the “Executive Approval”), use (except for the benefit of the Company) any Confidential and Trade Secret Information relating to the Company. The Executive shall hold in strictest confidence and shall not, without the Executive Approval, disclose to anyone, other than directors, officers, employees and counsel of the Company in furtherance of the business of the Company, any Confidential and Trade Secret Information relating to the Company. For purposes of this Agreement, “Confidential and Trade Secret Information” includes: the general or specific nature of any concept in development, the business plan or development schedule of any concept, vendor, merchant or customer lists or other processes, know-how, designs, formulas, methods, software, improvements, technology, new products, marketing and selling plans, business plans, development schedules, budgets and unpublished financial statements, licenses, prices and costs, suppliers, and 

information regarding the skills, compensation or duties of employees, independent contractors or consultants of the Company and any other information about the Company that is proprietary or confidential. Notwithstanding the foregoing, nothing herein shall prevent the Executive from disclosing Confidential and Trade Secret Information to the extent required by law or by any court or regulatory authority having actual or apparent authority to require such disclosure or in connection with any litigation or arbitration involving this Agreement.

The restrictions set forth in this Section 6(b) shall not apply to information that is or becomes generally available to the public or known within the Company’s trade or industry (other than as a result of its wrongful disclosure by the Executive), or information received on a non-confidential basis from sources other than the Company who are not in violation of a confidentiality agreement with the Company. 

The Executive further represents and agrees that, during the Term and at all times thereafter, the Executive is obligated to comply with the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding trading shares and/or exercising options related to the Company's stock. The Executive acknowledges that the Company has not provided opinions or legal advice regarding the Executive’s obligations in this respect and that it is the Executive's responsibility to seek independent legal advice with respect to any stock or option transaction.   

		
	(c) 
	Non-Disparagement and Cooperation. Neither the Executive nor any officer, director of the Company, nor any other spokesperson authorized as a spokesperson by any officer or director of the Company, shall, during the Term or at any time thereafter, intentionally 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 the market and community at large. During the Term and at all times thereafter, the Executive 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 the Executive. If at any time the Executive should be required to cooperate with the Company pursuant to this Section 6(c), the Company agrees to promptly reimburse the Executive for reasonable documented costs and expenses incurred as a result thereof. The Executive agrees that, during the Term and at all times thereafter, the Executive will not speak or communicate with any party or representative of any party, who is known to the Executive 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 the Executive receives the written consent of the Company to do so, or is otherwise compelled by law to do so, and then only after advance notice to the Company.  Nothing herein shall prevent the Executive from pursuing any claim in connection with enforcing or defending the Executive’s rights or obligations under this Agreement. 

		
	(d) 
	Non-Competition. For the period of Executive’s employment with the Company and its subsidiaries and for twelve months following Executive’s Termination Date with the Company and its subsidiaries for any reason (the “Non-Competition Period”), Executive shall not, directly or indirectly, without the Executive Approval, 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 entity listed on Appendix A attached to this Agreement, or any of their current or future divisions, subsidiaries or affiliates (whether majority or minority owned), even if said division, subsidiary or affiliate becomes unrelated to the entity on Appendix A at some future date, or any other entity engaged in a business that is competitive with the Company in any part of the world in which the Company conducts business or is actively preparing or considering conducting business (“Competing Entity”); provided, however, that the “beneficial ownership” by the Executive, either individually or by a “group” in which the Executive is a member (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 less than 2% of the voting stock of any publicly held corporation shall not be a violation of this Section 6(d). The Executive acknowledges and agrees that any consideration that the Executive received in respect of any non-competition covenant in favor of the Company or its subsidiaries entered into prior to the date hereof shall be incorporated herein as consideration for the promises set forth in this Section 6(d) and that the provisions contained in this Section 6(d) shall supersede any prior non-competition covenants between the Executive and the Company or its subsidiaries.

		
	(e) 
	Non-Solicitation. For the period of Executive’s employment with the Company and its subsidiaries and for twenty-four months following Executive’s Termination Date with the Company and its subsidiaries for any reason (“Non-Solicitation Period”), the Executive shall not, either directly or indirectly, alone or in conjunction with another party, interfere with or harm, or attempt to interfere with or harm, the relationship of the Company with any person who at any time was a customer or supplier of the Company or otherwise had a business relationship with the Company. During the Non-Solicitation Period, the Executive shall not hire, solicit for hire, aid in or facilitate the hire, or cause to be hired, either as an employee, contractor or consultant, any person who is currently employed, or was employed at any time during the six-month period prior thereto, as an employee, contractor or consultant of the Company. The 

Executive acknowledges and agrees that any consideration that the Executive received for in respect of any non-solicitation covenant in favor of the Company or its subsidiaries entered into prior to the date hereof shall be incorporated herein as consideration for the promises set forth in this Section 6(e) and that the provisions contained in this Section 6(e) shall supersede any prior non-solicitation covenants between the Executive and the Company or its subsidiaries.

		
	(f)
	Confidentiality of this Agreement. The Executive agrees that, during the Term and at all times thereafter, the Executive shall not speak 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 (i) an attorney, accountant, or other advisor engaged by the Executive; (ii) the Internal Revenue Service or other governmental agency upon proper request; or (iii) the Executive’s immediate family; provided, that all such persons agree in advance to keep said information confidential and not to disclose it to others.  Notwithstanding the foregoing, the Executive shall have the duty to disclose to any employer or prospective employer the fact that the Executive is bound by the Executive Covenants contained in Sections 6(b), (d), and (e) of this Agreement, but remains prohibited from disclosing other terms of this Agreement consistent with this Section 6(f).

		
	(g)
	Remedies. The Executive agrees that any breach of the terms of this Section 6 would result in irreparable injury and damage to the Company for which the 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. The terms of this Section 6(g) 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 confidentiality provisions and the covenants not to compete and solicit contained in this Section 6 are reasonable and that the Company would not have entered into this Agreement but for the inclusion of such covenants herein. The parties agree that the prevailing party shall be entitled to all costs and expenses, including reasonable attorneys' fees and costs, in addition to any other remedies to which either may be entitled at law or in equity in connection with the enforcement of the covenants set forth in this Section 6. Should a court with jurisdiction determine, however, that all or any portion of the covenants set forth in this Section 6 is unreasonable, either in period of time, geographical area, or otherwise, the parties hereto agree that such covenants or portion thereof should be interpreted and enforced to the maximum extent that such court deems reasonable. In the event of any violation of the provisions of this Section 6, the Executive acknowledges and agrees that the post-termination restrictions contained in this Section 6 shall be extended by a period of time equal to the period of such violation, it being the intention of the parties hereto that the running of the applicable post-termination of employment restriction period shall be tolled during any period of such violation. In the event of a material violation by the Executive of this Section 6, any severance being paid to the Executive pursuant to Section 2 of this Agreement or otherwise shall immediately cease, and the aggregate gross amount of any severance previously paid to the Executive shall be immediately repaid to the Company.

 (h)   The provisions of this Section 6 shall survive any termination of this Agreement and any termination of the Executive’s employment, 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 6.

7.    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 to the Company's business and/or assets. 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, the Executive's 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.

8.    Arbitration. Except with respect to the remedies set forth in Section 6(g) hereof, any controversy or claim between the Company or any of its affiliates and the Executive arising out of or relating to this Agreement or its termination shall be settled and determined by a single arbitrator whose award shall be accepted as final and binding upon the parties. The American Arbitration Association, under its Employment Arbitration Rules, shall administer the binding arbitration. The arbitration shall take place in Columbus, Ohio. The Company and the Executive each waive any right to a jury trial or to a petition for stay in any action or proceeding of any kind arising out of or relating to this Agreement or its termination and agree that the arbitrator shall have the authority to award costs and attorney fees to the prevailing party.

9.    Effect on Prior Agreements. Except as otherwise set forth herein, this Agreement supersedes all provisions in prior agreements, either express or implied, between the parties hereto, with respect to post-termination payments and/or benefits; provided, that, this Agreement shall not supersede the Company’s 2005, 2007 or 2016 Long-Term Incentive Plans (or any other applicable equity plan) or any applicable award agreements evidencing equity-based incentive awards thereunder (the “Equity Documents”), and any rights of the Executive with respect to equity-based incentive awards hereunder shall be in addition to, and not in lieu of, any rights pursuant to the Equity Documents.  

10.    Notice. For the purposes of this Agreement, notices and all other communications provided for in this 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:
To Executive's last home address as listed in the books and records of the Company.

To the Company:
Abercrombie & Fitch Management Co.
6301 Fitch Path
New Albany, Ohio 43054
Attn: General Counsel

11.    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.

12.    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.

13.    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.

[Remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the undersigned has hereto set her hand this 11th day of May, 2016.
	
	
	 

	/s/ Stacia Andersen

	Stacia Andersen

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 20th day of May, 2016.
	
	
	 

	/s/ Arthur C. Martinez

	Arthur C. Martinez

	Executive Chairman of the Board of Directors

	Abercrombie & Fitch Co.

IN WITNESS WHEREOF, the undersigned has hereto set his hand this 20th day of May, 2016.
	
	
	 

	/s/ Michael E. Greenlees

	Michael E. Greenlees

	Chair of the Compensation and Organization Committee of the Board of Directors

	Abercrombie & Fitch Co.

Appendix A to EXHIBIT B

(all current and future (as described in Section 6(d) of the Agreement) subsidiaries, divisions and affiliates of the entities below)

	
		
	American Eagle Outfitters, Inc.
	Gap, Inc.

	J. Crew Group, Inc.
	Pacific Sunwear of California, Inc. 

	Urban Outfitters, Inc.
	Aeropostale, Inc. 

	Polo Ralph Lauren Corporation
	Jack Wills, Ltd.

	SuperGroup, Plc.
	Levi Strauss & Co.

	L Brands (formerly known as Limited Brands, including, without limitation, Victoria’s Secret, Pink, Bath & Body Works, La Senza and Henri Bendel)
	Express, Inc.

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