On November 14, 2011, the Company and Mr. Hanson entered into the Agreement effective January 30, 2012 (the "Start Date") to secure his services as Chief Executive Officer of the Company.  The term of the Agreement (the "Term") expires on January 31, 2015, the last day of the Company's 2014 fiscal year and is automatically renewed for successive one-year terms thereafter unless the Company or Mr. Hanson gives written notice to the other party at least 90 days prior to the expiration of the then-current term.

As sign-on compensation under the Agreement, Mr. Hanson will receive the following on the Start Date, unless otherwise denoted:

(1) A signing bonus of $3,339,000 less applicable withholding taxes, payable in a lump sum within 60 days after Mr. Hanson's signing of the Agreement subject to various provisions as set forth in the Agreement;

(2) A $300,000 contribution by the Company to a deferred compensation account for Mr. Hanson that shall vest and become non-forfeitable at a rate of one-third on each of the first three anniversaries of Mr. Hanson's Start Date subject to his continued employment with the Company on each such date;

(3)  A restricted stock unit award ("RSU") with a value of $2,500,000 under the Company's 2005 Stock Award and Incentive Plan, as amended (the "2005 Plan").  The number of units subject to this RSU award will be calculated by dividing $2,500,000 by the closing price of AEO common stock on the Start Date rounded to the nearest whole share.  Vesting of the RSU award will be subject to both continued employment and achievement of pre-determined objective performance goals set forth in writing established by the Compensation Committee of the Board of Directors (the "Committee").  If the performance goals are not met, then the entire RSU award will forfeit.  The Committee must verify that the performance goals are met prior to vesting.  If the performance goals are met, then the grant will vest in equal annual installments over three years from the grant date based solely on Executive's continued service to the Company over that period;

(4) A stock option grant for the number of option shares of Company's common stock with a grant date value equal to $2,500,000.  The exercise price will be the closing price of AEO common stock on the grant date. The number of option shares subject to this stock option will be determined as of the grant date using a valuation methodology consistent with that used to compute the value of the Company's stock options in its financial statements. The option grant will be made by the Committee pursuant to and subject to all the terms and conditions set forth in the 2005 Plan and related award agreement; provided that (i) Mr. Hanson shall be allowed a period of no less than three (3) months following termination of employment to exercise the portion of this stock option which is vested on his termination date, other than in the event of a termination by the Company for Cause in accordance with Section 5.e. of the Agreement, and (ii) Mr. Hanson may exercise this stock option by means of a "net exercise," pursuant to which a number of shares subject to such exercise having a fair market value equal to the applicable exercise price will be withheld by the Company in satisfaction of such exercise price;

/s/ Neil Bulman, Jr.

Vice President, General Counsel and Secretary