Employment Agreement with Katherine Lawther Krill
Amendment to Employment Agreement
Special Severance Plan
First Amendment to Special Severance Plan
Special Severance Plan as Amended
 
                              EMPLOYMENT AGREEMENT
 
         EMPLOYMENT AGREEMENT (the "Agreement"), dated as of October 1, 2005
(the "Effective Date"), between ANNTAYLOR STORES CORPORATION, a Delaware
corporation (the "Company"), and Katherine Lawther Krill (the "Executive").
 
         WHEREAS, the Executive has been employed in the position of President
of the Company pursuant to an Employment Agreement dated January 29, 2004 (the
"Prior Agreement");
 
         WHEREAS, the Executive has been promoted to the position of Chief
Executive Officer of the Company, effective as of the Effective Date, and the
parties wish to set forth the terms and conditions of Executive's continued
employment with the Company;
 
         NOW, THEREFORE, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:
 
         1. Employment. The Company hereby agrees to continue to employ the
     Executive, and the Executive hereby agrees to be employed by and continue
     to serve the Company, effective as of the Effective Date, on the terms and
     conditions set forth herein.
 
         2. Term. The term of this Agreement shall commence as of the Effective
     Date and will end on October 1, 2008; provided, however, that commencing
     on October 1, 2008, and each such anniversary thereafter, the term of the
     Executive's employment shall automatically be extended for one additional
     year, unless, no later than the April 1 immediately preceding such
     anniversary, either party shall have given notice (a "Non-Renewal Notice")
     to the other that it does not wish to extend this Agreement. References
     hereinafter to the "Term" of this Agreement shall refer to both the
     initial term and any extended term of the Agreement hereunder.
     Notwithstanding expiration of the Term or other provisions that survive by
     their intent, the provisions of Sections 4, 7 and 8 hereof shall continue
     in effect.
 
         3. Position and Duties. The Executive shall serve as Chief Executive
     Officer of the Company ("CEO"), and shall have such responsibilities,
     duties and authority consistent with such position as may from time to
     time be determined by the Board of Directors of the Company (the "Board").
     The Executive shall devote substantially all of her working time and
     efforts to the business and affairs of the Company; provided that, this
     Agreement shall not be interpreted to prohibit the Executive from making
     passive investments, engaging in charitable activities or, subject to the
     prior approval of the Board, serving on the board of directors of other
     corporations. The Executive shall report directly to the Board and, for as
     long as the Executive is employed by the Company as the CEO, the Company
     shall nominate the Executive for re-election as a member of the Board. At
     the time of her termination of employment with the Company, the Executive
     shall resign from the Board if requested to do so by the Company.
 
         4. Indemnification. To the fullest extent permitted by law and the
     Company's certificate of incorporation and by-laws, the Company shall
     indemnify the Executive for all amounts (including, without limitation,
     judgments, fines, awards, settlement payments, losses, damages, costs and
     expenses, including reasonable attorneys' fees) incurred or paid by the
     Executive in connection with any action, proceeding, suit or investigation
     arising out of or relating to the performance by the Executive of services
     for, or acting as a fiduciary of any employee benefit plans, programs or
     arrangements of the Company or as a director, officer or employee of, the
     Company or any subsidiary thereof. The Executive shall be covered by the
     Company's D&O insurance policy in accordance with its terms, as in effect
     from time to time. Following the Term, the Company shall continue to
     indemnify the Executive with respect to such services performed during the
     Term, to the same extent as the Company indemnifies its officers,
     directors, employees and fiduciaries, as applicable.
 
         5. Compensation and Related Matters.
 
            (a)  Annual Compensation.
 
                 (i)     Base Salary. During the period of the Executive's
                         employment hereunder, the Company shall pay to the
                         Executive an annual base salary at a rate not less
                         than $1,000,000 (effective as of the Effective Date),
                         such salary to be paid in conformity with the
                         Company's policies relating to salaried employees.
                         This salary may be (but is not required to be)
                         increased from time to time, subject to and in
                         accordance with the annual executive performance
                         review procedures of the Company and, if increased,
                         shall not thereafter be decreased.
 
                 (ii)    Annual Bonus. During the period of the Executive's
                         employment hereunder, the Executive shall be eligible
                         to participate in the Company's annual bonus plan as
                         in effect from time to time, and shall be entitled to
                         receive such amounts (a "Bonus") as may be authorized,
                         declared and paid by the Company pursuant to the terms
                         of such plan. The Company currently maintains a
                         Management Performance Compensation Plan (the
                         "Performance Plan") providing performance bonus
                         compensation pursuant to which the Executive has been
                         participating. It is agreed that the Executive shall
                         participate in the Performance Plan. Commencing with
                         the Company's 2006 fiscal year, the Executive's
                         Performance Percentage (as that term is defined in the
                         Performance Plan) shall be established at 100% per
                         annum. The business criterion to be used in
                         determining the relevant Performance Goal (as that
                         term is defined in the Performance Plan) shall be
                         determined by the Compensation Committee of the Board
                         (the "Compensation Committee") and approved by the
                         Board. The Executive shall also participate in the
                         Long Term Cash Incentive Compensation Plan and the
                         2004 Long Term Cash Incentive Plan and any successor
                         plan (together, the "Long-Term Plans"). Commencing
                         with any awards granted under the Long-Term Plans on
                         or after the Effective Date, her Target Award (as
                         defined in the Long-Term Plans) shall be 50%. Any
                         awards granted under the Performance Plan and the
                         Long-Term Plans prior to the Effective Date shall be
                         subject to the terms and conditions under which the
                         awards were granted.
 
            (b)  Stock Option. In connection with her promotion to CEO and the
                 execution of this Agreement, the Executive has been granted a
                 ten-year time-vested non-qualified stock option (the
                 "Option"), to acquire 200,000 shares of the Company's common
                 stock ("Shares") under the Company's 2003 Equity Incentive
                 Plan, as amended (the "2003 Plan"). The exercise price per
                 Share shall be equal to the Fair Market Value (as defined in
                 the 2003 Plan) of a Share on the date of Board approval of
                 this Agreement, which shall be the date of grant of the
                 Option. The Option shall become vested and exercisable with
                 respect to an aggregate of 66,666 Shares on the first
                 anniversary of the Effective Date and with respect to an
                 additional 66,667 Shares on each of the second and third
                 anniversaries of the Effective Date, provided the Executive
                 has remained continuously employed by the Company until the
                 applicable date (except as provided in this Agreement).
                 Subject to the provisions herein, the Option shall contain
                 such other terms and conditions as are set forth in the
                 Company's standard form of stock option agreements, which
                 shall include, but not be limited to, accelerated
                 exercisability upon the occurrence of a "change in control",
                 which term shall have the same meaning as the term
                 "Acceleration Event," as defined in the 2003 Plan (hereinafter
                 referred to as a "Change in Control").
 
            (c)  Time-Vested Restricted Stock. In connection with her promotion
                 to CEO and the execution of this Agreement, the Executive has
                 been granted an aggregate of 200,000 time-vested restricted
                 Shares (the "Time-Vested Restricted Shares") under the 2003
                 Plan, subject to approval by the Company's shareholders at the
                 Company's 2006 annual meeting of an amendment to the 2003 Plan
                 increasing the number of shares available for issuance under
                 the 2003 Plan (the "Amendment"), which Amendment the Board has
                 approved concurrently with its approval of this Agreement. An
                 aggregate of 66,666 Time-Vested Restricted Shares shall vest
                 on, and be delivered to the Executive promptly following, the
                 first anniversary of the Effective Date, and an aggregate of
                 66,667 Time-Vested Restricted Shares shall vest on, and be
                 delivered to the Executive promptly following, each of the
                 second and third anniversaries of the Effective Date, in each
                 case, provided the Executive has remained continuously
                 employed by the Company until the applicable anniversary date
                 (except as provided in this Agreement). The Company shall
                 enter into a restricted stock award agreement with the
                 Executive for the above grant of Time-Vested Restricted
                 Shares, incorporating the vesting terms in this Agreement and
                 otherwise on the terms and conditions set forth in the
                 Company's standard form of restricted stock award agreement,
                 which shall include, but not be limited to, accelerated
                 vesting upon the occurrence of a Change in Control.
 
            (d)  Performance-Based Restricted Stock Grant. In connection with
                 her promotion to CEO and the execution of this Agreement, the
                 Executive has been granted an aggregate of 200,000
                 performance-based restricted Shares (the "Performance-Based
                 Restricted Shares") under the 2003 Plan, subject to
                 shareholder approval of the Amendment. An aggregate of 66,666
                 Performance-Based Restricted Shares shall be eligible to vest
                 and be delivered to the Executive on the March 15 following
                 the end of the Company's 2006 fiscal year, and an aggregate of
                 66,667 Performance-Based Restricted Shares shall be eligible
                 to vest and be delivered to the Executive on the March 15
                 following the end of the Company's 2007 and 2008 fiscal years,
                 in each case subject to the attainment by the Company of
                 specified corporate performance goals with respect to the
                 applicable fiscal year, as determined by the Compensation
                 Committee and approved by the Board. A portion of the
                 Performance-Based Restricted Shares scheduled to vest on the
                 March 15 following the end of a particular fiscal year may
                 vest and be delivered to Executive upon partial achievement of
                 performance goals for such fiscal year, as determined by the
                 Compensation Committee. Any portion of the Performance-Based
                 Restricted Shares scheduled to vest on the March 15 following
                 the end of a particular fiscal year which do not so vest shall
                 be immediately forfeited. The Company shall enter into a
                 restricted stock award agreement with the Executive for the
                 above grant of Performance-Based Restricted Shares,
                 incorporating the vesting terms in this Agreement and
                 otherwise on the terms and conditions set forth in the
                 Company's standard form of restricted stock award agreement,
                 which shall include, but not be limited to, accelerated
                 vesting upon the occurrence of a Change in Control.
 
            (e)  Ongoing Annual Equity Grants. The Executive shall be eligible
                 to receive, in the discretion of the Compensation Committee,
                 additional annual equity grants during the Term, which grants,
                 if made, shall be in amounts consistent with the Executive's
                 position as CEO and appropriate with respect to the annual
                 grants made to other senior executives of the Company.
 
            (f)  Other Benefits. During the Executive's employment hereunder,
                 the Executive shall continue to be entitled to participate in
                 all other employee benefit plans, programs and arrangements of
                 the Company, as now or hereinafter in effect, which are
                 applicable to the Company's employees generally or to its
                 executive officers, as the case may be, subject to and on a
                 basis consistent with the terms, conditions and overall
                 administration of such plans, programs and arrangements;
                 provided, however, that the Executive hereby acknowledges and
                 agrees that she will not participate in the Company's Special
                 Severance Plan. During the period of the Executive's
                 employment hereunder, the Executive shall be entitled to
                 participate in and receive any fringe benefits or perquisites
                 which may become available to the Company's executive
                 employees. Without limiting the generality of the foregoing,
                 the Company shall provide the Executive with reimbursement of
                 expenses incurred by the Executive for financial, tax and real
                 estate planning services in an amount not to exceed $25,000
                 per year.
 
            (g)  Vacations and Other Leaves. The Executive shall be eligible
                 for a paid time off bank of 25 days per year and paid holidays
                 and sick days, all as determined in accordance with applicable
                 Company plans and policies.
 
            (h)  Expenses. During the Executive's employment hereunder, the
                 Executive shall be entitled to receive prompt reimbursement
                 for all reasonable and customary expenses incurred by the
                 Executive in performing services hereunder, including all
                 expenses of travel and accommodations while away from home on
                 business or at the request of and in the service of the
                 Company; provided that, such expenses are incurred and
                 accounted for in accordance with the policies and procedures
                 established by the Company.
 
            (i)  Life Insurance. During the Term of this Agreement and
                 throughout the Severance Period (as defined in Section
                 6A(d)(3)), the Company shall maintain a supplemental life
                 insurance policy on behalf of the Executive which provides for
                 a death benefit equal to no less than seven million dollars
                 ($7,000,000), the proceeds of which shall be paid upon the
                 death of the Executive to the beneficiary designated by the
                 Executive.
 
            (j)  Transportation. During the Executive's employment hereunder,
                 for security purposes the Company shall require that the
                 Executive be transported by a car and driver as provided by
                 the Company with the full cost of such transportation
                 grossed-up for taxes to be paid by the Company.
 
         6. Termination. (a) The Executive's employment hereunder may be
     terminated without breach of this Agreement only under the following
     circumstances:
 
                 (i)     Death. The Executive's employment hereunder shall
                         terminate upon her death.
 
                 (ii)    Cause. The Company may terminate the Executive's
                         employment hereunder for "Cause." For purposes of this
                         Agreement, the Company shall have "Cause" to terminate
                         the Executive's employment hereunder upon (1) the
                         Executive's conviction for the commission of any act
                         or acts constituting a felony under the laws of the
                         United States or any state thereof, (2) action by the
                         Executive toward the Company involving dishonesty, (3)
                         the Executive's refusal to abide by or follow
                         reasonable written directions of the Board, which does
                         not cease within ten business days after such written
                         notice regarding such refusal has been given to the
                         Executive by the Board, (4) the Executive's gross
                         nonfeasance which does not cease within ten business
                         days after written notice regarding such nonfeasance
                         has been given to the Executive by the Board, or (5)
                         failure of the Executive to comply with the provisions
                         of Section 7 (prior to cessation of employment
                         following a Change of Control of the Company) or 8 of
                         this Agreement, or other willful conduct by the
                         Executive which is intended to have and does have a
                         material adverse impact on the Company.
 
                 (iii)   Disability. If, as a result of the Executive's
                         incapacity due to physical or mental illness, the
                         Executive shall have been absent from her duties
                         hereunder on a full-time basis for the entire period
                         of six (6) consecutive months, and within thirty (30)
                         days after written Notice of Termination (as defined
                         in Section 6(b) below) is given (which may occur
                         before or after the end of such six (6) month period)
                         shall not have returned to the performance of her
                         duties hereunder on a full-time basis, the Executive's
                         employment hereunder shall terminate for "Disability".
 
                 (iv)    Termination by the Executive for Good Reason. The
                         Executive may terminate her employment hereunder for
                         "Good Reason." For purposes of this Agreement, the
                         Executive shall have "Good Reason" to terminate her
                         employment hereunder (1) upon a failure by the Company
                         to comply with any material provision of this
                         Agreement which has not been cured within ten business
                         days after notice of such noncompliance has been given
                         by the Executive to the Company, (2) upon action by
                         the Company resulting in a diminution of the
                         Executive's title or authority, (3) upon the Company's
                         relocation of the Executive's principal place of
                         employment outside of the New York City metropolitan
                         area, or (4) one year after a Change in Control.
 
                 (v)     Termination by the Executive without Good Reason and
                         Termination by the Company without Cause. The Company
                         may terminate the Executive's employment hereunder
                         without Cause and the Executive may terminate her
                         employment voluntarily hereunder without Good Reason.
 
            (b) Notice of Termination. Any termination of the Executive's
                employment by the Company or by the Executive (other than
                termination under Section 6(a)(i) hereof) shall be communicated
                by written Notice of Termination to the other party hereto in
                accordance with Section 10 hereof. For purposes of this
                Agreement, a "Notice of Termination" shall mean a notice which
                shall indicate the specific termination provision in this
                Agreement relied upon and shall set forth in reasonable detail
                the facts and circumstances claimed to provide a basis for
                termination of the Executive's employment under the provision
                so indicated.
 
            (c) Date of Termination. "Date of Termination" shall mean (i) if
                the Executive's employment is terminated by her death, the date
                of her death, (ii) in the event that the Term shall expire as a
                result of a Non-Renewal Notice provided by the Company to the
                Executive, the date of the expiration of the then current Term,
                and (iii) in each other case, the date specified in the Notice
                of Termination; provided that, if within thirty days after any
                Notice of Termination is given, the party receiving such Notice
                of Termination notifies the other party that a dispute exists
                concerning the characterization for purposes of this Agreement
                of such termination and if the party disputing such matter
                prevails in such dispute as evidenced by a binding and final
                arbitration award, then the Date of Termination shall
                retroactively be adjusted to be the date specified as such in
                the award or, if no date is so specified, then as of the date
                on which such award is issued.
 
         6A. Compensation Upon Termination or During Disability.
 
            (a)  Disability. During any period that the Executive fails to
                 perform her duties hereunder as a result of incapacity due to
                 physical or mental illness, the Executive shall continue to
                 receive her full salary at the rate then in effect for such
                 period and other applicable benefits provided to active
                 employees until her employment is terminated pursuant to
                 Section 6(a)(iii) hereof. Subject to the provisions of Section
                 7 hereof, in the event the Executive's employment is
                 terminated pursuant to Section 6(a)(iii) hereof, then
 
                 (i)     as soon as practicable thereafter, the Company shall
                         pay the Executive all unpaid amounts, if any, to which
                         the Executive is entitled as of the Date of
                         Termination under Section 5(a) hereof and shall pay or
                         provide to the Executive, in accordance with the terms
                         of the applicable plan or program, all other unpaid
                         amounts and benefits to which Executive is then
                         entitled under any compensation or benefit plan or
                         program of the Company (collectively, "Accrued
                         Obligations");
 
                 (ii)    following the Date of Termination and for a period of
                         eighteen (18) months thereafter, the Company shall pay
                         the Executive monthly an amount equal to (x) the
                         quotient of (A) the sum of (1) the Executive's annual
                         base salary at the rate in effect as of the Date of
                         Termination and (2) the Severance Bonus (as defined in
                         Section 6A(d)(2)(B)(i), except that only the
                         Executive's annual Bonus under the Performance Plan or
                         any successor plan (and no bonuses under the Long-Term
                         Plans or any successor plan) shall be taken into
                         account in calculating the Severance Bonus for
                         purposes of this paragraph (ii)), divided by (B) the
                         number twelve (12) (such quotient being referred to
                         herein as the "Severance Payments"), minus (y) any
                         amounts payable to the Executive during such month as
                         a disability benefit under a Company paid plan;
                         thereafter, the Executive shall be eligible to receive
                         payments pursuant to the Company's applicable
                         short-term and long-term disability plans; provided,
                         however, that the Company shall provide the Executive
                         with a supplemental long-term disability benefit with
                         a total monthly benefit such that her aggregate annual
                         long-term disability benefit is not less than sixty
                         percent (60%) of the Executive's annual base salary in
                         effect on the Date of Termination;
 
                 (iii)   as of the Date of Termination, all outstanding stock
                         options, restricted Shares and other equity-based
                         awards granted to the Executive prior to the Effective
                         Date (including any such awards granted at the time of
                         execution of the Prior Agreement) shall continue to be
                         governed by their respective terms (including, as
                         applicable, the terms set forth in the Prior
                         Agreement);
 
                 (iv)    as of the Date of Termination, all outstanding stock
                         options granted to the Executive on or after the
                         Effective Date (including the Option granted pursuant
                         to Section 5(b) hereof) shall become vested and
                         exercisable and shall remain exercisable for the
                         period set forth in the relevant stock option
                         agreement and plan under which each was granted and
                         all then outstanding time-vested restricted shares
                         granted on or after the Effective Date (including the
                         Time-Vested Restricted Shares granted pursuant to
                         Section 5(c) hereof) shall vest and be promptly
                         delivered to the Executive;
 
                 (v)     on the Date of Termination, a pro rata portion of all
                         then outstanding performance-based restricted shares
                         granted on or after the Effective Date (including the
                         Performance-Based Restricted Shares granted pursuant
                         to Section 5(d) hereof) which are scheduled to vest on
                         the March 15 following the end of the fiscal year in
                         which the Date of Termination occurs shall vest as of
                         such March 15 and shall be delivered to the Executive
                         as soon as practicable thereafter, such pro rata
                         portion to be based on actual performance for such
                         fiscal year and the number of days during such fiscal
                         year that the Executive remained employed by the
                         Company through the Date of Termination; and
 
                 (vi)    continued medical and welfare benefits shall be
                         provided to the Executive and her dependents for a
                         period of eighteen (18) months following the Date of
                         Termination with the full cost to be paid by the
                         Company.
 
            (b)  Death. If the Executive's employment is terminated by her
                 death, the Company shall pay to the person(s) or entity set
                 forth in Section 9(b) hereof the Accrued Obligations, the
                 proceeds of the supplemental life insurance policy as
                 described in Section 5(i) and all then outstanding equity
                 awards shall be treated as set forth in Sections
                 6A(a)(iii)-(v) hereof.
 
            (c)  Termination for Cause; Voluntary Termination Without Good
                 Reason. If the Executive's employment is terminated by the
                 Company for Cause or voluntarily by the Executive for other
                 than Good Reason (including by reason of the expiration of the
                 Term of this Agreement as a result of a Non-Renewal Notice
                 having been given by the Executive), the Company shall pay the
                 Accrued Obligations to the Executive at the time(s) set forth
                 in Section 6A(a)(i) hereof and the Company shall have no
                 further payment obligations to the Executive under this
                 Agreement. All outstanding equity awards granted on or after
                 the Effective Date which are not then vested or exercisable
                 (as the case may be) shall be immediately forfeited and shall
                 terminate. All outstanding equity awards granted to the
                 Executive prior to the Effective Date shall be treated in
                 accordance with the Prior Agreement or the respective plans
                 and award agreements under which they were granted.
 
            (d)  Termination Without Cause; Termination for Good Reason;
                 Non-Renewal. If (i) the Company shall terminate the
                 Executive's employment other than for Disability pursuant to
                 Section 6(a)(iii) or for Cause, (ii) the Executive shall
                 terminate her employment for Good Reason, or (iii) the Term of
                 this Agreement expires as a result of a Non-Renewal Notice
                 having been provided by the Company, then, subject to the
                 provisions of Sections 7 and 8 hereof:
 
                 (1) the Company shall pay the Accrued Obligations to the
                 Executive at the time(s) set forth in Section 6A(a)(i) hereof
                 and shall continue to provide health, medical and life
                 insurance benefits to the Executive with the full cost to be
                 paid by the Company for the greater of the term of the
                 Agreement or eighteen (18) months (but in no event later than
                 the end of the second calendar year following the calendar
                 year in which the Date of Termination occurs); and, if
                 permissible, COBRA benefits will commence after the applicable
                 period has expired); provided, however that the Company's
                 obligation to provide such continued health and medical
                 benefits shall be reduced to the extent that equivalent
                 coverages and benefits (determined on a coverage-by-coverage
                 and benefit-by-benefit basis) of the same type are received by
                 or made available by a subsequent employer to the Executive
                 during such time (and the Executive within a reasonable period
                 of time will notify the Company with respect to any such
                 benefits received by or made available to the Executive);
 
                 (2) (A) unless clause (B) below applies, then following the
                 Date of Termination and for the longer of eighteen (18) months
                 thereafter or the remaining Term of this Agreement, the
                 Company shall pay to the Executive monthly an amount equal to
                 the Severance Payments (as defined in Section 6A(a)(ii)
                 hereof) and all equity awards shall be treated as set forth in
                 Sections 6A(a)(iii)-(v) hereof, or
 
                 (B) in the event the Date of Termination occurs following a
                 Change in Control, then,
 
                     (i) within five days after the Date of Termination, the
                 Company shall pay to the Executive in a lump sum an amount
                 equal to the product of (X) three (3), multiplied by (Y) the
                 sum of the Executive's annual salary at the rate in effect as
                 of the Date of Termination plus the Severance Bonus (as
                 defined below). Severance Bonus shall mean: (I) if the Date of
                 Termination occurs on or after the end of the Company's 2006
                 fiscal year, the average of the total bonuses earned by the
                 Executive, including bonuses earned under the Performance
                 Plan, the Long-Term Plans and all successor plans, in the
                 three (or fewer) fiscal years of the Company ended immediately
                 prior to the Date of Termination (excluding fiscal years prior
                 to the Company's 2006 fiscal year); or (II) if the Date of
                 Termination occurs on or prior to the end of the Company's
                 2006 fiscal year, the greater of (i) the total bonuses earned
                 by the Executive for the fiscal year ended coincident with or
                 immediately prior to the Date of Termination, or (ii) 100% of
                 the target bonus for the year in which the Date of Termination
                 occurs;
 
                 For purposes of this subsection (2)(B): (I) if the Date of
                 Termination occurs prior to the occurrence of a Change in
                 Control but during the pendency of a Potential Change in
                 Control (as hereinafter defined), such Date of Termination
                 shall be deemed to have occurred following a Change in
                 Control, and (II) a "Potential Change in Control" shall be
                 deemed to have occurred if the event set forth in any one of
                 the following clauses shall have occurred:
 
                 (i)     the Company enters into an agreement, the consummation
                         of which would result in the occurrence of a Change in
                         Control;
 
                 (ii)    the Company or any person (as defined in Section
                         3(a)(9) of the Securities Exchange Act of 1934, as
                         amended (the "Exchange Act"), as modified and used in
                         Sections 13(d) and 14(d) thereof (a "Person"), except
                         that such term shall not include (w) the Company or
                         any of its subsidiaries, (x) a trustee or other
                         fiduciary holding securities under an employee benefit
                         plan of the Company or any of its affiliates, (y) an
                         underwriter temporarily holding securities pursuant to
                         an offering of such securities, or (z) a corporation
                         owned, directly or indirectly, by the stockholders of
                         the Company in substantially the same proportions as
                         their ownership of stock of the Company) publicly
                         announces an intention to take or to consider taking
                         actions which, if consummated, would constitute a
                         Change in Control;
 
                 (iii)   any Person becomes the beneficial owner (as defined in
                         Rule 13d-3 under the Exchange Act), directly or
                         indirectly, of securities of the Company representing
                         15% or more of either the then outstanding shares of
                         common stock of the Company or the combined voting
                         power of the Company's then outstanding securities
                         (not including the securities beneficially owned by
                         such Person or any securities acquired directly from
                         the Company); or
 
                 (iv)    the Board of Directors adopts a resolution to the
                         effect that, for purposes of this subsection (2), a
                         Potential Change in Control has occurred. The pendency
                         of a Potential Change in Control shall immediately
                         cease upon the adoption of a resolution of the
                         Company's Board of Directors to that effect.
 
                 (3) For purposes of this Agreement, the period during or with
                 respect to which the Executive is entitled to receive payments
                 hereunder is referred to as the "Severance Period";
 
                 (4) all outstanding stock options granted to the Executive
                 (including the Option granted pursuant to Section 5(b) hereof)
                 and all outstanding restricted shares granted to the Executive
                 (including the Time-Vested Restricted Shares and the
                 Performance-Based Restricted Shares granted pursuant to
                 Sections 5(c) and 5(d), respectively) shall be governed by the
                 respective plans and award agreements under which each such
                 award was granted; and
 
                 (5) the Executive shall be provided with outplacement services
                 commensurate with her position.
 
            (e)  Gross-Up Payment. In the event that any payment or benefit
                 received or to be received by the Executive in connection with
                 a Change in Control or the termination of the Executive's
                 employment, whether such payments or benefits are received
                 pursuant to the terms of this Agreement or any other plan,
                 arrangement or agreement with the Company, any person whose
                 actions result in a Change in Control or any person affiliated
                 with the Company or such person (all such payments and
                 benefits being hereinafter called "Total Payments"), would be
                 subject (in whole or part), to the tax (the "Excise Tax")
                 imposed under Section 4999 of the Internal Revenue Code of
                 1986, as amended (the "Code"), the Company shall pay to the
                 Executive such additional amounts (the "Gross-Up Payment") as
                 may be necessary to place the Executive in the same after-tax
                 position as if no portion of the Total Payments had been
                 subject to the Excise Tax. In the event that the Excise Tax is
                 subsequently determined to be less than the amount taken into
                 account hereunder, the Executive shall repay to the Company,
                 at the time that the amount of such reduction in Excise Tax is
                 finally determined, the portion of the Gross-Up Payment
                 attributable to such reduction (plus that portion of the
                 Gross-Up Payment attributable to the Excise Tax and federal,
                 state and local income tax imposed on the Gross-Up Payment
                 being repaid by the Executive to the extent that such
                 repayment results in a reduction in Excise Tax and/or a
                 federal, state or local income tax deduction) plus interest on
                 the amount of such repayment at the rate provided in Section
                 1274(b)(2)(B) of the Code. In the event that the Excise Tax is
                 determined to exceed the amount taken into account hereunder
                 (including by reason of any payment the existence or amount of
                 which cannot be determined at the time of the Gross-Up
                 Payment), the Company shall make an additional Gross-Up
                 Payment in respect of such excess (plus any interest,
                 penalties or additions payable by the Executive with respect
                 to such excess) at the time that the amount of such excess is
                 finally determined. The Executive and the Company shall each
                 reasonably cooperate with the other in connection with any
                 administrative or judicial proceedings concerning the
                 existence or amount of liability for Excise Tax with respect
                 to the Total Payments.
 
            (f)  Compliance with Section 409A. Notwithstanding anything in this
                 Agreement to the contrary, in the event that the Executive is
                 deemed to be a "specified employee" within the meaning of
                 Section 409A of the Internal Revenue Code of 1986, as amended
                 ("Section 409A"), no payment that is "deferred compensation"
                 subject to Section 409A shall be made to the Executive prior
                 to the date that is six (6) months after the date of
                 separation from service (as defined in Section 409A)(or, if
                 earlier, the Executive's date of death). In such event, the
                 payments subject to the six (6) month delay will be paid in a
                 lump sum on the earliest permissible payment date.
 
         7. Nonsolicitation; Noncompete. Subject to (c) below, during the
     period of the Executive's employment, during the period she is receiving
     Severance Payments hereunder and, in the case where the Executive's
     employment is terminated for Cause or the Executive voluntarily terminates
     her employment without Good Reason, for a period of twelve months
     following such termination, the Executive shall not initiate discussions
     with any person who is then an executive employee of the Company (i.e.,
     director level or above) with the intent of soliciting or inducing such
     person to leave his or her employment with a view toward joining the
     Executive in the pursuit of any business activity (whether or not such
     activity involves engaging or participating in a Competitive Business, as
     defined below). Notwithstanding any other provision of this Agreement to
     the contrary, in the event the Executive fails to comply with the
     preceding sentence, all rights of the Executive and her surviving spouse
     or other beneficiary hereunder to any future Severance Payments and
     continuing life insurance and medical coverage and all rights with respect
     to restricted stock and exercisability of stock options shall be
     forfeited; provided that, the foregoing shall not apply if such failure of
     compliance commences following a Change in Control.
 
            (a)  Subject to (c) below, as long as the Executive receives
                 Severance Payments, or in the case where the Executive's
                 employment is terminated for Cause or the Executive
                 voluntarily terminates her employment without Good Reason, for
                 a period of twelve months following such termination, the
                 Executive shall not, without the prior written consent of the
                 Company (which consent shall not be unreasonably withheld),
                 engage or participate in any business which is "in
                 competition" (as defined below) with the business of the
                 Company or any of its 50% or more owned affiliates (such
                 business being referred to herein as a "Competitive
                 Business"). Notwithstanding any other provision of this
                 Agreement to the contrary, in the event the Executive fails to
                 comply with the preceding sentence, all rights of the
                 Executive and her surviving spouse or other beneficiary
                 hereunder to any future Severance Payments, and continuing
                 life insurance and medical coverage and all rights with
                 respect to restricted stock and exercisability of stock
                 options shall be forfeited; provided that, the foregoing shall
                 not apply if such failure of compliance commences following a
                 Change in Control.
 
            (b)  In the event of a violation of Sections 7(a) or 7(b) hereof,
                 the remedies of the Company shall be limited to (i) if such
                 violation occurs during the period of Executive's employment
                 hereunder, termination of the Executive for Cause and the
                 associated rights of the Company specified herein resulting
                 therefrom, (ii) regardless of when such violation occurs,
                 forfeiture by the Executive of the payments, benefits and
                 other rights set forth in sections (a) and (b) above if and to
                 the extent provided in such sections, and (iii) the right to
                 seek injunctive relief in accordance with and to the extent
                 provided in Section 14 hereof; provided such injunctive relief
                 may only be sought for competitive activity under Section (b)
                 above if such activity occurs during employment or after
                 Executive's dismissal for Cause or Executive voluntarily
                 terminates her employment for Good Reason.
 
            (c)  For purposes hereof, a business will be "in competition" with
                 the business of the Company or its 50% or more owned
                 affiliates only if (i) the Company's business with which the
                 other business competes accounted for 20% or more of the
                 Company's consolidated revenues as of the end of its most
                 recently completed fiscal year prior to the Date of
                 Termination, and (ii) the entity (including all 50% or more
                 owned affiliates) through which the other business is or will
                 be operated maintains a "women's apparel" business which
                 generated at least $100 million in revenue during the entity's
                 most recently completed fiscal year ended prior to the date
                 the Executive commences (or proposes to commence) to engage or
                 participate in the other business. For purposes hereof,
                 "women's apparel" shall consist of dresses, jackets, pants,
                 shorts, skirts, blouses, sweaters, T-shirts, outerwear,
                 footwear and accessories.
 
            (d)  Notwithstanding the foregoing, the Executive's engaging in the
                 following activities shall not be construed as engaging or
                 participating in a Competitive Business: (i) investment
                 banking; (ii) passive ownership of less than 2% of any class
                 of securities of a public company; (iii) engaging or
                 participating in noncompetitive businesses of an entity which
                 also operates a business which is "in competition" with the
                 business of the Company or its affiliates; (iv) serving as an
                 outside director of an entity which operates a business which
                 is "in competition" with the business of the Company or its
                 affiliates, so long as such business did not account for 10%
                 or more of the consolidated revenues of such entity as of the
                 end of its most recently completed fiscal year prior to the
                 date the Executive commences (or proposes to commence) serving
                 as an outside director; (v) engaging in a business involving
                 licensing arrangements so long as such business is not an
                 in-house arrangement for any entity "in competition" with the
                 business of the Company or its affiliates; (vi) affiliation
                 with an advertising agency, and (vii) after cessation of
                 employment, engaging or participating in the "wholesale" side
                 of the women's apparel business, which for purposes hereof
                 shall mean the design, manufacture and sale of piece goods and
                 women's apparel to unrelated third parties, provided that if
                 the entity for which the Executive so engages or participates
                 (including its affiliates) also conducts a retail women's
                 apparel business, then effective upon the Executive's engaging
                 or participating in such business, all continuing life
                 insurance and medical coverage provided by the Company shall
                 cease and all Severance Payments shall cease except for
                 amounts representing the excess (if any) of the Executive's
                 annual base salary hereunder (at the rate in effect as of the
                 Date of Termination) over the Executive's base salary received
                 from such entity and its affiliates, which amounts shall
                 continue to be paid by the Company for the remainder of the
                 period in which the Executive is entitled to receive Severance
                 Payments hereunder. The exceptions contained in subsection
                 (vii) above and subsection (iii) above to the extent covered
                 by subsection (vii) shall not be applicable if the Executive's
                 cessation of employment is voluntary by the Executive without
                 Good Reason and her new engagement or participation involves
                 "wholesale" operations which include or also conduct retail
                 sales of women's apparel other than factory outlet or discount
                 stores to liquidate unsold women's apparel of such wholesale
                 operations.
 
         8. Protection of Confidential Information.
 
            (a)  The Executive acknowledges that her employment by the Company
                 will, throughout the Term of this Agreement, involve her
                 obtaining knowledge of confidential information regarding the
                 business and affairs of the Company. In recognition of the
                 foregoing, the Executive covenants and agrees that:
 
                 (i)     except in compliance with legal process, she will keep
                         secret all confidential matters of the Company which
                         are not otherwise in the public domain and will not
                         intentionally disclose them to anyone outside of the
                         Company, wherever located (other than to a person to
                         whom disclosure is reasonably necessary or appropriate
                         in connection with the performance by Executive of her
                         duties as an executive officer of the Company), either
                         during or after the Term, except with the prior
                         written consent of the Board of Directors or a person
                         authorized thereby; and
 
                 (ii)    she will deliver promptly to the Company on
                         termination of her employment or at any other time the
                         Company may so request, all memoranda, notes, records,
                         customer lists, reports and other documents (and all
                         copies thereof) relating to the business of the
                         Company which she obtained while employed by, or
                         otherwise serving or acting on behalf of, the Company
                         and which she may then possess or have under her
                         control.
 
            (b)  Notwithstanding the provisions of Section 14 of this
                 Agreement, if the Executive commits a breach of the provisions
                 of Section 8(a)(i) or 8(a) (ii), the Company shall have the
                 right and remedy to have such provisions specifically enforced
                 by any court having equity jurisdiction, it being acknowledged
                 and agreed that any such breach or threatened breach will
                 cause irreparable injury to the Company and that money damages
                 will not provide an adequate remedy to the Company.
 
         9. Successors; Binding Agreement.
 
            (a)  Neither this Agreement nor any rights hereunder shall be
                 assignable or otherwise subject to hypothecation by the
                 Executive (except by will or by operation of the laws of
                 intestate succession) or by the Company, except that the
                 Company 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, by agreement in form and substance reasonably
                 satisfactory to the Executive, 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 had taken place. Failure of the Company to
                 obtain such assumption and agreement prior to the
                 effectiveness of any such succession shall be a breach of this
                 Agreement and shall entitle the Executive to compensation from
                 the Company in the same amount and on the same terms as she
                 would be entitled to hereunder if she terminated her
                 employment for Good Reason except that for purposes of
                 implementing the foregoing, the date on which any such
                 succession becomes effective shall be deemed the Date of
                 Termination. As used in this Agreement, "Company" shall mean
                 the Company as herein before defined and any successor to its
                 business and/or assets as aforesaid which executes and
                 delivers the agreement provided for in this Section 9 or which
                 otherwise becomes bound by all the terms and provisions of
                 this Agreement by operation of law.
 
            (b)  This Agreement and all rights of the Executive hereunder shall
                 inure to the benefit of and be enforceable by the Executive's
                 personal or legal representatives, executors, administrators,
                 successors, heirs, devisees and legatees. If the Executive
                 should die while any amounts would still be payable to her
                 hereunder if she had continued to live, all such amounts,
                 unless otherwise provided herein, shall be paid in accordance
                 with the terms of this Agreement to the Executive's devisee,
                 legatee, or other designee or, if there is no such designee,
                 to the Executive's estate.
 
         10. Notice. For the purposes of this Agreement, notices, demands and
     all other communications provided for in this Agreement shall be in
     writing and shall be deemed to have been duly given when (i) personally
     delivered to the Executive or an executive officer of the Company, (ii)
     five (5) business days after being mailed by United States certified or
     registered mail, return receipt requested, postage prepaid, or (iii) one
     business day after being shipped by an overnight courier service, to the
     address as follows:
 
                  If to the Company:
                  AnnTaylor Stores Corporation
                  7 Times Square
                  New York, New York 10036
                  Attn: General Counsel
 
                  If to the Executive:
 
                  Katherine Lawther Krill
                  333 Stamford Avenue
                  Stamford, Connecticut 06902
 
                  With a copy to:
                  Howard Pianko, Esq.
                  Epstein Becker & Green, P.C.
                  250 Park Avenue
                  New York, New York 10177
 
     or to such other address as a party may have furnished to the other in
     writing in accordance herewith, except that notices of change of address
     shall be effective only upon receipt.
 
         11. Miscellaneous. No provisions of this Agreement may be modified,
     waived or discharged unless such waiver, modification or discharge is
     agreed to in a writing signed by the Executive and such officer of the
     Company as may be specifically designated by the Board of Directors. 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 agreements or representations, oral or otherwise,
     express or implied, with respect to the subject matter hereof have been
     made by either party which are not set forth expressly in this Agreement.
     The validity, interpretation, construction and performance of this
     Agreement shall be governed by the laws of the State of New York without
     regard to its conflicts of law principles. All payments hereunder shall be
     subject to applicable Federal, State and local tax withholding
     requirements.
 
         12. Validity. The invalidity or unenforceability of any provision or
     provisions of this Agreement shall not affect the validity or
     enforceability of any other provision of this Agreement, which shall
     remain in full force and effect.
 
         13. Counterparts. This Agreement may be executed in one or more
     counterparts, each of which shall be deemed to be an original but all of
     which together will constitute one and the same instrument.
 
         14. Arbitration. Any dispute or controversy arising under or in
     connection with this Agreement shall be settled exclusively by
     arbitration, conducted before a panel of three arbitrators in New York
     City in accordance with the rules of the American Arbitration Association
     then in effect. Judgment may be entered on the arbitrator's award in any
     court having jurisdiction; provided that, the Company shall be entitled to
     seek a restraining order or injunction in any court of competent
     jurisdiction to prevent any continuation of any violation of the
     provisions of Section 7 or 8 of the Agreement and the Executive hereby
     consents that such restraining order or injunction may be granted without
     the necessity of the Company's posting any bond and further provided that,
     the Executive shall be entitled to seek specific performance of her right
     to be paid until the Date of Termination during the pendency of any
     dispute or controversy arising under or in connection with this Agreement.
     Each party shall bear its own costs and expenses (including, without
     limitation, legal fees) in connection with any arbitration proceeding
     instituted hereunder; provided that the Company shall pay directly or
     reimburse the Executive for any legal fees incurred by Executive in any
     arbitration in which she prevails.
 
         15. Payment of Fees. The Company shall reimburse the Executive for all
     legal and consulting fees incurred in connection with the preparation and
     negotiation of this Agreement in an amount not to exceed $110,000.
 
         16. Section 409A. This Agreement is intended to comply with the
     requirements of Section 409A and shall be interpreted accordingly. In the
     event that any provision of this Agreement would or may cause this
     Agreement to fail to comply with Section 409A, such provision may be
     deemed null and void and the Company and the Executive agree to amend or
     restructure this Agreement, to the extent necessary and appropriate to
     avoid adverse tax consequences under Section 409A.
 
         17. Entire Agreement. This Agreement sets forth the entire agreement
     of the parties hereto in respect of the subject matter contained herein
     and supersedes any other prior agreements, promises, covenants,
     arrangements, communications, representations or warranties, whether oral
     or written, by any officer, employee or representative of any party
     hereto, including without limitation, and the Prior Agreement which is
     replaced hereby as of the Effective Date, except that any equity awards
     granted prior to the Effective Date shall continue to be governed by the
     Prior Agreement and the respective plans and award agreements under which
     such awards were granted.
 
<PAGE>
 
 
                                    ANNTAYLOR STORES CORPORATION
 
 
                                    By: /s/ Ronald W. Hovsepian
                                       --------------------------------
                                    Name:   Ronald W. Hovsepian
                                    Title:  Non-Executive Chairman
                                            of the Board
 
 
                                    EXECUTIVE
 
                                    /s/ Katherine Lawther Krill
                                    ------------------------------
                                    Katherine Lawther Krill
 
#Top of the Document

EX-10.32.1 3 dex10321.htm AMENDMENT TO EMPLOYMENT AGREEMENT

Exhibit 10.32.1

AMENDMENT TO

EMPLOYMENT AGREEMENT

THIS AMENDMENT (“Amendment”) to the Employment Agreement (“Employment Agreement”) by and between AnnTaylor Stores Corporation (the “Company”) and Katherine Lawther Krill (the “Executive”) dated as of October 1, 2005, is entered into by the Company and the Executive on, and to be effective as of December 19, 2008. Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Employment Agreement.

W I T N E S S E T H

WHEREAS, the parties hereto desire to amend the Employment Agreement on the terms set forth herein, including amendments to allow the Employment Agreement to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”).

NOW, THEREFORE, in consideration of the foregoing, and of the representations, warranties, covenants and agreements contained in the Employment Agreement and herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged and accepted, the parties hereto hereby agree as follows:

1. The last sentence of Section 5(f) of the Employment Agreement is amended to read as follows:

Without limiting the generality of the foregoing, the Company shall provide the Executive with reimbursement of expenses incurred by the Executive for financial, tax and real estate planning services in an amount not to exceed $25,000 per year; provided such reimbursements shall be made as soon as practicable following incurrence of the expense, but in no event later than the end of the calendar year following the calendar year in which the expense was incurred.”

2. Section 5(i) of the Employment Agreement is amended to read as follows:

Life Insurance. During the Term of this Agreement and for a period of eighteen (18) months following the Date of Termination (other than a Date of Termination in connection with the Executive’s death or a termination of Executive’s employment by the Company for Cause or by the Executive for other than Good Reason), the Company shall maintain a supplemental life insurance policy on behalf of the Executive which provides for a death benefit equal to no less than seven million dollars ($7,000,000), the proceeds of which shall be paid upon the death of the Executive to the beneficiary designated by the Executive.”

3. Section 5(j) of the Employment Agreement is amended to add the following sentence at the end thereof:

Such gross-up payments shall be made as soon as practicable (but in no event later than the end of the calendar year) following the calendar year in which the transportation services are provided.”


4. The second sentence of Section 6(a)(iv) of the Employment Agreement is amended to read as follows:

For purposes of this Agreement, the Executive shall have “Good Reason” to terminate her employment hereunder (1) upon a failure by the Company to comply with any material provision of this Agreement which has not been cured within ten business days after notice of such noncompliance has been given by the Executive to the Company, (2) upon action by the Company resulting in a diminution of the Executive’s title or authority, (3) upon the Company’s relocation of the Executive’s principal place of employment outside of the New York City metropolitan area, (4) one year after a Change in Control, or (5) upon failure of the Company to obtain from a successor the assumption and agreement to perform this Agreement, as set forth in Section 9(a).”

5. Section 6A(a) of the Employment Agreement is amended to add the following sentence to the end thereof:

Following termination of Executive’s employment for Disability, the Executive shall have no further rights to any compensation or any other benefits under this Agreement other than as set forth in this Section 6A(a).”

6. The initial clause (i) of Section 6A(d)(2)(B) of the Employment Agreement is amended to read as follows:

(i) within five days after the Date of Termination, the Company shall pay to the Executive in a lump sum an amount equal to the product of (X) three (3), multiplied by (Y) the sum of the Executive’s annual salary at the rate in effect as of the Date of Termination plus the Severance Bonus (as defined below). Severance Bonus shall mean the average of the total bonuses earned by the Executive, including bonuses earned under the Performance Plan, the Long-Term Plans and all successor plans, in the three (or fewer) fiscal years of the Company ended immediately prior to the Date of Termination (excluding fiscal years prior to the Company’s 2006 fiscal year); provided however, that if (1) the Change in Control under this Agreement does not constitute a “change in the ownership or effective control of the corporation, or in the ownership of a substantial portion of the assets of the corporation” (within the meaning of Section 409A of the Code and applicable guidance issued thereunder) or (2) as described in the following paragraph, such termination occurs prior to the occurrence of a Change in Control but during the pendency of a Potential Change in Control (as hereinafter defined), the Company shall pay to the Executive, on a monthly basis for a period of eighteen (18) months, an amount equal to one-sixth ( 1/6th) of the Executive’s annual salary at the rate in effect as of the Date of Termination plus one-sixth ( 1/6th) of the Severance Bonus (as defined above).”

7. Section 6A(d)(3) of the Employment Agreement is amended to read as follows:

(3) RESERVED.”

8. Section 6A(d)(5) of the Employment Agreement is amended to read as follows:

(5) the Executive shall be provided with outplacement services commensurate with her position, provided that any outplacement expenses shall be incurred no later than the end of the second calendar year following the calendar year in which the Date of Termination occurs and shall be reimbursed no later than the end of the third such calendar year.”


9. Section 6A(e) of the Employment Agreement is amended to add the following sentence at the end thereof:

Any Gross-Up Payments shall be made as soon as practicable (but in no event later than the end of the calendar year) following the calendar year in which the Excise Tax is paid.”

10. Section 6A(f) of the Employment Agreement is deleted.

11. The initial paragraph of Section 7 of the Employment Agreement is redesignated as Section 7(a), the subsections of Section 7 of the Employment Agreement currently designated (a) through (d) are redesignated as subsections (b) through (e), and the proviso of Section 7(c) as redesignated is amended by changing the word “for” to “without” in the last line thereof.

12. The second sentence of Section 9(a) of the Employment Agreement is amended to read as follows:

Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute “Good Reason” under Section 6(a)(iv), thus entitling the Executive to terminate her employment in accordance with the provisions thereof and receive compensation from the Company as set forth in Section 6A(d) of this Agreement.”

13. Section 16 of the Employment Agreement is amended to read as follows:

Section 409A. It is intended that the payments and benefits under this Agreement comply with, or as applicable, constitute a short-term deferral or otherwise be exempt from, the provisions of Section 409A of the Code and the regulations and other guidance issued thereunder (“Section 409A”). The Company shall administer and interpret this Agreement in a manner so that such payments and benefits comply with, or are otherwise exempt from, the provisions of Section 409A. Any provision that would cause this Agreement to fail to satisfy Section 409A will have no force and effect until amended to comply therewith (which amendment may be retroactive to the extent permitted by Section 409A). Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payments shall be due to Executive under this Agreement providing for payment of amounts on termination of employment unless Executive would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Executive’s termination of employment shall instead be paid on the first business day after the date that is six months following Executive’s termination of employment (or upon death, if earlier). In addition, for purposes of this Agreement, each amount to be paid or benefit to be provided to Executive pursuant to this Agreement which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A.”

Except as amended hereunder, all other terms and conditions of the Employment Agreement shall remain in full force and effect. This Amendment may be executed in counterparts, each of which shall be an original, with the same effect as of the signatures hereto and thereto were upon the same instrument.

 


IN WITNESS WHEREOF, the parties have executed this Amendment and caused the same to be duly delivered on their behalf on the day and year first written above.

 

ANNTAYLOR STORES CORPORATION

By

 

/s/ Ronald W. Hovsepian

EXECUTIVE

/s/ Katherine Lawther Krill

Katherine Lawther Krill

 
Exhibit 10.18
 
 
                          ANNTAYLOR STORES CORPORATION
                             SPECIAL SEVERANCE PLAN
 
 
            AnnTaylor   Stores   Corporation,   a  Delaware   corporation   (the
 
"Company"),  hereby adopts the AnnTaylor Stores  Corporation  Special  Severance
 
Plan (the  "Plan") for the benefit of certain  employees  of the Company and its
 
subsidiaries, on the terms and conditions hereinafter stated.
 
 
            The Plan, as set forth herein,  is intended to help retain qualified
 
employees,  maintain a stable work environment and provide economic  security to
 
certain  employees of the Company in the event of a Qualifying  Termination  (as
 
defined herein).  The Plan, as a "severance pay arrangement"  within the meaning
 
of Section  3(2)(B)(i) of ERISA, is intended to be excepted from the definitions
 
of "employee  pension  benefit plan" and "pension  plan" set forth under Section
 
3(2) of ERISA,  and is intended to meet the  descriptive  requirements of a plan
 
constituting a "severance pay plan" within the meaning of regulations  published
 
by the  Secretary  of  Labor at  Title  29,  Code of  Federal  Regulations,  ss.
 
2510.3-2(b).
 
 
 
SECTION 1.  DEFINITIONS.  As hereinafter used:
            -----------
 
 
 
            1.1 "Affiliate" shall mean any corporation,  directly or indirectly,
                 ---------
through one or more intermediaries,  controlling,  controlled by or under common
 
control with the Company.
 
 
 
            1.2  "Annual  Compensation"  shall mean (i) the  Severed  Employee's
                  --------------------
current  rate of base salary  (determined  immediately  prior to the  Qualifying
 
Termination and without regard to any decrease in such salary  constituting Good
 
Reason),  plus (ii) the average of the Severed  Employee's annual bonuses earned
 
in respect of the three full  fiscal  years (or the number of full years  worked
 
with the Company,  if fewer than three) immediately  preceding the year in which
 
the Change in Control occurs or, if higher, in which the Qualifying  Termination
 
occurs.
 
 
 
            1.3 "Board" shall mean the Board of Directors of the Company.
                 -----
 
 
            1.4  "Cause"  shall  mean,  with  respect  to a  termination  of the
                  -----
Employee's employment with the Company, (i) the willful and continued failure by
 
the Employee to  substantially  perform the  Employee's  duties with the Company
 
(other than by reason of physical or mental  incapacity)  or (ii) the conviction
 
of the Employee for the commission of a felony involving moral turpitude.
 
 
 
            1.5 "Change in Control" shall be deemed to have occurred if:
                 -----------------
 
            (I)   any "person", as such term is used in Sections 13(d) and
 
                  14(d) of the Exchange Act, other than (A) the Company, (B)
 
                  any trustee or other fiduciary holding securities under an
 
                  employee benefit plan of the Company, or (C) any
 
                                      -1-
 
                  corporation owned, directly or indirectly, by the
 
                  stockholders of the Company (in substantially the same
 
                  proportion as their ownership of shares), (a "Person") is
 
                  or becomes the "beneficial owner" (as defined in Rule 13d-3
 
                  under the Exchange Act), directly or indirectly, of
 
                  securities of the Company representing 30% or more of the
 
                  combined voting power of the Company's then outstanding
 
                  voting securities;
 
 
 
 
            (II)  during any period of not more than two consecutive years,
 
                  individuals who at the beginning of such period constitute
 
                  the Board, and any new director (other than a director
 
                  designated by a person who has entered into an agreement
 
                  with the Company to effect a transaction described in
 
                  clause (I), (III) or (IV) of this Section 1.5) whose
 
                  election by the Company's stockholders was approved by a
 
                  vote of at least two-thirds (2/3) of the directors then
 
                  still in office who either were directors at the beginning
 
                  of the period or whose election or nomination for election
 
                  was previously so approved, cease for any reason to
 
                  constitute at least a majority thereof;
 
 
 
(III)             the   stockholders   of  the  Company   approve  a  merger  or
 
                  consolidation of the Company with any other corporation, other
 
                  than (A) a merger or  consolidation  which would result in the
 
                  voting securities of the Company outstanding immediately prior
 
                  thereto   continuing   to   represent   (either  by  remaining
 
                  outstanding or by being  converted  into voting  securities of
 
                  the  surviving  or parent  entity) 50% or more of the combined
 
                  voting power of the voting  securities  of the Company or such
 
                  surviving or parent entity outstanding  immediately after such
 
                  merger  or  consolidation  or (B) a  merger  or  consolidation
 
                  effected to  implement a  recapitalization  of the Company (or
 
                  similar  transaction)  in which no  Person is or  becomes  the
 
                  beneficial owner (as defined in clause (I) above), directly or
 
                  indirectly,  of securities of the Company  representing 30% or
 
                  more  of the  combined  voting  power  of the  Company's  then
 
                  outstanding securities; or
 
 
 
(IV)              the  stockholders  of the  Company  approve a plan of complete
 
                  liquidation  of the  Company or an  agreement  for the sale or
 
                  disposition by the Company of all or substantially  all of the
 
                  Company's assets (or any transaction having a similar effect).
 
 
 
            1.6 "Code" shall mean the Internal  Revenue Code of 1986,  as it may
                 ----
be amended from time to time.
 
 
 
            1.7 "Committee" shall mean the Compensation Committee of the Board.
                 ---------
 
                                      -2-
 
            1.8 "Company" shall mean AnnTaylor  Stores  Corporation,  a Delaware
                 -------
corporation, or any successor thereto.
 
 
 
            1.9 "Disability"  shall mean a physical or mental condition  causing
                 ----------
the  Employee to be unable to  substantially  perform his or her duties with the
 
Company,  including,  without limitation, such condition entitling him or her to
 
benefits  under  any sick pay or  disability  income  policy or  program  of the
 
Company.
 
 
 
            1.10 "Effective Date" shall mean January 1, 2000.
                  --------------
 
 
            1.11 "Employee" shall mean any employee of the Company or any direct
                  --------
or indirect  subsidiary  of the Company who is a Level I, Level II, Level III or
 
Level IV Employee.
 
 
 
            1.12 "ERISA" shall mean the Employee  Retirement Income Security Act
                  -----
of 1974, as it may be amended from time to time.
 
 
 
            1.13 "Exchange Act" shall mean the Securities  Exchange Act of 1934,
                  ------------
as amended.
 
 
 
            1.14 "Good Reason" shall mean any of the following acts or omissions
                  -----------
that take  place on or after the  occurrence  of a Change  in  Control:  (i) the
 
material diminution in the Employee's duties or authority;  (ii) a change of the
 
Employee's  place of  employment  by more  than  fifty  (50)  miles;  or (iii) a
 
reduction in the Employee's salary or bonus opportunity; provided, however, that
                                                         -----------------
clause (i) above shall only be  applicable to an Employee who is as a Level I or
 
Level II Employee.
 
 
 
            1.15 "Level I Employee"  shall mean an Employee who has the title of
                  ----------------
Executive Vice President of the Company or any direct or indirect  subsidiary of
 
the Company.
 
 
 
            1.16 "Level II Employee" shall mean an Employee who has the title of
                  -----------------
Senior Vice President of the Company or any direct or indirect subsidiary of the
 
Company.
 
 
 
            1.17 "Level III  Employee"  shall mean an Employee who has the title
                  -------------------
of Vice  President  of the Company or any direct or indirect  subsidiary  of the
 
Company.
 
 
 
            1.18  "Level  IV   Employee"   shall  mean  an  Employee  who  is  a
                   --------------------
Director-level  employee of the Company or any direct or indirect  subsidiary of
 
the Company (including District Managers and Merchandising Managers).
 
 
 
            1.19 "Person" shall mean any individual, entity or group, within the
                  ------
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.
 
                                      -3-
 
            1.20  "Plan   Administrator"   shall  mean  the  person  or  persons
                   --------------------
designated by the Committee or by the Board to administer the Plan.
 
 
            1.21  "Potential  Change in Control" shall be deemed to occur in the
                   ----------------------------
event that, after the Effective Date, the Company enters into an agreement,  the
 
consummation of which would result in a Change in Control or the Company, or any
 
Person  publicly  announces an intention  to take or to consider  taking  action
 
which, if consummated, would constitute a Change in Control.
 
 
            1.22  "Qualifying  Termination"  shall  mean  a  termination  of  an
                   -----------------------
Employee's  employment  following  a Change in  Control  and on or  before  such
 
Employee's Qualifying  Termination Date, either (i) by the Company without Cause
 
or (ii) by the Employee for Good Reason.  Severance Benefits will not be paid in
 
the event of termination of an Employee's  employment by reason of retirement or
 
death,  by the Company for Cause or Disability  or by the Employee  without Good
 
Reason. A termination of employment will not be deemed to have occurred upon (1)
 
the transfer of the Employee to  employment  with an Affiliate of the Company if
 
the Affiliate assumes the Company's responsibilities under the Plan with respect
 
to the Employee or (2) the  divestiture of a business with which the Employee is
 
primarily  associated  if the Employee is offered  comparable  employment by the
 
successor   company  and  such   successor   company   assumes   the   Company's
 
responsibilities under the Plan with respect to such Employee.
 
 
            1.23  "Qualifying  Termination  Date" shall mean the date  occurring
                   -----------------------------
twenty-four (24) months following a Change in Control.
 
 
 
            1.24  "Severance  Benefits"  shall mean the  payments  and  benefits
                   -------------------
provided to Severed Employees pursuant to Section 2.1 and 2.2 hereof.
 
 
            1.25  "Severance  Date"  shall  mean the  date on which an  Employee
                   ---------------
incurs a Qualifying Termination.
 
 
 
            1.26  "Severance Multiple" shall mean:
                   ------------------
 
                  (a)  with respect to Level I Employees, two and one-half;
 
 
                  (b) with respect to Level II employees, two;
 
 
                  (c) with respect to Level III Employees, one and one-half; and
 
 
                  (d) with respect to Level IV Employees, one.
 
 
 
            1.27  "Severed  Employee"  shall mean an Employee who has incurred a
                   -----------------
Qualifying Termination.
 
 
 
Additional definitions are set forth within the Plan and shall have the meanings
 
ascribed to them in the Plan.
 
                                      -4-
 
 
SECTION 2.  BENEFITS.
 
 
            2.1 Subject to Section 2.4 hereof,  each Severed  Employee  shall be
 
entitled to receive  from the Company an amount  equal to the product of (i) the
 
Severed Employee's Annual Compensation and (ii) the Severed Employee's Severance
 
Multiple (the "Severance  Amount").  The Severance  Amount shall be paid to such
 
Severed Employee in a lump sum as soon as practicable but no later than ten days
 
following the first date on which the Release  referred to in Section 2.5 hereof
 
is no longer  revocable.  The Severance Amount that a Severed Employee  receives
 
under this Plan shall not be taken into  account  for  purposes  of  determining
 
benefits under any other qualified or nonqualified plans of the Company.
 
 
 
            2.2  Subject  to  Section  2.4  hereof,   commencing   on  the  date
 
immediately  following the Severed Employee's  Severance Date and continuing for
 
the period set forth below (the  "Welfare  Benefit  Continuation  Period"),  the
 
Company shall provide each Severed  Employee and anyone  entitled to claim under
 
or through such Severed Employee with all Company-paid  benefits under any group
 
health plan and life  insurance  plan of the  Company (as in effect  immediately
 
prior to the such Severed Employee's Severance Date or, if more favorable to the
 
Severed  Employee,  immediately  prior  to the  Change  in  Control)  for  which
 
employees of the Company and its subsidiaries  are eligible,  to the same extent
 
as if such Severed  Employee  had  continued to be an employee of the Company or
 
any subsidiary  thereof during the Welfare Benefit  Continuation  Period. To the
 
extent that the Severed Employee's participation in Company benefit plans is not
 
practicable,  the  Company  shall  arrange to  provide,  at the  Company's  sole
 
expense, the Severed Employee and anyone entitled to claim under or through such
 
Severed  Employee with  equivalent  health and life insurance  benefits under an
 
alternative  arrangement  during the Welfare Benefit  Continuation  Period.  The
 
coverage  period for purposes of the group health  continuation  requirements of
 
Section  4980B of the Code  shall  commence  at the  expiration  of the  Welfare
 
Benefit  Continuation  Period.  For  purposes of this  Section  2.2, the Welfare
 
Benefit  Continuation  Period shall be the product of (a) the Severed Employee's
 
Severance Multiple and (b) twelve months.
 
 
 
            2.3 In the  event  of a claim by an  Employee  as to the  amount  or
 
timing of any payment or benefit under the Plan, such Employee shall present the
 
reason  for his or her  claim in  writing  to the Plan  Administrator.  The Plan
 
Administrator  shall,  within  thirty  (30) days after  receipt of such  written
 
claim, send a written notification to the Employee as to its disposition. In the
 
event the claim is wholly or partially denied,  such written  notification shall
 
(i) state the  specific  reason or reasons  for the denial,  (ii) make  specific
 
reference  to  pertinent  Plan  provisions  on which the denial is based,  (iii)
 
provide a description  of any additional  material or information  necessary for
 
the  Employee to perfect the claim and an  explanation  of why such  material or
 
information is necessary, and (iv) set forth the procedure by which the Employee
 
may appeal the denial of his or her claim.  In the event an  Employee  wishes to
 
appeal the denial of his or her  claim,  he or she may  request a review of such
 
denial by making application in writing to the Plan Administrator within fifteen
 
(15) days  after  receipt  of such  denial.  Such  Employee  (or his or her duly
 
                                      -5-
 
authorized  legal   representative)  may,  upon  written  request  to  the  Plan
 
Administrator, review any documents pertinent to his or her claim, and submit in
 
writing  issues and comments in support of his or her  position.  Within  thirty
 
(30) days after receipt of a written appeal (unless special circumstances,  such
 
as the need to hold a hearing,  require an  extension  of time,  but in no event
 
more than thirty (30) days after such  receipt),  the Plan  Administrator  shall
 
notify  the  Employee  of the final  decision.  The final  decision  shall be in
 
writing and shall include specific reasons for the decision, written in a manner
 
calculated  to be understood  by the  claimant,  and specific  references to the
 
pertinent Plan provisions on which the decision is based.
 
 
 
            2.4 No  Employee  shall be eligible  to receive  Severance  Benefits
 
unless he or she first executes a Release  (substantially in the form of Exhibit
 
A hereto)  in favor of the  Company  and  others  set forth on said  Exhibit  A,
 
relating  to all  claims  or  liabilities  of any  kind  relating  to his or her
 
employment  with the Company or a subsidiary  thereof and the termination of the
 
Employee's employment.
 
 
 
            2.5 The Company shall pay to each Employee all reasonable legal fees
 
and  expenses  incurred  by such  Employee in seeking in good faith to obtain or
 
enforce any right or benefit  provided under this Plan (other than any such fees
 
and  expenses  incurred in pursuing any claim  determined  to be frivolous by an
 
arbitrator or by a court of competent jurisdiction).
 
 
 
            2.6 (a) In the event that any  payment or benefit  received or to be
 
received hereunder by a Severed Employee who is a Level I Employee or a Level II
 
Employee (a "Severed  Executive")  would be subject (in whole or in part) to the
 
tax (the "Excise Tax") imposed under Section 4999 of the Code, the Company shall
 
pay to the Severed Executive such additional amounts (the "Gross-Up Payment") as
 
may be necessary to place the Severed  Executive in the same after-tax  position
 
in which he or she would  have been had no  portion  of the Total  Payments  (as
 
hereinafter  defined)  been subject to the Excise Tax. For purposes of the Plan,
 
"Total Payments" shall mean any payments made or benefits provided in connection
 
with a Change in  Control  of the  Company  or the  termination  of the  Severed
 
Executive's employment,  whether such payments or benefits are received pursuant
 
to the terms of this Plan or any other plan,  arrangement  or agreement with the
 
Company,  any person whose actions  result in a Change in Control of the Company
 
or any person affiliated with the Company or such person.
 
 
            (b) In the event that the Excise Tax is  subsequently  determined to
 
be less than the amount  taken into  account  hereunder,  the Severed  Executive
 
shall repay to the  Company,  at the time that the amount of such  reduction  in
 
Excise  Tax  is  finally  determined,   the  portion  of  the  Gross-Up  Payment
 
attributable  to the  reduction  (plus  that  portion  of the  Gross-Up  Payment
 
attributable  to the Excise Tax and federal,  state and local income tax imposed
 
on the Gross-Up Payment being repaid by the Severed Executive to the extent that
 
such  repayment  results in a reduction in Excise Tax and/or  federal,  state or
 
income tax deduction)  plus interest on the amount of such repayment at the rate
 
                                      -6-
>
 
provided in Section  1274(b)(2)(B) of the Code. In the event that the Excise Tax
 
is  determined to exceed the amount taken into account  hereunder  (including by
 
reason of any payment the existence of which cannot be determined as the time of
 
the Gross-Up Payment),  the Company shall make an additional Gross-Up Payment in
 
respect of such excess (plus any interest, penalties or additions payable by the
 
Severed  Executive  with  respect of such excess) at the time that the amount of
 
such excess if finally  determined.  The Severed Executive and the Company shall
 
each reasonably  cooperate with the other in connection with any  administrative
 
or judicial  proceedings  concerning  the  existence or amount of liability  for
 
Excise Tax with respect to the Total Payments.
 
 
 
 
SECTION 3.  PLAN ADMINISTRATION.
            -------------------
 
            3.1 The Plan shall be interpreted,  administered and operated by the
 
Plan Administrator,  which shall have complete authority, in its sole discretion
 
subject  to the  express  provisions  of the  Plan,  to  determine  who shall be
 
eligible for Severance Benefits, to interpret the Plan, to prescribe,  amend and
 
rescind  rules  and   regulations   relating  to  it,  and  to  make  all  other
 
determinations necessary or advisable for the administration of the Plan.
 
 
 
            3.2 All questions of any character  whatsoever arising in connection
 
with the  interpretation of the Plan or its administration or operation shall be
 
submitted  to and  settled  and  determined  by  the  Plan  Administrator  in an
 
equitable  and fair  manner in  accordance  with the  procedure  for  claims and
 
appeals described in Section 2.3 hereof.
 
 
 
            3.3 The Plan  Administrator may delegate any of its duties hereunder
 
to such person or persons from time to time as it may designate.
 
 
 
            3.4 The Plan  Administrator is empowered,  on behalf of the Plan, to
 
engage accountants, legal counsel and such other personnel as it deems necessary
 
or advisable to assist it in the  performance  of its duties under the Plan. The
 
functions of any such persons engaged by the Plan Administrator shall be limited
 
to the  specified  services  and  duties for which  they are  engaged,  and such
 
persons shall have no other duties,  obligations or  responsibilities  under the
 
Plan. Such persons shall exercise no  discretionary  authority or  discretionary
 
control  respecting the management of the Plan. All reasonable  expenses thereof
 
shall be borne by the Company.
 
 
 
 
SECTION 4.  PLAN MODIFICATION OR TERMINATION.
            --------------------------------
 
 
            The Plan may be  amended  or  terminated  by the  Board at any time;
 
provided,  however,  that (i) no termination or amendment of the Plan may reduce
 
the Severance  Benefits  payable under the Plan to an Employee if the Employee's
 
termination  of  employment   with  the  Company  has  occurred  prior  to  such
 
termination  of the Plan or  amendment  of its  provisions  and (ii)  during the
 
pendency of a Potential Change in Control and following a Change in Control, the
 
Plan may not be  terminated  and may not be amended  without the consent of each
 
                                      -7-
 
affected  Employee,  if such amendment  would be adverse to the interests of any
 
Employee.
 
 
 
SECTION 5.  GENERAL PROVISIONS.
            ------------------
 
 
            5.1  Except as  otherwise  provided  herein  or by law,  none of the
 
payments,  benefits or rights of any  Employee  shall be subject to any claim of
 
any creditor,  and, in particular,  to the fullest extent  permitted by law, all
 
such payments,  benefits and rights shall be free from attachment,  garnishment,
 
trustee's  process,  or any other legal or  equitable  process  available to any
 
creditor  of such  Employee.  No  Employee  shall  have the  right to  alienate,
 
anticipate,  commute, pledge, encumber or assign any of the benefits or payments
 
which he or she may expect to receive,  contingently  or  otherwise,  under this
 
Plan.
 
 
 
            5.2  Neither the  establishment  of the Plan,  nor any  modification
 
thereof,  nor the creation of any fund, trust or account, nor the payment of any
 
benefits  shall be construed as giving any Employee,  or any person  whomsoever,
 
the  right to be  retained  in the  service  of the  Company  or any  subsidiary
 
thereof,  and all Employees shall remain subject to discharge to the same extent
 
as if the Plan had never been adopted.
 
 
 
            5.3 If  any  provision  of  this  Plan  shall  be  held  invalid  or
 
unenforceable,  such invalidity or  unenforceability  shall not affect any other
 
provisions  hereof,  and this Plan shall be  construed  and  enforced as if such
 
provisions had not been included.
 
 
 
            5.4  This  Plan  shall  be  binding   upon  the  heirs,   executors,
 
administrators,  successors and assigns of the parties, including each Employee,
 
present and future, and any successor to the Company.
 
 
 
            5.5 The headings and captions  herein are provided for reference and
 
convenience  only,  shall not be considered  part of the Plan,  and shall not be
 
employed in the construction of the Plan.
 
 
 
            5.6 The Plan shall not be funded.  No Employee  shall have any right
 
to, or  interest  in,  any  assets of the  Company  which may be  applied by the
 
Company to the payment of benefits or other rights under this Plan.
 
 
 
            5.7  Any  benefit  payable  to or for the  benefit  of a  minor,  an
 
incompetent  person or other person incapable of giving a receipt therefor shall
 
be deemed paid when paid to such person's  guardian or to the party providing or
 
reasonably  appearing to provide for the care of such  person,  and such payment
 
shall fully discharge the Company, its subsidiaries,  the Plan Administrator and
 
all other parties with respect thereto.  If a Severed Employee dies prior to the
 
payment of all benefits due such Severed Employee,  such unpaid amounts shall be
 
paid to the executor, personal representative or estate of such Employee.
 
                                      -8-
 
 
            5.8 Any notice or other communication required or permitted pursuant
 
to the terms  hereof  shall  have been duly given  when  delivered  or mailed by
 
United  States mail,  first class,  postage  prepaid,  addressed to the intended
 
recipient at his, her or its last known address.
 
 
 
            5.9 This Plan shall be construed and enforced  according to the laws
 
of the State of Delaware,  without  giving effect to its principles of conflicts
 
of law,  to the extent not  preempted  by federal  law,  which  shall  otherwise
 
control.
 
 
                                      -9-
EXHIBIT A
 
                                RELEASE AGREEMENT
                                -----------------
 
            In  consideration  of the payments and benefits  provided for in the
 
annexed AnnTaylor Stores  Corporation  Special Severance Plan (the "Plan"),  and
 
the release from [insert  employee's  name] (the  "Employee")  set forth herein,
 
AnnTaylor Stores Corporation (the "Company") and the Employee agree to the terms
 
of this  Release  Agreement.  Capitalized  terms  used and not  defined  in this
 
Release Agreement shall have the meanings assigned thereto in the Plan.
 
 
 
            1. The Employee acknowledges and agrees that the Company is under no
 
obligation  to offer the  Employee  the  payments  and benefits set forth in the
 
annexed  Plan,  unless  the  Employee  consents  to the  terms  of this  Release
 
Agreement.  The Employee further acknowledges that he/she is under no obligation
 
to consent to the terms of this  Release  Agreement  and that the  Employee  has
 
entered into this agreement freely and voluntarily.
 
 
 
            2. The Employee  voluntarily,  knowingly and willingly  releases and
 
forever  discharges the Company and its Affiliates,  together with its and their
 
respective officers, directors,  partners,  shareholders,  employees and agents,
 
and each of its and their  predecessors,  successors and assigns  (collectively,
 
"Releasees"),   from  any  and  all  charges,   complaints,   claims,  promises,
 
agreements, controversies, causes of action and demands of any nature whatsoever
 
that the Employee or his/her  executors,  administrators,  successors or assigns
 
ever had, now have or  hereafter  can,  shall or may have  against  Releasees by
 
reason of any matter,  cause or thing  whatsoever  arising  prior to the time of
 
signing of this Release Agreement by the Employee. The release being provided by
 
the  Employee in this  Release  Agreement  includes,  but is not limited to, any
 
rights or claims relating in any way to the Employee's  employment  relationship
 
with the Company or any its Affiliates, or the termination thereof, or under any
 
statute,  including the federal Age  Discrimination  in Employment  Act of 1967,
 
Title VII of the Civil  Rights Act of 1964,  the Civil  Rights Act of 1990,  the
 
Americans with Disabilities Act of 1990, the Employee Retirement Income Security
 
Act of 1974, the Family and Medical Leave Act of 1993, each as amended,  and any
 
other federal, state or local law or judicial decision.
 
 
 
            3. The  Employee  acknowledges  and agrees  that  he/she  shall not,
 
directly or indirectly,  seek or further be entitled to any personal recovery in
 
any lawsuit or other claim  against the Company or any other  Releasee  based on
 
any event arising out of the matters released in paragraph 2.
 
 
 
            4.  Nothing  herein  shall  be  deemed  to  release  (i)  any of the
 
Employee's  rights  under the Plan or (ii) any of the vested  benefits  that the
 
Employee has accrued prior to the date this Release Agreement is executed by the
 
Employee under the employee benefit plans and arrangements of the Company or any
 
of its Affiliates.
 
                                      A-1
 
            5. In consideration of the Employee's release set forth in paragraph
 
2, the Company  knowingly  and  willingly  releases and forever  discharges  the
 
Employee from any and all charges,  complaints,  claims,  promises,  agreements,
 
controversies,  causes of action and demands of any nature  whatsoever  that the
 
Company now has or hereafter can, shall or may have against him/her by reason of
 
any matter,  cause or thing  whatsoever  arising prior to the time of signing of
 
this Release Agreement by the Company, provided, however, that nothing herein is
 
intended to release any claim the Company may have  against the Employee for any
 
illegal conduct.
 
 
 
            6. The Employee acknowledges that the Company has advised him/her to
 
consult  with an  attorney  of  his/her  choice  prior to signing  this  Release
 
Agreement.  The Employee  represents that, to the extent he/she desires,  he/she
 
has had the  opportunity  to review this Release  Agreement  with an attorney of
 
his/her choice.
 
 
 
            7. The  Employee  acknowledges  that  he/she  has been  offered  the
 
opportunity  to consider the terms of this Release  Agreement for a period of at
 
least  forty-five  (45) days,  although  he/she may sign it sooner should he/she
 
desire.  The Employee  further shall have seven additional days from the date of
 
signing this Release Agreement to revoke his/her consent hereto by notifying, in
 
writing,  the General  Counsel of the Company.  This Release  Agreement will not
 
become  effective  until  seven  days after the date on which the  Employee  has
 
signed it without revocation.
 
 
 
 
Dated:  ____________________         _______________________________
                                     [Employee Name]
 
 
                                     ANNTAYLOR STORES CORPORATION
 
 
                                    By:
                                     ---------------------------------
                                     Title:
 
#Top of the Document

Exhibit 10.1

 

FIRST AMENDMENT TO

ANNTAYLOR STORES CORPORATION

SPECIAL SEVERANCE PLAN

The AnnTaylor Stores Corporation Special Severance Plan (the “Special Severance Plan”) is hereby amended effective as of November 16, 2006, as set forth below.

The following provisions of the Special Severance Plan are hereby amended to read in their entirety as follows:

(i) Clause III of paragraph 1.5 of SECTION 1. DEFINITIONS: “(III) there is consummated a merger or consolidation of the Company with any other entity, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) 50% or more of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner (as defined in clause (I) above), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities; or”

(ii) Paragraph 1.15 of SECTION 1. DEFINITIONS: “1.15 “Level I Employee” shall mean an Employee who has the title of (i) President of the AnnTaylor Stores, LOFT or AnnTaylor Factory divisions of the Company, or (ii) Executive Vice President of the Company or any direct or indirect subsidiary of the Company.”

 

EX-10.4 5 dex104.htm ANNTAYLOR STORES CORPORATION SPECIAL SEVERANCE PLAN

Exhibit 10.4

ANNTAYLOR STORES CORPORATION

SPECIAL SEVERANCE PLAN, AS AMENDED

AnnTaylor Stores Corporation, a Delaware corporation (the “Company”), hereby adopts the AnnTaylor Stores Corporation Special Severance Plan (the “Plan”) for the benefit of certain employees of the Company and its subsidiaries, on the terms and conditions hereinafter stated.

The Plan, as set forth herein, is intended to help retain qualified employees, maintain a stable work environment and provide economic security to certain employees of the Company in the event of a Qualifying Termination (as defined herein). The Plan, as a “severance pay arrangement” within the meaning of Section 3(2)(B)(i) of ERISA, is intended to be excepted from the definitions of “employee pension benefit plan” and “pension plan” set forth under Section 3(2) of ERISA, and is intended to meet the descriptive requirements of a plan constituting a “severance pay plan” within the meaning of regulations published by the Secretary of Labor at Title 29, Code of Federal Regulations, ss. 2510.3-2(b).

SECTION 1. DEFINITIONS. As hereinafter used:

1.1 “Affiliate” shall mean any corporation, directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with the Company.

1.2 “Annual Compensation” shall mean (i) the Severed Employee’s current rate of base salary (determined immediately prior to the Qualifying Termination and without regard to any decrease in such salary constituting Good Reason), plus (ii) the average of the Severed Employee’s annual bonuses earned in respect of the three full fiscal years (or the number of full years worked with the Company, if fewer than three) immediately preceding the year in which the Change in Control occurs or, if higher, in which the Qualifying Termination occurs.

1.3 “Board” shall mean the Board of Directors of the Company.

1.4 “Cause” shall mean, with respect to a termination of the Employee’s employment with the Company, (i) the willful and continued failure by the Employee to substantially perform the Employee’s duties with the Company (other than by reason of physical or mental incapacity) or (ii) the conviction of the Employee for the commission of a felony involving moral turpitude.

1.5 “Change in Control” shall be deemed to have occurred if:

(I) any “person”, as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than (A) the Company, (B) any trustee or other fiduciary holding securities under an employee benefit plan of the Company, or (C) any corporation owned, directly or indirectly, by the stockholders of the Company (in substantially the


same proportion as their ownership of shares), (a “Person”) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding voting securities;

(II) during any period of not more than two consecutive years, individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement with the Company to effect a transaction described in clause (I), (III) or (IV) of this Section 1.5) whose election by the Company’s stockholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority thereof;

(III) there is consummated a merger or consolidation of the Company with any other entity, other than (A) a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving or parent entity) 50% or more of the combined voting power of the voting securities of the Company or such surviving or parent entity outstanding immediately after such merger or consolidation or (B) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person is or becomes the beneficial owner (as defined in clause (I) above), directly or indirectly, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities; or

(IV) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (or any transaction having a similar effect).

1.6 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended from time to time.

1.7 “Committee” shall mean the Compensation Committee of the Board.

1.8 “Company” shall mean AnnTaylor Stores Corporation, a Delaware corporation, or any successor thereto.

1.9 “Disability” shall mean a physical or mental condition causing the Employee to be unable to substantially perform his or her duties with the Company, including, without limitation, such condition entitling him or her to benefits under any sick pay or disability income policy or program of the Company.

1.10 “Effective Date” shall mean January 1, 2000.

1.11 “Employee” shall mean any employee of the Company or any direct or indirect subsidiary of the Company who is a Level I, Level II, Level III or Level IV Employee.


1.12 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as it may be amended from time to time.

1.13 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.14 “Good Reason” shall mean any of the following acts or omissions that take place on or after the occurrence of a Change in Control: (i) the material diminution in the Employee’s duties or authority; (ii) a change of the Employee’s place of employment by more than fifty (50) miles; or (iii) a reduction in the Employee’s salary or bonus opportunity; provided, however, that clause (i) above shall only be applicable to an Employee who is as a Level I or Level II Employee.

1.15 “Level I Employee” shall mean an Employee who has the title of (i) President of the AnnTaylor Stores, LOFT or AnnTaylor Factory divisions of the Company, or (ii) Executive Vice President of the Company or any direct or indirect subsidiary of the Company.

1.16 “Level II Employee” shall mean an Employee who has the title of Senior Vice President of the Company or any direct or indirect subsidiary of the Company.

1.17 “Level III Employee” shall mean an Employee who has the title of Vice President of the Company or any direct or indirect subsidiary of the Company.

1.18 “Level IV Employee” shall mean an Employee who is a Director-level employee of the Company or any direct or indirect subsidiary of the Company (including District Managers and Merchandising Managers).

1.19 “Person” shall mean any individual, entity or group, within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act.

1.20 “Plan Administrator” shall mean the person or persons designated by the Committee or by the Board to administer the Plan.

1.21 “Potential Change in Control” shall be deemed to occur in the event that, after the Effective Date, the Company enters into an agreement, the consummation of which would result in a Change in Control or the Company, or any Person publicly announces an intention to take or to consider taking action which, if consummated, would constitute a Change in Control.

1.22 “Qualifying Termination” shall mean a termination of an Employee’s employment following a Change in Control and on or before such Employee’s Qualifying Termination Date, either (i) by the Company without Cause or (ii) by the Employee for Good Reason. Severance Benefits will not be paid in the event of termination of an


Employee’s employment by reason of retirement or death, by the Company for Cause or Disability or by the Employee without Good Reason. A termination of employment will not be deemed to have occurred upon (1) the transfer of the Employee to employment with an Affiliate of the Company if the Affiliate assumes the Company’s responsibilities under the Plan with respect to the Employee or (2) the divestiture of a business with which the Employee is primarily associated if the Employee is offered comparable employment by the successor company and such successor company assumes the Company’s responsibilities under the Plan with respect to such Employee.

1.23 “Qualifying Termination Date” shall mean the date occurring twenty-four (24) months following a Change in Control.

1.24 “Severance Benefits” shall mean the payments and benefits provided to Severed Employees pursuant to Section 2.1 and 2.2 hereof.

1.25 “Severance Date” shall mean the date on which an Employee incurs a Qualifying Termination.

1.26 “Severance Multiple” shall mean:

 

 

(a)

with respect to Level I Employees, two and one-half;

 

 

(b)

with respect to Level II employees, two;

 

 

(c)

with respect to Level III Employees, one and one-half; and

 

 

(d)

with respect to Level IV Employees, one.

1.27 “Severed Employee” shall mean an Employee who has incurred a Qualifying Termination.

Additional definitions are set forth within the Plan and shall have the meanings ascribed to them in the Plan.

SECTION 2. BENEFITS.

2.1 (a) Subject to Section 2.4 hereof and to subsections (b) and (c) of this Section 2.1, each Severed Employee shall be entitled to receive from the Company an amount equal to the product of (i) the Severed Employee’s Annual Compensation and (ii) the Severed Employee’s Severance Multiple (the “Severance Amount”). The Severance Amount shall be paid to such Severed Employee in a lump sum as soon as practicable following the first date on which the Release referred to in Section 2.4 hereof is no longer revocable, but in no event later than the last day of the “applicable 2 1/2 month period”, as such term in defined in Treasury Regulation § 1.409A-1(b)(4)(i)(A).

(b) Notwithstanding the foregoing, if a Change in Control under the Plan does not constitute a “change in the ownership or effective control of the corporation or in the


ownership of a substantial portion of the assets of the corporation” (within the meaning of Section 409A of the Code and applicable guidance issued thereunder), then in the case of a Severed Employee who is either (i) a participant in the AnnTaylor Stores Corporation Severance Plan or (ii) party to an individual agreement with the Company providing for non-Change in Control-related severance payments which are payable other than in a lump sum, the Severance Amount under this Plan shall be paid to the Severed Employee in substantially equal monthly installments over a number of years corresponding to the Severed Employee’s Severance Multiple.

(c) Notwithstanding the foregoing, to the extent required by Section 409A of the Code and applicable guidance issued thereunder, the payment of amounts under this Section 2.1 to a Severed Employee who is a “specified employee” (within the meaning of said Section 409A) shall not be made until the expiration of six (6) months following the Severed Employee’s Severance Date.

(d) The Severance Amount that a Severed Employee receives under this Plan shall not be taken into account for purposes of determining benefits under any other qualified or nonqualified plans of the Company.”

2.2 Subject to Section 2.4 hereof, commencing on the date immediately following the Severed Employee’s Severance Date and continuing for the period set forth below (the “Welfare Benefit Continuation Period”), the Company shall provide each Severed Employee and anyone entitled to claim under or through such Severed Employee with all Company-paid benefits under any group health plan and life insurance plan of the Company (as in effect immediately prior to the such Severed Employee’s Severance Date or, if more favorable to the Severed Employee, immediately prior to the Change in Control) for which employees of the Company and its subsidiaries are eligible, to the same extent as if such Severed Employee had continued to be an employee of the Company or any subsidiary thereof during the Welfare Benefit Continuation Period. To the extent that the Severed Employee’s participation in Company benefit plans is not practicable, the Company shall arrange to provide, at the Company’s sole expense, the Severed Employee and anyone entitled to claim under or through such Severed Employee with equivalent health and life insurance benefits under an alternative arrangement during the Welfare Benefit Continuation Period. The coverage period for purposes of the group health continuation requirements of Section 4980B of the Code shall commence at the expiration of the Welfare Benefit Continuation Period. For purposes of this Section 2.2, the Welfare Benefit Continuation Period shall be the product of (a) the Severed Employee’s Severance Multiple and (b) twelve months. Notwithstanding the foregoing, to the extent required by Section 409A of the Code and applicable guidance issued thereunder, the provision of benefits under this Section 2.2 to a Severed Employee who is a “specified employee” (within the meaning of said Section 409A) shall not commence until the expiration of six (6) months following the Severed Employee’s Severance Date, at which time the Company shall provide such benefits in respect of such six-month period (including by way of reimbursement of expenses incurred by such Severed Employee during such period in respect of the provision of such benefits).


2.3 In the event of a claim by an Employee as to the amount or timing of any payment or benefit under the Plan, such Employee shall present the reason for his or her claim in writing to the Plan Administrator. The Plan Administrator shall, within thirty (30) days after receipt of such written claim, send a written notification to the Employee as to its disposition. In the event the claim is wholly or partially denied, such written notification shall (i) state the specific reason or reasons for the denial, (ii) make specific reference to pertinent Plan provisions on which the denial is based, (iii) provide a description of any additional material or information necessary for the Employee to perfect the claim and an explanation of why such material or information is necessary, and (iv) set forth the procedure by which the Employee may appeal the denial of his or her claim. In the event an Employee wishes to appeal the denial of his or her claim, he or she may request a review of such denial by making application in writing to the Plan Administrator within fifteen (15) days after receipt of such denial. Such Employee (or his or her duly authorized legal representative) may, upon written request to the Plan Administrator, review any documents pertinent to his or her claim, and submit in writing issues and comments in support of his or her position. Within thirty (30) days after receipt of a written appeal (unless special circumstances, such as the need to hold a hearing, require an extension of time, but in no event more than thirty (30) days after such receipt), the Plan Administrator shall notify the Employee of the final decision. The final decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and specific references to the pertinent Plan provisions on which the decision is based.

2.4 No Employee shall be eligible to receive Severance Benefits under Section 2.1 or 2.2 above, unless, within forty-five (45) days following such Employee’s Severance Date, he or she first executes a Release (substantially in the form of Exhibit A hereto) in favor of the Company and others set forth on said Exhibit A, relating to all claims or liabilities of any kind relating to his or her employment with the Company or a subsidiary thereof and the termination of the Employee’s employment. In the event that a Severed Employee’s Severance Date occurs within fifty two (52) days before the end of a calendar year, the provision of Severance Benefits (other than continued life insurance benefits under Section 2.2) to such Severed Employee shall not commence until January 1 of the next calendar year.

2.5 The Company shall pay to each Employee all reasonable legal fees and expenses incurred by such Employee in seeking in good faith to obtain or enforce any right or benefit provided under this Plan (other than any such fees and expenses incurred in pursuing any claim determined to be frivolous by an arbitrator or by a court of competent jurisdiction).

2.6 (a) In the event that any payment or benefit received or to be received hereunder by a Severed Employee who is a Level I Employee or a Level II Employee (a “Severed Executive”) would be subject (in whole or in part) to the tax (the “Excise Tax”) imposed under Section 4999 of the Code, the Company shall pay to the Severed Executive such additional amounts (the “Gross-Up Payment”) as may be necessary to


place the Severed Executive in the same after-tax position in which he or she would have been had no portion of the Total Payments (as hereinafter defined) been subject to the Excise Tax. The Gross-Up Payment shall be paid as soon as practicable following determination of the Excise Tax (but in no event later than the end of the calendar year following the calendar year in which the Excise Tax is paid). For purposes of the Plan, “Total Payments” shall mean any payments made or benefits provided in connection with a Change in Control of the Company or the termination of the Severed Executive’s employment, whether such payments or benefits are received pursuant to the terms of this Plan or any other plan, arrangement or agreement with the Company, any person whose actions result in a Change in Control of the Company or any person affiliated with the Company or such person.

(b) In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder, the Severed Executive shall repay to the Company, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to the reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income tax imposed on the Gross-Up Payment being repaid by the Severed Executive to the extent that such repayment results in a reduction in Excise Tax and/or federal, state or income tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder (including by reason of any payment the existence of which cannot be determined as the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Severed Executive with respect of such excess) at the time that the amount of such excess if finally determined. The Severed Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

SECTION 3. PLAN ADMINISTRATION.

3.1 The Plan shall be interpreted, administered and operated by the Plan Administrator, which shall have complete authority, in its sole discretion subject to the express provisions of the Plan, to determine who shall be eligible for Severance Benefits, to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, and to make all other determinations necessary or advisable for the administration of the Plan.

3.2 All questions of any character whatsoever arising in connection with the interpretation of the Plan or its administration or operation shall be submitted to and settled and determined by the Plan Administrator in an equitable and fair manner in accordance with the procedure for claims and appeals described in Section 2.3 hereof.

3.3 The Plan Administrator may delegate any of its duties hereunder to such person or persons from time to time as it may designate.


3.4 The Plan Administrator is empowered, on behalf of the Plan, to engage accountants, legal counsel and such other personnel as it deems necessary or advisable to assist it in the performance of its duties under the Plan. The functions of any such persons engaged by the Plan Administrator shall be limited to the specified services and duties for which they are engaged, and such persons shall have no other duties, obligations or responsibilities under the Plan. Such persons shall exercise no discretionary authority or discretionary control respecting the management of the Plan. All reasonable expenses thereof shall be borne by the Company.

SECTION 4. PLAN MODIFICATION OR TERMINATION.

The Plan may be amended or terminated by the Board at any time; provided, however, that (i) no termination or amendment of the Plan may reduce the Severance Benefits payable under the Plan to an Employee if the Employee’s termination of employment with the Company has occurred prior to such termination of the Plan or amendment of its provisions and (ii) during the pendency of a Potential Change in Control and following a Change in Control, the Plan may not be terminated and may not be amended without the consent of each affected Employee, if such amendment would be adverse to the interests of any Employee.

SECTION 5. GENERAL PROVISIONS.

5.1 Except as otherwise provided herein or by law, none of the payments, benefits or rights of any Employee shall be subject to any claim of any creditor, and, in particular, to the fullest extent permitted by law, all such payments, benefits and rights shall be free from attachment, garnishment, trustee’s process, or any other legal or equitable process available to any creditor of such Employee. No Employee shall have the right to alienate, anticipate, commute, pledge, encumber or assign any of the benefits or payments which he or she may expect to receive, contingently or otherwise, under this Plan.

5.2 Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Employee, or any person whomsoever, the right to be retained in the service of the Company or any subsidiary thereof, and all Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.

5.3 If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

5.4 This Plan shall be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Employee, present and future, and any successor to the Company.


5.5 The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

5.6 The Plan shall not be funded. No Employee shall have any right to, or interest in, any assets of the Company which may be applied by the Company to the payment of benefits or other rights under this Plan.

5.7 Any benefit payable to or for the benefit of a minor, an incompetent person or other person incapable of giving a receipt therefor shall be deemed paid when paid to such person’s guardian or to the party providing or reasonably appearing to provide for the care of such person, and such payment shall fully discharge the Company, its subsidiaries, the Plan Administrator and all other parties with respect thereto. If a Severed Employee dies prior to the payment of all benefits due such Severed Employee, such unpaid amounts shall be paid to the executor, personal representative or estate of such Employee.

5.8 Any notice or other communication required or permitted pursuant to the terms hereof shall have been duly given when delivered or mailed by United States mail, first class, postage prepaid, addressed to the intended recipient at his, her or its last known address.

5.9 This Plan shall be construed and enforced according to the laws of the State of Delaware, without giving effect to its principles of conflicts of law, to the extent not preempted by federal law, which shall otherwise control.


EXHIBIT A

RELEASE AGREEMENT

In consideration of the payments and benefits provided for in the annexed AnnTaylor Stores Corporation Special Severance Plan (the “Plan”), and the release from [insert employee’s name] (the “Employee”) set forth herein, AnnTaylor Stores Corporation (the “Company”) and the Employee agree to the terms of this Release Agreement. Capitalized terms used and not defined in this Release Agreement shall have the meanings assigned thereto in the Plan.

1. The Employee acknowledges and agrees that the Company is under no obligation to offer the Employee the payments and benefits set forth in the annexed Plan, unless the Employee consents to the terms of this Release Agreement within forty-five (45) days following the Employee’s severance date.

2. The Employee voluntarily, knowingly and willingly releases and forever discharges the Company and its Affiliates, together with its and their respective officers, directors, partners, shareholders, employees and agents, and each of its and their predecessors, successors and assigns (collectively, “Releasees”), from any and all charges, complaints, claims, promises, agreements, controversies, causes of action and demands of any nature whatsoever that the Employee or his/her executors, administrators, successors or assigns ever had, now have or hereafter can, shall or may have against Releasees by reason of any matter, cause or thing whatsoever arising prior to the time of signing of this Release Agreement by the Employee. The release being provided by the Employee in this Release Agreement includes, but is not limited to, any rights or claims relating in any way to the Employee’s employment relationship with the Company or any its Affiliates, or the termination thereof, or under any statute, including the federal Age Discrimination in Employment Act of 1967, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1990, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, the Family and Medical Leave Act of 1993, each as amended, and any other federal, state or local law or judicial decision.

3. The Employee acknowledges and agrees that he/she shall not, directly or indirectly, seek or further be entitled to any personal recovery in any lawsuit or other claim against the Company or any other Releasee based on any event arising out of the matters released in paragraph 2.

4. Nothing herein shall be deemed to release (i) any of the Employee’s rights under the Plan or (ii) any of the vested benefits that the Employee has accrued prior to the date this Release Agreement is executed by the Employee under the employee benefit plans and arrangements of the Company or any of its Affiliates.

5. In consideration of the Employee’s release set forth in paragraph 2, the Company knowingly and willingly releases and forever discharges the Employee from any and all charges, complaints, claims, promises, agreements, controversies, causes of action and demands of any nature whatsoever that the Company now has or hereafter can, shall or may have against him/her by reason of any matter, cause or


thing whatsoever arising prior to the time of signing of this Release Agreement by the Company, provided, however, that nothing herein is intended to release any claim the Company may have against the Employee for any illegal conduct.

6. The Employee acknowledges that the Company has advised him/her to consult with an attorney of his/her choice prior to signing this Release Agreement. The Employee represents that, to the extent he/she desires, he/she has had the opportunity to review this Release Agreement with an attorney of his/her choice.

7. The Employee acknowledges that he/she has been offered the opportunity to consider the terms of this Release Agreement for a period of at least forty-five (45) days, although he/she may sign it sooner should he/she desire. The Employee further shall have seven additional days from the date of signing this Release Agreement to revoke his/her consent hereto by notifying, in writing, the General Counsel of the Company. This Release Agreement will not become effective until seven days after the date on which the Employee has signed it without revocation.

 

Dated:

 

 

 

 

 

 

 

 

[Employee Name]

 

 

 

ANNTAYLOR STORES CORPORATION

 

 

 

By:

 

 

 

 

 

Title: