EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the 'Agreement'), dated as of February 16, 1996,
effective as of February 19, 1996 (the 'Starting Date') between ANNTAYLOR STORES
CORPORATION, a Delaware corporation (the 'Company'), and J. PATRICK SPAINHOUR
(the 'Executive').
WHEREAS, the Company desires to provide for the services and
employment of the Executive with the Company and the Executive wishes to
provide such services and to become employed by the Company, all in accordance
with the terms and conditions provided herein.
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 employ the Executive,
and the Executive hereby agrees to become employed by and to serve the Company,
on the terms and conditions set forth herein.
2. Term. The initial term of employment of the Executive by the
Company hereunder will commence effective as of the Starting Date, and such
initial term will end 36 months thereafter unless further extended or sooner
terminated as hereinafter provided. Commencing on the third anniversary date
of the Starting Date, and on each anniversary date of the Starting Date
thereafter (each date, an 'Anniversary Date'), the term of the Executive's
employment shall automatically be extended for one additional year unless not
later than six months prior to such Anniversary Date, either party shall have
given notice (a 'Nonrenewal Notice') to the other party 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 3(b), 9 and 10 hereof
shall continue in effect.
3. Nature of Performance.
(a) Position and Duties. The Executive shall serve as President
and Chief Operating Officer of the Company and shall have such responsibilities,
duties and authority consistent with such positions as may from time to time be
determined by the Board of Directors of the Company (the 'Board'). The Executive
shall report directly to the Chairman and Chief Executive
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Officer. Initially, the following officers and executives of the Company
shall report directly to the Executive who shall have the responsibility of
overseeing, coordinating and directing their performance: Chief Financial
Officer and Executive Vice President of Strategic Planning (which includes
indirect reporting through such officer of Investor Relations, Legal Services
and Credit Services), Senior Vice President Information Services, Distribution
Services and Logistics, Senior Vice President Real Estate, Store Planning and
Design, Senior Vice President Human Resources and executives in charge of
Sourcing and Quality Assurance. The Executive shall devote substantially all of
his working time and effects 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 prior approval of the Board (which approval shall not be unreasonably
withheld), serving on the board of directors of any other corporation. The
Company shall also use its best efforts to appoint and elect Executive as a
member of the Company's Board of Directors at the earliest possible date. Such
appointment and election shall be to that Class of Directors which shall be
subject to election by the stockholders of the Company at the latest possible
time consistent with Company's Certificate of Incorporation and Bylaws.
(b) 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, 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. 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. Executive shall be provided director
and officer liability insurance coverage by the Company on the same terms and
conditions as that being provided to any other director and officer of the
Company from time to time during the Term hereof.
4. Place of Performance. In connection with the Executive's
employment by the Company, the Executive shall be based at the principal
executive offices of the Company in the City of New York or at such other
principal executive office in the New York City Metropolitan Area as the
Company may hereafter maintain, except for required travel on the Company's
business. The Company is aware that Executive maintains his principal residence
and his family resides in Columbus, Mississippi. The Company has been advised
by Executive that he intends to continue to maintain such residence which will
require
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Executive to commute at Executive's sole cost and expense between the
Company's headquarters and his residence in Mississippi on a regular basis to
which the Company has no objection.
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 $525,000, 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 so increased, shall not thereafter be decreased
during the Term of this Agreement. Compensation of the Executive
by salary payments shall not be deemed exclusive and shall not
prevent the Executive from participating in any other
compensation or benefit plan of the Company. The salary payments
(including any increased salary payments) hereunder shall not in
any way limit or reduce any other obligation of the Company
hereunder, and no other compensation, benefit or payment
hereunder shall in any way limit or reduce the obligation of the
Company to pay the Executive's salary hereunder.
(ii) Annual Bonus. During the period of 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; provided that,
notwithstanding any contrary provisions of such bonus plan,
unless the Executive's employment is terminated by the Company
for Cause (as defined in Section 6(c) hereof) or by the Executive
other than for Good Reason, as defined in Section 6(d)(1)
hereof), the Executive shall be entitled to receive any Bonus
paid with respect to any bonus period completed on or prior to
the Date of Termination or, in the case a Nonrenewal Notice is
given by the Company, through the scheduled expiration date of
the Term (even if the Executive terminates his employment prior
to such scheduled expiration date for Good Reason under Section
6(d)(1)(v) hereof). The Company currently maintains a Management
Performance Compensation Plan (the 'Performance Plan') pursuant
to which it pays performance bonus compensation to certain of its
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executives and employees. It is agreed that Executive shall
participate in the Performance Plan effective as of the Starting
Date. Executive's Performance Percentage (as that term is defined
in the Performance Plan) shall be established at 40% during the
first year of participation under the Performance Plan and
thereafter the Performance Percentage shall be determined as
provided in the Performance Plan. Notwithstanding the foregoing,
the minimum bonus to be paid to Executive under the Performance
Plan or otherwise for the fiscal year ending February 1, 1997
shall be $200,000, provided Executive's employment hereunder
during such period has not been terminated by the Company for
Cause or by the Executive without Good Reason.
(b) Stock Options. The Executive will be granted a time vested
Non-Qualified Stock Option to acquire one hundred thousand (100,000) shares of
the Company's Common Stock (the 'Option Shares') under the Company's 1992 Stock
Option and Restricted Stock and Unit Award Plan (the 'Option Plan') with an
exercise price equal to the fair market value (as defined and determined as of
the Starting Date under the Option Plan) of the Common Stock. The Option shall
vest 50% on the first anniversary date of the grant and 50% on the second
anniversary date of the grant and shall be subject to accelerated vesting and
termination in accordance with the terms of the Option Plan. The Executive shall
be eligible to receive additional options under the Option Plan or other and
additional option plans as may be adopted by the Company during the term hereof,
taking into account, among other things, Executive's performance and position
with the Company.
(c) Other Benefits. During the period of 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, the Company shall waive or cause to
be waived the one year waiting period after commencement of employment
applicable to its life insurance and group accident insurance programs and any
other program where such waiver will not be a violation of any Federal or state
law or regulation . During the period of 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 financial planning and tax preparation services on a tax-free
basis.
(e) Vacations and Other Leaves. The Executive shall be
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entitled to an aggregate paid vacation of not less than four (4) weeks for each
twelve (12) month period of the Term hereof. Payment for any accrued and unused
vacation time at the time of termination of this Agreement shall be in
accordance with the Company's policies at the time of such termination. Any such
vacation taken shall be coordinated with the Chairman so as not to adversely
impact the performance of the Company. The Executive shall be entitled to paid
holidays and personal leave days in accordance with the Company policy covering
executive employees.
(f) Expenses. During the period of 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. It is
understood and agreed by Executive that such reimbursement shall not cover
expenses and costs incurred by him in connection with his commuting from his
principal residence as described in Section 4 of this Agreement.
(g) Services Furnished. The Company shall furnish the
Executive with office space, stenographic assistance and such other facilities
and services as shall be suitable to the Executive's position and adequate for
the performance of his duties hereunder.
(h) Legal Fees. The Company shall pay directly or reimburse
the Executive for any legal fees incurred by the Executive in connection with
the negotiation and preparation of the Agreement; provided that, such payment
or reimbursement shall not exceed $5,000.
(6) Termination. The Executive's employment hereunder may be
terminated without breach of this Agreement only under the following
circumstances:
(a) Death. The Executive's employment hereunder shall
terminate upon his death.
(b) Disability. If, as a result of the Executive's incapacity
due to physical or mental illness, the Executive shall have been absent
from his 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 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 his
duties hereunder on a full-
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time basis, the Executive's employment hereunder shall terminate for
'Disability.'
(c) 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 (i)
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, (ii) action by
the Executive toward the Company involving dishonesty (other than good faith
expense account disputes), (iii) the Executive's refusal to abide by or follow
written directions of the Board or the Chairman, (iv) the Executive's gross
nonfeasance which does not cease within ten (10) business days after notice
regarding such nonfeasance has been given to the Executive by the Company or
(v) failure of the Executive to comply with the provisions of Section 9 (prior
to a cessation of employment following a Change in Control of the Company) or
10 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.
(d) Termination by the Executive.
(1) The Executive may terminate his employment hereunder
for 'Good Reason'. For purposes of this Agreement, the Executive
shall have 'Good Reason' to terminate his employment hereunder
(i) upon a failure by the Company to comply with any material
provision of this Agreement which has not been cured within ten
(10) business days after notice of such noncompliance has been
given by the Executive to the Company, (ii) upon action by the
Company resulting in a diminution of the Executive's title or
authority, (iii) upon the Company's relocation of the Executive's
principal place of employment outside of the New York City
Metropolitan Area, (iv) one year after a 'Change in Control of
the Company' (as defined in paragraph (d)(2) below) or (v) at any
time following the expiration of ninety (90) days following the
Company's issuance of a Nonrenewal Notice. The Executive may
terminate his employment voluntarily without Good Reason upon at
least six months' prior notice to the Company.
(2) For purposes of this Agreement, a 'Change in Control of
the Company' will be deemed to have occurred if:
(A) any 'person', as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended
(the 'Exchange Act'), other than (1) the Company, (2)
Merrill Lynch & Co. or any affiliate thereof,
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which for purposes of this Agreement shall include
Stonington Partners Inc. and its affiliates (collectively,
'ML'), (3) any trustee or other fiduciary holding securities
under an employee benefit plan of the company, or (4) 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 (not including in the securities
beneficially owned by such Person securities acquired
directly from ML representing in excess of 15% of the
combined voting power of the Company's then outstanding
voting securities but including any such securities acquired
directly from ML representing up to 15% of such combined
voting power);
(B) 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
(A), (C) or (D) of this Section 6(d)(2)) whose election by
the Board or nomination for 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;
(C) the stockholders of the company approve a merger or
consolidation of the Company with any other corporation,
other than (1) 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
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or consolidation or (2) 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 (A) 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 (not including in the securities beneficially
owned by such Person securities acquired directly from ML
representing in excess of 15% of the combined voting power
of the Company's then outstanding voting securities but
including any such securities acquired directly from ML
representing up to 15% of such combined voting power); or
(D) 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).
(e) Notice of Termination. Any termination of the Executive's
employment by the Company or by the Executive (other than termination under
Section 6(a) hereof) shall be communicated by written Notice of Termination to
the other party hereto in accordance with Section 12 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 to indicated.
(f) Date of Termination. 'Date of Termination' shall mean (I)
if the Executive's employment is terminated by his death, the date of his death,
(ii) if the Executive's employment is terminated pursuant to Subsection (b)
above, the date which is the later of thirty (30) days after Notice of
Termination is given (provided that the Executive shall not have returned to the
performance of his duties on a full-time basis during such thirty (30) day
period) or the end of the six (6) consecutive month period referred to in
Subsection (b) above, and (iii) if the Executive's employment is terminated
pursuant to subsection (c) or (d) above, the date specified in the Notice of
Termination; provided that, if within thirty (30) 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 termination, the Date of
Termination shall be the date on which the dispute is
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finally determined, either by mutual written agreement of the parties
or by a binding and final arbitration award.
7. Compensation Upon Termination or During Disability.
(a) Disability. During any period that the Executive fails to
perform his duties hereunder as a result of incapacity due to physical or mental
illness, the Executive shall continue to receive his full salary at the rate
then in effect for such period and other applicable benefits provided to active
employees until his employment is terminated pursuant to Section 6(b) hereof.
Subject to the provisions of Section 9 hereof, in the event the Executive's
employment is terminated pursuant to Section 6(b) 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 Sections 5(a) and (b)
hereof and shall pay to the Executive, in accordance with the terms of
the applicable plan or program, all other unpaid amounts to which
Executive is then entitled under any compensation or benefit plan or
program of the Company (collectively, 'Accrued Obligations'); and
(ii) following the Date of Termination and for a period of
twelve (12) months thereafter (the 'Severance Period'), 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 average of the
annual bonuses, or in the case of the first year hereof (if the Date
of Termination occurs in such year) the guaranteed minimum bonus,
earned by the Executive in the three fiscal years of the Company
ended immediately prior to the Date of Termination, 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.
(b) Death. If the Executive's employment is terminated by his
death, the Company shall pay to the person(s) or entity set forth in Section
11(b) hereof the Accrued Obligations and the Severance Payments at the time(s)
set forth in Sections 7(a)(i) and 7 (a)(ii) hereof.
(c) Termination for Cause; Voluntary Termination Without Good
Reason. If the Executive's employment is terminated by the Company for
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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
Nonrenewal 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 7(a)(i)
hereof and the Company shall have no further obligations to the Executive under
this Agreement.
(d) Termination Without Cause; Termination for Good Reason;
Nonrenewal. If (i) the Company shall terminate the Executive's employment other
than for Disability pursuant to Section 6(b) or for Cause, (ii) the Executive
shall terminate his employment for Good Reason or (iii) the Term of this
Agreement expires as a result of a Nonrenewal Notice having been provided by the
Company, then, subject to the provisions of Section 9 hereof:
(1) the Company shall pay the Accrued Obligations to the
Executive at the time(s) set forth in Section 7(a)(i)
hereof;
(2) the Company shall pay to the Executive the Severance
Payments as defined in Section 7(a)(ii) hereof for the
longer of the remaining Term of this Agreement and the
Severance Period;
(3) the Executive shall continue to be provided with the same
medical and life insurance coverage as existed immediately
prior to the applicable Notice of Termination or Notice of
Nonrenewal, as the case may be, such coverage to continue as
long as Executive is receiving Severance Payments; and
(4) the Executive shall be provided with outplacement services
commensurate with his position.
8. Change in Control. In the event that any payment or benefit
received or to be received by the Executive in connection with a Change in
Control of the Company 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 of the Company 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
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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 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 Executive to the extent that such
repayment results in a reduction in Excise Tax and/or 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 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 of such excess) at the time that the amount of such
excess if 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.
9. Nonsolicitation; Noncompete
(a) Subject to (c) below, during the period of Executive's
employment, during the period he is receiving Severance Payments hereunder and,
in the case where the Executive's employment is terminated for Cause or
Executive voluntarily terminates his employment without Good Reason, for a
period of twelve (12) months following such termination, the Executive shall not
initiate discussions (of a non-isolated nature) 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 Executive fails to comply with the
preceding sentence, all rights of the Executive and his surviving spouse or
other beneficiary hereunder to any future Severance Payments and continuing life
insurance and medical coverage shall be forfeited; provided that, the foregoing
shall not apply if such failure of compliance commences following a cessation of
employment following a Change in Control of the Company.
(b) Subject to (c) below, as long as Executive receives
Severance Payments, or in the case where the Executive's employment is
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terminated for Cause or Executive voluntarily terminates his employment without
Good Reason, for a period of twelve (12) months following such termination,
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 his surviving spouse or
other beneficiary hereunder to any future Severance Payments and continuing life
insurance and medical coverage shall be forfeited; provided that, the foregoing
shall not apply if such failure of compliance commences following a cessation of
employment following a Change in Control of the Company.
(c) In the event of a violation of paragraphs 9(a) or 9(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 and (ii) regardless of when such violation occurs,
forfeiture by the Executive of the payments and benefits set forth in paragraphs
(a) and (b) above if and to the extent provided in such paragraphs and (iii) the
right to seek injunctive relief in accordance with and to the extent provided in
Section 16 hereof; provided, such injunctive relief may only be sought for
competitive activity under paragraph (b) above if such activity occurs during
employment or after Executive's dismissal for Cause or Executive voluntarily
terminates his employment without Good Reason.
(d) 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 'woman's apparel' business which
generated at least $50 million in revenues 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, 'woman's apparel' shall consist of dresses, jackets, pants,
skirts, blouses, sweaters and T-shirts.
(e) 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
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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 Executive commences ( or proposes to
commence) serving as a 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 woman's apparel business, which for purposes hereof shall mean the design,
manufacture and sale of piece goods and woman's apparel to unrelated third
parties, provided that if the entity for which Executive so engages or
participates (including its affiliates) also conducts a retail woman's apparel
business , then effective upon 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 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 Severance Period.
The exceptions contained in subparagraph (vii) above and subparagraph (iii)
above to the extent covered by subparagraph (vii) shall not be applicable if
Executive's cessation of employment is voluntary by Executive without Good
Reason and his new engagement or participation involves 'wholesale' operations
which include or also conduct retail sales of woman's apparel other than factory
outlet or discount stores to liquidate unsold woman's apparel of such wholesale
operations.
10. Protection of Confidential Information
(a) Executive acknowledges that his employment by the
Company will, throughout the Term of this Agreement, involve his obtaining
knowledge of confidential information regarding the business and affairs of the
Company. In recognition of the foregoing, the Executive covenants and agrees:
(i) that, except in compliance with legal process, he will
keep secret all confidential matters of the Company which are not otherwise in
the public domain and will not be 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 his duties as an executive officer of the Company), either during
or
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after the Term, except with the prior written consent of the Board or a person
authorized thereby; and
(ii) that he will deliver promptly to the Company on
termination of his 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 he obtained
while employed by, or otherwise serving or acting on behalf of, the Company and
which he may then possess or have under his control.
(b) Notwithstanding the provisions of Section 16 of this
Agreement, if the Executive commits a breach of the provisions of paragraphs
10(a)(i) or 10(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.
11. 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 he would be entitled to hereunder if he terminated his
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 11 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
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representatives, executors, administrators, successors, heirs, distributes,
devises and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he 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 be no such designee, to the Executive's estate.
12. 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 delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, address as follows:
If to the Company:
AnnTaylor Stores Corporation
142 West 57th Street
New York, New York 10019
Attn: General Counsel
With a copy to:
Stuart N. Alperin, Esq.
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
If to the Executive:
J. Patrick Spainhour
114 Scarlet Drive
Columbus, Mississippi 39701
With a copy to:
Leon I. Jacobson, Esq.
Jacobson & Mermelstein, P.C.
52 Vanderbilt Avenue
New York, New York 10017
or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effectively only upon receipt.
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13. 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. 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 ate
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.
14. 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.
15. Counterparts. This Agreement may be executed in one or more
counterparts and by facsimile signature each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
16. 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. Judgement
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 9 of the Agreement during the period
of Executive's employment or following Executive's termination of employment for
Cause or the voluntary termination of employment by Executive without Good
Reason or of Section 10 of this Agreement at any time, 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 his 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. The Company shall pay
directly or reimburse the Executive for any legal fees incurred by Executive in
connection with any arbitration related to the last proviso of the preceding
sentence and any other arbitration in which he prevails.
17. Entire Agreement. This Agreement sets forth the entire
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agreement of the parties hereto in respect of the subject matter contained
herein and supersedes any and all other prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any party hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
ANNTAYLOR STORES CORPORATION
By: /s/ Sally Frame Kasaks
-------------------------------
Name: Sally Frame Kasaks
Title: Chairman and Chief
Executive Officer
EXECUTIVE
/s/ J. Patrick Spainhour
-----------------------------
J. Patrick Spainhour
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Employment Agreement - AnnTaylor Stores Corp. and J. Patrick Spainhour
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