Employment Agreement – AnnTaylor Stores Corp. and Sally Frame Kasaks
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (the 'Agreement'), dated
as of February 1, 1994, between ANNTAYLOR STORES
CORPORATION, a Delaware corporation (the 'Company'), and SALLY
FRAME KASAKS (the 'Executive').
WHEREAS, the Company and the Executive are
currently parties to an agreement (the 'Prior Agreement')
relating to Executive's employment with the Company; and
WHEREAS, the Company desires to provide for the
continued service and employment of the Executive with
the Company and the Executive wishes to continue in the
service of 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
continue to employ the Executive, and the Executive
hereby agrees to continue 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 February 1, 1994, and such initial term
will end on January 31, 1997, unless further extended or
sooner terminated as hereinafter provided. Commencing on
February 1, 1997, and each February 1 thereafter (each
such February 1st, an 'Anniversary Date'), the term of
the Executive's employment shall automatically be
extended for one additional year unless, not later than
the July 31 immediately preceding an 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 termination
of this Agreement, without limiting other provisions that
survive by their intent, the provisions of Sections 3(b),
5(c), 10 and 11 hereof shall continue in effect.
3. Nature of Performance.
(a) Position and Duties. The Executive
shall continue to serve as Chairman and Chief Executive
Officer of the Company and shall have such
responsibilities, duties and authority consistent with
such positions (and not less than her current
responsibilities, duties and authority) 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 prior approval of
the Board (which approval shall not be unreasonably
withheld), serving on the board of directors of any
other corporation.
(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.
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.
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 $750,000, 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 her employment prior to
such scheduled expiration date for Good Reason
under Section 6(d)(1)(v) hereof).
(b) Stock Options. During the period of
Executive's employment hereunder, the Executive shall be
eligible to be granted options to acquire shares of common
stock of the Company ('Shares') pursuant to the
Company's stock option plan. In determining the number
of Shares to be covered by such stock option grants, the
Committee administering the Company's stock option plan
shall take into account, among other things, the position
of the Executive and the number of Shares covered
by options granted to other executives of the Company.
(c) SERP.
(i) Subject to the terms and conditions
set forth herein, the Executive shall be
entitled to payment by the Company of an annual
supplemental retirement benefit (the 'SERP'), expressed
as a life annuity commencing on the Executive's
sixty-fifth (65th) birthday, equal to (A) fifty percent
(50%) of her 'Final Average Compensation'
(as defined in clause (ii) below) minus (B) the sum of
(1) any amounts payable to the Executive under any
'defined benefit plan' (as defined in Section 3(35)
of the Employee Retirement Income Security Act of 1974),
now or hereafter maintained by the Company, including
excess benefit or supplemental retirement plans;
and (2) any amounts payable to the Executive as annual
primary social security retirement benefits.
(ii) As used in this Agreement,
'Final Average Compensation' shall mean the highest
average of the Executive's annual salary and Bonus
payable from the Company for any period of three
consecutive fiscal years; provided that, the maximum
amount of any Bonus to be taken into account
for any year in determining Final Average Compensation
shall be 100% of the Executive's salary for
the year to which the Bonus relates.
(iii) The Executive shall be fully
vested in the SERP upon the completion of fifteen
(15) years of service with the Company and attainment
of age 55; provided that, the SERP shall be
fully vested if the Executive's employment is terminated
(1) by the Company without Cause (as hereinafter defined),
(2) by the Executive for Good Reason (as hereinafter
defined), (3) due to the Executive's death, (4) due to
the Executive's Disability (as hereinafter defined),
or (5) by reason of the expiration of the Term of this
Agreement as a result of a Nonrenewal Notice having been
provided by the Company. For purposes hereof, all service
by the Executive with the Company or any predecessor,
including her prior service from May 1979
through September 1985, shall be recognized. In
the event the Executive's employment is terminated
under any of the circumstances referred to in the
foregoing proviso, the amount of the SERP referred
to in sub-clause (A) of clause (i) above shall be
determined by multiplying such amount by a fraction
(not to exceed one (1)) the numerator of which is
the number of years of service of the Executive as
of the Date of Termination (taking into account,
where and to the extent applicable, the additional
period referred to in Section 7(a)(v) or Section
7(d)(4) hereof) and the denominator of which is
fifteen (15).
(iv) The SERP shall be payable on a
monthly basis in the form of an annuity for the
Executive's life with fifty percent (50%) of the
SERP amount being payable after Executive's death
to her surviving spouse for his life. The fifty
percent (50%) survivor benefit referred to in the
preceding sentence shall also be payable to Executive's
surviving spouse in the event of her death
during employment or her death after cessation of
employment but prior to commencement of SERP payments.
SERP payments shall commence on the first
day of the month following the later of the
Executive's fifty-fifth (55th) birthday or her Date
of Termination; provided that, Executive (or, in
the event of her death, her surviving spouse) may
elect, at least one year prior to termination of
employment, to commence receiving SERP payments at
any later date (but in no event later than the
later of her sixty-fifth (65th) birthday or her
Date of Termination). In the event SERP payments
commence prior to the Executive's sixty-fifth
(65th) birthday, the amount of such payments shall
be actuarially reduced (in accordance with the
methods and assumptions used under the Company's
qualified defined benefit pension plan) to reflect
such early commencement.
(v) Notwithstanding the foregoing
provisions, if the Executive's employment is terminated
by the Company for Cause, all rights of the
Executive and her spouse to future SERP payments
shall be forfeited.
(d) 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.
During the period of Executive's employment
hereunder, the Company shall continue to provide to the
Executive all of the fringe benefits and perquisites
which she is receiving as of the date hereof, at not
less than the levels currently provided, and the Executive
shall be entitled to participate in and receive any
other 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 continue to be entitled to the number of
vacation days (and to compensation in respect of earned
but unused vacation days), paid holidays and personal
leave days that she is entitled to as of the date hereof.
(f) Expenses. During the period of the
Executive's employment hereunder, the Executive shall be
entitled to receive prompt reimbursement for all reason
able 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.
(g) Services Furnished. The Company
shall continue to 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 her 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 $10,000.
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 her 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 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 paragraph (e) 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.'
(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 an 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, (iv) the
Executive's gross nonfeasance which does not cease with
in 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 10 (prior to a Change in Control)
or 11 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 her
employment hereunder for 'Good Reason'. For purposes
of this Agreement, the Executive shall have
'Good Reason' to terminate her 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 her 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 Sections 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 there
of, which for purposes of this
Agreement shall include First Capital
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 there
to 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 (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 represent
ing 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 13 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.
(f) 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) 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 her 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 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 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(b)
hereof. Subject to the provisions of Section 10 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');
(ii) following the Date of Termination
and for the longer of eighteen (18) months
thereafter or the balance of the Term as then in
effect (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 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;
(iii) as of the Date of Termination,
an additional number of Shares underlying
outstanding stock options granted to the Executive
shall become exercisable, such that the total number
of Shares underlying each such grant which are
exercisable (including Shares covered by such grant
which have already become exercisable, whether or
not exercised) is equal to the product of (A) the
total number of Shares covered by such grant (whether
or not any portion of such grant has previously
been exercised) and (B) a fraction the numerator of
which is the number of full months from the date of
grant to the end of the Severance Period and the
denominator of which is the number of full months
from the date of grant to the date the option would
otherwise have become fully exercisable. The Executive
shall have the right to exercise any stock
option, to the extent then exercisable, for a
period of one (1) year following the Date of
Termination, but in no event beyond the expiration
date of the option, and to the extent not exercisable,
the option shall immediately terminate;
(iv) as of the Termination Date,
restrictions with respect to an additional number
of restricted Shares then held by the Executive
shall lapse, such that the aggregate number of
Shares underlying each grant with respect to which
such restrictions have lapsed (including restricted
Shares underlying such grant with respect to which
such restrictions have previously lapsed) shall
equal the number of Shares with respect to which
such restrictions would have lapsed had the Executive
continued in the employment of the Company
through the end of the Severance Period, and all
additional restricted Shares shall be forfeited;
(v) for purposes of computing the
SERP payable to Executive, Executive shall be treated
as if she had continued in employment through
the end of the Severance Period; and
(vi) all outstanding principal
amounts (and accrued interest thereon) with respect
to the loan described in Section 8 hereof shall be
forgiven.
(b) Death. If the Executive's employment
is terminated by her death,
(i) the Company shall pay to the
person(s) or entity set forth in Section 12(b)
hereof: (A) the Accrued Obligations, at the time(s)
set forth in Section 7(a)(i) hereof; and (B) as
soon as practicable following the end of the fiscal
year of the Company in which the Executive's death
occurs, the Bonus which would otherwise have been
paid to the Executive with respect to such fiscal
year;
(ii) the additional vesting of
stock options and restricted Shares, as described
in Sections 7(a)(iii) and 7(a)(iv), respectively,
shall apply; and
(iii) all outstanding principal
amounts (and accrued interest thereon) with respect
to the loan described in Section 8 hereof shall be
forgiven.
(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 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, except with respect
to any obligations to pay the SERP hereunder, 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 her 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
10 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
and for the period set forth
in Section 7(a)(ii) hereof (except
that in the case of the expiration
of the Term, as described in clause
(iii) above, or if the Executive
shall terminate her employment based
upon the event of Good Reason set
forth in Section 6(d)(1)(v) hereof,
the Severance Period shall end on
the first anniversary of the expiration
of the Term or on the first
anniversary of the scheduled expiration
of the Term (after giving effect to the
relevant Nonrenewal Notice), as the
case may be);
(3) the additional vesting of stock options
and restricted Shares, as described in
Sections 7(a)(iii) and
7(a)(iv), respectively, shall apply
(except that in the case of the expiration
of the Term, as described in
clause (iii) above, or if the Executive
shall terminate her employment
based upon the event of Good Reason
set forth in Section 6(d)(1)(v) here
of, (1) the number of additional option
Shares becoming exercisable
shall be determined by reference to
the number of full months from the
date of grant to the first anniversary
of the date of expiration of the
Term or to the first anniversary of
the scheduled expiration of the Term
(after giving effect to the relevant
Nonrenewal Notice), as the case may
be, and (2) the number of additional
Shares as to which restrictions
shall lapse shall be determined as
if Executive had remained employed
through the first anniversary of the
date of such expiration or scheduled
expiration, as the case may be;
(4) for purposes of computing the SERP
payable to the Executive, the Executive
shall be treated as if she had
continued in employment through the
end of the Severance Period (or, in
the case of the expiration of the
Term, as described in clause (iii)
above, or if the Executive shall
terminate her employment based upon
the event of Good Reason set forth
in Section 6(d)(1)(v) hereof,
through the first anniversary of the
date of such expiration or through
the first anniversary of the scheduled
expiration of the Term (after
giving effect to the relevant
Nonrenewal Notice), as the case may
be);
(5) 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 through the end
of the Severance Period (or, in the
case of expiration of the Term, as
described in clause (iii) above, or
if the Executive shall terminate her
employment based upon the event of
Good Reason set forth in Section
6(d)(1)(v) hereof, through the first
anniversary of the date of such expiration
or through the first anniversary of
the scheduled expiration of
the Term (after giving effect to the
relevant Nonrenewal Notice), as the
case may be); provided that, such
coverage shall cease as of the date
the Executive commences new employment;
(6) the Executive shall be provided with
outplacement services commensurate
with her position; and
(7) all outstanding principal amounts
(and accrued interest thereon) with
respect to the loan described in Section
8 hereof shall be forgiven.
8. Loan.
(a) As soon practicable following the
execution of this Agreement, the Company shall make a
loan to the Executive in the principal amount of
$500,000, which loan shall be evidenced by a promissory
note (the 'Note') substantially in the form of Exhibit A
annexed hereto.
(b) In connection with the loan, the
Company agrees to pay to the Executive, on the date(s)
on which interest is payable under the Note, such
amounts as may be necessary to place the Executive in
the same after-tax position as if the Note had been
interest-free.
9. Change in Control.
(a) Upon the occurrence of a Change in
Control of the Company during the Term, (i) all then
outstanding stock options granted to the Executive shall
become fully exercisable, whether or not otherwise exercisable,
(ii) the restrictions applicable to any restricted Shares
granted to the Executive shall lapse,
and such options and restricted Shares shall be fully
vested.
(b) 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
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.
10. Nonsolicitation; Noncompete.
(a) Subject to (c) below, during the period
of Executive's employment and during the Severance
Period, 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 her surviving spouse or other beneficiary
hereunder to any future Severance Payments, SERP payments
and continuing life insurance and medical converge shall
be forfeited; provided that, the foregoing shall not
apply if such failure of compliance commences following a
Change in Control of the Company.
(b) Subject to (c) below, for as long as
Executive has the right to payment of any future SERP
benefits, 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,
SERP 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 Change in Control of the Company.
(c) In the event of a violation of paragraphs
10(a) or 10(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 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 17 hereof.
(d) For purposes hereof, a business will
be 'in competition' with the business of the Company or
its 50% or more owned affiliates 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 $50
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, 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 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 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; and (vi) affiliation with an advertising agency.
11. Protection of Confidential Information.
(a) 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:
(i) that, 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 inconnection 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
or a person authorized thereby; and
(ii) that 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 17 of this Agreement, if the Executive commits a
breach of the provisions of paragraphs 11(a)(i) or
11(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.
12. 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 12 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, distributees, 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 be no such designee, to the Executive's estate.
13. 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, addressed 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:
Sally Frame Kasaks
99 Anderson Avenue
Demarest, New Jersey 07627
With a copy to:
Michael S. Sirkin, Esq.
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
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 effective only
upon receipt.
14. Miscellaneous. No provisions of this
Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in
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 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.
15. 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.
16. 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.
17. 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 10 of the Agreement during
the period of Executive's employment prior to a Change in
Control or of Section 11 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 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. The Company shall pay directly or reimburse
the Executive for any legal fees incurred by the Executive
in connection with any arbitration related to the last
proviso of the preceding sentence and any other arbitration
in which she prevails.
18. Entire Agreement. This Agreement sets
forth the entire agreement of the parties hereto in
respect of the subject matter contained herein and
supersedes the Prior Agreement 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;
and any prior agreement of the parties hereto in respect
of the subject matter contained herein (including, but
not limited to, the Prior Agreement) is hereby terminated
and cancelled.
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date and year first above written.
ANNTAYLOR STORES CORPORATION
By:
Name:
Title:
Sally Frame Kasaks
Exhibit A
PROMISSORY NOTE
('NOTE')
$500,000 November 4, 1994
Reference is made to that certain Employment
Agreement by and between the Company and the Borrower (as
hereinafter defined), dated as of February 1, 1994 (the
'Employment Agreement'). Capitalized terms which are not
defined in this Note shall have the meaning ascribed to
such term in the Employment Agreement. The proceeds
received by the Borrower to which this Note applies shall
constitute the 'Loan' described in Section 8 of the
Employment Agreement and shall be subject to the terms
hereof and to the applicable provisions of the Employment
Agreement, which provisions are incorporated herein by
reference.
FOR VALUE RECEIVED, the undersigned, Sally
Frame Kasaks (the 'Borrower'), hereby promises to pay to
AnnTaylor Stores Corporation, a Delaware corporation (the
'Company'), or to the legal holder of this Note at the
time of payment, on the Maturity Date (as hereinafter
defined) the principal sum (the 'Principal Sum') of Five
Hundred Thousand Dollars ($500,000) in lawful money of
the United States of America. The Borrower also agrees
to pay interest (computed on the basis of a 365 or 366
day year, as the case may be) on any unpaid amount of the
Principal Sum, from and after the effective date of this
Note, at an annual rate equal to 7.32%, compounded
semi-annually.
This Note is subject to the following further
terms and conditions:
1. Time, Form and Place of Payments.
The Principal Sum will become due and
payable on January 31, 1999 (the 'Maturity Date'). If
the Maturity Date falls on a Saturday, Sunday or legal
holiday, then such payment shall be made on the next
succeeding business day.
Accrued interest shall be payable annually
on January 31, 1995 and on each January 31 thereafter,
with the final payment of all accrued interest to be paid
on the Maturity Date.
All payments and prepayments of the Principal
Sum of and the accrued interest on this Note shall
be made to the Company or its order, or to the legal
holder of this Note or such holder's order, in lawful
money of the United States of America at the principal
offices of the Company (or at such other place as the
holder hereof shall notify the Borrower in writing).
2. Prepayment. The Borrower may, at her
option, prepay this Note in whole or in part at any time
or from time to time without penalty or premium. Any
prepayments of any portion of the Principal Sum of this Note
shall be accompanied by payment of all interest accrued
but unpaid hereunder. Upon full and final payment of the
Principal Sum of and interest accrued on this Note, it
shall be surrendered to the Borrower, and canceled by the
Company or other holder.
3. Acceleration of Repayment. Upon the earliest
to occur of (i) the Borrower's voluntary termination
of employment with the Company without Good Reason or
(ii) the Company's termination of the Borrower's employment
for Cause, the holder of this Note may declare, by
notice given to the Borrower, the entire outstanding
Principal Sum to be immediately due and payable, whereupon
such Principal Sum, and any accrued and unpaid interest
thereon, shall become due and payable without presentment,
demand, protest, notice of dishonor and all
other demands and notices of any kind, all of which are
hereby expressly waived.
4. Loan Forgiveness. The outstanding Principal
Sum and all accrued interest thereon shall be forgiven and
the Borrower shall be free of all liability and
obligations under this Note if (i) the Borrower is
employed by the Company on the Maturity Date, (ii) the
Borrower dies or becomes Disabled (and there shall not have
previously occurred the Borrower's voluntary termination
of employment without Good Reason, or the termination of
Borrower's employment for Cause), (iii) the Borrower's
employment is involuntarily terminated by the Company
without Cause or voluntarily terminated by the Borrower
for Good Reason, or (iv) the Term of the Employment
Agreement expires by reason of a Nonrenewal Notice having
been provided by the Company.
5. Notice. For the purposes of this Note,
notices, demands and all other communications provided
for herein 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,
addressed as follows:
If to the Executive:
Sally Frame Kasaks
99 Anderson Avenue
Demarest, New Jersey 07627
If to the Company:
AnnTaylor Stores Corporation
142 West 57th Street
New York, New York 10019
Attn: General Counsel
or to such other address as any party may have furnished
to the others in writing in accordance herewith, except
that notices of change of address shall be effective only
upon receipt.
6. Miscellaneous.
(a) No delay or failure by the Company or
the holder of this Note in the exercise of any right or
remedy shall constitute a waiver thereof, and no single
or partial exercise by the holder hereof of any right or
remedy shall preclude other or future exercise thereof or
the exercise of any other right or remedy.
(b) The headings contained in this Note
are for reference purposes only and shall not affect in
any way the meaning or interpretation of the provisions
hereof.
(c) Nothing in this Note shall confer
upon the Borrower the right to continue in the employment
of the Company or any of its affiliates or affect any
rights which the Company may have to terminate the
employment of the Borrower.
(d) The provisions of this Note shall be
governed by and construed in accordance with laws of the
State of New York, without giving effect to the choice of
law principles thereof.
IN WITNESS WHEREOF, this Note has been duly
executed and delivered to the Company by the Borrower on
the date first above written.
Witness:
Sally Frame Kasaks
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