EXHIBIT 10.6.2
AMENDMENT #2 TO EMPLOYMENT AGREEMENT
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This AMENDMENT #2 (this "Amendment") is entered into on this 12th
day of August, 1999, by and between ANNTAYLOR STORES CORPORATION (the
"Company") and J. PATRICK SPAINHOUR (the "Executive"), and amends the
Employment Agreement between the Company and the Executive, dated as of
February 16, 1996, as previously amended by agreement dated as of August
23, 1996 (as so amended, the "Employment Agreement").
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the parties, the Company and the
Executive agree as follows:
1. All capitalized terms used and not defined herein shall have the
meanings ascribed to them in the Employment Agreement.
2. The first two sentences of Section 2 of the Employment Agreement
are hereby amended as of the date hereof to read in their entirety as
follows:
The term of this Agreement shall continue through May 31,
2002, unless further extended or sooner terminated as provided
in this Agreement. Commencing on June 1, 2002, and on each
anniversary of such 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 which to extend
this Agreement.
3. Section 5(a)(i) of the Employment Agreement is hereby amended to
provide that, commencing June 1, 1999, Executive's annual base salary
shall be increased to a rate of $850,000.
4. Section 5(a)(ii) of the Employment Agreement is hereby amended
to increase Executive's annual Performance Percentage under the Company's
Management Performance Compensation Plan to 80%, commencing with the
Fiscal Year 1999 Performance Period under such plan.
5. (a) The Executive is hereby awarded twenty-five thousand
(25,000) restricted shares of Company Common Stock under the Company's
1992 Stock Option and Restricted Stock and Unit Award Plan (the "Option
Plan"). Executive's rights to such shares shall vest, and the
restrictions thereon shall lapse, on March 8, 2000.
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(b) The Executive shall be awarded an additional 25,000
restricted shares under the Option Plan on March 8, 2000. Executive's
rights to such 25,000 restricted shares shall vest, and the restrictions
thereon shall lapse, on March 8, 2001, provided that the Company shall
have achieved at least 110% of the net income provided for in the
Company's fiscal year 2000 operating budget as approved by the Board of
Directors of the Company in the ordinary course. If the Company shall not
have achieved at least 110% of budgeted net income for fiscal year 2000,
Executive's rights to such restricted shares shall not vest, and such
restricted shares shall automatically be forfeited by Executive.
(c) The Executive shall be awarded an additional 25,000
restricted shares under the Option Plan on March 8, 2001. Executive's
rights to such 25,000 restricted shares shall vest, and the restrictions
thereon shall lapse, on March 8, 2002, provided that the Company shall
have achieved at least 110% of the net income provided for in the
Company's fiscal year 2001 operating budget as approved by the Board of
Directors of the Company in the ordinary course. If the Company shall not
have achieved at least 110% of budgeted net income for fiscal year 2001,
Executive's rights to such restricted shares shall not vest, and such
restricted shares shall automatically be forfeited by Executive.
(d) The Company shall enter into a Restricted Stock Award
Agreement with the Executive for each of the above grants of restricted
shares, incorporating the vesting terms set forth above with respect to
each such grant, and otherwise on the terms and conditions set forth in
the form of Restricted Stock Award Agreement previously approved by the
Compensation Committee of the Board of Directors for restricted stock
awards under the Option Plan, including, but not limited to, terms
providing for accelerated exercisability upon the occurrence of an
Acceleration Event (as defined in the Option Plan).
6. (a) Executive is hereby awarded a non-qualified stock option to
purchase 250,000 shares of Common Stock under the Option Plan, having an
exercise price of $44.25. Such option shall become exercisable commencing
March 8, 2002, provided that Executive has remained continuously employed
by the Company through such date. The option shall contain such other
terms and conditions as are set forth in the Company's standard stock
option agreements applicable to "time-vesting" options, including, but not
limited to, accelerated exercisability upon the occurrence of an
Acceleration Event (as defined in the Option Plan).
(b) Executive is also hereby awarded a "super-incentive"
non-qualified performance-vesting stock option to purchase 100,000 shares
of Common Stock under the Option Plan, having an exercise price of
$44.25. Such option shall become exercisable as follows:
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(i) 50,000 of the option shares shall vest and become
exercisable on March 8, 2000, if the Company shall have
achieved earnings per share for the fiscal year 1999 of at
least $***;
(ii) the remaining 50,000 of the option shares shall vest and
become exercisable on March 8, 2001, if the Company shall
have achieved earnings per share for the fiscal year 2000 of
at least $***;
(iii)if the Company shall not have achieved the earnings target
specified in clause (i) or (ii), but the Company shall have
achieved cumulative earnings per share aggregating at least
$*** for the three fiscal year period from fiscal 1999
through fiscal 2001, then any option shares that did not
vest pursuant to clause (i) or (ii), shall vest and become
exercisable on March 8, 2002; and
(iv) any option shares that shall not have vested pursuant to any
of clauses (i), (ii), or (iii) above by March 8, 2002 shall
lapse and such portion of the option shall be canceled,
immediately upon determination thereof.
The Company shall enter into a Stock Option Agreement with the Executive
for the above stock option grant, incorporating the vesting terms set forth
above, and otherwise substantially on the terms and conditions set forth in the
form of the Company's standard Stock Option Agreement applicable to "performance
vesting" options previously approved by the Compensation Committee of the Board
of Directors, including, but not limited to, terms providing for accelerated
exercisability upon the occurrence of an Acceleration Event (as defined in the
Option Plan).
(c) On January 31, 2000, Executive shall be awarded an additional
"super-incentive" non-qualified performance-vesting stock option to
purchase 100,000 shares of Common Stock under the Option Plan, having
an exercise price equal to the Fair Market Value of the Common Stock
on the date of grant, determined in accordance with the Option Plan.
Such option shall become vested with respect to 100% of the option
shares, on March 8, 2002, provided that (i) the Company shall have
achieved earnings per share for the fiscal year 2001 of at least $***,
or the Company shall have achieved cumulative earnings per share
aggregating at least $*** for the three fiscal year period from fiscal
1999 through fiscal 2001, and (ii) Executive has remained continuously
employed by the Company through such date. If the Company shall not
have achieved the earnings per share target for fiscal year 2001, such
option shall lapse and be canceled, immediately upon determination
thereof. If the Fair Market Value of the Common Stock on January 31,
2000, determined in accordance with the Option Plan, is greater than
$44.25, then the number of shares subject to the option to be granted
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pursuant to this section shall be increased to equal the product of
100,000 multiplied by a fraction, the numerator of which is the Fair
Market Value of the Common Stock on January 31, 2000 and the
denominator of which is $44.25.
The Company shall enter into a Stock Option Agreement with the Executive
for such stock option grant, incorporating the vesting terms set forth above,
and otherwise substantially on the terms and conditions set forth in the form of
the Company's standard Stock Option Agreement applicable to "performance
vesting" options previously approved by the Compensation Committee of the Board
of Directors, including, but not limited to, terms providing for accelerated
exercisability upon the occurrence of an Acceleration Event (as defined in the
Option Plan).
7. (a) For purposes of this Amendment, a "fiscal year" of the
Company shall mean the fiscal year commencing on the Sunday closest to
January 31 in the year mentioned (for example, "fiscal year 1999" means
the fiscal year that began on February 2, 1999 and ends on January 29,
2000).
(b) For purposes of Sections 5(b) and 5(c), net income shall
mean that net income set forth on the Company's audited consolidated
operating statement for the fiscal year in question.
(c) For purposes of Sections 6(b) and 6(c), earnings per share
shall mean the net earnings per share, on a diluted basis, set forth on
the Company's audited consolidated operating statement for the fiscal year
in question.
8. From and after the date hereof, the term "Agreement" as used in
the Employment Agreement, shall mean the Employment Agreement as amended
by this Amendment, and the Employment Agreement, as so amended, shall
continue in full force and effect.
9. Sections 11 through 17 of the Employment Agreement are hereby
made a part of, and are incorporated by this reference into, this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment this
12th day of August, 1999.
ANNTAYLOR STORES CORPORATION EXECUTIVE
By: /S/ Rochelle B. Lazarus /s/ J. Patrick Spainhour
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Rochelle B. Lazarus, Director J. PATRICK SPAINHOUR
*** Confidential Treatment Requested