AMENDMENT
TO EMPLOYMENT AGREEMENT AND RESTRICTED STOCK UNIT
AGREEMENT
This
Agreement (the “ Amendment ”) modifies certain
terms and conditions of (i) the Employment Agreement between
Pacific Sunwear of California, Inc. (the “ Company
”) and Sally Frame Kasaks (the " Executive ”)
previously entered into as of May 22, 2007 (the “
Employment Agreement ”) and (ii) the Restricted
Stock Unit Award Agreement between the Company and the Executive
previously entered into as of May 24, 2007 (the “
Restricted Stock Unit Agreement ”). The purpose of
this Amendment is to make certain conforming changes to establish
documentary compliance with Section 409A of the Internal
Revenue Code of 1986 and its accompanying regulations (“
Section 409A ”), and to permit ongoing
operational compliance with Section 409A. This Amendment also
makes certain additional changes related to the Section 409A
changes and related to the Settlement and Release Agreement entered
into in December 2008, by and between AnnTaylor Stores
Corporation (“ AnnTaylor ”), the Company and the
Executive (the “ Settlement Agreement
”).
Notwithstanding
anything else to the contrary in the Employment Agreement or
Restricted Stock Unit Agreement, as applicable, the provisions of
this Amendment shall apply effective as of December 31, 2008
and shall supersede and replace any conflicting or different terms
currently contained in the Employment Agreement or Restricted Stock
Unit Agreement, as applicable. Capitalized terms used in this
Amendment without definition shall have the same meanings as in the
Employment Agreement or Restricted Stock Unit Agreement, as
applicable.
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EMPLOYMENT AGREEMENT
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1. Timing
of Annual Bonus Payment.
Any
Annual Bonus that becomes payable pursuant to Section 3(b) of the
Employment Agreement shall be paid in the same calendar year in
which the fiscal year for which the Annual Bonus is earned
ends.
2. Timing
of Expense Reimbursements.
To
the extent that any expense reimbursements pursuant to
Section 4(c), 4(d) or 30 of the Employment Agreement are
taxable to the Executive, any reimbursement payment due to the
Executive pursuant to any such provision shall be paid to the
Executive in accordance with the Company’s usual expense
policies and in all events on or before the last day of the
Executive’s taxable year following the taxable year in which
the related expense was incurred. The Executive will provide the
Company with timely documentation of her reimbursable expenses to
facilitate the Company’s obligation to make such
reimbursement payment no later than such deadline. The
reimbursements pursuant to Section 4(c), 4(d) and 30 of the
Employment Agreement are not subject to liquidation or exchange for
another benefit and the amount of such reimbursements that the
Executive receives in one taxable year shall not affect the amount
of reimbursements that the Executive receives in any other taxable
year.
3. Improper
Terminations for Cause.
For
the avoidance of doubt, an improper termination of the Executive by
the Company for Cause pursuant to Section 6 of the Employment
Agreement shall be treated as a termination of the Executive by the
Company without Cause. The last paragraph of Section 6(a) shall be
deleted.
4.
Separation from Service.
For
purposes of the cash severance benefit payable pursuant to Section
6(b) of the Employment Agreement upon a Termination of the
Executive’s employment by the Company without Cause or by the
Executive for Good Reason, payment of such benefit shall, subject
to Section 29(c) of the Employment Agreement (as amended by this
Amendment), commence in the month in which the Executive has a
“separation from service” within the meaning of
Section 409A (including §1.409A-1(h)), and shall continue
for the full period specified in Section 6(b)(ii) of the
Employment Agreement.
5. Good
Reason Definition.
In
order for the Executive to terminate her employment for Good
Reason, she must comply with the following procedural requirements:
(i) the termination for Good Reason must occur within a
limited period of time not to exceed two years following the
initial existence of the events claimed to constitute Good Reason,
(ii) the Executive must provide written notice to the Company
within ninety (90) days after the initial existence of the
events claimed to constitute Good Reason and (iii) the Company
must be provided with a period of thirty (30) days after the
Company’s receipt of such written notice to remedy the events
claimed to constitute Good Reason without being required to pay the
benefits pursuant to Section 6(b) of the Employment
Agreement.
6.
Severance Benefits Offsets.
In
the event the Company adopts a change in control severance plan,
the Employment Agreement entitles the Executive to participate in
such plan and receive the greater of the cash severance benefits
provided under the Employment Agreement or any such change in
control severance plan (with the cash severance benefits otherwise
payable subject to offset to avoid a duplication of benefits (
i.e. , cash severance benefits are payable under either the
Employment Agreement or change in control severance plan, but not
both)). If the Executive becomes entitled to cash severance
benefits under any such change in control severance plan because
the cash severance benefits thereunder in the circumstances are
greater than under the Employment Agreement, then, to the extent of
the amount of the cash severance benefits that would otherwise be
payable under the Employment Agreement in the circumstances, the
severance benefits payable under any such change in control
severance plan shall be paid at the same time and in the same form
as provided under Section 6(b) of the Employment Agreement as
amended by this Amendment. Any cash severance benefits payable in
the circumstances under any such change in control severance plan
having a value in excess of the cash severance benefits that would
otherwise be payable under the Employment Agreement shall be paid
in the time and form specified in any such change in control
severance plan. Notwithstanding the preceding two sentences, if the
Executive becomes entitled to cash severance benefits under any
such change in control severance plan, the full amount of the cash
severance benefits shall be paid in the time and form specified in
any such change in control severance plan if the Executive has
a
“separation
from service” (within the meaning of Section 409A,
including §1.409A-1(h)
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