ANNTAYLOR STORES CORPORATION SPECIAL SEVERANCE PLAN, AS AMENDED

Exhibit 10.8

ANNTAYLOR STORES CORPORATION

SPECIAL SEVERANCE PLAN, AS AMENDED

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

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

SECTION 1. DEFINITIONS. As hereinafter used:

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

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

1.3 "Board" shall mean the Board of Directors of the Company.

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

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

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

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

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

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

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

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

1.7 "Committee" shall mean the Compensation Committee of the Board.

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

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

1.10 "Effective Date" shall mean January 1, 2000.

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

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

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

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

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

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

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

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

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

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

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

1.22 "Qualifying Termination" shall mean a termination of an Employee’s employment following a Change in Control and on or before such Employee’s Qualifying Termination Date, either (i) by the Company without Cause or (ii) by the Employee for

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

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

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

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

1.26 "Severance Multiple" shall mean:

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

(b) with respect to Level II employees, two;

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

(d) with respect to Level IV Employees, one.

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

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

SECTION 2. BENEFITS.

2.1 (a) Subject to Section 2.4 hereof and to subsections (b) and (c) of this Section 2.1, each Severed Employee shall be entitled to receive from the Company an amount equal to the product of (i) the Severed Employee’s Annual Compensation and (ii) the Severed Employee’s Severance Multiple (the "Severance Amount"). The Severance Amount shall be paid to such Severed Employee in a lump sum as soon as practicable following the first date on which the Release referred to in Section 2.5 hereof is no longer revocable, but in no event later than the last day of the "applicable 2  ¹ / 2 month period", as such term in defined in Treasury Regulation § 1.409A-1(b)(4)(i)(A).

(b) Notwithstanding the foregoing, if a Change in Control under the Plan does

not constitute a "change in the ownership or effective control of the corporation or in the ownership of a substantial portion of the assets of the corporation" (within the meaning of Section 409A of the Code and applicable guidance issued thereunder), then in the case of a Severed Employee who is either (i) a participant in the AnnTaylor Stores Corporation Severance Plan or (ii) party to an individual agreement with the Company providing for non-Change in Control-related severance payments which are payable other than in a lump sum, the Severance Amount under this Plan shall be paid to the Severed Employee in substantially equal monthly installments over a number of years corresponding to the Severed Employee’s Severance Multiple.

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

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

2.2 Subject to Section 2.4 hereof, commencing on the date immediately following the Severed Employee’s Severance Date and continuing for the period set forth below (the "Welfare Benefit Continuation Period"), the Company shall provide each Severed Empl