Exhibit 10.3

 

2002 STOCK OPTION AND RESTRICTED STOCK

AND UNIT AWARD PLAN, AS AMENDED

 

NON-QUALIFIED STOCK OPTION AGREEMENT

TIME-VESTING OPTIONS

 

This Non-Qualified Stock Option Agreement (this “Agreement”) is entered into as
of «GrantDate» (the “Grant Date”), between AnnTaylor Stores Corporation, a
Delaware corporation (the “Company”), and «Name» (the “Option Holder”).

 

Pursuant to the AnnTaylor Stores Corporation 2002 Stock Option and Restricted
Stock and Unit Award Plan, as amended (the “Plan”), the Compensation Committee
of the Board of Directors of the Company (the “Committee”) or its designee has
determined that the Option Holder be granted an option under the Plan, upon the
terms and subject to the conditions hereinafter contained. Capitalized terms
used but not defined herein shall have the meanings assigned to them in the
Plan.

 

1. Number and Price of Shares.    The Company hereby grants to the Option Holder
an option (the “Option”) to purchase «Options» shares of its Common Stock (the
“Option Shares”) at a price of $«Price» per share (the “Option Price”).

 

2. Time of Exercise.    Subject to the provisions of Section 4 hereof, the right
to purchase shares pursuant to the Option shall be exercisable in whole or in
part, at any time and from time to time, during the term set forth in Section 4
below in accordance with the following schedule:

 

Before the 1st anniversary of the Grant Date, for no Option Shares;

 

From the 1st anniversary of the Grant Date through the 2nd anniversary of the
Grant Date, for up to 25% of the Option Shares;

 

From the 2nd anniversary of the Grant Date, through the 3rd anniversary of the
Grant Date, for up to 50% of the Option Shares;

 

From the 3rd anniversary of the Grant Date, through the 4th anniversary of the
Grant Date, for up to 75% of the Option Shares; and

 

From and after the 4th anniversary of the Grant Date, for up to 100% of the
Option Shares.

 

The foregoing notwithstanding, if an Acceleration Event shall occur prior to
termination of the Option pursuant to Section 4 hereof, the Option Holder’s
right to purchase 100% of the Option Shares shall become exercisable
immediately.

 

3. Method of Exercise.    The Option, or any part thereof, shall be exercised by
written notice from the Option Holder to the Secretary of the Company specifying
the number of Option Shares to be purchased (which must be a whole number of
shares) and accompanied by payment in full of the Option Price for the shares
being purchased. Such payment may be made (i) in cash, (ii) in shares of Common
Stock (that you have owned for at least six months) having a Fair Market Value
equal to such

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Option Price, (iii) in a combination of cash and shares or (iv) through a
“cashless exercise” procedure involving a broker. A minimum of one hundred (100)
shares must be purchased each time the Option is exercised, unless the Option is
being exercised with respect to all Option Shares available at such time for
purchase hereunder. No shares shall be issued until full payment therefor has
been received by the Company and the provisions of Section 8 hereof shall have
been complied with, and the Option Holder shall have no rights as a stockholder
of the Company in respect of such shares until the date of the issuance by the
Company of a stock certificate representing such shares, or issuance of the
shares in uncertificated form by book entry on the records of the Company’s
Common Stock registrar and transfer agent.

 

4. Term of the Option.

 

(a) The Option shall be exercisable, in accordance with the provisions of
Sections 2 and 3 hereof, through the tenth anniversary of the Grant Date, unless
terminated earlier as provided herein.

 

(b) Except as may be provided pursuant to paragraph (d) of this Section 4, if
the Option Holder’s employment is terminated by reason of the Option Holder’s
Disability or Retirement, or if the Option Holder shall die while employed by
the Company or a Subsidiary Corporation, the Option may, to the extent otherwise
exercisable pursuant to Section 2 above on the date of such termination or
death, be exercised by the Option Holder or the Option Holder’s estate or the
person who acquired the right to exercise the Option by bequest or inheritance
or otherwise by reason of the death or Disability of the Option Holder, at any
time within three years after the date of death or termination of employment by
reason of Disability or Retirement, but in any event not beyond the date on
which the Option would otherwise expire pursuant to paragraph (a) of this
Section 4. Except as set forth in paragraph (d) of this Section 4, the Option
shall, to the extent not theretofore exercised or terminated, terminate upon the
expiration of such three-year (or shorter) period.

 

(c) Except as otherwise provided in paragraph (b) of this Section 4, and except
as may be provided in accordance with paragraph (d) of this Section 4, the
Option may not be exercised unless the Option Holder is then in the employ of
the Company or one of its divisions or Subsidiary Corporations, and unless the
Option Holder has remained continuously so employed since the Grant Date. In the
event the Option Holder’s employment is terminated for any reason other than the
Option Holder’s death, Disability or Retirement, all Options shall, to the
extent not theretofore exercised or canceled, terminate immediately upon such
separation of employment.

 

(d) The period for exercise of the Option may be extended by, and in the sole
discretion of, the Committee in accordance with the Plan, but in any event not
longer than the term set forth in paragraph (a) of this Section 4.

 

5. Non-Transferability.    The Option and the Option Holder’s rights hereunder
shall not be transferable other than by will or the law of descent and
distribution, and during the lifetime of the Option Holder the Option may be
exercised only by the Option Holder or by the Option Holder’s guardian or legal
representative.

 

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6. No Guarantee of Employment.    Nothing set forth herein or in the Plan shall
confer upon the Option Holder any right of continued employment for any period
by the Company or any of its divisions or Parent or Subsidiary Corporations, or
shall interfere in any way with the right of the Company or any such division or
Parent or Subsidiary Corporation to terminate such employment.

 

7. Non-Qualified Stock Option.    No portion of the Option constitutes an
Incentive Stock Option. The Option granted hereunder constitutes a Non-Qualified
Stock Option.

 

8. Taxes upon Exercise of Options.    The Option Holder agrees that:

 

(a) no later than the date of any exercise of the Option, the Option Holder
shall pay to the Company, or make arrangements satisfactory to the Committee
regarding the payment of, any federal, state or local taxes required by law to
be withheld upon or in connection with such exercise; and

 

(b) the Company shall, to the extent permitted or required by law, have the
right to deduct all federal, state and local taxes of any kind required by law
to be withheld upon any exercise of the Option or from any payment of any kind
otherwise due to the Option Holder with respect to the Option.

 

9. Failure to Enforce Not a Waiver.    The failure of the Company to enforce at
any time any provision of this Option Agreement shall in no way be construed to
be a waiver of such provision or of any other provision hereof.

 

10. Governing Law.    This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of laws provisions thereof.

 

11. Stock Option Plan.    A copy of the Plan is attached hereto. The Plan is
hereby incorporated herein by reference and made a part of this Agreement, and
this Agreement and the Option shall be subject to the terms of the Plan, as it
may be amended from time to time, provided that such amendment of the Plan is
made in accordance with Section 10 of the Plan.

 

12. Counterparts.    This Agreement may be executed in two or more counterparts,
each of which shall be an original but all of which together shall represent one
and the same agreement.

 

ANNTAYLOR STORES CORPORATION   OPTION HOLDER: By:  

 

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                        «Name»

 

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