Filed by Bowne Pure Compliance





Exhibit 10.4




FIRST AMENDMENT TO

EMPLOYMENT LETTER




FIRST AMENDMENT, dated as of August 6, 2008 (this “ First Amendment”) to EMPLOYMENT
LETTER, dated as of November 28, 2007 ( the “Employment Letter”) between A.C. Moore Arts & Crafts,
Inc., a Pennsylvania corporation (“Company”), and Joseph A. Jeffries (“Executive”). Capitalized
terms used herein and not defined herein shall have the respective meanings set forth for such
terms in the Employment Letter.



R E C I T A L S:




WHEREAS, Company and Executive have mutually agreed that certain provisions of the Employment
Letter be amended, as set forth herein.




NOW, THEREFORE, intending to be legally bound hereby, it is agreed as follows:



Section 1. Addition of Appendix I. The Board of Directors of the Company (the
“Board”) has determined that it is in the best interests of the Company and its shareholders to
assure that the Company will have the continued dedication of the Executive, notwithstanding the
possibility, threat or occurrence of a Change of Control (as defined in Appendix I to the
Employment Letter) of the Company. The Board believes it is imperative to diminish the inevitable
distraction of the Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive’s full attention and dedication to
the Company currently and in the event of any threatened or pending Change of Control, and to
provide the Executive with compensation and benefits arrangements upon a Change of Control which
ensure that the compensation and benefits expectations of the Executive will be satisfied and which
are competitive with those of other corporations. Therefore, in order to accomplish these
objectives if a Change of Control occurs, paragraphs 1 through 11 of the Employment Letter (except
paragraph 9 which shall continue) shall be superseded by Appendix I.



Section 2. Title. The second sentence of paragraph 1 of the Employment Letter is
amended to read in its entirety as follows: “Your title will be Executive Vice President and Chief
Operating Officer.”



Section 3. Effectiveness. This Amendment shall be become effective as of the date
hereof.



Section 4. Status of Employment Letter. This Amendment is limited solely for the
purposes and to the extent expressly set forth herein, and, except as expressly set forth herein
all of the terms, provisions and conditions of the Employment Letter shall continue in full force
and effect and are not effected by this Amendment.


 


 









 





IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Employment Letter
to be duly executed and delivered as of the date first written above.



	 	 	 	 	 
	 	                                                /s/ Joseph A. Jeffries
 	 
	Date:  August 6, 2008 	EXECUTIVE 	 
	 
	 	A.C. MOORE ARTS & CRAFTS, INC.

 	 
	Date: August 6, 2008 	By:  	/s/ Rick A. Lepley
 	 
	 	 	Rick A. Lepley 	 
	 	 	President and Chief Executive Officer 	 



 


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APPENDIX I




CHANGE OF CONTROL PROVISIONS




To Employment Letter of Joseph A. Jeffries




If a Change of Control (as defined in this Appendix I) of the Company occurs, paragraphs 1
through 11 of the Employment Letter (except paragraph 9 which shall continue) shall be superseded
by this Appendix I.




NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:




1. Effective Date.



For the purpose of this Appendix I, the “Effective Date” shall mean the date on which a Change
of Control (as defined in Section 2 of this Appendix I) occurs. Anything in the Employment Letter
to the contrary notwithstanding, if a Change of Control occurs and if the Executive’s employment
with the Company is terminated prior to the date on which the Change of Control occurs, and if it
is reasonably demonstrated by the Executive that such termination of employment (i) was at the
request of a third party who has taken steps reasonably calculated to effect a Change of Control or
(ii) otherwise arose in connection with or anticipation of a Change of Control, then for all
purposes of the Employment Letter and this Appendix I, the “Effective Date” shall mean the date
immediately prior to the date of such termination of employment.



2. Change of Control. For the purpose of this Appendix I and the Employment Letter, a
“Change of Control” shall mean:



(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
more than 50% of either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding Company Common Stock”) or (ii) the combined voting power of the then-outstanding
voting securities of the Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection
(a), the following acquisitions shall not constitute a Change of Control: (i) any acquisition
directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) of this Section 2; or



(b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
for any reason to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or nomination for
election by the Company’s shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board; or


 


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(c) Consummation of a reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company (a “Business Combination”), in each case,
unless, following such Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock and the combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation resulting from such
Business Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any
corporation resulting from such Business Combination or any employee benefit plan (or related
trust) of the Company or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common
stock of the corporation resulting from such Business Combination, or the combined voting power of
the then-outstanding voting securities of such corporation except to the extent that such ownership
existed prior to the Business Combination and (iii) at least a majority of the members of the board
of directors of the corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the action of the
Board, providing for such Business Combination; or



(d) Approval by the shareholders of the Company of a complete liquidation or dissolution of
the Company.



3. Employment Term; Sign-on Bonus; Relocation Benefits. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby agrees to remain in the employ of
the Company subject to the terms and conditions of the Employment Letter and this Appendix I, for
the period commencing on the Effective Date and ending on the twelfth month anniversary of such
date (the “Employment Term”). Such period may be extended in writing by the mutual agreement of the
Company and Executive at any time prior to such anniversary. On the Effective Date Executive’s
Sign-on Bonus and Relocation Benefits shall be deemed completely earned.


 


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4. Terms of Employment.




(a) Position and Duties.



(i) During the Employment Term, (A) the Executive’s position, authority, duties and
responsibilities shall be at least commensurate in all material respects with
the most significant of those held, exercised and assigned to him at any time during the
120-day period immediately preceding the Effective Date and (B) the Executive’s services shall be
performed at the location where the Executive was employed immediately preceding the Effective Date
or any office or location less than 35 miles from such location.



(ii) During the Employment Term, and excluding any periods of vacation and sick leave to which
the Executive is entitled, the Executive agrees to devote Executive’s best efforts and Executive’s
full business time and attention to the business and affairs of the Company and its subsidiaries.
During the Employment Term it shall not be a violation of this Appendix I or the Employment Letter
for the Executive to (A) serve on corporate, civic or charitable boards or committees, (B) deliver
lectures, fulfill speaking engagements or teach at educational institutions, and (C) manage
personal investments, so long as such activities do not significantly interfere with the
performance of the Executive’s responsibilities as an employee of the Company in accordance with
this Appendix I and the Employment Letter. It is expressly understood and agreed that to the extent
that any such activities have been conducted by the Executive prior to the Effective Date, the
continued conduct of such activities (or the conduct of activities similar in nature and scope
thereto) subsequent to the Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive’s responsibilities to the Company.




(b) Compensation.



(i) Base Salary. During the Employment Term, the Executive shall receive an annual base
salary (“Annual Base Salary”), which shall be paid at a monthly rate, at least equal to twelve
times the highest monthly base salary paid or payable, including any base salary which has been
earned but deferred, to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date occurs. During the
Employment Term, the Annual Base Salary shall be reviewed no more than 12 months after the last
salary increase awarded to the Executive prior to the Effective Date. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive under the
Employment Letter and this Appendix I. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in the Employment Letter and this Appendix I
shall refer to Annual Base Salary as so increased. As used in this Appendix I, the term “affiliated
companies” shall include any company controlled by, controlling or under common control with the
Company.



(ii) Annual Bonus; Long-term incentive plan; Benefits. In addition to Annual Base Salary, the
Executive shall be awarded, for each calendar year ending during the Employment Term, an annual
bonus (the “Annual Bonus”) in cash at least equal to the Executive’s bonus under the Company’s
annual bonus plans or any comparable bonus under any predecessor or successor plan or plans, for
the last full calendar year prior to the Effective Date (annualized in the event that the Executive
was not employed by the Company for the whole of such calendar year). Each such Annual Bonus shall
be paid no later than March 15th of the calendar year next following the calendar year for which
the Annual Bonus is awarded. Executive will continue to be eligible to participate in the
Company’s long-term incentive plan as administered and determined by the Compensation Committee of
the Board of Directors and to
be entitled to receive benefits generally provided to officers of the Company consistent with
the Company’s practices.


 


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5. Termination of Employment.



(a) Death or Disability. The Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Term. If the Company determines in good faith that the
Disability of the Executive has occurred during the Employment Term (pursuant to the definition of
Disability set forth below), it may give to the Executive written notice in accordance with this
Appendix I and the Employment Letter of its intention to terminate the Executive’s employment. In
such event, the Executive’s employment with the Company shall terminate effective on the 30th day
after receipt of such notice by the Executive (the “Disability Effective Date”), provided that,
within the 30 days after such receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties. For purposes of this Appendix I and the Employment Letter,
“Disability” shall mean the absence of the Executive from the Executive’s duties with the Company
on a full-time basis for 90 consecutive days as a result of incapacity due to mental or physical
illness which is determined to be total and permanent by a physician selected by the Company or its
insurers and acceptable to the Executive or the Executive’s legal representative.



(b) Cause. The Company may terminate the Executive’s employment during the Employment Term
for Cause. For purposes of this Appendix I and the Employment Letter, “Cause” shall mean:



(i) the failure of the Executive to perform substantially the Executive’s duties with the
Company or one of its affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance is delivered to the
Executive by the Chief Executive Officer which specifically identifies the manner in which the
Chief Executive Officer believes that the Executive has not substantially performed the Executive’s
duties; provided however, that Executive shall have one opportunity to cure the failure so
identified for sixty days from the written demand, or



(ii) the engaging by the Executive in illegal conduct or gross misconduct, in either case, in
violation of the Company’s Code of Ethical Business Conduct.



Any act, or failure to act, based upon authority given pursuant to a resolution duty adopted by the
Board or upon the instructions of the Chief Executive Officer or based upon the advice of counsel
for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until there shall have been delivered to
the Executive a written notice from the Chief Executive Officer, a copy of which notice has been
previously delivered to the Board of Directors, finding that, in the good faith opinion of the
Chief Executive Officer, the Executive is guilty of the conduct described in subsection 5 (b)(i) or
(ii) above, and specifying the particulars thereof in detail.


 


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(c) Good Reason. The Executive’s employment may be terminated by the Executive for Good
Reason. For purposes of this Appendix I and the Employment Letter, “Good Reason” shall mean:



(i) the assignment to the Executive of any duties inconsistent in any respect with the
Executive’s position, authority, duties or responsibilities as contemplated by Section 4(a) of this
Appendix I, or any other action by the Company which results in a material diminution in such
position, authority, duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the Executive;



(ii) any failure by the Company to comply with any of the provisions of Section 4(b) of this
Appendix I, other than an isolated, insubstantial and inadvertent failure not occurring in bad
faith and which is remedied by the Company promptly after receipt of notice thereof given by the
Executive;



(iii) the Company’s requiring the Executive to be based at any office or location other than
as provided in Section 4(a)(i)(B) of this Appendix I;



(iv) any purported termination by the Company of the Executive’s employment otherwise than as
expressly permitted by this Appendix I; or



(v) any failure by the Company to 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 to assume expressly and agree to perform the this Appendix I and the
Employment Letter 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.



(d) Date of Termination. “Date of Termination” means (i) if the Executive’s employment is
terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of
the notice of termination, (ii) if the Executive’s employment is terminated by the Company other
than for Cause or Disability, the date on which the Company notifies the Executive of such
termination and (iii) if the Executive’s employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case may be.




 


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6. Obligations of the Company upon Termination.



(a) Good Reason; Other Than for Cause, Death or Disability. If, during the Employment Term,
the Company shall terminate the Executive’s employment other than for Cause, death or Disability or
the Executive shall terminate Executive’s employment for Good Reason:



(i) the Company shall pay to the Executive in a single lump sum payment in cash within 30 days
after the Date of Termination the aggregate of the following amounts:



(A) the sum of (1) the Executive’s Annual Base Salary through the Date of Termination to the
extent not theretofore paid, plus (2) the product of (I) the target Annual Bonus paid or payable,
for the most recently completed calendar year during the Employment Term and (II) a fraction, the
numerator of which is the number of days in the current calendar year through the Date of
Termination, and the denominator of which is 365 (“Pro Rata Bonus”), plus (3) any compensation
previously deferred by the Executive and not theretofore previously paid shall be paid in
accordance with the terms of the plan pursuant to which deferral was made and (4) the amount equal
to the Executive’s Annual Base Salary through the twelfth month anniversary of the Date of
Termination.



(ii) The Company shall provide all benefits as are, from time to time, maintained for officers
of the Company, including without limitation, medical and other insurance plans to the Executive
through the twelfth month anniversary of the Date of the Termination of Executive’s employment
pursuant to or, if not pursuant to, which are substantially equal to the Company’s insurance
programs in effect and to the extent Executive participated immediately prior to the date of such
termination, provided that if the Consolidated Omnibus Reconciliation Act of 1985 (“COBRA”) applies
to the provision of health insurance benefits for any part of the period of benefit continuation
provided for by this paragraph, Executive will make all necessary elections and such benefits will
run concurrently with and satisfy the continuation coverage requirements of this paragraph for the
period to which COBRA applies.



No payment of any sum nor the receipt of any benefit shall be due to Executive under this Section
6(a) unless and until Executive shall have executed and delivered to the Company a release of any
and all claims against the Company and its subsidiaries (and their respective present and former
officers, directors, employees and agents — collectively the “Released Parties”) and a covenant not
to sue the Released Parties, all in form and substance as provided by counsel to the Company (the
“Release”) and any waiting period or revocation period provided by law for the effectiveness of
such Release shall have expired without Executive’s having revoked such Release. In the event
Executive shall decline or fail for any reason to execute and deliver such Release, the Executive
shall be entitled to receive only those amounts provided pursuant to Section 6(d) provided for an
Executive whose employment is terminated by the Company for Cause or by Executive without Good
Reason.



(b) Death. If the Executive’s employment is terminated by reason of the Executive’s death
during the Employment Term, this Appendix I and the Employment Letter shall terminate without
further obligations to the Executive’s legal representatives under this Appendix I and the
Employment Letter, except that Executive, or Executive’s estate if applicable, shall be entitled to
receive the sum of (i) Executive’s Annual Base Salary through the Date of Termination, (ii)
Executive’s Pro Rata Bonus (as defined in Section 6(a)(i)(A)(2)) and (iii) the timely payment or
provision of any other amounts or benefits required to be paid or provided or which the Executive
is eligible to receive under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies. The amounts set forth in Section 6(b)(i) and (ii) shall be
paid to the Executive’s estate, as applicable, in a lump sum in cash within 30 days of the Date of
Termination.


 


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(c) Disability. If the Executive’s employment is terminated by reason of the Executive’s
Disability during the Employment Term, this Appendix I and the Employment
Letter shall terminate without further obligations to the Executive, except that Executive
shall be entitled to receive the sum of (i) Executive’s Annual Base Salary through the Disability
Effective Date and (ii) Executive’s Pro Rata Bonus (as defined in Section 6(a)(i)(A)(2)) and (iii)
the timely payment or provision of other benefits required to be paid or provided to Executive or
which Executive is eligible to receive under any plan, program, practices or policies relating to
disability of the Company and its affiliated Companies. The amounts set forth in Section 6(c)(i)
and (ii) shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.



(d) Cause; Other than for Good Reason. If the Executive’s employment shall be terminated for
Cause or Executive voluntarily terminates employment without Good Reason during the Employment
Term, this Appendix I and the Employment Letter shall terminate without further obligations to the
Executive other than for the Executive’s Annual Base Salary through the Date of Termination and
timely payment or provision of any other applicable benefits, in each case to the extent
theretofore unpaid.



7. Options, SARs and Restricted Stock. All options to purchase and stock appreciation
rights in common stock in the Company and the grants of common stock in the Company with vesting
restrictions held by Executive on the date of a Change of Control shall immediately be deemed
vested and the options and stock appreciation rights shall immediately become exercisable on the
date of the Change in Control and Executive shall have until the end of the applicable original
term of each such option and stock appreciation right to exercise such option and stock
appreciation right; provided, however, that if Executive’s employment with the Company is
terminated for any reason (other than Cause) after the Change in Control, Executive shall have
until the earlier of (1) the end of the applicable original term of each such option and stock
appreciation right and (2) 18 months after the Date of Termination to exercise each such option and
stock appreciation right post-termination. In the event that Executive’s employment with the
Company is terminated for Cause, all options, stock appreciation rights and unvested restricted
stock held by Executive shall terminate immediately.



8. Nonexclusivity of Rights. Nothing in this Appendix I or the Employment Letter
shall prevent or limit the Executive’s continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies and amounts which are
vested benefits or which the Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company or any of its affiliated
companies at or subsequent to the date of termination of employment shall be payable in accordance
with such plan, policy, practice or program or contract or agreement except as explicitly modified
by this Appendix I and the Employment Letter.



9. Section 409A. In the event that an amount becomes payable to the Executive after
his termination of employment, the Company shall determine whether such payment is subject to the
requirements of Section 409A (a) (2)(A)(i) and Section 409A (a)(2)(B)(i) of the Internal Revenue
Code of 1986, as amended (hereinafter referred to as the “Specified Employee Rule”). The Company
shall make such determination and provide written notice thereof to the Executive prior to the
earlier of the date that any such amounts would be paid to the Executive without regard to Code
Section 409A or within 30 days after his termination of employment. Upon the request of the
Executive, the Company agrees to promptly provide to him such
information that the Executive may reasonably request with regard to its determination. In
the event that the Company determines that an amount payable to the Executive after his termination
of employment is subject to the Specified Employee Rule, then no distribution of such amount shall
be made to the Executive on account of his separation from service before the date which is six (6)
months after the date of his separation from service (or if earlier, the date of death of the
Executive). The aggregate amount that would have been payable to the Executive but for the
restrictions imposed by Section 409A shall be paid to the Executive as soon as permitted by Section
409A.




 


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