EXHIBIT 10.28.3
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ATSC PLEDGE AGREEMENT
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THIS SECURITY AND PLEDGE AGREEMENT (as such agreement may be amended,
supplemented or otherwise modified from time to time, this "Agreement"), dated
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as of June 30, 1998, is made by ANNTAYLOR STORES CORPORATION, a Delaware
corporation, with its principal place of business located at 142 West 57th
Street, New York, New York 10019 (the "Grantor"), in favor of BANK OF AMERICA
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NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455
Market Street, San Francisco, California 94103, in its capacity as
administrative agent for the Lenders under the Credit Agreement (as defined
below) (in such capacity, the "Administrative Agent").
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R E C I T A L S:
AnnTaylor, Inc., a Subsidiary of the Grantor, (the "Borrower"),
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certain financial institutions currently and in the future to be parties
to the Credit Agreement (such financial institutions being collectively
referred to as the "Lenders"), the Administrative Agent, BancAmerica
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Robertson Stephens, as Arranger (in such capacity, the "Arranger"),
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Citicorp USA and First Union Capital Markets, in their respective
capacities as Syndication Agents (in such capacities, the "Syndication
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Agents") and Bank of America National Trust and Savings Association,
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Citibank, N.A. and First Union National Bank, in their respective
capacities as Issuing Banks (in such capacities, the "Issuing Banks")
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have entered into a certain Credit Agreement dated as of June 30, 1998,
(as such agreement may be amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"; the capitalized terms not
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otherwise defined herein are being used herein as defined in the Credit
Agreement), which provides for the Lenders to make Loans and the Issuing
Banks to issue Letters of Credit. In connection with the Credit Agreement,
the Grantor has entered into the Guaranty, dated as of June 30, 1998
(the "Guaranty"). It is a condition precedent to the effectiveness of
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the Credit Agreement that this Agreement shall have been executed and
delivered.
NOW, THEREFORE, in consideration of the above premises and in
order to induce the Lenders to make Loans and each Issuing Bank to issue
Letters of Credit under the Credit Agreement, the Grantor hereby agrees
with the Administrative Agent for its benefit, and for the benefit of the
Lenders, the Issuing Banks, the Arranger and the Syndication Agents, by
acceptance hereof, as follows:
Section 1. Grant of Security. To secure the prompt and complete
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payment, observance and performance when due (whether at the stated
maturity, by acceleration or otherwise) of all the Guaranteed Obligations
(as defined in the Guaranty) and all other obligations of the Grantor under
the Guaranty, the Grantor hereby assigns and pledges to the Administrative
Agent, and hereby grants to the Administrative Agent, for its benefit and
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the benefit of the Lenders, the Issuing Banks, the Arranger, and the
Syndication Agents, a security interest in all of the Grantor's right,
title and interest in and to the following, whether now owned or existing
or hereafter arising or acquired and wheresoever located (collectively,
the "Collateral"):
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ACCOUNTS: All accounts receivable and other rights to payment
arising out of the sale or lease of goods and services, whether or not
earned by performance, and all Credit Card Accounts, including, without
limitation, all "accounts", as such term is defined in the Uniform
Commercial Code in effect on the date hereof in the State of New York
(the "UCC") (in each instance, however, and wherever arising,
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collectively, "Accounts");
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CHATTEL PAPER, INSTRUMENTS, INVESTMENT PROPERTY AND DOCUMENTS: All
chattel paper, all instruments, all investment property and all documents
(including, without limitation, (a) the shares of stock described in Annex
I-A hereto (the "Pledged Shares") and all dividends, instruments and other
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property from time to time distributed in respect thereof or in exchange
therefor, and (b) the notes and debt instruments described in Annex IB
hereto (the "Pledged Debt") and all payments thereunder and instruments and
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other property from time to time delivered in respect thereof or in exchange
therefor), and all bills of lading, warehouse receipts and other documents
of title and documents, including, without limitation, all "chattel paper",
"instruments", "investment property" and "documents", as such terms are
defined in the UCC, in each instance whether now owned or hereafter acquired
by the Grantor, other than any promissory note with an original principal
amount of less than $1,000,000 owing to the Grantor from a senior executive
or key employee of the Grantor (an "Excluded Note") (collectively, "Chattel
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Paper, Instruments, Investment Property and Documents");
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EQUIPMENT: All machinery and equipment, all manufacturing,
distribution, selling, data processing and office equipment, all furniture,
furnishings, appliances, tools, tooling, molds, dies, vehicles, vessels,
aircraft and all other goods of every type and description, in each instance
whether now owned or hereafter acquired by the Grantor and wherever located,
including all "equipment", as such term is defined in the UCC; provided that
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equipment shall not include "fixtures" as defined in Section 9-313 of the UCC
(collectively, "Equipment");
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GENERAL INTANGIBLES: All rights, interests, choses in action, causes
of action, claims and all other intangible property of the Grantor of every
kind and nature, in each instance whether now owned or hereafter acquired
by the Grantor, including, without limitation, all corporate and other
business records; all loans, royalties, and other obligations receivable;
all inventions, designs, patents, patent applications, service marks, trade
names and trademarks (including any applications for the foregoing and
whether or not registered) and the goodwill of the Grantor's business
connected with and symbolized by such trademarks, trade secrets,
computer programs, software, printouts and other computer materials,
goodwill, registrations, U.S. registered copyrights, licenses relating to
trademarks and U.S. registered copyrights, franchises, customer lists,
credit files, correspondence and advertising materials; all customer and
supplier contracts, firm sale orders, rights under license and franchise
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agreements, and other contracts and contract rights; all interests in
partnerships, joint ventures and other entities; all tax refunds and
tax refund claims; all right, title and interest under leases, subleases,
licenses and concessions and other agreements relating to real or personal
property; all payments due or made to the Grantor in connection with
any requisition, confiscation, condemnation, seizure or forfeiture of
any property by any person or governmental authority; all deposit
accounts (general or special) with any bank or other financial institution;
all credits with and other claims against carriers and shippers; all
rights to indemnification; all reversionary interests in pension and
profit sharing plans and reversionary, beneficial and residual interest
in trusts; all proceeds of insurance of which the Grantor is beneficiary;
and all letters of credit, guaranties, liens, security interests and
other security held by or granted to the Grantor; and all other
intangible property, whether or not similar to the foregoing,
including, without limitation, all "general intangibles", as such term
is defined in the UCC (in each instance, however and wherever arising,
collectively, "General Intangibles"); provided, that the foregoing
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limitation shall not affect, limit, restrict or impair the grant by
such Grantor of a security interest pursuant to this Agreement in any
receivable or any money or other amounts due or to become due under
any such contract, agreement, instrument or indenture
INVENTORY: All inventory, finished goods, raw materials, work
in process and other goods, including, without limitation, all "inventory",
as such term is defined in the UCC (in each instance, however, and wherever
arising, collectively, "Inventory"); and
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OTHER PROPERTY: All property or interests in property now owned or
hereafter acquired by the Grantor which now may be owned or hereafter may
come into the possession, custody or control of the Administrative Agent,
any of the Lenders, any Issuing Bank or any agent or Affiliate of any of
them in any way or for any purpose (whether for safekeeping, deposit,
custody, pledge, transmission, collection or otherwise); and all rights and
interests of the Grantor, now existing or hereafter arising and however and
wherever arising, in respect of any and all (i) notes, drafts, letters of
credit, bank accounts, stocks, bonds, and debt and equity securities,
whether or not certificated, and warrants, options, puts and calls and
other rights to acquire or otherwise relating to the same; (ii) money;
(iii) proceeds of loans, including without limitation, all the Loans made
to the Grantor under the Credit Agreement; and (iv) insurance proceeds
and books and records relating to any of the property covered by this
Agreement (collectively, "Other Property");
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together, in each instance, with all accessions and additions thereto,
substitutions therefor, and replacements, proceeds and products thereof;
provided, however, that the foregoing grant of a security interest shall
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not include a security interest in any contract, lease and any property
subject to an enforceable lease which by its terms expressly prohibits
the right of the Grantor to grant a security interest in such contract,
lease or property. Each Grantor agrees to use its commercially reasonable
efforts to ensure that no future lease contains any restrictions on such
Grantor's right to grant a security interest in any equipment placed on
the leased premises.
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Section 2. Grantor Remains Liable. Anything herein to the contrary
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notwithstanding, (a) the Grantor shall remain liable under the contracts
and agreements included in the Collateral to the extent set forth therein to
perform its duties and obligations thereunder to the same extent as if this
Agreement had not been executed, (b) the exercise by the Administrative
Agent of any of its rights hereunder shall not release the Grantor from
any of its duties or obligations under the contracts and agreements
included in the Collateral (except to the extent that such exercise
prevents the Grantor from satisfying such duties and obligations), and
(c) the Administrative Agent shall not have any obligation or liability
under the contracts and agreements included in the Collateral by reason of
this Agreement, nor shall the Administrative Agent be obligated to perform
any of the obligations or duties of the Grantor thereunder, to make any
payment, to make any inquiry as to the nature or sufficiency of any
payment received by the Grantor or the sufficiency of any performance by
any party under any such contract or agreement or to take any action to
collect or enforce any claim for payment assigned hereunder.
Section 3. Delivery of Pledged Collateral. All certificates, notes
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and other instruments representing or evidencing the Pledged Shares or the
Pledged Debt and all other instruments now owned or at any time hereafter
acquired by the Grantor other than any Excluded Notes (collectively, the
"Pledged Collateral") shall be delivered to and held by or on behalf of the
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Administrative Agent pursuant hereto (except as otherwise provided in the
last sentence of Section 4(f) hereof) and shall be in suitable form for
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transfer by delivery, or shall be accompanied by duly executed instruments
of transfer or assignments in blank, all in form and substance satisfactory
to the Administrative Agent. Upon the occurrence and during the continuance
of an Event of Default, the Administrative Agent shall have the right, at
any time in its discretion and without notice to the Grantor, to transfer
to or to register in the name of the Administrative Agent or any nominee
of the Administrative Agent any or all of the Pledged Collateral, subject
only to the revocable rights specified in Section 8 hereof. In addition,
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upon the occurrence and during the continuance of an Event of Default,
the Administrative Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger
denominations.
Section 4. Representations and Warranties. The Grantor represents and
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warrants as follows:
(a) As of the date of this Agreement, the locations listed
on Annex II to this Agreement constitute all locations at which its
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Inventory or Equipment is located, except (i) for Inventory
(other than raw materials or work in progress) or Equipment
temporarily in transit from one location listed on such Annex to
another location listed on such Annex or (ii) Inventory (other
than raw materials or work in process) or Equipment in transit with
common or other carriers to a location listed on such Annex.
As of the date of this Agreement, the chief place of business and
chief executive office of the Grantor are located at the address
first specified above for the Grantor.
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(b) The Grantor is the legal and beneficial owner of
the Collateral free and clear of all liens, security interests
or other encumbrances, except (other than in respect of Pledged
Collateral described in (e) below) as expressly permitted by
Section 8.02(b) of the Credit Agreement. For the past five
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years, Grantor has conducted business only under its own
corporate name and not under any trade name or other name.
(c) The Grantor has exclusive possession and control of
the Inventory (other than raw materials and work in process) and
Equipment, except for (i) Equipment in the possession and control
of the Grantor's lessees and licensees under written lease and
license agreements entered into in the ordinary course of business
and consistent with past practice and (ii) Inventory or Equipment
in transit with common or other carriers.
(d) The Pledged Shares have been duly authorized and
validly issued and are fully paid and non-assessable. The Pledged
Debt of the Grantor's Subsidiaries (if any), and, to the best of
the Grantor's knowledge, all other Pledged Debt, has been duly
authorized, issued and delivered, and is the legal, valid,
binding and enforceable obligation of the issuers thereof.
(e) The Pledged Shares indicated on Annex I-A
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hereto constitute all of the shares of stock held by the Grantor
of the respective issuers thereof and constitute 65% of all of
the shares of stock of the respective issuers who are Foreign
Subsidiaries. The Pledged Shares and the Pledged Debt constitute
all of the Pledged Collateral except for Pledged Collateral
consisting of checks and drafts received in the ordinary course of
business and with respect to which the Administrative Agent has
not at any time requested possession and which are not a material
portion of the Collateral under this Agreement (the "Personal
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Property Collateral"), either singly or in the aggregate.
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(f) This Agreement creates a valid security interest
in the Collateral (other than the Pledged Collateral), securing the
payment of the Guaranteed Obligations, and all filings and other
actions necessary or desirable to perfect such security interest
under the Uniform Commercial Code as enacted in each relevant
jurisdiction have been duly taken or will be duly taken not later
than five Business Days after the date hereof (all such actions
being the filing of financing statements in the filing offices
listed on Annex III hereto). The pledge and delivery of the
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Pledged Collateral pursuant to this Agreement and all other
filings and other actions taken by the Grantor to perfect such
security interest prior to the date hereof, create a valid and
perfected first priority security interest in the Pledged
Collateral, securing the payment of the Guaranteed Obligations
except for Pledged Collateral consisting of checks and drafts
received in the ordinary course of business with respect to
which the Administrative Agent has not at any time requested
possession and which are not a material portion of the Personal
Property Collateral, either singly or in the aggregate.
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(g) Other than the filings with the United States Patent
and Trademark Office, filings and registrations with the United
States Copyright Office and filings under the Uniform Commercial
Code in effect in each relevant jurisdiction, no authorization,
approval or other action by, and no notice to or filing with,
any federal, state or local governmental authority in the United
States that have not already been taken or made and which are in
full force and effect, is required (i) for the pledge by the Grantor
of the Pledged Collateral or for the grant by the Grantor of the
security interest in the Collateral granted hereby or for the
execution, delivery or performance of this Agreement by the
Grantor, (ii) for the exercise by the Administrative Agent of
the voting or other rights provided in this Agreement with respect
to the Pledged Collateral or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required
in connection with the disposition thereof by laws affecting the
offering and sale of securities generally), or (iii) for the
exercise by the Administrative Agent of any of its other rights or
remedies hereunder.
(h) (i) No amount payable to the Grantor under or
in connection with any Account is evidenced by any "instrument" or
"chattel paper", as such terms are defined in the UCC, which has
not been delivered to the Administrative Agent.
(ii) The amounts represented by the Grantor to the
Lenders from time to time as owing to such Grantor in respect of
the Accounts will at such times be accurate.
Section 5. Further Assurances.
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(a) The Grantor agrees that from time to time, at the
expense of the Grantor, the Grantor will promptly execute and
deliver all further instruments and documents, and take all
further action, that may be necessary or desirable, or that the
Administrative Agent may reasonably request, in order to perfect
and protect any security interest granted or purported to be
granted hereby or to enable the Administrative Agent to exercise
and enforce its rights and remedies hereunder with respect to
any Collateral. Without limiting the generality of the foregoing,
at the request of the Administrative Agent, the Grantor shall:
(i) if an Event of Default shall have occurred and be continuing,
mark conspicuously each document included in the Collateral at the
request of the Administrative Agent made at any time, and whether
or not an Event of Default shall have occurred, mark each of its
records pertaining to the Collateral with a legend, in form and
substance satisfactory to the Administrative Agent, indicating
that such document or Collateral is subject to the security
interest granted hereby; (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other
instruments or notices, as may be necessary or desirable, or as
the Administrative Agent may reasonably request, in order to
perfect and preserve the security interests granted or purported
to be granted hereby; and (iii) in the case of investment property
and any other relevant Collateral, taking any actions necessary to
enable the Administrative Agent to obtain "control" (within the
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meaning of the applicable Uniform Commercial Code) with respect
thereto. The Grantor shall maintain the security interest created
by this Agreement as a perfected security interest and shall defend
such security interest against the claims and demands of all Persons
whomsoever.
(b) The Grantor hereby authorizes the Administrative
Agent to file one or more financing or continuation statements, and
amendments thereto, relative to all or any part of the Collateral
without the signature of the Grantor where permitted by law. A
carbon, photographic or other reproduction of this Agreement or
any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where
permitted by law.
(c) The Grantor shall furnish to the Administrative
Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports
in connection with the Collateral as the Administrative Agent
may request, all in reasonable detail.
Section 6. As to Inventory, Equipment and Accounts.
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The Grantor shall:
(a) Keep its Inventory and Equipment (other than raw
materials and work in process and Inventory sold in the ordinary
course of business and Equipment sold in accordance with Section
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8.02 of the Credit Agreement) at the places specified in
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Section 4(a) hereof and deliver written notice to the
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Administrative Agent at least 30 days prior to establishing any
other location at which it reasonably expects to maintain
Inventory or Equipment in which jurisdiction all action required
by Section 5 hereof shall have been taken with respect to all
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such Inventory (other than raw materials and work in process)
or Equipment, as the case may be, in order to perfect the security
interest granted therein under this Agreement.
(b) Maintain or cause to be maintained in good repair,
working order and condition, excepting ordinary wear and tear and
damage due to casualty, all of the Equipment, and make or cause to
be made all appropriate repairs, renewals and replacements thereof,
to the extent not obsolete and consistent with past practice of the
Grantor, as quickly as practicable after the occurrence of any loss
or damage thereto which are necessary or desirable to such end.
The Grantor shall promptly furnish to the Administrative Agent a
statement respecting any material loss or damage as a result of
a single occurrence to any of its Inventory or Equipment which has
an aggregate fair market value exceeding $250,000.
(c) Maintain the same or substantially the same insurance
with respect to its properties as Borrower may be required to
maintain under Section 7.05 of the Credit Agreement with respect to
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its properties and to comply with the terms thereof. All insurance
maintained by the Grantor with respect to the Collateral shall
(i) provide that no cancellation, material reduction in amount or
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material change in coverage thereof shall be effective until at
least 30 days after receipt by the Administrative Agent of written
notice thereof, (ii) name the Administrative Agent as insured party
or loss payee, (iii) if reasonably requested by the Administrative
Agent, include a breach of warranty clause and (iv) be reasonably
satisfactory in all other respects to the Administrative Agent.
(d) The Grantor will not, except upon 30 days' prior
written notice to the Administrative Agent and delivery to the
Administrative Agent of all additional executed financing
statements and other documents reasonably requested by the
Administrative Agent to maintain the validity, perfection and
priority of the security interests provided for herein:
(i) change its jurisdiction of organization or the
location of its chief executive office or sole place of business
from that referred to in Section 4(a) hereof; or
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(ii) change its name, identity or corporate structure
to such an extent that any financing statement filed by the
Administrative Agent in connection with this Agreement would
become misleading.
Section 7. As to the Pledged Collateral.
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(a) So long as no Event of Default shall have occurred
and be continuing:
(i) The Grantor and not the Administrative
Agent shall be entitled to exercise any and all voting
and other rights of consent or approval pertaining to
the Pledged Collateral or any part thereof for any
purpose not inconsistent with the terms of this
Agreement or the Credit Agreement; provided, however,
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that the Grantor shall not exercise or refrain from
exercising any such right without the consent of the
Administrative Agent if such action or inaction would
have a material adverse effect on the value of the
Pledged Collateral or the benefits to the Administrative
Agent, the Lenders, the Issuing Banks, the Arranger and
the Syndication Agents, including, without limitation,
the validity, priority or perfection of the security
interest granted hereby or the remedies of the
Administrative Agent hereunder.
(ii) The Grantor and not the Administrative Agent
shall be entitled to receive and retain any and all dividends
and interest paid in respect of the Pledged Collateral;
provided, however, that any and all
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(A) dividends and interest paid or payable
other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,
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(B) dividends and other distributions
paid or payable in cash in respect of any Pledged Collateral
consisting of stock of any Subsidiary of the Grantor and
dividends and other distributions paid or payable in cash
in respect of any other Pledged Collateral in connection
with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital-surplus or
paid-in-surplus, and
(C) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of,
or in exchange for, any Pledged Collateral,
shall forthwith be delivered to the Administrative Agent, in the
case of (A) above, to hold as Pledged Collateral and shall, if
received by the Grantor, be received in trust for the benefit of
the Administrative Agent, the Lenders, the Issuing Banks, the
Arranger and the Syndication Agents, be segregated from the other
property or funds of the Grantor, and be forthwith delivered to
the Administrative Agent, as Pledged Collateral in the same form
as so received (with any necessary indorsement) and, in the case
of (B) and (C) above, to the extent required under the terms of
the Credit Agreement, shall forthwith be delivered to the
Administrative Agent to be applied to the Guaranteed Obligations
in such order as provided in Section 2.05(b) of the Credit Agreement.
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(iii) The Administrative Agent shall promptly
execute and deliver (or cause to be executed and delivered) to
the Grantor all such proxies and other instruments as the Grantor
may reasonably request for the purpose of enabling the Grantor
to exercise the voting and other rights which it is entitled
to exercise pursuant to paragraph (i) above and to receive the
dividends or interest payments which it is authorized to receive
and retain pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an
Event of Default and at the Administrative Agent's option:
(i) All rights of the Grantor to exercise the
voting and other rights of consent or approval which it would
otherwise be entitled to exercise pursuant to Section 8(a)(i)
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hereof and to receive the dividends and interest payments which
it would otherwise be authorized to receive and retain pursuant
to Section 8(a)(ii) hereof shall cease, and all such rights
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shall thereupon become vested in the Administrative Agent,
who shall thereupon have the sole right to exercise such voting
and other rights of consent or approval and to receive and hold
as Pledged Collateral such dividends and interest payments.
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(ii) All dividends and interest payments which are
received by the Grantor contrary to the provisions of paragraph
(i) of this Section 8(b) hereof shall be received in trust for
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the benefit of the Administrative Agent, the Lenders, the
Issuing Banks, the Arranger and the Syndication Agents and
shall be segregated from other funds of the Grantor and shall
be forthwith paid over to the Administrative Agent as Pledged
Collateral in the same form as so received (with any necessary
indorsement).
Section 8. Additional Shares. The Grantor agrees that it
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will (i) cause each issuer of the Pledged Shares subject to its control not
to issue any stock or other securities in addition to or in substitution
for the Pledged Shares issued by such issuer, except to the Grantor or as
otherwise permitted under the Credit Agreement, and (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and
all additional shares of stock or other securities of each issuer of the
Pledged Shares; provided that in no event shall the Grantor be required to
pledge more than 65% of the shares of any Foreign Subsidiary. The
Grantor hereby authorizes the Administrative Agent to modify this Agreement
by amending Annex I to include such additional shares or other securities.
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Section 9. Payment of Taxes and Claims. The Grantor shall pay (i)
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all taxes, assessments and other charges of any Governmental Authority
imposed upon it or on any of the Collateral before any penalty or interest
accrues thereon, and (ii) all claims (including, without limitation, claims
for labor, services, materials and supplies) for sums materially adversely
affecting the Collateral, which have become due and payable and which by
law have or may become a lien or other encumbrance upon any of the
Collateral prior to the time when any penalty or fine shall be incurred
with respect thereto; provided that no such taxes, assessments and charges
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of any such governmental authority referred to in clause (i) above or claims
referred to in clause (ii) above need to be paid if being contested in good
faith by appropriate proceedings promptly instituted and diligently
conducted and enforcement thereof is stayed and if a reserve or other
appropriate provision required in conformity with GAAP shall have been
made therefor.
Section 10. The Administrative Agent Appointed Attorney-in-Fact.
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The Grantor hereby irrevocably appoints the Administrative Agent the
Grantor's attorney-in-fact, with full authority in the place and stead
of the Grantor and in the name of the Grantor or otherwise, from time to
time in the Administrative Agent's discretion, to take, upon the
occurrence and during the continuance of an Event of Default, any action
and to execute any instrument which the Administrative Agent may deem
necessary or advisable to accomplish the purposes of this Agreement
(subject to the rights of the Grantor under Section 7 hereof), including,
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without limitation:
(a) to obtain and adjust insurance required to be paid
to the Administrative Agent pursuant to Section 6(c) hereof,
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(i) to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys
due and to become due under or in respect of any of the Collateral,
(ii) to receive, indorse, and collect any drafts
or other instruments, documents and chattel paper, in connection
with clause (i) or (ii) above,
(iii) to sell or assign any Account upon such terms,
for such amount and at such time or times as Administrative Agent
deems advisable, to settle, adjust, compromise, extend or renew any
Account or to discharge and release any Account,
(iv) to file any claims or take any action or
institute any proceedings which the Administrative Agent may deem
necessary or desirable for the collection of any of the Collateral
or otherwise to enforce the rights of the Administrative Agent with
respect to any of the Collateral, and
(v) to receive, indorse and collect all
instruments made payable to the Grantor representing any dividend,
interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the
same.
Nothing set forth in this Section 10 and no exercise by the
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Administrative Agent of the rights and powers granted in this Section 10
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shall limit or impair the Grantor's rights under Section 7 hereof.
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The Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. All powers, authorizations and agencies
contained in this Agreement are coupled with an interest and shall be
irrevocable until the Obligations are paid in full, no Letters of Credit
are outstanding and the commitments of the Lenders to extend credit under
the Credit Agreement are terminated.
Section 11. The Administrative Agent May Perform. If the Grantor
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fails to perform any agreement contained herein, the Administrative Agent,
upon written notice to the Grantor if practicable, may itself perform,
or cause performance of, such agreement, and the expenses of the
Administrative Agent incurred in connection therewith shall be payable
by the Grantor under Section 15 hereof.
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Section 12. The Administrative Agent's Duties. The powers
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conferred on the Administrative Agent hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it,
in the absence of willful misconduct or gross negligence, to exercise
any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it
hereunder, the Administrative Agent shall have no duty as to any
Collateral. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords
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-12-
its own property, it being understood that the Administrative Agent
shall be under no obligation to (i) ascertain or take action with
respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not the
Administrative Agent has or is deemed to have knowledge of such
matters, or (ii) take any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral, but
may do so at its option, and all reasonable expenses incurred in
connection therewith shall be for the sole account of the Grantor
and shall be added to the Guaranteed Obligations.
Section 13. Remedies. If any Event of Default shall have
--------
occurred and be continuing:
(a) The Administrative Agent may exercise in respect
of the Collateral, in addition to other rights and remedies provided
for herein or otherwise available to it, all the rights and remedies of
a secured party upon default under the Uniform Commercial Code as in
effect from time to time in the State of New York (the "Code")
---
(whether or not the Code applies to the affected Collateral) and
also may (i) require the Grantor to, and the Grantor hereby
agrees that it will at its expense and upon request of the
Administrative Agent forthwith, assemble all or any part of
the Collateral as directed by the Administrative Agent and make it
available to the Administrative Agent at a place to be designated
by the Administrative Agent which is reasonably convenient to both
parties and (ii) without notice except as specified below, sell,
lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof in one or more parcels
at public or private sale, at any exchange, broker's board or at any
of the Administrative Agent's offices or elsewhere, for cash, on credit
or for future delivery, and upon such other terms as may be
commercially reasonable. The Administrative Agent may be the purchaser
of any or all of the Collateral so sold at any public sale (or, if
the Collateral is of a type customarily sold in a recognized market
or is of a type which is the subject of widely distributed standard
price quotations, at any private sale) and thereafter hold the same,
absolutely, free from any right or claim of whatsoever kind.
The Administrative Agent is authorized, at any such sale, if it
deems it advisable so to do, to restrict the prospective bidders or
purchasers of any of the Pledged Collateral to persons who will
represent and agree that they are purchasing for their own
account for investment, and not with a view to the distribution
or sale of any such Pledged Collateral, and to take such other
actions as it may deem appropriate to exempt the offer and sale of
the Collateral from any registration requirements of state or
federal securities laws (including, if it deems it appropriate,
actions to comply with Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933, as from time to time
amended (the "Securities Act")). To the extent permitted by law,
--------------
the Grantor hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any rule of law
or statute now existing or hereafter in force. The Grantor agrees
that, to the extent notice of sale shall be required by law, at
least ten days' written notice to the Grantor of the time and
place of any public sale or the time after which any private
====================================================================
-13-
sale is to be made shall constitute reasonable notification.
The Administrative Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given.
The Administrative Agent may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
In case of any sale of all or any part of the Collateral on credit
or for future delivery, the Collateral so sold may be retained
by the Administrative Agent until the selling price is paid by
the purchaser thereof, but the Administrative Agent shall not
incur any liability in case of the failure of such purchaser to
take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may again be sold upon like notice.
The Administrative Agent instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law
or in equity to foreclose the security interests herein granted and
sell the Collateral, or any portion thereof, under a judgment or
decree of a court or courts of competent jurisdiction.
(b) Any cash held by the Administrative Agent as
Collateral and all cash proceeds received by the Administrative Agent
in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral may, in the discretion of the
Administrative Agent, be held by the Administrative Agent as
Collateral for, and/or then or at any time thereafter applied against
(after payment of any amounts payable to the Administrative Agent
pursuant to Section 16 hereof) in whole or in part by the
----------
Administrative Agent, for the benefit of the Administrative Agent,
the Lenders and the Issuing Banks, all or any part of the Guaranteed
Obligations. Any surplus of such cash or cash proceeds held by the
Administrative Agent and remaining after payment in full of all
the Guaranteed Obligations under this Agreement, the expiration or
termination of all outstanding Letters of Credit and the termination
of the commitments of the Lenders to extend credit under the Credit
Agreement shall be promptly paid over to the Grantor or to whomsoever
may be lawfully entitled to receive such surplus.
(c) (i) Subject to Section 7.06 of the Credit
Agreement, the Administrative Agent shall have the right to make test
verifications of the Accounts in any manner and through any medium that
it reasonably considers advisable, and the Grantor shall furnish all
such assistance and information as the Administrative Agent may require
in connection with such test verifications. Subject to Section 7.06 of
the Credit Agreement, at any time and from time to time, upon the
Administrative Agent's request and at the expense of the Grantor,
the Grantor shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and
test verifications of, and trial balances for, the Accounts.
(ii) At any time after the occurrence and during
the continuance of an Event of Default, the Grantor hereby
authorizes the Administrative Agent to collect the Grantor's
==========================================================================
-14-
Accounts. If required by the Administrative Agent at any
time after the occurrence and during the continuance of an
Event of Default, any payments of Accounts, when collected by
any Grantor, (i) shall be forthwith (and, in any event, within
two Business Days) deposited by the Grantor in the exact
form received, duly indorsed by such Grantor to the
Administrative Agent if required, in a Collateral Account
maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Lenders only as
provided herein, and (ii) until so turned over, shall be
held by the Grantor in trust for the Administrative Agent,
the Lenders, the Issuing Banks, the Arranger and the
Syndication Agents, segregated from other funds of the Grantor.
Each such deposit of proceeds of Accounts shall be accompanied
by a report identifying in reasonable detail the nature and
source of the payments included in the deposit.
(iii) At the Administrative Agent's request, the Grantor
shall deliver to the Administrative Agent all original and other
documents (other than register tapes) evidencing, and relating to,
the agreements and transactions which gave rise to the Accounts,
including, without limitation, all original orders, invoices and
shipping receipts.
(iv) The Administrative Agent in its own name or in the
name of others may at any time after the occurrence and during the
continuance of an Event of Default communicate with obligors under
the Accounts to verify with them to the Administrative Agent's
satisfaction the existence, amount and terms of any Accounts.
(v) Upon the request of the Administrative Agent at any
time after the occurrence and during the continuance of an Event of
Default, the Grantor shall notify obligors on the Accounts that the
Accounts have been assigned to the Administrative Agent for the
ratable benefit of the Lenders and that payments in respect
thereof shall be made directly to the Administrative Agent.
Section 14. Registration Rights.
-------------------
(a) If the Administrative Agent shall determine to
exercise its right to sell all or any of the Pledged Collateral
pursuant to Section 13 hereof, the Grantor agrees that, upon
----------
request of the Administrative Agent, the Grantor will, at its
own expense:
(i) execute and deliver, and cause each
issuer of the Pledged Collateral which is a Subsidiary
contemplated to be sold and the directors and officers
thereof to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts
and things, as may be necessary or, in the opinion of the
Administrative Agent, advisable to register such Pledged
Collateral under the provisions of the Securities Act,
and to cause the registration statement relating thereto
to become effective and to remain effective for such
=============================================================================
-15-
period as prospectuses are required by law to be furnished,
and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and
Exchange Commission applicable thereto;
(ii) use its best efforts to qualify the Pledged
Collateral under the state securities or "Blue Sky" laws
and to obtain all necessary approvals of all Governmental
Authorities for the sale of the Pledged Collateral, as
requested by the Administrative Agent;
(iii) cause each such issuer to make available
to its security holders, as soon as practicable, an earnings
statement which will satisfy the provisions of Section 11(a)
-------------
of the Securities Act; and
(iv) do or cause to be done all such other acts
and things as may be necessary to make such sale of the
Pledged Collateral or any part thereof valid and binding
and in compliance with applicable law.
(b) Determination by the Administrative Agent to
exercise its right to sell any or all of the Pledged Collateral
pursuant to Section 13 hereof without making a request of the
----------
Grantor pursuant to Section 14(a) hereof shall not by the sole
-------------
fact of such sale be deemed to be commercially unreasonable.
Section 15. Binding Effect; Benefits. This Agreement shall be
------------------------
binding upon the Grantor and its successors and assigns, and shall inure
to the benefit of the Administrative Agent, the Lenders, the Issuing Banks,
the Arranger and the Syndication Agents. The Grantor's successors and
assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Grantor.
Section 16. Expenses. The Grantor shall upon written demand pay
--------
to the Administrative Agent the amount of any and all expenses, including
the fees and disbursements of its counsel and of any experts and agents,
as provided in Section 12.03 of the Credit Agreement.
-------------
Section 17. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement nor consent to any departure by the Grantor
herefrom shall in any event be effective unless the same shall be in
writing and signed by the party to be charged therewith, and then such
waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
Section 18. Notices. All notices and other communications
-------
provided for hereunder shall be given in the manner set forth in the
Credit Agreement and to the addresses first above written or, as to
=========================================================================
-16-
each party, at such other address as may be designated by such party
in a written notice to the other party.
Section 19. Continuing Security Interest; Termination.
-----------------------------------------
(a) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until payment
in full of the Guaranteed Obligations, the termination of the
commitments of the Lenders to extend credit under the Credit Agreement,
the expiration or termination of all Letters of Credit and the
termination of the Credit Agreement, (ii) be binding upon the Grantor,
its successors and assigns and (iii) except to the extent that the
rights of any transferor or assignor are limited by Section 12.01
-------------
(concerning assignments) of the Credit Agreement, inure,
together with the rights and remedies of the Administrative Agent
hereunder, to the benefit of the Administrative Agent, the Lenders,
the Issuing Banks, the Arranger and the Syndication Agents, subject
to the terms and conditions of the Credit Agreement. Without limiting
the generality of the foregoing clause (iii), any Lender may assign
or otherwise transfer any interest in any Loan owing to such Lender
to any other Person, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to the
Administrative Agent herein or otherwise, subject, however, to
the provisions of Section 12.01 (concerning assignments) of the
-------------
Credit Agreement. Nothing set forth herein or in any other Loan
Document is intended or shall be construed to give the Grantor's
successors and assigns any right, remedy or claim under, to or in
respect of this Agreement, any other Loan Document or any Collateral.
The Grantor's successors and assigns shall include, without limitation,
a receiver, trustee or debtor-in-possession thereof or therefor.
(b) Upon the payment in full of the Guaranteed Obligations,
the termination of the commitments of the Lenders to extend credit under
the Credit Agreement, the termination or expiration of all Letters of
Credit and the termination of the Credit Agreement, the security interest
granted hereby shall terminate and all rights to the Collateral shall
revert to the Grantor. Upon any such termination, the Administrative
Agent shall promptly return to the Grantor, at the Grantor's expense,
such of the Collateral held by the Administrative Agent as shall not
have been sold or otherwise applied pursuant to the terms hereof.
The Administrative Agent will, at the Grantor's expense, execute and
deliver to the Grantor such other documents as the Grantor shall
reasonably request to evidence such termination.
Section 20. Applicable Law; Severability. This Agreement
----------------------------
shall be construed in all respects in accordance with, and governed by,
the laws of the State of New York. Whenever possible, each provision
of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law, but if any provision of
this Agreement shall be prohibited by or invalid under applicable law,
such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of
such provisions or the remaining provisions of this Agreement.
Section 21. Consent to Jurisdiction and Service of Process;
----------------------------------------------
Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST EACH
- --------------------
PARTY HERETO WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY
====================================================================
-17-
STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
PARTY HERETO ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE
BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH
THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE.
EACH PARTY HERETO IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE
HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH
MAILING. EACH OF THE GRANTOR AND, BY ACCEPTANCE HEREOF,
THE ADMINISTRATIVE AGENT, THE ARRANGER, THE SYNDICATION AGENTS
AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, AND (B)
ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF
THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS)
--------------------
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY
JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW, OR
SHALL LIMIT THE RIGHT OF ANY PARTY HERETO TO BRING PROCEEDINGS
AGAINST ANY OTHER PARTY HERETO IN THE COURTS OF ANY OTHER JURISDICTION.
Section 22. Waiver of Notice, Hearing and Bond.
----------------------------------
THE GRANTOR WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR
TO THE EXERCISE BY THE ADMINISTRATIVE AGENT OR THE LENDERS OF ITS RIGHTS,
FROM AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON
THE COLLATERAL. THE GRANTOR WAIVES THE POSTING OF ANY BOND OTHERWISE
REQUIRED OF THE ADMINISTRATIVE AGENT OR THE LENDERS IN CONNECTION WITH
THE JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY,
ATTACH, OR LEVY UPON THE COLLATERAL TO ENFORCE ANY JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENT OR
THE LENDER OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING
ORDER PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT.
Section 23. Advice of Counsel. THE GRANTOR REPRESENTS TO
-----------------
THE ADMINISTRATIVE AGENT THAT IT HAS DISCUSSED THIS AGREEMENT WITH
ITS ATTORNEYS.
======================================================================
-18-
Section 24. Section Titles. The section titles herein are
--------------
for convenience and reference only and shall not affect in any way
the interpretation of any of the provisions hereof.
IN WITNESS WHEREOF, the Grantor has caused this Agreement to
be duly executed and delivered by its officer thereunto duly authorized
as of the day first above written.
ANNTAYLOR STORES CORPORATION
By:/s/ Walter J. Parks
---------------------------
Name: Walter J. Parks
Title: Senior Vice President-
Chief Financial Officer
Agreed and accepted to as of
the date first above written:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Administrative Agent
By:/s/ Dietmar Schiel
--------------------------
Name: Dietmar Schiel
Title: Vice President