SECOND AMENDMENT TO CREDIT AGREEMENT
This Second Amendment to Credit Agreement (this "Amendment")
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is entered into as of September 5, 1995 among ANNTAYLOR, INC., a
Delaware corporation (the "Borrower"), the various financial institutions
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named on the signature pages hereto (the "Lenders") and BANK OF AMERICA
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NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent.
WHEREAS, the Borrower, the Lenders, the Co-Agents named therein,
BA Securities, Inc. as Arranger and the Agent are party to that certain
Credit Agreement dated as of July 29, 1994 (as from time to time amended,
the "Credit Agreement"); and
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WHEREAS, the Borrower has requested the Lenders to amend certain
financial covenants and other provisions of the Credit Agreement and the
Lenders are willing to agree to the Borrower's request on the terms and
subject to the conditions set forth herein;
NOW THEREFORE, the parties hereto hereby agree as follows:
Section 1. Defined Terms. Unless otherwise defined in
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this Amendment, defined terms used herein shall have the meanings
assigned to such terms in the Credit Agreement.
Section 2. Amendment to Credit Agreement.
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(a) Amendment to Definition of "Fixed Charge Coverage
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Ratio."
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The definition of the term "Fixed Charge Coverage Ratio"
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contained in Section 1.01 of the Credit Agreement is hereby
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amended to read as follows:
" 'Fixed Charge Coverage Ratio' shall mean, for any
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period, the quotient obtained by dividing (a) EBITDA by
(b) the sum of (i) Capital Expenditures paid or accrued
during such periods excluding (A) any Capital Expenditures
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made in respect of the Distribution Center and (B) any
Capital Expenditures in the aggregate maximum amount of
$28,000,000 made in respect of the leasing or financing of
material handling equipment, furniture and fixtures in
stores of the Borrower and its Subsidiaries, plus
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(ii) schedule payments made since the Initial Funding Date
for principal on Indebtedness excluding any payment made
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upon termination of a Receivables Transaction plus (iii)
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Cash Interest Expense during such period plus (iv) income
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tax expense during such period."
(b) Change in Cleandown Provisions. Clause (v) of Section
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2.01(a) of the Credit Agreement is hereby amended to read as
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follows:
"(v) The Borrower shall from time to time effect a
prepayment of the oustanding Loans (such amount, a "Cleandown")
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so as to cause the aggregate outstanding principal amount of
the Loans to be not more than (A) $50,000,000, for at least 30
consecutive days during the period from the Intitial Funding
Date to the last day of the Fiscal Year beginning on January
30, 1994, (B) $85,000,000, for at least 15 consecutive days in
the last six months of the Fiscal Year beginning on January
29, 1995 and (C) $50,000,000, for at lease 30 consecutive days
in each Fiscal Year thereafter (each such period, a "Cleandown
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Period"). Promptly after the end of any Cleandown Period,
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the Borrower shall notify the Agent that a Cleandown Period
has occurred and the Agent shall notify the Lenders."
(c) Additional Indebtedness.
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(i) Paragraph (j) of Section 8.01 of the Credit Agreement
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is hereby amended by deleting the work "and" appearing at the
end thereof.
(ii) A new paragraph (k) is hereby added to Section 8.01
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of the Credit Agreement reading as follows:
"(k) Indebtedness in connection with Liens
permitted under clause (x) of Section 8.02(b); and".
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(iii) Present paragraph (k) of Section 8.01 of the Credit
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Agreement is hereby relettered as paragraph (1).
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(d) Additional Liens.
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(i) Clause (ix) of Section 8.02(b) of the Credit
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Agreement is hereby amended to read as follows:
"(ix) Liens in respect of Indebtedness permitted
pursuant to Section 8.01(l);"
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(ii) A new clause (x) is hereby added to Section 8.02(b)
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of the Credit Agreement reading as follows:
"(x) Liens on the Distribution Center; and".
(iii) Present clause (x) of Section 8.02(b) of the Credit
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Agreement is hereby renumbered as clause (xi).
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(e) Additional Accommodation Obligations.
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Section 8.04 of the Credit Agreement is hereby
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amended to read as follows:
"8.04. Accomodation Obligations. The Borrower
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shall not, and shall not permit ATSC or any Restricted
Subsidiary to, create or become or be liable, directly
or indirectly, with respect to any Accommodation
Obligation except:
(a) guaranties resulting from endorsement of
negotiable instruments for collection in the ordinary
course of business;
(b) obligations, warranties and indemnities, not
relating to Indebtedness of any Person, which have
been or are undertaken or made in the ordinary course
of business and not for the benefit or in favor of an
Affiliate of the Borrower or such Subsidiary;
(c) obligations in respect of any Receivables
Transaction;
(d) guaranties of obligations of the Borrower
or Subsidiaries of the Borrower in connection with
the leasing or financing of material handling
equipment, furniture and fixtures in the ordinary
course of business;
(e) Accomodation Obligations arising in connection
with the Borrower's agreement to provide the CAT Joint
Venture with one or more Letters of Credit issued for the
benefit of the CAT Joint Venture pursuant to the CAT Joint
Venture Agreement to the extent permitted by section
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8.03(i) and similar arrangements for the benefit of other
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joint ventures; and
(f) with respect to ATSC, Accommodation Obligations
arising in connection with the ATSC Guaranty or
Accommodation Obligations for Indebtedness of the
Borrower or its wholly-owned Restricted Subsidiaries
permitted to be incurred under Section 8.01.
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(f) Limitation on Capital Expenditures.
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A new negative covenant is hereby added to the Credit
Agreement reading as follows:
"8.15 Capital Expenditures. The Borrower shall not
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make Capital Expenditures in any Fiscal Year set forth below
exceeding the amount set forth below with respect to such
Fiscal Year:
Fiscal Year Capital Expenditures
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Fiscal Year beginning 1/29/95 $78,200,000
Fiscal Year beginning 2/04/96 $45,000,000
Each Fiscal Year thereafter $30,000,000
provided, however, that in the Fiscal Year beginning on
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February 4, 1996 no more than $22,500,000 in Capital
Expenditures may be incurred or committed to be incurred
during the first six months of such Fiscal Year."
(g) Change in Minimum Fixed Charge Coverage Ratio.
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Section 9.03 of the Credit Agreement is hereby amended
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to read as follows:
"9.03 Minimum Fixed Charge Coverage Ratio. The
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Borrower shall not permit the Fixed Charge Coverage
Ratio, as determined at the end of any fiscal quarter
for the preceding four fiscal quarters (or, if less,
the number of quarters elapsed since the Initial
Funding Date) to be less than the ratio set forth
opposite the month in which such fiscal quarter ends:
Quarter Ended Minimum Ratio
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October 1994 1.00 to 1.00
January 1995 1.00 to 1.00
April 1995 1.00 to 1.00
July 1995 0.76 to 1.00
October 1995 0.825 to 1.00
January 1996 0.820 to 1.00
April 1996 1.00 to 1.00
July 1996 1.05 to 1.00
October 1996
and thereafter 1.10 to 1.00"
Section 3. Representations and Warranties.
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The Borrower represents and warrants that:
(a) (i) the execution and delivery of this Amendment
have been duly authorized by all necessary corporate action;
and (ii) do not violate any Requirement of Law nor conflict
with or result in the breach of any Contractual Obligation
binding on the Borrower; and
(b) after giving effect to this Amendment, the
representations and warranties of the Borrower contained in
Article V of the Credit Agreement (except for representations
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and warranties relating to a particular point in time) and in
each other Loan Document are true and correct in all material
respects as if made on and as of the date of this Amendment and
no Potential Event of Default or Event of Default has occurred
and is continuing.
Section 4. Effectiveness.
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(a) This Amendment shall become effective as of the date
first above written when the Agent has received the following:
(i) counterparts hereof executed by the Borrower, the
the Requisite Lenders and the Agent and signed by ATSC
as a consenting party; and
(ii) a fee equal to 0.20% of the aggregate amount
of the Commitments to be allocated among the Lenders
having executed and delivered a counterpart of this
Amendment by September 6, 1995 ratably in accordance
with the amounts of the respective Commitments of
such Lenders.
(b) Upon the effectiveness of this Amendment (i) each
reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein", or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby and (ii) each
reference in each other Loan Document to the Credit Agreement shall
mean and be a reference to the Credit Agreement as amended hereby.
(c) Except as specifically amended above, the Credit Agreement
shall remain in full force and effect.
(d) The execution, delivery, and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of
any right, power, or remedy of any Lender or the Agent under the
Credit Agreement or any of the other Loan Documents, nor constitute
a waiver of any provision of any of the Loan Documents.
Section 5. Waiver of Defaults. The Lenders hereby waive any
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Potential Event of Default or Event of Default that may have occurred
as a result of a violation of Section 9.03 of the Credit Agreement
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prior to the date of this Amendment.
Section 6. Miscellaneous.
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(a) This Amendment may be executed in any number of
counterparts and by different parties hereto in separate
counterparts, each of which when executed and delivered
shall be deemed to be an original and all of which taken
together shall constitute but one and the same instrument.
(b) THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective duly authorized officers as of the date
first above written.
ANNTAYLOR, INC.
By: /s/ Walter J. Parks
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Title: Senior V.P. - Finance
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATIONS,
as Agent
By: /s/ Dietmar Schiel
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Title: Vice President
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BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ John Pocalyko
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Title: Vice President
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FLEET BANK, NATIONAL ASSOCIATION
By: /s/ David W. Parmelee
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Title: Executive Vice President
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LTCB TRUST COMPANY
By: /s/ Rene O. LeBlanc
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Title: Senior Vice President
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PNC BANK, NATIONAL ASSOCIATION
By: /s/ Mark Williams
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Title: Vice President
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SHAWMUT BANK, N.A.
By: /s/
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Title:
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Consenting Party:
ANNTAYLOR STORES CORPORATION
By: /s/ Walter J. Parks
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Title: Sr. V.P. - Finance
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