CREDIT AGREEMENT
CREDIT AGREEMENT
ANNTAYLOR GLOBAL SOURCING, INC.
(formerly known as CAT US, Inc.)
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AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 20, 1996
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THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED,
NEW YORK BRANCH
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS. 1
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1.01 Certain Defined Terms 1
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1.02 Accounting Terms and Determinations 11
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SECTION 2. THE CREDIT FACILITIES 11
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2.01 Facilities 11
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2.02 Letters of Credit 12
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2.03 Loans 13
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2.04 Certain Fees 13
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2.05 Credit Offices 14
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2.06 Extension of Termination Date 14
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SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST. 14
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3.01 Repayments of Reimbursement Obligations
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and Loans 14
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3.02 Interest 14
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3.03 Optional Prepayments of Loans 15
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3.04 Mandatory Prepayments of Loans 15
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SECTION 4. PAYMENTS; COMPUTATIONS; ETC. 15
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4.01 Payments 15
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4.02 Computations 16
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4.03 Setoff 16
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4.04 Minimum Amounts 16
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4.05 Certain Notices 16
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SECTION 5. YIELD PROTECTION 17
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SECTION 6. CONDITIONS PRECEDENT 18
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6.01 Initial Credits 18
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6.02 Subsequent Credits 20
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SECTION 7. REPRESENTATIONS AND WARRANTIES 20
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7.01 Corporate Existence 20
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7.02 Financial Condition 20
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7.03 Litigation 21
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7.04 No Breach 21
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7.05 Corporate Action 21
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7.06 Approvals 21
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7.07 Use of Credits 22
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7.08 ERISA 22
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7.09 Taxes 22
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7.10 Investment Company Act 22
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7.11 Public Utility Holding Company Act 22
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7.12 Credit Agreements 22
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7.13 Hazardous Materials 22
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7.14 Subsidiaries 23
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SECTION 8. COVENANTS OF THE COMPANY 23
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8.01 Financial Statements 23
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8.02 Litigation 25
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8.03 Corporate Existence, Etc. 25
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8.04 Insurance 26
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8.05 Prohibition of Fundamental Changes 26
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8.06 Limitation on Liens 26
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8.07 Indebtedness 27
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8.08 Investments 28
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8.09 Dividend Payments 28
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8.10 Leverage Ratio 28
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8.11 Net Worth 28
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8.12 Current Ratio 29
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8.13 Subordinated Indebtedness 29
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8.14 Lines of Business 29
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8.15 Transactions with Affiliates 29
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8.16 Use of Proceeds 30
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8.17 AT Credit 30
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8.18 Amendments to Other Documents 30
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8.19 Audit of Inventory and Accounts Receivable 30
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8.20 Sales to AT 30
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8.21 Operating Account 30
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8.22 Additional Subsidiaries 30
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SECTION 9. EVENTS OF DEFAULT AND REMEDIES 31
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SECTION 10. MISCELLANEOUS 33
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10.01 Waiver 33
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10.02 Notices 34
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10.03 Expenses, Etc. 35
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10.04 Amendments, Etc. 35
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10.05 Successors and Assigns; Assignment 35
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10.06 Assignments and Participations 35
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10.07 Survival 36
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10.08 Captions 36
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10.09 Counterparts 36
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10.10 Governing Law; Submission to Jurisdiction 36
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10.11 Waiver of Jury Trial 37
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10.12 Severability 37
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Signature Page
Schedule 7.12 - Credit Agreements
Schedule 8.07 - Indebtedness
Schedule 8.08 - Investments
Exhibit A - Form of Note
Exhibit B - Security Agreement
Exhibit C - Letter of Negative Pledge
Exhibit D - Form of AT Credit
Exhibit E - Sales Agreement
Exhibit F - Borrowing Base Certificate
Exhibit G - Commitment Letter
Exhibit H - Form of Opinion of Company Counsel
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AMENDED AND RESTATED CREDIT AGREEMENT dated as of
September 20, 1996 between ANNTAYLOR GLOBAL SOURCING, INC.
(formerly known as CAT US, Inc.), a Delaware corporation (the
"Company"), and THE HONGKONG AND SHANGHAI BANKING CORPORATION
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LIMITED, a foreign banking corporation acting through its New
York Branch (the "Bank"). Unless otherwise defined in this
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heading or in the recitals to this Agreement, all terms used in
this heading and in such recitals have the respective meanings
set forth in Section 1.01 of this Agreement.
W I T N E S S E T H :
WHEREAS, the Company is presently the subject of an
acquisition in accordance with the terms and conditions of the
Stock and Asset Purchase Agreement, pursuant to which the Company
shall become a wholly-owned subsidiary of AT;
WHEREAS, on the date hereof, there exists a credit
facility up to an aggregate face or principal amount of
$40,000,000 between the Bank and the Company, which facility is
evidenced by a related credit agreement (the "Existing Credit
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Agreement");
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WHEREAS, the Company has requested the amendment and
modification of certain provisions of the Existing Credit
Agreement; and
WHEREAS, the Company has requested that the Existing
Credit Agreement, as amended prior to the date hereof and as
amended and modified hereby, be restated in its entirety to
reflect such amendment and modification;
NOW THEREFORE, the parties hereto agree that the
Existing Credit Agreement is hereby amended and restated in its
entirety as follows:
SECTION 1. DEFINITIONS AND ACCOUNTING MATTERS.
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1.01 Certain Defined Terms. As used herein, the
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following terms shall have the following meanings (all terms
defined in this Section 1.01 or in other provisions of this
Agreement in the singular to have the same meanings when used in
the plural and vice versa):
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"Affiliate" shall mean, as to any Person, any other
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Person which directly or indirectly controls, or is under common
control with, or is controlled by, such Person and, if such
Person is an individual, any member of the immediate family
(including parents, spouse and children) of such individual and
any trust whose principal beneficiary is such individual or one
or more members of such immediate family and any Person who is
controlled by any such member or trust. As used in this
definition, "control" (including, with its correlative meanings,
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"controlled by" and "under common control with") shall mean
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possession, directly or indirectly, of power to direct or cause
the direction of management or policies (whether through
ownership of securities or partnership or other ownership
interests, by contract or otherwise), provided that, in any
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event, (i) any Person which owns directly or indirectly five
percent (5%) or more of the securities having ordinary voting
power for the election of directors or other governing body of a
corporation or five percent (5%) or more of the partnership or
other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control
such corporation or other Person, and (ii) no financial
institution, mutual fund or investment banking firm shall be an
Affiliate of the Company unless it owns, directly or indirectly,
at least twenty percent (20%) of the securities of the Company.
Notwithstanding the foregoing, no individual shall be deemed to
be an Affiliate of a corporation solely by reason of his or her
being an officer or director of such corporation and a Person and
its subsidiaries shall not be deemed to be Affiliates of each
other.
"Alternative Credit Office" shall mean any office of
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the Bank other than the Bank's New York Office.
"AT" shall mean AnnTaylor, Inc., a Delaware
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corporation.
"ATSC" shall mean AnnTaylor Stores Corporation, a
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Delaware corporation.
"AT Credit" shall mean the standby letter of credit in
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the face amount of $8,000,000 issued on behalf of AT in favor of
the Bank by a bank acceptable to the Bank substantially in the
form of Exhibit D hereto.
"AT Facility Agreement" shall mean that certain Amended
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and Restated Credit Agreement dated as of September 29, 1995
among AT, Bank of America National Trust and Savings Association
and the other financial institutions party thereto, as amended,
supplemented or otherwise modified and in effect from time to
time.
"Applicable Credit Office" shall mean, with respect to
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each type of Credit, the Bank's New York Office or such other
office of the Bank as the Bank may from time to time designate as
the office at which its Credits of such type are to be extended
and maintained.
"Available Facility" shall mean, as at any date of
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determination thereof, the amount equal to the excess of the
Total Facility over the aggregate sum of (i) the outstanding
amount of all Reimbursement Obligations, (ii) the undrawn face
amount of all issued Letters of Credit, and (iii) the outstanding
principal amount of all Loans.
"Bank's New York Office" shall mean the New York City
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office of the Bank, presently located at 140 Broadway, New York,
New York 10005.
"Basle Accord" shall mean the proposals for a risked-
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based capital framework described by the Basle Committee on
Banking Regulations and Supervisory Practices in its paper
entitled "International Convergence of Capital Measurement and
Capital Standards" dated July 1988, as modified and supplemented
and in effect from time to time.
"Borrowing Base" shall mean, as at any day of
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determination thereof, the sum of (i) 80% of the aggregate amount
of Eligible Receivables at said date plus (ii) 60% of the
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aggregate amount of Eligible Inventory at said date, which
Eligible Inventory shall in no event exceed $4,000,000 in the
aggregate prior to such fractional reduction, plus (iii) 60% of
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the aggregate face amount of all undrawn Letters of Credit at
said date plus (iv) the undrawn face amount of the AT Credit at
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said date minus (v) an amount equal to two times the average
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monthly commissions or processing fees (to the extent such are
included in the value of Inventory) paid to bailees,
warehousemen, terminal operators, Processors (as defined in the
definition of "Eligible Inventory" set forth in this Section
1.01) or other third parties with whom the Company has lodged
Inventory during the period of two fiscal quarters most recently
ended on or before such date.
"Borrowing Base Certificate" shall mean a certificate
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of the executive vice president or the senior vice president -
finance of the Company, in substantially the form of Exhibit F
hereto and appropriately completed.
"Business Day" shall mean any day on which commercial
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banks are not authorized or required to close in New York City.
"CAT" shall mean, collectively, the Company and C.A.T.
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(Far East) Limited, a Hong Kong corporation.
"CDI" shall mean Cygne Designs, Inc., a Delaware
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corporation.
"Capital Lease Obligations" shall mean, as to any
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Person, the obligations of such Person to pay rent or other
amounts under a lease of (or other agreement conveying the right
to use) real and/or personal property which obligations are
required to be classified and accounted for as a capital lease on
a balance sheet of such Person under GAAP (including Statement of
Financial Accounting Standards No. 13 of the Financial Accounting
Standards Board) and, for purposes of this Agreement, the amount
of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP (including such Statement No.
13).
"Cash Against Documents" shall mean, with respect to
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any applicable trade transaction between the Company and AT or
its Affiliates, the requirement that title to the underlying
goods and all related documents be delivered only upon prior
receipt of full payment therefor evidenced by a wire transfer of
Federal or other immediately available funds.
"Code" shall mean the Internal Revenue Code of 1986, as
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amended from time to time, and any successor thereto.
"Commitment Letter" shall mean that certain letter from
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the Bank to the Company dated April 10, 1996 and accepted by the
Company on April 19, 1996, a copy of which is attached hereto as
Exhibit G. The terms of the Commitment Letter are incorporated
herein by reference and such terms and conditions as set forth
therein shall survive until the Note has been repaid in full and
this Agreement has been terminated. In the event of a conflict
between the terms of the Commitment Letter and the terms of this
Agreement, the terms of this Agreement shall prevail.
"Commitments" shall mean, collectively, the Letter of
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Credit Commitment and the Loan Commitment.
"Credit" shall mean a Loan or a Letter of Credit.
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"Credit Documents" shall mean, collectively, this
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Agreement, the Note and the Security Documents.
"Default" shall mean an Event of Default or an event
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which with notice or lapse of time or both would become an Event
of Default.
"Dividend Payment" shall mean dividends (in cash,
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property or obligations) on, or other payments or distributions
on account of, or the setting apart of money for a sinking or
other analogous fund for, the purchase, redemption, retirement or
other acquisition of, any shares of any class of stock of the
Company, but excluding dividends payable solely in shares of
common stock of the Company.
"Dollars" and "$" shall mean lawful money of the United
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States of America.
"Eligible Inventory" shall mean, as at any date of
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determination thereof, the sum of the following (determined
without duplication):
(a) the value (determined at the lower of cost or
market in accordance with GAAP, except that cost shall be
determined on a first-in-first-out basis) of all Inventory owned
by (and in the possession or under the control of) the Company
and located in a jurisdiction in the United States of America as
to which appropriate Uniform Commercial Code financing statements
have been filed naming the Company, as "debtor" and the Bank as
"secured party" (excluding however, except to the extent that the
Bank otherwise agrees with respect to any specific customer or
Processor, any such Inventory which has been shipped to a
customer of the Company, including Processors referred to below,
even if on a consignment or "sale or return" basis) and which is
in good condition, meets all standards imposed by any
governmental agency or department or division thereof having
regulatory authority over such Inventory, its use or sale and
which is either currently useable or currently saleable in the
normal course of the Company's business without any notice to, or
consent of, any governmental agency or department or division
thereof, plus
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(b) the value (determined as described in clause (a)
above) of all Inventory being processed by third parties on
behalf of the Company (any such third party being herein called a
"Processor"), but only to the extent that the Company shall have
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filed an appropriate uniform commercial code financing statement
in the respective jurisdiction in which such Inventory is located
naming the respective Processor as "debtor", the Company as
"secured party" and the Bank as the "assignee" and delivered to
the Bank an opinion of counsel satisfactory to the Bank to the
effect that to the extent such arrangement constitutes a
consignment or security interest under applicable law, the
Company has a valid perfected first priority security interest in
such Inventory and that, by virtue of the Security Agreement,
such security interest has been validly assigned to the Bank and
accordingly the Bank has a valid and perfected security interest
in such Inventory under the Security Agreement.
"Eligible Letter of Credit Transaction" shall mean
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Reimbursement Obligations arising in connection with trade
transactions relating to the purchase of apparel, shoes and
accessories.
"Eligible Receivables" shall mean, as at any date of
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determination thereof, the aggregate of all Receivables at said
date due to the Company other than the following (determined
without duplication):
(a) any Receivable due from an account debtor other
than AT or its Affiliates,
(b) any Receivable not payable in Dollars,
(c) any Receivable which, at the date of issuance of
the respective invoice therefor, were payable more than
ninety days after shipment of the related Inventory,
(d) any Receivable due from an account debtor whose
principal place of business is located outside of the United
States of America unless the Bank has agreed in writing that
such Receivable shall be treated as "Eligible" or backed by
U.S. Government insurance or a letter of credit issued or
confirmed by a bank organized under the laws of the United
States of America or a State thereof and having capital and
surplus in excess of $500,000,000 (so long as such letter of
credit has been delivered to the Bank as additional
collateral under the Security Agreement),
(e) any Receivable due from an account debtor which
the Bank has notified the Company does not have a
satisfactory credit standing (as determined in the sole
discretion of the Bank),
(f) any Receivable which remains unpaid for more than
sixty days (measured from the date of the original issuance
of the invoice thereof),
(g) all Receivables of any account debtor if more than
20% of the aggregate amount of the Receivables of such
account debtor have at the time remained unpaid for more
than sixty days (measured from the date of the original
issuance of the invoice thereof),
(h) any Receivable as to which there is any unresolved
dispute with the respective account debtor (but only to the
extent of the amount thereof in dispute),
(i) any Receivable evidenced by an Instrument (as
defined in the Security Agreement) not in the possession of
the Bank,
(j) any Receivable representing an obligation for
goods sold on consignment, or approval or on a sale-or-
return basis or subject to any other repurchase or return
arrangement, except to the extent the Bank shall have
otherwise agreed in writing, and
(k) any Receivable due from an account debtor if such
account debtor is operating under the protection of any law
relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts.
"Environmental Laws" shall mean any and all federal,
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state, local and foreign statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including, without
limitation, ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income
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Security Act of 1974, as amended from time to time.
"ERISA Affiliate" shall mean (a) any corporation or
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trade or business which is a member of the same controlled group
of corporations (within the meaning of Section 414(b) of the
Code) as the Company, (b) any entity which is under common
control (within the meaning of Section 414(c) of the Code) with
the Company, (c) any member of an affiliated service group
(within the meaning of Section 414(m) of the Code) in which the
Company is also a member, and (d) any other entity affiliated
with the Company under Section 414(o) of the Code.
"Event of Default" shall have the meaning assigned to
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such term in Section 9 hereof.
"Foreign Subsidiary" shall mean, with respect to any
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Person, any Subsidiary of such Person incorporated or organized
under laws other than that of any State of the United States or
the District of Columbia.
"GAAP" shall mean generally accepted accounting
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principles as in effect at the time of application to the
provisions hereof.
"Guarantee" shall mean a guarantee, an endorsement, a
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contingent agreement to purchase or to furnish funds for the
payment or maintenance of, or otherwise to be or become
contingently liable under or with respect to, the Indebtedness,
other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other
distributions upon the stock of any corporation, or an agreement
to purchase, sell or lease (as lessee or lessor) property,
products, materials, supplies or services primarily for the
purpose of enabling a debtor to make payment of his, her or its
obligations or an agreement to assure a creditor against loss,
and including without limitation, causing a bank to open a letter
of credit for the benefit of another Person, but excluding
endorsements for collection or deposit in the ordinary course of
business. The terms "Guarantee" and "Guaranteed" used as a verb
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shall have a correlative meaning.
"Indebtedness" shall mean, as to any Person: (a)
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indebtedness created, issued or incurred by such Person for
borrowed money (whether by loan or the issuance and sale of debt
securities); (b) obligations of such Person to pay the deferred
purchase or acquisition price of property or services, other than
trade accounts payable (other than for borrowed money) arising,
and accrued expenses incurred, in the ordinary course of business
so long as such trade accounts payable are payable within 180
days of the date the respective goods are delivered or respective
services rendered; (c) Indebtedness of others secured by a Lien
on the property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d)
obligations of such Person in respect of letters of credit or
similar instruments issued or accepted by banks and other
financial institutions for the account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of
others guaranteed by such Person.
"Interest Rate" shall mean the Prime Rate plus 0.50%.
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"Inventory" shall mean apparel, shoes and accessories,
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and other readily marketable materials of a type purchased,
produced, manufactured or consumed by the Company in the ordinary
course of business as presently conducted.
"Investment" in any Person shall mean: (a) the
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acquisition (whether for cash, property, services or securities
or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of
such Person; and (b) any deposit with, or advance, loan or other
extension of credit to, such Person (other than any such advance,
loan or extension of credit having a term not exceeding 90 days
representing the purchase price of inventory or supplies
purchased in the ordinary course of business) or guarantee of, or
other contingent obligation with respect to, Indebtedness or
other liability of such Person and (without duplication) any
amount committed to be advanced, lent or extended to such Person.
"Letter of Credit" shall have the meaning assigned to
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such term in Section 2.01(a) hereof.
"Letter of Credit Commitment" shall mean the obligation
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of the Bank to issue Letters of Credit up to an aggregate face
amount for all Letters of Credit at any one time outstanding up
to $40,000,000.
"Letter of Credit Documents" shall mean, with respect
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to any Letter of Credit, collectively, such Letter of Credit, any
amendments thereto, any documents delivered thereunder, any
application therefor, and any other agreements, instruments,
guarantees or other documents (whether general in application or
applicable only to such Letter of Credit) governing or providing
for (i) the rights and obligations of the parties concerned or at
risk or (ii) any collateral security for such obligations.
"Letter of Negative Pledge" shall mean the agreement
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substantially in the form of Exhibit C hereto, pursuant to which
each of the parties thereto shall agree to the effect set forth
therein, as amended, supplemented or otherwise modified and in
effect from time to time.
"Leverage Ratio" shall mean, at any time, the ratio of
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Total Liabilities to the aggregate amount at such time of (i)
Tangible Net Worth and (ii) the undrawn face amount of the AT
Credit.
"Lien" shall mean, with respect to any asset, any
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mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset. For purposes of this
Agreement, the Company shall be deemed to own subject to a Lien
any asset which it has acquired or holds subject to the interest
of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such
asset.
"Loan" shall have the meaning assigned to such term in
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Section 2.01(b) hereof.
"Loan Commitment" shall mean the obligation of the Bank
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to make Loans up to an aggregate principal amount for all Loans
at any one time outstanding up to $8,000,000.
"Margin Stock" shall mean margin stock within the
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meaning of Regulations U and X.
"Material Adverse Effect" shall mean a material adverse
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effect upon (a) the financial conditions, operations, business or
prospects of the Company or ATSC and its Subsidiaries taken as a
whole, as the case may be, (b) the ability of the Company to
repay any Loan, Reimbursement Obligation or any other amount
payable by the Company hereunder, or (c) the rights and remedies
of the Bank under this Agreement and the other Credit Documents.
"Maturity Date" shall have the meaning assigned to that
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term in Section 2.01(c) hereof.
"Multiemployer Plan" shall mean a multiemployer plan
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defined as such in Section 3(37) of ERISA to which contributions
have been made by the Company or any ERISA Affiliate and which is
covered by Title IV of ERISA.
"Note" shall mean the promissory note provided for by
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Section 2.03(b) hereof.
"Obligor" shall mean either the Company, AT or ATSC.
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"PBGC" shall mean the Pension Benefit Guaranty
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Corporation or any entity succeeding to any or all of its
functions under ERISA.
"Penalty Rate" shall mean, in respect of any principal
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of any Loan, any Reimbursement Obligation or any other amount
payable by the Company under this Agreement or the Note that is
not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period from and including
the due date to but excluding the date on which such amount is
paid in full equal to 2% above the interest rate otherwise in
effect.
"Permitted Investments" of any Person shall mean: (a)
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direct obligations of the United States of America, or of any
agency thereof, or obligations guaranteed as to principal and
interest by the United States of America, or of any agency
thereof, in any case maturing not more than 90 days from the date
of acquisition thereof by such Person; (b) certificates of
deposit issued by any bank or trust company organized under the
laws of the United States of America (or any state thereof) and
having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of
acquisition thereof by such Person; and (c) commercial paper
rated A-1 or better or P-1 by Standard & Poor's Corporation or
Moody's Investors Services, Inc., respectively, maturing not more
than 90 days from the date of acquisition thereof by such Person.
"Person" shall mean any individual, corporation,
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company, voluntary association, partnership, joint venture,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Plan" shall mean an employee benefit or other plan
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established or maintained by the Company or any ERISA Affiliate
and which is covered by Title IV of ERISA, other than a
Multiemployer Plan.
"Prime Rate" shall mean the rate of interest from time
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to time announced by Marine Midland Bank in New York City as its
prime commercial lending rate. Each change in any interest rate
provided for herein based upon the Prime Rate resulting from a
change in the Prime Rate shall take effect at the time of such
change in the Prime Rate.
"Receivables" shall mean, as at any date of
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determination thereof, the unpaid portion of the obligation owed
to the Company, as stated on the respective invoice, of a
customer of the Company in respect of Inventory purchased and
shipped, net of any credits, rebates or offsets owed to the
respective customer (and for purposes hereof, a credit or rebate
paid by check or draft of the Company shall be deemed to be
outstanding until such check or draft shall have been debited to
the respective account of the Company on which such check or
draft was drawn).
"Regulations D, G, T, U and X" shall mean,
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respectively, Regulations D, G, T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as
the same may be amended or supplemented from time to time.
"Regulatory Change" shall mean any change after the
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date of this Agreement in United States Federal, state or foreign
law or regulations or the adoption or making after such date of
any interpretation, directive or request applying to a class of
banks including the Bank of or under any United States Federal,
state or foreign law or regulations (whether or not having the
force of law) by any court or governmental or monetary authority
charged with the interpretation or administration thereof.
"Reimbursement Obligation" shall mean at any time, the
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obligation of the Company to reimburse the Bank on demand for
amounts theretofore paid by the Bank pursuant to a drawing under
a Letter of Credit.
"Sales Agreement" shall mean the sales and purchase
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agreement substantially in the form of Exhibit E hereto, pursuant
to which the Company shall sell garments and accessories to AT on
the terms and conditions referred to therein, as amended,
supplemented or otherwise modified and in effect from time to
time.
"Security Documents" shall mean, collectively, each
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Guarantee required by this Agreement, the Security Agreement and
all Uniform Commercial Code financing statements required by this
Agreement and the Security Agreement to be filed with respect to
the security interests in personal property created pursuant to
the Security Agreement.
"Security Agreement" shall mean the security agreement
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substantially in the form of Exhibit B hereto, pursuant to which
the Company shall provide collateral security for the Secured
Obligations referred to therein, as amended, supplemented or
otherwise modified and in effect from time to time.
"Special CAD Event" shall mean either (i) an event of
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default under the Sales Agreement, (ii) any failure by the
Company in the performance of any of its obligations under
Sections 8.10, 8.11 and 8.12 hereof or (iii) any event under
Section 9(b) hereof.
"Stock and Asset Purchase Agreement" shall mean that
-----------------------------------
certain Stock and Asset Purchase Agreement dated as of June 7,
1996, and amended as of August 27, 1996, by and between CDI,
Cygne Group (F.E.) Limited, ATSC and AT, pursuant to which AT
shall acquire the business relating to the Company.
"Subordinated Indebtedness" shall mean, collectively,
-------------------------
Indebtedness for which the Company is directly and primarily
liable and which is subordinated to the obligation of the Company
to pay principal of and interest on the Loans and the Note, any
Reimbursement Obligation and any other amount payable hereunder
on terms, and which contains other terms (including interest,
amortization and financial and other covenants), in form and
substance satisfactory to the Bank.
"Subsidiary" shall mean, with respect to any Person,
----------
any other Person of which at least a majority of the outstanding
securities or other ownership interests having by the terms
thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similiar functions for such
other Person (irrespective of whether or not at the time
securities or other ownership interests of any other class or
classes of such other Person shall have or might have voting
power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by such first
Person or one or more of its Subsidiaries or by such first Person
and one or more of its Subsidiaries.
"Tangible Net Worth" shall mean, as at any date of
-------------------
determination thereof, the sum of the following for the Company
determined (without duplication) in accordance with GAAP:
(a) the amount of the capital stock account, plus
----
(b) the amount of paid-in surplus and retained
earnings (or, in the case of a surplus or retained earnings
deficit, minus the amount of such deficit), minus
----- -----
(c) the sum of the following: cost of treasury shares
and the book value of all assets of the Company which should
be classified as intangibles (other than good-will) (without
duplication of deductions in respect of items already
deducted in arriving at surplus and retained earnings) but
in any event including research and development costs,
trade-marks, trade names, copyrights, patents and
franchises, unamortized debt discount and expense, and all
reserves.
"Termination Date" shall mean July 29, 1997, unless
-----------------
otherwise extended to a later date by the Bank pursuant to
Section 2.06 hereof.
"Total Facility" shall mean, as to all Credits
---------------
hereunder, the aggregate face or principal amount of $40,000,000.
"Total Liabilities" shall mean, as at any date of
------------------
determination thereof, the sum, for the Company determined
(without duplication) in accordance with GAAP, of all
Indebtedness of the Company and all other liabilities of the
Company which should be classified as liabilities on a balance
sheet of the Company prepared in accordance with GAAP and in any
event including all reserves (other than general contingency
reserves) and all deferred taxes and other deferred items.
1.02 Accounting Terms and Determinations. Unless
--------------------------------------
otherwise specified herein, all accounting terms used herein
shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters
required to be furnished to the Bank hereunder shall be prepared,
in accordance with GAAP. To enable the ready and consistent
determination of compliance with the covenants set forth in
Section 8 hereof, the Company will not change the last day of its
fiscal year from the Saturday nearest January 31.
SECTION 2. THE CREDIT FACILITIES.
----------------------
2.01 Facilities. Subject to the terms and conditions
----------
of this Agreement:
(a) The Bank agrees to issue from time to time for the
account of the Company sight letters of credit (each, a
"Letter of Credit") in support of Eligible Letter of Credit
----------------
Transactions during the period from and including the date
hereof to the day falling 30 days before the Termination
Date in an aggregate undrawn face amount (as to all Letters
of Credit issued for account of the Company) not exceeding
at any one time outstanding an amount equal to the excess of
the amount of the Letter of Credit Commitment over the
aggregate outstanding amount of the Reimbursement
Obligations; provided that (i) the Letter of Credit
--------
Commitment shall not at any time exceed the Available
Facility, and (ii) the stated expiry date of each Letter of
Credit shall be a Business Day falling no more than 60 days
after the related issuance date and on or before the
Termination Date.
(b) The Bank agrees to make a loan or loans (each, a
"Loan") to the Company, during the period from and including
----
the date hereof to the day falling 30 days before the
Termination Date to finance Reimbursement Obligations owed
hereunder, in an aggregate principal amount (as to all
Loans) not exceeding at any one time outstanding the Loan
Commitment as in effect from time to time; provided that the
Loan Commitment shall not at any time exceed the Available
Facility.
(c) Each Loan shall mature on the date (the "Maturity
--------
Date") falling 60 days after the funds in connection with
----
such Loan are made available as provided in Section 2.03
hereof. Each Loan with a Maturity Date later than the
Termination Date shall not in any case be renewed or
otherwise extended. Subject to the terms of this Agreement,
the Company may borrow, prepay and reborrow the amount of
the Letter of Credit Commitment and the Loan Commitment.
(d) So long as a Special CAD Event shall have occurred
and be continuing, the Bank shall only issue Letters of
Credit and make Loans hereunder after the Company has first
provided to the Bank a deposit equal to the related face or
principal amount of each such Letter of Credit or Loan,
which deposit shall be made to an account maintained with,
and pledged as collateral security to, the Bank.
2.02 Letters of Credit.
-----------------
(a) The Company shall give the Bank notice of each
Letter of Credit to be issued for account of the Company as
provided in Section 4.05 hereof (unless such Letter of
Credit is opened through the Bank's Hexagon System).
(b) The issuance by the Bank of each Letter of Credit
shall, in addition to the conditions precedent set forth in
Sections 6.01 and 6.02 hereof, be subject to the conditions
that such Letter of Credit be in such form, contain such
terms and support such transactions or obligations (which
shall be Eligible Letter of Credit Transactions with respect
to which the Company shall be the primary obligor) as shall
be reasonably satisfactory to the Bank consistent with its
then current practices and procedures with respect to
similar letters of credit and that the Company shall have
executed and delivered such other instruments and agreements
relating to such Letter of Credit as the Bank shall have
reasonably requested consistent with such practices and
procedures.
(c) Without duplication of Section 10.03 hereof, the
Company hereby indemnifies and holds harmless the Bank from
and against any and all claims, damages, losses,
liabilities, costs or expenses which the Bank may incur (or
which may be claimed against the Bank) by any Person by
reason of or in connection with the issuance or transfer of
or payment or failure to pay under any Letter of Credit;
provided that the Company shall not be required to indemnify
the Bank for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, (i)
caused by the willful misconduct or gross negligence of the
Bank in determining whether a request presented under any
Letter of Credit complied with the terms of such Letter of
Credit, or (ii) caused by the Bank's failure to pay under
any Letter of Credit after the presentation to it of a
request strictly complying with the terms and conditions of
such Letter of Credit, unless such payment is prohibited by
any law, regulation, court order or decree.
(d) If the Termination Date is at any time or from
time to time extended pursuant to Section 2.06 hereof, the
Bank shall, at the request of the Company, subject to
Section 6.02 hereof, extend the expiry date of any
outstanding Letter of Credit issued for account of the
Company to a date specified by the Company not later than
the Termination Date so extended.
(e) With respect to each Letter of Credit issued by
the Bank hereunder, the Company shall (i) arrange for the
related goods and merchandise being shipped in connection
with such Letter of Credit to be consigned to the Bank, and
(ii) in the case of air shipments, provide to the Bank the
complete set of original documents described in the related
Letter of Credit, including the airway bill setting forth
the Bank as consignee. The Bank shall provide to the
Company an air release with respect to each such air
shipment upon receipt by the Company of full payment
therefor from AT or its Affiliates, which payment shall be
evidenced by a wire transfer of Federal or other immediately
available funds to an account of the Company maintained
with, and pledged as collateral security to, the Bank.
2.03 Loans.
-----
(a) The Company shall give the Bank notice of each
Loan to be made to the Company as provided in Section 4.05
hereof. On the date specified for the making of each Loan,
the Bank shall make available the amount of such Loan to the
Company by depositing the same, in immediately available
funds, in an account of the Company maintained with the
Bank's New York Office.
(b) The Loans shall be evidenced by a single
promissory note of the Company in substantially the form of
Exhibit A hereto (the "Note"), payable to the Bank in a
principal amount equal to the amount of the Loan Commitment
as originally in effect or such lesser amount as may then be
applicable. The Note shall be dated the date of the
delivery of such to the Bank. The date, amount and interest
rate of the Loans made by the Bank to the Company, and each
payment made on account of the principal thereof, shall be
recorded by the Bank on its books; provided that the failure
by the Bank so to record such Loans shall not affect the
obligations of the Company hereunder or under the Note.
2.04 Certain Fees.
------------
(a) (i) The Company shall pay to the Bank an initial
commitment fee on the aggregate amount of the Commitments
(without duplication) as follows: (x) 0.25% upon execution
of the Commitment Letter and (y) 0.25% upon execution of
this Agreement.
(ii) The Company shall pay to the Bank a
commitment fee at a rate per annum equal to 0.25% of
the daily average Available Facility for the period
from and including the date hereof to and including the
date the Commitments expire or are terminated.
(iii) Accrued commitment fees shall be
payable in arrears on the first Business Day of each
month and on the earlier of the date the Commitments
expire or are terminated.
(b) The Company shall pay to the Bank from time to
time at then prevailing rates unless otherwise indicated, in
respect of each Letter of Credit issued for account of the
Company, all charges, costs and expenses customarily charged
by the Bank in like circumstances with respect to similar
letters of credit.
(c) In the event the Company requests the cancellation
of any Commitment prior to the Termination Date, the Company
shall pay to the Bank in connection therewith a cancellation
fee equal to 0.25% of the aggregate amount of such
Commitment.
2.05 Credit Offices. The Credits shall be extended and
--------------
maintained at the Bank's New York Office or an Alternative Credit
Office in the United States of America.
2.06 Extension of Termination Date. Subject to the
------------------------------
terms and conditions hereof, the Bank may, at its option and upon
the request of the Company, extend the Termination Date to the
next subsequent anniversary thereof, each such extension being
limited to a single anniversary period.
SECTION 3. PAYMENTS OF PRINCIPAL AND INTEREST.
-----------------------------------
3.01 Repayments of Reimbursement Obligations and Loans.
--------------------------------------------------
(a) The Company shall pay to the Bank the amount paid
by the Bank in respect of any drawing under any Letter of
Credit issued for account of the Company, such payment to be
made by the Company on demand by the Bank (or, in the
absence of demand, on the same Business Day of such payment
by the Bank).
(b) The Company shall pay to the Bank the outstanding
principal amount of each Loan on the respective Maturity
Date.
3.02 Interest.
--------
(a) The Company will pay to the Bank interest on the
unpaid principal amount of each Loan for the period from and
including the date of such Loan to but excluding the date
such Loan shall be paid in full at the Interest Rate (as in
effect from time to time).
(b) Notwithstanding the provisions of clause (a)
above, the Company will pay to the Bank interest at the
Penalty Rate on any principal of any Loan, on any
Reimbursement Obligation owing to the Bank by the Company
and (to the fullest extent permitted by law) on any other
amount payable by the Company hereunder or under the Note,
which shall not be paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period from
and including the due date thereof to but excluding the date
the same is paid in full.
(c) Accrued interest on each Loan shall, subject to
the following sentence, be payable on the first Business Day
of each month such Loan remains outstanding, on the Maturity
Date and upon the prepayment thereof, except that interest
payable at the Penalty Rate shall be payable in arrears on
the first Business Day of each month and from time to time
on demand of the Bank. Promptly after the determination of
any interest rate provided for herein or any change therein,
the Bank shall give notice thereof to the Company.
3.03 Optional Prepayments of Loans. Subject to Section
-----------------------------
4.04 hereof, the Company shall have the right to prepay the
Loans, at any time from time to time, provided that the Company
shall give the Bank notice of each such prepayment, as provided
in Section 4.05 hereof.
3.04 Mandatory Prepayments of Loans.
------------------------------
(a) If the outstanding principal amount of the Loans
exceeds on any date the applicable Commitment on such date,
the Company shall cause the applicable Loans to be repaid on
such date in an aggregate principal amount at least equal to
such excess.
(b) If the outstanding principal amount of the Loans
exceeds on any date the amount equal to (i) the Borrowing
Base at said date minus (ii) the amount equal to the sum of
(x) the aggregate undrawn face amount of all issued Letters
of Credit at said date and (y) the outstanding principal
amount of Reimbursement Obligations at said date, the
Company shall cause the Loans to be prepaid on such date in
an aggregate principal amount at least equal to such excess.
SECTION 4. PAYMENTS; COMPUTATIONS; ETC.
----------------------------
4.01 Payments.
---------
(a) Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be
made by the Company under this Agreement and the Note shall
be made in Dollars, in immediately available funds, without
deduction, set-off or counterclaim, to the Bank's New York
Office, not later than 11:00 a.m. New York time on the date
on which such payment shall become due (each such payment
made after such time on such due date to be deemed to have
been made on the next succeeding Business Day).
(b) The Bank may (but shall not be obligated to) debit
the amount of any such payment which is not made by such
time to any ordinary deposit account of the Company with the
Bank.
(c) The Company shall, at the time of making each
payment under this Agreement or the Note, specify to the
Bank the Loan, Reimbursement Obligation or other amounts
payable hereunder to which such payment is to be applied
(and in the event that it fails to so specify, or if an
Event of Default has occurred and is continuing, the Bank
may apply such payment in such manner as it may determine to
be appropriate).
(d) If the due date of any payment under this
Agreement or the Note would otherwise fall on a day which is
not a Business Day and such date is extended to the next
succeeding Business Day in accordance with the terms and
conditions hereof, interest shall be payable on any payment
amount so extended for the period of such extension.
4.02 Computations. Interest shall be computed on the
------------
basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period
for which payable.
4.03 Setoff. The Company agrees that, in addition to
------
(and without limitation of) any right of set-off, bankers' lien
or counterclaim the Bank may otherwise have, the Bank shall be
entitled, at its option, to offset balances held by it for
account of the Company at any of its offices, in Dollars or in
any other currency, against any principal of or interest on any
of the Loans, any Reimbursement Obligation or any other amount
payable to the Bank hereunder, which is not paid when due, in
which case it shall promptly notify the Company thereof, provided
that the Bank's failure to give such notice shall not affect the
validity thereof.
4.04 Minimum Amounts. Each borrowing and prepayment of
---------------
principal of Loans shall be in an amount at least equal to
$20,000.
4.05 Certain Notices. Notices to the Bank of
----------------
borrowings and prepayments of Loans and of issuances and
extensions of Letters of Credit shall be irrevocable and shall be
effective only if received by the Bank not later than 11:00 a.m.
New York time on the number of Business Days prior to the date of
the relevant borrowing, prepayment, issuance or extension
specified below:
Number of
Business
Notice Days Prior
------- ----------
Borrowing or prepayment of
Loan 1
Issuance or extension of
Letters of Credit 3
Each such notice of borrowing or prepayment shall specify the
amount (subject to Section 4.04 hereof) and date (which shall be
a Business Day, and in the case of a borrowing, no later than the
day 30 days preceding the Termination Date) such Loan is to be
borrowed or prepaid. Each such notice of issuance or extension
shall specify the date (which shall be a Business Day no later
than the day 30 days preceding the Termination Date) such Letter
of Credit is to be issued, the amount thereof, the beneficiary
thereof, the expiry date thereof (which shall be a Business Day
falling no more than 60 days after the related issuance date and
no later than the Termination Date) and, in reasonable detail,
the other terms of such Letter of Credit and the nature of the
transaction (which shall be an Eligible Letter of Credit
Transaction) to be supported thereby. Each such request for an
extension of a Letter of Credit shall specify the new expiry date
thereof (which shall be a Business Day no later than the
Termination Date).
SECTION 5. YIELD PROTECTION.
----------------
(a) The Company shall pay directly to the Bank from
time to time such amounts as the Bank may reasonably
determine to be necessary to compensate it for any costs
which the Bank determines are attributable to its making or
maintaining any Credit or its obligation to make any Credit
hereunder, or any reduction in any amount receivable by the
Bank hereunder in respect of any such Credit or obligation,
resulting from any Regulatory Change which:
(i) changes the basis of taxation of any
amounts payable to the Bank under this Agreement or the
Note in respect of any such Credit (other than taxes
imposed on or measured by the overall net income of the
Bank or its Applicable Credit Office for any of such
Credits by the jurisdiction in which such Applicable
Credit Office is located); or
(ii) imposes or modifies any reserve, special
deposit or similar requirements relating to any
extensions of credit or other assets of, or any
deposits with or other liabilities of, the Bank, or any
Commitment of the Bank available for the Company; or
(iii) imposes any other condition affecting
this Agreement or the Note of the Bank (or any of such
extensions of credit or liabilities) or any Commitment
of the Bank available for the Company.
(b) Without limiting the effect of the foregoing
provisions of this Section 5 (but without duplication), the
Company shall pay to the Bank from time to time on request
such amounts as the Bank may reasonably determine to be
necessary to compensate the Bank for any costs which it
determines are attributable to the maintenance by the Bank
(or any Applicable Credit Office), pursuant to any law or
regulation or any interpretation, directive or request
(whether or not having the force of law) of any court or
governmental or monetary authority following any Regulatory
Change, or pursuant to any risk-based capital guideline or
other requirement (whether or not having the force of law
and whether or not the failure to comply therewith would be
unlawful) heretofore or hereafter issued by any government
or governmental or supervisory authority, including any
implementation at the Federal level of the Basle Accord
(including, without limitation, the Final Risk-Based Capital
Guidelines of the Board of Governors of the Federal Reserve
System (12 CFR Part 208, Appendix A; 12 CFR Part 225,
Appendix A) and the Final Risk-Based Capital Guidelines of
the Office of the Comptroller of the Currency (12 CFR
Part 3, Appendix A), of capital in respect of any Commitment
of the Bank available for the Company, any Credit issued for
account of the Company or any participation in any Credit
issued for account of the Company (such compensation to
include, without limitation, an amount equal to any
reduction of the rate of return on assets or equity of the
Bank (or any Applicable Credit Office) to a level below that
which the Bank (or any Applicable Credit Office) could have
achieved but for such law, regulation, interpretation,
directive or request).
(c) The Bank will notify the Company of any event
occurring after the date of this Agreement that will entitle
the Bank to compensation under paragraph (a) or (b) of this
Section 5 as promptly as practicable, but in any event
within 45 days, after the Bank obtains actual knowledge
thereof; provided, however, that if the Bank fails to give
such notice within 45 days after it obtains actual knowledge
of such an event, the Bank shall, with respect to
compensation payable pursuant to this Section 5 in respect
of any costs resulting from such event, only be entitled to
payment under this Section 5 for costs incurred from and
after the date 45 days prior to the date that the Bank does
give such notice. The Bank will furnish to the Company a
certificate setting forth the basis and amount of each
request by the Bank for compensation under paragraph (a) or
(b) of this Section 5. Determinations and allocations by the
Bank for purposes of this Section 5 of the effect of any
Regulatory Change pursuant to this Section 5, or of the
effect of capital maintained pursuant to the preceding
paragraph, on its costs or rate of return of maintaining
Credits or its obligation to make Credits, or on amounts
receivable by it in respect of Credits, and of the amounts
required to compensate the Bank under this Section 5, shall
be conclusive, provided that such determinations and
allocations are made on a reasonable basis.
SECTION 6. CONDITIONS PRECEDENT.
--------------------
6.01 Initial Credits. The extension of Credits by the
---------------
Bank is subject to the conditions precedent that all matters
relating to this Agreement and the transactions contemplated
hereby should be reasonably satisfactory to the Bank and the
receipt by the Bank of the following documents, each of which
shall be satisfactory to the Bank and its counsel in form and
substance:
(a) The Note, duly executed and delivered by the
Company;
(b) The Security Agreement, duly executed and
delivered by the Company;
(c) The Letter of Negative Pledge, duly executed and
delivered by the Company;
(d) The Sales Agreement, duly executed and delivered
by the Company and AT;
(e) Evidence of the AT Credit;
(f) Evidence of the consummation of the transactions
contemplated by the Stock and Asset Purchase Agreement;
(g) Evidence of the release by Mitsubishi Corporation
and Mitsubishi International Corporation, respectively, of
Liens relating to the assets subject to the transactions
contemplated by the Stock and Asset Purchase Agreement;
(h) Certified copies of the charter or certificate of
incorporation (as the case may be) and by-laws (or
equivalent documents) of the Company and of the resolutions
of its Board of Directors authorizing its entering into and
performance of its obligations under the Credit Documents to
which it is party and the transactions contemplated hereby
and thereby;
(i) Certificate of the secretary or an assistant
secretary of the Company in respect of each of the officers
(i) who is authorized to sign on its behalf the Credit
Documents to which it is party and (ii) who will, until
replaced by another officer or officers duly authorized for
that purpose, act as its representative for the purposes of
signing documents and giving notices and other
communications in connection with this Agreement and the
transactions contemplated hereby (and the Bank may
conclusively rely on such certificate until it receives
notice in writing from the Company to the contrary);
(j) Certificate of the president or a vice president
of the Company to the effect that (i) the Company has
complied and is then in compliance with all of the terms,
conditions and covenants of the Credit Documents to which it
is party, (ii) no Default or Event of Default has occurred
hereunder or thereunder, either before or after giving
effect to the extension of any Credit, (iii) the
representations and warranties of the Company contained in
the Credit Documents to which it is party are true in all
respects as if such representations and warranties had been
made on such date, and (iv) except as disclosed to the Bank
prior to the date of the initial extension of Credits
hereunder, there shall have been no material adverse change
in the financial condition, business or property of the
Company since February 3, 1996;
(k) Copies of duly completed and executed Uniform
Commercial Code Financing Statements covering the collateral
security described in the Security Agreement, together with
evidence satisfactory to the Bank that such financing
statements have been duly filed in all jurisdictions in
which such filing is necessary or appropriate;
(l) The results of Uniform Commercial Code, tax and
judgment searches as may be requested by the Bank;
(m) A Borrowing Base Certificate, certified by the
executive vice president or the senior vice president -
finance of the Company;
(n) A detailed aged accounts receivable schedule,
certified by the executive vice president or the senior vice
president - finance of the Company;
(o) A detailed inventory schedule, certified by the
executive vice president or the senior vice president -
finance of the Company;
(p) Projections of sales revenue and income for each
of the Company and AT for the fiscal year ending in 1998,
certified, in the case of the Company, by the executive vice
president or the senior vice president - finance and, in the
case of AT, by the executive vice president - finance or the
senior vice president - finance;
(q) Evidence of a marine cargo insurance policy in
form and substance satisfactory to the Bank, which policy
shall name the Bank as loss payee;
(r) Evidence that the Company shall have changed its
name to "AnnTaylor Global Sourcing, Inc.";
(s) An opinion of counsel to the Company,
substantially in the form of Exhibit H hereto; and
(t) Such other documents, approvals and opinions
relating to the transactions contemplated hereby as the Bank
or its counsel may reasonably request.
6.02 Subsequent Credits. The extension of Credits by
------------------
the Bank to the Company subsequent to the date hereof is subject
to the further conditions precedent that both immediately prior
to the extension of such Credit and also after giving effect
thereto (i) no Default shall have occurred and be continuing and
(ii) the representations and warranties made by the Company in
Section 7 hereof shall be true and complete on and as of the date
of the extension of such Credit with the same force and effect as
if made on and as of such date (except as disclosed to the Bank
in writing prior to the date thereof).
Each notice by the Company hereunder with respect to the
extension of any Credit shall constitute a certification by the
Company to the effect set forth in this Section 6.02 (both as of
the date of such notice and, unless the Company otherwise
notifies the Bank prior thereto, as of the date of the extension
of such Credit).
SECTION 7. REPRESENTATIONS AND WARRANTIES. The Company
--------------------------------
represents and warrants to the Bank that:
7.01 Corporate Existence. It is a corporation duly
--------------------
organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation; has all requisite
corporate power and all governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on
its business as now being or as proposed to be conducted; and is
qualified to do business in all jurisdictions in which the nature
of the business conducted by it makes such qualification
necessary and where failure so to qualify would have a Material
Adverse Effect.
7.02 Financial Condition. The combined balance sheets
-------------------
of CAT as at February 3, 1996 and the related combined statements
of income, retained earnings and changes in financial position
(or of cash flow, as the case may be) of CAT for the fiscal year
ended on said date, with the opinion thereon (in the case of said
balance sheet and statements) of Ernst & Young LLP, heretofore
furnished to the Bank, are complete and correct and fairly
present the financial condition of CAT as at said date and the
results of its operations for the fiscal year ended on said date,
all in accordance with generally accepted accounting principles
and practices applied on a consistent basis. CAT had on said
date no material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or
anticipated losses from any unfavorable commitments, except as
referred to or reflected or provided for in said balance sheet as
at said date. Since February 3, 1996, there has been no material
adverse change in the financial condition, operations, business
or prospects of CAT from that set forth in said financial
statements as at said date.
7.03 Litigation. (a) There are no actions, suits or
----------
proceedings (whether or not purportedly on behalf of the Company)
pending or, to the knowledge of the Company, threatened against
or affecting the Company at law or in equity or before or by any
Federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or
foreign, which involve any of the transactions contemplated
herein or which, if adversely determined against the Company,
would result in a Material Adverse Effect; and (b) to the
knowledge of the Company, the Company is not in default with
respect to any judgment, writ, injunction, decree, rule or
regulation of any court or Federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have a Material
Adverse Effect.
7.04 No Breach. The execution and delivery of the
----------
Credit Documents to which it is party, the consummation of the
transactions herein and therein contemplated and compliance with
the terms and provisions hereof and thereof, will not conflict
with or result in a breach of, or require any consent under, the
charter or by-laws of the Company, or any applicable law or
regulation, or any order, writ, injunction or decree of any court
or governmental authority or agency, or any agreement or
instrument to which the Company is a party or by which it is
bound or to which it is subject, or constitute a default under
any such agreement or instrument, or result in the creation or
imposition of any Lien upon any of the revenues or assets of the
Company pursuant to the terms of any such agreement or
instrument.
7.05 Corporate Action. The Company has all necessary
----------------
corporate power and authority to execute, deliver and perform its
obligations under the Credit Documents to which it is party; the
execution, delivery and performance by the Company of the Credit
Documents to which it is party have been duly authorized by all
necessary corporate action on its part; and this Agreement and
the Security Agreement have been duly and validly executed and
delivered by the Company and constitute, and the Note when
executed and delivered for value will constitute, its legal,
valid and binding obligation, enforceable in accordance with
their respective terms, except to the extent that enforcement may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally, and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
7.06 Approvals. No authorizations, approvals or
---------
consents of, and no filings or registrations with, any
governmental or regulatory authority or agency are necessary for
the execution, delivery or performance by the Company of the
Credit Documents to which it is party or for the validity or
enforceability thereof.
7.07 Use of Credits. The Company is not engaged
-----------------
principally, or as one of its important activities, in the
business of extending credit for the purpose, whether immediate,
incidental or ultimate, of buying or carrying Margin Stock and no
part of the proceeds of any Credit hereunder will be used to buy
or carry any Margin Stock.
7.08 ERISA. The Company and its ERISA Affiliates have
-----
fulfilled their respective obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are
in compliance in all material respects with the presently
applicable provisions of ERISA and the Code, and have not
incurred any liability to the PBGC or any Plan or Multiemployer
Plan (other than to make contributions in the ordinary course of
business, each of which has been made on a timely basis). The
total benefit liabilities under each Plan do not exceed the fair
market value of the assets of such Plan by an amount in excess of
$250,000, based on actuarial assumptions which are reasonable,
both individually and in the aggregate.
7.09 Taxes. The Company has filed all United States
-----
Federal income tax returns and all other material tax returns
which are required to be filed by it and has paid all taxes due
pursuant to such returns or pursuant to any assessment received
by the Company, except such taxes as are being contested in good
faith by appropriate proceedings. The charges, accruals and
reserves on the books of the Company in respect of taxes and
other governmental charges are, in the opinion of the Company,
adequate.
7.10 Investment Company Act. The Company is not an
----------------------
"investment company", or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of
1940, as amended.
7.11 Public Utility Holding Company Act. The Company
-----------------------------------
is not a "holding company", or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as
amended.
7.12 Credit Agreements. Schedule 7.12 hereto is a
------------------
complete and correct list, as of the date of this Agreement, of
each credit agreement, loan agreement, indenture, purchase
agreement, guarantee or other arrangement providing for or
otherwise relating to any Indebtedness or any extension of credit
(or commitment for any Indebtedness or any extension of credit)
to, or guarantee by, the Company the aggregate principal or face
amount of which equals or exceeds (or may equal or exceed)
$250,000 and the aggregate principal or face amount outstanding
or which may become outstanding under each such arrangement is
correctly described in said Schedule 7.12.
7.13 Hazardous Materials. The Company has obtained all
-------------------
permits, licenses and other authorizations which are required
under all applicable Environmental Laws, except to the extent
failure to have any such permit, license or authorization would
not have a Material Adverse Effect. The Company is in material
compliance with the terms and conditions of all such permits,
licenses and authorizations, and is also in material compliance
with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any
regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder.
7.14 Subsidiaries. As of the date of this Agreement,
------------
the Company has no Subsidiaries.
SECTION 8. COVENANTS OF THE COMPANY. The Company agrees
--------------------------
that, so long as either of the Commitments is in effect and until
payment in full of the principal of and interest on the Loans,
the Reimbursement Obligations and all other amounts payable by
the Company hereunder:
8.01 Financial Statements. The Company shall deliver
--------------------
to the Bank:
(a) as soon as available and in any event within 45
days after the end of each of the first three fiscal
quarterly periods of each fiscal year of the Company,
statements of income, retained earnings and changes in
financial position (or of cash flow, as the case may be) of
the Company for such period and for the period from the
beginning of the respective fiscal year to the end of such
period, and the related balance sheets as at the end of such
period setting forth in each case in comparative form the
corresponding figures for the corresponding period in the
preceding fiscal year, accompanied by a certificate of the
executive vice president or the senior vice president -
finance of the Company, which certificate shall state that
said financial statements fairly present the financial
condition and results of operations, as the case may be, of
the Company in accordance with generally accepted accounting
principles, consistently applied, as at the end of, and for,
such period (subject to normal year-end audit adjustments,
none of which shall be material);
(b) as soon as available and in any event within 120
days after the end of each fiscal year of the Company, (i)
statements of income, retained earnings and changes in
financial position (or of cash flow, as the case may be) of
the Company for such year and the related balance sheets as
at the end of such year, setting forth in each case in
comparative form the corresponding figures for the preceding
fiscal year, and (ii) projections of sales revenue and
income of the Company for the succeeding fiscal year, and
accompanied in the case of said statements and balance sheet
described in clause (i) above by a certificate of the
executive vice president or the senior vice president -
finance of the Company, which certificate shall state that
said financial statements fairly present the financial
condition and results of operations of the Company in
accordance with generally accepted accounting principles,
consistently applied, as at the end of, and for, such fiscal
year;
(c) as soon as available and in any event within ten
(10) days after the end of each month of each fiscal year of
the Company, an updated aged accounts receivable schedule
and inventory schedule, which schedules shall be in form and
substance satisfactory to the Bank and certified by the
executive vice president or the senior vice president -
finance of the Company.
(d) as soon as available and in any event within ten
(10) days after the end of each month of each fiscal year of
the Company, an updated Borrowing Base Certificate, which
certificate shall be in form and substance satisfactory to
the Bank and certified by the executive vice president or
the senior vice president - finance of the Company.
(e) promptly upon their becoming available, copies of
all registration statements and regular periodic reports, if
any, which the Company shall have filed with the Securities
and Exchange Commission (or any governmental agency
substituted therefor) or any national securities exchange;
(f) promptly upon the mailing thereof to the
shareholders of the Company generally, copies of all
financial statements, reports and proxy statements so
mailed;
(g) as soon as possible, and in any event within ten
(10) days after the Company knows or has reason to know that
any of the events or conditions specified below with respect
to any Plan or Multiemployer Plan have occurred or exist, a
statement signed by the executive vice president or the
senior vice president - finance of the Company setting forth
details respecting such event or condition and the action,
if any, which the Company or its ERISA Affiliate proposes to
take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by the
Company or an ERISA Affiliate with respect to such event or
condition):
(i) any reportable event, as defined in
Section 4043(b) of ERISA and the regulations issued
thereunder, as to which PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that
it be notified within 30 days of the occurrence of such
event (provided that a failure to meet the minimum
funding standard of Section 412 of the Code or Section
302 of ERISA shall be a reportable event regardless of
the issuance of any waivers in accordance with Section
412(d) of the Code);
(ii) the filing under Section 4041 of ERISA
of a notice of intent to terminate any Plan or the
termination of any Plan;
(iii) the institution by PBGC of proceedings
under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Plan,
or the receipt by the Company or any ERISA Affiliate of
a notice from a Multiemployer Plan that such action has
been taken by PBGC with respect to such Multiemployer
Plan;
(iv) the complete or partial withdrawal by
the Company or any ERISA Affiliate under Section 4201
or 4204 of ERISA from a Multiemployer Plan, or the
receipt by the Company or any ERISA Affiliate of notice
from a Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA
or that it intends to terminate or has terminated under
Section 4041A of ERISA; and
(v) the institution of a proceeding against
the Company or any ERISA Affiliate to enforce Section
515 of ERISA, which proceeding is not dismissed within
30 days;
(h) promptly after the Company knows or has reason to
know that any Default has occurred, a notice of such Default
describing the same in reasonable detail and, together with
such notice or as soon thereafter as possible, a description
of the action that the Company has taken and proposes to
take with respect thereto;
(i) promptly upon their becoming available, copies of
all registration statements and regular periodic reports, if
any, which ATSC shall have filed with the Securities and
Exchange Commission (or any governmental agency substituted
therefor) or any national securities exchange;
(j) as soon as available and in any event within ten
(10) days after the end of each month of each fiscal year of
ATSC, a report setting forth the status of the credit lines
under the AT Facility Agreement, which report shall be in
form and substance satisfactory to the Bank and certified by
the executive vice president or the senior vice president -
finance of ATSC; and
(k) from time to time such other information regarding
the business, affairs or financial condition of the Company
as the Bank may reasonably request.
The Company will furnish to the Bank, at the time it furnishes
each set of financial statements pursuant to paragraph (a) or (b)
above, a certificate of the executive vice president or the
senior vice president - finance of the Company to the effect that
no Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable
detail and describing the action that the Company has taken and
proposes to take with respect thereto).
8.02 Litigation. The Company will promptly give to the
----------
Bank notice of all legal or arbitral proceedings, and of all
proceedings by or before any governmental or regulatory authority
or agency, and any material development in respect of such legal
or other proceeding affecting the Company, except proceedings
which, if adversely determined, would not have a Material Adverse
Effect.
8.03 Corporate Existence, Etc. The Company will
--------------------------
preserve and maintain its corporate existence and all of its
material rights, privileges and franchises (provided that nothing
in this Section 8.03 shall prohibit any transaction expressly
permitted under Section 8.05 hereof); comply with the
requirements of all applicable laws, rules, regulations and
orders of governmental or regulatory authorities if failure to
comply with such requirements would have a Material Adverse
Effect; pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on
any of its property prior to the date on which penalties attach
thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper
proceedings and against which adequate reserves are being
maintained; maintain all of its properties used or useful in its
business in good working order and condition, ordinary wear and
tear excepted; and permit representatives of the Bank, during
normal business hours, to examine, copy and make extracts from
its books and records, to inspect its properties, and to discuss
its business and affairs with its officers, all to the extent
reasonably requested by the Bank.
8.04 Insurance. The Company will keep insured by
----------
financially sound and reputable insurers all property of a
character usually insured by corporations engaged in the same or
similar business similarly situated against loss or damage of the
kinds and in the amounts customarily insured against by such
corporations and carry such other insurance as is usually carried
by such corporations.
8.05 Prohibition of Fundamental Changes. The Company
----------------------------------
will not enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution). The Company will not acquire
any business or assets from, or capital stock of, or be a party
to any acquisition of, any Person except for purchases of
inventory and other assets to be sold or used in the ordinary
course of business. The Company will not convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series
of transactions, all or a substantial part of its business or
assets, whether now owned or hereafter acquired (including,
without limitation, receivables and leasehold interests, but
excluding (i) any inventory or other assets sold or disposed of
in the ordinary course of business and (ii) obsolete or worn-out
property, tools or equipment no longer used or useful in its
business). The Company will not amend its certificate of
incorporation or by-laws in any manner adverse to the interests
of the Bank hereunder. Notwithstanding the foregoing, the
Company shall be permitted to acquire one (1) share of the
outstanding capital stock of C.A.T. (Far East) Limited, a Hong
Kong corporation.
8.06 Limitation on Liens. The Company will not create,
-------------------
incur, assume or suffer to exist any Lien upon any of its
property, assets or revenues, whether now owned or hereafter
acquired, except:
(a) Liens imposed by any governmental authority for
taxes, assessments or charges not yet due or which are being
contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the
books of the Company in accordance with GAAP;
(b) carriers', warehousemen's, mechanics', material-
men's, repairmen's or other like Liens arising in the
ordinary course of business which are not overdue for a
period of more than 30 days or which are being contested in
good faith and by appropriate proceedings;
(c) pledges or deposits under worker's compensation,
unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of
business and encumbrances consisting of zoning restrictions,
easements, licenses, restrictions on the use of property or
minor imperfections in title thereto which, in the
aggregate, are not material in amount, and which do not in
any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of
the business of the Company;
(f) Liens on assets of corporations which become
Subsidiaries of the Company after the date of this
Agreement, provided that such Liens are in existence at the
time the respective corporations become Subsidiaries of the
Company and were not created in anticipation thereof;
(g) Liens upon real and/or tangible personal property
acquired after the date hereof (by purchase, construction or
otherwise) by the Company, each of which Liens either (A)
existed on such property before the time of its acquisition
and was not created in anticipation thereof, or (B) was
created solely for the purpose of securing Indebtedness
representing, or incurred to finance, refinance or refund,
the cost (including the cost of construction) of the
respective property; provided that no such Lien shall extend
to or cover any property of the Company other than the
respective property so acquired and improvements thereon;
and provided further that the principal amount of
Indebtedness secured by any such Lien shall at no time
exceed 80% of the fair market value (as determined in good
faith by the executive vice president or the senior vice
president - finance or controller of the Company) of the
respective property at the time it was acquired (by
purchase, construction or otherwise); and
(h) any extension, renewal or replacement of the
foregoing, provided, however, that the Liens permitted
hereunder shall not be spread to cover any additional
Indebtedness or property (other than a substitution of like
property).
8.07 Indebtedness. The Company will not create, incur
-------------
or suffer to exist any Indebtedness except:
(a) Indebtedness to the Bank hereunder or heretofore
outstanding;
(b) Indebtedness outstanding on the date hereof and
listed in Schedule 8.07 hereto;
(c) Indebtedness of the Company secured by Liens
permitted under Section 8.06(g) hereof up to such amount as
is permitted by the Bank in its sole discretion;
(d) Subordinated Indebtedness (but in no event greater
than $150,000 in the aggregate); and
(e) additional Indebtedness of the Company up to such
amount as is permitted by the Bank in its sole discretion.
8.08 Investments. The Company will not make or permit
-----------
to remain outstanding any Investments except:
(a) operating deposit accounts with banks;
(b) Permitted Investments;
(c) Investments outstanding on the date hereof and
identified in Schedule 8.08 hereto; and
(d) such other Investments as is permitted by the Bank
in its sole discretion.
8.09 Dividend Payments. The Company will not declare
-----------------
or make any Dividend Payment at any time; provided, however, that
-------- -------
the Company may declare and make Dividend Payments in cash,
subject to the satisfaction of each of the following conditions
on the date of such Dividend Payment and after giving effect
thereto:
(a) no Default shall have occurred and be continuing;
and
(b) the Company shall have delivered to the Bank, at
least 3 Business Days (but not more than 7 Business Days)
prior to the date of the proposed Dividend Payment, a
certificate of the executive vice president or the senior
vice president - finance of the Company setting forth
computations in reasonable detail demonstrating satisfaction
of the covenants set forth in Section 8.10, 8.11 and 8.12
hereof as at the date of such certificate.
8.10 Leverage Ratio. The Company will not permit the
--------------
Leverage Ratio to exceed the following respective amounts at any
time during the following respective periods:
Period Ratio
------ -----
From the date hereof
and at all times thereafter 3.20 to 1
8.11 Net Worth. The Company will not permit the
----------
aggregate sum of (i) Tangible Net Worth and (ii) the undrawn face
amount of the AT Credit to be less than the following respective
amounts at any time during the following respective periods:
Period Amount
------ ------
From the date hereof
and at all times thereafter $13,000,000
8.12 Current Ratio. The Company will not permit the
--------------
ratio of current assets of the Company to current liabilities of
the Company to be less than the following respective amounts at
any time during the following respective periods:
Period Ratio
------ ------
From the date hereof
through February 1, 1997 1.25 to 1
From February 2, 1997
and at all times thereafter 1.50 to 1
For purposes hereof, the terms "current assets" and "current
-------------- -------
liabilities" shall have the respective meanings assigned to them
- -----------
by GAAP.
8.13 Subordinated Indebtedness. The Company shall not
-------------------------
purchase, redeem, retire or otherwise acquire for value, set
apart any money for a sinking, defeasance or other analogous fund
for, the purchase, redemption, retirement or other acquisition
of, or make any voluntary payment or prepayment of the principal
of or interest on, or any other amount owing in respect of, any
Subordinated Indebtedness, except for regularly scheduled
payments of principal and interest in respect thereof required
pursuant to the instruments evidencing such Subordinated
Indebtedness.
8.14 Lines of Business. Without the prior written
-------------------
consent of the Bank, the Company shall not engage to any
substantial extent in any line or lines of business activity
other than the business of purchase and wholesale distribution of
apparel, shoes and accessories.
8.15 Transactions with Affiliates. The Company will
----------------------------
not directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose
of any assets to an Affiliate; (c) merge into or consolidate with
or purchase or acquire assets from an Affiliate; or (d) enter
into any other transaction directly or indirectly with or for the
benefit of an Affiliate (including, without limitation,
guarantees and assumptions of obligations of an Affiliate);
provided that (w) the Company may enter into transactions with AT
- --------
or ATSC contemplated by the Sales Agreement, (x) any Affiliate
who is an individual may serve as a director, officer or employee
of the Company and receive reasonable compensation for his or her
services in such capacity, (y) the Company may enter into
transactions (other than extensions of credit by the Company to
an Affiliate) providing for the leasing of property, the
rendering or receipt of services or the purchase or sale of
inventory and other assets in the ordinary course of business if
the monetary or business consideration arising therefrom would be
substantially as advantageous to the Company as the monetary or
business consideration which would obtain in a comparable
transaction with a Person not an Affiliate, and (z) the Company
may enter into transactions (other than extensions of credit by
the Company) with AT or ATSC providing for the leasing of
property or the rendering or receipt of support services;
provided, further, the Company may in the ordinary course of
- -------- -------
business enter into such transactions (other than extensions of
credit by the Company) not otherwise permitted by this Section
8.15 to the extent the related Affiliate is either AT or ATSC.
8.16 Use of Proceeds. The Company will use the
-----------------
proceeds of the Credits hereunder solely in connection with the
purchase and wholesale distribution of apparel, shoes and
accessories (in compliance with all applicable legal and
regulatory requirements, including, without limitation,
Regulations G, T, U and X and the Securities Act of 1933 and the
Securities Exchange Act of 1934 and the regulations thereunder);
provided, that the Bank shall not have any responsibility as to
- --------
the use of any of such proceeds.
8.17 AT Credit. In the event any Credit hereunder
----------
remains outstanding beyond the expiry date of the AT Credit, the
Company shall at the request of the Bank cause AT to extend the
expiry date of the AT Credit to such later date.
8.18 Amendments to Other Documents. The Company shall
-----------------------------
not (a) amend, supplement or otherwise modify the Sales Agreement
or any of the documents or instruments evidencing, constituting,
governing, Guaranteeing or securing the payment of any
Subordinated Indebtedness, or (b) waive any of the obligations of
AT under the Sales Agreement.
8.19 Audit of Inventory and Accounts Receivable. At
-------------------------------------------
the request of the Bank, the Company shall permit the Bank to
conduct from time to time an audit (in scope reasonably
satisfactory to the Bank) of the inventory and the accounts
receivable of the Company, at the expense of the Company
(provided that the costs of such audit are in accordance with
normal industry practice for similar audits).
8.20 Sales to AT. So long as a Special CAD Event shall
-----------
have occurred and be continuing, the Company shall conduct all
transactions with AT (under the Sales Agreement or otherwise)
exclusively on a Cash Against Documents basis.
8.21 Operating Account. Other than in connection with
-----------------
its payroll operations, the Company shall maintain all of its
principal bank accounts with the Bank.
8.22 Additional Subsidiaries. Promptly upon any Person
-----------------------
becoming a Subsidiary of the Company on or after the date hereof,
the Company shall so notify the Bank (specifying such
Subsidiary) and, if requested by the Bank, (a) cause the shares
of capital stock of such Person to be pledged to the Bank by the
owner thereof pursuant to a pledge agreement (which may be an
existing Security Document) in form and substance satisfactory to
the Bank (unless such Person is a Foreign Subsidiary of the
Company, in which case (i) if such Person is a Subsidiary of a
Foreign Subsidiary of the Company, no shares of stock of such
Person shall be required to be pledged pursuant to this clause
(a) and (ii) in all other cases, not more than 65% of the issued
and outstanding stock of such Person shall be required to be
pledged hereunder); (b) cause such Person (unless such Person is
a Foreign Subsidiary of the Company) to execute and deliver to
the Bank a Guarantee in form and substance reasonably
satisfactory to the Bank (which shall, to the fullest extent
practicable, be in the form of one of the existing Security
Documents) guaranteeing the obligations of the Company hereunder
and under the other Credit Documents to which it is party; (c)
cause such Person (unless such Person is a Foreign Subsidiary of
the Company) to execute and deliver a security agreement, pledge
agreement and/or mortgage in form and substance reasonably
satisfactory to the Bank (each of which shall, to the fullest
extent practicable, be in the form of one of the existing
Security Documents) granting Liens on substantially all of the
properties, assets, revenues, rights or business of such
Subsidiary as collateral security for the payment of the
obligations of the Company hereunder and under the other Credit
Documents to which it is party; and (d) cause to be executed and
delivered to the Bank such other documentation as the Bank may
reasonably request in connection with the foregoing, including,
without limitation, certificates evidencing pledged shares of
stock, executed, undated stock powers therefor, certified
corporate resolutions and other corporate documents of such
Person and favorable opinions of counsel to such Person (which
shall cover, among other things, the legality, validity, binding
effect and enforceability of the documentation referred to above,
subject to customary exceptions satisfactory to the Bank) all in
form, content and scope, mutatis mutandis, comparable to the
------- --------
corresponding documentation furnished pursuant to Sections 6.01
and 6.02 hereof.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES. If one or more of
------------------------------
the following events (herein called "Events of Default") shall
-----------------
occur and be continuing:
(a) The Company shall default in the payment when due
of any principal of or interest on any Loan, any
Reimbursement Obligation or any other amount payable by it
hereunder; or
(b) Any Obligor shall default in the payment when due
of any principal of or interest on any of its or their other
Indebtedness in the aggregate outstanding principal amount
of $5,000,000 (in the case of the Company, $500,000) or more
for such Obligor or Obligors; or any event specified in any
note, agreement, indenture or other document evidencing or
relating to any other Indebtedness of any Obligor or
Obligors in the aggregate outstanding principal amount of
$5,000,000 (in the case of the Company, $500,000) or more
for such Obligor or Obligors shall occur if the effect of
such event is to cause, or (with the giving of any notice or
the lapse of time or both) to permit the holder or holders
of such Indebtedness (or a trustee or agent on behalf of
such holder or holders) to cause, such Indebtedness to
become due, or to be prepaid in full (whether by redemption,
purchase or otherwise), prior to its stated maturity; or
(c) Any representation, warranty or certification made
or deemed made herein (or in any modification or supplement
hereto) by the Company, or any certificate furnished to the
Bank pursuant to the provisions hereof (or thereof), shall
prove to have been false or misleading as of the time made
or furnished in any material respect and, unless the Bank
reasonably determines that circumstances rendering such
representation, warranty certification or certificate false
or misleading are not reasonably susceptible of remedy
within 15 days after notice thereof, such circumstances
shall continue unremedied for a period of 15 days after
notice thereof to the Company by the Bank; or
(d) The Company shall default in the performance of
any of its obligations under Section 8.01(h) hereof; or the
Company shall default in the performance of any of its other
obligations in this Agreement or the other Credit Documents
and such default shall continue unremedied for a period of
15 days after notice thereof to the Company by the Bank; or
(e) Any Obligor shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts
become due; or
(f) Any Obligor shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence
a voluntary case under any applicable bankruptcy law, (iv)
file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (v)
fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an
involuntary case under any applicable bankruptcy law, or
(vi) take any corporate action for the purpose of effecting
any of the foregoing; or
(g) A proceeding or case shall be commenced, without
the application or consent of any Obligor, in any court of
competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the
composition or readjustment of its debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or
the like of the Company of all or any substantial part of
its assets, or (iii) similar relief in respect of the
Company under any law relating to bankruptcy, insolvency,
reorganization, winding-up, or composition or adjustment of
debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or
an order for relief against such Obligor shall be entered in
an involuntary case under any applicable bankruptcy law; or
(h) A final judgment or a series of related final
judgments for the payment of money in excess of $250,000 in
the aggregate (net of related insurance proceeds) shall be
rendered by a court or courts against the Company and the
same shall not be discharged (or provision shall not be made
for such discharge), or a stay of execution thereof shall
not be procured, within 30 days from the date of entry
thereof and the Company shall not, within said period of 30
days, or such longer period during which execution of the
same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal;
(i) An event or condition specified in Section 8.01(g)
hereof shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or
condition, together with all other such events or
conditions, the Company or any of its ERISA Affiliates shall
incur a liability to a Plan, a Multiemployer Plan or PBGC
(or any combination of the foregoing) in excess of $250,000
in the aggregate for the Company and all ERISA Affiliates;
or
(j) Any of the Security Documents shall cease to be in
full force and effect, or shall cease in any material
respect to grant to the Bank the Liens, rights, powers and
privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and
Lien on, all of the collateral subject thereto superior and
prior to the rights of all third Persons and subject to no
other Liens (except to the extent expressly permitted herein
or therein)); or
(k) The AT Credit shall cease to be in full force and
effect, or shall cease in any material respect to grant to
the Bank the rights, powers and privileges purported to be
created thereby; or
(l) AT shall default in the performance of any of its
obligations under any of the covenants set forth in the AT
Facility Agreement, including those obligations provided for
in Sections 9.01, 9.02 and 9.03 thereof, irrespective of
whether the holder or holders of the related Indebtedness
(or a trustee or agent on behalf of such holder or holders)
shall provide notice to AT or otherwise of any such event of
default (for purposes of this Section 9, the provisions of
the AT Facility Agreement shall be applied as originally set
forth therein, notwithstanding as any such provision may be
amended, supplemented or otherwise modified).
THEREUPON: (i) in the case of an Event of Default other than one
referred to in clause (f) or (g) of this Section 9 with respect
to any Obligor, the Bank may, by notice to the Company, cancel
the Commitments and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans, any
Reimbursement Obligations and all other amounts payable by the
Company hereunder and under the Note (including, without
limitation, any amounts payable under Section 5 hereof) to be
forthwith due and payable, whereupon such amounts shall be
immediately due and payable without presentment, demand, protest
or other formalities of any kind, all of which are hereby
expressly waived by the Company; and (ii) in the case of the
occurrence of an Event of Default referred to in clause (f) or
(g) of this Section 9 with respect to any Obligor, the
Commitments shall automatically be canceled and the principal
amount then outstanding of, and the accrued interest on, the
Loans, any Reimbursement Obligations and all other amounts
payable by the Company hereunder and under the Note (including,
without limitation, any amounts payable under Section 5 hereof)
shall become automatically immediately due and payable without
presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the Company.
SECTION 10. MISCELLANEOUS.
-------------
10.01 Waiver. No failure on the part of the Bank to
------
exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this
Agreement or any Note shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or
privilege under this Agreement or the Note preclude any other or
further exercise thereof or the exercise of any other right,
power or privilege. The remedies provided herein are cumulative
and not exclusive of any remedies provided by law.
10.02 Notices. All notices and other communications
-------
provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement)
shall be given or made by telecopy, telegraph, cable or in
writing and telecopied, telegraphed, cabled, mailed or delivered,
addressed as follows:
if to the Company:
AnnTaylor Global Sourcing, Inc.
142 West 57th Street
New York, NY 10019
Attention: General Counsel
Telecopier No.: (212) 541-3299
Telephone No.: (212) 541-3300
with a copy to:
AnnTaylor Global Sourcing, Inc.
142 West 57th Street
New York, NY 10019
Attention: Senior Vice President - Finance
with an additional copy to:
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, NY 10022
Attention: Charles M. Fox, Esq.
if to the Bank:
The Hongkong and Shanghai Banking
Corporation Limited, New York Branch
140 Broadway
New York, NY 10005
Attention: NYK CBU TRS
Telecopier No.: (212) 658-2813
Telephone No.: (212) 658-2888
with a copy to:
Moon & Ikeda
555 Madison Avenue
New York, NY 10022
Attention: Alexander P. Moon, Esq.
or, as to any party, at such other address as shall be designated
by such party in a notice to each other party. Except as
otherwise provided in this Agreement, all such communications
shall be deemed to have been duly given when transmitted by
telecopier, delivered to the telegraph or cable office or
personally delivered or, in the case of a mailed notice, 5
Business Days after the date deposited in the mails, postage
prepaid, in each case given or addressed as aforesaid.
10.03 Expenses, Etc. The Company agrees, upon demand,
-------------
to pay or reimburse the Bank for paying: (a) all reasonable
out-of-pocket expenses of the Bank (including, without
limitation, the reasonable fees and expenses of Messrs. Moon &
Ikeda, counsel to the Bank), in connection with (i) the
negotiation, preparation, execution and delivery of this
Agreement and the other Credit Documents and (ii) any amendment,
modification or waiver of any of the terms of this Agreement or
the other Credit Documents; (b) all reasonable costs and expenses
of the Bank (including reasonable counsels' fees) in connection
with any Default and any enforcement or collection proceedings
resulting therefrom; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any
governmental or revenue authority in respect of this Agreement,
the Note or any other document referred to herein and all costs,
expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection
of any security interest contemplated by this Agreement or any
document referred to herein.
10.04 Amendments, Etc. Any provision of this Agreement
---------------
may be amended or modified only by any instrument in writing
signed by the Company and the Bank.
10.05 Successors and Assigns; Assignment. This
---------------------------------------
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted
assigns.
10.06 Assignments and Participations.
------------------------------
(a) The Company may not assign its rights or
obligations hereunder or under the Notes without the prior
consent of the Bank.
(b) The Bank may sell or agree to sell to one or more
other Persons ("participants") a participation in all or any
part of the Loans, the Note, the Commitments, the Letters of
Credit, provided that no participant shall have any rights
under any Credit Document (a participant's rights against
the Bank in respect of such participation to be those set
forth in the agreement (the "Participation Agreement")
executed by the Bank in favor of the participant).
Notwithstanding any such sale, this Agreement shall continue
in full force and effect in all respects as if the Bank were
maintaining and funding each Commitment and Credit in which
participations have been sold in the same way that it is
maintaining and funding the portion of such Commitment and
Credit in which no participations have been sold. All
amounts payable by the Company to the Bank under Section 5
hereof shall be determined as if the Bank had not sold or
agreed to sell any participations in such Loan and as if the
Bank were funding all of such Loan in the same way that it
is funding the portion of such Loan in which no
participations have been sold. In no event shall the Bank
be obligated to the participant under the Participation
Agreement to take or refrain from taking any action under
the Credit Document (including without limitation granting
approval of any amendment or waiver) except that the Bank
may agree in the Participation Agreement that it will not,
without the consent of the participant, agree to (i) the
extension of any date fixed for the payment of principal of
or interest on the related Credit, (ii) the reduction of any
payment of principal thereof, (iii) the reduction of the
rate at which either interest is payable thereon or (if the
participant is entitled to any part thereof) fees are
payable hereunder to a level below the rate at which the
participant is entitled to receive interest or fees (as the
case may be) in respect of such participation or (iv) the
release of any guarantee or collateral security.
(c) The Bank may furnish any information concerning
the Company or any of its Subsidiaries in the possession of
the Bank from time to time to assignees and participants
(including prospective assignees and participants).
10.07 Survival. The obligations of the Company under
--------
Sections 5 and 10.03 hereof shall survive the repayment of the
Loans and the Reimbursement Obligations, and the termination of
the Commitments. In addition, each representation and warranty
made, or deemed to be made by a notice of any extension of
Credit, hereunder shall survive the extension of such Credit and
the Bank shall not be deemed to have waived, by reason of
extension of such Credit, any Default or Event of Default which
may arise by reason of such representation or warranty proving to
have been false or misleading, notwithstanding that the Bank may
have had notice or knowledge or reason to know that such
representation or warranty was false or misleading at the time of
such extension of Credit.
10.08 Captions. The table of contents and captions and
--------
section headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
10.09 Counterparts. This Agreement may be executed in
-------------
any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such
counterpart.
10.10 Governing Law; Submission to Jurisdiction. THIS
----------------------------------------- ----
AGREEMENT AND EACH NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
- -----------------------------------------------------------------
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. The Company
- --------------------------------------------------
hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and
of any New York State Court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. The
Company irrevocably waives, to the fullest extent permitted by
law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
10.11 Waiver of Jury Trial. Each of the Company and the
--------------------
Bank hereby irrevocably waives, to the fullest extent permitted
by law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
10.12 Severability. If any provision hereof is invalid
------------
and unenforceable in any applicable jurisdiction, then, to the
fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and
shall be liberally construed in favor of the Bank in order to
carry out the intentions of the parties hereto as nearly as may
be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
_
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
ANNTAYLOR GLOBAL SOURCING, INC.
By /s/ Dwight Meyer
_______________________
Name: Dwight Meyer
Title: Executive Vice President
Address for Notices:
142 West 57th Street
New York, NY 10019
Attention: Senior Vice President - Finance
Telecopy: (212) 245-7724
THE HONGKONG AND SHANGHAI
BANKING CORPORATION LIMITED,
NEW YORK BRANCH
By: /s/Ian Wright
_______________________
Name: Ian Wright
Title: Vice President
Address for Notices:
140 Broadway
New York, NY 10005
Attention: NYK CBU TRS
Telecopy: (212) 658-2813
====================================================================
SCHEDULE 7.12
Credit Agreements
------------------
Amended and Restated Credit Agreement dated as of September 20, 1996
between AnnTaylor Global Sourcing, Inc. and
The Hongkong and Shanghai Banking Corporation Limited
==========================================================================
SCHEDULE 8.07
Indebtedness
------------
Lease Number Description Payment Amount
- ------------ ------------- --------------
00013347-001 5/F F & F 405,705.00
00010769-001 5F/PCs & Network 299,869.00
-----------
TOTAL 705,574.00
==========
=========================================================================
SCHEDULE 8.08
Investments
------------
None
=====================================================================
EXHIBIT A
PROMISSORY NOTE
$8,000,000 September 20, 1996
New York, New York
FOR VALUE RECEIVED, ANNTAYLOR GLOBAL SOURCING, INC.
(formerly known as CAT US, Inc.), a Delaware corporation (the
"Company"), hereby promises to pay to THE HONGKONG AND SHANGHAI
-------
BANKING CORPORATION LIMITED, NEW YORK BRANCH (the "Bank"), at its
----
office located at 140 Broadway, New York, NY 10005, the principal
sum of Eight Million Dollars ($8,000,000) or such lesser amount
as shall equal the aggregate unpaid principal amount of the Loans
made by the Bank to the Company under the Amended and Restated
Credit Agreement dated as of September 20, 1996 between the
Company and the Bank (as modified and supplemented and in effect
from time to time, the "Credit Agreement"), in lawful money of
----------------
the United States of America and in immediately available funds,
on the dates provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at
such office, in like money and funds, for the period commencing
on the date of such Loan until such Loan shall be paid in full,
at the rates per annum and on the dates provided in the Credit
Agreement. In no event shall interest hereunder exceed the
maximum rate allowed under New York law.
The date, amount and interest rate of each Loan made by
the Bank to the Company, and each payment made on account of the
principal thereof, shall be recorded by the Bank on its books;
provided that the failure by the Bank so to record such Loans
shall not affect the obligations of the Company hereunder.
This Note is the Note referred to in the Credit
Agreement and evidences Loans made by the Bank thereunder. This
Note modifies that certain note dated as of August 4, 1995 (the
"Existing Note") made by the Company in favor of the Bank in the
-------------
principal amount of Eight Million Dollars ($8,000,000) and is
hereby delivered in substitution for the Existing Note, but not
in payment, satisfaction or cancellation of the outstanding
obligations evidenced by the Existing Note. This Note is subject
to the terms and conditions set forth in the Credit Agreement,
which terms and conditions are incorporated herein by reference.
Capitalized terms used but not defined herein have the respective
meanings assigned to them in the Credit Agreement.
The payment of this Note is supported by collateral
security provided under the Security Documents referred to in the
Credit Agreement.
The Credit Agreement provides for the acceleration of
the maturity of this Note upon the occurrence of certain events
and for prepayments of Loans upon the terms and conditions
specified therein.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
------------------------------------------------------
ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
- -----------------------------------------------------------------
APPLICABLE TO NOTES MADE AND TO BE PERFORMED THEREIN.
- ----------------------------------------------------
ANNTAYLOR GLOBAL SOURCING, INC.
By /s/
_ ---------------------------
Name:
Title:
============================================================================
SCHEDULE
This Note evidences Loans made under the Credit
Agreement to the Company, on the dates, in the principal amounts
and bearing interest at the rates set forth below, subject to the
payments and prepayments of principal set forth below.
Principal Amount Unpaid
Date Amount Interest Paid or Principal Notation
Made of Loan Rate Prepaid Amount Made By
---- --------- --------- ------- --------- --------
=======================================================================
EXHIBIT B
AMENDED AND RESTATED SECURITY AGREEMENT
AMENDED AND RESTATED SECURITY AGREEMENT dated as of
September 20, 1996 between ANNTAYLOR GLOBAL SOURCING, INC.
(formerly known as CAT US, Inc.), a Delaware corporation having
an office at 142 West 57th Street, New York, NY 10019 (the
"Company") and THE HONGKONG AND SHANGHAI BANKING CORPORATION
-------
LIMITED, a foreign banking corporation acting through its New
York Branch (the "Bank").
----
W I T N E S S E T H :
WHEREAS, the Company has provided a collateral security
interest to the Bank under a General Security Agreement dated
August 4, 1995 (the "Original Agreement");
------------------
WHEREAS, the Company has requested that the Original
Agreement be restated in its entirety to reflect the amendment of
certain provisions thereof; and
WHEREAS, the Company and the Bank are parties to an
Amended and Restated Credit Agreement dated as of September 20,
1996 (as modified and supplemented and in effect from time to
time, the "Credit Agreement"), providing, subject to the terms
----------------
and conditions thereof, for extensions of credit (by issuing
letters of credit and making loans) to be made by the Bank to the
Company in an aggregate face or principal amount not exceeding
$40,000,000.
NOW, THEREFORE, to induce the Bank to enter into the
Credit Agreement, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Company has agreed to continue to pledge and to grant a security
interest in the Collateral (as hereinafter defined) as security
for the Secured Obligations (as hereinafter defined).
Accordingly, the parties hereto agree that the Original Agreement
is hereby amended and restated in its entirety as follows:
Section 1. Definitions. Terms defined in the Credit Agreement
-----------
are used herein as defined therein. In addition, as used herein:
"Accounts" shall have the meaning ascribed thereto in
--------
Section 3(d) hereof.
"Collateral" shall have the meaning ascribed thereto in
----------
Section 3 hereof.
"Documents" shall have the meaning ascribed thereto in
---------
Section 3(i) hereof.
"Equipment" shall have the meaning ascribed thereto in
---------
Section 3(g) hereof.
===========================================================================
"Instruments" shall have the meaning ascribed thereto in
-----------
Section 3(e) hereof.
"Inventory" shall have the meaning ascribed thereto in
---------
Section 3(f) hereof.
"Issuers" shall mean, collectively, the respective
-------
corporations identified in Annex 1 hereto under the caption
"Issuers".
-------
"Pledged Stock" shall have the meaning ascribed thereto in
-------------
Section 3(a) hereof.
"Secured Obligations" shall mean, collectively, (a) the
--------------------
principal of and interest on the Loans made by the Bank to,
and the Note held by the Bank of, the Company, and all other
amounts from time to time owing to the Bank by the Company
under the Credit Agreement or the Note, (b) all obligations of
the Company to the Bank hereunder, and (c) all obligations of
the Company under any other Credit Document to which it is
party.
"Stock Collateral" shall mean, collectively, the
----------------
Collateral described in clauses (a) through (c) of Section 3
hereof and the proceeds of and to any such property and, to
the extent related to any such property or such proceeds, all
books, correspondence, credit files, records, invoices and
other papers.
"Uniform Commercial Code" shall mean the Uniform
-----------------------
Commercial Code as in effect in the State of New York from
time to time.
Section 2. Representations and Warranties. The Company
------------------------------
represents and warrants to the Bank that:
(a) the Company is the sole beneficial owner of the
Collateral and no Lien exists or will exist upon any
Collateral at any time (and, with respect to the Stock
Collateral, no right or option to acquire the same exists in
favor of any other Person), except for Liens permitted under
Section 8.06 of the Credit Agreement and except for the pledge
and security interest in favor of the Bank created or provided
for herein which pledge and security interest constitutes a
first priority perfected pledge and security interest in and
to all of the Collateral;
(b) the Pledged Stock evidenced by the certificates
identified in Annex 1 hereto is, and all other Pledged Stock
will be, duly authorized, validly issued, fully paid and
nonassessable and none of such Pledged Stock is or will be
subject to any contractual restriction, or any restriction
under the charter or by-laws of the respective Issuers of such
Pledged Stock, upon the transfer of such Pledged Stock (except
for any such restriction contained herein or in the Credit
Agreement);
===========================================================================
(c) the Pledged Stock evidenced by the certificates
identified in Annex 1 hereto constitutes the indicated
percentage of the total issued and outstanding shares of
capital stock of any class of the Issuers beneficially owned
by the Company on the date hereof (whether or not registered
in the name of the Company) and said Annex 1 correctly
identifies, as at the date hereof, the respective Issuers of
such Pledged Stock, the respective class and par value of the
shares comprising such Pledged Stock and the respective number
of shares (and registered owner thereof) evidenced by each
such certificate; and
(d) any goods now or hereafter produced by the Company or
any of its Subsidiaries included in the Collateral have been
and will be produced in compliance with the requirements of
the Fair Labor Standards Act, as amended.
Section 3. Collateral. As collateral security for the prompt
----------
payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations, the
Company hereby continues to pledge and grant to the Bank a
security interest in all of the Company's right, title and
interest in the following property, whether now owned by the
Company or hereafter acquired and whether now existing or
hereafter coming into existence, and wherever located (all being
collectively referred to herein as "Collateral"):
----------
(a) the respective shares of common/preferred stock of
the Issuers evidenced by the certificates identified in Annex
1 hereto and all other shares of capital stock of whatever
class of the Issuers, now or hereafter owned by the Company,
together with in each case the certificates evidencing the
same (collectively, the "Pledged Stock");
-------------
(b) all shares, securities, moneys or property
representing a dividend on any of the Pledged Stock, or
representing a distribution or return of capital upon or in
respect of the Pledged Stock, or resulting from a split-up,
revision, reclassification or other like change of the Pledged
Stock or otherwise received in exchange therefor, and any
subscription warrants, rights or options issued to the holders
of, or otherwise in respect of, the Pledged Stock;
(c) without affecting the obligations of the Company
under any provision prohibiting such action hereunder or under
the Credit Agreement, in the event of any consolidation or
merger in which any Issuer is not the surviving corporation,
all shares of each class of the capital stock of the successor
corporation (unless such successor corporation is the Company
itself) formed by or resulting from such consolidation or
merger;
(d) all accounts and general intangibles (each as defined
in the Uniform Commercial Code) of the Company constituting
any right to the payment of money, including (but not limited
to) all moneys due and to become due to the Company in respect
of any loans or advances for the purchase price of Inventory
or Equipment or other goods sold or leased or for services
========================================================================
rendered, all moneys due and to become due to the Company
under any guarantee (including a letter of credit) of the
purchase price of Inventory or Equipment sold by the Company
and all tax refunds (such accounts, general intangibles and
moneys due and to become due being herein called collectively
"Accounts");
--------
(e) all instruments, chattel paper or letters of credit
(each as defined in the Uniform Commercial Code) of the
Company evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited
to) promissory notes, drafts, bills of exchange and trade
acceptances (herein collectively called "Instruments");
-----------
(f) all inventory (as defined in the Uniform Commercial
Code) of the Company, all goods obtained by the Company in
exchange for such inventory, and any products made or
processed from such inventory including all substances, if
any, commingled therewith or added thereto (herein
collectively called "Inventory");
---------
(g) all equipment (as defined in the Uniform Commercial
Code) of the Company (herein collectively called "Equipment");
---------
(h) each contract and other agreement of the Company
relating to the sale or other disposition of Inventory or
Equipment;
(i) all documents of title (as defined in the Uniform
Commercial Code) or other receipts of the Company covering,
evidencing or representing Inventory or Equipment (herein
collectively called "Documents");
---------
(j) all rights, claims and benefits of the Company
against any Person arising out of, relating to or in
connection with Inventory or Equipment purchased by the
Company, including, without limitation, any such rights,
claims or benefits against any Person storing or transporting
such Inventory or Equipment; and
(k) all other tangible or intangible property of the
Company, including, without limitation, all proceeds, products
and accessions of and to any of the property of the Company
described in clauses (a) through (j) above in this Section 3
(including, without limitation, any proceeds of insurance
thereon), and, to the extent related to any property described
in said clauses or such proceeds, products and accessions, all
books, correspondence, credit files, records, invoices and
other papers, including without limitation all tapes, cards,
computer runs and other papers and documents in the possession
or under the control of the Company or any computer bureau or
service company from time to time acting for the Company.
===========================================================================
Section 4. Further Assurances; Remedies. In furtherance of the
----------------------------
grant of the pledge and security interest pursuant to Section 3
hereof, the Company hereby agrees with the Bank as follows:
4.01 Delivery and Other Perfection. The Company shall:
-----------------------------
(a) if any of the above-described shares, securities,
monies or property required to be pledged by the Company under
clauses (a), (b) and (c) of Section 3 hereof are received by
the Company, forthwith either (x) transfer and deliver to the
Bank such shares or securities so received by the Company
(together with the certificates for any such shares and
securities duly endorsed in blank or accompanied by undated
stock powers duly executed in blank) all of which thereafter
shall be held by the Bank, pursuant to the terms of this
Agreement, as part of the Collateral or (y) take such other
action as the Bank shall deem necessary or appropriate to duly
record the Lien created hereunder in such shares, securities,
monies or property referred to in said clauses (a), (b) and
(c);
(b) deliver and pledge to the Bank any and all
Instruments, endorsed and/or accompanied by such instruments
of assignment and transfer in such form and substance as the
Bank may request; provided, that so long as no Default shall
have occurred and be continuing, the Company may retain for
collection in the ordinary course any Instruments received by
it in the ordinary course of business and the Bank shall,
promptly upon request of the Company, make appropriate
arrangements for making any other Instrument pledged by the
Company available to it for purposes of presentation,
collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate by the Bank, against trust
receipt or like document);
(c) give, execute, deliver, file and/or record any
financing statement, notice, instrument, document, agreement
or other papers that may be necessary or desirable (in the
judgment of the Bank) to create, preserve, perfect or validate
any security interest granted pursuant hereto or to enable the
Bank to exercise and enforce its rights hereunder with respect
to such security interest, including, without limitation,
causing any or all of the Stock Collateral to be transferred
of record into the name of the Bank or its nominee (and the
Bank agrees that if any Stock Collateral is transferred into
its name or the name of its nominee, the Bank will thereafter
promptly give to the Company copies of any notices and
communications received by it with respect to the Stock
Collateral), provided that notices to account debtors in
respect of any Accounts or Instruments shall be subject to the
provisions of clause (g) below;
(d) upon the acquisition after the date hereof by the
Company of any Equipment covered by a certificate of title or
ownership, cause the Bank to be listed as the lienholder on
=======================================================================
such certificate of title and within 120 days of the
acquisition thereof deliver evidence of the same to the Bank;
(e) keep full and accurate books and records relating to
the Collateral, and stamp or otherwise mark such books and
records in such manner as the Bank may reasonably require in
order to reflect the security interests granted by this
Agreement;
(f) permit representatives of the Bank, upon reasonable
notice, at any time during normal business hours to inspect
and make abstracts from its books and records pertaining to
the Collateral, and permit representatives of the Bank to be
present at the Company's place of business to receive copies
of all communications and remittances relating to the
Collateral, and forward copies of any notices or
communications by the Company with respect to the Collateral,
all in such manner as the Bank may require; and
(g) upon the occurrence and during the continuance of any
Default, upon request of the Bank, promptly notify (and the
Company hereby authorizes the Bank so to notify) each account
debtor in respect of any Accounts or Instruments that such
Collateral has been assigned to the Bank hereunder, and that
any payments due or to become due in respect of such
Collateral are to be made directly to the Bank.
4.02 Other Financing Statements and Liens. Without the
------------------------------------
prior written consent of the Bank, the Company shall not file or
suffer to be on file, or authorize or permit to be filed or to be
on file, in any jurisdiction, any financing statement or like
instrument with respect to the Collateral in which the Bank is
not named as the sole secured party.
4.03 Preservation of Rights. The Bank shall not be
------------------------
required to take steps necessary to preserve any rights against
prior parties to any of the Collateral.
4.04 Special Provisions Relating to Stock Collateral.
-----------------------------------------------
(a) The Company will cause the Stock Collateral to
constitute at all times the percentage indicated on Annex 1
hereto of the total number of shares of each class of capital
stock of each Issuer then outstanding.
(b) So long as no Event of Default shall have occurred
and be continuing, the Company shall have the right to
exercise all voting, consensual and other powers of ownership
pertaining to the Stock Collateral for all purposes not
inconsistent with the terms of this Agreement, the Credit
Agreement, the Notes or any other instrument or agreement
referred to herein or therein, provided that the Company
agrees that it will not vote the Stock Collateral in any
manner that is inconsistent with the terms of this Agreement,
===========================================================================
the Credit Agreement, the Notes or any such other instrument
or agreement; and the Bank shall execute and deliver to the
Company or cause to be executed and delivered to the Company
all such proxies, powers of attorney, dividend and other
orders, and all such instruments, without recourse, as the
Company may reasonably request for the purpose of enabling the
Company to exercise the rights and powers which it is entitled
to exercise pursuant to this Section 4.04(b).
(c) Unless and until an Event of Default has occurred and
is continuing, the Company shall be entitled to receive and
retain any dividends on the Stock Collateral paid in cash out
of earned surplus.
(d) If any Event of Default shall have occurred, then so
long as such Event of Default shall continue, and whether or
not the Bank or any Bank exercises any available right to
declare any Secured Obligation due and payable or seeks or
pursues any other relief or remedy available to it under
applicable law or under this Agreement, the Credit Agreement,
the Notes or any other agreement relating to such Secured
Obligation, all dividends and other distributions on the Stock
Collateral shall be paid directly to the Bank and retained by
it as part of the Stock Collateral, subject to the terms of
this Agreement, and, if the Bank shall so request in writing,
the Company agrees to execute and deliver to the Bank
appropriate additional dividend, distribution and other orders
and documents to that end, provided that if such Event of
Default is cured, any such dividend or distribution
theretofore paid to the Bank shall, upon request of the
Company (except to the extent theretofore applied to the
Secured Obligations) be returned by the Bank to the Company.
4.05 Events of Default, etc. During the period during
-------------------------
which an Event of Default shall have occurred and be continuing:
(i) the Company shall, at the request of the
Bank, assemble the Collateral owned by it at such place
or places, reasonably convenient to both the Bank and the
Company, designated in its request;
(ii) the Bank may make any reasonable compromise
or settlement deemed desirable with respect to any of the
Collateral and may extend the time of payment, arrange
for payment in installments, or otherwise modify the
terms of, any of the Collateral;
(iii) the Bank shall have all of the rights and
remedies with respect to the Collateral of a secured
party under the Uniform Commercial Code (whether or not
said Code is in effect in the jurisdiction where the
rights and remedies are asserted) and such additional
rights and remedies to which a secured party is entitled
==========================================================================
under the laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted, including,
without limitation, the right, to the maximum extent
permitted by law, to exercise all voting, consensual and
other powers of ownership pertaining to the Collateral as
if the Bank were the sole and absolute owner thereof (and
the Company agrees to take all such action as may be
appropriate to give effect to such right);
(iv) the Bank in its discretion may, in its name
or in the name of the Company or otherwise, demand, sue
for, collect or receive any money or property at any time
payable or receivable on account of or in exchange for
any of the Collateral, but shall be under no obligation
to do so; and
(v) the Bank may, upon 10 Business Days' prior
written notice to the Company of the time and place, with
respect to the Collateral or any part thereof which shall
then be or shall thereafter come into the possession,
custody or control of the Bank, or any of its agents,
sell, lease, assign or otherwise dispose of all or any of
such Collateral, at such place or places as the Bank
deems best, and for cash or on credit or for future
delivery (without thereby assuming any credit risk), at
public or private sale, without demand of performance or
notice of intention to effect any such disposition or of
time or place thereof (except such notice as is required
above or by applicable statute and cannot be waived) and
the Bank or anyone else may be the purchaser, lessee,
assignee or recipient of any or all of the Collateral so
disposed of at any public sale (or, to the extent
permitted by law, at any private sale), and thereafter
hold the same absolutely, free from any claim or right of
whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Company, any
such demand, notice or right and equity being hereby
expressly waived and released. The Bank may, without
notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by
announcement at the time and place fixed for the sale,
and such sale may be made at any time or place to which
the same may be so adjourned.
The proceeds of each collection, sale or other disposition under
this Section 4.05 shall be applied in accordance with Section
4.09 hereof.
The Company recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended,
and applicable state securities laws, the Bank may be compelled,
with respect to any sale of all or any part of the Collateral, to
limit purchasers to those who will agree, among other things, to
acquire the Collateral for their own account, for investment and
not with a view to the distribution or resale thereof. The
Company acknowledges that any such private sales may be at prices
and on terms less favorable to the Bank than those obtainable
through a public sale without such restrictions, and,
notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially
reasonable manner and that the Bank shall have no obligation to
engage in public sales and no obligation to delay the sale of any
Collateral for the period of time necessary to permit the
respective Issuer thereof to register it for public sale.
4.06 Deficiency. If the proceeds of sale, collection or
----------
other realization of or upon the Collateral pursuant to Section
4.05 hereof are insufficient to cover the costs and expenses of
such realization and the payment in full of the Secured
Obligations, the Company shall remain liable for any deficiency.
4.07 Removals, etc. Without at least 30 days prior
-------------
written notice to the Bank, the Company shall not (i) maintain
any of its books or records with respect to the Collateral at any
office or maintain its chief executive office or its principal
place of business at any place, or permit any Inventory or
Equipment to be located anywhere other than at the address
indicated beneath the signature of the Company to the Credit
Agreement or at one of the locations identified in Annex 2 hereto
or in transit from one of such locations to another (or, with
respect to Inventory, in transit from one of such locations to a
customer of the Company) or (ii) change its corporate name, or
the name under which it does business, from the name shown on the
signature page hereto.
4.08 Private Sale. The Bank shall incur no liability as a
------------
result of the sale of the Collateral, or any part thereof, at any
private sale pursuant to Section 4.05 hereof conducted in a
commercially reasonable manner. The Company hereby waives any
claims against the Bank arising by reason of the fact that the
price at which the Collateral may have been sold at such a
private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount
of the Secured Obligations, even if the Bank accepts the first
offer received and does not offer the Collateral to more than one
offeree.
4.09 Application of Proceeds. Except as otherwise herein
-----------------------
expressly provided, the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto,
and any other cash at the time held by the Bank under this
Section 4, shall be applied by the Bank:
First, to the payment of the costs and expenses of such
-----
collection, sale or other realization, including reasonable
out-of-pocket costs and expenses of the Bank and the fees and
expenses of its agents and counsel, and all expenses, and
advances made or incurred by the Bank in connection therewith;
Next, to the payment in full of the Secured Obligations; and
----
==========================================================================
Finally, to the payment to the Company, or its successors
-------
or assigns, or as a court of competent jurisdiction may
direct, of any surplus then remaining.
As used in this Section 5, "proceeds" of Collateral shall mean
--------
cash, securities and other property realized in respect of, and
distributions in kind of, Collateral, including any thereof
received under any reorganization, liquidation or adjustment of
debt of the Company or any issuer of or obligor on any of the
Collateral.
4.10 Attorney-in-Fact. Without limiting any rights or
----------------
powers granted by this Agreement to the Bank while no Event of
Default has occurred and is continuing, upon the occurrence and
during the continuance of any Event of Default the Bank is hereby
appointed the attorney-in-fact of the Company for the purpose of
carrying out the provisions of this Section 4 and taking any
action and executing any instruments which the Bank may deem
necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with
an interest. Without limiting the generality of the foregoing,
so long as the Bank shall be entitled under this Section 4 to
make collections in respect of the Collateral, the Bank shall
have the right and power to receive, endorse and collect all
checks made payable to the order of the Company representing any
dividend, payment, or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the
same.
4.11 Perfection. Prior to or concurrently with the
----------
execution and delivery of this Agreement, the Company shall (i)
file such financing statements and other documents in such
offices as the Bank may request to perfect the security interests
granted by Section 3 of this Agreement, and (ii) deliver to the
Bank all certificates identified in Annex 1 hereto, accompanied
by undated stock powers duly executed in blank.
4.12 Termination. When all Secured Obligations shall have
-----------
been paid in full and the Facilities of the Bank under the Credit
Agreement shall have expired or been terminated, this Agreement
shall terminate, and the Bank shall forthwith cause to be
assigned, transferred and delivered, against receipt but without
any recourse, warranty or representation whatsoever, any
remaining Collateral and money received in respect thereof, to or
on the order of the Company. The Bank shall also execute and
deliver to the Company upon such termination such Uniform
Commercial Code termination statements and such other
documentation as shall be reasonably requested by the Company to
effect the termination and release of the Liens on the
Collateral.
4.13 Expenses. The Company agrees to pay to the Bank all
--------
out-of-pocket expenses (including reasonable expenses for legal
services of every kind) of, or incident to, the enforcement of
any of the provisions of this Section 4, or performance by the
Bank of any obligations of the Company in respect of the
Collateral which the Company has failed or refused to perform, or
any actual or attempted sale, or any exchange, enforcement,
============================================================================
collection, compromise or settlement in respect of any of the
Collateral, and for the care of the Collateral and defending or
asserting rights and claims of the Bank in respect thereof, by
litigation or otherwise, including expenses of insurance, and all
such expenses shall be Secured Obligations to the Bank secured
under Section 3 hereof.
4.14 Further Assurances. The Company agrees that, from
-------------------
time to time upon the written request of the Bank, the Company
will execute and deliver such further documents and do such other
acts and things as the Bank may reasonably request in order fully
to effect the purposes of this Agreement.
4.15 Collateral Audit. The Company shall permit
------------------
representatives of the Bank to undertake an annual audit of the
Collateral, and the Company agrees to pay all reasonable expenses
of the Bank incurred in connection therewith.
Section 5. Miscellaneous.
-------------
5.01 No Waiver. No failure on the part of the Bank or any
---------
of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise by the Bank or any of its agents of any
right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive
of any remedies provided by law.
5.02 Governing Law. This Agreement shall be governed by,
-------------
and construed in accordance with, the law of the State of New
York.
5.03 Notices. All notices, requests, consents and demands
-------
hereunder shall be in writing and telexed, telecopied,
telegraphed, cabled or delivered to the intended recipient at its
address or telex number specified pursuant to Section 10.02 of
the Credit Agreement and shall be deemed to have been given at
the times specified in said Section 10.02.
5.04 Waivers, etc. The terms of this Agreement may be
--------------
waived, altered or amended only by an instrument in writing duly
executed by the Company and the Bank. Any such amendment or
waiver shall be binding upon the Bank, each holder of any Secured
Obligation and the Company.
5.05 Successors and Assigns. This Agreement shall be
------------------------
binding upon and inure to the benefit of the respective
successors and assigns of the Company, the Bank, and each holder
of the Secured Obligations (provided, however, that the Company
shall not assign or transfer its rights hereunder without the
prior written consent of the Bank).
===========================================================================
5.06 Counterparts. This Agreement may be executed in any
------------
number of counterparts, all of which together shall constitute
one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart.
5.07 Agents. The Bank may employ agents and
------
attorneys-in-fact in connection herewith and shall not be
responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it in good faith.
5.08 Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally
construed in favor of the Bank in order to carry out the
intentions of the parties hereto as nearly as may be possible and
(ii) the invalidity or unenforceability of any provision hereof
in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
--------------
=========================================================================
_
IN WITNESS WHEREOF, the parties hereto have caused this
Security Agreement to be duly executed as of the day and year
first above written.
ANNTAYLOR GLOBAL SOURCING, INC.
By /s/
_________________________
Name:
Title:
Address for Notices:
142 West 57th Street
New York, NY 10019
Telecopy: (212)
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED, NEW YORK BRANCH
By /s/
_______________________
Name: Ian Wright
Title: Vice President
Address for Notices:
140 Broadway
New York, NY 10005
Attention: NYK CBU TRS
Telecopy: (212) 658-2813
============================================================================
ANNEX 1
LIST OF PLEDGED STOCK
NONE
============================================================================
ANNEX 2
LIST OF LOCATIONS
AnnTaylor Global Sourcing, Inc.
414 Chapel Street
New Haven, CT 06511
Louisville Distribution Center
7101 Distribution Drive
Louisville, KY 40258
Flag Trucking Services Company
5 Dwight Place
Fairfield, NJ 07006
SSCI
1072 West Side Avenue
Jersey City, NJ 07306
Summit Transportation
Building 40
Hackensack Avenue
Kearny, NJ 07032
AnnTaylor Global Sourcing, Inc.
1372 Broadway
New York, New York 10018
AnnTaylor Global Sourcing, Inc.
142 West 57th Street
New York, NY 10019
Freight-A-Ranger
3275 Alum Creek Drive
Columbus, OH 43207
===================================================================
EXHIBIT C
LETTER OF NEGATIVE PLEDGE
The Hongkong and Shanghai Banking Corporation Limited
140 Broadway
New York, NY 10005-1196
Re: Amended and Restated Credit
Agreement dated as of September 20,
1996 with ANNTAYLOR GLOBAL
SOURCING, INC. (formerly known as
CAT US, Inc.) (the "Company") up to
-------
an aggregate amount of $40,000,000
---------------------
(the "Credit Agreement")
------------------------
Dear Sir/Madam:
In consideration of your agreeing to grant, continue and/or
further extend credit facilities and other financial
accommodation to the Company, the Company hereby irrevocably and
unconditionally covenants and undertakes with you as follows:
1. The Company shall not:
a. Create or attempt to create, assume or permit to
subsist any mortgage, security interest, charge,
pledge, lien, or other encumbrance upon, or permit any
lien, security interest or other encumbrance (except
for statutory or constitutional liens arising in the
ordinary course of business with respect to any
obligation or indebtedness which is not yet due and
payable) to arise on or affect, the whole or any part
of its respective undertaking, property, assets and
rights, other than pledges created over goods and/or
services acquired pursuant to documentary credits
opened in the ordinary course of business for the
purpose of financing the acquisition or provision of
such goods and services; or
b. Transfer, sell or otherwise dispose of or attempt
or agree to transfer, sell or dispose of the whole or
any part of its respective undertaking, property,
assets and rights, except (i) by way of sale at full
value in the usual and ordinary course of business as
now conducted and for the purpose of carrying on the
relevant business, (ii) obsolete or worn-out property,
tools or equipment no longer used or useful in its
business or (iii) the sale, in a single transaction, of
the CAD-CAM computer equipment described in Exhibit F
to the Stock and Asset Purchase Agreement (as defined
in the Credit Agreement), the value of which equipment
shall not exceed $10,000.00 in the aggregate; or
c. Grant, issue or extend any guarantee or indemnity
or enter into any other form of contractual undertaking
or arrangement of similar effect in respect of any
===========================================================================
indebtedness or obligations, actual or contingent, of
any other Person whatsoever except in the usual and
ordinary course of business as now conducted by the
Company and for the purpose of the carrying on by the
Company of its business.
2. The undertakings set out herein shall not be deemed breached
by reason only of the existence of any mortgage, security
interest, charge, pledge, lien or other encumbrance or
guarantee or indemnity which has been created, assumed or
which subsists or has arisen prior to the date hereof,
provided, that any further or additional encumbrance over or
affecting the relevant asset, or increase in the amount
secured by or other variation of the relevant encumbrance or
guarantee or indemnity of similar effect, shall constitute
such a breach.
3. The Company further authorizes you, in your absolute
discretion, at any time and from time to time to notify any
creditors of the Company of the terms of the undertakings
set out herein in the event that you receive notice of
proposals which, if implemented, would or might be in breach
of such undertakings.
Yours faithfully,
ANNTAYLOR GLOBAL SOURCING, INC.
By /s/
_________________________
Name:
Title:
Date: As of September 20, 1996
================================================================
EXHIBIT F
[Form of Borrowing Base Certificate]
BORROWING BASE CERTIFICATE
Monthly accounting period ended _____________, 19__
Reference is made to the Amended and Restated Credit
Agreement dated as of September 20, 1996 (as modified and
supplemented and in effect from time to time, the "Credit
------
Agreement") between ANNTAYLOR GLOBAL SOURCING, INC. (formerly
- ---------
known as CAT US, Inc.), a Delaware corporation, and THE HONGKONG
AND SHANGHAI BANKING CORPORATION LIMITED, a foreign banking
corporation acting through its New York Branch. Terms defined in
the Credit Agreement are used herein as defined therein.
Pursuant to Section [6.01(m)/8.01(d)] of the Credit
Agreement, the undersigned, the [Executive Vice President]
[Senior Vice President - Finance] of the Company, hereby
certifies that, to the best of [his/her] knowledge, attached
hereto as Annex 1 is a true and accurate calculation of the
Borrowing Base as at the end of the monthly accounting period
ended ___________, 19___ determined in accordance with the
requirements of the Credit Agreement.
IN WITNESS WHEREOF, the undersigned has caused this
certificate to be duly executed as of the ___ day of ________,
19__.
Name:
-------------------------
Title:
------------------------
===================================================================
Annex 1
ANNTAYLOR GLOBAL SOURCING, INC.
Borrowing Base Certificate
Omitted (OOO's)
Receivables (determined net of credits)
-- beginning balance period ended
______________, 19 _____ ______
Plus: total sales for period ______
Less: total cash receipts for period ______
total other adjustments for period
(+/-) (details attached) including
rebates, offsets and commissions ______
Receivables (determined net of credits)
-- ending balance period ending
_____________, 19 _____ ______
Less: ineligible Receivables at period end
(determined without duplication):
Receivables due from an account debtor other than
AT or its Affiliates ______
Receivables not payable in Dollars ______
Receivables over 90 days original terms ______
Export Receivables, letters of credit or U.S.
Government Insurance ______
Receivables from creditors with
unsatisfactory credit standing (as
determined by the Bank) ______
Receivables over 60 days from invoice date ______
Receivables with excess of 20% of balances
past 60 days from invoice date ______
Receivables subject to dispute ______
Receivables evidenced by Instruments
not in the possession of the Bank ______
Receivables arising out of sale or
return transactions ______
Receivables from DIP creditors ______
Total ineligible Receivables ______
Total Eligible Receivables ______
- --------------------------
Inventory at lower of cost or market
covered by appropriate filings
(from attached schedule): ______
Beginning period Inventory Balance
____________, 19 _____ ______
Ending period Inventory Balance
____________, 19 _____ ______
Plus: Inventory held by Processors
covered by appropriate UCC
filings ______
Less: Inventory held more than __ days ______
Total Eligible Inventory ______
- ------------------------
=====================================================================
Borrowing Base Certificate (continued)
80% of Eligible Receivables ______
Plus: 60% of Eligible Inventory ______
(no more than $4,000,000)
Plus: 60% of the aggregate face amount of
all undrawn Letters of Credit ______
Plus: 100% of the undrawn face amount of
the AT Credit ______
Less: 2 times average monthly commissions
to bailees, Processors, etc. ______
Borrowing Base: ______
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Loan Balance: Period begin ______
___________, 19 ___
advances for period ______
reductions for period ______
other adjustments (+/-) ______
Loan Balance: Period end
__________, 19 ___ ______
Plus: [Describe other obligations] ______
Total outstanding ______
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
Availability (overadvance) ______
=======================================================================
ANNTAYLOR GLOBAL SOURCING, INC.
Inventory Schedule
Unit
Cost
Quantity Cents/ Value Eligible
M Units Unit M$ M$
--------- ---- ------ ---------
Finished Product Inventory
- ---------------------------
Location/product/unit
Total fin. prod. inv.
Raw Material Inventory
- ----------------------
Location/product/unit
Total raw material inv.
Inventory Value - M$
- ---------------------
Finished product inventory
Raw materials inventory
=================================================================
EXHIBIT H
[Form of Opinion of Counsel to the Company]
September 20, 1996
The Hongkong and Shanghai Banking
Corporation Limited, New York Branch
140 Broadway
New York, NY 10005
Gentlemen:
We have acted as counsel to AnnTaylor Global Sourcing, Inc.
(formerly known as CAT US, Inc.) (the "Company") in connection
-------
with the Amended and Restated Credit Agreement (the "Credit
------
Agreement") dated as of September 20, 1996 between the Company
- ---------
and The Hongkong and Shanghai Banking Corporation Limited, New
York Branch (the "Bank"), providing for letters of credit to be
issued and loans to be made by the Bank in an aggregate face or
principal amount not exceeding $40,000,000. Terms defined in the
Credit Agreement are used herein as defined therein.
In rendering the opinion expressed below, we have examined
the originals or conformed copies of such corporate records,
agreements and instruments of the Company, certificates of public
officials and of officers of the Company, and such other
documents and records, and such matters of law, as we have deemed
appropriate as a basis for the opinions hereinafter expressed.
Based upon the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
jurisdiction of its organization and has the necessary
corporate power to execute, perform and deliver its
obligations under the Credit Documents to which it is a
party. Further, the Company has the necessary corporate
power to open Letters of Credit for its account and borrow
Loans. The Company is duly qualified to transact business
in such jurisdictions where failure so to qualify would have
a material adverse effect on the financial condition,
operations, business or prospects of the Company.
2. The execution, delivery and performance by the
Company of the Credit Documents to which it is a party, and
the borrowings by the Company under the Credit Agreement,
have been duly authorized by all necessary corporate action,
and do not and will not violate and provision of law or
regulation or any provision of the charter or by-laws of the
Company or result in the breach of, or constitute a default
or require any consent under, or (except for the Liens
created pursuant to the Security Documents) result in the
creation of any lien upon any of the properties, revenues or
assets of the Company pursuant to, any indenture or other
agreement or instrument to which the Company is a party or
by which the Company or its assets may be bound.
3. The Credit Agreement and Security Documents
constitute and the Note when executed and delivered for
value will constitute, legal, valid and binding obligations
of the Company enforceable in accordance with their
respective terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general applicability
affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in
equity or at law.)
4. There are no legal or arbitral proceedings, and no
proceedings by or before any governmental or regulatory
authority or agency, pending or (to our knowledge)
threatened against or affecting the Company, or any
properties or rights of the Company, which, if adversely
determined, would have a Material Adverse Effect.
5. No authorizations, consents, approvals, licenses,
filings or registrations with, any governmental or
regulatory authority or agency are required in connection
with the execution, delivery or performance by the Company
of the Credit Documents to which it is a party, except the
filings and recordings of Liens to be created pursuant to
the Security Documents.
6. The Security Agreement creates, in favor of the
Bank, valid security interests (to the extent the Uniform
Commercial Code is applicable thereto) in all Collateral (as
defined therein) in which the Company has rights, in each
case as collateral security for the payment of the Secured
Obligations described in the Security Agreement. All such
security interests which can be perfected by a Uniform
Commercial Code filing in the United States of America will
have been, upon such filings being completed, so perfected.
Very truly yours,