PURCHASE AND SALE AGREEMENT
Dated as of January 27, 1994
between
ANNTAYLOR, INC.
and
ANNTAYLOR FUNDING, INC.
TABLE OF CONTENTS
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PAGE
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ARTICLE I AGREEMENT TO PURCHASE AND SELL . . . . . . . 3
1.1 Agreement to Purchase and Sell . . . . . . . 4
1.2 Timing of Purchases . . . . . . . . . . . . . 4
1.3 Consideration for Purchases . . . . . . . . . 4
1.4 Purchase and Sale Termination Date . . . . . 4
ARTICLE II CALCULATION OF PURCHASE PRICE . . . . . . . . 4
2.1 Calculation of Purchase Price . . . . . . . . 4
ARTICLE III PAYMENT OF PURCHASE PRICE . . . . . . . . . . 6
3.1 Initial Purchase Price Payment . . . . . . . 6
3.2 Subsequent Purchase Price Payments . . . . . 6
3.3 Settlement as to Specific Receivables . . . . 7
3.4 Settlement as to Dilution . . . . . . . . . . 7
ARTICLE IV CONDITIONS OF PURCHASES . . . . . . . . . . . 8
4.1 Conditions Precedent to Initial Purchase . . 8
4.2 Certification as to Representations
and Warranties . . . . . . . . . . . . . . 10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF
ANNTAYLOR . . . . . . . . . . . . . . . . 10
5.1 Organization and Good Standing . . . . . . . 10
5.2 Due Qualification . . . . . . . . . . . . . . 10
5.3 Power and Authority; Due Authorization . . . 11
5.4 Valid Sale; Binding Obligations . . . . . . . 11
5.5 No Violation . . . . . . . . . . . . . . . . 11
5.6 Proceedings . . . . . . . . . . . . . . . . . 11
5.7 Bulk Sales Act . . . . . . . . . . . . . . . 12
5.8 Government Approvals . . . . . . . . . . . . 12
5.9 Financial Condition . . . . . . . . . . . . . 12
5.10 Licenses, Contingent Liabilities,
and Labor Controversies . . . . . . . . . 12
5.11 Margin Regulations . . . . . . . . . . . . . 12
5.12 Quality of Title . . . . . . . . . . . . . . 12
5.13 Accuracy of Information . . . . . . . . . . . 13
5.14 Offices . . . . . . . . . . . . . . . . . . . 13
5.15 Trade Names . . . . . . . . . . . . . . . . . 13
5.16 Taxes . . . . . . . . . . . . . . . . . . . . 14
5.17 Compliance with Applicable Laws . . . . . . . 14
5.18 Reliance on Separate Legal Identity . . . . . 14
5.19 Receivables . . . . . . . . . . . . . . . . . 14
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ARTICLE VI COVENANTS OF ANNTAYLOR . . . . . . . . . . . 15
6.1 Affirmative Covenants . . . . . . . . . . . . 15
6.2 Reporting Requirements . . . . . . . . . . . 17
6.3 Negative Covenants . . . . . . . . . . . . . 18
ARTICLE VII ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES . . . . . . . . . 18
7.1 Rights of the Company . . . . . . . . . . . . 18
7.2 Responsibilities of AnnTaylor . . . . . . . . 19
7.3 Further Action Evidencing Purchases . . . . . 19
7.4 Application of Collections . . . . . . . . . 20
ARTICLE VIII INDEMNIFICATION . . . . . . . . . . . . . . . 20
9.1 Indemnities by AnnTaylor . . . . . . . . . . 20
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . 22
10.1 Amendments, Etc . . . . . . . . . . . . . . . 22
10.2 Notices, Etc . . . . . . . . . . . . . . . . 23
10.3 No Waiver; Cumulative Remedies . . . . . . . 23
10.4 Binding Effect; Assignability . . . . . . . . 23
10.5 Governing Law . . . . . . . . . . . . . . . . 23
10.6 Costs, Expenses and Taxes . . . . . . . . . . 23
10.7 Submission to Jurisdiction . . . . . . . . . 24
10.8 Waiver of Jury Trial . . . . . . . . . . . . 24
10.9 Captions and Cross References;
Incorporation by Reference . . . . . . . . 24
10.10 Execution in Counterparts . . . . . . . . . . 24
10.11 Acknowledgment and Agreement . . . . . . . . 24
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EXHIBIT A - Form of Purchase Report
EXHIBIT B - Form of the Company Note
EXHIBIT C - Form of Opinion of AnnTaylor's Counsel
EXHIBIT D - Form of Subscription Agreement
EXHIBIT E - Office Locations
EXHIBIT F - Form of In-House Counsel's Opinion
Schedule 4.1(k) Data Processing Reports
Schedule 5.14 Trade Names
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (as amended, supplemented
or modified from time to time, this "Agreement"), dated as of
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January 27, 1994, is between ANNTAYLOR, INC., a Delaware
corporation ("AnnTaylor"), as seller and ANNTAYLOR FUNDING, INC.,
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a Delaware corporation (the "Company"), as purchaser.
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Definitions
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Unless otherwise indicated, certain terms that are
capitalized and used throughout this Agreement are defined in
Appendix A to the Receivables Financing Agreement of even-date
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herewith (as, amended supplemented or otherwise modified, the
"Receivables Financing Agreement"), among the Company, AnnTaylor,
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as initial Servicer, CLIPPER RECEIVABLES CORPORATION, as lender
("Lender"), STATE STREET BOSTON CAPITAL CORPORATION, as
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administrator for Lender under the Program Administration
Agreement (the "Administrator") and PNC BANK, NATIONAL
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ASSOCIATION, as referral agent for Lender under the Relationship
Bank Agreement (in such capacity, together with any successors
thereto in such capacity, the "Relationship Bank" and in its
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individual capacity, "PNC Bank"). The following terms have the
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respective meanings indicated hereinbelow:
Adverse Claim means a lien, security interest, charge or
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encumbrance, or similar right or claim of any Person.
Company Note shall have the meaning assigned to such term in
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Section 3.1 hereof.
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Deemed Collection means amounts payable by AnnTaylor pursuant
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to Section 3.3 or 3.4.
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Funding Account means the bank account maintained by the
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Company as specified by the Company to AnnTaylor and the
Administrator from time to time; provided, that during the
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continuance of an Event of Default, such account shall be the
Lock-Box Account.
Ineligible Purchased Receivable means a Receivable purchased
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hereunder that does not comply with any of the following
conditions in any material respect
(a) was generated by AnnTaylor in the ordinary
course of its business;
(b) may be sold hereunder without contravening or
conflicting any laws;
(c) arises under an Eligible Contract that has
been duly authorized by the parties thereto and that,
together with such Receivable, is in full force and effect
and constitutes the legal, valid and binding obligation of
the Obligor of such Receivable enforceable against such
Obligor in accordance with its terms except as enforceability
may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding of equity or at law;
(d) which, together with the Contract related
thereto, does not contravene in any material respect any
laws, rules or regulations applicable thereto (including,
without limitation, laws, rules and regulations relating to
usury, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection
practices and privacy) and with respect to which no party to
the Contract related thereto is in violation of any such law,
rule or regulation in any material respect if such violation
would impair the collectability of such Receivable; and
(e) satisfies all applicable requirements of the
Credit and Collection Policy.
Initial Closing Date shall have the meaning assigned to such
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term in Section 1.2 hereof.
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Initial Cut-Off Date means December 24, 1993.
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Initial Posting Date means January 24, 1994.
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Initial Reporting Period shall have the meaning assigned to
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such term in Section 2.1 hereof.
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Lock-Box Accounts means one or more lock-box accounts held in
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Lock-Box Banks for receiving Collections from Pool Receivables.
Payment Day means (i) the Initial Closing Date and (ii) each
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Business Day thereafter that AnnTaylor is open for business.
Purchase and Sale Indemnified Amounts shall have the meaning
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assigned to such term in Section 8.1 hereof.
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Purchase and Sale Indemnified Party shall have the meaning
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assigned to such term in Section 9.1 hereof.
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Purchase and Sale Termination Date shall have the meaning
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assigned to such term in Section 1.4 hereof.
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Purchase Facility shall have the meaning assigned to such
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term in Section 1.1 hereof.
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Purchase Price shall have the meaning assigned to such term
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in Section 2.1 hereof.
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Purchase Report shall have the meaning assigned to such term
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in Section 2.1 hereof.
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Receivables Review shall have the meaning assigned to such
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term in Section 6.1(c) hereof.
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Related Rights shall have the meaning assigned to such term
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in Section 1.1 hereof.
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Seller Material Adverse Effect means, with respect to any
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event or circumstance, a material adverse effect on:
(i) the business, assets, financial condition,
operations or prospects of AnnTaylor, as seller;
(ii) the ability of AnnTaylor to perform its
obligations under this Agreement or any other Transaction
Document to which AnnTaylor, as seller, in its capacity as
such, is a party;
(iii) the validity or enforceability as against
AnnTaylor of this Agreement or any other Transaction Document
to which AnnTaylor, as seller, in its capacity as such, is a
party;
(iv) the status, existence, perfection, priority
or enforceability of the Company's interest in the
Receivables assets described in Section 1.1; or
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(v) the collectability of a significant portion of
the Pool Receivables.
Subscription Agreement means the Subscription Agreement,
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dated as of January 24, 1994, between the Company and AnnTaylor,
in the form of Exhibit D, as it may be amended, supplemented or
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modified from time to time.
Background
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1. The Company is a limited purpose corporation, all of
the issued and outstanding shares of capital stock of which are
wholly-owned by AnnTaylor.
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2. AnnTaylor is concurrently transferring certain
Receivables and Related Rights to the Company as part of the
capitalization of the Company.
3. In order to finance its business, AnnTaylor wishes to
sell Receivables and Related Rights to the Company, and the
Company is willing, on the terms and subject to the conditions
set forth herein, to purchase Receivables and Related Rights from
AnnTaylor.
4. The Company intends to borrow from Lender from time to
time pursuant to the Receivables Financing Agreement in order to
finance, in part, its purchases of such Receivables and Related
Rights hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
1.1. Agreement to Purchase and Sell. On the terms and
--------------------------------
subject to the conditions set forth in this Agreement (including
Article V), and in consideration of the Purchase Price, AnnTaylor
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agrees to sell, assign and transfer, and does hereby sell, assign
and transfer to the Company, and the Company agrees to purchase,
and does hereby purchase, from AnnTaylor, all of AnnTaylor's
right, title and interest in and to:
(a) each Receivable of AnnTaylor that existed and was
owing to AnnTaylor as of the close of AnnTaylor's
business on the Initial Cut-Off Date;
(b) each Receivable created or originated by AnnTaylor
from the close of AnnTaylor's business on the Initial
Cut-Off Date, to and including the Purchase and Sale
Termination Date and all Finance Charge Receivables
relating to Receivables that were created or
originated prior to the Purchase and Sale Termination
Date;
(c) all rights to, but not the obligations under, the
Contracts and all Related Security;
(d) all monies due or to become due with respect thereto;
(e) all books and records related to any of the foregoing;
and
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(f) all proceeds thereof (as defined in the UCC) received
on or after the date hereof including, without
limitation, all funds which either are received by
AnnTaylor, the Company or the Servicer from or on
behalf of the Obligors in payment of any amounts owed
(including, without limitation, finance charges,
interest and all other charges) in respect of
Receivables, or are applied to such amounts owed by
the Obligors (including, without limitation, insurance
payments, if any, that AnnTaylor or the Servicer (if
other than AnnTaylor) applies in the ordinary course
of its business to amounts owed in respect of any
Receivable).
All purchases hereunder shall be made without recourse, but shall
be made pursuant to and in reliance upon the representations,
warranties and covenants of AnnTaylor, in its capacity as seller,
set forth in each Transaction Document. The Company's foregoing
commitment to purchase such Receivables and the proceeds and
rights described in subsections (c), (d), (e) and (f) of this
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Section 1.1 (collectively, the "Related Rights") is herein called
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the "Purchase Facility".
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1.2. Timing of Purchases.
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(a) Initial Closing Date Purchases. On January __, 1994
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(the "Initial Closing Date") AnnTaylor shall sell to the Company
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in part, and contribute to the Company, in part, and the Company
shall purchase and acquire, pursuant to Section 1.1, AnnTaylor's
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entire right, title and interest in (i) each Receivable that
existed and was owing to AnnTaylor as of the close of AnnTaylor's
business on the Initial Cut-Off Date, (ii) all Receivables
created by AnnTaylor from and including the close of AnnTaylor's
business on the Initial Cut-Off Date to and including the Initial
Closing Date, and (iii) all Related Rights.
(b) Regular Purchases. After the Initial Closing Date,
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each Receivable and Related Rights created or originated by
AnnTaylor and described in Section 1.1(b) hereof shall be owned
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by the Company (without any further action) upon the creation or
origination of such Receivable.
1.3. Consideration for Purchases. On the terms and subject
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to the conditions set forth in this Agreement, the Company agrees
to make all Purchase Price payments to AnnTaylor in accordance
with Article III.
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1.4. Purchase and Sale Termination Date. The "Purchase and
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Sale Termination Date" shall be the Final Payout Date under the
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Receivables Financing Agreement.
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ARTICLE II
CALCULATION OF PURCHASE PRICE
2.1. Calculation of Purchase Price. On each Reporting Date
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(commencing February 7, 1994), the Servicer shall deliver to the
Company, the Administrator, the Relationship Bank, and AnnTaylor
(if the Servicer is other than AnnTaylor) a report in
substantially the form of Exhibit A (each such report being
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herein called a "Purchase Report") with respect to the Company's
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purchases of Receivables from AnnTaylor
(a) that arose on or prior to the Initial Posting Date (in
the case of the first Purchase Report to be delivered
hereunder) or
(b) that arose during the Settlement Period immediately
preceding such Reporting Date (in the case of each
subsequent Purchase Report).
The "Purchase Price" (to be paid to AnnTaylor in accordance with
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the terms of Article III) for the Receivables and the Related
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Rights shall be determined in accordance with the following
formula:
PP = AUB X FMVD
where:
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PP = Purchase Price (to be paid to AnnTaylor in
accordance with the terms of Article III) as
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calculated on the relevant Reporting Date
AUB = (i) for purposes of calculating the Purchase
Price on the initial Reporting Date, the aggregate
Unpaid Balance of all Receivables that existed and
were owing to AnnTaylor as measured as at the
Initial Cut-Off Date plus the aggregate Unpaid
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Balance of all Receivables that were created or
originated by AnnTaylor from the Initial Cut-Off
Date, to and including the close of AnnTaylor's
business on the Initial Posting Date (excluding, in
each case, all Receivables that had been written
off the books of AnnTaylor as uncollectible), less
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an amount equal to the sum of (A) the aggregate
Unpaid Balance of all Receivables that comprised
the capital contribution made by AnnTaylor to the
Company on the Initial Closing Date, and (B) the
aggregate Collections received by AnnTaylor after
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the Initial Cut-Off Date to and including the
Initial Posting Date,
(ii) for purposes of calculating the Purchase
Price for Receivables on the second Reporting Date,
the aggregate Unpaid Balance of the Receivables
that were generated by AnnTaylor during the
immediately preceding Settlement Period less the
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aggregate Collections received by AnnTaylor from
but excluding the Initial Posting Date to but
excluding the Initial Closing Date, and
(iii) for purposes of calculating the Purchase
Price for Receivables on each Reporting Date
thereafter, the aggregate Unpaid Balance of the
Receivables described in Section 1.1(b) hereof that
were generated by AnnTaylor during the immediately
preceding Settlement Period.
FMVD = Fair Market Value Discount Factor on the
determination date, which is the quotient of (i)
one divided by (ii) an amount equal to 1+ (90/365 x
ABR), where ABR is the Alternate Base Rate plus 2%
on such day, expressed as a fraction.
ARTICLE III
PAYMENT OF PURCHASE PRICE
3.1. Initial Purchase Price Payment. On the Initial
--------------------------------
Closing Date, AnnTaylor shall, and hereby does contribute to the
capital of the Company, Receivables and Related Property Rights
with respect thereto consisting of each Receivable described in
Section 1.1(a) hereof beginning with the oldest of such
Receivables and continuing chronologically thereafter and all or
an undivided interest in the most recent of such contributed
Receivables such that the aggregate Unpaid Balance of all such
contributed Receivables shall be equal to $1,800,000. On the
terms and subject to the conditions set forth in this Agreement,
the Company agrees to pay to AnnTaylor on the Initial Closing
Date a portion of the Purchase Price for the purchase to be made
from AnnTaylor with respect to Receivables existing on or prior
to the Initial Posting Date (a) in cash in the amount of the
proceeds of the Loans made to the Company on the Initial Closing
Date under the Receivables Financing Agreement and (b) by the
issuance of a subordinated promissory note in the form of Exhibit
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B to AnnTaylor (such promissory note, as it may be amended,
- -
supplemented, indorsed or otherwise modified from time to time in
substitution therefor or renewal thereof in accordance with the
Transaction Documents, being herein called a "Company Note") in
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the initial principal amount equal to $5,412,000. The portion of
the Purchase Price paid to AnnTaylor pursuant to the immediately
preceding sentence shall be adjusted on the initial Reporting
Date by the amount of the difference, if any, between (x) the
Purchase Price calculated on the initial Reporting Date pursuant
to Section 2.1 hereof and (y) the amount paid to AnnTaylor
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pursuant to the immediately preceding sentence. If the amount
described in clause (x) is greater than the amount described in
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clause (y), the Company shall pay to AnnTaylor the difference by
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increasing the principal amount outstanding under the Company
Note, effective as of the last day of the related Settlement
Period. If the amount described in clause (x) is less than the
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amount described in clause (y), AnnTaylor shall pay to the
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Company the difference by a reduction in the principal amount of
the Company Note, effective as of the last day of the related
Settlement Period; provided, however, that if at any time the
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unpaid principal amount of the Company Note has been reduced to
zero, AnnTaylor shall pay the Company the remainder owed with
respect thereto in immediately available funds to the Funding
Account.
3.2. Subsequent Purchase Price Payments. On each Business
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Day after the Initial Closing Date until the termination of this
Agreement pursuant to Section 9.4 hereof, the Company shall pay
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to AnnTaylor a portion of the Purchase Price due pursuant to
Section 2.1 by depositing into such account as AnnTaylor shall
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specify immediately available funds from monies then held by or
on behalf of the Company from Collections or Deemed Collections,
solely to the extent that such monies do not constitute
Collections that are required to be segregated and held by the
Servicer pursuant to the Receivables Financing Agreement or to be
distributed to the Administrator pursuant to the Receivables
Financing Agreement on the next Settlement Date or required to be
paid to the Servicer as the Servicer's Fee on the next Settlement
Date, or required to be deposited into the Spread Account or paid
as a reimbursement to the issuer of the Letter of Credit pursuant
to the Receivables Financing Agreement on the next Settlement
Date, or otherwise necessary to pay current expenses of the
Company (in its discretion) and provided that AnnTaylor has paid
all amounts then owing by it hereunder. The portion of the
Purchase Price paid to AnnTaylor shall be adjusted on each
Settlement Date (beginning on March 5, 1994) by the amount of the
difference, if any, between (x) the amount due pursuant to
Section 2.1 with respect to all Receivables created or originated
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by AnnTaylor that arose during the corresponding Settlement
Period and (y) the amount paid to AnnTaylor during such
Settlement Period pursuant to the foregoing sentence for such
Receivables. If the amount described in clause (x) is greater
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than the amount described in clause (y), the Company shall pay to
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AnnTaylor the difference by increasing the principal amount
outstanding under the Company Note, effective as of the last day
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of the related Settlement Period. If the amount described in
clause (x) is less than the amount described in clause (y),
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AnnTaylor shall pay to the Company the difference by a reduction
in the principal amount of the Company Note, effective as of the
last day of the related Settlement Period; provided, however,
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that if at any time the unpaid principal amount of the Company
Note has been reduced to zero, AnnTaylor shall pay the Company
the remainder owed with respect thereto in immediately available
funds to the Funding Account. On each Settlement Date, if no
Event of Default under the Receivables Financing Agreement has
occurred and is continuing and payment of the Company Note will
not result in an Event of Default under the Receivables Financing
Agreement, the Servicer will, upon the direction of the Company,
make a payment on the Company Note to AnnTaylor in an amount
equal to the amount of Collections (not previously paid to
AnnTaylor hereunder) that are available to the Company under
Section 3.01(b) of the Receivables Financing Agreement.
Servicer shall make all appropriate record keeping entries
with respect to the Company Note to reflect payments by the
Company thereon and Servicer's books and records shall constitute
rebuttable presumptive evidence of the principal amount of and
accrued interest on the Company Note. AnnTaylor hereby
irrevocably authorizes Servicer to return the Company Note to the
Company upon the final payment thereof after the termination of
this Agreement pursuant to Section 9.4 hereof.
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3.3. Settlement as to Specific Receivables. Subject to
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Section 7.2(a) hereof, if an officer of AnnTaylor obtains
knowledge or receives notice from the Company or the
Administrator that (a) on the day that any Receivable purchased
hereunder was created or originated by AnnTaylor any of the
representations or warranties set forth in Section 5.11 was not
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true with respect to such Receivable, or such Receivable was an
Ineligible Purchased Receivable or, (b) as a result of any action
or inaction of AnnTaylor, on any day any of the representations
or warranties set forth in Section 5.11 is no longer true with
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respect to a Receivable, then AnnTaylor forthwith shall reduce
the Purchase Price with respect to Receivables that arose during
the same Settlement Period in which such knowledge is obtained or
notification is received by an amount equal to the Unpaid Balance
of such Receivable; provided, however, that if there have been no
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purchases of Receivables (or insufficiently large purchases of
Receivables to create a Purchase Price large enough to so reduce
by the amount of such net reduction) from AnnTaylor during such
Settlement Period, any amount owed by which the Purchase Price
payable to AnnTaylor would have been reduced pursuant to the
immediately preceding clause of this sentence shall be paid by
either (at the option of AnnTaylor, unless the Company will,
absent such payment in cash, be unable to meet its obligations
under the Receivables Financing Agreement on the next occurring
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Settlement Date, in which case AnnTaylor shall make a cash
payment) a reduction in the principal amount of the Company Note
(but not below zero) or by payment within two Business Days after
the related Report Date in cash by AnnTaylor to the Company by
deposit in the Funding Account of same day funds; provided,
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further, that if the Company thereafter receives payment on
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account of Collections due with respect to such Receivable, the
Company promptly shall deliver such funds to AnnTaylor.
3.4. Settlement as to Dilution. Each Purchase Report shall
-------------------------
include, in respect of the Receivables previously generated by
AnnTaylor (including those Receivables that were contributed to
the capital of the Company on the Initial Closing Date), a
calculation of the aggregate net reduction in the aggregate
Unpaid Balance of such Receivables owed by particular Obligors on
account of any defective, rejected or returned merchandise or
services, any cash discount, or any incorrect billings, other
adjustments, or setoffs in respect of any claims by the
Obligor(s) thereof against AnnTaylor or any of its Affiliates
(other than the Company) (whether such claims arise out of the
same or a related or unrelated transaction), or any rebate or
refund during the most recent month. Subject to Section 7.2(a)
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hereof, the Purchase Price to be paid to AnnTaylor for the
Receivables generated during the Settlement Period for which such
Purchase Report is delivered shall be decreased by the amount of
such net reduction; provided, however, that if there have been no
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purchases of Receivables (or insufficiently large purchases of
Receivables to create a Purchase Price large enough to so reduce
by the amount of such net reduction) from AnnTaylor during such
Settlement Period, any amount owed by which the Purchase Price
payable to AnnTaylor would have been reduced pursuant to the
immediately preceding clause of this sentence shall be paid by
either (at the option of AnnTaylor, unless the Company will,
absent such payment in cash, be unable to meet its obligations
under the Receivables Financing Agreement on the next occurring
Settlement Date, in which case AnnTaylor shall make a cash
payment) a reduction in the principal amount of the Company Note
(but not below zero) or by payment within two Business Days after
the related Report Date in cash by AnnTaylor to the Company by
deposit in the Funding Account of same day funds.
3.5. Reconveyance of Receivables. In the event that
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AnnTaylor has paid to the Company the full Unpaid Balance of any
Receivable pursuant to Section 3.3 or 3.4, the Company shall
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reconvey such Receivable to AnnTaylor, without representation or
warranty, but free and clear of all liens created by the Company.
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ARTICLE IV
CONDITIONS OF PURCHASES
4.1. Conditions Precedent to Initial Purchase. The initial
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purchase hereunder is subject to the condition precedent that the
Company shall have received, on or before the Initial Closing
Date, the following, each (unless otherwise indicated) dated the
Initial Closing Date, and each in form, substance and date satis-
factory to the Company:
(a) A copy of the resolutions of the Board of
Directors of AnnTaylor approving the Transaction Documents
to be delivered by it and the transactions contemplated
hereby and thereby, certified by the Secretary or Assistant
Secretary of AnnTaylor;
(b) Good standing certificates for AnnTaylor issued
as of a recent date by the Secretary of State of Delaware;
(c) A certificate of the Secretary or Assistant
Secretary of AnnTaylor certifying the names and true
signatures of the officers authorized on Anntaylor's behalf
to sign the Transaction Documents to be delivered by it (on
which certificate the Company and Servicer (if other than
AnnTaylor) may conclusively rely until such time as the
Company and the Servicer shall receive from AnnTaylor a
revised certificate meeting the requirements of this
subsection (c));
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(d) The certificate of incorporation of AnnTaylor,
duly certified by the Secretary of State of Delaware as of a
recent date, together with a copy of the by-laws of
AnnTaylor, each duly certified by the Secretary or an
Assistant Secretary of AnnTaylor;
(e) Copies of the proper financing statements (Form
UCC-1) that have been duly executed and name AnnTaylor as
the assignor and the Company as the assignee (and Lender as
assignee of the Company) of the Receivables generated by
AnnTaylor or other, similar instruments or documents, as may
be necessary or, in Servicer's or the Administrators's
opinion, desirable under the UCC of all appropriate
jurisdictions or any comparable law of all appropriate
jurisdictions to perfect the Company's ownership interest in
all Receivables and such other rights, accounts, instruments
and moneys (including, without limitation, Related Security)
in which an ownership interest may be assigned to it
hereunder;
(f) A written search report from a Person
satisfactory to Servicer and the Administrator listing all
effective financing statements that name AnnTaylor as debtor
-11-
or assignor and that are filed in the jurisdictions in which
filings were made pursuant to the foregoing subsection (e),
--------------
together with copies of such financing statements (none of
which, except for those described in the foregoing
subsection (f), shall cover any Receivable or any right
---------------
related to any Receivable that is of the type described in
Section 1.1) which is to be sold to the Company hereunder,
-----------
and tax and judgment lien search reports from a Person
satisfactory to Servicer and the Administrator showing no
evidence of such liens filed against AnnTaylor;
(g) A favorable opinion of Skadden, Arps, Slate,
Meagher & Flom, counsel to AnnTaylor, in the form of
Exhibit C and a favorable opinion of Jocelyn F.L.
---------
Barandiaran, in the form of Exhibit F;
---------
(h) Evidence (i) of the execution and delivery by
each of the parties thereto of each of the other Transaction
Documents to be executed and delivered in connection
herewith and (ii) that each of the conditions precedent to
the execution, delivery and effectiveness of such other
Transaction Documents has been satisfied to the Company's
satisfaction;
(i) The Company Note in favor of AnnTaylor, duly
executed by the Company;
(j) A certificate from an officer of AnnTaylor to the
effect that Servicer and AnnTaylor have placed on the most
recent, and have taken all steps reasonably necessary to
ensure that there shall be placed on subsequent, summary
master control data processing reports the following legend
(or the substantive equivalent thereof): "THE RECEIVABLES
DESCRIBED HEREIN HAVE BEEN SOLD TO ANNTAYLOR FUNDING, INC.
PURSUANT TO A PURCHASE AND SALE AGREEMENT, DATED AS OF
JANUARY 27, 1994, AS AMENDED, BETWEEN ANNTAYLOR FUNDING,
INC. AND ANNTAYLOR, INC.; AND A SECURITY INTEREST IN THE
RECEIVABLES DESCRIBED HEREIN HAS BEEN GRANTED TO CLIPPER
RECEIVABLES CORPORATION, PURSUANT TO A RECEIVABLES FINANCING
AGREEMENT, DATED AS OF JANUARY 27, 1994, AMONG ANNTAYLOR
FUNDING, INC., ANNTAYLOR, INC., CLIPPER RECEIVABLES
CORPORATION, STATE STREET BOSTON CAPITAL CORPORATION, AS THE
ADMINISTRATOR, AND PNC BANK, NATIONAL ASSOCIATION, AS THE
RELATIONSHIP BANK; and
(k) A duly executed counterpart of the Subscription
Agreement from each party thereto.
4.2. Certification as to Representations and Warranties.
-----------------------------------------------------
AnnTaylor, by accepting the Purchase Price related to each
purchase of Receivables (and Related Rights) generated by
AnnTaylor, shall be deemed to have certified that the
representations and warranties contained in Article V are true
---------
and correct on and as of such day, with the same effect as though
made on and as of such day.
-12-
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ANNTAYLOR
In order to induce the Company to enter into this Agreement
and to make purchases hereunder, AnnTaylor, in its capacity as
seller under this Agreement, hereby makes the representations and
warranties set forth in this Article V.
---------
5.1. Organization and Good Standing. AnnTaylor has been
-------------------------------
duly organized and is validly existing as a corporation in good
standing under the laws of the state of its incorporation, with
power and authority to own its properties and to conduct its
business as such properties are presently owned and such business
is presently conducted.
5.2. Due Qualification. AnnTaylor is duly licensed or
------------------
qualified to do business as a foreign corporation in good
standing in all jurisdictions in which (a) the ownership or lease
of its property or the conduct of its business requires such
licensing or qualification and (b) the failure to be so licensed
or qualified has not had and will not have a Seller Material
Adverse Effect.
5.3. Power and Authority; Due Authorization. AnnTaylor has
--------------------------------------
(a) all necessary power, authority and legal right (i) to execute
and deliver, and perform its obligations under, each Transaction
Document to which it is a party, as seller, and (ii) to generate,
own, sell and assign Receivables on the terms and subject to the
conditions herein and therein provided; and (b) duly authorized
such execution and delivery and such sale and assignment and the
performance of such obligations by all necessary corporate
action.
5.4. Valid Sale; Binding Obligations. Each sale of
---------------------------------
Receivables and Related Rights made by AnnTaylor pursuant to this
Agreement shall constitute a valid sale, transfer, and assignment
thereof to the Company, enforceable against creditors of, and
purchasers from, AnnTaylor; and this Agreement constitutes, and
each other Transaction Document to be signed by AnnTaylor, as
seller, when duly executed and delivered, will constitute, a
legal, valid, and binding obligation of AnnTaylor, enforceable in
accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors' rights
-13-
generally and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding in
equity or at law.
5.5. No Violation. The consummation of the transactions
-------------
contemplated by this Agreement and the other Transaction
Documents to which AnnTaylor is a party as seller, and the
fulfillment of the terms hereof or thereof will not (a) conflict
with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a
default under (i) AnnTaylor's certificate of incorporation or by-
laws, or (ii) any indenture, loan agreement, mortgage, deed of
trust, or other agreement or instrument to which it is a party or
by which it is bound, except where such conflict, breach or
default has not had and will not have a Seller Material Adverse
Effect, (b) result in the creation or imposition of any Adverse
Claim upon any of its properties pursuant to the terms of any
such indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument, other than the Transaction Documents, or
(c) violate any law or any order, rule, or regulation applicable
to it of any court or of any federal, state or foreign regulatory
body, administrative agency, or other governmental instrumen-
tality having jurisdiction over it or any of its properties,
except where such violation has not had and will not have a
Seller Material Adverse Effect.
5.6. Proceedings. There is no action, suit, proceeding or
-----------
investigation pending before any court, regulatory body,
arbitrator, administrative agency, or other tribunal or
governmental instrumentality (a) asserting the invalidity of any
Transaction Document to which AnnTaylor is a party as seller, (b)
seeking to prevent the sale of Receivables to the Company or the
consummation of any of the other transactions contemplated by any
Transaction Document to which AnnTaylor is a party as seller, or
(c) seeking any determination or ruling that could reasonably be
expected to have a Seller Material Adverse Effect.
5.7. Bulk Sales Act. No transaction contemplated hereby
---------------
requires compliance with any bulk sales act or similar law.
5.8. Government Approvals. Except for the filing of the
--------------------
UCC financing statements referred to in Article IV, all of which,
----------
at the time required in Article IV, shall have been duly made and
----------
shall be in full force and effect, no authorization or approval
or other action by, and no notice to or filing with, any govern-
mental authority or regulatory body is required for AnnTaylor's
due execution, delivery and performance of any Transaction
Document to which it is a party, as seller.
5.9. Financial Condition. On the date hereof AnnTaylor is,
-------------------
and on the date of each transfer of a new Receivable hereunder
-14-
(both before and after giving effect to such transfer), AnnTaylor
shall be solvent.
5.10. Margin Regulations. No use of any funds acquired by
------------------
AnnTaylor under this Agreement will conflict with or contravene
any of Regulations G, T, U and X promulgated by the Board of
Governors of the Federal Reserve System from time to time.
5.11. Quality of Title.
----------------
(a) Each Receivable (together with the Related
Security for such Receivable) which is to be sold to the
Company hereunder is or shall be owned by AnnTaylor, free
and clear of any Adverse Claim, except as provided herein
and in the Receivables Financing Agreement. Whenever the
Company makes a purchase hereunder, it shall have acquired
and shall continue to have maintained a valid and perfected
ownership interest (free and clear of any Adverse Claim
created by AnnTaylor) in all Receivables generated by
AnnTaylor and all Collections related thereto, and in
AnnTaylor's entire right, title and interest in and to the
Related Security with respect thereto.
(b) No effective financing statement or other
instrument similar in effect covering any Receivable
generated by AnnTaylor or any right related to any such
Receivable that is of the type described in Section 1.1 is
-----------
on file in any recording office except such as may be filed
in favor of the Company or AnnTaylor, as the case may be, in
accordance with this Agreement or in favor of the Lender in
accordance with the Receivables Financing Agreement or in
favor of Bank of America National Trust and Savings
Association for which AnnTaylor has delivered executed
partial releases (UCC-3 statements) on or prior to the
Initial Closing Date.
5.12. Accuracy of Information. No factual written
-------------------------
information heretofore or contemporaneously furnished in writing
(and prepared) by AnnTaylor, as seller, to the Company, the
Lender or the Administrator for purposes of or in connection with
any Transaction Document or any transaction contemplated hereby
or thereby is, and no other such factual written information
hereafter furnished (and prepared) by AnnTaylor, as seller, to
the Company, the Lender, or the Administrator pursuant to or in
connection with any Transaction Document will be inaccurate in
any material respect (in light of the circumstances under which
such information was furnished and taken as a whole together with
all other information previously furnished or then being
furnished) as of the date it was furnished or (except as
otherwise disclosed to the Company at or prior to such time) as
of the date as of which such information is dated or certified.
-15-
No information contained in any report delivered pursuant to
Section 6.2 or in any Purchase Report shall contain any material
- -----------
misstatement of fact or omitted or will omit to state any
material fact necessary to make such information not materially
misleading on the date as of which such information is dated or
certified.
5.13. Offices. AnnTaylor's principal place of business and
-------
chief executive office is located at the address set forth under
AnnTaylor's signature hereto, and the offices where AnnTaylor
keeps all its books, records and documents evidencing the
Receivables, the related Contracts and all other agreements
related to such Receivables are located at the addresses
specified in Exhibit E (or at such other locations, notified to
----------
Servicer (if other than AnnTaylor) and the Administrator in
accordance with Section 6.1(f), in jurisdictions where all action
--------------
required by Section 7.3 has been taken and completed).
-----------
5.14. Trade Names. Except as disclosed on Schedule 5.15,
------------ -------------
AnnTaylor does not use any trade name other than its actual
corporate name. From and after the date that fell five (5) years
before the date hereof, AnnTaylor has not been known by any legal
name other than its corporate name as of the date hereof, nor has
AnnTaylor been the subject of any merger or other corporate
reorganization except as disclosed on Schedule 5.14.
-------------
5.15. Taxes. AnnTaylor has filed all tax returns and
-----
reports required by law to have been filed by it and has paid all
taxes and governmental charges thereby shown to be owing, except
any such taxes which are not yet delinquent or are being
diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with generally accepted
accounting principles shall have been set aside on its books.
5.16. Compliance with Applicable Laws. AnnTaylor is in
--------------------------------
compliance, in all material respects, with the requirements of
all applicable laws, rules, regulations, and orders of all
governmental authorities (including, without limitation,
Regulation Z, laws, rules and regulations relating to usury,
truth in lending, fair credit billing, fair credit reporting,
equal credit opportunity, fair debt collection practices and
privacy and all other consumer laws applicable to the Receivables
and related Contracts), a breach of any of which, individually or
in the aggregate, would be reasonably likely to have a Seller
Material Adverse Effect.
5.17. Reliance on Separate Legal Identity. AnnTaylor is
-------------------------------------
aware that Lender, the Relationship Bank and the Administrator
are entering into the Transaction Documents to which they are
parties in reliance upon the Company's identity as a legal entity
separate from AnnTaylor.
-16-
ARTICLE VI
COVENANTS OF ANNTAYLOR
6.1. Affirmative Covenants. From the date hereof until the
---------------------
first day following the Purchase and Sale Termination Date,
AnnTaylor will, unless the Company, the Administrator, and the
Relationship Bank shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all
-----------------------------
material respects with all applicable laws, rules,
regulations and orders with respect to the Receivables
generated by it and the Contracts and other agreements
related thereto, except where such noncompliance has not had
and will not have a Seller Material Adverse Effect.
(b) Preservation of Corporate Existence. Preserve
------------------------------------
and maintain its corporate existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and
qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the failure to
preserve and maintain such existence, rights, franchises,
privileges and qualification would have a Seller Material
Adverse Effect.
(c) Receivables Review. (i) At any time and from
------------------
time to time during regular business hours, upon reasonable
notice and in a manner designed not to unreasonably disrupt
the normal business operations of AnnTaylor, permit the
Company, the Collateral Agent, the Administrator and the
Relationship Bank or their respective agents or
representatives, (A) to examine, to audit and make copies of
and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in
the possession or under the control of AnnTaylor relating to
the Receivables generated by it, including, without
limitation, the Contracts and other agreements related
thereto, and (B) to visit AnnTaylor's offices and properties
for the purpose of examining such materials described in the
foregoing clause (A) and discussing matters relating to the
----------
Receivables generated by AnnTaylor or AnnTaylor's
performance hereunder with any of the officers or employees
of AnnTaylor having knowledge of such matters; and (ii)
without limiting the provisions of clause (i) next above,
----------
from time to time on request of Administrator or the
Relationship Bank, permit certified public accountants or
other auditors acceptable to the Administrator to conduct a
review of its books and records; provided, however, that,
-------- -------
unless an Event of Default has occurred and is continuing,
-17-
AnnTaylor shall not be obligated to pay for any such
reviews, which together with reviews conducted pursuant to
Section 7.01(c) of the Receivables Financing Agreement, are
done more frequently than three times per year by internal
auditors of the Administrator or the Relationship Bank (and
such expenses shall be subject to Section 14.05(a) of the
Receivables Financing Agreement).
(d) Keeping of Records and Books of Account.
---------------------------------------------
Maintain an ability to recreate records evidencing the
Receivables generated by it in the event of the destruction
of the originals thereof.
(e) Performance and Compliance with Receivables and
-------------------------------------------------
Contracts. Timely and fully perform and comply with all
---------
provisions, covenants and other promises required to be
observed by it under the Contracts and all other agreements
related to the Receivables.
(f) Location of Records. Keep its principal place of
-------------------
business and chief executive office, and the offices where
it keeps its records concerning or related to Receivables,
at the address(es) referred to in Exhibit E or, upon 30
----------
days' prior written notice to the Company and the
Administrator, at such other locations in jurisdictions
where all action required by Section 7.3 shall have been
-----------
taken and completed.
(g) Credit and Collection Policies. Comply in all
-------------------------------
material respects with its Credit and Collection Policy in
connection with the Receivables that it generates and all
Contracts related thereto.
(h) Separate Corporate Existence of the Company.
----------------------------------------------
Take such actions as shall be required in order that:
(i) the Company's operating expenses (other than
certain organization expenses and expenses incurred in
connection with the preparation, negotiation and
delivery of the Transaction Documents) will not be
paid by AnnTaylor;
(ii) the Company's books and records will be
maintained separately from those of AnnTaylor;
(iii) All financial statements of AnnTaylor that
are consolidated to include the Company and are used
other than for internal purposes by AnnTaylor or any
Affiliate thereof will contain detailed notes clearly
stating that (A) all of the Company's assets are owned
by the Company, and (B) the Company is a separate
-18-
corporate entity with creditors who have received
security interests in the Company's assets;
(iv) AnnTaylor will strictly observe corporate
formalities in its dealing with the Company;
(v) AnnTaylor shall not commingle its funds with
any funds of the Company; provided that AnnTaylor and
--------
the Company acknowledge that some Obligors make their
payments to AnnTaylor's stores or headquarters, which
in-store collections are subject to the provisions of
Section 7.2(a) hereof;
--------------
(vi) AnnTaylor will maintain arm's length
relationships with the Company, and AnnTaylor will be
compensated at market rates for any services it
renders or otherwise furnishes to the Company; and
(vii) AnnTaylor will not be, and will not hold
itself out to be, responsible for the debts of the
Company or the decisions or actions in respect of the
daily business and affairs of the Company.
6.2. Reporting Requirements. From the date hereof until
----------------------
the first day following the Purchase and Sale Termination Date,
AnnTaylor will, unless the Administrator and the Relationship
Bank shall otherwise consent in writing, furnish to the Company,
the Administrator, and the Relationship Bank:
(a) Proceedings. As soon as possible and in any
-----------
event within three Business Days after AnnTaylor has
knowledge thereof, written notice to the Company, the
Administrator and the Relationship Bank of (i) all pending
proceedings and investigations of the type described in
Section 5.6 not previously disclosed to the Company and/or
-----------
the Administrator and (ii) all material adverse developments
that have occurred with respect to any previously disclosed
proceedings and investigations; and
(b) Other. Promptly, from time to time, such other
-----
information, documents, records or reports respecting the
Receivables or AnnTaylor's performance as seller hereunder
that the Company, the Administrator or the Relationship Bank
may from time to time reasonably request in order to protect
the interests of the Company, the Lender, the Administrator,
the Relationship Bank, or any other Affected Party under or
as contemplated by the Transaction Documents.
6.3. Negative Covenants. From the date hereof until the
------------------
date following the Purchase and Sale Termination Date, AnnTaylor
-19-
agrees that, unless the Administrator, and the Relationship bank
shall otherwise consent in writing, it shall not:
(a) Sales, Liens, Etc. Except as otherwise provided
-----------------
herein or in any other Transaction Document, sell, assign
(by operation of law or otherwise) or otherwise dispose of,
or create or suffer to exist any Adverse Claim upon or with
respect to, any Receivable or related Contract or Related
Security, or any interest therein, or any Collections
thereon, or assign any right to receive income in respect
thereof.
(b) Change in Credit and Collection Policy. Make any
--------------------------------------
change in the Credit and Collection Policy that would not be
permitted under Section 7.04(c) of the Receivables Financing
Agreement.
(c) Receivables Not to be Evidenced by Promissory
------------------------------------------------
Notes. Take any action to cause or permit any Receivable
-----
generated by it to become evidenced by any "instrument" (as
defined in the applicable UCC), except as contemplated by
Section 6.01(u) of the Receivables Financing Agreement.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE RECEIVABLES
7.1. Rights of the Company. AnnTaylor hereby authorizes
----------------------
the Company and the Servicer (if other than AnnTaylor) or their
respective designees to take any and all steps in AnnTaylor's
name necessary or desirable, in their respective determination,
to collect all amounts due under any and all Receivables,
including, without limitation, endorsing AnnTaylor's name on
checks and other instruments representing Collections and
enforcing such Receivables and the provisions of the related
Contracts that concern payment and/or enforcement of rights to
payment.
7.2. Responsibilities of AnnTaylor. Anything herein to the
-----------------------------
contrary notwithstanding:
(a) Collection Procedures. AnnTaylor agrees to
----------------------
direct its respective Obligors in the billing statements to
make payments of Receivables directly to a Lock-Box Account
at a Lock-Box Bank. AnnTaylor further agrees to transfer
any Collections that it receives (including, without
limitation, in-store and headquarters payments) directly to
Servicer (for deposit to the Funding Account) within two
Business Days of receipt thereof, and agrees that all such
-20-
Collections shall be deemed to be received in trust for the
Company; provided that, to the extent permitted pursuant to
--------
Section 3.2, AnnTaylor may retain such Collections as a
------------
portion of the Purchase Price then payable or apply such
Collections to the reduction of the outstanding balance of
the Company Note. AnnTaylor agrees to pay all Deemed
Collections payable pursuant to Section 3.3 or 3.4; provided
----------- ---
that, notwithstanding anything to the contrary set forth
therein, if requested by the Administrator or the
Relationship Bank during the continuance of an Event of
Default, AnnTaylor shall pay such Deemed Collections to the
Servicer for deposit to the Lock-Box Account on the second
Business Day following the day on which they arise.
(b) AnnTaylor shall perform its obligations
hereunder, and the exercise by the Company or its designee
of its rights hereunder shall not relieve AnnTaylor from
such obligations.
(c) AnnTaylor hereby grants to Servicer (if other
than AnnTaylor) an irrevocable power of attorney, with full
power of substitution, coupled with an interest, to take in
the name of AnnTaylor all steps necessary or advisable to
indorse, negotiate or otherwise realize on any writing or
other right of any kind held or transmitted by AnnTaylor or
transmitted or received by the Company (whether or not from
AnnTaylor) in connection with any Receivable.
7.3. Further Action Evidencing Purchases. AnnTaylor agrees
-----------------------------------
that from time to time, at its expense, it will promptly execute
and deliver all further instruments and documents, and take all
further action that the Company may reasonably request in order
to perfect, protect or more fully evidence the Receivables (and
the Related Rights) purchased by the Company hereunder, or to
enable the Company to exercise or enforce any of its rights
hereunder or under any other Transaction Document. Without
limiting the generality of the foregoing, upon the request of the
Company, AnnTaylor will:
(a) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof,
and such other instruments or notices, as may be necessary
or appropriate; and
(b) mark the summary master control data processing
records with the legend set forth in Section 4.1(j).
--------------
AnnTaylor hereby authorizes the Company or its designee to file
one or more financing or continuation statements, and amendments
thereto and assignments thereof, relative to all or any of the
Receivables (and the Related Rights) now existing or hereafter
-21-
generated by AnnTaylor. If AnnTaylor fails to perform any of its
agreements or obligations under this Agreement, the Company or
its designee may (but shall not be required to) itself perform,
or cause performance of, such agreement or obligation, and the
expenses of the Company or its designee incurred in connection
therewith shall be payable by AnnTaylor as provided in
Section 9.6.
- -----------
7.4. Application of Collections. Any payment by an Obligor
--------------------------
in respect of any indebtedness owed by it to AnnTaylor in respect
of any Contract shall, except as otherwise specified by such
Obligor or otherwise required by contract or law, be applied
first, as a Collection of any Finance Charge Receivable or
- -----
Receivables of such Obligor, in the order of the age of such
Finance Charge Receivables, starting with the oldest of such
Finance Charge Receivables, second, to the collection of any
------
Principal Receivable or Receivables then outstanding of such
Obligor in the order of the age of such Principal Receivables,
starting with the oldest of such Principal Receivables, and
third, to any other indebtedness of such Obligor.
- -----
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnities by AnnTaylor. Without limiting any other
------------------------
rights which the Company may have hereunder or under applicable
law, AnnTaylor hereby agrees to indemnify the Company and each of
its assigns, officers, directors, employees and agents (each of
the foregoing Persons being individually called a "Purchase and
------------
Sale Indemnified Party"), forthwith on demand, from and against
- ----------------------
any and all damages, losses, claims, judgments, liabilities and
related costs and expenses, including reasonable attorneys' fees
and disbursements (all of the foregoing being collectively called
"Purchase and Sale Indemnified Amounts") awarded against or
----------------------------------------
incurred by any of them arising out of or as a result of the
following:
(a) the transfer by AnnTaylor of an interest in any
Receivable or Related Right to any Person other than the
Company;
(b) without duplication of amounts paid as Deemed
Collections, the breach of any representation or warranty
made by AnnTaylor under or in connection with this Agreement
or any other Transaction Document, or any information or
report delivered by AnnTaylor pursuant hereto or thereto
which shall have been false or incorrect in any material
respect when made or deemed made;
-22-
(c) the failure by AnnTaylor to comply with any
applicable law, rule or regulation with respect to any
Receivable generated by AnnTaylor or the related Contract,
or the nonconformity of any Receivable generated by
AnnTaylor or the related Contract with any such applicable
law, rule or regulation;
(d) the failure to vest and maintain vested in the
Company an ownership interest in the Receivables generated
by AnnTaylor free and clear of any Adverse Claim, other than
an Adverse Claim arising solely as a result of an act of the
Company, whether existing at the time of the purchase of
such Receivables or at any time thereafter;
(e) the failure of AnnTaylor to file with respect to
itself, or any delay in filing, financing statements or
other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with
respect to any Receivables or purported Receivables
generated by AnnTaylor, whether at the time of any purchase
or at any subsequent time;
(f) without duplication of amounts paid as Deemed
Collections, any dispute, claim, offset or defense (other
than discharge in bankruptcy) of the Obligor to the payment
of any Receivable or purported Receivable generated by
AnnTaylor (including, without limitation, a defense based on
such Receivables or the related Contracts not being a legal,
valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim
resulting from the services related to any such Receivable
or the furnishing of or failure to furnish such services;
(g) any product liability claim arising out of or in
connection with services that are the subject of any
Receivable generated by AnnTaylor; and
(h) any tax or governmental fee or charge (other than
any tax excluded pursuant to clause (iii) in the proviso to
------------
the preceding sentence), all interest and penalties thereon
or with respect thereto, and all out-of-pocket costs and
expenses, including the reasonable fees and expenses of
counsel in defending against the same, which may arise by
reason of the purchase or ownership of the Receivables
generated by AnnTaylor or any Related Right connected with
any such Receivables;
excluding, however, (i) Purchase and Sale Indemnified Amounts to
- --------- -------
the extent resulting from gross negligence or willful misconduct
on the part of such Purchase and Sale Indemnified Party, (ii) any
indemnification which has the effect of recourse for non-payment
-23-
of the Receivables to AnnTaylor (except as otherwise specifically
provided under this Section 8.1) and (iii) any tax based upon or
------------
measured by net income.
If for any reason the indemnification provided above in this
Section 8.1 is unavailable to a Purchase and Sale Indemnified
- -----------
Party or is insufficient to hold such Purchase and Sale
Indemnified Party harmless, then AnnTaylor shall contribute to
the amount paid or payable by such Purchase and Sale Indemnified
Party to the maximum extent permitted under applicable law.
ARTICLE IX
MISCELLANEOUS
9.1. Amendments, etc.
---------------
(a) The provisions of this Agreement may from time to
time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by
AnnTaylor, the Company, the Administrator, the Relationship
Bank and the Servicer (if other than AnnTaylor).
(b) No failure or delay on the part of the Company,
Servicer, AnnTaylor or any third party beneficiary in
exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further
exercise thereof or the exercise of any other power or
right. No notice to or demand on the Company, Servicer, or
AnnTaylor in any case shall entitle it to any notice or
demand in similar or other circumstances. No waiver or
approval by the Company or Servicer under this Agreement
shall, except as may otherwise be stated in such waiver or
approval, be applicable to subsequent transactions. No
waiver or approval under this Agreement shall require any
similar or dissimilar waiver or approval thereafter to be
granted hereunder.
9.2. Notices, etc. All notices and other communications
-------------
provided for hereunder shall, unless otherwise stated herein, be
in writing (including facsimile communication) and shall be
personally delivered or sent by express mail or courier or by
certified mail, postage-prepaid, or by facsimile, to the intended
party at the address or facsimile number of such party set forth
under its name on the signature pages hereof or at such other
address or facsimile number as shall be designated by such party
in a written notice to the other parties hereto. All such
notices and communications shall be effective, (i) if personally
delivered or sent by express mail or courier or if sent by
-24-
certified mail, when received, and (ii) if transmitted by
facsimile, when sent, receipt confirmed by telephone or
electronic means.
9.3. No Waiver; Cumulative Remedies. The remedies herein
-------------------------------
provided are cumulative and not exclusive of any remedies
provided by law.
9.4. Binding Effect; Assignability. This Agreement shall
------------------------------
be binding upon and inure to the benefit of the Company,
AnnTaylor and its respective successors and permitted assigns.
AnnTaylor may not assign its rights hereunder or any interest
herein without the prior consent of the Company, the
Administrator and the Relationship Bank. This Agreement shall
create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full
force and effect until the date after the Purchase and Sale
Termination Date on which AnnTaylor has received payment in full
for all Receivables and Related Rights conveyed pursuant to
Section 1.1 hereof. The rights and remedies with respect to any
- -----------
breach of any representation and warranty made by AnnTaylor
pursuant to Article V and the indemnification and payment
---------
provisions of Article VIII and Section 9.6 shall be continuing
------------ -----------
and shall survive any termination of this Agreement.
9.5. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
--------------
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
9.6. Costs, Expenses and Taxes. In addition to the
---------------------------
obligations of AnnTaylor under Article VIII and subject to any
------------
limitations agreed to in writing by any Affected Party prior to
the date hereof, AnnTaylor agrees to pay on demand:
(a) all reasonable costs and expenses in connection
with the enforcement of this Agreement and the other
Transaction Documents executed by AnnTaylor as seller; and
(b) all stamp and other similar taxes and fees
payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement
or the other Transaction Documents, and agrees to indemnify
each Purchase and Sale Indemnified Party against any
liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
9.7. Submission to Jurisdiction. EACH PARTY HERETO HEREBY
--------------------------
IRREVOCABLY (a) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN THE
BOROUGH OF MANHATTAN, STATE OF NEW YORK, OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY TRANSACTION
-25-
DOCUMENT; (b) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE OR UNITED
STATES FEDERAL COURT; (c) WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR
PROCEEDING; (d) CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH
PROCESS TO SUCH PERSON AT ITS ADDRESS SPECIFIED IN SECTION 10.2;
------------
AND (e) TO THE EXTENT ALLOWED BY LAW, AGREES THAT A FINAL
JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS SECTION
-------
10.7 SHALL AFFECT THE COMPANY'S RIGHT TO SERVE LEGAL PROCESS IN
- ----
ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY ACTION OR
PROCEEDING AGAINST ANNTAYLOR OR ITS PROPERTY IN THE COURTS OF ANY
OTHER JURISDICTIONS.
9.8. Waiver of Jury Trial. EACH PARTY HERETO EXPRESSLY
---------------------
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT, INSTRUMENT OR
DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT,
AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.
9.9. Captions and Cross References; Incorporation by
----------------------------------------------------
Reference. The various captions (including, without limitation,
- ---------
the table of contents) in this Agreement are included for
convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in
this Agreement to any underscored Section or Exhibit are to such
Section or Exhibit of this Agreement, as the case may be. The
Exhibits hereto are hereby incorporated by reference into and
made a part of this Agreement.
9.10. Execution in Counterparts. This Agreement may be
--------------------------
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken
together shall constitute one and the same Agreement.
9.11. Acknowledgment and Agreement. By execution below,
-----------------------------
AnnTaylor expressly acknowledges and agrees that all of the
Company's rights, title, and interests in, to, and under this
Agreement shall be assigned by the Company to the Lender pursuant
to the Receivables Financing Agreement, and AnnTaylor consents to
such assignment. Each of the parties hereto acknowledges and
agrees that the Administrator, the Lender, and the Relationship
Bank are third party beneficiaries of the rights of the Company
arising hereunder and under the other Transaction Documents to
which AnnTaylor is a party as seller.
-26-
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective officers thereunto duly
authorized, as of the date first above written.
ANNTAYLOR FUNDING INC.
By
--------------------------------
Title: Vice President
414 Chapel Street
New Haven, CT 06511
Attention: Bert A. Tieben
Vice President
Facsimile: (203) 865-0811
ANNTAYLOR, INC.
By________________________________
Title: Senior Vice President
142 West 57th Street
New York, NY 10019
Attention: Jocelyn Barandiaran, Esq.
Vice President/Secretary and General Counsel
Facsimile: (212) 541-3299
With a copy to:
AnnTaylor, Inc.
414 Chapel Street
New Haven, CT 06511
Facsimile: (203) 865-2756
Attention: Walter Parks
Vice President/Financial Reporting
Exhibit A
ANNTAYLOR FUNDING, INC.
RECEIVABLES REPORT AS OF 12/24/93
FOR Dec-93
Portfolio Information
I. Outstanding Principal $________
II. Beginning Receivables Balance $________
III. New Receivables to add $________
IV. Collections to deduct $________
V. Defaulted Receivables to deduct $________
VI. +/-Other Adjustments $________
VII. Delinquent Receivables to deduct $________
VIII. Other Ineligible Receivables to deduct $________
(Not including Defaulted Receivables)
IX. Aging Schedule
Current Age 1 Age 2 Age 3 Age 4 Age 5 Age 6 Age 7+
EXHIBIT B
to
Purchase and Sale Agreement
SUBORDINATED PROMISSORY NOTE
(NON-NEGOTIABLE
COMPANY NOTE)
New York, New York
January , 1994
--
FOR VALUE RECEIVED, the undersigned, ANNTAYLOR FUNDING,
INC., a Delaware corporation ( the "Company"), promises to pay to
-------
ANNTAYLOR, INC., a Delaware corporation ("AnnTaylor"), on the
---------
terms and subject to the conditions set forth herein and in the
Purchase and Sale Agreement referred to below, the sum of (i) the
aggregate unpaid Purchase Price of all Receivables purchased by
the Company from AnnTaylor pursuant to such Purchase and Sale
Agreement, as such unpaid Purchase Price is shown in the records
of Servicer plus (ii) any capitalized interest pursuant to
----
Section 4 hereof as shown on the records of AnnTaylor.
- ---------
1. Purchase and Sale Agreement. This promissory note
---------------------------
(this "Company Note") is the Company Note described in, and is
------------
subject to the terms and conditions set forth in, that certain
Purchase and Sale Agreement of even date herewith (as the same
may be amended or otherwise modified from time to time, the
"Purchase and Sale Agreement"), between AnnTaylor and the
---------------------------
Company. Reference is hereby made to the Purchase and Sale
Agreement for a statement of certain other rights and obligations
of AnnTaylor and the Company.
2. Definitions. Capitalized terms used (but not defined)
-----------
herein have the meanings assigned thereto in Appendix A to the
----------
Receivables Financing Agreement dated as of even date herewith
among AnnTaylor, as Servicer, the Company, Clipper Receivables
Corporation, as Lender, State Street Boston Capital Corporation,
as Administrator, and PNC Bank, National Association, as
Relationship Bank (as may be amended or otherwise modified from
time to time, the "Receivables Financing Agreement"). In
-------------------------------
addition, as used herein, the following terms have the following
meanings:
"Bankruptcy Proceedings" has the meaning set forth
----------------------
in clause (b) of paragraph 9 hereof.
---------- -----------
"Final Maturity Date" means the second Business Day
-------------------
after a demand for payment has been made by AnnTaylor,
but in no event earlier than the Settlement Date
immediately following the date on which one hundred
twenty one (121) days have elapsed since the date the
Senior Interests have been paid in full.
"Interest Period" means the period from and
---------------
including a Report Date (or, in the case of the first
Interest Period, the date hereof) to but excluding the
next Report Date.
"Senior Interests" means, collectively, (i) the
----------------
aggregate unpaid principal amount of the Loans, (ii)
accrued interest on the aggregate unpaid principal
amount of the Loans, (iii) all fees payable pursuant to
the Receivables Financing Agreement, (iv) any
Indemnified Amounts, (v) unpaid Servicer's Fees,
provided that AnnTaylor is not the Servicer, and (vi)
--------
all other obligations of the Company that are due and
payable to any Affected Party, together with all
interest accruing on any such amounts after the
commencement of any Bankruptcy Proceedings,
notwithstanding any provision or rule of law that might
restrict the rights of any Senior Interest Holder, as
against the Company or anyone else, to collect such
interest.
"Senior Interest Holders" means, collectively, the
-----------------------
Lender, the Administrator, the Relationship Bank, the
other Affected Parties and the Indemnified Parties.
"Subordination Provisions" means, collectively,
------------------------
clauses (a) through (l) of paragraph 9 hereof.
----------- --- -----------
3. Interest. Subject to the Subordination Provisions set
--------
forth below, the Company promises to pay interest on this Company
Note as follows:
(a) Prior to the Final Maturity Date, the
aggregate unpaid Purchase Price from time to time
outstanding during any Interest Period shall bear
interest at a rate per annum equal to the Alternate Base
--- -----
Rate plus 3% as in effect from time to time as
determined by Servicer; and
(b) From (and including) the Final Maturity Date
to (but excluding) the date on which the entire
aggregate unpaid Purchase Price is fully paid, the
aggregate unpaid Purchase Price from time to time
outstanding shall bear interest at a rate per annum
--- -----
equal to the Alternate Base Rate as in effect from time
to time, plus 5%, as determined by Servicer.
4. Interest Payment Dates. Subject to the
----------------------
Subordination Provisions set forth below, the Company shall
pay accrued interest on this Company Note on each Settlement
Date, and shall pay accrued interest on the amount of each
-2-
principal payment made in cash on a date other than a
Settlement Date at the time of such principal payment;
provided, however, that unless AnnTaylor instructs the
- -------- -------
Company otherwise, such interest may be paid by means of an
increase in the amount of the unpaid principal amount hereof
by an amount equal to the interest being so paid.
5. Basis of Computation. Interest accrued hereunder
--------------------
shall be computed for the actual number of days elapsed on
the basis of a 365- or 366-day year.
6. Principal Payment Dates. Subject to the
-----------------------
Subordination Provisions set forth below, payments of the
principal amount of this Company Note shall be made as
follows:
(a) The principal amount of this Company Note
shall be reduced from time to time pursuant to
Sections 3.2, 3.3, 3.4 and 7.2 of the Purchase and Sale
-------------- --- --- ---
Agreement; and
(b) The entire remaining unpaid Purchase Price of
all Receivables purchased by the Company from AnnTaylor
pursuant to the Purchase and Sale Agreement shall be
paid on the Final Maturity Date.
Subject to the Subordination Provisions set forth below, the
principal amount of and accrued interest on this Company Note
may be prepaid on any Business Day without premium or
penalty.
7. Payments. All payments of principal and interest
--------
hereunder are to be made in lawful money of the United States
of America.
8. Enforcement Expenses. In addition to and not in
--------------------
limitation of the foregoing, but subject to the Subordination
Provisions set forth below and to any limitation imposed by
applicable law, the Company agrees to pay all expenses,
including reasonable attorneys' fees and legal expenses,
incurred by AnnTaylor in seeking to collect any amounts
payable hereunder which are not paid when due.
9. Subordination Provisions. The Company covenants
------------------------
and agrees, and AnnTaylor, by its acceptance of this Company
Note, likewise covenants and agrees on behalf of itself and
any holder of this Company Note, that the payment of the
principal amount of and interest on this Company Note is
hereby expressly subordinated in right of payment to the
payment and performance of the Senior Interests to the extent
- 3 -
and in the manner set forth in the following clauses of this
paragraph 9:
- -----------
(a) No payment or other distribution of the
Company's assets of any kind or character, whether in
cash, securities, or other rights or property, shall be
made on account of this Company Note except to the
extent such payment or other distribution is permitted
under the Purchase and Sale Agreement and Section 3.01
------------
of the Receivables Financing Agreement;
(b) In the event of any dissolution, winding up,
liquidation, readjustment, reorganization or other
similar event relating to the Company, whether voluntary
or involuntary, partial or complete, and whether in
bankruptcy, insolvency or receivership proceedings, or
upon an assignment for the benefit of creditors, or any
other marshalling of the assets and liabilities of the
Company or any sale of all or substantially all of the
assets of the Company (such proceedings being herein
collectively called "Bankruptcy Proceedings"), the
----------------------
Senior Interests shall first be paid and performed in
full and in cash before AnnTaylor shall be entitled to
receive and to retain any payment or distribution in
respect of this Company Note. In order to implement the
foregoing: (i) all payments and distributions of any
kind or character in respect of this Company Note to
which AnnTaylor would be entitled except for this clause
------
(b) shall be made directly to the Administrator (for the
---
benefit of the Senior Interest Holders); (ii) AnnTaylor
shall promptly file a claim or claims, in the form
required in any Bankruptcy Proceedings, for the full
outstanding amount of this Company Note, and shall use
commercially reasonable efforts to cause said claim or
claims to be approved and all payments and other
distributions in respect thereof to be made directly to
the Administrator (for the benefit of the Senior
Interest Holders) until the Senior Interests shall have
been paid and performed in full and in cash; and (iii)
AnnTaylor hereby irrevocably agrees that the
Administrator, in the name of AnnTaylor or otherwise,
may demand, sue for, collect, receive and receipt for
any and all such payments or distributions, and file,
prove and vote or consent in any such Bankruptcy
Proceedings with respect to any and all claims of
AnnTaylor relating to this Company Note, in each case
until the Senior Interests shall have been paid and
performed in full and in cash;
(c) In the event that AnnTaylor receives any
payment or other distribution of any kind or character
- 4 -
from the Company or from any other source whatsoever, in
respect of this Company Note, other than as expressly
permitted by the terms of this Company Note, such
payment or other distribution shall be received for the
sole benefit of the Senior Interest Holders and shall be
turned over by AnnTaylor to the Administrator (for the
benefit of the Senior Interest Holders) forthwith.
AnnTaylor will mark its books and records so as clearly
to indicate that this Company Note is subordinated in
accordance with the terms hereof. All payments and
distributions received by the Administrator in respect
of this Company Note, to the extent received in or
converted into cash, may be applied by the Administrator
(for the benefit of the Senior Interest Holders) first
to the payment of any and all expenses (including
reasonable attorneys' fees and legal expenses) paid or
incurred by the Senior Interest Holders in enforcing
these Subordination Provisions, or in endeavoring to
collect or realize upon this Company Note, and any
balance thereof shall, solely as between AnnTaylor and
the Senior Interest Holders, be applied by the
Administrator toward the payment of the Senior
Interests; but as between the Company and its creditors,
no such payments or distributions of any kind or
character shall be deemed to be payments or
distributions in respect of the Senior Interests;
(d) Notwithstanding any payments or distributions
received by the Senior Interest Holders in respect of
this Company Note, while any Bankruptcy Proceedings are
pending AnnTaylor shall not be subrogated to the then
existing rights of the Senior Interest Holders in
respect of the Senior Interests until the Senior
Interests have been paid and performed in full and in
cash;
(e) These Subordination Provisions are intended
solely for the purpose of defining the relative rights
of AnnTaylor, on the one hand, and the Senior Interest
Holders on the other hand. Nothing contained in these
Subordination Provisions or elsewhere in this Company
Note is intended to or shall impair, as between the
Company, its creditors (other than the Senior Interest
Holders) and AnnTaylor, the Company's obligation, which
is unconditional and absolute, to pay AnnTaylor the
principal of and interest on this Company Note as and
when the same shall become due and payable in accordance
with the terms hereof or to affect the relative rights
of AnnTaylor and creditors of the Company (other than
the Senior Interest Holders);
- 5 -
(f) AnnTaylor shall not, until the Senior
Interests have been paid and performed in full and in
cash, (i) cancel, waive, forgive, transfer or assign, or
commence legal proceedings to enforce or collect, or
subordinate to any obligation of the Company, howsoever
created, arising or evidenced, whether direct or
indirect, absolute or contingent, or now or hereafter
existing, or due or to become due, other than the Senior
Interests, this Company Note or any rights in respect
hereof (except as set forth in Section 12 hereof) or
----------
(ii) convert this Company Note into an equity interest
in the Company, unless AnnTaylor shall have received the
prior written consent of the Administrator and the
Relationship Bank in each case;
(g) AnnTaylor shall not, without the advance
written consent of the Administrator and the
Relationship Bank, commence, or join with any other
Person in commencing, any Bankruptcy Proceedings with
respect to the Company until at least one year and one
day shall have passed since the Senior Interests shall
have been paid and performed in full and in cash;
(h) If, at any time, any payment (in whole or in
part) of any Senior Interest is rescinded or must be
restored or returned by a Senior Interest Holder
(whether in connection with Bankruptcy Proceedings or
otherwise), these Subordination Provisions shall
continue to be effective or shall be reinstated, as the
case may be, as though such payment had not been made;
(i) Without affecting the rights and restrictions
set forth in the Transaction Documents, each of the
Senior Interest Holders may, from time to time, at its
sole discretion, without notice to AnnTaylor, and
without waiving any of its rights under these
Subordination Provisions, take any or all of the
following actions: (i) retain or obtain an interest in
any property to secure any of the Senior Interests; (ii)
retain or obtain the primary or secondary obligations of
any other obligor or obligors with respect to any of the
Senior Interests; (iii) extend or renew for one or more
periods (whether or not longer than the original
period), alter or exchange any of the Senior Interests,
or release or compromise any obligation of any nature
with respect to any of the Senior Interests; (iv) amend,
supplement, amend and restate, or otherwise modify any
Transaction Document; and (v) release its security
interest in, or surrender, release or permit any
substitution or exchange for all or any part of any
rights or property securing any of the Senior Interests,
- 6 -
or extend or renew for one or more periods (whether or
not longer than the original period), or release,
compromise, alter or exchange any obligations of any
nature of any obligor with respect to any such rights or
property;
(j) AnnTaylor hereby waives: (i) notice of
acceptance of these Subordination Provisions by any of
the Senior Interest Holders; (ii) notice of the
existence, creation, non-payment or non-performance of
all or any of the Senior Interests; and (iii) all
diligence in enforcement, collection or protection of,
or realization upon, the Senior Interests, or any
thereof, or any security therefor;
(k) Each of the Senior Interest Holders may, from
time to time, on the terms and subject to the conditions
set forth in the Transaction Documents to which such
Persons are party, but without notice to AnnTaylor,
assign or transfer any or all of the Senior Interests,
or any interest therein; and, notwithstanding any such
assignment or transfer or any subsequent assignment or
transfer thereof, such Senior Interests shall be and
remain Senior Interests for the purposes of these
Subordination Provisions, and every immediate and
successive assignee or transferee of any of the Senior
Interests or of any interest of such assignee or
transferee in the Senior Interests shall be entitled to
the benefits of these Subordination Provisions to the
same extent as if such assignee or transferee were the
assignor or transferor; and
(l) These Subordination Provisions constitute a
continuing offer from the holder of this Company Note to
all Persons who become the holders of, or who continue
to hold, Senior Interests; and these Subordination
Provisions are made for the benefit of the Senior
Interest Holders, and the Administrator or the Lender
may proceed to enforce such provisions on behalf of each
of such Persons.
10. General. No failure or delay on the part of
-------
AnnTaylor in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or
further exercise thereof or the exercise of any other power
or right. No amendment, modification or waiver of, or
consent with respect to, any provision of this Company Note
shall in any event be effective unless (i) the same shall be
in writing and signed and delivered by the Company and
AnnTaylor and (ii) all consents required for such actions
- 7 -
under the Transaction Documents shall have been received by
the appropriate Persons.
12. No Negotiation. This Company Note is not
--------------
negotiable; provided, AnnTaylor may pledge this Company Note
--------
to the agent for the benefit of the lenders under the
AnnTaylor Credit Agreement.
13. Governing Law. THIS PROMISSORY NOTE SHALL BE
-------------
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
14. Captions. Paragraph captions used in this Company
--------
Note are for convenience only and shall not affect the
meaning or interpretation of any provision of this Company
Note.
ANNTAYLOR FUNDING, INC.
By:___________________________
Title:________________________
Pay to the order of Bank of
America National Trust and
Savings Association, as Agent
ANNTAYLOR, INC.
By:___________________________
Title: Senior Vice President
- 8 -
Exhibit C
January 27, 1994
The Persons Listed on
Schedule I Hereto
Re: Receivables Facility of
AnnTaylor, Inc. and
AnnTaylor Funding, Inc.
-----------------------
Ladies and Gentlemen:
We have acted as special counsel to AnnTaylor
Funding, Inc., a Delaware corporation (the "Company"),
and AnnTaylor, Inc., a Delaware corporation ("AnnTaylor",
and together with the Company, the "Credit Parties") in
connection with the preparation, execution and delivery
of (i) the Purchase and Sale Agreement dated as of
January 27, 1994 (the "Purchase Agreement") between the
Company, as purchaser and AnnTaylor, as seller, (ii) the
Receivables Financing Agreement, dated as of January 27,
1994 (the "Receivables Financing Agreement"), among the
Company, Clipper Receivables Corporation (the "Lender"),
AnnTaylor, as Servicer, State Street Boston Capital
Corporation (the "Administrator"), and PNC Bank, National
Association (the "Relationship Bank"), and (iii) certain
other agreements, instruments and documents related to
the Purchase Agreement and the Receivables Financing
Agreement. This opinion is being delivered pursuant to
Section 4.1(h) of the Purchase Agreement and Section
5.01(h)(i) of the Receivables Financing Agreement. Capi-
talized terms used herein and not otherwise defined
herein shall have the same meanings herein as set forth
in Appendix A to the Receivables Financing Agreement.
In our examination we have assumed the genuine-
ness of all signatures including endorsements, the legal
capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as
facsimile, certified or photostatic copies, and the au-
thenticity of the originals of such copies. As to any
facts material to this opinion which we did not indepen-
The Persons listed on
Schedule I hereto
January 27, 1994
Page 2
dently establish or verify, we have relied upon state-
ments and representations of the Credit Parties and their
respective officers and other representatives and of
public officials, including the facts set forth in the
Company's Certificate and AnnTaylor's Certificate, each
as described below.
In rendering opinions set forth herein, we have
examined and relied on originals or copies of the follow-
ing:
(a) the Receivables Financing Agreement;
(b) the Purchase Agreement;
(c) the Spread Account Agreement;
(d) the Note;
(e) the Company Note (as defined in the
Purchase Agreement);
(f) the Fee Letter;
(g) the certificate of the Company exe-
cuted by an officer of the Company dated the date hereof,
a copy of which is attached as Exhibit A hereto (the
"Company's Certificate");
(h) the certificate of AnnTaylor executed
by an officer of AnnTaylor, dated the date hereof, a copy
of which is attached as Exhibit B hereto ("AnnTaylor's
Certificate");
(i) the Certificate of Incorporation and
By-laws of each of the Credit Parties;
(j) certain resolutions of the Board of
Directors of the Company adopted by unanimous written
consent on January 24, 1994;
(k) certain resolutions of the Board of
Directors of AnnTaylor adopted on January 19, 1994;
The Persons listed on
Schedule I hereto
January 27, 1994
Page 3
(l) signed, unfiled copies of financing
statements under the Uniform Commercial Code as in effect
in the State of New York, naming (i) AnnTaylor as the
debtor, the Company as secured party and the Lender as
the assignee and (ii) the Company as debtor and the
Lender as the secured party, which we understand and have
assumed in each case will be filed within ten days of the
assignment of Pool Receivables from AnnTaylor to the
Company and the transfer of the security interest therein
from the Company to the Lender in the offices of the
Secretary of State of the State of New York and the City
Register of New York County, New York (the "Filing Offic-
es") (such financing statements, the "Financing State-
ments");
(m) search reports provided by Lexis
Document Services, (i) dated January 25, 1994 and cover-
ing the period through December 17, 1993 listing financ-
ing statements that name AnnTaylor as debtor and that are
filed in the Secretary of State of the State of New York
and (ii) dated January 24, 1994, and covering the period
through December 17, 1993, listing financing statements
that name the Company as debtor and that are filed in the
Secretary of State of the State of New York, together
with copies of such financing statements, a summary of
which search reports are attached as Exhibit C hereto
(the "Search Reports");
(n) a certificate from the Secretary of
State of the State of Delaware as to the good standing of
the Company in such jurisdiction; and
(o) such other documents as we have
deemed necessary or appropriate as a basis for the opin-
ions set forth below.
Unless otherwise indicated, references in this
opinion to the "New York UCC" shall mean the Uniform Com-
mercial Code as in effect on the date hereof in the State
of New York. The documents listed in paragraphs (a)
through (f) above shall hereinafter be referred to col-
lectively as the "Documents."
The Persons listed on
Schedule I hereto
January 27, 1994
Page 4
Members of our firm are admitted to the bar of
the State of New York. We express no opinion as to the
laws of any jurisdiction other than (i) the laws of the
State of New York, (ii) the General Corporation Law of
the State of Delaware (the "DGCL"), and (iii) the federal
laws of the United States of America to the extent spe-
cifically referred to herein.
The opinions set forth below are subject to the
following qualifications:
(i) enforcement of each of the
Documents and of any interests created thereby may
be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general
principles of equity (regardless of whether enforce-
ment is sought in equity or at law);
(ii) certain of the remedial provi-
sions with respect to the security including waivers
with respect to the exercise of remedies against the
collateral contained in each of the Documents may be
unenforceable in whole or in part, but the inclusion
of such provisions does not affect the validity of
the Documents, each taken as a whole, and, subject
to the other qualifications and exceptions contained
in this opinion, each of the Documents, each taken
as a whole, together with applicable law, contains
adequate provisions for the practical realization of
the benefits of the security created thereby;
(iii) we express no opinion as to
any provision with respect to governing law to the
extent that it purports to affect the choice of law
governing perfection and the effect of perfection
and non-perfection of the security interests.
(iv) enforcement of the Documents
may be subject to the terms of instruments, leases,
contracts or other agreements between the Credit
Parties and the other parties to such agreements,
The Persons listed on
Schedule I hereto
January 27, 1994
Page 5
the rights of such other parties and any claims or
defenses of such other parties against the Credit
Parties arising under or outside such instruments,
leases or contracts or other agreements; and
(v) we express no opinion as to the
enforceability of any rights to contribution or
indemnification provided for in the Documents which
are violative of the public policy underlying any
law, rule or regulation (including any federal or
state securities law, rule or regulation).
We have assumed for the purpose of the opinions
set forth herein that the assignment from AnnTaylor to
the Company pursuant to the Purchase Agreement consti-
tutes the sale of (and not a lien upon) the assets pur-
ported to be conveyed thereby. We call to your attention
that we have delivered an opinion to you on even date
herewith with respect to the characterization of such
assignment in the event that AnnTaylor were to become a
debtor under the United States Bankruptcy Code, 11 U.S.C.
Sec. 101 et. seq. (the "Bankruptcy Code").
Based upon the foregoing and subject to the
limitations, qualifications, exceptions and assumptions
set forth herein, we are of the opinion that:
1. The Company has been incorporated and is
validly existing and is in good standing under the laws
of the State of Delaware.
2. Each of the Credit Parties has the corpo-
rate power and corporate authority to execute, deliver
and perform all of its obligations under each of the
Documents to which it is a party. The execution and
delivery by each of the Credit Parties of each of the
Documents to which it is a party and the consummation of
the transactions contemplated thereby have been duly
authorized by all requisite corporate action on the part
of each such Credit Party. Each of the Documents has
been duly executed and delivered by each Credit Party
which is a party thereto.
The Persons listed on
Schedule I hereto
January 27, 1994
Page 6
3. Each of the Documents constitutes the
valid and binding obligation of each Credit Party that is
a party thereto enforceable against such Credit Party in
accordance with its terms.
4. The execution and delivery by each of the
Credit Parties of each of the Documents to which it is a
party and the performance by each such Credit Party of
its obligations under each such Document, each in accor-
dance with its terms, do not (i) conflict with the Cer-
tificate of Incorporation or By-laws of such Credit
Party, (ii) constitute a violation of or a default under
any Applicable Contract (as hereinafter defined) or (iii)
cause the creation of any security interest or lien
(other than the liens granted under, created by or per-
mitted by the Documents) upon any of the property of such
Credit Party pursuant to any Applicable Contracts. We do
not express any opinion, however, as to whether the
execution, delivery or performance by any Credit Party of
any Document to which it is a party will constitute a
violation of or a default under any covenant, restriction
or provision with respect to financial ratios or tests or
any aspect of the financial condition or results of
operations of such Credit Party or the effect of any such
violation or default on the opinions expressed herein.
For purposes of this paragraph 4, "Applicable Contracts"
means those agreements or instruments set forth on Sched-
ule I to the Company's Certificate with respect to the
Company and on Schedule I to AnnTaylor's Certificate with
respect to AnnTaylor and which have been identified to us
as all the agreements and instruments (other than the
Documents) which are material to the business or finan-
cial condition of the Company and AnnTaylor respectively.
5. Neither the execution, delivery or perfor-
mance by any Credit Party of any of the Documents to
which it is a party nor the compliance by such Credit
Party with the terms and provisions thereof will contra-
vene any provision of any Applicable Law (as hereinafter
defined). For purposes of this paragraph 5 and para-
graph 6, "Applicable Laws" means the DGCL and those laws,
rules and regulations of the State of New York and of the
The Persons listed on
Schedule I hereto
January 27, 1994
Page 7
United States of America (including, without limitation,
Regulations G, U and X of the Federal Reserve Board)
which, in our experience, are normally applicable to
transactions of the type contemplated by the Documents
and are not the subject of a specific opinion herein
referring expressly to a particular law or laws.
6. No Governmental Approval (as hereinafter
defined) which has not been obtained or taken and is not
in full force and effect is required to authorize or is
required in connection with the execution, delivery or
performance of any of the Documents by any Credit Party
except the filing of the Financing Statements in the
Filing Offices, the filing of financing statements in the
State of Connecticut and the filing of partial releases
(UCC-3 statements) with respect to security interests of
the Bank of America National Trust and Savings Associa-
tion, as agent (the "Bank of America Release State-
ments"). For the purposes of this paragraph 6, the term
"Governmental Approval" means any consent, approval,
license, authorization or validation of, or filing,
recording or registration with, any Governmental Authori-
ty pursuant to Applicable Laws, and for the purposes of
this paragraph 6 and paragraph 7, the term "Governmental
Authority" means any federal, New York or, to the extent
relating to the DGCL, Delaware executive, legislative,
judicial, administrative or regulatory body.
7. Neither the execution, delivery or perfor-
mance by any Credit Party of its obligations under the
Documents to which it is a party nor compliance by such
Credit Party with the terms thereof will contravene any
Applicable Order (as hereinafter defined) against such
Credit Party. For purposes of this paragraph 7, the term
"Applicable Orders" means those orders or decrees of
Governmental Authorities identified on Schedule II to the
Company's Certificate with respect to the Company and on
Schedule II to AnnTaylor's Certificate with respect to
AnnTaylor.
8. The provisions of the Purchase Agreement
are effective to create, in favor of the Company, a valid
The Persons listed on
Schedule I hereto
January 27, 1994
Page 8
security interest (as such term is defined in Section 1-
201 of the New York UCC) in that portion of the Pool
Receivables of AnnTaylor constituting accounts (as such
term is defined in Section 9-106 of the New York UCC)
(the "Accounts Property"), and the proceeds thereof. We
call to your attention that the term security interest as
defined in Section 1-201 of the New York UCC includes the
sale of accounts. We express no opinion with respect to
the nature or extent of the obligations being secured by
the security interest granted to the Company.
9. While there is no case law precisely on
point and the issue is not free from doubt, based upon
our review of relevant case law authority in New York,
including Stathos v. Murphy, 26 App. Div. 2d 500, 276
-----------------
N.Y. Supp. 2d 727, aff'd 19 N.Y.2d 883, 281 N.Y. Supp. 2d
81 (1967), and the principles set forth in Restatement of
--------------
Contracts 2d (1981), the provisions of the Purchase
- ------------
Agreement are effective to create, in favor of the Compa-
ny, a valid interest under the common law of the State of
New York in that portion (if any) of the Pool Receivables
of AnnTaylor constituting general intangibles (as such
term is defined in Section 9-106 of the New York UCC)
(the "General Intangibles Property," and together with
the Accounts Property, the "Receivables Property") that
is enforceable against subsequent creditors of or pur-
chasers from AnnTaylor. We note, however, that unless
the Obligor in respect of a Pool Receivable has received
notice of such sale, bona fide payments made by such
Obligor to AnnTaylor or to a subsequent assignee of such
Pool Receivable as to which the Obligor has received
notice of such assignment will discharge such Obligor's
obligations to the extent of such payment, and such
payment will be recoverable only from AnnTaylor or such
assignee.
The opinions expressed in paragraphs 8 and 9
are subject to the following qualifications:
(a) we have assumed that the Receivables
Property exists and that AnnTaylor has sufficient rights
in the Receivables Property for the interest of the
The Persons listed on
Schedule I hereto
January 27, 1994
Page 9
Company to attach, and we express no opinion as to the
nature or extent of any of AnnTaylor's rights in or title
to any Receivables Property;
(b) we call to your attention that Sec-
tion 552 of the Bankruptcy Code limits the extent to
which property acquired by a debtor after the commence-
ment of a case under the Bankruptcy Code may be subject
to a security interest arising from a security agreement
entered into by such debtor before the commencement of
such case;
(c) we call to your attention that the
security interest of the Company in proceeds of the
Accounts Property is limited to the extent set forth in
Section 9-306 of the New York UCC and to property of a
type subject to the New York UCC;
(d) we have assumed that there are no
agreements between AnnTaylor and any account debtor
prohibiting, restricting or conditioning the assignment
of any portion of the Receivables Property;
(e) we call to your attention that the
interest of the Company in the Receivables Property may
be subject to the rights of account debtors, claims and
defenses of account debtors and the terms of agreements
with account debtors;
(f) we express no opinion regarding the
interest of the Company in any of the Receivables Proper-
ty consisting of claims against any government or gov-
ernmental agency (including, without limitation, the
United States of America or any state thereof or any
agency or department of the United States of America or
any state thereof); and
(g) in the case of any account or general
intangible which is itself secured by other property, we
express no opinion with respect to the rights of the
Company in and to such underlying property.
The Persons listed on
Schedule I hereto
January 27, 1994
Page 10
10. The provisions of the Receivables Financ-
ing Agreement are effective to create, in favor of the
Lender, as security for the obligations of the Company
described in Section 9.01 thereof, a valid security
interest in that portion of the Pool Receivables consti-
tuting accounts or general intangibles (as each such term
is defined in Section 9-106 of the New York UCC) (the
"Receivables Collateral"), and the proceeds thereof.
The opinions expressed in paragraph 10 are sub-
ject to the qualifications to opinion paragraphs 8 and 9
set forth above and to the following qualifications:
(a) we have assumed that the Receivables
Collateral exists and the Company has sufficient rights
in the Receivables Collateral for the security interest
of the Lender to attach, and, except to the extent set
forth in opinion paragraphs 8 and 9 above, we express no
opinion as to the nature or extent of the Company's
rights in or title to any Receivables Collateral;
(b) we call to your attention that Sec-
tion 552 of the Bankruptcy Code limits the extent to
which property acquired by a debtor after the commence-
ment of a case under the Bankruptcy Code may be subject
to a security interest arising from a security agreement
entered into by such debtor before the commencement of
such case;
(c) we call to your attention that the
security interest of the Lender in proceeds is limited to
the extent set forth in Section 9-306 of the New York UCC
and to property of a type subject to the New York UCC;
(d) we call to your attention that the
security interest of the Lender may be subject to the
rights of account debtors, claims and defenses of account
debtors and the terms of agreements with account debtors;
(e) we express no opinion regarding the
security interest of the Lender in any of the Receivables
Collateral consisting of claims against any government or
The Persons listed on
Schedule I hereto
January 27, 1994
Page 11
governmental agency (including, without limitation, the
United States of America or any state thereof or any
agency or department of the United States of America or
any state thereof); and
(f) in the case of any account or general
intangible which is itself secured by other property, we
express no opinion with respect to the rights of the
Lender in and to such underlying property.
11. The Financing Statements are in appropri-
ate form for filing in each of the Filing Offices under
the New York UCC.
12. The security interest in favor of the
Company in the Accounts Property described in the Financ-
ing Statements naming AnnTaylor as debtor (the "Article 9
Filing Property") will be perfected upon the filing of
such Financing Statements in the respective Filing Offic-
es, and no other security interest of any other transfer-
ee of AnnTaylor is equal or prior to the security inter-
est of the Company in such Article 9 Filing Property.
13. If the chief executive office of the
Company is located in the State of New York for the
purposes of the New York UCC, the security interest in
favor of the Lender in the Receivables Collateral de-
scribed in the Financing Statements naming the Company as
debtor (the "Article 9 Filing Collateral") will be per-
fected upon the filing of such Financing Statements in
the respective Filing Offices, and no other security
interest of any other transferee from the Company is
equal or prior to the security interest of the Lender in
such Article 9 Filing Collateral.
The opinions expressed in paragraphs 11, 12 and
13 are subject to the qualifications to opinion para-
graphs 8, 9 and 10 set forth above and to the following
qualifications:
(a) we have assumed based upon AnnTaylor's
Certificate that, for the purposes of the New York UCC,
The Persons listed on
Schedule I hereto
January 27, 1994
Page 12
the chief executive office of AnnTaylor as of the date of
filing of the Financing Statements is located in New York
County in the State of New York;
(b) we have assumed based upon the Company's
Certificate that, for the purposes of the New York UCC,
the chief executive office of the Company as of the date
of filing of the Financing Statements is located either
in New York County in the State of New York or in the
State of Connecticut, and we express no opinion with
respect to the perfection or priority of the security
interest of the Lender in the Receivables Collateral to
the extent that the chief executive office of the Company
is located in the State of Connecticut;
(c) we call to your attention that the perfec-
tion and the effect of perfection and nonperfection of
the security interest of the Company in the Article 9
Filing Property and the security interest of the Lender
in the Article 9 Filing Collateral may be governed by
laws other than those of the New York UCC to the extent
that the chief executive office of either AnnTaylor or
the Company respectively is or becomes located in a
jurisdiction other than New York;
(d) we call to your attention that (i) the
perfection of the security interest of the Company as to
the Article 9 Filing Property and the Lender as to the
Article 9 Filing Collateral will be terminated as to any
such property acquired by AnnTaylor or the Company re-
spectively more than four months after AnnTaylor or the
Company respectively changes its name, identity, or
corporate structure so as to make the applicable Financ-
ing Statements seriously misleading unless new appropri-
ate financing statements indicating the new name, identi-
ty or corporate structure of AnnTaylor or the Company, as
the case may be, are properly filed before the expiration
of such four months, and (ii) the New York UCC requires
the filing of continuation statements within the period
of six months prior to the expiration of five years from
the date of the filing of the original Financing State-
ments or the filing of any continuation statements in
The Persons listed on
Schedule I hereto
January 27, 1994
Page 13
order to maintain the effectiveness of the original
Financing Statements;
(e) we express no opinion with respect to any
of the Accounts Property consisting of accounts or gener-
al intangibles arising from or relating to the sale of
farm products by a farmer, consumer goods in the hands of
AnnTaylor, crops growing or to be gown, timber to be cut
or minerals or the like (including oil and gas) or ac-
counts subject to subsection 5 of Section 9-103 of the
New York UCC;
(f) we express no opinion with respect to any
of the Receivables Collateral consisting of accounts or
general intangibles arising from or relating to the sale
of farm products by a farmer, consumer goods in the hands
of the Company, crops growing or to be grown, timber to
be cut or minerals or the like (including oil and gas) or
accounts subject to subsection 5 of Section 9-103 of the
New York UCC;
(g) we express no opinion as to the priority
of the security interest of the Company in the Article 9
Filing Property or the Lender in the Article 9 Filing
Collateral against: (i) any liens, claims or other
interests that arise by operation of law and do not
require any filing or possession in order to take priori-
ty over security interests perfected through the filing
of a financing statement; (ii) any lien, claim or encum-
brance in favor of the United States of America or any
state, or any agency or instrumentality of any of them or
any other governmental entity (including, without limita-
tion, federal tax liens, liens arising under the Employee
Retirement Income Security Act of 1974, as amended, or
claims given priority pursuant to 31 U.S.C. Sec. 3713);
(iii) a lien creditor who attached or levied prior to the
perfection of the security interest of the Company or the
Lender, as the case may be; (iv) a lien creditor with
respect to future advances to the extent set forth in
Section 9-301(4) of the New York UCC; (v) another secured
creditor with respect to any future advances to the
extent set forth in Section 9-312(7) of the New York UCC;
The Persons listed on
Schedule I hereto
January 27, 1994
Page 14
(vi) a security interest perfected under the laws of
another jurisdiction to the extent that either AnnTaylor
or the Company had its chief executive office in such
jurisdiction within four months prior to the date of the
perfection of the security interest of the Company or the
Lender, as the case may be; (vii) a security interest
perfected without filing any financing statement pursuant
to Section 9-302(1) of the New York UCC; (viii) a secu-
rity interest perfected by filing a financing statement
naming AnnTaylor or the Company as debtor using a trade
name, fictitious name or previous name; (ix) the holder
of a perfected "purchase money security interest" as such
term is defined in Section 9-107 of the New York UCC;
(x) another secured party with a perfected security
interest in other property of AnnTaylor or the Company to
the extent the Pool Receivables are proceeds of such
other creditor's collateral; (xi) any person who has en-
tered into a subordination or intercreditor agreement
with the Company with respect to the Accounts Property or
with the Lender with respect to the Receivables Collat-
eral; (xii) any claim for wages, salary or other compen-
sation; (xiii) a purchaser of accounts purchased as part
of the sale of the business out of which they arose;
(xiv) an assignment of accounts for purposes of collec-
tion only or a transfer of a single account; (xv) any
claim arising out of tort or any surety who is subrogated
to the rights of AnnTaylor or the Company, as the case
may be; or (xvi) the security interest of a creditor who
filed a financing statement based on a prior or incorrect
location of the chief executive office of AnnTaylor or
the Company to the extent such other financing statement
would be effective under Section 9-401(2) or (3) of the
New York UCC;
(h) we have assumed that (i) all financing
statements presented for filing prior to the effective
date of the applicable search report in which each of
AnnTaylor and the Company is named as debtor have been
properly filed, indexed and recorded with the Secretary
of State of the State of New York and are identified in
the appropriate Search Report and (ii) no financing
statements naming AnnTaylor or the Company as debtor were
The Persons listed on
Schedule I hereto
January 27, 1994
Page 15
filed with Secretary of State of the State of New York
between the effective date of the Search Reports and the
date of the filing of the applicable Financing Statements
in such Filing Office; and we call to your attention that
we did not review any search report with respect to any
financing statements naming AnnTaylor or the Company as
debtor filed with the City Register of New York County,
New York; and
(i) we have assumed that the Bank of America
Release Statements will be filed on or prior to the date
of the filing of the Financing Statements.
14. No registration of AnnTaylor or the Compa-
ny under the Investment Company Act of 1940, as amended,
is required in connection with the initial assignment
under the Purchase Agreement or the initial borrowing
under the Receivables Financing Agreement, respectively.
In rendering the foregoing opinions, we have
assumed, with your consent, that:
(a) AnnTaylor has been incorporated in
the State of Delaware and is validly existing and in
good standing under the laws of all jurisdictions in
which it owns or leases property of a nature, or
transacts business of a type, that would make such
qualification necessary;
(b) the execution, delivery and perfor-
mance of each Credit Party's obligations under the
Documents to which it is a party does not and will
not conflict with, contravene, violate or constitute
a default under (i) any lease, indenture, instrument
or other agreement to which such Credit Party or its
property is subject (other than the Applicable
Contracts, as to which we make no such assumption),
(ii) any rule, law or regulation to which such
Credit Party is subject (other than Applicable Laws,
as to which we make no such assumption), or (iii)
any judicial or administrative order or decree of
The Persons listed on
Schedule I hereto
January 27, 1994
Page 16
any governmental authority (other than Applicable
Orders, as to which we make no such assumption); and
(c) no authorization, consent or
other approval of, notice to or filing with any
court, governmental authority or regulatory body
(other than Governmental Approvals, as to which we
make no such assumption) is required to authorize or
is required in connection with the execution, deliv-
ery or performance by any Credit Party of any Docu-
ment to which it is a party or the transactions
contemplated thereby.
Our opinions are also subject to the following
assumptions and qualifications:
(a) we have assumed each of the Documents
constitutes the legal, valid and binding obligation
of each party to such Document (other than the
Credit Parties) enforceable against such party in
accordance with its terms; and
(b) we express no opinion as to the
effect on the opinions expressed herein of (i) the
compliance or noncompliance of the Administrator,
the Relationship Bank, the Collateral Agent, the
Credit Bank, the Liquidity Bank, the Lock-Box Bank,
the Lender or any other party (other than the Credit
Parties) to the Documents with any state, federal or
other laws or regulations applicable to them or (ii)
the legal or regulatory status or the nature of the
business of any such Person.
This opinion is being furnished only to you and
is solely for your benefit and is not to be used, quoted,
relied upon or otherwise referred to by any other Person
or for any other purpose without our prior written con-
sent.
Very truly yours,
SCHEDULE I
Clipper Receivables Corporation
P.O. Box 4024
Boston, Massachusetts 02201
State Street Boston Capital Corporation
225 Franklin Street
Boston, Massachusetts 02110
PNC Bank, National Association
Fifth Avenue and Wood Street
Pittsburgh, Pennsylvania 15265
Standard & Poor's Ratings Group
25 Broadway
New York, New York 10004
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Exhibit A to Opinion of
Special Counsel to AnnTaylor Funding, Inc.
------------------------------------------
Officer's Certificate
---------------------
I, Jocelyn F.L. Barandiaran, am Corporate
Secretary of AnnTaylor Funding, Inc., a Delaware corpora-
tion ("Funding"). I understand that pursuant to Section
5.01(h)(i) of that certain Receivables Financing Agree-
ment, dated as of January 27, 1994 (the "Receivables Fi-
nancing Agreement"), among Funding, AnnTaylor, Inc.
("AnnTaylor") as servicer, Clipper Receivables Corpora-
tion, State Street Boston Capital Corporation and PNC
Bank, National Association, Skadden, Arps, Slate, Meagher
& Flom is rendering an opinion (the "Opinion"). Defined
terms used herein but not otherwise defined shall have
the meaning set forth in Appendix A to the Receivables
Financing Agreement. I further understand that Skadden,
Arps, Slate, Meagher & Flom is relying on this certifi-
cate and the statements made herein in rendering the
Opinion.
With regard to the foregoing, on behalf of
Funding, I certify that:
1. The chief executive office of Funding is
located at either 142 West 57th Street, New York, New
York 10019 or 414 Chapel Street, New Haven, Connecticut
06511.
2. Set forth on Schedule I hereto are all of
the agreements and instruments (other than the Transac-
tion Documents) to which Funding is a party which are
material to the business or financial condition of Fund-
ing.
3. Set forth on Schedule II hereto are all of
the orders, judgments and decrees of any governmental
authority which are material to the business or property
of Funding.
4. Funding holds no stock in any company.
5. Funding is engaged in the business set
forth in the Transaction Documents. The value of all
securities owned by Funding does not exceed 10% of the
value of Funding's total assets.
6. Funding does not directly or indirectly
own or operate facilities used for the generation, trans-
mission or distribution of electric energy for sale or
facilities used for the distribution at retail of natural
or manufactured gas for heat, light or power and Funding
does not own any interest in any company which owns or
operates such facilities.
7. Neither Funding nor any of its subsidiaries
is a person providing railroad transportation for compen-
sation (a "rail carrier") or a person controlled by or
affiliated with a rail carrier or a person providing
sleeping car transportation for compensation (a "sleeping
car carrier") or a corporation organzied to provide
transportation by rail carrier or sleeping car carrier.
IN WITNESS WHEREOF, I have executed this cer-
tificate this day of January 1994.
----
By:
--------------------------------------
Name: Jocelyn F.L. Barandiaran
Title: Corporate Secretary
2
Schedule I
Applicable Contracts
--------------------
None
3
Schedule II
Applicable Orders
-----------------
None
4
Exhibit B to Opinion of
Special Counsel to AnnTaylor, Inc.
----------------------------------
Officer's Certificate
---------------------
I, Jocelyn F.L. Barandiaran, am Vice President,
General Counsel and Corporate Secretary of AnnTaylor,
Inc., a Delaware corporation ("AnnTaylor"). I understand
that pursuant to (i) Section 5.01(h)(i) of that certain
Receivables Financing Agreement, dated as of January 27,
1994 (the "Receivables Financing Agreement"), among
AnnTaylor Funding, Inc. ("Funding"), AnnTaylor, as ser-
vicer, Clipper Receivables Corporation, State Street
Boston Capital Corporation and PNC Bank, National Associ-
ation and (ii) Section 4.1(h) of that certain Purchase
and Sale Agreement, dated as of January 27, 1994 between
Funding and AnnTaylor, Skadden, Arps, Slate, Meagher &
Flom is rendering an opinion (the "Opinion"). Defined
terms used herein but not otherwise defined shall have
the meaning set forth in Appendix A to the Receivables
Financing Agreement. I further understand that Skadden,
Arps, Slate, Meagher & Flom is relying on this certifi-
cate and the statements made herein in rendering the
Opinion.
With regard to the foregoing, on behalf of
AnnTaylor, I certify that:
1. The chief executive office of AnnTaylor is
located at 142 West 57th Street, New York, New York
10019.
2. Set forth on Schedule I hereto are all of
the agreements and instruments (other than the Transac-
tion Documents) to which AnnTaylor is a party which are
material to the business or financial condition of
AnnTaylor.
3. Set forth on Schedule II hereto are all of
the orders, judgments and decrees of any governmental
authority which are material to the business or property
of AnnTaylor.
4. AnnTaylor holds no stock in any company
other than the stock represented by the certificates set
forth on Schedule III hereto; none of such stock is trad-
ed on a national securities exchange.
5. AnnTaylor is primarily engaged in the
business described in Schedule IV. The value of all
securities owned by AnnTaylor (excluding those referred
to in paragraph 4 above) does not exceed 10% of the value
of AnnTaylor's total assets.
6. AnnTaylor does not directly or indirectly
own or operate facilities used for the generation, trans-
mission or distribution of electric energy for sale or
facilities used for the distribution at retail of natural
or manufactured gas for heat, light or power and
AnnTaylor does not own any interest in any company which
owns or operates such facilities.
7. Neither AnnTaylor nor any of its subsid-
iaries is a person providing railroad transportation for
compensation (a "rail carrier") or a person controlled by
or affiliated with a rail carrier or a person providing
sleeping car transportation for compensation (a "sleeping
car carrier") or a corporation organzied to provide
transportation by rail carrier or sleeping car carrier.
2
IN WITNESS WHEREOF, I have executed this cer-
tificate this day of January 1994.
----
By:
--------------------------------------
Name: Jocelyn F.L. Barandiaran
Title: Vice President, General Counsel
and Corporate Secretary
3
Schedule I
Applicable Contracts
--------------------
1. Indenture, dated as of July 15, 1989, between AnnTaylor
and United States Trust Company of New York, as Trustee,
together with the Certificate of Satisfaction and Dis-
charge in favor of AnnTaylor as of July 29, 1993 by such
Trustee.
2. Indenture, dated as of July 15, 1989, between AnnTaylor
and State Street Bank and Trust Company of Connecticut,
as successor trustee to The Connecticut Bank and Trust
Company, National Association, as Trustee, together with
the Certificate of Satisfaction and Discharge in favor of
AnnTaylor as of July 29, 1993 by such Trustee.
3. Credit Agreement, dated as of June 28, 1993, among
AnnTaylor, Bank of America, Bank of Montreal and the
other financial institutions party thereto, as amended by
Amendment No. 1 to Credit Agreement dated as August 10,
1993, Amendment No. 2 to Credit Agreement dated as Sep-
tember 30, 1993, Amendment No. 3 to Credit Agreement
dated as December 23, 1993, and Amendment No. 4 and
Consent to Credit Agreement dated as January 24, 1994.
4. Security and Pledge Agreement, dated as of June 28, 1993,
made by AnnTaylor in favor of Bank of America, as Agent,
as modified by Amendment No. 4 and Consent to Credit
Agreement dated as January 24, 1994.
5. Trademark Assignment, dated as of June 28, 1993, made by
AnnTaylor with Bank of America, as Agent.
6. Tax Sharing Agreement, dated as of July 12, 1989, between
the Company and AnnTaylor Stores Corporation ("ATSC").
7. Agreement, dated as of July 13, 1993, among Cygne De-
signs, Inc., Cygne Design F.E. Limited, CAT US Inc.,
C.A.T. (Far East) Limited and AnnTaylor.
8. Stock Purchase Agreement, dated as of July 13, 1993,
between Cleveland Investment Limited and AnnTaylor.
9. Agreement, dated as of June 14, 1989, and the Trademark
License Agreement, effective as of January 1, 1990, among
Allied Stores Corporation, AnnTaylor and ATSC.
4
10. Indenture, dated as of June 15, 1993, between AnnTaylor
and Fleet Bank, N.A., as Trustee.
11. Employment Agreement, effective as of February 3, 1992,
between AnnTaylor, AnnTaylor Stores Corporation and Sally
Frame Kasaks.
12. Lease, dated as of March 17, 1989, between Carven Associ-
ates and AnnTaylor concerning the West 57th Street head-
quarters, as amended by the First Amendment thereto dated
as of November 14, 1990, the Second Amendment thereto
dated as of February 28, 1993, the Third Amendment there-
to dated as of June 24, 1993, and the letter agreement
dated as of October 1, 1993.
13. Lease, dated December 1, 1985, between Hamilton Realty
Co. and AnnTaylor (as successor in interest to ASC Stores
III, Inc.) concerning the New Haven distribution center,
as amended by the letter agreement dated March 22, 1993,
and the letter agreement dated July 26, 1993.
14. Lease, dated June 12, 1986, between SMR 85-1 Limited
Partnership and AnnTaylor (as successor in interest to
ASC Stores III, Inc.) concerning the New Haven offices,
as amended by the Amendment to Lease dated December 7,
1987 and the Second Amendment to Lease dated December 10,
1992.
5
Schedule II
Applicable Orders
-----------------
None
6
Schedule III
Stock Certificates
------------------
Company Certificate Nos. No. of Shares
- ------- ---------------- -------------
AnnTaylor Travel, Inc.1 1 1
CAT U.S. Inc.1 1 and 11 4,000
C.A.T. (Far East) Limited1 5 and 8 60,000
AnnTaylor Funding, Inc.1 1 100
- --------------------
1 Pledged to Bank of America pursuant to the Security
and Pledge Agreement, dated as of June 28, 1993.
7
Schedule IV
Description of Business
-----------------------
AnnTaylor is primarily engaged in the business of the
retail sale of women's apparel, shoes and accessories.
8
EXHIBIT D
to
Purchase and Sale Agreement
STOCK SUBSCRIPTION AGREEMENT
----------------------------
This Stock Subscription Agreement (as amended or modified
from time to time, this "Agreement") is entered into as of
---------
January 24, 1994 among ANNTAYLOR FUNDING, INC., a Delaware
corporation ("Issuer") and ANNTAYLOR, INC., a Delaware
------
corporation ("AnnTaylor").
---------
R E C I T A L S
A. Issuer is organized under the laws of the State of
Delaware for the purpose of purchasing accounts receivable (and
certain related rights) of AnnTaylor.
B. (i) Issuer and AnnTaylor will enter into a Purchase and
Sale Agreement (the "Purchase and Sale Agreement") pursuant to
----------------------------
which AnnTaylor will sell all of the Receivables (and certain
related rights) generated by it (other than Receivables being
used to purchase Shares (as defined below) hereunder) to Issuer,
and (ii) Issuer, AnnTaylor, Clipper Receivables Corporation,
State Street Boston Capital Corporation and PNC Bank, National
Association will enter into a Receivables Financing Agreement
("Receivables Financing Agreement"), in connection with which,
--------------------------------
Issuer will grant to Lender a security interest in the
Receivables referred to in clause (i) and the Receivables being
----------
contributed to Issuer hereunder. The term "Receivables" and the
other capitalized terms used (but not otherwise defined) herein
shall have the meanings set forth in the Receivables Financing
Agreement (when executed).
C. Issuer desires to sell all the shares of its capital
stock to AnnTaylor, and AnnTaylor desires to purchase such
shares, on the terms set forth in this Agreement.
NOW, THEREFORE, Issuer and AnnTaylor agree as follows:
1. Purchase and Sale of Capital Stock.
----------------------------------
(a) On the Closing Date, Issuer shall sell to
AnnTaylor, and AnnTaylor shall purchase from Issuer, 100 shares
of common stock, $1.00 par value, of Issuer (such aggregate
number of shares and common stock herein called the "Shares" and
------
"Common Stock," respectively).
------------
(b) The purchase price for the Shares will
consist of an aggregate of $100.
2. Closing.
-------
The closing of the purchase and sale of the Shares
hereunder (the "Closing") shall be held at the offices of
-------
AnnTaylor in New York, New York on January 24, 1994 (the "Closing
-------
Date"). On the Closing Date, Issuer shall deliver to AnnTaylor a
- ----
certificate registered in AnnTaylor's name representing the
number of Shares to be purchased by AnnTaylor against delivery to
Issuer by AnnTaylor of the purchase price set forth in Section
-------
1(b).
- ----
3. Representations and Warranties of Issuer. Issuer
----------------------------------------
represents and warrants to AnnTaylor as follows:
(a) Issuer is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Delaware, and has all requisite corporate power and authority
to carry on its business as proposed to be conducted.
(b) Issuer has all requisite legal and corporate
power to enter into this Agreement, to issue the Shares and to
perform its other obligations under the terms of this Agreement.
(c) The authorized capital stock of Issuer as of
the date hereof and as of the Closing Date is 100 shares. The
Shares have been duly authorized and, when issued, and upon
receipt of the purchase price thereof, will be validly issued,
fully paid and nonassessable.
(d) Issuer has taken all corporate action
necessary for its authorization, execution, and delivery of, and
its performance under, this Agreement.
(e) This Agreement constitutes a legal, valid and
binding obligation of Issuer, enforceable against Issuer in
accordance with its terms, except that enforceability may be
limited by (i) bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally and (ii) general
principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law.
4. Representations and Warranties of AnnTaylor.
-------------------------------------------
AnnTaylor represents and warrants to Issuer as
follows:
(a) AnnTaylor is a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware,
- 2 -
and has all requisite corporate power and authority to carry on
its business as conducted on the date hereof.
(b) AnnTaylor has taken all actions required for
its authorization, execution, and delivery of, and its
performance under, this Agreement.
(c) This Agreement constitutes a valid and
binding obligation of AnnTaylor, enforceable against AnnTaylor in
accordance with its terms, except that enforceability may be
limited by (i) bankruptcy, insolvency or other laws affecting the
enforcement of creditors' rights generally and (ii) general
principles of equity regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(d) AnnTaylor is purchasing the Shares for
investment for its own account, not as a nominee or agent, and
not with a view to the sale or distribution of any part thereof;
and AnnTaylor has no current intention of selling, granting a
participation in, or otherwise distributing, the same.
(e) AnnTaylor understands that the Shares have
not been registered under the Securities Act of 1933, as amended,
or under any other Federal or state law, and that Issuer does not
contemplate such a registration.
(f) AnnTaylor has such knowledge, sophistication
and experience in financial and business matters that it is
capable of evaluating the merits and risks of the transactions
contemplated by this Agreement, and has made such investigations
in connection herewith as have been deemed necessary or desirable
to make such evaluation.
5. Conditions to AnnTaylor's Obligations at the
--------------------------------------------------
Closing.
- -------
AnnTaylor's obligation to purchase the Shares at
the Closing is subject to the fulfillment on or prior to the
Closing Date of the following conditions:
(a) The representations and warranties made by
Issuer herein shall be true and correct when made, and shall be
true and correct on the Closing Date with the same force and
effect as if they had been made on and as of the Closing Date;
and Issuer shall have performed all obligations and conditions
herein required to be performed or observed by it on or prior to
the Closing Date and all documents incident thereto shall be
satisfactory in form and content to AnnTaylor and its counsel.
(b) Issuer shall have filed the Certificate of
Incorporation, in the form attached hereto as Exhibit A with the
---------
- 3 -
Delaware Secretary of State and adopted the By-laws in the form
attached hereto as Exhibit B.
---------
(c) The purchase of the Shares by AnnTaylor
hereunder shall be legally permitted by all laws and regulations
to which AnnTaylor or Issuer are subject.
6. Conditions to Issuer's Obligations at the Closing.
-------------------------------------------------
Issuer's obligation to sell and issue the Shares
at the Closing is subject to the fulfillment to Issuer's
satisfaction on or prior to the Closing Date of the following
conditions:
(a) The representations and warranties made by
AnnTaylor herein shall be true and correct when made, and shall
be true and correct on the Closing Date with the same force and
effect as if they had been made on and as of the same date; and
AnnTaylor shall have performed all obligations and conditions
herein required to be performed or observed by it on or prior to
the Closing Date and all documents incident thereto shall be
satisfactory in form and content to Issuer and its counsel.
(b) The purchase of the Shares by AnnTaylor
hereunder shall be legally permitted by all laws and regulations
to which AnnTaylor or Issuer are subject.
(c) AnnTaylor shall have delivered the purchase
price for the Shares to be purchased by it hereunder, by
conveyance to Issuer of the amount of the Receivables set forth
in Section 1(b) (which conveyance shall be pursuant to
-------------
instruments reasonably satisfactory to Issuer).
7. Restrictions on Transfer; Legend.
--------------------------------
7.1 Legend. Each certificate representing the Shares
------
shall be endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR
HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT COVERING SUCH SECURITIES, THE SALE
IS MADE IN ACCORDANCE WITH RULE 144 OR ANY SUCCESSOR RULE OR
OTHER EXEMPTION FROM REGISTRATION UNDER THE ACT. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A
STOCK SUBSCRIPTION AGREEMENT DATED AS OF JANUARY 24, 1994,
BETWEEN ANNTAYLOR, INC. AND ANNTAYLOR FUNDING, INC. (THE
"COMPANY"), A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY, AND THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE VOTED, TRANSFERRED, SOLD, ASSIGNED,
- 4 -
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS SUCH
VOTING, TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF SUCH
AGREEMENT. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF
THIS CERTIFICATE, AGREES TO BE BOUND BY ALL OF THE
PROVISIONS OF SUCH AGREEMENT.
7.2 Registration of Transfers. Issuer need not
---------------------------
register a transfer of any Shares unless the conditions specified
in the foregoing legend are satisfied. Issuer shall also
instruct its transfer agent, if any, not to register the transfer
of any Shares unless the conditions specified in the foregoing
legend are satisfied.
8. Agreement to Vote.
-----------------
(a) AnnTaylor hereby agrees and covenants to vote
all of the shares of Common Stock now or hereafter owned by it at
a meeting of stockholders of Issuer, or by written consent in
lieu of any such meeting, to cause to be elected to, and
maintained on, Issuer's board of directors at all times one
individual who meets the requirements of an "Independent
Director" as defined in the Issuer's certificate of incorporation
as in effect on the date hereof. AnnTaylor hereby further agrees
and covenants that in the event the Independent Director resigns
or otherwise ceases to be a director of Issuer, AnnTaylor will
vote all of the shares of Common Stock then owned by it, whether
beneficially or otherwise, as is necessary at a meeting of
stockholders of Issuer, or by written consent in lieu of any such
meeting, to select and cause to be elected a replacement
Independent Director who meets all of the qualifications of an
Independent Director as set forth in the Issuer's certificate of
incorporation.
(b) AnnTaylor (for itself and its successors and
assigns) hereby acknowledges and agrees that any decision to
approve or otherwise cause the commencement of a voluntary case
or other proceeding with respect to the Issuer under any
applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law, or the appointment
of or taking possession by, a receiver, liquidator, assignee,
trustee, custodian, or other similar official for the Issuer
shall be approved in writing by the Independent Director prior to
the making thereof, and the Independent Director shall owe a
fiduciary duty to the Issuer (and its creditors) and not to the
stockholders of Issuer in respect of any such decision.
(c) AnnTaylor hereby agrees and covenants to
maintain a separate corporate existence from the Issuer
including, without limitation, doing all things with respect to
itself of the type set forth in Section 7.02 of the Receivables
Financing Agreement.
- 5 -
9. General Restrictions on Transfer and Issuance.
---------------------------------------------
No Shares or any interest therein shall be validly
sold, assigned, pledged, encumbered, awarded, confirmed, or
otherwise transferred, for consideration or otherwise, whether
voluntarily, involuntarily, or by operation of law, and no
purported transferee shall be recognized as a shareholder of
Issuer for any purpose whatsoever unless and until the holders of
all of the other Shares, the Lender, the Administrator and the
Relationship Bank have filed with the secretary of Issuer their
written consents to such transfer; provided that the Shares may
--------
be pledged to Bank of America National Trust and Savings
Association as Agent pursuant to documents relating to the
AnnTaylor Credit Agreement. A transfer or attempt to transfer
subject to the provisions of this Agreement shall be deemed to
occur whenever any interest in Common Stock is transferred or is
attempted to be transferred, voluntarily, involuntarily, or by
operation of law, irrespective of whether any change in the
record ownership of any shares of Common Stock occurs.
10. Successors and Assigns.
----------------------
Each party agrees that it will not assign, sell,
transfer, delegate, or otherwise dispose of, whether voluntarily
or involuntarily, or by operation of law, any right or obligation
under this Agreement except in connection with a transfer of
Shares in compliance with the terms and conditions hereof or
otherwise in accordance with the terms hereof. Any purported
assignment, transfer, or delegation in violation of this Section
shall be null and void ab initio. Subject to the foregoing
-- ------
limits on assignment and delegation and except as otherwise
provided herein, this Agreement shall be binding upon and inure
to the benefit of the parties hereto, their respective heirs,
legatees, executors, administrators, assignees and legal
successors. Any transferee of any shares of Common Stock or any
interest hereunder shall take its interest subject to the terms
and conditions hereof and shall, upon request of any party
hereto, execute a counterpart of this Agreement. The parties
intend that each of the Lender, the Administrator and the
Relationship Bank be third party beneficiaries to this Agreement.
11. Amendments and Waivers.
----------------------
Any term hereof may be amended and the observance
of any term hereof may be waived (either generally or in a
particular instance and either retroactively or prospectively)
only with the written consent of Issuer, the Lender, AnnTaylor,
the Administrator and the Relationship Bank. Any amendment or
- 6 -
waiver so effected shall be binding upon Issuer and AnnTaylor.
Sections 7, 8, 9 and 10 of this Agreement and any requirement in
- ---------- - - --
this Section 11 for the consent of the Lender, the Administrator
----------
or the Relationship Bank shall be null and void and of no further
effect unless the Issuer and AnnTaylor shall have entered into
both the Purchase and Sale Agreement and the Receivables
Financing Agreement on or prior to February 15, 1994.
12. Further Acts.
------------
Each party agrees to perform any further acts and
execute and deliver any document which may be reasonably
necessary to carry out the provisions of this Agreement.
13. Counterparts.
------------
This Agreement may be executed in any number of
counterparts, all of such counterparts together to be deemed one
instrument.
14. Notices.
-------
Any and all notices, acceptances, statements and
other communications provided for herein shall be in writing,
delivered personally, by telefacsimile or certified mail, return
receipt requested.
15. Governing Law.
-------------
This Agreement shall be construed in accordance
with and be governed by the internal laws of the State of
Delaware.
16. Severability of this Agreement.
------------------------------
In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way
be affected or impaired thereby.
- 7 -
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
THE ISSUER:
ANNTAYLOR FUNDING, INC.,
a Delaware corporation
By: ___________________________________
Name: Bert A. Tieben
Title: Vice President
THE PURCHASER:
ANNTAYLOR, INC.,
a Delaware corporation
By: ______________________________________
Name: Bert A. Tieben
Title: Senior Vice President
EXHIBIT A
CERTIFICATE OF INCORPORATION
EXHIBIT B
BY-LAWS
Exhibit E
List of Offices Where
Records Are Kept
---------------------
AnnTaylor, Inc.
- ---------------
Chief place of business and chief executive office:
142 West 57th Street
New York, New York 10019
location of books and records, etc:
142 West 57th Street
New York, New York 10019
414 Chapel Street
New Haven, Connecticut 06511
9
Exhibit F
January 27, 1994
The Persons Listed
on Schedule I Hereto
Dear Sirs and Madams:
I am Vice President, General Counsel and Corpo-
rate Secretary of AnnTaylor, Inc., a Delaware corporation
("AnnTaylor"). I am delivering this opinion in connec-
tion with the preparation, execution and delivery of
(i) the Purchase and Sale Agreement dated as of
January 27, 1994 (the "Purchase Agreement") between
AnnTaylor Funding, Inc., a Delaware corporation (the
"Company"), as purchaser and AnnTaylor, as seller,
(ii) the Receivables Financing Agreement, dated as of
January 27, 1994 (the "Receivables Financing Agreement"),
among the Company, Clipper Receivables Corporation (the
"Lender"), AnnTaylor, as Servicer, State Street Boston
Capital Corporation (the "Administrator"), and PNC Bank,
National Association (the "Relationship Bank"), and
(iii) certain other agreements, instruments and documents
related to the Purchase Agreement and the Receivables Fi-
nancing Agreement. This opinion is being delivered
pursuant to Section 4.1(h) of the Purchase Agreement and
Section 5.01(h)(i) of the Receivables Financing Agree-
ment. Capitalized terms used herein and not otherwise
defined herein shall have the same meanings herein as set
forth in Appendix A to the Receivables Financing Agree-
ment.
In this connection, I have examined and am
familiar with originals or copies, certified or otherwise
identified to my satisfaction, of (i) the Receivables
Financing Agreement; (ii) the Purchase Agreement;
(iii) the Certificate of Incorporation and Bylaws of
AnnTaylor, as presently in effect; and (iv) resolutions
of the Board of Directors of AnnTaylor relating to the
Receivables Financing Agreement and the Purchase Agree-
ment. I have also examined and am familiar with origi-
nals or copies, certified or otherwise identified to my
January 27, 1994
Page 2
satisfaction, of such records of AnnTaylor and such
agreements, certificates of public officials, certifi-
cates of officers or representatives of AnnTaylor and
others, and such other documents, certificates and corpo-
rate or other records as I have deemed necessary or
appropriate as a basis for the opinions set forth below.
In my examination, I have assumed the genuiness
of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to
me as originals, the conformity to original documents of
all documents submitted to me as certified or photostatic
copies and the authenticity of the originals of such
copies. As to any facts material to this opinion which I
did not independently establish or verify, I have relied
upon certificates, statements and representations of
officers and other representatives of AnnTaylor and
others.
I am admitted to the Bar of the State of New
York and express no opinion as to the laws of any juris-
diction except the General Corporation Law of the State
of Delaware and the laws of the United States of America
to the extent specifically referred to herein.
Based upon and subject to the limitations,
qualifications, exceptions and assumptions set forth
herein, I am of the opinion that:
(i) AnnTaylor is a corporation duly incor-
porated, validly existing and in good standing under
the laws of the State of Delaware.
(ii) AnnTaylor is duly qualified to transact
business as a foreign corporation and is in good
standing in each other jurisdiction in which it owns
or leases property of a nature, or transacts busi-
ness of a type, that would make such qualification
necessary, except to the extent that the failure to
so qualify or be in good standing would not have a
material adverse effect on AnnTaylor.
January 27, 1994
Page 3
This opinion is being furnished by me as Vice
President, General Counsel and Corporate Secretary of
AnnTaylor to you solely for your benefit, and is not to
be used or relied upon by any other person without my
express prior written consent.
Very truly yours,
SCHEDULE I
Clipper Receivables Corporation
P.O. Box 4024
Boston, Massachusetts 02101
State Street Boston Capital Corporation
225 Franklin Street
Boston, Massachusetts 02110
PNC Bank, National Association
Fifth Avenue and Wood Street
Pittsburgh, Pennsylvania 15265
Moody's Investors Service
99 Church Street
New York, New York 10007
Standard & Poors Corporation
26 Broadway, 15th Floor
New York, New York 10004
SCHEDULE 5.14 to the Purchase Agreement
---------------------------------------
Trade Names
-----------
AnnTaylor, Inc.
- ---------------
CAC XIII, Inc.
ASC Stores III, Inc.
AnnTaylor Factory Stores
On February 8, 1989, AnnTaylor Acquisition Corp., a Dela-
ware corporation merged with and into AnnTaylor, Inc.
with AnnTaylor, Inc. being the surviving corporation.
10
Schedule 2
SUBORDINATED PROMISSORY NOTE
(NON-NEGOTIABLE
COMPANY NOTE)
New York, New York
January 27, 1994
FOR VALUE RECEIVED, the undersigned, ANNTAYLOR FUNDING,
INC., a Delaware corporation (the "Company"), promises to pay to
-------
ANNTAYLOR, INC., a Delaware corporation ("AnnTaylor"), on the
---------
terms and subject to the conditions set forth herein and in the
Purchase and Sale Agreement referred to below, the sum of (i) the
aggregate unpaid Purchase Price of all Receivables purchased by
the Company from AnnTaylor pursuant to such Purchase and Sale
Agreement, as such unpaid Purchase Price is shown in the records
of Servicer plus (ii) any capitalized interest pursuant to
----
Section 4 hereof as shown on the records of AnnTaylor.
- ---------
1. Purchase and Sale Agreement. This promissory note
---------------------------
(this "Company Note") is the Company Note described in, and is
------------
subject to the terms and conditions set forth in, that certain
Purchase and Sale Agreement of even date herewith (as the same
may be amended or otherwise modified from time to time, the
"Purchase and Sale Agreement"), between AnnTaylor and the
---------------------------
Company. Reference is hereby made to the Purchase and Sale
Agreement for a statement of certain other rights and obligations
of AnnTaylor and the Company.
2. Definitions. Capitalized terms used (but not defined)
-----------
herein have the meanings assigned thereto in Appendix A to the
----------
Receivables Financing Agreement dated as of even date herewith
among AnnTaylor, as Servicer, the Company, Clipper Receivables
Corporation, as Lender, State Street Boston Capital Corporation,
as Administrator, and PNC Bank, National Association, as
Relationship Bank (as may be amended or otherwise modified from
time to time, the "Receivables Financing Agreement"). In
-------------------------------
addition, as used herein, the following terms have the following
meanings:
"Bankruptcy Proceedings" has the meaning set forth in
----------------------
clause (b) of paragraph 9 hereof.
---------- -----------
"Final Maturity Date" means the second Business Day
-------------------
after a demand for payment has been made by AnnTaylor, but
in no event earlier than the Settlement Date immediately
following the date on which one hundred twenty-one (121)
days have elapsed since the date the Senior Interests have
been paid in full.
"Interest Period" means the period from and including a
---------------
Report Date (or, in the case of the first Interest Period,
the date hereof) to but excluding the next Report Date.
"Senior Interests" means, collectively, (i) the
----------------
aggregate unpaid principal amount of the Loans, (ii) accrued
interest on the aggregate unpaid principal amount of the
Loans, (iii) all fees payable pursuant to the Receivables
Financing Agreement, (iv) any Indemnified Amounts, (v) unpaid
Servicer's Fees, provided that AnnTaylor is not the
--------
Servicer, and (vi) all other obligations of the Company that
are due and payable to any Affected Party, together with all
interest accruing on any such amounts after the commencement
of any Bankruptcy Proceedings, notwithstanding any provision
or rule of law that might restrict the rights of any Senior
Interest Holder, as against the Company or anyone else, to
collect such interest.
"Senior Interest Holders" means, collectively, the
-----------------------
Lender, the Administrator, the Relationship Bank, the other
Affected Parties and the Indemnified Parties.
"Subordination Provisions" means, collectively, clauses
------------------------ -------
(a) through (l) of paragraph 9 hereof.
--- --- -----------
3. Interest. Subject to the Subordination Provisions set
--------
forth below, the Company promises to pay interest on this Company
Note as follows:
(a) Prior to the Final Maturity Date, the aggregate
unpaid Purchase Price from time to time outstanding during
any Interest Period shall bear interest at a rate per annum
---------
equal to the Alternate Base Rate plus 3% as in effect from
time to time as determined by Servicer; and
(b) From (and including) the Final Maturity Date to
(but excluding) the date on which the entire aggregate
unpaid Purchase Price is fully paid, the aggregate unpaid
Purchase Price from time to time outstanding shall bear
interest at a rate per annum equal to the Alternate Base
---------
Rate as in effect from time to time, plus 5%, as determined
by Servicer.
4. Interest Payment Dates. Subject to the Subordination
----------------------
Provisions set forth below, the Company shall pay accrued
interest on this Company Note on each Settlement Date, and shall
pay accrued interest on the amount of each principal payment made
in cash on a date other than a Settlement Date at the time of
such principal payment; provided, however, that unless AnnTaylor
-------- -------
instructs the Company otherwise, such interest may be paid by
means of an increase in the amount of the unpaid principal amount
hereof by an amount equal to the interest being so paid.
5. Basis of Computation. Interest accrued hereunder shall
--------------------
be computed for the actual number of days elapsed on the basis of
a 365- or 366-day year.
6. Principal Payment Dates. Subject to the Subordination
-----------------------
Provisions set forth below, payments of the principal amount of
this Company Note shall be made as follows:
(a) The principal amount of this Company Note shall be
reduced from time to time pursuant to Sections 3.2, 3.3,
------------- ---
3.4, and 7.2 of the Purchase and Sale Agreement; and
--- ---
(b) The entire remaining unpaid Purchase Price of all
Receivables purchased by the Company from AnnTaylor pursuant
to the Purchase and Sale Agreement shall be paid on the
Final Maturity Date.
Subject to the Subordination Provisions set forth below, the
principal amount of and accrued interest on this Company Note may
be prepaid on any Business Day without premium or penalty.
7. Payments. All payments of principal and interest
--------
hereunder are to be made in lawful money of the United States of
America.
8. Enforcement Expenses. In addition to and not in
--------------------
limitation of the foregoing, but subject to the Subordination
Provisions set forth below and to any limitation imposed by
applicable law, the Company agrees to pay all expenses, including
reasonable attorneys' fees and legal expenses, incurred by
AnnTaylor in seeking to collect any amounts payable hereunder
which are not paid when due.
9. Subordination Provisions. The Company covenants and
------------------------
agrees, and AnnTaylor, by its acceptance of this Company Note,
likewise covenants and agrees on behalf of itself and any holder
of this Company Note, that the payment of the principal amount of
and interest on this Company Note is hereby expressly
subordinated in right of payment to the payment and performance
of the Senior Interests to the extent and in the manner set forth
in the following clauses of this paragraph 9:
-----------
(a) No payment or other distribution of the Company's
assets of any kind or character, whether in cash,
securities, or other rights or property, shall be made on
account of this Company Note except to the extent such
payment or other distribution is permitted under the
Purchase and Sale Agreement and Section 3.01 of the
------------
Receivables Financing Agreement;
(b) In the event of any dissolution, winding up,
liquidation, readjustment, reorganization or other similar
event relating to the Company, whether voluntary or
involuntary, partial or complete, and whether in bankruptcy,
insolvency or receivership proceedings, or upon an
assignment for the benefit of creditors, or any other
marshalling of the assets and liabilities of the Company or
any sale of all or substantially all of the assets of the
Company (such proceedings being herein collectively called
"Bankruptcy Proceedings"), the Senior Interests shall first
----------------------
be paid and performed in full and in cash before AnnTaylor
shall be entitled to receive and to retain any payment or
distribution in respect of this Company Note. In order to
implement the foregoing: (i) all payments and distributions
of any kind or character in respect of this Company Note to
which AnnTaylor would be entitled except for this clause (b)
----------
shall be made directly to the Administrator (for the benefit
of the Senior Interest Holders); (ii) AnnTaylor shall
promptly file a claim or claims, in the form required in any
Bankruptcy Proceedings, for the full outstanding amount of
this Company Note, and shall use commercially reasonable
efforts to cause said claim or claims to be approved and all
payments and other distributions in respect thereof to be
made directly to the Administrator (for the benefit of the
Senior Interest Holders) until the Senior Interests shall
have been paid and performed in full and in cash; and (iii)
AnnTaylor hereby irrevocably agrees that the Administrator,
in the name of AnnTaylor or otherwise, may demand, sue for,
collect, receive and receipt for any and all such payments
or distributions, and file, prove and vote or consent in any
such Bankruptcy Proceedings with respect to any and all
claims of AnnTaylor relating to this Company Note, in each
case until the Senior Interests shall have been paid and
performed in full and in cash;
(c) In the event that AnnTaylor receives any payment
or other distribution of any kind or character from the
Company or from any other source whatsoever, in respect of
this Company Note, other than as expressly permitted by the
terms of this Company Note, such payment or other
distribution shall be received for the sole benefit of the
Senior Interest Holders and shall be turned over by
AnnTaylor to the Administrator (for the benefit of the
Senior Interest Holders) forthwith. AnnTaylor will mark its
books and records so as clearly to indicate that this
Company Note is subordinated in accordance with the terms
hereof. All payments and distributions received by the
Administrator in respect of this Company Note, to the extent
received in or converted into cash, may be applied by the
Administrator (for the benefit of the Senior Interest
Holders) first to the payment of any and all expenses
(including reasonable attorneys' fees and legal expenses)
paid or incurred by the Senior Interest Holders in enforcing
these Subordination Provisions, or in endeavoring to collect
or realize upon this Company Note, and any balance thereof
shall, solely as between AnnTaylor and the Senior Interest
Holders, be applied by the Administrator toward the payment
of the Senior Interests; but as between the Company and its
creditors, no such payments or distributions of any kind or
character shall be deemed to be payments or distributions
in respect of the Senior Interests;
(d) Notwithstanding any payments or distributions
received by the Senior Interest Holders in respect of this
Company Note, while any Bankruptcy Proceedings are pending
AnnTaylor shall not be subrogated to the then existing
rights of the Senior Interest Holders in respect of the
Senior Interests until the Senior Interests have been paid
and performed in full and in cash;
(e) These Subordination Provisions are intended solely
for the purpose of defining the relative rights of
AnnTaylor, on the one hand, and the Senior Interest Holders,
on the other hand. Nothing contained in these Subordination
Provisions or elsewhere in this Company Note is intended to
or shall impair, as between the Company, its creditors
(other than the Senior Interest Holders) and AnnTaylor, the
Company's obligation, which is unconditional and absolute,
to pay AnnTaylor the principal of and interest on this
Company Note as and when the same shall become due and
payable in accordance with the terms hereof or to affect the
relative rights of AnnTaylor and creditors of the Company
(other than the Senior Interest Holders);
(f) AnnTaylor shall not, until the Senior Interests
have been paid and performed in full and in cash, (i)
cancel, waive, forgive, transfer or assign, or commence
legal proceedings to enforce or collect, or subordinate to
any obligation of the Company, howsoever created, arising or
evidenced, whether direct or indirect, absolute or
contingent, or now or hereafter existing, or due or to
become due, other than the Senior Interests, this Company
Note or any rights in respect hereof (except as set forth in
Section 12 hereof) or (ii) convert this Company Note into an
----------
equity interest in the Company, unless AnnTaylor shall have
received the prior written consent of the Administrator and
the Relationship Bank in each case;
(g) AnnTaylor shall not, without the advance written
consent of the Administrator and the Relationship Bank,
commence, or join with any other Person in commencing, any
Bankruptcy Proceedings with respect to the Company until at
least one year and one day shall have passed since the
Senior Interests shall have been paid and performed in full
and in cash;
(h) If, at any time, any payment (in whole or in part)
of any Senior Interest is rescinded or must be restored or
returned by a Senior Interest Holder (whether in connection
with Bankruptcy Proceedings or otherwise), these
Subordination Provisions shall continue to be effective or
shall be reinstated, as the case may be, as though such
payment had not been made;
(i) Without affecting the rights and restrictions set
forth in the Transaction Documents, each of the Senior
Interest Holders may, from time to time, at its sole
discretion, without notice to AnnTaylor, and without waiving
any of its rights under these Subordination Provisions, take
any or all of the following actions: (i) retain or obtain
an interest in any property to secure any of the Senior
Interests; (ii) retain or obtain the primary or secondary
obligations of any other obligor or obligors with respect to
any of the Senior Interests; (iii) extend or renew for one
or more periods (whether or not longer than the original
period), alter or exchange any of the Senior Interests, or
release or compromise any obligation of any nature with
respect to any of the Senior Interests; (iv) amend,
supplement, amend and restate, or otherwise modify any
Transaction Document; and (v) release its security interest
in, or surrender, release or permit any substitution or
exchange for all or any part of any rights or property
securing any of the Senior Interests, or extend or renew for
one or more periods (whether or not longer than the original
period), or release, compromise, alter or exchange any
obligations of any nature of any obligor with respect to any
such rights or property;
(j) AnnTaylor hereby waives: (i) notice of acceptance
of these Subordination Provisions by any of the Senior
Interest Holders; (ii) notice of the existence, creation,
non-payment or non-performance of all or any of the Senior
Interests; and (iii) all diligence in enforcement,
collection or protection of, or realization upon, the Senior
Interests, or any thereof, or any security therefor;
(k) Each of the Senior Interest Holders may, from time
to time, on the terms and subject to the conditions set
forth in the Transaction Documents to which such Persons are
party, but without notice to AnnTaylor, assign or transfer
any or all of the Senior Interests, or any interest therein;
and, notwithstanding any such assignment or transfer or any
subsequent assignment or transfer thereof, such Senior
Interests shall be and remain Senior Interests for the
purposes of these Subordination Provisions, and every
immediate and successive assignee or transferee of any of
the Senior Interests or of any interest of such assignee or
transferee in the Senior Interests shall be entitled to the
benefits of these Subordination Provisions to the same
extent as if such assignee or transferee were the assignor
or transferor; and
(l) These Subordination Provisions constitute a
continuing offer from the holder of this Company Note to all
Persons who become the holders of, or who continue to hold,
Senior Interests; and these Subordination Provisions are
made for the benefit of the Senior Interest Holders, and the
Administrator or the Lender may proceed to enforce such
provisions on behalf of each of such Persons.
10. General. No failure or delay on the part of AnnTaylor
-------
in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any
such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No
amendment, modification or waiver of, or consent with respect to,
any provision of this Company Note shall in any event be
effective unless (i) the same shall be in writing and signed and
delivered by the Company and AnnTaylor and (ii) all consents
required for such actions under the Transaction Documents shall
have been received by the appropriate Persons.
11. No Negotiation. This Company Note is not negotiable;
--------------
provided, AnnTaylor may pledge this Company Note to the agent for
- --------
the benefit of the lenders under the AnnTaylor Credit Agreement.
12. Governing Law. THIS PROMISSORY NOTE SHALL BE DEEMED TO
-------------
BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK.
13. Captions. Paragraph captions used in this Company Note
--------
are for convenience only and shall not affect the meaning or
interpretation of any provision of this Company Note.
ANNTAYLOR FUNDING, INC.
By:_______________________
Title: Vice President
Pay to the order of Bank of
America National Trust and
Savings Association, as Agent
ANNTAYLOR, INC.
By:_________________________
Title: Senior Vice President
Schedule 3
ANNTAYLOR, INC.
CERTIFICATE
I, Bert A. Tieben, Senior Vice President of ANNTAYLOR, INC.,
a Delaware corporation, DO HEREBY CERTIFY that:
Pursuant to Section 4.1(k) of the Purchase and Sale
Agreement, dated as of January 27, 1994 (as amended or
otherwise modified from time to time, the "Agreement") among
AnnTaylor, Inc. and AnnTaylor Funding, Inc., AnnTaylor, Inc.
has marked its summary master control processing records
evidencing the Pool Receivables (as defined in the
Receivables Financing Agreement referred to in the
Agreement) and the related Contracts (as defined in the
Receivables Financing Agreement referred to in the
Agreement) with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO
ANNTAYLOR FUNDING, INC. PURSUANT TO A PURCHASE AND SALE
AGREEMENT, DATED AS OF JANUARY 27, 1994, AS AMENDED, BETWEEN
ANNTAYLOR FUNDING, INC. AND ANNTAYLOR, INC. AND A SECURITY
INTEREST IN THE RECEIVABLES DESCRIBED HEREIN HAS BEEN
GRANTED TO CLIPPER RECEIVABLES CORPORATION, PURSUANT TO A
RECEIVABLES FINANCING AGREEMENT, DATED AS OF JANUARY 27,
1994, AMONG ANNTAYLOR FUNDING, INC., ANNTAYLOR, INC.,
CLIPPER RECEIVABLES CORPORATION, STATE STREET BOSTON CAPITAL
CORPORATION, AS THE ADMINISTRATOR, AND PNC BANK, NATIONAL
ASSOCIATION, AS THE RELATIONSHIP BANK."
WITNESS my hand this 27th day of January, 1994.
ANNTAYLOR, INC.
By: /s/ Bert A. Tieben
------------------
Name: Bert A. Tieben
Title: Senior Vice President