-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, De6V4ixRGMHp0CZyzGOLEsJhPEnnkd2Pp8BIn02KGHt9DYS99RAO4bUsZqOcNnrc Gi5xHTHlxCe7JrdLBYJktg== 0000850090-95-000005.txt : 19951030 0000850090-95-000005.hdr.sgml : 19951030 ACCESSION NUMBER: 0000850090-95-000005 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19950929 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19951017 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANNTAYLOR INC CENTRAL INDEX KEY: 0000850090 STANDARD INDUSTRIAL CLASSIFICATION: 5621 IRS NUMBER: 510297083 STATE OF INCORPORATION: DE FISCAL YEAR END: 0128 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11980 FILM NUMBER: 95581170 BUSINESS ADDRESS: STREET 1: 142 W 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2125413300 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported)September 29, 1995 ANNTAYLOR, INC. (Exact name of registrant as specified in its charter) Delaware 1-11980 51-0297083 (State of other jurisdiction of (Commission (I.R.S. Employer Identification Number) incorporation) File Number) 142 West 57th Street, New York, NY 10019 (Address of principal executive offices) (Zip Code) (212) 541-3300 (Registrant's telephone number, including area code) N/A (Former name or former address, if changed since last report) ITEM 5. Other Events On September 29, 1995, AnnTaylor, Inc. (the "Company") entered into an amended and restated credit agreement to replace its existing bank credit agreement. The amended and restated credit agreement provides, among other things, for an additional $25 million of financing pursuant to a term loan, thereby increasing the amounts available to the Company under the credit agreement from $125 million to $150 million. The amended and restated credit agreement contains financial and other covenants, including limitations on indebtedness, liens and investments, restrictions on dividends or other distributions to stockholders, and maintaining certain financial ratios and specified levels of net worth, some of which provisions were amended by the new agreement. The amended and restated credit agreement also provides for, among other things, a revised interest rate and the addition of a limitation on capital expenditures. The Company's payment obligations under the agreement are guaranteed by the Company's parent company, AnnTaylor Stores Corporation ("ATSC"). A copy of the amended and restated bank credit agreement and related agreements are filed as exhibits to this Report. The foregoing summary of the amended and restated bank credit agreement and related agreements is qualified in its entirety by reference to such agreements. ITEM 7. Financial Statements and Exhibits The exhibits listed in the following exhibit index are filed as part of this Report. Exhibit No. 10.1 Amended and Restated Credit Agreement, dated as of September 29, 1995, among the Company, Bank of America National Trust and Savings Association ("Bank of America"), Fleet Bank, National Association, as Co-Agents, the financial institutions from time to time party thereto, BA Securities, Inc., as Arranger, and Bank of America, as Agent. 10.2 Amended and Restated Security and Pledge Agreement, dated as of September 29, 1995, made by the Company in favor of Bank of America, as Agent. 10.3 Trademark Security Agreement, dated as of September 29, 1995, made by the Company in favor of Bank of America, as Agent. 10.4 Amended and Restated Guaranty, dated as of September 29, 1995, made by ATSC in favor of Bank of America, as Agent. 10.5 Amended and Restated Security and Pledge Agreement, dated as of September 29, 1995, made by ATSC in favor of Bank of America, as Agent. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AnnTaylor, Inc. Date: October 17, 1995 By: /s/ Walter J. Parks Walter J. Parks Senior Vice President - Finance EX-10 2 EXHIBIT 10.1 098888\0048\00067\959MAQA5.AGR 098888\0048\00067\959MAQA5.AGR CONFORMED COPY AMENDED AND RESTATED CREDIT AGREEMENT Dated as of September 29, 1995 among ANNTAYLOR, INC., as Borrower BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION FLEET BANK, NATIONAL ASSOCIATION, as Co-Agents THE FINANCIAL INSTITUTIONS FROM TIME TO TIME PARTY HERETO BA SECURITIES, INC. as Arranger and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent $150,000,000 TABLE OF CONTENTS ARTICLE I Definitions 1 1.01. Certain Defined Terms 1 1.02. Computation of Time Periods 23 1.03. Accounting Terms 23 1.04. Other Definitional Provisions 23 ARTICLE II Amounts and Terms of Loans 23 2.01. The Term Loan Facility 23 (a) Amount of the Term Loan 23 (b) Notice of Borrowing 24 (c) Making of Loans 24 (d) Amount of Term Loans 24 (e) Loan Accounts; Term Notes 25 (f) Repayment of Term Loans 25 (g) No Change of Term Loan Provisions 25 2.02. The Revolving Loan Facility 25 (a) Availability 25 (b) Notice of Borrowing 26 (c) Making of Loans 27 (d) Loan Accounts 27 (e) Termination or Reduction of Revolving Loan Commitments 27 (f) Extension of Revolving Loan Commitments 28 (g) Repayment of Revolving Loans 28 2.03. Interest on the Loans 28 (a) Rate of Interest 28 (b) Interest Payments 30 (c) Conversion or Continuation 30 (d) Default Interest 31 (e) Computation of Interest 31 (f) Changes; Legal Restrictions 31 2.04. Fees 32 (a) Fees to Bank of America 32 (b) Commitment Fee 32 (c) Agency Fee 33 (d) Letter of Credit Fees 33 (e) Amendment Fee 33 (f) Payment of Fees 33 2.05. Prepayments 34 (a) Voluntary Prepayments 34 (b) Mandatory Commitment Reductions; Mandatory Prepayments 34 (c) Treatment of Term Loans 35 2.06. Payments 36 (a) Manner and Time of Payment 36 (b) Apportionment of Payments 36 (c) Payments on Non-Business Days 37 (d) Payments by Lenders to the Agent 38 2.07. Interest Periods 38 2.08. Special Provisions Governing Eurodollar Rate Loans 39 (a) Determination of Interest Rate 39 (b) Interest Rate Unascertainable, Inadequate or Unfair 39 (c) Illegality 39 (d) Compensation 40 (e) Quotation of Eurodollar Rate 41 (f) Booking of Eurodollar Rate Loans 41 2.09. Taxes 41 2.10. Increased Capital 44 2.11. Use of Proceeds of the Loans 45 2.12. Authorized Officers of the Borrower 45 2.13. Replacement of Lender in Event of Adverse Condition 45 ARTICLE III Letters of Credit 46 3.01. Obligation to Issue 46 3.02. Types and Amounts 46 3.03. Conditions 47 3.04. Issuance of Letters of Credit 47 3.05. Reimbursement Obligations; Duties of the Issuing Bank 49 3.06. Participations 51 3.07. Payment of Reimbursement Obligations 52 3.08. Compensation for Letters of Credit 53 (a) Letter of Credit Fees 53 (b) Issuing Bank Charges 54 3.09. Indemnification; Exoneration 54 ARTICLE IV Conditions To Loans and Letters of Credit 55 4.01. Conditions Precedent to the Initial Funding 55 (a) Certain Documents and Other Items 55 (b) Fees and Expenses Paid 57 4.02. Conditions Precedent to all Loans and Letters of Credit 57 (a) Notice of Borrowing 57 (b) Additional Matters 57 (c) Supplemental Documentation 58 ARTICLE V Representations and Warranties 58 5.01. Representations and Warranties on the Initial Funding Date 58 (a) Organization; Corporate Powers 58 (b) Authority 59 (c) No Conflict 59 (d) Governmental Consents 60 (e) Governmental Regulation 60 (f) Financial Position 60 (g) Permitted Indebtedness 60 (h) Litigation; Adverse Effects 60 (i) No Material Adverse Change 61 (j) Payment of Taxes 61 (k) Material Adverse Agreements 61 (l) Securities Activities 61 (m) Disclosure 61 (n) Patents, Trademarks, Permits, Etc 62 (o) Environmental Matters 62 (p) ERISA 62 (q) Net Worth 63 5.02. Subsequent Funding Representations and Warranties 63 ARTICLE VI Reporting Covenants 63 6.01. Financial Statements 63 ARTICLE VII Affirmative Covenants 66 7.01. Corporate Existence, Etc 66 7.02. Corporate Powers, Etc 67 7.03. Compliance with Laws 67 7.04. Payment of Taxes and Claims 67 7.05. Maintenance of Properties; Insurance 67 7.06. Inspection of Property; Books and Records; Discussions 67 7.07. Labor Matters 68 7.08. Maintenance of Permits 68 7.09. ERISA 68 7.10. Distribution Center Financing; Lease Financing 68 7.11. UCC Searches 69 ARTICLE VIII Negative Covenants 69 8.01. Indebtedness 69 8.02. Sales of Assets; Liens 70 (a) Sales 70 (b) Liens 71 8.03. Investments 71 8.04. Accommodation Obligations 72 8.05. Restricted Payments 73 8.06. Conduct of Business 73 8.07. Transactions with Affiliates 74 8.08. Restriction on Fundamental Changes 74 8.09. ERISA 74 8.10. Sales and Leasebacks 75 8.11. Subordinated Indebtedness 75 (a) No Change 75 (b) Notices 76 8.12. Margin Regulations 76 8.13. Change of Fiscal Year 76 8.14. Subsidiaries 76 8.15. Capital Expenditures 76 ARTICLE IX Financial Covenants 77 9.01. Minimum Net Worth 77 9.02. Funded Debt to Total Capitalization Ratio 78 9.03. Minimum Fixed Charge Coverage Ratio 78 ARTICLE X Events of Default; Right and Remedies 78 10.01. Events of Default 78 (a) Failure to Make Payments When Due 78 (b) Breach of Certain Covenants 78 (c) Breach of Representation or Warranty 79 (d) Other Defaults 79 (e) Default as to Other Indebtedness 79 (f) Involuntary Bankruptcy; Appointment of Receiver, Etc 79 (g) Voluntary Bankruptcy; Appointment of Receiver, Etc 80 (h) Judgments and Attachments 80 (i) Dissolution 80 (j) Collateral Documents; Failure of Security or Subordination 80 (k) Change in Control 81 (l) ERISA Liabilities 81 10.02. Rights and Remedies 81 (a) Acceleration 81 (b) Deposit for Letters of Credit 81 (c) Rescission 82 ARTICLE XI The Agent 82 11.01. Appointment and Authorization 82 11.02. Delegation of Duties 83 11.03. Liability of Agent 83 11.04. Reliance by Agent 83 11.05. Notice of Default 84 11.06. Credit Decision 84 11.07. Indemnification 85 11.08. Agent in Individual Capacity 85 11.09. Successor Agent 86 11.10. The Arranger 86 11.11. Co-Agents 86 11.12. Collateral Matters 86 11.13. Relations Among Lenders 87 ARTICLE XII Miscellaneous 87 12.01. Assignments and Participations 87 12.02. Assignments to Federal Reserve Banks 91 12.03. Expenses 92 (a) Generally 92 (b) After Default 92 12.04. Indemnity 92 12.05. Change in Accounting Principles 93 12.06. Setoff 94 12.07. Ratable Sharing 94 12.08. Amendments and Waivers 95 12.09. Independence of Covenants 96 12.10. Notices 96 12.11. Survival of Warranties and Agreements 97 12.12. Failure or Indulgence Not Waiver; Remedies Cumulative 97 12.13. Marshalling; Recourse to Security; Payments Set Aside 97 12.14. Severability 97 12.15. Headings 97 12.16. Governing Law 97 12.17. Successors and Assigns 97 12.18. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial 98 12.19. Effect of Amendment and Restatement 98 12.20. Counterparts; Effectiveness; Inconsistencies 99 EXHIBITS Exhibit 2.01 -- Form of Notice of Borrowing Exhibit 2.01(e) -- Form of Term Note Exhibit 2.03 -- Form of Notice of Conversion/ Continuation Exhibit 4.01(a)(iii) (A) -- Form of Borrower Pledge Agreement Exhibit 4.01(a)(iii)(B) -- Form of Trademark Assignment Exhibit 4.01(a)(iv) -- Form of ATSC Guaranty Exhibit 4.01(a)(v) -- Form of ATSC Pledge Agreement Exhibit 4.01(a)(x) -- Form of Opinion of Skadden, Arps, Slate, Meagher & Flom Exhibit 6.01(d)(i) -- Form of Compliance Certificate Exhibit 6.01(d)(ii) -- Form of Pricing Ratio Certificate Exhibit 12.01 -- Form of Assignment and Acceptance SCHEDULES Schedule 1.01(a) -- Lending Offices Schedule 1.01(b) -- Commitments Schedule 3.01 -- Existing Letters of Credit Schedule 4.01 -- UCC Filing Jurisdictions Schedule 8.02(b) -- Permitted Existing Liens AMENDED AND RESTATED CREDIT AGREEMENT AMENDED AND RESTATED CREDIT AGREEMENT, dated as of September 29, 1995 (as amended, supplemented or modified from time to time, this "Agreement"), among ANNTAYLOR, INC., a Delaware corporation (the "Borrower"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION and FLEET BANK, NATIONAL ASSOCIATION, as Co-Agents (the "Co-Agents") and each other Person signatory hereto as a Lender or which from time to time becomes a Lender party hereto in accordance with Section 12.01(a) (together with its respective successors and assigns, individually, a "Lender" and, collectively, the "Lenders"), BA SECURITIES, INC., as Arranger (the "Arranger") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION in its separate capacity as administrative agent for the Lenders hereunder (in such capacity, the "Agent"). W I T N E S S E T H: WHEREAS, the parties hereto wish to amend and restate the Existing Credit Agreement; NOW, THEREFORE, the parties hereto hereby agree that on the Initial Funding Date, the Existing Credit Agreement will be amended and restated in its entirety as follows: ARTICLE I Definitions 1.01. Certain Defined Terms. The following terms used in this Agreement shall have the following meanings (such meanings to be applicable, except to the extent otherwise indicated in a definition of a particular term, both to the singular and the plural forms of the terms defined): "Accommodation Obligation", as applied to any Person, shall mean any contractual obligation, contingent or otherwise, of that Person with respect to any Indebtedness or other obligation or liability of another, including any such Indebtedness, obligation or liability directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by that Person, or in respect of which that Person is otherwise directly or indirectly liable, including Contractual Obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such Indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make payment other than for value received. "Affiliate", as applied to any Person, shall mean any other Person directly or indirectly controlling, controlled by, or under common control with, that Person. For purposes of this definition, "control" (including, with correlative meanings, the terms "controlling", "controlled by" and "under common control with), as applied to any Person, means the possession, directly or indirectly, of the power to vote 5% or more of the Securities having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting Securities or by contract or otherwise; provided that no financial institution, mutual fund or investment banking firm shall be an Affiliate of the Borrower unless it owns, directly or indirectly, at least 20% of such Securities of the Borrower. "Agent" shall have the meaning ascribed to such term in the preamble and shall include any successor Agent appointed pursuant to Section 11.09. "Agent-Related Person" shall mean Bank of America and any successor agent pursuant to Section 11.09, together with their respective Affiliates, and the officers, directors, employees, agents and attorneys-in-fact of such Persons and Affiliates. "Agent's Payment Office" shall mean the address for payments set forth on the signature page hereto relating to the Agent or such other address as the Agent may from time to time specify in accordance with Section 12.10. "Agreement" shall have the meaning ascribed to such term in the preamble hereto. "Applicable Lending Office" shall mean, with respect to each Lender, such Lender's Domestic Lending Office, in the case of a Base Rate Loan, and such Lender's Eurodollar Lending Office, in the case of a Eurodollar Rate Loan. "Arranger" shall have the meaning ascribed to such term in the preamble. "Assignment and Acceptance" shall mean an Assignment and Acceptance in the form of Exhibit 12.01 (with blanks appropri ately filled in) delivered to the Agent and the Borrower in connection with an assignment of a Lender's interest under this Agreement pursuant to Section 12.01. "ATSC" shall mean AnnTaylor Stores Corporation, a Delaware corporation. "ATSC Guaranty" shall mean the Amended and Restated Guaranty dated as of the Initial Funding Date substantially in the form of, and on the terms set forth in, Exhibit 4.01(a)(iv), as the same may be amended, supplemented or otherwise modified from time to time. "ATSC Pledge Agreement" shall mean the Amended and Restated Security and Pledge Agreement dated as of the Initial Funding Date substantially in the form of, and on the terms set forth in, Exhibit 4.01(a)(v), as the same may be amended, modified or otherwise modified from time to time. "Bank of America" shall mean Bank of America National Trust and Savings Association, a national banking association. "Bankruptcy Code" shall mean Title 11 of the United States Code (11 U.S.C 101 et seq.), as amended from time to time, or any successor statute. "Base Rate" shall mean, for any day a fluctuating interest rate per annum equal to the higher of (a) the Reference Rate in effect on such day and (b) the sum of the Federal Funds Rate plus 0.50%. "Base Rate Loans" shall mean all Loans outstanding which bear interest at a rate determined by reference to the Base Rate as provided in Section 2.03. "Benefit Plan" shall mean a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of which the Borrower or an ERISA Affiliate is, or within the immediately preceding six years was, an "employer" as defined in Section 3(5) of ERISA. "Borrower" shall have the meaning ascribed to such term in the preamble hereto. "Borrower Pledge Agreement" shall mean the Amended and Restated Security and Pledge Agreement dated as of the Initial Funding Date substantially in the form of, and on the terms set forth in, Exhibit 4.01(iii)(A), as the same may be amended, supplemented or otherwise modified from time to time. "Borrowing" shall mean, except as otherwise provided in Section 2.08(c)(ii), a borrowing consisting of Loans of the same type, having the same Interest Period and made on the same day by the Revolving Loan Lenders or the Term Loan Lenders, as the case may be. "Business Day" shall mean (a) for all purposes other than as covered by clause (b) below, any day excluding Saturday, Sunday and any day which is a legal holiday under the laws of the State of New York or the State of California, or is a day on which banking institutions located in either of those states are required or authorized by law or other governmental action to close and (b) with respect to all notices, determinations, fundings and payments in connection with the Eurodollar Rate, any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in the London interbank market. "Capital Expenditures" shall mean, for any period, on a consolidated basis for the Borrower and its Restricted Subsidiaries, the aggregate of all expenditures (whether paid in cash or accrued as liabilities during that period and including that portion of Capital Leases (except any capitalized interest) which is capitalized on the consolidated balance sheet of the Borrower and its Restricted Subsidiaries) made by the Borrower or any Restricted Subsidiary during such period that, in conformity with GAAP, are required to be included in or reflected by property, plant or equipment, licenses and permits, or other similar fixed asset accounts as reflected in such balance sheet (including expenditures for equipment purchased simultaneously with the tradein of existing equipment owned by the Borrower or any such Restricted Subsidiary to the extent the gross amount of such purchase price exceeds the book value of the equipment being traded in, but excluding expenditures made in connection with the replacement or restoration of assets, to the extent reimbursed or financed from insurance proceeds or condemnation awards). "Capital Lease", as applied to any Person, shall mean any lease of any property (whether real, personal, or mixed) by that Person as lessee which, in conformity with GAAP, is accounted for as a capital lease on the balance sheet of that Person. "Cash Equivalents" shall mean (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within one year after the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within 90 days after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then from such other nationally recognized rating services acceptable to the Requisite Lenders) and not listed in Credit Watch published by S&P; (c) commercial paper, other than commercial paper issued by the Borrower or any Subsidiary of the Borrower or any of their Affiliates, maturing no more than 90 days after the date of creation thereof and, at the time of acquisition, having a rating of at least A-1 or P-1 from either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be rating such obligations, then the highest rating from other nationally recognized rating services acceptable to the Requisite Lenders); and (d) domestic and Eurodollar certificates of deposit or time deposits or bankers' acceptances maturing within 90 days after the date of acquisition thereof issued by any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than $500,000,000. "Cash Interest Expense" shall mean, for any period, all Interest Expense for such period payable in cash. "CAT Joint Venture" shall mean the joint venture entered into between the Borrower, Cygne Designs, Inc., Cygne Design F.E., Limited, CAT US Inc. and C.A.T. (Far East) Ltd. in accordance with the CAT Joint Venture Agreement. "CAT Joint Venture Agreement" shall mean (a) the agreement dated July 13, 1993 among the Borrower, Cygne Designs, Inc., Cygne Design F.E., Limited, CAT US Inc. and C.A.T. (Far East) Ltd., as from time to time amended or modified and (b) any agreement related to the CAT Joint Venture replacing the agreement referred to in clause (a). "Change in Control" shall have the meaning ascribed to such term in the Subordinated Note Indenture. "Claim" shall mean any claim or demand, by any Person, of whatsoever kind or nature for any actual or alleged Liabilities and Costs, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, Permit, ordinance or regulation, common law or otherwise. "Cleandown Period" shall have the meaning ascribed to such term in Section 2.02(a)(v). "Cleandown" shall have the meaning ascribed to such term in Section 2.02(a)(v). "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Collateral" shall mean all property and interests in property now owned or hereafter acquired in or upon which a security interest, pledge, lien or mortgage is granted or of which a collateral assignment is made under the Collateral Documents. "Collateral Documents" shall mean the ATSC Guaranty, the ATSC Pledge Agreement, the Borrower Pledge Agreement and the Trademark Assignment, any mortgage delivered pursuant to Section 7.10, and any other document creating in favor of the Agent a security interest in any property as security for the Obligations, as any of the foregoing may be amended, supplemented or otherwise modified from time to time. "Commercial Letter of Credit" shall mean any Letter of Credit which is drawable upon presentation of documents evidencing the sale or shipment of goods purchased by the Borrower in the ordinary course of its business. "Commission" shall mean the Securities and Exchange Commission. "Commitment" shall mean, with respect to each Lender as the context may require, (a) the amount set out opposite such Lender's name under the heading "Total Commitment" in Schedule 1.01(b) or assigned to it in accordance with Section 12.01(a), as such amount may be reduced or otherwise adjusted from time to time pursuant to the terms of this Agreement or (b) the obligation of such Lender to make Loans hereunder and participate in Letters of Credit up to the amount specified in the immediately preceding clause (a), and "Commitments" shall mean the aggregate amount of the Commitments of all Lenders. "Commitment Letter" shall mean the letter dated September 19, 1995 from Bank of America and the Arranger to the Borrower. "Common Stock" shall mean the common stock of ATSC the par value of which is set forth in ATSC Certificate of Incorpora tion, as such certificate may be amended, restated or otherwise modified from time to time. "Compliance Certificate" shall mean a certificate in substantially the form of Exhibit 6.01(d)(i) delivered to the Agent by Borrower pursuant to Section 6.01(d)(i) and covering the Borrower's compliance with the covenants contained in Article IX and certain of the covenants contained in Article VIII. "Contaminant" shall mean any pollutant, hazardous substance, hazardous chemical, toxic substance, hazardous waste or special waste, as those terms are defined in federal, state or local laws and regulations, radioactive material, petroleum, including crude oil or any petroleum-derived substance, or breakdown or decomposition product thereof, or any constituent of any such substance or waste, including polychlorinated biphenyls and asbestos. "Contractual Obligation", as applied to any Person, shall mean any provision of any Securities issued by that Person or any indenture, mortgage, deed of trust, contract, undertaking, document, instrument or other agreement or instrument to which that Person is a party or by which it or any of its properties is bound, or to which it or any of its properties is subject (including any restrictive covenant affecting such Person or any of its properties). "Credit Facility" shall mean the loan and letter of credit facility provided to the Borrower pursuant to this Agreement. "Current Assets" shall mean, as at any date of determination, the consolidated assets of the Borrower and its Restricted Subsidiaries which may properly be classified as current assets in conformity with GAAP. "Current Liabilities" shall mean, as at any date of determination, the consolidated liabilities of the Borrower and its Restricted Subsidiaries which may properly be classified as current liabilities in conformity with GAAP. "Customary Permitted Liens" shall mean (a) Liens (other than Environmental Liens and any Lien imposed under ERISA) for claims, taxes, assessments or charges of any Governmental Authority not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (b) statutory Liens of landlords, bankers, carriers, warehousemen, mechanics, materialmen and other Liens (other than any Lien imposed under ERISA or any Environmental Lien) imposed by law, arising in the ordinary course of business and for amounts which (i) are not yet due, (ii) are not more than 30 days past due as long as no notice of default has been given or other action taken to enforce such Liens, or (iii)(A) are not more than 30 days past due and a notice of default has been given or other action taken to enforce such Liens, or (B) are more than 30 days past due, and, in the case of clause (A) or (B), are being contested in good faith by appropriate proceedings which are sufficient to prevent imminent foreclosure of such Liens and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (c) Liens (other than any Lien imposed under ERISA or any Environmental Lien) incurred or deposits made in the ordinary course of business (including surety bonds and appeal bonds) in connection with workers' compensation, unemployment insurance and other types of employment benefits or to secure the performance of tenders, bids, leases, contracts (other than for the repayment of Indebtedness), statutory obligations and other similar obligations or arising as a result of progress payments under government contracts; (d) easements (including reciprocal easement agreements and utility agreements), rights-of-way, covenants, consents, rights of landlords, reservations, encroachments, variations and other restrictions, charges or encumbrances (whether or not recorded) affecting the use of real property, which do not materially interfere with the ordinary conduct of the business of the Borrower; and (e) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods. "Distribution Center" shall mean the new distribution center, fulfillment facility and related systems and equipment, to be built, purchased or leased by the Borrower for the purpose of replacing the Borrower's existing distribution facilities. "Distribution Center Financing" shall mean a financing transaction in which the Borrower or any Restricted Subsidiary shall incur Indebtedness secured by a mortgage on the Distribution Center and shall receive at least $5,000,000 in cash proceeds of such Indebtedness. "DOL" shall mean the United States Department of Labor and any successor department or agency. "Dollars" and "$" shall mean the lawful money of the United States of America. "Domestic Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Domestic Lending Office" in Schedule 1.01(a) or on the Assignment and Acceptance by which it became a Lender or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. "EBITDA" shall mean, for any period, the sum of the amounts for such period, of (a) Net Income, plus (b) to the extent Net Income is reduced thereby (i) all charges for amortization of intangibles and depreciation, (ii) Interest Expense, (iii) income tax expense and (iv) extraordinary losses, minus (c) extraordinary gains (net of taxes). "Eligible Assignee" means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having a combined capital and surplus of at least $100,000,000; (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development (the "OECD"), or a political subdivision of any such country, and having a combined capital and surplus of at least $100,000,000, provided that such bank is acting through a branch or agency located in the United States of America; (c) a Person that is primarily engaged in the business of commercial banking and that is (i) a Subsidiary of a Lender, (ii) a Subsidiary of a Person of which a Lender is a Subsidiary, or (iii) a Person of which a Lender is a Subsidiary; and (d) any Person that in the ordinary course of business extends credit or purchases loans of a character substantially similar to the Loans. "Environmental Lien" shall mean a Lien in favor of any Governmental Authority for (a) any liability of the Borrower or any Subsidiary of the Borrower under federal or state environmental laws or regulations, or (b) damages arising from, or costs incurred by such Governmental Authority in response to, a Release or threatened Release of a Contaminant into the environment. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute. "ERISA Affiliate" shall mean any (a) corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the IRC) as the Borrower or any of its Subsidiaries, (b) partnership or other trade or business (whether or not incorporated) under common control (within the meaning of Section 414(c) of the IRC) with the Borrower or any of its Subsidiaries, and (c) member of the same affiliated service group (within the meaning of Section 414(m) of the IRC) as the Borrower or any of its Subsidiaries, any corporation described in clause (a) above or any partnership or trade or business described in clause (b) above. "Eurodollar Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Eurodollar Lending Office" in Schedule 1.01(a) or on the Assignment and Acceptance by which it became a Lender (or, if no such office is specified, its Domestic Lending Office) or such other office of such Lender as such Lender may from time to time specify by written notice to the Borrower and the Agent. "Eurodollar Rate" shall mean, with respect to any Interest Period applicable to a Borrowing of Eurodollar Rate Loans, an interest rate per annum obtained by dividing (a) the rate of interest notified to the Agent by the Reference Bank at which deposits in Dollars for such Interest Period would be offered by the Reference Bank to major banks in the London eurodollar interbank market at approximately 11:00 a.m. (London time) on the second Business Day prior to the commencement of such Interest Period, by (b) a percentage equal to 1 minus the Eurodollar Reserve Percentage. "Eurodollar Rate Loans" shall mean those Loans outstanding which bear interest at a rate determined by reference to the Eurodollar Rate as provided in Section 2.03. "Eurodollar Reserve Percentage" shall mean with respect to any Interest Period for any Eurodollar Rate Loan, that percent age (expressed as a decimal rounded upwards to the nearest 1/100%) which is in effect on the date the Eurodollar Rate for such Interest Period is determined as prescribed by the Federal Reserve Board, for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) for a member bank of the Federal Reserve System with deposits exceeding $5,000,000,000 in respect of "Eurocurrency liabilities" having a term equal to such Interest Period (or in respect of any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Rate Loans is determined or any category of extensions of credit or other assets which includes loans by a non-United States office of any bank to United States residents). "Event of Default" shall mean any of the occurrences set forth in Section 10.01 after the expiration of any applicable grace period expressly provided therein. "Existing Credit Agreement" means the Credit Agreement dated as of July 29, 1994 among AnnTaylor, Inc., Bank of America and Fleet Bank, National Association, as Co-Agents, BA Securities, Inc., as Arranger, Bank of America, as Agent, and the financial institutions party thereto, as amended. "Existing Letter of Credit" shall mean each Letter of Credit identified in Schedule 3.01. "FDIC" shall mean the Federal Deposit Insurance Corporation or any successor thereto. "Federal Funds Rate" shall mean, for any day, the rate set forth in the weekly statistical release designated as H.15(519), or any successor publication, published by the Federal Reserve Board (including any such successor, "H.15(519)") for such day opposite the caption "Federal Funds (Effective)". If on any relevant day such rate is not yet published in H.15(519), the rate for such day will be the rate set forth in the daily statistical release designated as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication, published by the Federal Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m. Quotation") for such day under the caption "Federal Funds Effective Rate". If on any relevant day the appropriate rate for such previous day is not yet published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be the arithmetic mean as determined by the Agent of the rates for the last transaction in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three leading brokers of Federal funds transactions in New York City selected by the Agent. "Federal Reserve Board" shall mean the Board of Gover nors of the Federal Reserve System or any Governmental Authority succeeding to its functions. "Fee Letter" shall mean the fee letter dated September 19, 1995 between the Borrower and Bank of America. "Final Maturity Date" shall mean July 29, 1998, as such date may be extended pursuant to Section 2.02(f). "Fiscal Year" shall mean the fiscal year of the Borrower, which shall be the twelve-month period ending on the Saturday closest to January 31 in each year or such other period as the Borrower may designate and the Requisite Lenders may approve in writing. A Fiscal Year ending in January or February, as the case may be, of any calendar year shall have the numerical designation of the prior calendar year. "Fixed Charge Coverage Ratio" shall mean, for any period, the quotient obtained by dividing (a) EBITDA by (b) the sum of (i) Capital Expenditures paid or payable during such period, plus (ii) scheduled payments made during such period for principal on Indebtedness excluding any payment made upon termination of a Receivables Transaction plus (iii) Cash Interest Expense during such period plus (iv) income tax expense during such period. "Funded Debt" shall mean, as at any date of determina tion, all Indebtedness then outstanding (a) for the principal of Loans under this Agreement and (b) for money borrowed or under any debt Securities issued by ATSC, the Borrower or any Restricted Subsidiary (whether or not subordinated, and specifically including the Subordinated Notes). "Funding Date" shall mean the date of borrowing any Loan. "GAAP" shall mean generally accepted accounting princi ples set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board, or in such other statements by such other entity as may be in general use by significant segments of the accounting profession, which are applicable to the circumstances as of the date of determination. "Governmental Authority" shall mean any nation, state, sovereign, or government, any federal, regional, state, local or political subdivision and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Indebtedness", as applied to any Person, shall mean any obligation for the payment of money which is a Contractual Obligation, and shall include, but without duplication, (a) all indebtedness, obligations or other liabilities of such Person for borrowed money or under any debt Securities, whether or not subordinated, (b) all obligations with respect to redeemable stock and redemption or repurchase obligations under any equity securities or profit payment agreements, (c) all reimbursement obligations and other liabilities of such Person with respect to letters of credit issued for such Person's account, (d) all obligations of such Person to pay the purchase price of property or services, except trade payables incurred by such Person in the ordinary course of business as presently conducted, (e) all obligations in respect of Capital Leases of such Person, (f) all Accommodation Obligations of such Person, (g) all indebtedness, obligations or other liabilities of such Person or others secured by a Lien on any asset of such Person, whether or not such indebtedness, obligations or liabilities are assumed by or are a personal liability of such Person, all as of such time, and (h) all indebtedness, obligations or other liabilities in respect of Interest Rate Contracts and foreign currency exchange agreements. "Initial Funding" shall mean the funding of Loans on the Initial Funding Date. "Initial Funding Date" shall mean the date (on or before October 15, 1995) on which all conditions precedent set forth in Section 4.01 have been satisfied or waived. "Initial Loans" shall have the meaning ascribed to such term in Section 4.01. "Interest Expense" shall mean, for any period for ATSC, the Borrower and its Restricted Subsidiaries on a consolidated basis, total consolidated interest expense, whether paid or accrued (including any amortization of discount and the interest component of Capital Leases), for such period, including to the extent included in interest expense, all commissions, discounts and other fees and charges owed with respect to the letters of credit, the fees payable under this Agreement and net costs under Interest Rate Contracts, all as determined in conformity with GAAP, plus (without duplication) all capitalized interest. "Interest Payment Date" shall mean with respect to any Eurodollar Rate Loan, the last day of each Interest Period applicable to such Loan; provided that in the case of an Interest Period of six months or longer, "Interest Payment Date" shall also include each date that is a three-month anniversary of the first day of such Interest Period. "Interest Period" shall have the meaning ascribed to such term in Section 2.07. "Interest Rate Contracts" shall mean interest rate exchange, collar, cap or similar agreements providing interest rate protection, entered into by the Borrower or ATSC. "Investment" shall mean, as applied to any Person, any direct or indirect purchase or other acquisition by that Person of Securities, or of a beneficial interest in Securities, of any other Person, and any direct or indirect loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, advances to employees and similar items made or incurred in the ordinary course of business), or capital contribution by such Person to any other Person, including all Indebtedness and accounts owed by that other Person which are not current assets or did not arise from sales of goods or services to that Person in the ordinary course of business. The amount of any Investment shall be determined in conformity with GAAP. "Investor Group" shall mean Merrill Lynch Capital Partners, Inc. and its Affiliates. "IRC" shall mean the Internal Revenue Code of 1986, as amended from time to time hereafter, and any successor statute. "IRS" shall mean the Internal Revenue Service of the United States or any Governmental Authority succeeding to the functions thereof. "Issuing Bank" shall mean Bank of America, BankAmerica International or any other Lender mutually acceptable to the Agent and the Borrower. "Lease Financing" shall mean one or more financing transactions (including sales and leasebacks) in which the Borrower or any Restricted Subsidiary shall incur Indebtedness secured by materials handling equipment, computer equipment and/or store furniture and fixtures. "Lender" shall have the meaning ascribed to such term in the preamble and shall include Bank of America, in its individual capacity, the Issuing Bank and each Person which at any time becomes a Lender pursuant to Section 12.01(a). "Letter of Credit" shall mean any Commercial Letter of Credit or any Standby Letter of Credit issued by the Issuing Bank for the account of the Borrower pursuant to Article III and includes each Existing Letter of Credit. "Letter of Credit Fee" shall have the meaning ascribed to such term in Section 2.04(d). "Letter of Credit Obligations" shall mean, at any particular time, the sum of (a) Reimbursement Obligations and (b) the aggregate maximum amount then available for drawing under the Letters of Credit. "Level I Status" exists at any date if the Pricing Ratio on such date is less than 2.00 to 1.00. "Level II Status" exists at any date if the Pricing Ratio on such date is greater than or equal to 2.00 to 1.00 but less than 3.00 to 1.00. "Level III Status" exists at any date if the Pricing Ratio on such date is greater than or equal to 3.00 to 1.00 but less than 3.50 to 1.00. "Level IV Status" exists at any date if the Pricing Ratio on such date is greater than or equal to 3.50 to 1.00 but less than 4.25 to 1.00. "Level V Status" exists at any date if the Pricing Ratio on such date is greater than or equal to 4.25 to 1.00. "Liabilities and Costs" shall mean all liabilities, claims, obligations, responsibilities, losses, damages, punitive damages, consequential damages, treble damages, charges, costs and expenses (including attorney's, expert's and consulting fees and costs of investigation and feasibility studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future. "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance (including, but not limited to, easements, rights of way and the like), lien (statutory or other), Environmental Lien, security agreement or transfer intended as security, including any conditional sale or other title retention agreement, the interest of a lessor under a Capital Lease, any financing lease having substantially the same economic effect as any of the foregoing, and the filing of any financing statement (other than a financing statement filed pursuant to Section 9-408 of the Uniform Commercial Code not intended as security). "Loan Documents" shall mean this Agreement, the Collateral Documents and the Letters of Credit and all other agreements delivered to the Agent, the Issuing Bank or any Lender by or on behalf of the Borrower in satisfaction of the requirements of this Agreement. "Loans" shall mean, collectively, the Term Loans and the Revolving Loans. "Margin Stock" shall have the meaning ascribed to such term in Regulation G and Regulation U. "Material Adverse Effect" shall mean, with respect to the Borrower or ATSC, a material adverse effect upon the business, assets or other properties, liabilities or condition (financial or otherwise), results of operations or prospects of the Borrower and its Restricted Subsidiaries taken as a whole or ATSC and its Subsidiaries taken as a whole, as the case may be, upon the ability of the Borrower to repay the Loans, or upon the benefits provided to the Agent or the Lenders under the Collateral Documents. "Maximum Revolving Loan Amount" shall mean, at any time, (a) the Revolving Loan Commitments at such time (as reduced pursuant to Section 2.02(e) and 2.05) less (b) the sum of (i) the then aggregate outstanding Letter of Credit Obligations and (ii) if applicable, the amount of any Cleandown. "Multiemployer Plan" shall mean a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is, or within the immediately preceding six years was, contributed to by either the Borrower or any ERISA Affiliate. "Net Income" shall mean, for any period on a consolidated basis for ATSC, the Borrower and its Restricted Subsidiaries, the consolidated net income (or loss) of the Borrower and its Restricted Subsidiaries for such period taken as a single accounting period, after adding or deducting the amount of any extraordinary gain and extraordinary loss net of taxes, determined in conformity with GAAP. "Net Worth" shall mean, as at any date of determi nation, the amount by which (a) the total consolidated assets of ATSC, the Borrower and its Restricted Subsidiaries exceed (b) the total consolidated liabilities of ATSC, the Borrower and its Restricted Subsidiaries, as determined in conformity with GAAP but excluding, for purposes of this definition, unrealized foreign exchange translation gains and losses from Investments in foreign Subsidiaries. "Non-U.S. Lender" shall have the meaning ascribed to such term in Section 2.09(e). "Notice of Borrowing" shall mean, with respect to a proposed Borrowing pursuant to Section 2.01(b) or 2.02(b), a notice substantially in the form of Exhibit 2.01. "Notice of Conversion/Continuation" shall mean, with respect to a proposed conversion or continuation of a Loan pursuant to Section 2.03(c), a notice substantially in the form of Exhibit 2.03. "Obligations" shall mean the principal of and all interest on all Loans and Reimbursement Obligations, all fees, expense reimbursements, taxes, compensation and indemnities payable by the Borrower to the Agent, the Issuing Bank, or any Lender pursuant to this Agreement and all other present and future Indebtedness and other liabilities of the Borrower owing to the Agent, the Issuing Bank, any Lender, or any Person entitled to indemnification pursuant to Section 12.04, or any of their respective successors, transferees or assigns, of every type and description, whether or not evidenced by any note, guaranty or other instrument, arising under or in connection with this Agreement, any other Loan Document, or any Interest Rate Contract, whether or not for the payment of money, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, now existing or hereafter arising and however arising. "Operating Lease" shall mean, as applied to any Person, any lease of any Property by that Person as lessee which is not a Capital Lease. "Other Taxes" shall have the meaning ascribed to such term in Section 2.09(b). "PBGC" shall mean the Pension Benefit Guaranty Corpora tion and any Person succeeding to the functions thereof. "Permits" shall mean any permit, approval, consent, authorization, license, variance, or permission required from a Governmental Authority under an applicable Requirement of Law. "Permitted Existing Liens" shall mean the Liens on any Property, other than any Environmental Liens, reflected on Schedule 8.02(b). "Person" shall mean any natural person, corporation, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, or any other nongovernmental entity, or any Governmental Authority. "Plan" shall mean an employee benefit plan defined in Section 3(3) of ERISA in respect of which either the Borrower or any ERISA Affiliate is, or within the immediately preceding six years was, an "employer" as defined in Section 3(5) of ERISA. "Potential Event of Default" shall mean an event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default. "Prepayment Acceptance Amount" shall mean, with respect to each Term Loan Lender in connection with any Specified Prepayment Event, the maximum principal amount of such Lender's Term Loan that such Lender wishes to be subject to prepayment, as indicated in the applicable Prepayment Offer Response Notice of such Lender. "Prepayment Amount" shall mean, with respect to any Specified Prepayment Event, the amount of net proceeds allocated pursuant to Section 2.05(a) or 2.05(b) to the prepayment of Term Loans in connection with such Specified Prepayment Event. "Prepayment Offer Notice" shall mean a written notice (i) offering to prepay, on a specified date no less than 10 nor more than 14 days after the date thereof (the "Specified Prepayment Date"), the Term Loans in an aggregate amount equal to the Prepayment Amount, (ii) requesting each Term Loan Lender to respond to such offer by delivering to the Agent and the Borrower a Prepayment Offer Response Notice no later than four Business Days prior to the Specified Prepayment Date, and (iii) informing each such Lender that the failure by such Lender to deliver a Prepayment Offer Response Notice on or before the fourth Business Day prior to the Specified Prepayment Date shall be deemed to be a rejection of such offer by such Lender. "Prepayment Offer Response Notice" shall mean a written notice to the Agent and the Borrower in response to a Prepayment Offer Notice, pursuant to which the Term Loan Lender delivering such notice states whether such Lender accepts or rejects the Borrower's offer to prepay Term Loans contained in such Prepayment Offer Notice, and, if such offer is accepted, states the maximum principal amount of such Lender's Term Loan which such Lender wishes to be subject to prepayment. "Prepayment Pro Rata Amount" shall mean, with respect to each Term Loan Lender in connection with any Specified Prepayment Event, such Lender's Pro Rata Term Loan Share of the associated Prepayment Amount. "Prepayment Share" shall mean, with respect to each Term Loan Lender in connection with any Specified Prepayment Event, the lesser of its Prepayment Acceptance Amount and its Prepayment Pro Rata Amount. "Pricing Ratio" shall mean, during any fiscal quarter, the ratio of (i) Funded Debt as of the last day of the immediately preceding fiscal quarter to (ii) EBITDA for the four consecutive fiscal quarters ending with such immediately preceding fiscal quarter. Changes in the Pricing Ratio indicated by a Pricing Ratio Certificate shall become effective on the first day of the fiscal quarter following the fiscal quarter in respect of which such Pricing Ratio Certificate is delivered; provided, however, that (a) if any payment of interest, commitment fee or Letter of Credit Fee is made during the period between the first day of a fiscal quarter and the date which is five Business Days after the date of delivery of the Pricing Ratio Certificate for the immediately preceding fiscal quarter, such payment shall be tentatively calculated on the basis of the Pricing Ratio in effect during such immediately preceding fiscal quarter until the Pricing Ratio is adjusted upon delivery of such Pricing Ratio Certificate and (b) in the event that no Pricing Ratio Certificate has been delivered for a fiscal quarter prior to the last day of the next succeeding fiscal quarter, Level V Status shall be presumed to exist until delivery of such Pricing Ratio Certificate. Changes in the rates of calculation of interest, commitment fee or Letter of Credit Fee resulting from the operation of either of clauses (a) or (b) above for any fiscal quarter shall be given effect through adjustments to the next payments to be made of interest, commitment fee or Letter of Credit Fee, as the case may be, so as to give effect to such changes retroactively to the beginning of such fiscal quarter. "Pricing Ratio Certificate" shall have the meaning given to such term in Section 6.01(d)(ii). "Property" shall mean with respect to any Person, any real or personal property, plant, building, facility, structure, equipment or unit, or other asset (tangible or intangible) owned, leased or operated by such Person. "Pro Rata Revolving Loan Share" shall mean, at any particular time and with respect to any Lender, a fraction (expressed as a percentage), the numerator of which shall be the then amount of such Lender's Revolving Loan Commitment (or, if the Revolving Loan Commitments have been terminated, such Lender's Revolving Loan Commitment as in effect immediately prior to such termination) and the denominator of which shall be the then aggregate amount of all Revolving Loan Commitments (or, if the Revolving Loan Commitments have been terminated, the aggregate amount of all Revolving Loan Commitments as in effect immediately prior to such termination). "Pro Rata Share" shall mean, at any particular time and with respect to any Lender, a fraction (expressed as a percentage), the numerator of which shall be the then amount of such Lender's Commitment (or, if the Commitments have been terminated, such Lender's Commitment as in effect immediately prior to such termination) and the denominator of which shall be the then aggregate amount of all Commitments (or, if the Commitments have been terminated, the aggregate amount of all Commitments as in effect immediately prior to such termination). "Pro Rata Term Loan Share" shall mean, at any particular time and with respect to any Lender, a fraction (expressed as a percentage), the numerator of which shall be the then amount of such Lender's Term Loan Commitment (or, if the Term Loans have been made, the outstanding principal amount of such Lender's Term Loan) and the denominator of which shall be the then aggregate amount of all Term Loan Commitments (or, if the Term Loans have been made, the aggregate outstanding principal amount of all Term Loans). "Receivables" shall mean and include all of the Borrower's presently existing and hereafter arising or acquired right, title and interest in and to (a) any rights to payment (the "Pool Receivables") from any Person (an "Obligor") whether constituting an account, chattel paper, instrument or a general intangible, arising under revolving credit card accounts established pursuant to contracts (the "Contracts") between the Borrower and each Obligor pursuant to which indebtedness may arise for the purchase of goods, including rights to payment of any interest or finance charges and other obligations of such Obligors with respect thereto, (b) all rights to, but not obligations under, all Contracts, (c) all rights in the merchandise (including returned merchandise), if any, relating to the sale which gave rise to any Pool Receivable, (d) all other security interests or liens and property subject thereto from time to time purporting to secure payment of a Pool Receivable, whether pursuant to the Contract related to such Pool Receivable or otherwise, (e) all UCC financing statements covering any collateral securing payment of any Pool Receivables, (f) all guarantees and other agreements or arrangements of whatever character from time to time supporting or securing payment of any Pool Receivable whether pursuant to the contract related to such Pool Receivable or otherwise, (g) all monies due or to become due with respect thereto, (h) all books and records related to any of the foregoing, and (i) all proceeds thereof (as defined in the Uniform Commercial Code) including funds received from or on behalf of the Obligors in payment of any amounts owed (including finance charges, interest and all other charges) in respect of the Pool Receivables or are applied to such amounts owed by the Obligors (including insurance payments to be applied to amounts owed in respect of any Pool Receivable). "Receivables Transaction" shall mean (a) the transaction contemplated by that certain Receivables Financing Agreement, dated as of January 27, 1994 among AnnTaylor Funding, Inc., the Borrower, Clipper Receivables Corporation, State Street Boston Capital Corporation and PNC Bank, National Association and the other documents relating thereto (the "1994 Receivables Transaction") and (b) any other similar transaction replacing the 1994 Receivables Transaction; provided the terms and conditions of such other transaction are on substantially the same terms as the transaction described in clause (a) or are satisfactory to the Requisite Lenders (whose approval shall not be unreasonably withheld or delayed). "Reference Bank" shall mean Bank of America. "Reference Rate" shall mean the rate of interest publicly announced from time to time by Bank of America in San Francisco, California, as its reference rate. It is a rate set by Bank of America based upon various factors including Bank of America's costs and desired return, general economic conditions and other factors, and is used as a reference point for pricing some loans, which may be priced at, above, or below such announced rate. Any change in the Reference Rate shall take effect at the opening of business on the date specified in the public announcement of such change. "Register" shall have the meaning ascribed to such term in Section 12.01(e). "Regulation D", "Regulation G", "Regulation T", "Regulation U" and "Regulation X" shall mean Regulation D, Regulation G, Regulation T, Regulation U and Regulation X, respectively, of the Federal Reserve Board as in effect from time to time. "Reimbursement Obligations" shall mean the reimburse ment or repayment obligations of the Borrower to the Issuing Bank with respect to Letters of Credit, for amounts paid out thereunder. "Release" shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration from any Property into the environment, including the movement of Contaminants through or in the air, soil, surface water, groundwater or Property. "Remedial Action" shall mean any action required to (i) clean up, remove, treat or in any other way address Contaminants in the indoor or outdoor environment; (ii) prevent a Release or threat of Release or minimize the further Release of Contaminants so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; or (iii) perform preremedial studies and investigations and post-remedial monitoring and care. "Reportable Event" shall mean the events described in Section 4043 of ERISA with respect to which the 30-day notice requirement is not waived. "Requirements of Law" shall mean, as to any Person, the charter and by-laws or other organizational or governing documents of such Person, and any law, rule or regulation, Permit, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject, including the Securities Act, the Securities Exchange Act, Regulation G, Regulation T, Regulation U and Regulation X, and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or Permit or occupational safety or health law, rule or regulation. "Requisite Lenders" shall mean Lenders whose Pro Rata Shares, in the aggregate, are more than 50%. "Responsible Officer" shall mean, as to ATSC or the Borrower, its Chief Financial Officer, its Treasurer or its Vice President-Finance. "Restricted Payment" shall mean (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of capital stock of ATSC or the Borrower or any of its Subsidiaries now or hereafter outstanding, including the Common Stock, except a distribution of stock as part of a stock split and except a dividend payable solely in shares of that class of stock or in any junior class of stock to the holders of that class, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of ATSC or the Borrower or any of its Subsidiaries now or hereafter outstanding, (c) any payment or prepayment of principal of, premium, if any, or interest on, and any redemption, purchase, retirement or defeasance of, or sinking fund or similar payment with respect to, the Subordinated Notes or any consideration paid to any Person for the purpose of any of the foregoing, and (d) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of capital stock of ATSC or the Borrower or any of the Borrower's Subsidiaries now or hereafter outstanding. "Restricted Subsidiary" shall mean any Subsidiary of the Borrower which is not an Unrestricted Subsidiary. Whether or not a Restricted Subsidiary is a "wholly-owned Restricted Subsidiary" shall be determined without taking into account any directors' qualifying shares. "Revolving Loan" shall have the meaning ascribed to such term in Section 2.02(a). "Revolving Loan Commitment" shall mean, with respect to each Lender as the context may require, (a) the principal amount set out opposite such Lender's name under the heading "Revolving Loan Commitment" in Schedule 1.01(b) or assigned to it in accordance with Section 12.01(a), as such amount may be reduced or otherwise adjusted from time to time pursuant to the terms of this Agreement or (b) the obligation of such Lender to make Revolving Loans hereunder in the amount specified in the immediately preceding clause (a), and "Revolving Loan Commitments" shall mean the aggregate amount of the Revolving Loan Commitments of all Lenders. "Revolving Loan Lender" shall mean each Lender having a Revolving Loan Commitment. "Securities" shall mean any stock, shares, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities", or any certificates of interest, shares, or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire any of the foregoing, but shall not include any evidence of the Obligations. "Securities Act" shall mean the Securities Act of 1933, as amended to the date hereof and from time to time hereafter, and any successor statute. "Securities Exchange Act" shall mean the Securities Exchange Act of 1934, as amended to the date hereof and from time to time hereafter, and any successor statute. "Specified Prepayment Date" shall have the meaning ascribed to such term in the definition of Prepayment Offer Notice in Section 1.01. "Specified Prepayment Event" shall mean any voluntary or mandatory prepayment by the Borrower in respect of the Term Loans pursuant to Section 2.05. "Specified Stated Prepayment Date" shall have the meaning ascribed to such term in Section 2.05(c). "Standby Letter of Credit" shall mean any Letter of Credit which is not a Commercial Letter of Credit. "Subordinated Note Indenture" shall mean the indenture dated as of June 15, 1993 between the Borrower and Fleet Bank, N.A., as trustee pursuant to which the Subordinated Notes were issued. "Subordinated Notes" shall mean the 8 3/4% Subordinated Notes due 2000 issued pursuant to the Subordinated Note Indenture. "Subsidiary" shall mean, with respect to any Person, any corporation, partnership, trust or other entity of which a majority of the stock (or equivalent ownership or controlling interest) having voting power to elect a majority of the Board of Directors (if a corporation) or to select the trustee or equivalent controlling interest is directly or indirectly owned or controlled by such Person or one or more of the other Subsidiaries of such Person or any combination thereof; provided, however, that for purposes of this Agreement the charitable foundation permitted to be established pursuant to Section 8.02(a)(viii) shall not be deemed to be a Subsidiary of the Borrower. "Taxes" shall have the meaning ascribed to such term in Section 2.09. "Term Loan" shall have the meaning ascribed to such term in Section 2.01(a). "Term Loan Commitment" shall mean, with respect to each Lender as the context may require (a) the principal amount set out opposite such Lender's name under the heading "Term Loan Commitment" in Schedule 1.01(b) or assigned to it in accordance with Section 12.01(a), as such amount may be reduced pursuant to the terms of this Agreement or (b) the obligation of such Lender to make Term Loans hereunder in the amount specified in the immediately preceding clause (a), and "Term Loan Commitments" shall mean the aggregate principal amount of the Term Loan Commitments of all Lenders. "Term Loan Lender" shall mean any Lender having a Term Loan Commitment. "Term Note" shall have the meaning ascribed to such term in Section 2.01(e). "Termination Date" shall mean the earlier to occur of (a) the Final Maturity Date and (b) the date of termination of the Commitments pursuant to Section 10.02(a). "Termination Event" shall mean (i) a Reportable Event with respect to any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in which the Borrower or such ERISA Affiliate was a "substan tial employer" as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of 20% of Benefit Plan participants who are employees of the Borrower and its ERISA Affiliates; (iii) the imposition of an obligation on the Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Benefit Plan; (v) any event or condition which constitutes grounds under Section 4042 of ERISA (excluding Section 4042(a)(4)) for the termination of, or the appointment of a trustee to administer, any Benefit Plan; or (vi) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan. "Total Capitalization" means, as of any date of determination, the sum of Funded Debt plus obligations in respect of Capital Leases plus ATSC shareholders equity. "Trademark Assignment" shall mean a Trademark Security Agreement substantially in the form of, and on the terms set forth in, Exhibit 4.01(a)(iii)(B), as the same may be amended, supplemented or otherwise modified from time to time. "Transaction Costs" shall mean the fees, costs and expenses payable by the Borrower or any of its Subsidiaries or ATSC pursuant hereto or in connection herewith or in respect hereof. "Unrestricted Subsidiary" shall mean a Subsidiary of the Borrower which has been designated as such by resolution duly adopted by the board of directors of the Borrower, which at the time of such designation had assets of $1,000 or less and which does not own or hold any Securities of, or any Lien on any Property of, ATSC, the Borrower or any Restricted Subsidiary provided no Subsidiary of the Borrower shall be (or if already an Unrestricted Subsidiary shall immediately cease to be) an Unrestricted Subsidiary if, at any time, ATSC, the Borrower or any other Restricted Subsidiary of the Borrower shall create, incur, issue, assume, guarantee or in any other manner whatsoever be or become liable with respect to any Claim against or any Contractual Obligation or Indebtedness of, such Subsidiary. 1.02. Computation of Time Periods. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. 1.03. Accounting Terms. For purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. 1.04. Other Definitional Provisions. References to "Articles", "Sections", "subsections", "Schedules", "Exhibits" and "the preamble" shall be to Articles, Sections, subsections, Schedules, Exhibits and the preamble, respectively, of this Agreement unless otherwise specifically provided. The words "include" and "including" when used herein are not intended to be exclusive and mean "include, without limitation" and "including, without limitation." ARTICLE II Amounts and Terms of Loans 2.01. The Term Loan Facility. (a) Amount of the Term Loan. (i) Subject to the terms and conditions set forth in this Agreement, each Term Loan Lender hereby severally and not jointly agrees to make to the Borrower on the Initial Funding Date a term loan (the term loan of each Lender, a "Term Loan", and the term loans of all Lenders, the "Term Loans") in the amount requested by the Borrower which shall not exceed such Lender's Term Loan Commitment. (ii) On the date of, and after giving effect, to the borrowing of the Term Loans, the Term Loan Commitments shall be automatically reduced by the unborrowed amount thereof. After the date of borrowing of the Term Loans, the Term Loan Commitments shall be further permanently reduced by the amount of any voluntary or mandatory prepayment pursuant to paragraphs (a) and (b) of Section 2.05, subject to Section 2.05(c). (iii) Any principal amount of the Term Loans borrowed pursuant to this Section 2.01 which is repaid or prepaid may not be reborrowed. (iv) The Term Loans shall be made by the Term Loan Lenders simultaneously and proportionately to their respec tive Pro Rata Term Loan Shares, it being understood that no Lender shall be responsible for any failure by any other Lender to perform its obligation to make a Term Loan hereunder and that the Term Loan Commitment of any Lender shall not be increased or decreased without the prior written consent of such Lender as a result of the failure by any other Lender to perform its obliga tion to make a Term Loan hereunder. (b) Notice of Borrowing. When the Borrower desires to borrow under this Section 2.01 it shall deliver to the Agent a Notice of Borrowing no later than 12:00 noon (New York time) (i) at least one Business Day in advance of the proposed Funding Date, in the case of a Borrowing of Base Rate Loans, and (ii) at least three Business Days in advance of the proposed Funding Date, in the case of a Borrowing of Eurodollar Rate Loans; provided, however, that in the case of a Borrowing of Base Rate Loans on the Initial Funding Date, the Notice of Borrowing may be delivered not later than 10:00 a.m. (New York time) on the date of such Borrowing. The Notice of Borrowing shall specify (A) the Funding Date, (B) the aggregate principal amount of Term Loans to be funded on such date, (C) whether the proposed Borrowing will be of Base Rate Loans or Eurodollar Rate Loans; and (D) in the case of Eurodollar Rate Loans, the requested Interest Period. In lieu of delivering the above-described Notice of Borrowing and only with the consent of the Agent in its sole discretion at such time, the Borrower may give the Agent telephonic notice of any proposed Borrowing by the time required under this Section 2.01(b); provided that, in the event the Agent so consents, such notice shall be confirmed immediately by delivery to the Agent of a Notice of Borrowing by facsimile. Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to this Section 2.01(b) shall be irrevocable. (c) Making of Loans. Promptly after receipt of a Notice of Borrowing under Section 2.01(b) (or telephonic notice in lieu thereof if the Agent consents to such telephonic notice immediately confirmed by facsimile), the Agent shall notify each Term Loan Lender by facsimile, or other similar form of tele transmission, of the proposed Borrowing. Each Term Loan Lender shall make the amount of its Term Loan available to the Agent at the Agent's Payment Office in Dollars and in immediately available funds, not later than (i) 1:00 p.m. (New York time) on the Funding Date, in the case of a Borrowing of Base Rate Loans and (ii) 11:00 a.m. (New York time) on the Funding Date, in the case of a Borrowing of Eurodollar Rate Loans. After the Agent's receipt of the proceeds of such Loans, the Agent shall make the proceeds of such Loans available to the Borrower on such Funding Date in Dollars and in immediately available funds to an account of the Borrower, designated in writing by the Borrower in the Notice of Borrowing. (d) Amount of Term Loans. Any Term Loans made shall be in the aggregate minimum amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof. (e) Loan Accounts; Term Notes. The Term Loans made by each Lender shall be evidenced by one or more loan accounts maintained by such Lender in the ordinary course of business. The loan accounts or records maintained by the Agent and each Lender shall be conclusive absent manifest error of the amount of the Term Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Term Loans. Notwithstanding the foregoing, the Borrower agrees that, upon request to the Agent by any Lender, in order to evidence such Lender's Term Loan, the Borrower will execute and deliver to such Lender a promissory note substantially in the form of Exhibit 2.01(e) (each, as amended, supplemented, replaced or otherwise modified from time to time, a "Term Note"), with appropriate insertions therein as to payee, date and principal amount. Each Term Note shall (i) be dated the Initial Funding Date, (ii) be payable as provided in Section 2.01(f) and (iii) provide for the payment of interest in accordance with Section 2.03. (f) Repayment of Term Loans. Subject to the earlier prepayment thereof pursuant to Section 2.05, the principal amount of the Term Loans shall be repaid by the Borrower on the third anniversary of the Initial Funding Date, and the Borrower hereby promises to make such payment on such date. (g) No Change of Term Loan Provisions. Notwithstanding any other provision of this Agreement, without the written consent of each Term Loan Lender affected thereby, no modification of this Agreement shall increase any Term Loan Commitment, extend the maturity date of the Term Loans, reduce the principal of, or rate of interest on, the Term Loans or change the provisions of Section 2.01 or 2.05(c). 2.02. The Revolving Loan Facility. (a) Availability. (i) Subject to the terms and conditions set forth in this Agreement, each Revolving Loan Lender hereby severally and not jointly agrees to make to the Borrower from time to time during the period from the Initial Funding Date to the Termination Date, revolving loans (each individually, a "Revolving Loan" and, collectively, the "Revolving Loans"), in an amount which shall not exceed, in the aggregate at any time outstanding, such Lender's Commitment; provided that the aggregate principal amount of all Revolving Loans outstanding at any one time shall not exceed the then Maximum Revolving Loan Amount. (ii) All Revolving Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their respective Pro Rata Revolving Loan Shares, it being understood that no Lender shall be responsible for any failure by any other Lender to perform its obligation to make a Loan hereunder and that the Revolving Loan Commitment of any Lender shall not be increased or decreased without the prior written consent of such Lender as a result of the failure by any other Lender to perform its obligation to make a Revolving Loan. The failure of any Lender to make available to the Agent any Borrowing of the Revolving Loan Commitments shall not relieve any other Lender of its obligation hereunder to make available to the Agent such other Lender's Pro Rata Revolving Loan Share of any Borrowing of the Revolving Loan Commitments on the date such funds are to be made available pursuant to the terms of this Agreement. (iii) Revolving Loans may be prepaid pursuant to Section 2.05, and, subject to the provisions of this Agreement, any amounts so prepaid may be reborrowed, up to the amount available under this Section 2.02(a) at the time of such Borrowing, until the Business Day immediately preceding the Final Maturity Date. Each Lender's Revolving Loan Commitment shall expire, and each Revolving Loan then outstanding shall mature and be repaid by the Borrower, without further action on the part of the Lenders, on the Final Maturity Date. (iv) Revolving Loans made on any Funding Date shall be in the aggregate minimum amount of $1,000,000 and in integral multiples of $1,000,000 in excess thereof. (v) The Borrower shall from time to time effect a prepayment of the outstanding Revolving Loans (such amount, a "Cleandown") so as to cause the aggregate outstanding principal amount of the Revolving Loans to be not more than (A) $85,000,000, for at least 15 consecutive days in the Fiscal Year beginning on January 29, 1995 and (B) $50,000,000, for at least 30 consecutive days in each Fiscal Year thereafter (each such period, a "Cleandown Period"). Promptly after the end of any Cleandown Period, the Borrower shall notify the Agent that a Cleandown Period has occurred and the Agent shall notify the Lenders. (b) Notice of Borrowing. Whenever the Borrower desires to borrow under this Section 2.02, the Borrower shall deliver to the Agent a Notice of Borrowing (i) no later than 11:00 a.m. (New York time) on the proposed Funding Date, in the case of a Borrowing of Base Rate Loans, and (ii) not later than 11:00 a.m. (New York time) at least three Business Days in advance of the proposed Funding Date, in the case of a Borrowing of Eurodollar Rate Loans. The Notice of Borrowing shall specify (A) the Funding Date (which shall be a Business Day), (B) the amount of the proposed Borrowing, (C) whether the proposed Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, and (D) in the case of Eurodollar Rate Loans, the requested Interest Period. In lieu of delivering the above-described Notice of Borrowing and only with the consent of the Agent in its sole discretion at such time, the Borrower may give the Agent telephonic notice of any proposed Borrowing by the time required under this Section 2.02(b); provided that, in the event the Agent so consents, such notice shall be confirmed immediately by delivery to the Agent of a Notice of Borrowing by facsimile. Any Notice of Borrowing (or telephonic notice in lieu thereof) pursuant to this Section 2.02(b) shall be irrevocable. (c) Making of Loans. Promptly after receipt of a Notice of Borrowing under Section 2.02(b) (or telephonic notice in lieu thereof if the Agent consents to such telephonic notice, immediately confirmed by facsimile), the Agent shall notify each Revolving Loan Lender by facsimile or other similar form of teletransmission, of the proposed Borrowing. Each Revolving Loan Lender shall make the amount of its Revolving Loan available to the Agent at the Agent's Payment Office in Dollars and in immediately available funds, not later than (i) 1:00 p.m. (New York time) on the Funding Date, in the case of a Borrowing of Base Rate Loans and (ii) 11:00 a.m. (New York time) on the Funding Date, in the case of a Borrowing of Eurodollar Rate Loans. After the Agent's receipt of the proceeds of such Loans, the Agent shall make the proceeds of such Loans available to the Borrower on such Funding Date in Dollars and in immediately available funds to an account of the Borrower, designated in writing by the Borrower in the Notice of Borrowing. (d) Loan Accounts. The Revolving Loans made by each Lender shall be evidenced by one or more loan accounts maintained by the Agent and such Lender in the ordinary course of business. The loan accounts or records maintained by the Agent and each Lender shall be conclusive absent manifest error of the amount of the Revolving Loans made by the Lenders to the Borrower and the interest and payments thereon. Any failure so to record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Revolving Loans. In case of a discrepancy between the entries in the Agent's books and any Lender's books, such Lender's books shall constitute prima facie evidence of the accuracy of the information so recorded. (e) Termination or Reduction of Revolving Loan Commitments. The Borrower shall have the right, at any time and from time to time, (a) to terminate the Revolving Loan Commitments in whole, without premium or penalty, if no Revolving Loans or Letter of Credit Obligations are then outstanding, or (b) permanently to reduce in part, without premium or penalty, the Revolving Loan Commitments by an amount of up to (i) the then maximum amount of the Revolving Loan Commitments, less (ii) the aggregate principal amount of Revolving Loans and Letter of Credit Obligations then outstanding. The Borrower shall give not less than three Business Days' prior irrevocable written notice (not later than 11:00 a.m. (New York time) on such day) to the Agent designating the date (which shall be a Business Day) of such termination or reduction and the amount of any partial reduction. Promptly after receipt of a notice of such termination or reduction, the Agent shall notify each Lender of the proposed termination or reduction. Such termination or partial reduction of the Revolving Loan Commitments shall be effective on the date specified in the Borrower's notice and shall reduce the Revolving Loan Commitment of each Revolving Loan Lender proportionately in accordance with its Pro Rata Revolving Loan Share. Any such partial reduction of the Commitments shall be in an aggregate minimum amount of $2,000,000 and integral multiples of $1,000,000 in excess of that amount. (f) Extension of Revolving Loan Commitments. (i) Upon the written request of the Borrower, received by the Agent not earlier than May 31, 1997 and not later than June 15, 1997, and subject to the consent of each Revolving Loan Lender willing to grant such request, the Final Maturity Date shall be extended for an additional one-year period commencing on the then current Final Maturity Date. The Agent shall promptly transmit such request to each Revolving Loan Lender. The Revolving Loan Lenders shall respond through the Agent to any such request of the Borrower not later than June 30, 1997. Any Revolving Loan Lender not responding by such time shall be deemed to have declined the request. (ii) At the option of the Borrower, the Revolving Loan Commitment of any Lender not consenting to the Borrower's request to extend such Lender's Revolving Loan Commitment may be assumed, in whole or in part, by one or more existing Revolving Loan Lenders or other Persons meeting the qualifications of Eligible Assignee acceptable to the Borrower and the Agent and consenting to such assumption, upon compliance with Section 12.01; provided, however, that unless otherwise agreed by the assuming Lender or bank, the Borrower shall pay the processing and recordation fee required by Section 12.01(a) and any breakfunding fee required pursuant to Section 2.08(d). (iii) If the Revolving Loan Commitment of any Lender which has declined the request to extend its Revolving Loan Commitment has not subsequently so consented and is not replaced within six months after the first or second anniversary of the Initial Funding Date, as the case may be, then the Revolving Loan Commitments shall terminate on the then current Final Maturity Date. (g) Repayment of Revolving Loans. The Borrower hereby promises to pay on the Final Maturity Date the then outstanding principal amount of Revolving Loans. 2.03. Interest on the Loans. (a) Rate of Interest. The Borrower promises to pay interest on the unpaid principal amount of all Loans from the date made until paid in full at a fluctuating rate determined from time to time by reference to the Base Rate or the Eurodollar Rate. The applicable basis for determining the rate of interest shall be selected by the Borrower at the time a Notice of Borrowing is given by the Borrower pursuant to Section 2.01(b) or 2.02(b) or at the time a Notice of Conversion/Continuation is delivered by the Borrower pursuant to Section 2.03(c); provided that the Borrower may not select the Eurodollar Rate as the applicable basis for determining the rate of interest on a Loan if at the time of such selection an Event of Default has occurred and is continuing. If on any day a Loan is outstanding with respect to which notice has not been delivered to the Agent in accordance with the terms of this Agreement specifying the basis for determining the rate of interest, then for each such day such Loan shall be a Base Rate Loan. Interest accrued and unpaid on loans under the Existing Credit Agreement for the period prior to the Initial Funding Date shall be payable as provided in the Existing Credit Agreement; and from and after the Initial Funding Date, the Loans shall bear interest, subject to Section 2.03(d), as follows: (i) Revolving Loans shall bear interest from the Initial Funding Date until the first day of the third full fiscal quarter after the Initial Funding Date at a rate per annum which is (A) in the case of Base Rate Loans, equal to the Base Rate plus .75% and (B) in the case of Eurodollar Rate Loans, equal to the Eurodollar Rate determined for the applicable Interest Period plus 1.75%; thereafter, Revolving Loans shall bear interest as follows: 1) if a Base Rate Loan, then at a rate per annum for each day equal to the sum of (x) the Base Rate as in effect from time to time as interest accrues and (y) the applicable margin set forth below opposite the Pricing Ratio in effect on such day: Pricing Ratio Applicable Margin Level I Status 0% Level II Status 0% Level III Status .50% Level IV Status .75% Level V Status 1.25% 2) if a Eurodollar Rate Loan, then at a rate per annum for each day equal to the sum of (x) the Eurodollar Rate determined for the applicable Interest Period and (y) the applicable margin set forth below opposite the Pricing Ratio in effect on such day: Pricing Ratio Applicable Margin Level I Status .75% Level II Status 1.00% Level III Status 1.50% Level IV Status 1.75% Level V Status 2.25% (ii) Term Loans shall bear interest at a rate per annum which is (A) in the case of Base Rate Loans, equal to the Base Rate plus 1.50% and (B) in the case of Eurodollar Rate Loans, equal to the Eurodollar Rate determined for the applicable Interest Period plus 2.50%; provided, that Bank of America may, at the time of any sale by it of all or any portion of the Term Loans, by written notice to the Agent and the Borrower, increase the interest rate margins applicable to the Term Loans by up to 1% per annum, and if such notice is given, such interest rate margins will so increase effective on the date of such sale. (b) Interest Payments. Subject to Section 2.03(d), (i) interest accrued on each Base Rate Loan shall be payable in arrears (A) on the 15th day of each January, April, July and October, for the three-month period ending on such date, commencing on the first such day following the making of such Base Rate Loan, (B) upon the prepayment thereof on the amount prepaid, (C) upon conversion thereof to a Eurodollar Rate Loan and (D) at maturity; and (ii) interest accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on each Interest Payment Date applicable to such Eurodollar Rate Loan, (B) upon the prepayment thereof on the amount prepaid and (C) at maturity. (c) Conversion or Continuation. (i) Subject to the provisions of Sections 2.07 and 2.08, the Borrower shall have the option (A) to convert at any time all or any part of outstanding Loans which comprise part of the same Borrowing and which, in the aggregate, equal $1,000,000 or an integral multiple of $1,000,000 in excess of such amount from Base Rate Loans to Eurodollar Rate Loans; or (B) to convert all or any part of outstanding Loans which, in the aggregate, equal $1,000,000 or an integral multiple of $1,000,000 in excess of that amount from Eurodollar Rate Loans to Base Rate Loans on the expiration date of any Interest Period applicable thereto, provided the remaining amount of Eurodollar Rate Loans with the same interest period shall not be less than $1,000,000; or (C) upon the expiration of any Interest Period applicable to a Borrowing of Eurodollar Rate Loans, to continue all or any portion of such Loans equal to $1,000,000 or an integral multiple of $1,000,000 in excess of such amount as Eurodollar Rate Loans, and the succeeding Interest Period of such continued Loans shall commence on the expiration date of the Interest Period applicable thereto; provided that no outstanding Loan may be continued as, or be converted into, a Eurodollar Rate Loan when any Event of Default has occurred and is continuing. (ii) In the event the Borrower shall elect to convert or continue a Loan under this Section 2.03(c), the Borrower shall deliver an irrevocable Notice of Conversion/Continuation to the Agent no later than 11:00 a.m. (New York time) at least three Business Days in advance of the proposed conversion date or date of continuation. A Notice of Conversion/Continuation shall specify (w) the proposed conversion/continuation date (which shall be a Business Day), (x) the amount of the Loan to be converted/continued, (y) the nature of the proposed conversion/continuation, and (z) in the case of a conversion to, or a continuation of, a Eurodollar Rate Loan, the requested Interest Period. In lieu of delivering the above-described Notice of Conversion/Continuation, the Borrower may give the Agent telephonic notice of any proposed conversion/continuation by the time required under this Section 2.03(c); provided that such notice shall be confirmed immediately by delivery to the Agent by facsimile of a Notice of Conversion/Continuation. No failure of the Borrower to confirm any telephonic notice by facsimile shall impair or in any way limit the Borrower's obligations with respect to such Loans. Promptly after receipt of a Notice of Conversion/Continuation under this Section 2.03(c) (or telephonic notice in lieu thereof immediately confirmed by facsimile), the Agent shall notify each Lender of the proposed conversion/continuation. (iii) Any Notice of Conversion/Continuation for conversion to, or continuation of, a Loan (or telephonic notice in lieu thereof) shall be irrevocable and the Borrower shall be bound to convert or continue in accordance therewith. (d) Default Interest. Notwithstanding the rates of interest specified in Section 2.03(a) and the payment dates specified in Section 2.03(b), effective immediately upon the occurrence of any Event of Default of the type specified in Section 10.01(a) or upon acceleration of maturity pursuant to Section 10.02(a) and for so long thereafter as any such Event of Default or acceleration shall be continuing, the principal balance of all Loans and Reimbursement Obligations then due and payable (including all amounts due and payable pursuant to Section 10.02(a)) and any interest payments on the Loans not paid when due, shall bear interest payable upon demand at a rate which is 2 per cent per annum in excess of the rate of interest otherwise payable under this Agreement. (e) Computation of Interest. Interest on Base Rate Loans and Reimbursement Obligations shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and a year of 365 or 366 days, as applicable. Interest on Eurodollar Rate Loans shall be computed on the basis of the actual number of days elapsed in the period during which interest accrues and a year of 360 days. In computing interest on any Loan, the date of the making of the Loan or the first day of an Interest Period, as the case may be, shall be included and the date of payment or the expiration date of an Interest Period, as the case may be, shall be excluded; provided that if a Loan is repaid on the same day on which it is made, one day's interest shall be paid on that Loan. (f) Changes; Legal Restrictions. In the event that after the date hereof (a) the adoption of or any change in any law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority, or (b) compliance by any Lender with any request or directive (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or control over banks or financial institutions generally, does impose, modify, or hold applicable, in the determination of a Lender, any reserve, special deposit, compulsory loan, FDIC insurance, capital allocation or similar requirement against assets held by, or deposits or other liabilities (including those pertaining to Letters of Credit) in or for the account of, advances or loans by, Commitments made, or other credit extended by, or any other acquisition of funds by, a Lender or any Applicable Lending Office of such Lender (except (a) with respect to Base Rate Loans, so long as the Base Rate in effect at the time is determined under clause (a) in the definition of "Base Rate", (b) with respect to Base Rate Loans, to the extent that the reserve and FDIC insurance requirements are reflected in the definition of "Base Rate" and (c) with respect to Eurodollar Rate Loans, to the extent that the reserve requirements are reflected in the definition of Eurodollar Rate"), and the result of any of the foregoing is to increase the cost to such Lender of making, renewing or maintaining the Loans or its Commitment to the Borrower or issuing to the Borrower any Letter of Credit or to reduce any amount receivable hereunder or thereunder; then, in any such case, the Borrower shall upon written notice from and demand by that Lender pay to such Lender, within 15 Business Days of the date specified in such notice and demand, such amount or amounts (based upon a reasonable allocation thereof by such Lender to the financing transactions contemplated by this Agreement and affected by this Section 2.03(f)) as may be necessary to compensate that Lender for any such additional cost incurred or reduced amount received. Such Lender shall deliver to the Borrower a written statement of the costs or reductions claimed and the basis therefor, and the allocation made by such Lender of such costs and reductions, which statement shall, in the absence of manifest error, be conclusive. If a Lender subsequently recovers from another Person any amount previously paid by the Borrower pursuant to this Section 2.03(f), such Lender shall, within 30 days after receipt of such refund and to the extent permitted by applicable law, pay to the Borrower, without interest, the amount of any such recovery. 2.04. Fees. (a) Fees to Bank of America. The Borrower shall pay to Bank of America, for its own account and/or for the account of the Arranger, fees in the amounts set forth in the Fee Letter, payable on the Initial Funding Date. Except as contemplated by the Fee Letter, no Person other than Bank of America and the Arranger shall have any interest in such fees. (b) Commitment Fee. (i) The Borrower shall pay to the Agent, for the account of each Revolving Loan Lender, in accordance with their Pro Rata Revolving Loan Shares, a commitment fee accruing from and after the Initial Funding Date to the Termination Date upon the difference between (A) the Revolving Loan Commitments in effect from time to time and (B) the Revolving Loans and Letter of Credit Obligations outstanding from time to time. All such commitment fees payable under this paragraph shall be payable in arrears on the fifteenth day of each January, April, July and October beginning after the Initial Funding Date and in addition on the Termination Date. (ii) Commitment fees shall accrue from the Initial Funding Date until the first day of the third full fiscal quarter after the Initial Funding Date at the rate of .375% per annum; thereafter, commitment fees shall accrue for each day at a rate per annum equal to the percentage per annum set forth below opposite the Pricing Ratio in effect on such day: Pricing Ratio Commitment Fee Level I Status .25% Level II Status .25% Level III Status .375% Level IV Status .375% Level V Status .50% (iii) Commitment fees accrued under the Existing Credit Agreement for the period prior the Initial Funding Date shall be payable as provided in the Existing Credit Agreement. (c) Agency Fee. The Borrower shall pay to the Agent, solely for its own account, the agency fee set forth in the Fee Letter in the amount per annum agreed between the Agent and the Borrower payable in advance on the Initial Funding Date and each one-year anniversary of the Initial Funding Date. No Person other than the Agent shall have any interest in such fee. (d) Letter of Credit Fees. The Borrower shall pay to the Agent, for the account of the Revolving Loan Lenders, or to the Issuing Bank, as applicable, a fee for each Letter of Credit issued on behalf of the Borrower (the "Letter of Credit Fee"), determined as set forth in Section 3.08(a) and (b). (e) Amendment Fee. The Borrower shall pay to the Agent, for the account of each Revolving Loan Lender that signs this Agreement, an amendment fee equal to 1/4 of 1% of the amount of the Revolving Loan Commitment of such Lender, payable on the Initial Funding Date. (f) Payment of Fees. The fees described in this Section 2.04 represent compensation for services rendered and to be rendered separate and apart from the lending of money or the provision of credit and do not constitute compensation for the use, detention or forbearance of money, and the obligation of the Borrower to pay each fee described herein shall be in addition to, and not in lieu of, the obligation of the Borrower to pay interest, other fees and expenses otherwise described in this Agreement. Fees and expenses shall be payable when due in immediately available funds. All fees and expenses shall be nonrefundable when paid. All fees and expenses specified or referred to in this Agreement due to the Agent, the Issuing Bank or a Lender, including those referred to in this Section 2.04 and in Section 12.03, shall constitute Obligations and shall be secured by all the Collateral. All fees described in this Section 2.04 which are expressed as a per annum charge shall be calculated on the basis of the actual number of days elapsed in a 360-day year. 2.05. Prepayments. (a) Voluntary Prepayments. The Borrower may, upon not less than one Business Day's prior written or telephonic irrevocable notice (in each case not later than 11:00 a.m. (New York time) on the date such notice is given), if made by telephone, confirmed immediately by facsimile to the Agent (which notice the Agent shall promptly transmit by facsimile (or other similar form of teletransmission) or telephone to each Lender), at any time and from time to time, prepay any Base Rate Loan or Eurodollar Rate Loan in whole or in part, without premium or penalty, in an aggregate minimum amount of $1,000,000, and integral multiples of $1,000,000 in excess of such amounts; provided that the Borrower may prepay such Loans in full without regard to such minimum amount; and provided, further, that if the Borrower prepays any Eurodollar Rate Loan on a date other than the expiration date of the Interest Period applicable thereto, the Borrower shall pay to the Agent the amounts described in Section 2.08(d). Any notice of prepayment given to the Agent under this Section 2.05(a) shall specify the date of prepayment and the aggregate principal amount of the prepayment. If a notice of prepayment has been delivered as provided herein, such notice shall be irrevocable and the principal amount of the Loans specified in such notice shall become due and payable on the prepayment date specified in such notice. (b) Mandatory Commitment Reductions; Mandatory Prepayments. (i) In the event that the Borrower and/or any Restricted Subsidiary shall consummate the Distribution Center Financing and/or any portion of the Lease Financing in any fiscal quarter, then at the time of the required delivery of the Borrower's financial statements under Section 6.01(a) or (b), as the case may be, for the period including such fiscal quarter, an amount equal to 50% of the greater of (x) the net cash proceeds of each such transaction and (y) the principal amount of Indebtedness (as reflected on such financial statements) incurred by the Borrower and/or such Restricted Subsidiary in each such transaction, shall be applied as follows: (A) the amount of such net proceeds shall be allocated between the Revolving Loan Commitments and the Term Loan Commitments pro rata (rounded upwards or downwards, as the case may be, to the nearest $1,000,000) based upon the amounts of the Revolving Loan Commitments and the Term Loan Commitments; (B) the Revolving Loan Commitments shall be immediately and permanently reduced by an amount equal to the amount of such net proceeds allocated to the Revolving Loan Commitments, and the Borrower shall make any prepayments of the Revolving Loans required by clause (iii) of this Section 2.05(b); and (C) the remainder of such net proceeds shall be immediately applied to prepay the Term Loans, subject to paragraph (c) below. (ii) If at any time the commitment under the Receivables Transaction shall be increased to an amount in excess of $40,000,000, the Revolving Loan Commitments shall immediately be automatically reduced by the amount of such excess. (iii) The Borrower shall not at any time cause or permit the aggregate outstanding balance of the Revolving Loans to exceed the Maximum Revolving Loan Amount. If at any time such outstanding balance shall exceed the Maximum Revolving Loan Amount, the Borrower shall, without demand or notice, pay to the Agent such amount as may be necessary to eliminate such excess, and the Borrower shall make such payment on the Business Day on which the Borrower learns or is notified of the excess, if the Borrower so learns or is so notified prior to 11:00 a.m. (New York time) on such day, and otherwise on the immediately succeeding Business Day. (c) Treatment of Term Loans. Notwithstanding anything to the contrary in this Section 2.05, on or prior to any date (a "Specified Stated Prepayment Date") specified for prepayment of the Term Loans pursuant to Section 2.05(a) or (b), the Borrower shall deliver a Prepayment Offer Notice to each Term Loan Lender (with a copy to the Agent). Each Term Loan Lender shall indicate its acceptance or rejection of such offer (and, in the case of its acceptance, its Prepayment Acceptance Amount) by delivering a Prepayment Offer Response Notice to the Agent and the Borrower no later than four Business Days prior to the Specified Prepayment Date set forth in the applicable Prepayment Offer Notice. On such Specified Prepayment Date, (i) the Borrower shall prepay each Term Loan Lender's Term Loans in a principal amount equal to such Term Loan Lender's Prepayment Share and (ii) the Revolving Loan Commitments shall be automatically further reduced in an aggregate amount equal to the Prepayment Amount less the aggregate principal amount of the Term Loans prepaid pursuant to clause (i) above, and the Borrower shall make any prepayments of the Revolving Loans required by clause (iii) of Section 2.05(b). The Agent shall calculate the amounts of the prepayments payable to the respective Lenders required by this Section 2.05(c). During the period from any Specified Stated Prepayment Date to the associated Specified Prepayment Date, the Prepayment Amount available for prepayment on such Specified Prepayment Date shall be held in a cash collateral account with the Agent, as security for the Term Loans, and shall be invested by the Agent, at the direction of the Borrower, in Cash Equivalents. The procedures set forth above in this Section 2.05(c) shall not apply in the case of any prepayment in whole of the Term Loans; provided, that any such prepayment in whole of the Term Loans shall be accompanied by a prepayment fee equal to the Prepayment Fee Percentage (as defined below) of the principal amount of Term Loans prepaid; such prepayment fee shall be in addition to, and without limitation of, any amounts payable pursuant to Section 2.08(d) in connection with such prepayment. For purposes of this Section 2.05(c), the "Prepayment Fee Percentage" applicable to prepayments in respect of the Term Loans on any date during any period set forth below shall be the percentage set forth opposite such period below. Period Prepayment Fee Percentage 9/29/95 - 12/31/95 6.00% 1/1/96 - 3/31/96 5.25% 4/1/96 - 6/30/96 4.50% 7/1/96 - 9/30/96 3.75% 10/1/96 - 12/31/96 3.00% 1/1/97 - 3/31/97 2.25% 4/1/97 - 6/30/97 1.50% 7/1/97 - 9/30/97 0.75% 10/1/97 - thereafter 0.00% 2.06. Payments. (a) Manner and Time of Payment. (i) All payments of principal, interest, Reimbursement Obligations and fees hereunder or any Letter of Credit payable to the Lenders shall be made without condition or reservation of right, in Dollars and in immediately available funds, delivered to the Agent at the Agent's Payment Office not later than 1:00 p.m. (New York time) on the date due; and funds received by the Agent after that time and date shall be deemed to have been paid and received by the Agent on the next succeeding Business Day. Payments actually received by the Agent for the account of the Lenders shall be paid to them promptly in like funds after receipt thereof by the Agent. (ii) Unless the Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date, and the Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand the excess of the amount distributed to such Lender over the amount, if any, paid by the Borrower for the account of such Lender, together with interest thereon at the Federal Funds Rate, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Agent; provided, however, that if any Lender shall fail to repay such amount within three Business Days after demand therefor, such Lender shall, from and after such third Business Day until payment is made to the Agent, pay interest thereon at a rate per annum equal to the Base Rate. (b) Apportionment of Payments. So long as there does not exist an Event of Default, all payments of principal and interest in respect of outstanding Loans, all payments of fees constituting Obligations, and all payments in respect of any other Obligations shall be allocated among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Revolving Loan Shares or Pro Rata Term Loan Shares, as the case may be, or otherwise as provided herein. After the occurrence and during the continuance of an Event of Default, and after notice by the Agent to the Borrower that payments and proceeds shall be so applied, all payments remitted to the Agent and all amounts and proceeds of Collateral received by the Agent shall be applied, subject to the provisions of this Agreement, (i) first, to pay Obligations in respect of any fees or indemnities then due to the Agent, the Issuing Bank and the Lenders; (ii) second, to pay Obligations in respect of expense reimbursements then due under Section 12.03; (iii) third, to pay or prepay principal of and interest on any outstanding Reimbursement Obligations and Loans, and to pay (or to the extent such Obligations are contingent, prepay or provide cash collateral in respect of) Letter of Credit Obligations; provided that if sufficient funds are not available to fund all payments to be made to the holders of the Obligations described in this clause (iii), the available funds shall be allocated to the payment of such Obligations ratably, based on the proportion of each such holder's interest in the aggregate outstanding Loans, Reimbursement Obligations and other Letter of Credit Obligations (in each instance whether or not due); and further, provided, that matured and, to the extent permitted by law, unmatured interest-bearing Obligations shall, in any event, be paid prior to prepayment or provision of cash collateral for contingent Letter of Credit Obligations; (iv) fourth, to the ratable payment of all other Obligations then due and payable for expense reimbursements; (v) fifth, to pay Obligations then due and payable in respect of the Interest Rate Contracts, if any; and (vi) sixth, to the ratable payment of all other Obligations due to any and all holders of Obligations. The Agent shall promptly distribute to each Lender at its primary address set forth in Schedule 1.01(a), or at such other address as a Lender may request in writing, such funds as it may be entitled to receive or as may be shown due to it in the Agent's Loan Account, provided that the Agent shall in any event not be bound to inquire into or determine the validity, scope or priority of any interest or entitlement of any Lender or any other holder of Obligations and may suspend all payments or seek appropriate relief (including instructions from the Requisite Lenders or an action in the nature of interpleader) in the event of any doubt or dispute as to any apportionment or distribution contemplated hereby. The order of priority herein is set forth solely to determine the rights and priorities of the holders of Obligations as among themselves and may at any time or from time to time be changed by the Lenders as they may elect, in writing in accordance with Section 12.08 (except that no amendment shall require prepayment or provision of cash collateral for contingent Letter of Credit Obligations unless (as provided in clause (iii) of Section 2.06(b)) matured and certain interest-bearing unmatured Obligations shall have been paid), without necessity of notice to or consent of or approval by the Borrower or any other Person. (c) Payments on Non-Business Days. Whenever any payment to be made by the Borrower hereunder shall be stated to be due on a day which is not a Business Day, payments shall be made on the next succeeding Business Day and such extension of time shall be included in the computation of the payment of interest hereunder and of any of the fees specified in Section 2.04, as the case may be. (d) Payments by Lenders to the Agent. Unless the Agent shall have been notified by any Lender prior to any Funding Date that such Lender does not intend to make available to the Agent such Lender's Loan on such Funding Date (except that in the case of Base Rate Loans, the Agent shall have been so notified no later than 1:00 p.m. (New York time) on the Funding Date), the Agent may assume that such Lender has made such amount available to the Agent on such Funding Date and the Agent in its sole discretion may, but shall not be obligated to, make available to the Borrower a corresponding amount on such Funding Date. If such corresponding amount is not in fact made available to the Agent by such Lender on or prior to a Funding Date, such Lender agrees to pay and the Borrower agrees to repay severally to the Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is paid or repaid to the Agent, at (A) in the case of such Lender, the Federal Funds Rate for the first three Business Days and thereafter at the Base Rate, and (B) in the case of the Borrower, the interest rate applicable at the time to a Borrowing of Base Rate Loans made on such Funding Date. If such Lender shall pay to the Agent such corresponding amount, such amount so paid shall constitute such Lender's Loan, and if both such Lender and the Borrower shall have paid and repaid, respectively, such corresponding amount, the Agent shall promptly pay over to the Borrower such corresponding amount in same day funds, but the Borrower shall remain obligated for all interest thereon. Nothing in this Section 2.06(d) shall be deemed to relieve any Lender of its obligation hereunder to make its Loan on any Funding Date. Notwithstanding any provision of this Agreement to the contrary, the Agent may apply all funds and proceeds of Collateral available for the payment of any Obligations first to repay any amount owing by any Lender to the Agent as a result of such Lender's failure to fund its Loan as required hereunder. 2.07. Interest Periods. By giving notice as set forth in Section 2.01(b), 2.02(b) or 2.03(c) with respect to a Borrowing of, conversion into or continuation of Eurodollar Rate Loans, the Borrower shall have the option, subject to the other provisions of this Section 2.06 and Section 2.07, to specify an interest period (each an "Interest Period") to apply to the Borrowing described in such notice, which Interest Period shall be either a 1-, 2-, 3-, or 6-month period and, to the extent generally available to each Revolving Loan Lender or Term Loan Lender, as the case may be, a 9- or 12-month period; provided, that only 1- month Interest Periods shall be available for Term Loans so long as any amount of the Term Loans is held by Bank of America. The determination of Interest Periods shall be subject to the following provisions: (a) In the case of immediately successive Interest Periods, each successive Interest Period shall commence on the day on which the next preceding Interest Period expires; (b) If any Interest Period would otherwise expire on a day which is not a Business Day, the Interest Period shall be extended to expire on the next succeeding Business Day; provided that if any such Interest Period would otherwise expire on a day which is not a Business Day and no further Business Day occurs in that month, that Interest Period shall expire on the immediately preceding Business Day; (c) The Borrower may not select an Interest Period in respect of Revolving Loans which terminates later than the Final Maturity Date, or in respect of Term Loans which terminates later than the third anniversary of the Initial Funding Date; and (d) Without the prior written consent of the Agent and the Requisite Lenders, there shall be no more than five Interest Periods under this Agreement at any time. 2.08. Special Provisions Governing Eurodollar Rate Loans. Notwithstanding other provisions of this Agreement, the following provisions shall govern with respect to Eurodollar Rate Loans as to the matters covered: (a) Determination of Interest Rate. As soon as practicable two Business Days prior to the Funding Date or date of conversion or continuation, the Agent shall determine (which determination shall, absent manifest error, be presumptively correct) the interest rate which shall apply to the Eurodollar Rate Loans for which an interest rate is then being determined for the applicable Interest Period and shall promptly give notice thereof (in writing or by telephone confirmed in writing) to the Borrower and to each Lender. (b) Interest Rate Unascertainable, Inadequate or Unfair. With respect to any Interest Period, if (i) the Reference Bank is offering deposits in Dollars (in the applicable amounts) in the London interbank Eurodollar market for such Interest Period, or (ii) the Agent reasonably determines that adequate and fair means do not exist for ascertaining the applica ble interest rate on the basis provided for in the definition of Eurodollar Rate, for any reason other than the failure of the Reference Bank to offer deposits in Dollars in the relevant market, then the Agent shall forthwith give notice thereof to the Borrower, whereupon until the Agent has determined that the circumstances giving rise to such suspension no longer exist, (a) the right of the Borrower to elect to have Loans bear interest based upon the Eurodollar Rate, shall be suspended, and (b) each outstanding Eurodollar Rate Loan, shall be converted into a Base Rate Loan or a Eurodollar Rate Loan not covered by the notice described above (as may be designated by the Borrower) on the last day of the then current Interest Period therefor, notwithstanding any prior election by the Borrower to the contrary. (c) Illegality. (i) In the event that on any date any Lender shall have determined (which determination shall, in the absence of manifest error, be final and conclusive and binding upon all parties) that the making or continuation of any Eurodollar Rate Loan has become unlawful by compliance by that Lender in good faith with any law, governmental rule, regulation or order of any Governmental Authority (whether or not having the force of law and whether or not failure to comply therewith would be unlawful), then, and in any such event, such Lender shall promptly give notice (by teletransmission or by telephone promptly confirmed in writing) to the Borrower and the Agent of that determination and the reasons therefor. (ii) Upon the giving of the notice referred to in Section 2.08(c)(i), (A) the Borrowers right to request of such Lender and such Lender's obligation to make Eurodollar Rate Loans shall be immediately suspended, and such Lender shall make a Loan, as part of any requested Borrowing of Eurodollar Rate Loans, as a Base Rate Loan or as a Eurodollar Rate Loan not covered by the notice described in Section 2.08(c)(i) (as designated by the Borrower), which Base Rate Loan or Eurodollar Rate Loan shall, for all purposes, be considered a part of such Borrowing, and (B) if the affected Eurodollar Rate Loan or Loans are then outstanding, the Borrower shall immediately (or, if permitted by applicable law, no later than the date permitted thereby, upon at least one Business Day's written notice to the Agent and the affected Lender) convert each such Loan into a Base Rate Loan or a Eurodollar Rate Loan not covered by such notice. If at any time notice is given under Section 2.08(c)(i) by one or more Lenders, but not by all of them, the provisions of this Section 2.08(c)(ii) shall apply only in favor of the Lenders which gave such notice. (iii) In the event that a Lender determines at any time following its giving of a notice referred to in Section 2.08(c)(i) that such Lender may lawfully make Eurodollar Rate Loans of the type(s) referred to in such notice, such Lender shall promptly give notice (by facsimile or by telephone promptly confirmed in writing) to the Borrower and the Agent of that determination, whereupon the Borrower's right to request of such Lender and such Lender's obligation to make Eurodollar Rate Loans of such type(s) shall be restored. (d) Compensation. In addition to such amounts as are required to be paid by the Borrower pursuant to Sections 2.03(a), (d) and (f), the Borrower shall compensate each Lender, upon demand, for all losses, expenses and liabilities (including any loss or expense incurred by reason of the liquidation or reemploy ment of deposits or other funds acquired by such Lender to fund or maintain such Lender's Eurodollar Rate Loans to the Borrower) which such Lender may sustain (i) if for any reason a Borrowing of, conversion into or continuation of Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of Borrowing or a Notice of Conversion/Continuation or in a telephonic request for borrowing or conversion/continuation or a successive Interest Period does not commence after notice therefor is given pursuant to Section 2.03(c), (ii) if any prepayment or payment of any Eurodollar Rate Loan (including any prepayment pursuant to Section 2.05) occurs for any reason on a date which is not the last day of the applicable Interest Period, (iii) as a consequence of any required conversion of a Eurodollar Rate Loan to a Base Rate Loan as a result of any of the events indicated in Section 2.08(c), or (iv) as a consequence of any other failure by the Borrower to prepay or repay Eurodollar Rate Loans when required by the terms of this Agreement. Such Lender shall deliver to the Borrower with a copy to the Agent, as a condition of the Borrower's obligation to compensate such Lender, a written statement as to such losses, expenses and liabilities which statement, in the absence of manifest error, shall be conclusive as to such amounts. (e) Quotation of Eurodollar Rate. If the Reference Bank shall have failed to provide offered quotations to the Agent in accordance with the definition of "Eurodollar Rate", the Agent shall give the Borrower and each Lender prompt notice thereof and the Loans requested shall be made or continued as, or converted into, Base Rate Loans. (f) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of, any of its branch offices, agencies or the office of an Affiliate of that Lender; provided that no such Lender shall be entitled to receive any greater amount under Section 2.03(f) or Section 2.09 as a result of the transfer of any such Loan than such Lender would be entitled to immediately prior thereto unless (i) such transfer occurred at a time when circumstances giving rise to the claim for such greater amount did not exist and were not reasonably foreseeable by such Lender, or (ii) such claim would have arisen even if such transfer had not occurred. 2.09. Taxes. (a) Any and all payments by the Borrower hereunder shall be made, in accordance with Section 2.06, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges, or withholdings, and all liabilities with respect thereto including those arising after the date hereof as a result of the adoption of or any change in any law, treaty, rule, regulation, guideline or determination of a Governmental Authority or any change in the interpretation or application thereof by a Governmental Authority but excluding, in the case of each Lender and the Agent, taxes imposed on its income and franchise taxes imposed on it by the United States of America or any Governmental Authority (including Puerto Rico) and, in the case of each Lender, taxes imposed on its income and franchise taxes imposed on it as a result of making any Loan, by the Governmental Authority of the jurisdiction of such Lender's Applicable Lending Office (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings, and liabilities which a Lender determines to be applicable to this Agreement, the Commitments, the Loans or the Letters of Credit being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender or the Agent, (i) so long as such Lender or the Agent is in compliance with Section 2.09(e), the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.09) such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, and (iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. If a withholding tax of the United States of America or any other Governmental Authority shall be or become applicable (y) after the date of this Agreement, to such payments by the Borrower made to the Applicable Lending Office or any other office that a Lender specified on Schedule 1.01(a) to this Agreement may claim as its Applicable Lending Office or (z) after such Lender's selection and designation of any other Applicable Lending Office, to such payments made to such other Applicable Lending Office, such Lender shall, in good faith, use its best efforts to make, fund and maintain its Loans, and to make, fund and maintain its obligations under the Letters of Credit, through another Applicable Lending Office of such Lender in another jurisdiction so as to reduce the Borrower's liability hereunder, if the making, funding or maintenance of such Loans or obligations under the Letters of Credit through such other Applicable Lending Office of such Lender does not, in the judgment of such Lender, otherwise materially adversely affect such Loans, obligations under the Letters of Credit or such Lender. (b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges, or similar levies which arise from any payment made hereunder, from the issuance of Letters of Credit hereunder, or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the Commitments, the Loans or the Letters of Credit (hereinafter referred to as "Other Taxes"). (c) The Borrower will indemnify each Lender and the Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by any Governmental Authority on amounts payable under this Section 2.09) paid by such Lender or the Agent (as the case may be) and any liability (including penalties, interest, and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted. This indemnification shall be made within 30 days after the date such Lender or the Agent (as the case may be) makes written demand therefor. A certificate as to any additional amount payable to any Lender under this Section 2.09 submitted to such Borrower and the Agent (if a Lender is so submitting) by such Lender or the Agent shall show in reasonable detail the amount payable and the calculations used to determine such amount and shall, absent manifest error, be final, conclusive and binding upon all parties hereto. Each Lender agrees that, to the extent that such Lender is entitled to claim an exemption in respect of all or a portion of any Taxes which are otherwise required to be paid or deducted or withheld pursuant to this Section 2.09 in respect of any payments under this Agreement such Lender shall within a reasonable time after receiving written request by the Borrower provide the Borrower with such certificates as such Lender in good faith may deem appropriate to obtain the benefits of such exemption. With respect to such deduction or withholding for or on account of any Taxes and to confirm that all such Taxes have been paid to the appropriate Governmental Authorities, the Borrower shall promptly (and in any event not later than 30 days after receipt) furnish to each Lender such certificates, receipts and other documents as may be required (in the judgment of such Lender) to establish any tax credit to which such Lender may be entitled. (d) Within 30 days after the date of any payment of Taxes or Other Taxes by the Borrower, the Borrower will furnish to the Agent, at its address referred to in Section 12.08, the original or a certified copy of a receipt evidencing payment thereof. (e) Each Lender (or transferee of any Lender) that is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States of America, or any estate or trust that is subject to federal income taxation regardless of the source of its income (a "Non-U.S. Lender") shall deliver to the Borrower and the Agent (or in the case of a participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a Form W-8, an annual certificate representing that such Non-U.S. Lender (i) is not a "bank" for purposes of Section 881(c) of the Code (and is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank in any filing with or submission made to any Governmental Authority or rating agency), (ii) is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and (iii) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S. Lender claiming complete exemption from U.S. federal withholding tax on all payments by the Borrower under this Agreement and the other Loan Documents, along with such other additional forms as the Borrower or the Agent may reasonably request to establish the availability of such exemption. Such forms shall be delivered by each Non-U.S. Lender on or before the date it becomes a party to this Agreement (or, in the case of any participant, on or before the date such participant purchases the related participation) and on or before the date, if any, such Non-U.S. Lender changes its Applicable Lending Office by designating a different lending office (a "New Lending Office"). In addition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide any previously delivered certificate to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision of Section 2.09, a Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.09(e) that such Non-U.S. Lender is not legally able to deliver. (f) The Borrower shall not be required to indemnify any Non-U.S. Lender, or to pay any additional amounts to any Non- U.S. Lender, in respect of United States federal withholding tax pursuant to paragraph (a) or (c) above to the extent that the obligation to withhold amounts with respect to United States federal withholding tax existed on the date such Non-U.S. Lender became a party to this Agreement (or, in the case of a participant, on the date such participant became a transferee of a participation interest hereunder) or, with respect to payments to a New Lending Office, the date such Non-U.S. Lender designated such New Lending Office with respect to a Loan. (g) If the IRS or any other Governmental Authority of the United States or of any other jurisdiction asserts a claim that the Agent or the Borrower did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Agent of a change in circumstances which rendered the exemption from withholding tax ineffective or for any other reason), such Lender shall indemnify the Agent and/or the Borrower, as applicable, fully for all amounts paid, directly or indirectly, by the Agent and/or the Borrower, as applicable, as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent or the Borrower, as applicable, under this Section 2.09, together with all costs and expenses, including, legal fees, incurred by the Agent or the Borrower. (h) Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and obligations of the Borrower contained in this Section 2.09 shall survive the payment in full of principal and interest hereunder, the termination of the Letters of Credit and the termination of this Agreement. 2.10. Increased Capital. If any Lender or the Issuing Bank determines that either (a) the introduction of or any change in any law, order or regulation or in the interpretation or administration of any law, order or regulation by any Governmental Authority charged with the interpretation or administration thereof after the date hereof or (b) compliance with any guideline or request issued or made after the date hereof from any central bank or other Governmental Authority (whether or not having the force of law) has or would have the effect of reducing the rate of return on the capital of such Lender or the Issuing Bank or any corporation controlling such Lender or the Issuing Bank, as a consequence of or with reference to such Lender's Commitment or its making or maintaining Loans or the Issuing Bank's issuance or maintenance of, or such Lender's participation in any Letter of Credit, below the rate which the Lender or the Issuing Bank or such other corporation could have achieved but for such compliance (taking into account the policies of such Lender or the Issuing Bank or corporation with regard to capital), then the Borrower shall from time to time, upon demand by such Lender or the Issuing Bank (with a copy of such demand to the Agent), pay to such Lender or the Issuing Bank additional amounts sufficient to compensate such Lender or other corporation for such reduction, upon receipt by the Borrower (with a copy to the Agent) of a certificate as to such amounts, by such Lender or the Issuing Bank, setting forth in reasonable detail the basis for, and the calculations used by such Lender or the Issuing Bank in determining, any such amounts. Such certificate, in the absence of manifest error shall be conclusive and binding for all purposes. Each Lender and the Issuing Bank agree promptly to notify the Borrower and the Agent of any circumstances that would cause the Borrower to pay additional amounts pursuant to this Section 2.10, provided that the failure to give such notice shall not affect the Borrower's obligation to pay such additional amounts hereunder. 2.11. Use of Proceeds of the Loans. The proceeds of the Loans may be used for general corporate purposes. 2.12. Authorized Officers of the Borrower. The Borrower shall notify the Agent in writing of the names of the officers and employees authorized to request Loans and Letters of Credit and to request a conversion/continuation of any Loan and shall provide the Agent with a specimen signature of each such officer or employee. The Agent shall be entitled to rely conclusively on such officer's or employee's authority to request such Loan or Letter of Credit or such conversion/continuation until the Agent receives written notice to the contrary. The Agent shall have no duty to verify the authenticity of the signature appearing on any written Notice of Borrowing or Notice of Conversion/Continuation and, with respect to an oral request for such a Loan or Letter of Credit or such conversion/continuation, the Agent shall have no duty to verify the identity of any person representing himself as one of the officers or employees authorized to make such request on behalf of the Borrower. Neither the Agent nor any Lender shall incur any liability to the Borrower in acting upon any telephonic notice referred to above which the Agent believes in good faith to have been given by a duly authorized officer or other person authorized to borrow on behalf of the Borrower. 2.13. Replacement of Lender in Event of Adverse Condition. If the Borrower becomes obligated to pay additional amounts to any Lender pursuant to Sections 2.03(f), 2.08(d), 2.09 or 2.10 as a result of any condition described in such Sections which is not generally applicable to all Lenders, then, unless such Lender has theretofore taken steps to remove or cure, and has removed or cured, the conditions creating the cause for such obligation to pay such additional amounts, the Borrower may designate another bank which is reasonably acceptable to the Agent and the Issuing Bank (such bank being herein called a "Replacement Lender") to purchase for cash all of the Obligations of such Lender and all of such Lender's rights hereunder, without recourse to or warranty by, or expense to, such Lender for a purchase price equal to the outstanding principal amount payable to such Lender plus any accrued but unpaid interest and accrued but unpaid commitment and other fees, expense reimbursements and indemnities in respect of that Lender's Commitment. Such Lender shall consummate such sale in accordance with such terms (and, if such Lender is an Issuing Bank, such other terms as may be necessary to compensate fully such Lender) within a reasonable time not exceeding 60 days from the date the Borrower designated a Replacement Lender, and upon compliance with the provisions of Section 12.01 such Lender shall no longer be a party hereto or have any obligations or rights hereunder (except rights which, pursuant to the provisions of this Agreement, survive the termination of this Agreement and the repayment of the Loans), and the Replacement Lender shall succeed to such obligations and rights. ARTICLE III Letters of Credit 3.01. Obligation to Issue. (a) Subject to the terms and conditions set forth in this Agreement, the Issuing Bank hereby agrees to issue, and each Revolving Loan Lender agrees to participate in, one or more Letters of Credit for the account of the Borrower, up to an aggregate face amount at any one time outstanding equal to the Revolving Loan Commitments from time to time during the period commencing on the Initial Funding Date and ending on the Business Day which is five Business Days prior to the Final Maturity Date. (b) The Revolving Loan Lenders acknowledge that the Existing Letters of Credit have been issued for the account of the Borrower prior to the Initial Funding Date and agree to participate in such Letters of Credit to the same extent and on the same conditions as if such Letters of Credit had been issued pursuant to paragraph (a) above. 3.02. Types and Amounts. The Issuing Bank shall not issue any Letter of Credit at any time: (a) if the aggregate maximum amount then available for drawing under Letters of Credit issued by the Issuing Bank, after giving effect to the issuance of such Letter of Credit, would exceed any limit imposed by law or regulation upon the Issuing Bank; (b) if, immediately after the issuance of such Letter of Credit, the aggregate principal amount of Letter of Credit Obligations then existing (which amount shall be calculated without giving effect to the participation of the Revolving Loan Lenders pursuant to Section 3.06) would exceed the Revolving Loan Commitments then in effect less the principal amount of all outstanding Revolving Loans; (c) which has an expiration date (A) more than one year after the date of issuance, for Standby Letters of Credit (provided that a Standby Letter of Credit may provide for an annual renewal on the terms set forth in Section 3.04(c)) or more than 180 days after the date of issuance (subject to extension for a maximum period of 60 days), for Commercial Letters of Credit, or (B) after four Business Days immediately preceding the Final Maturity Date; (d) if the Issuing Bank has received written notice from (i) Lenders whose Pro Rata Revolving Loan Shares, in the aggregate, are more than 50%, (ii) the Agent or (iii) the Borrower, on or prior to the Business Day prior to the requested date of issuance of such Letter of Credit, that one or more of the applicable conditions contained in Article IV is not then satisfied; or (e) if any requested Commercial Letter of Credit does not provide for drafts or any Letter of Credit is not otherwise in form and substance acceptable to the Issuing Bank, or if the issuance of the requested Letter of Credit would violate any applicable policies of the Issuing Bank. 3.03. Conditions. In addition to being subject to the satisfaction of the conditions precedent contained in Section 4.02, the obligation of the Issuing Bank to issue any Letter of Credit is subject to the condition that as of the date of issuance, no order, judgment or decree of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain the Issuing Bank from issuing such Letter of Credit and no law, rule or regulation applicable to the Issuing Bank and no request or directive (whether or not having the force of law and whether or not the failure to comply therewith would be unlawful) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit or request the Issuing Bank to refrain from the issuance of Letters of Credit generally or the issuance of such Letter of Credit. 3.04. Issuance of Letters of Credit. (a) The Borrower shall give the Issuing Bank notice (i) by facsimile (confirmed by delivery of the original executed Letter of Credit application to the Issuing Bank not later than one Business Day thereafter) or (ii) by Microtrade or similar system not later than 12:00 noon (New York time) one Business Day preceding the requested issuance of a Letter of Credit under this Agreement, or such shorter notice as may be acceptable to the Issuing Bank. Such notice shall be irrevocable and shall specify (A) the stated amount of the Letter of Credit requested to be issued, (B) if notice is given by facsimile, the effective date (which day shall be a Business Day) of issuance of such Letter of Credit, (C) the date on which such Letter of Credit is to expire (which date shall be a Business Day and shall be subject to paragraph (c) of Section 3.02), (D) the Person for whose benefit the requested Letter of Credit is to be issued, (E) in the case of Standby Letters of Credit, the full text of any certificate to be presented by the beneficiary in case of any drawing thereunder and (F) such other matters as the Issuing Bank may require. (b) The Issuing Bank shall not extend or amend any Letter of Credit if the issuance of a new Letter of Credit having the same terms as such Letter of Credit as so extended or amended would be prohibited by Section 3.02. Any request for amendment to any previously issued Letter of Credit shall be received by the Issuing Bank not later than 3:00 p.m. (New York time) one Business Day prior to the date of the proposed amendment (i) by facsimile confirmed by delivery of the original executed application for amendment not later than one Business Day thereafter or (ii) by Microtrade or similar system. Each written request for an amendment to a previously issued Letter of Credit made by facsimile or by Microtrade or similar system shall be in the form of the relevant letter of credit application signed by the Borrower and shall not request an extension beyond four Business Days immediately preceding the Final Maturity Date. Notwithstanding any provision of any letter of credit application to the contrary, in the event of any conflict between the terms of any such letter of credit application and the terms of this Agreement, the terms of this Agreement shall control with respect to events of default, representations and warranties, and covenants, except that such letter of credit application may provide for further warranties relating specifically to the transaction or affairs underlying such Letter of Credit. (c) The Issuing Bank and the Revolving Loan Lenders agree that, while a Standby Letter of Credit is outstanding and prior to the Final Maturity Date, at the option of the Borrower and upon the written request of the Borrower received by the Issuing Bank at least five days (or such shorter time as the Issuing Bank may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, the Issuing Bank shall be entitled to authorize the automatic renewal of any Letter of Credit issued by it. Each such request for renewal of a Letter of Credit shall be made by Microtrade or similar system or by facsimile, confirmed immediately in an original writing, and shall specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of Credit to be renewed; (ii) the proposed date of notification of renewal of the Letter of Credit (which shall be a Business Day); (iii) the revised expiry date of the Letter of Credit; and (iv) such other matters as the Issuing Bank may require. The Issuing Bank shall not so renew any Letter of Credit if: (A) the Issuing Bank would have no obligation at such time to issue or amend such Letter of Credit in its renewed form under the terms of Section 3.02 or 3.03; or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the Letter of Credit. If any outstanding Existing Letter of Credit shall provide that it shall be automatically renewed unless the beneficiary thereof receives notice from the Issuing Bank that such Letter of Credit shall not be renewed, and if at the time of renewal the Issuing Bank would be entitled to authorize the automatic renewal of such Letter of Credit in accordance with this paragraph (c) upon the request of the Borrower, but the Issuing Bank shall not have received any amendment application from the Borrower with respect to such renewal or other written direction by the Borrower with respect thereto, the Issuing Bank shall nonetheless be permitted to allow such Letter of Credit to renew, and the Borrower and the Revolving Loan Lenders hereby authorize such renewal, and, accordingly, the Issuing Bank shall be deemed to have received an amendment application from the Borrower requesting such renewal. (d) The Issuing Bank shall notify the Agent of (i) each request for issuance or amendment to confirm availability and (ii) each issuance and amendment of a Letter of Credit and the amount and expiration date thereof on the date such Letter of Credit is issued or amended and of each payment under a Letter of Credit and the amount thereof on the date of such payment. The Agent shall notify the Revolving Loan Lenders, on a weekly basis, of each issuance of a Letter of Credit. 3.05. Reimbursement Obligations; Duties of the Issuing Bank. (a) (i) The Borrower shall reimburse the Issuing Bank (and the Issuing Bank shall notify the Agent promptly of such reimbursement) for drawings under a Letter of Credit issued by it no later than 1:00 p.m. (New York time) on each date that any amount is paid by the Issuing Bank under any Letter of Credit in an amount equal to the amount so paid by the Issuing Bank; and (ii) any Reimbursement Obligation with respect to any Letter of Credit shall bear interest from the date of the relevant drawing at the interest rate applicable to Base Rate Loans until the first Business Day after the date on which the Issuing Bank gives notice of such drawing to the Borrower and thereafter at the interest rate for past due Base Rate Loans in accordance with Section 2.03(d). (b) No action taken or omitted to be taken by the Issuing Bank under or in connection with any Letter of Credit shall put the Issuing Bank under any resulting liability to any Revolving Loan Lender or relieve such Revolving Loan Lender of its obligations hereunder to the Issuing Bank except in the event of the Issuing Bank's gross negligence or wilful misconduct. In determining whether to pay under any Letter of Credit, the Issuing Bank shall have no obligation to the Revolving Loan Lenders other than to confirm that any documents required to be delivered under such Letter of Credit appear to have been delivered and that they appear on their face to comply with the requirements of such Letter of Credit. (c) The obligations of the Borrower under this Agreement and any Letter of Credit to reimburse the Issuing Bank for a drawing under a Letter of Credit, and to repay any drawing under a Letter of Credit, shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement and such Letter of Credit under all circumstances, including the following: (i) any lack of validity or enforceability of this Agreement or any Letter of Credit; (ii) any change in the time, manner or place of payment of, or in any other term of, all or any of the obligations of the Borrower in respect of any Letter of Credit or any other amendment or waiver of or any consent to departure from all or any Letter of Credit; (iii) the existence of any claim, set-off, defense or other right that the Borrower may have at any time against any beneficiary or any transferee of any Letter of Credit (or any Person for whom any such beneficiary or any such transferee may be acting), the Issuing Bank or any other Person, whether in connection with this Agreement, the transactions contemplated hereby or by the Letter of Credit or any unrelated transaction; (iv) any draft, demand, certificate or other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; or any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit; (v) any payment by the Issuing Bank under any Letter of Credit against presentation of a draft or certificate that does not strictly comply with the terms of any Letter of Credit; or any payment made by the Issuing Bank under any Letter of Credit to any Person purporting to be a trustee in bankruptcy, debtor-in-possession, assignee for the benefit of creditors, liquidator, receiver or other representative of or successor to any beneficiary or any transferee of any Letter of Credit, including any arising in connection with any insolvency proceeding; (vi) any exchange, release or non-perfection of any collateral, or any release or amendment or waiver of or consent to departure from any other guarantee, for all or any of the obligations of the Borrower in respect of any Letter of Credit; or (vii) any other circumstance or happening whatsoever, whether or not similar to any of the foregoing, including any other circumstance that might otherwise constitute a defense available to, or a discharge of, the Borrower or a guarantor. 3.06. Participations. (a) Immediately upon issuance by the Issuing Bank of any Letter of Credit for the account of the Borrower in accordance with the procedures set forth in this Article III, each Revolving Loan Lender shall be deemed to have irrevocably and unconditionally purchased and received from the Issuing Bank, without recourse or warranty, an undivided interest in the amount of such Lender's Pro Rata Revolving Loan Share in such Letter of Credit (including all obligations of the Borrower with respect thereto other than amounts owing to the Issuing Bank under Section 3.08(b)) and any security therefor or guaranty pertaining thereto. (b) If the Issuing Bank makes any payment under any Letter of Credit and the Borrower does not repay such amount to the Issuing Bank pursuant to Section 3.05(a) or 3.07, the Issuing Bank shall promptly notify the Agent and the Agent shall promptly notify each Revolving Loan Lender of such failure, and each Revolving Loan Lender shall promptly and unconditionally pay to the Agent for the account of the Issuing Bank the amount of such Lender's Pro Rata Revolving Loan Share of such payment, in Dollars and in immediately available funds, and the Agent shall promptly pay such amount, and any other amounts received by the Agent for the Issuing Bank's account pursuant to this Section 3.06(b), to the Issuing Bank. If the Agent so notifies such Revolving Loan Lender prior to 11:00 a.m. (New York time) on any Business Day, such Revolving Loan Lender shall make available to the Agent for the account of the Issuing Bank its Pro Rata Revolving Loan Share of the amount of such payment on such Business Day in Dollars and in immediately available funds at the Agent's Payment Office. If and to the extent such Revolving Loan Lender shall not have so made its Pro Rata Revolving Loan Share of the amount of such payment available to the Agent for the account of the Issuing Bank, such Revolving Loan Lender agrees to pay to the Agent for the account of the Issuing Bank forthwith on demand such amount together with interest thereon, for each day from the date such payment was first due until the date such amount is paid to the Agent for the account of the Issuing Bank, at the Federal Funds Rate for three Business Days and then at the Base Rate. The failure of any Revolving Loan Lender to make available to the Agent for the account of the Issuing Bank its Pro Rata Revolving Loan Share of any such payment shall not relieve any other Revolving Loan Lender of its obligation hereunder to make available to the Agent for the account of the Issuing Bank its Pro Rata Revolving Loan Share of any payment on the date such payment is to be made. (c) Whenever the Issuing Bank receives a payment from the Borrower on account of a Reimbursement Obligation, including any interest thereon, as to which the Agent has previously received payments from the Revolving Loan Lenders for the account of the Issuing Bank pursuant to this Section 3.06, it shall promptly pay to the Agent at the Agent's Payment Office and the Agent shall promptly pay to each Revolving Loan Lender which has funded its participating interest therein in Dollars and in the kind of funds so received, an amount equal to such Lender's Pro Rata Revolving Loan Share thereof. Each such payment shall be made by the Issuing Bank or the Agent, as the case may be, on the Business Day on which such Person receives the funds paid to such Person pursuant to the preceding sentence, if received prior to 11:00 a.m. (New York time) on such Business Day, and otherwise on the next succeeding Business Day. (d) Upon the request of any Revolving Loan Lender, the Issuing Bank shall furnish to such Revolving Loan Lender copies of any Letter of Credit or Letter of Credit application form to which the Issuing Bank is party and such other documentation as may reasonably be requested by such Revolving Loan Lender. (e) The obligations of a Revolving Loan Lender to make payments to the Agent for the account of the Issuing Bank with respect to a Letter of Credit issued on behalf of the Borrower in accordance with the terms hereof shall be irrevocable, shall not be subject to any qualification or exception whatsoever (except in the event of the Issuing Bank's gross negligence or wilful misconduct), and shall be honored in accordance with the terms and conditions of this Agreement under all circumstances (subject to Section 3.02), including any of the following circumstances: (i) any lack of validity or enforceability of this Agreement or any of the other Loan Documents; (ii) the existence of any claim, set-off, defense or other right which the Borrower may have at any time against a beneficiary named in a Letter of Credit or any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Agent, the Issuing Bank, any Lender, or any other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transactions between the Borrower and the beneficiary named in any Letter of Credit); (iii) any draft, certificate of any other document presented under the Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iv) the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents; (v) any failure by the Agent or the Issuing Bank to make any reports required pursuant to Section 3.09; or (vi) the occurrence of any Event of Default or Potential Event of Default. 3.07. Payment of Reimbursement Obligations. (a) The Borrower agrees to pay to the Issuing Bank the amount of all Reimbursement Obligations, interest and other amounts payable to the Issuing Bank under or in connection with any Letter of Credit issued on behalf of the Borrower immediately when due, irrespective of any claim, setoff, defense or other right which the Borrower may have at any time against the Issuing Bank or any other Person. (b) In the event any payment by the Borrower received by the Issuing Bank with respect to such Letter of Credit and distributed by the Agent to the Revolving Loan Lenders on account of their participations is thereafter set aside, avoided or recovered from the Issuing Bank in connection with any receivership, liquidation or bankruptcy proceeding or otherwise, each Revolving Loan Lender which received such distribution shall, upon demand by the Issuing Bank, contribute such Lender's Pro Rata Revolving Loan Share of the amount set aside, avoided or recovered together with interest at the rate required to be paid by the Issuing Bank upon the amount required to be repaid by it. 3.08. Compensation for Letters of Credit. (a) Letter of Credit Fees. (i) The Borrower shall pay with respect to each Letter of Credit issued as a Standby Letter of Credit quarterly in arrears, on the fifteenth day of each January, April, July and October beginning after the Initial Funding Date and also on the Termination Date, a Letter of Credit Fee equal to the percentage per annum set forth below, applied (on the basis of actual days elapsed in a 360-day year) to the maximum amount available to be drawn under such Standby Letter of Credit from day to day during the previous quarter. This fee shall be paid to the Agent, for the account of the Revolving Loan Lenders in proportion to their respective Pro Rata Revolving Loan Shares. Pricing Ratio Standby Letter of Credit Fee Level I Status .75% Level II Status 1.00% Level III Status 1.50% Level IV Status 1.75% Level V Status 2.25% (ii) The Borrower shall pay with respect to each Letter of Credit issued as a Commercial Letter of Credit quarterly in arrears on the fifteenth day of each January, April, July and October beginning after the Initial Funding Date and also on the Termination Date, a Letter of Credit Fee equal to 0.25% per annum applied (on the basis of actual days elapsed in a 360-day year) to the maximum amount available to be drawn under such Commercial Letter of Credit from day to day during the previous quarter. This fee shall be paid to the Agent, for the account of the Revolving Loans Lenders in proportion to their respective Pro Rata Revolving Loan Shares. (iii) Any Letter of Credit Fees accrued under the Existing Credit Agreement for the period prior to the Initial Funding Date shall be payable as provided in the Existing Credit Agreement. (b) Issuing Bank Charges. The Borrower shall pay to the Issuing Bank, solely for its own account, quarterly in arrears on the fifteenth day of each January, April, July and October beginning after the Initial Funding Date and also on the Termination Date, (i) a processing fee equal to .20% per annum applied (on the basis of actual days elapsed in a 360-day year) to the maximum amount available to be drawn from day to day during the immediately preceding fiscal quarter under each Letter of Credit issued by it, and (ii) the standard charges assessed by the Issuing Bank including charges assessed in connection with the negotiation, amendment or cancellation of Letters of Credit. 3.09. Indemnification; Exoneration. (a) In addition to amounts payable as elsewhere provided in this Article III, the Borrower hereby agrees to protect, indemnify, pay and save the Agent, the Issuing Bank and each Lender harmless from and against any and all Liabilities and Costs which the Agent or the Issuing Bank or Lender may incur or be subject to as a consequence, direct or indirect, of (i) the issuance of the Letter of Credit other than, in the case of the Issuing Bank, as a result of its gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction or (ii) the failure of the Issuing Bank to honor a drawing under such Letter of Credit as a result of any act or omission, whether rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions herein called "Governmental Acts"). (b) As between the Borrower, the Agent, the Lenders and the Issuing Bank, the Borrower assumes all risks of the acts and omissions of, or misuse of such Letter of Credit by, the beneficiary of such Letter of Credit. In furtherance and not in limitation of the foregoing, the Issuing Bank, the Agent and the Lenders shall not be responsible (except for the Issuing Bank's gross negligence or willful misconduct in connection therewith): (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of the Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex, or other similar form of teletransmission or otherwise, whether or not they be in cipher; (iv) for errors in interpretation of technical terms; (v) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (vi) for the misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (vii) for any consequences arising from causes beyond the control of the Agent, the Issuing Bank and Lenders including any Governmental Acts. None of the above shall affect, impair, or prevent the vesting of any of the Issuing Bank's rights or powers under this Section 3.09. (c) In furtherance and extension and not in limitation of the specific provisions hereinabove set forth, any action taken or omitted by the Issuing Bank under or in connection with Letters of Credit issued on behalf of the Borrower or any related certificates, if taken or omitted in good faith, shall not, in the absence of gross negligence or willful misconduct, put the Issuing Bank, the Agent or any Lender under any resulting liability to the Borrower or relieve the Borrower of any of its obligations hereunder to any such Person. ARTICLE IV Conditions To Loans and Letters of Credit 4.01. Conditions Precedent to the Initial Funding. The obligation of each Lender to make any Loan requested to be made by it on the Initial Funding Date (individually, an "Initial Loan" and collectively, the "Initial Loans") and of the Issuing Bank to issue any Letter of Credit pursuant hereto on the Initial Funding Date, and the effectiveness of this Agreement on the Initial Funding Date, shall be subject to satisfaction of all of the following conditions precedent (unless waived by all the Lenders): (a) Certain Documents and Other Items. The Agent shall have received on or before the Initial Funding Date all of the following, all of which, except as provided below, shall be in form and substance satisfactory to the Agent, the Co-Agents and the Lenders and in sufficient copies for each Lender: (i) This Agreement, executed by the Borrower, each Term Loan Lender and each of the Lenders (as defined in the Existing Credit Agreement), together with all Exhibits and Schedules; (ii) Evidence that any amounts due and payable under the Existing Credit Agreement have been paid; (iii) The Borrower Pledge Agreement and the Trademark Assignment, in each case, executed by the Borrower, together with stock certificates and appropriate stock powers (endorsed in blank) in respect of any securities pledged pursuant to the Borrower Pledge Agreement; (iv) The ATSC Guaranty executed by ATSC; (v) The ATSC Pledge Agreement executed by ATSC, together with stock certificates and appropriate stock powers (endorsed in blank) in respect of any securities pledged pursuant to the ATSC Pledge Agreement; (vi) The Borrower's Certificate of Incorporation, as amended, modified or supplemented to the Initial Funding Date, certified to be true, correct and complete by the Secretary of State of Delaware as of a date not more than ten Business Days prior to the Initial Funding Date, together with a good standing certificate from the Secretary of State of Delaware dated a date not more than ten Business Days prior to the Initial Funding Date; (vii) ATSC's Certificate of Incorporation, as amended, modified or supplemented to the Initial Funding Date, certified to be true, correct and complete by the Secretary of State of Delaware as of a date not more than ten Business Days prior to the Initial Funding Date, together with a good standing certificate from the Secretary of State of Delaware dated as of a date not more than ten Business Days prior to the Initial Funding Date; (viii) A certificate of the Secretary or Assistant Secretary of the Borrower dated the Initial Funding Date certifying (A) the names and true signatures of the incumbent officers of the Borrower authorized to sign this Agreement, the other Loan Documents and any notice or certificate to be delivered hereunder, (B) the By-Laws of the Borrower as in effect on the date of such certification, (C) the resolutions of the Borrower's Board of Directors approving and authorizing the execution, delivery and performance of this Agreement, and all other Loan Documents executed by the Borrower, and (D) that there have been no changes in the Certificate of Incorporation of the Borrower since the date of the most recent certification thereof by the Secretary of State of Delaware; (ix) A certificate of the Secretary or Assistant Secretary of ATSC dated the Initial Funding Date certifying (A) the names and true signatures of the incumbent officers of ATSC authorized to sign the ATSC Guaranty and the ATSC Pledge Agreement, (B) the By-Laws of ATSC as in effect on the date of such certification, (C) the resolutions of ATSC's Board of Directors approving and authorizing the execution, delivery and performance of the ATSC Guaranty and the ATSC Pledge Agreement and all other Loan Documents executed by ATSC, and (D) that there have been no changes in the Certificate of Incorporation of ATSC since the date of the most recent certification thereof by the Secretary of the State of Delaware; (x) A favorable legal opinion, dated the Initial Funding Date, addressed to the Agent, the Issuing Bank and the Lenders from Skadden, Arps, Slate, Meagher & Flom, counsel to the Borrower and ATSC, in substantially the form of Exhibit 4.01(a)(x); (xi) UCC-1 financing statements signed by the Borrower or ATSC, as the case may be, as debtor naming the Agent as secured party to be filed in the jurisdictions listed in Schedule 4.01; provided, that no fixture filings shall be required to be made; (xii) A certificate dated the Initial Funding Date executed by the Senior Vice President-Finance of each of the Borrower and ATSC to the effect that there has been no material adverse change in the financial condition, business, operations, properties or prospects of the Borrower or ATSC, from the date of the last available financial statements; (xiii) A certificate dated the Initial Funding Date executed by the Senior Vice President-Finance of the Borrower to the effect that the Commitments and all Obligations hereunder constitute "Permitted Indebtedness" and "Senior Indebtedness" under the Subordinated Note Indenture, and that there is no outstanding Event of Default (as defined in the Subordinated Note Indenture); and (xiv) Such additional items as the Agent or the Requisite Lenders may reasonably require. (b) Fees and Expenses Paid. All costs, fees and expenses (including legal fees and expenses, including the allocated cost of in-house counsel) for which invoices have been delivered at least three Business Days prior to the Initial Funding Date) and other compensation payable to the Arranger, the Co-Agents, the Agent and the Lenders shall have been paid. The acceptance by the Borrower of the proceeds of the Initial Loans made hereunder shall constitute a representation and warranty by the Borrower as of the Initial Funding Date in respect of such Loans that all the conditions contained in this Section 4.01 have been satisfied or waived in writing pursuant to Section 12.08. 4.02. Conditions Precedent to all Loans and Letters of Credit. The obligation of the Lenders to make any Loan requested to be made by it, and of the Issuing Bank to issue any Letter of Credit, on any date, is subject to the following conditions precedent as of such date: (a)Notice of Borrowing. The Agent shall have received in accordance with the provisions of Section 2.01(b) or 2.02(b), on or before any Funding Date, a Notice of Borrowing. (b)Additional Matters. As of the Funding Date for any Loan or the date of issuance of any Letter of Credit: (i) Representations and Warranties. All of the representations and warranties of the Borrower contained in or repeated pursuant to Section 5.02 and in any other Loan Document (other than representations and warranties which expressly speak only as of a different date) shall be true and complete in all material respects on and as of such Funding Date or issuance date, as though made on and as of such date; (ii) No Default. No Event of Default or Potential Event of Default shall have occurred and be continuing or would result from the making of the requested Loan or the issuance of the Letter of Credit; (iii) No Material Adverse Chance. No event shall have occurred after July 31, 1995 which, in the reasonable judgment of the Requisite Lenders, has had or is likely to have a Material Adverse Effect; and (iv) Additional Term Loan Condition. If such Loan is a Term Loan, since July 31, 1995 nothing shall have occurred (and no Term Loan Lender shall have become aware of any facts or conditions not previously known) which any Term Loan Lender in its sole discretion shall determine (1) could have a material adverse effect (a) on the rights or remedies of the Term Loan Lenders or the Agent, (b) on the ability of the Borrower or any of its Subsidiaries to perform their obligations to the Term Loan Lenders and the Agent or (c) on the financial condition, business operations, property, or prospects of the Borrower and its Subsidiaries taken as a whole; or (2) has caused a material deterioration in the Borrower's weekly or monthly operating results. (c)Supplemental Documentation. Such additional documentation (including opinions of counsel) as the Agent or any Lender through the Agent may reasonably require. The acceptance by the Borrower of the proceeds of each Loan made on any Funding Date other than the Initial Funding Date or the issuance of any Letter of Credit in accordance with this Agreement shall constitute a representation and warranty by the Borrower as of such Funding Date or issuance date that all the conditions contained in this Section 4.02 have been satisfied or waived in writing pursuant to Section 12.08. ARTICLE V Representations and Warranties 5.01. Representations and Warranties on the Initial Funding Date. In order to induce the Lenders to enter into this Agreement and to make the Initial Loans, the Borrower hereby represents and warrants to each Lender, the Co-Agents and the Agent that the following statements are true and correct: (a) Organization; Corporate Powers. Each of ATSC, the Borrower and each Subsidiary of the Borrower (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which it owns or leases real property or in which the nature of its business requires it to be so qualified, except those jurisdictions (other than Alabama, Arkansas, Mississippi and Vermont) where the failure to be in good standing or to so qualify has not had or will not have a Material Adverse Effect, and (iii) has all requisite corporate power and authority to own, operate and encumber its property and assets and to conduct its business as presently conducted and as proposed to be conducted in connection with and following the consummation of the transactions contemplated by the Loan Documents. (b) Authority. (i) Each of ATSC and the Borrower has the requisite corporate power and authority to execute, deliver and perform its obligations under each of the Loan Documents executed by it, or to be executed by it. (ii) The execution, delivery and performance (or filing or recording, as the case may be) of each of the Loan Documents to which it is party and the consummation of the transactions contemplated thereby, have been duly authorized by all necessary corporate action on the part of each of ATSC and the Borrower and no other corporate proceedings on the part of ATSC or the Borrower are necessary to consummate such transactions. (iii) Each of the Loan Documents (other than those not in effect on the date of the making of this representation) to which it is a party has been duly executed and delivered by each of ATSC and the Borrower and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, is in full force and effect and no term or condition thereof has been amended, modified or waived from the terms and conditions contained therein delivered to the Agent pursuant to Article IV without the prior written consent of the Agent and the Requisite Lenders, and each of ATSC and the Borrower and, to the best of the Borrower's knowledge, the other parties thereto have performed and complied in all material respects with all the material terms, provisions, agreements and conditions set forth therein and required to be performed or complied with by such parties on or before the effective date thereof, and no default by any such party exists thereunder. (c) No Conflict. The execution, delivery and perfor mance of each Loan Document to which it is a party by each of ATSC and the Borrower and each of the transactions contemplated thereby do not and will not (i) constitute a tortious interference with any Contractual Obligation of any Person, any liability resulting from which would have or be reasonably expected to have a Material Adverse Effect, or (ii) conflict with or violate such Person's Certificate of Incorporation or By-Laws or (iii) conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law or material Contractual Obligation of the Borrower or any Subsidiary of the Borrower or (iv) result in or require the creation or imposition of any Lien whatsoever upon any of the properties or assets of ATSC, the Borrower or any Subsidiary of the Borrower (other than Liens in favor of the Agent or the Issuing Bank arising pursuant to the Loan Documents or Liens permitted pursuant to Section 8.02(b)), or (v) require any approval of stockholders, unless such approval has been obtained. (d) Governmental Consents. The execution, delivery and performance of each Loan Document to which it is a party, by each of ATSC and the Borrower and the transactions contemplated thereby do not and will not require any registration with, consent or approval of, or notice to, or other action, with or by any Governmental Authority, except filings, consents or notices which have been, or will in due course be, made, obtained or given. (e) Governmental Regulation. None of ATSC, the Borrower or any of its Subsidiaries is subject to regulation under the Public Utility Holdings Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 or any other statute or regulation of any Governmental Authority such that its ability to incur indebtedness is limited or its ability to consummate the transactions contemplated hereby is materially impaired. (f) Financial Position. All quarterly and annual financial statements of ATSC, the Borrower or of the Borrower and any of its Restricted Subsidiaries delivered to the Agent were prepared in conformity with GAAP, except as otherwise noted therein, and fairly present the financial position of ATSC, the Borrower or the consolidated financial position of ATSC, the Borrower and such Subsidiaries, as the case may be, as at the respective dates thereof and the results of operations and changes in cash flows for each of the periods covered thereby, subject, in the case of any unaudited interim financial statements, to changes resulting from audit and normal year-end adjustments. Except as contemplated in the Loan Documents, none of ATSC, the Borrower or any of its Restricted Subsidiaries has any material obligations, contingent liabilities or liabilities for taxes, long term leases or material or unusual forward or long term commitments which are not reflected in such financial statements and the notes thereto. (g) Permitted Indebtedness. All Obligations hereunder constitute "Permitted Indebtedness" and "Senior Indebtedness" as such term is defined in the Subordinated Note Indenture. (h) Litigation; Adverse Effects. (i) There is no action, suit, proceeding, investigation of any Governmental Authority or arbitration, at law or in equity, or before or by any Governmental Authority, pending, or, to the best knowledge of the Borrower, threatened against ATSC, the Borrower or any Subsidiary of the Borrower or any property of any of them, which would be reasonably expected to (I) result in any Material Adverse Effect, (II) materially and adversely affect the ability of any party to any of the Loan Documents to perform its obligations thereunder, or (III) materially and adversely affect the ability of the Borrower to perform its Obligations or the Lenders' ability to enforce such Obligations. (ii) None of ATSC, the Borrower or any Subsidiary of the Borrower is (A) in violation of any applicable law which violation has or might reasonably be expected to have a Material Adverse Effect, or (B) subject to or in default with respect to any final judgment, writ, injunction, decree, order, rule or regulation of any court or Governmental Authority which has or might have a Material Adverse Effect. There is no action, suit, proceeding or investigation pending or, to the knowledge of the Borrower, threatened against or affecting ATSC, the Borrower or any Subsidiary of the Borrower challenging the validity or the enforceability of any of the Loan Documents. (i) No Material Adverse Change. With respect to the Borrower or any Restricted Subsidiary, there has occurred no event since July 31, 1995 which has or would be reasonably expected to have a Material Adverse Effect. (j) Payment of Taxes. All tax returns and reports of each of ATSC, the Borrower and its Subsidiaries required to be filed (including extensions), have been timely filed, and all taxes, assessments, fees and other charges of Governmental Authorities thereupon and upon their respective properties, assets, income and franchises which are shown on such returns as being due and payable, have been paid when due and payable, except such taxes, if any, that are reserved against in accordance with GAAP, such taxes which are not yet delinquent, such taxes which are payable in installments so long as paid before any penalty accrues with respect thereto and such taxes as are being contested in good faith by appropriate proceedings. (k) Material Adverse Agreements. None of ATSC, the Borrower or any of its Subsidiaries is a party to or subject to any Contractual Obligation or other restriction contained in its charter or By-laws which has or would be reasonably expected to have a Material Adverse Effect after giving effect to the consummation of the transactions contemplated in the Loan Documents or otherwise. (l) Securities Activities. None of ATSC, the Borrower or any of its Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying any Margin Stock and the Borrower shall not use the proceeds of any Loan in violation of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System. (m) Disclosure. Subject to changes in facts or conditions which are required or permitted under this Agreement, the representations and warranties of ATSC and the Borrower contained in the Loan Documents, and all certificates and other documents delivered to the Agent in connection therewith, taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. (n) Patents, Trademarks, Permits, Etc. The Borrower and each of its Restricted Subsidiaries owns, is licensed or otherwise has the lawful right to use, or has all permits and other approvals of Governmental Authorities, patents, trademarks, service marks, trade names, copyrights, technology, know-how and processes used in or necessary for the conduct of its business as currently conducted which are material to its financial condition, business, operations, assets and prospects, individually or taken as a whole. The use of such permits and other approvals of Governmental Authorities, patents, trademarks, service marks trade names, copyrights, technology, know-how and processes by the Borrower or any such Subsidiary does not infringe on the rights of any Person, subject to such claims and infringements the existence of which do not have or are not reasonably expected to have a Material Adverse Effect. The transactions contemplated by the Loan Documents will not impair the ownership of or rights under (or the license or other right to use, as the case may be) any permits and governmental approvals, patents, trademarks, service marks, trade names, copyrights, technology, know-how or processes by the Borrower or any such Subsidiary in any manner which has or might have a Material Adverse Effect. (o) Environmental Matters. To the best of the Borrower's knowledge, the operations of the Borrower and its Restricted Subsidiaries comply in all material respects with all applicable environmental, health and safety Requirements of Law except where any failure to comply is not reasonably likely to have a Material Adverse Effect. (p) ERISA. Each Plan which is intended to be qualified under Section 401(a) of the IRC has been or will promptly be submitted to the IRS for a determination that it is so qualified and that the trust related to any such Plan is exempt from Federal income tax under Section 501(a) of the IRC as currently in effect. Neither the Borrower nor any ERISA Affiliate has breached any of the responsibilities, obligations or duties imposed on it by ERISA or regulations promulgated thereunder with respect to any Plan which breach would have or would be reasonably expected to have a Material Adverse Effect. No Benefit Plan has incurred any accumulated funding deficiency (as defined in Sections 302(a)(2) of ERISA and 412(a) of the IRC) whether or not waived which would have or would be reasonably expected to have a Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate nor any fiduciary of any Plan which is not a Multiemployer Plan (i) has engaged in a nonexempt prohibited transaction described in Section 406 of ERISA or 4975 of the IRC or (ii) has taken or failed to take any action which would constitute or result in a Termination Event such that the events under (i) or (ii) or both would have or would be reasonably expected to have a Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC which remains outstanding other than the payment of premiums, and there are no premium payments which have become due which are unpaid. Neither the Borrower nor any ERISA Affiliate has (i) failed to make a required contribution or payment to a Multiemployer Plan which would have or would be reasonably expected to have a Material Adverse Effect or (ii) made a complete or partial withdrawal under Section 4203 or 4205 of ERISA from a Multiemployer Plan which would have or would be reasonably expected to have a Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate has failed to make a required installment or any other required payment under Section 412 of the IRC on or before the due date for such installment or other payment which would have or would be reasonably expected to have a Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate is required to provide security to a Benefit Plan under Section 401(a)(29) of the IRC due to a Plan amendment that results in an increase in current liability for,the plan year. (q) Net Worth. The Net Worth of the Borrower is at least $269,000,000 on the Initial Funding Date prior to giving effect to all transactions contemplated by Loan Documents, including the payment and accrual of all Transaction Costs payable by the Borrower with respect to any of the foregoing. 5.02. Subsequent Funding Representations and Warranties. In order to induce the Lenders and the Issuing Bank to make any Loans after the Initial Funding Date, and the Issuing Bank to issue Letters of Credit, the Borrower hereby represents and warrants to each Lender, the Issuing Bank and the Agent that the statements set forth in Section 5.01 (except to the extent that such statements expressly are made only as of the Initial Funding Date), are true, correct and complete in all material respects as though made on and as of the Funding Date in respect of each Borrowing after the Initial Funding Date and the date of issuance of each Letter of Credit, except that the representations and warranties need not be true and correct to the extent that changes in the facts and conditions on which such representations and warranties are based are required or permitted under this Agreement. ARTICLE VI Reporting Covenants 6.01. Financial Statements. So long as the Borrower shall have any Obligation or any Lender shall have any Commitment hereunder the Borrower shall maintain or cause to be maintained a system of accounting established and administered in accordance with sound business practices and consistent with past practice to permit preparation of financial statements in conformity with GAAP, and each of the financial statements described below shall be prepared from such system and records. The Borrower shall deliver or cause to be delivered to the Agent (with a sufficient number of copies for all Lenders): (a) As soon as practicable, and in any event within 45 days after the end of each of ATSC's first three fiscal quarters on a consolidated basis for ATSC, the Borrower and its Restricted Subsidiaries, a balance sheet, income statement and cash flow statement for such fiscal quarter and a year-to-date balance sheet, income statement and cash flow statement of ATSC, all certified by a Responsible Officer; (b) As soon as practicable, and in any event within 90 days after the end of each Fiscal Year, annual financial statements on a consolidated basis for ATSC, the Borrower and its Subsidiaries, consisting of a balance sheet, income statement and cash flow statement, certified without qualification by the firm of independent certified public accountants of recognized national standing regularly retained by ATSC and acceptable to the Agent, and accompanied by such firm's certification that, in the course of its audit (conducted in accordance with generally accepted auditing standards), it obtained no knowledge that an Event of Default or Potential Event of Default has occurred as a result of a violation of any of the covenants set forth in Article IX; (c) As soon as practicable, and in any event within 45 days after the end of each Fiscal Year, on a consolidated basis for ATSC, the Borrower and its Subsidiaries, detailed financial projections for the next succeeding Fiscal Year, including a written explanation of the principal assumptions made with respect thereto; (d) (i) Together with each delivery of the financial statements pursuant to paragraphs (a) and (b) above, a Compliance Certificate of the Borrower substantially in the form of Exhibit 6.01, stating that the executive officers signatory thereto have reviewed the terms of this Agreement, the ATSC Guaranty, the ATSC Pledge Agreement and the Borrower Pledge Agreement, and have made, or caused to be made under their supervision, a review in reasonable detail of the transactions and condition of the Borrower and its Subsidiaries, during the accounting period covered by such financial statements, and that such review has not disclosed the existence during or at the end of such accounting period, and that the signers do not have knowledge of the existence as at the date of such certificate, of any condition or event which constitutes an Event of Default or Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Borrower has taken, is taking and proposes to take with respect thereto; provided, however, that Attachment 2 to Exhibit 6.01 need not be included in the Compliance Certificate provided together with the financial statements delivered pursuant to paragraph (a) above and (ii) not later than 45 days after the end of each fiscal quarter (including the fourth fiscal quarter), a Pricing Ratio Certificate, substantially in the form of Exhibit 6.01(d)(ii) (a "Pricing Ratio Certificate"), calculating the Pricing Ratio on the basis of the amount of Funded Debt outstanding on the last day of such fiscal quarter and EBITDA for the four consecutive fiscal quarters ending with such fiscal quarter. (e) Promptly upon the Borrower obtaining knowledge (A) of any condition or event which constitutes an Event of Default or Potential Event of Default, (B) of any condition or event which constitutes an event of default or which, with the giving of notice or lapse of time or both, would constitute an event of default under the Subordinated Note Indenture, (C) of any condition or event which has or in the Borrower's judgment is likely to have a Material Adverse Effect, a certificate of a Responsible Officer specifying the nature and period of existence of any such condition or event, or specifying the notice given or action taken by any lender or holder of the Subordinated Notes and the nature of such claimed default, Event of Default, Potential Event of Default, event or condition, and what action the Borrower has taken, is taking and proposes to take with respect thereto; (f) (A) Promptly after learning thereof, notice of the institution of, or threat of, any action, suit, proceeding, governmental investigation or arbitration against or affecting the Borrower or any Restricted Subsidiary of the Borrower involving claims in excess of $5,000,000, or any Property of ATSC, the Borrower or any Restricted Subsidiary of the Borrower valued in excess of $5,000,000 except, in each case, where the same is fully covered by insurance (other than any applicable deductible) or has been previously disclosed in writing by the Borrower and of any material adverse change in any existing action, suit, proceeding, governmental investigation or arbitration; and (B) promptly upon learning thereof, notice of any investigation or proceeding before or by any Governmental Authority, the effect of which might limit, prohibit or restrict materially the manner in which it currently conducts its business or to declare any substance contained in the products manufactured or distributed by it to be dangerous, if such declaration is reasonably likely to have a Material Adverse Effect; (g) As soon as possible, and in any event within ten Business Days after either the Borrower or any ERISA Affiliate knows or, solely with respect to any Benefit Plan maintained by the Borrower or an ERISA Affiliate on or after the Initial Funding Date, has reason to know that a Termination Event has occurred, a written statement of a Responsible Officer of the Borrower describing such Termination Event and the action, if any, which the Borrower or such ERISA Affiliate has taken, is taking or proposes to take with respect thereto, and when known, any action taken or threatened by the IRS, DOL or PBGC with respect thereto; (h) As soon as possible, and in any event within ten Business Days, after either the Borrower or any ERISA Affiliate knows that a prohibited transaction (defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code) involving the Borrower or any ERISA Affiliate has occurred, a statement of a Responsible Officer of the Borrower describing such transaction and the action which the Borrower or such ERISA Affiliate has taken, is taking or proposes to take with respect thereto; (i) Promptly upon, and in any event within ten Business Days after, receipt by the Borrower or an ERISA Affiliate of the PBGC's intention to terminate a Benefit Plan or to have a trustee appointed to administer a Benefit Plan, copies of each such notice; (j) Promptly upon, and in any event within ten Business Days after, receipt by the Borrower or any ERISA Affiliate of any unfavorable determination letter from the IRS regarding the qualification of a Plan under Section 401(a) of the IRC, copies of such letter; (k) Promptly upon, and in any event within ten Business Days after, receipt by the Borrower or an ERISA Affiliate of a notice from a Multiemployer Plan regarding the imposition of withdrawal liability, copies of each such notice; (l) Promptly upon, and in any event within ten Business Days, after the Borrower or any ERISA Affiliate knows (A) a Multiemployer Plan has been terminated, (B) the administrator or plan sponsor of a Multiemployer Plan intends to terminate a Multiemployer Plan, or (C) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA to terminate a Multiemployer Plan a notification of such information; (m) Such other information respecting the financial condition of ATSC, the Borrower or any Subsidiary of the Borrower, business, operations, assets, performance or prospects as the Agent or the Requisite Lenders may, from time to time, reasonably request including financial projections and including monthly balance sheets, income statements and cash flow statements; (n) On a timely basis consistent with the Borrower's legal obligations to release such materials, copies of all financial statements, reports and notices, if any, sent or made available generally by the Borrower to the holders of its publiclyheld Securities or sent or made available generally to a holder of the Subordinated Notes or the trustee under the Subordinated Note Indenture or filed with the Commission, and of all press releases made available generally by the Borrower to the public concerning material developments in the business of the Borrower; and (o) Upon the request of the Agent or any Lender, copies of any management reports prepared by the Borrower's independent certified public accountants in connection with the annual audit. ARTICLE VII Affirmative Covenants The Borrower covenants and agrees that, on and after the date hereof and so long as any Lender shall have any Commitment hereunder and until payment in full of all of the Obligations: 7.01. Corporate Existence, Etc. The Borrower shall, and shall cause ATSC and each of its Subsidiaries to, at all times maintain its corporate existence and preserve and keep in full force and effect its rights and franchises except as permitted under Section 8.08. 7.02. Corporate Powers, Etc. The Borrower shall, and shall cause ATSC and each Subsidiary of the Borrower to, qualify and remain qualified to do business in each jurisdiction in which the nature of its business requires it to be so qualified, except in those jurisdictions (other than Alabama, Arkansas, Mississippi, and Vermont) where the failure to so qualify does not have or would not reasonably be expected to have a Material Adverse Effect. 7.03. Compliance with Laws. The Borrower shall, and shall cause ATSC and each Subsidiary of the Borrower to, comply with all Requirements of Law, and all restrictive covenants affecting it or its business, properties, assets or operations, except where the failure so to comply would be reasonably expected to have Material Adverse Effect. 7.04. Payment of Taxes and Claims. The Borrower shall, and shall cause ATSC and each Subsidiary of the Borrower, to pay (a) all taxes, assessments and other governmental charges imposed upon it or on any of its properties or assets or in respect of any of its franchises, business, income or property before any material penalty or interest in a material amount accrues thereon, and (b) all claims (including claims for labor, services, materials and supplies) for sums, material in the aggregate, which have become due and payable and which by law have or may become a Lien (other than a Customary Permitted Lien) upon any of its properties or assets, prior to the time when any material penalty or fine shall be incurred with respect thereto; provided that no such taxes, assessments and governmental charges referred to in clause (a) above or claims referred to in clause (b) above need be paid if being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. 7.05. Maintenance of Properties; Insurance. The Borrower shall and shall cause ATSC and each Restricted Subsidiary of the Borrower to, maintain or cause to be maintained in good repair, working order and condition, excepting ordinary wear and tear and damage due to casualty or condemnation, all Property material to its operations and will make or cause to be made all appropriate repairs, renewals and replacements thereof, consistent with past practice. The Borrower shall, and shall cause each of its Restricted Subsidiaries to, maintain such insurance as it may be required to maintain under its leases and other contracts and, to the extent not inconsistent with such requirements, shall also maintain with financially sound insurance companies, insurance policies and programs against loss or damage by fire, theft, burglary, pilferage and loss in transit, together with such other hazards as is reasonably consistent with prudent industry practice, and maintain product and other liability insurance consistent with prudent industry practice with financially sound insurance companies. 7.06. Inspection of Property; Books and Records; Discussions. The Borrower shall, and shall cause ATSC and each Subsidiary of the Borrower to, permit any authorized representative(s) designated by the Agent to visit and inspect any of its properties, including financial and accounting records, and to make copies and take extracts therefrom, and to discuss its affairs, finances and accounts with its officers, employees, representatives, agents or independent certified public accountants, all upon reasonable notice and at such reasonable time and as often as may be reasonably requested. Each such visitation and inspection made by or on behalf of the Agent shall be at the Borrower's expense. The Borrower will keep proper books of record and account in which entries in conformity with GAAP shall be made to prepare the financial statements described in Section 6.01 and to satisfy all Requirements of Law. 7.07. Labor Matters. The Borrower shall notify the Agent in writing, promptly, of any material labor dispute to which it may become a party, any strikes or walkouts relating to any of its facilities and the expiration of any labor contract to which it is a party or by which it is bound. 7.08. Maintenance of Permits. The Borrower shall obtain and maintain, and shall cause each of its Subsidiaries to obtain and maintain, in full force and effect all Permits or other rights necessary for the operation of its business, except where the failure to obtain or maintain such Permits or rights would not have or would not reasonably be expected to have a Material Adverse Effect. 7.09. ERISA. The Borrower shall establish, maintain and operate and cause each of its ERISA Affiliates to establish, maintain and operate, all Plans in all material respects in compliance with the applicable provisions of ERISA, the IRC, and all other Requirements of Law. 7.10. Distribution Center Financing; Lease Financing. (a) In the event that the Distribution Center Financing is not consummated within 90 days after the Initial Funding Date, the Borrower will provide to the Agent a mortgage on the Distribution Center in form and substance reasonably satisfactory to the Agent, and take such additional actions (including, without limitation, delivery of real property surveys and FIRREA appraisals (to the extent FIRREA appraisals are required by law) and policies of title insurance and flood insurance (if applicable)), as the Agent may reasonably request in order to grant to the Agent, as collateral security for the Obligations, a first priority mortgage on the Distribution Center. (b) In the event that the Lease Financing is not consummated within 90 days after the Initial Funding Date, the Borrower will provide to the Agent a security agreement covering the materials handling equipment related to the Distribution Center, in form and substance reasonably satisfactory to the Agent, and take such additional actions as the Agent may reasonably request in order to grant to the Agent, as collateral security for the Obligations, a first priority security interest in such equipment. 7.11. UCC Searches. The Borrower shall provide to the Agent, as soon as practicable after the Initial Funding Date, UCC searches by a recognized service agency demonstrating that the UCC financing statements referred to in Section 4.01(a)(xi) have been filed in the appropriate filing offices and that there are no other filings in such offices covering the Collateral. ARTICLE VIII Negative Covenants The Borrower covenants and agrees that, on and after the date hereof and so long as any Lender shall have any Commitment hereunder and until payment in full of all of the Obligations: 8.01. Indebtedness. The Borrower shall not, and shall not permit ATSC or any Restricted Subsidiary to, create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except: (a) the Obligations; (b) Indebtedness in the form of bank overdrafts in the ordinary course of business; (c) the Subordinated Notes and obligations for fees, expenses and indemnifications related thereto; (d) Indebtedness in connection with any Receivables Transaction; (e) (i) Indebtedness incurred by the Borrower or any Restricted Subsidiary to finance Capital Expenditures and (ii) Capital Lease obligations of the Borrower or any Restricted Subsidiary; provided, however, that Capital Expenditures made in connection with the Distribution Center shall not exceed $25,000,000 during the term of this Agreement; (f) Indebtedness in respect of Accommodation Obligations permitted under Section 8.04; (g) Indebtedness of ATSC to the Borrower and any Restricted Subsidiary in connection with any advances made pursuant to Section 8.03(b); (h) Indebtedness in respect of Interest Rate Contracts; (i) intercompany Indebtedness among the Borrower and its Restricted Subsidiaries; (j) if the CAT Joint Venture becomes a Restricted Subsidiary, Indebtedness of the CAT Joint Venture existing on the date the CAT Joint Venture becomes a Restricted Subsidiary; (k) Indebtedness in connection with Liens permitted under clause (x) of Section 8.02(b); (l) Indebtedness under the Distribution Center Financing and the Lease Financing; and (m) other Indebtedness of the Borrower and its Restricted Subsidiaries not exceeding in the aggregate principal amount of $5,000,000 at any one time outstanding. 8.02. Sales of Assets; Liens. (a) Sales. The Borrower shall not, and shall not permit ATSC or any Restricted Subsidiary to, sell, assign, trans fer, lease, convey or otherwise dispose of, any properties or assets, whether now owned or hereafter acquired, or any income or profits therefrom, except among ATSC, the Borrower and any Restricted Subsidiary and except: (i) sales of inventory and subleases of real property in the ordinary course of business (and with respect to such subleases consistent with its past practices); (ii) subleases of real property not in the ordinary course of business, but only to the extent the aggregate annual rental payments accrued under all such subleases do not exceed $1,000,000; (iii) Receivables Transactions; (iv) other sales of assets, including the sale of Securities of Subsidiaries, whether or not in the ordinary course of business, having an aggregate fair market value of not more than $1,000,000 pursuant to one single disposition or $2,000,000 in the aggregate pursuant to several dispositions in any one Fiscal Year; (v) licenses of trademarks to the extent necessary to maintain or protect such trademarks in jurisdictions outside the United States of America; (vi) sales or dispositions of Cash Equivalents; (vii) sales of the Borrower's interest in the CAT Joint Venture pursuant to the CAT Joint Venture Agreement; and (viii) transfer of cash or property in an amount not to exceed 1% of EBITDA for each Fiscal Year to a charitable foundation established by the Borrower or ATSC; provided, that (A) no disposition (other than sales of Receivables permitted by clause (iii) or transfers permitted by clause (viii)) in excess of $1,000,000 shall be permitted unless the price to be received therefor represents the then fair market value of the asset or property sold at the time of such disposition and at least 80% of the price is to be paid in cash at the closing of the disposition and (B) this Section 8.02(a) shall not prohibit the Lease Financing or the Distribution Center Financing. (b)Liens. The Borrower shall not, and shall not permit ATSC or any Restricted Subsidiary to, create, incur, assume or permit to exist, directly or indirectly, any Lien on or with respect to any of its Property except: (i) Liens securing the Obligations; (ii) Liens upon the interest or title of a lessor or secured by a lessor's interest under any lease under which the Borrower or any Restricted Subsidiary is the lessee and the interest of the lessee under any lease under which the Borrower or any Restricted Subsidiary is the lessor; (iii) Customary Permitted Liens; (iv) Liens granted by the Borrower or any Restricted Subsidiary (including the interest of a lessor under a Capital Lease) and Liens on Property existing at the time of acquisition thereof by the Borrower or any Restricted Subsidiary securing Indebtedness permitted by Section 8.01(e); (v) Liens on Property of any Person existing at the time such Person becomes a Restricted Subsidiary incurring Indebtedness permitted by Section 8.01; (vi) Liens with respect to judgments or attachments which do not result in an Event of Default or Potential Event of Default hereunder; (vii) Permitted Existing Liens; (viii) Liens in respect of Receivables sold pursuant to a Receivables Transaction; (ix) Liens in respect of Indebtedness permitted pursuant to Section 8.01(l) and (m); and (x) to the extent Indebtedness secured thereby is permitted to be extended, renewed, replaced or refinanced, a future Lien upon any Property which is subject to a Lien described in clause (vii) above, if such future Lien attaches only to the same Property, secures only such permitted extensions, renewals, replacements or refinancings and is of like quality, character and extent. 8.03. Investments. The Borrower shall not, and shall not permit ATSC or any Restricted Subsidiary to, make or own, directly or indirectly, any Investment in any Person except: (a)Investments by the Borrower in Cash Equivalents; (b)Investments by the Borrower resulting from advances to ATSC to fund any of the items set forth in Section 8.05(a) or (b); (c)Investments by ATSC in the capital stock of the Borrower; (d)Investments in Subsidiaries if such Subsidiaries have been organized in connection with a Receivables Transaction; (e)Investments in Restricted Subsidiaries and investments resulting from transactions permitted pursuant to Section 8.01(i); (f)Investments in joint ventures (in the form of corporations, partnerships or otherwise) in a maximum amount not exceeding $10,000,000 at any one time outstanding; (g)Investments in Unrestricted Subsidiaries in an amount not to exceed $1,000,000 in the aggregate in any Fiscal Year; (h)Investments not exceeding $5,000,000 at any one time outstanding in respect of loans to senior executives and key employees of the Borrower or any Restricted Subsidiary; (i)Investments by the Borrower in the CAT Joint Venture pursuant to the CAT Joint Venture Agreement in the form of (i) capital stock, (ii) advances made to the CAT Joint Venture not to exceed $5,000,000 in the aggregate outstanding at any time and (iii) one or more Letters of Credit issued in respect of obligations of the CAT Joint Venture; (j)Investments in the form of advance payments to suppliers not in excess of an aggregate amount of $10,000,000 outstanding at any one time; and (k)other Investments by the Borrower not in excess of an aggregate amount of $500,000 outstanding at any one time. 8.04. Accommodation Obligations. The Borrower shall not, and shall not permit ATSC or any Restricted Subsidiary to, create or become or be liable, directly or indirectly, with respect to any Accommodation Obligation except: (a)guaranties resulting from endorsement of negotiable instruments for collection in the ordinary course of business; (b)obligations, warranties and indemnities, not relating to Indebtedness of any Person, which have been or are undertaken or made in the ordinary course of business and not for the benefit or in favor of an Affiliate of the Borrower or such Subsidiary; (c)obligations in respect of any Receivables Transaction; (d)guaranties of obligations of the Borrower or Subsidiaries of the Borrower in connection with the Distribution Center Financing or the leasing or financing of materials handling equipment, computer equipment, furniture and fixtures in the ordinary course of business; (e)Accommodation Obligations arising in connection with the Borrower's agreement to provide the CAT Joint Venture with one or more Letters of Credit issued for the benefit of the CAT Joint Venture pursuant to the CAT Joint Venture Agreement to the extent permitted by Section 8.03(i) and similar arrangements for the benefit of other joint ventures; and (f)with respect to ATSC, Accommodation Obligations arising in connection with the ATSC Guaranty or Accommodation Obligations for Indebtedness of the Borrower or its wholly-owned Restricted Subsidiaries permitted to be incurred under Section 8.01. 8.05. Restricted Payments. The Borrower shall not, and shall not permit any of its Subsidiaries or ATSC, to declare or make any Restricted Payment except: (a)scheduled payments (but not prepayments) of interest due on the Subordinated Notes, if such scheduled payments are permitted to be made pursuant to the terms of such Subordinated Notes; (b)dividends paid and declared in any Fiscal Year by the Borrower to ATSC to fund (i) income and franchise taxes payable in such Fiscal Year owed by ATSC pursuant to the Tax Sharing Agreement dated as of July 12, 1989 between ATSC and the Borrower; (ii) other ordinary operating expenses of ATSC not in excess of $500,000 in any Fiscal Year; (iii) ATSC's share of expenses incurred in connection with, any public offering of Common Stock; and (iv) payments permitted under Section 8.05(e); (c)dividends paid or any other distribution made by any Subsidiary on its capital stock; (d)payments by ATSC to the Investor Group of its share of expenses incurred in connection with any public offering of the Common Stock held by the Investor Group; and (e)payments by ATSC or the Borrower to acquire shares of Common Stock from employees of ATSC, the Borrower or any Restricted Subsidiary in an aggregate amount not exceeding $100,000 in any Fiscal Year. 8.06. Conduct of Business. The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any business other than (a) the business engaged in by the Borrower or such Subsidiary on the date hereof; (b) any business activities substantially similar or related thereto; and (c) any Receivables Transaction. 8.07. Transactions with Affiliates. The Borrower shall not, and shall not permit ATSC or any Restricted Subsidiary to, at any time after the Initial Funding Date directly or indirectly enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property or the rendering of any service) with any of its Affiliates on terms that are less favorable to it than those fair and reasonable terms that might be obtained in a comparable armslength transaction at the time; provided that the foregoing restriction shall not apply to transactions among ATSC, the Borrower and its wholly-owned Restricted Subsidiaries, customary fees paid to members of the Board of Directors of the Borrower or ATSC or payments permitted under Section 8.03(h) or the business contemplated by the CAT Joint Venture Agreement or other joint ventures. 8.08. Restriction on Fundamental Changes. (a)The Borrower shall not, and shall not permit any Restricted Subsidiary to, enter into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), discontinue its business or convey, lease, sell, transfer or otherwise dispose of, in one transaction or series of transactions, all or any substantial part of its business or Property, whether now or hereafter acquired, except (i) as otherwise permitted under Section 8.02(a), (ii) that any Restricted Subsidiary may merge into or convey, sell, lease or transfer all or substantially all of its assets to, the Borrower or any other Restricted Subsidiary and (iii) that nothing contained herein shall prohibit the Borrower from dissolving or liquidating any Subsidiary if in the reasonable opinion of the Borrower's senior management such dissolution or liquidation has no reasonable likelihood of having a Material Adverse Effect. (b)The Borrower shall not and shall not permit ATSC or any Restricted Subsidiary to, amend its Certificate of Incorporation or By-Laws in a manner that is in any way adverse to the rights of the Agent and the Lenders hereunder. 8.09. ERISA. The Borrower shall not, and shall not permit any of its ERISA Affiliates to, do any of the following to the extent that such act or failure to act would in the aggregate, after taking into account any other such acts or failures to act, have a Material Adverse Effect. (a)Engage, or permit any ERISA Affiliate to engage, in any prohibited transaction described in Sections 406 of ERISA or 4975 of the IRC for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the DOL; (b)permit to exist any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or not waived; (c)terminate, or permit any ERISA Affiliate to terminate, any Benefit Plan which would result in any liability of the Borrower or any ERISA Affiliate under Title IV of ERISA; (d)fail, or permit any ERISA Affiliate to fail, to make any contribution or payment to any Multiemployer Plan which the Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; (e)fail, or permit any ERISA Affiliate to fail, to pay any required installment or any other payment required under Section 412 of the IRC on or before the due date for such installment or other payment; or (f)amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability for the plan year such that the Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the IRC. 8.10. Sales and Leasebacks. The Borrower shall not, and shall not permit any Restricted Subsidiary to, become liable, directly or by way of any Accommodation Obligation, with respect to any lease, whether an Operating Lease or a Capital Lease, of any Property whether now owned or hereafter acquired, (a) which the Borrower or any Restricted Subsidiary has sold or transferred or is to sell or transfer to any other Person, or (b) which the Borrower or any such Restricted Subsidiary intends to use for substantially the same purposes as any other Property which has been or is to be sold or transferred by that entity to any other Person in connection with such lease; provided, that this Section 8.10 shall not prohibit the Lease Financing or the Distribution Center Financing. 8.11. Subordinated Indebtedness. (a)No Change. The Borrower shall not, and shall not permit ATSC to, amend, supplement or modify the terms of the Subordinated Notes (i) which relate to subordination, interest (including options to pay in kind), principal, tenor, extension of maturity, payments in respect of redemptions, repurchases, sinking fund, principal, interest or other payments, or the acceleration thereof or any rescission of acceleration or (ii) except if necessary to comply with the provisions of the Trust Indenture Act of 1939 or (iii) by making more restrictive, or adding, covenants, breaches, defaults, or events of default, or (iv) by shortening cure periods, or (v) if the benefits to the Borrower or the Agent or the Lenders would thereby be in any material respect limited, restricted or diminished. (b)Notices. The Borrower shall deliver to the Agent (i) a copy of each notice or other written communication delivered by or on behalf of the Borrower to any trustee under the Subordinated Indenture, such delivery to be made at the same time and by the same means as such notice or other written communication is delivered to such Person, and (ii) a copy of each notice or other written communication received by the Borrower from the trustee under the Subordinated Indenture, such delivery to be made promptly after such notice or other written communication is received by the Borrower. 8.12. Margin Regulations. No portion of the proceeds of any credit extended under this Agreement shall be used in any manner which might cause the extension of credit or the application of such proceeds to violate Regulation G, Regulation T, Regulation U or Regulation X or any other regulation of the Federal Reserve Board or to violate the Securities Exchange Act or the Securities Act, in each case as in effect on the date or dates of such Borrowing and such use of proceeds. 8.13. Change of Fiscal Year. The Borrower shall not change its Fiscal Year. 8.14. Subsidiaries. (a) The Borrower shall not permit any Unrestricted Subsidiary to enter into any Accommodation Obligation with respect to any Indebtedness of ATSC, the Borrower or any Restricted Subsidiary or to grant or permit to exist any Lien on its Property to secure any such Indebtedness. (b)The Borrower shall not, and shall not permit any Restricted Subsidiary to, create or otherwise become effective any consensual encumbrance or restriction of any kind on the ability of any Restricted Subsidiary to pay dividends or make any other distribution, in respect of its stock or make any other Restricted Payment, pay any Indebtedness or other Obligation owed to the Borrower or any other Restricted Subsidiary, make loans or advances or other Investments in the Borrower or any other Restricted Subsidiary or sell, transfer or otherwise convey any of its Property to the Borrower or any other Restricted Subsidiary. 8.15. Capital Expenditures. The Borrower shall not make Capital Expenditures in any Fiscal Year, commencing with Fiscal Year 1996, exceeding (a) during Fiscal Year 1996, the sum of (i) $6,250,000 during each fiscal quarter in such Fiscal Year, with amounts thereof not used in such fiscal quarter being carried forward and available in the subsequent fiscal quarters in Fiscal Year 1996, plus (ii) if the Borrower issues and sells its equity securities during Fiscal Year 1996, an amount equal to the lesser of (x) one-third of the net cash proceeds received by the Borrower from such equity sales and (y) the difference between $32,500,000 and the amount of capital expenditures permitted for Fiscal Year 1996 by the foregoing clause (i) (provided, that the Borrower may not make or commit any amount of Capital Expenditures permitted by this clause (ii) unless the Borrower shall have delivered to the Banks the financial statements required by Section 6.01(a) for the fiscal quarter ending July 31, 1996 and such financial statements show that the Borrower was in compliance with Section 9.03 as of the end of such fiscal quarter); and (b) during any Fiscal Year after Fiscal Year 1996, $32,500,000 in the aggregate; provided, that if in any Fiscal Year after Fiscal Year 1996 (each, a "Calculation Year"), the Fixed Charge Coverage Ratio for such Calculation Year is greater than 1.25, then Capital Expenditures during the Fiscal Year immediately following such Calculation Year may be increased by the lesser of (x) $17,500,000 and (y) the Contingent Amount, determined in accordance with the following formula: C = (EBITDA) - B A where C = Contingent Amount; EBITDA = EBITDA for such Calculation Year; A = 1.25 plus 50% of the difference between 1.25 and the actual Fixed Charge Coverage Ratio for such Calculation Year; and B = the sum of the amounts described in clause (b) of the definition of Fixed Charge Coverage Ratio in Section 1.01 for such Calculation Year. The Borrower will not, at any time when it is not in compliance with Section 9.03, commit to make any Capital Expenditures, and during such time as the Borrower is not in compliance with Section 9.03, the Borrower will make only such Capital Expenditures as were legally committed at a time when the Borrower was in compliance with Section 9.03. For purposes hereof, it is agreed that the Borrower shall be in compliance with Section 9.03 at any time that a breach thereunder has been effectively waived or cured. ARTICLE IX Financial Covenants The Borrower covenants and agrees that, on and after the date hereof and so long as any Lender has any Commitment hereunder and until payment in full of all the Obligations: 9.01. Minimum Net Worth. The Borrower shall not permit Net Worth as determined at the end of any fiscal quarter (beginning with the fiscal quarter ending on or about October 31, 1994) to be less than the Net Worth on or about July 29, 1994 plus (a) 50% of Net Income after July 31, 1994 (without deducting from such cumulative amount the amount of any net loss incurred in any Fiscal Year except extraordinary losses associated with the redemption or repurchase of Indebtedness) plus (b) 100% of the net proceeds of any equity issue or conversion of debt to equity subsequent to the Initial Funding Date minus (c) any expenses related to the payments described in Section 8.05(b)(iii) or Section 8.05(e). 9.02. Funded Debt to Total Capitalization Ratio. The Borrower shall not permit the ratio of (a) (i) Funded Debt plus (ii) obligations in respect of Capital Leases to (b) Total Capitalization as determined at the end of each fiscal quarter, (x) for any fiscal quarter prior to the fourth quarter of Fiscal Year 1996, to exceed .475 to 1 or (y) for any fiscal quarter from and after the fourth quarter of Fiscal Year 1996, .45 to 1 9.03. Minimum Fixed Charge Coverage Ratio. The Borrower shall not permit the Fixed Charge Coverage Ratio, as determined at the end of any fiscal quarter for the preceding four fiscal quarters (or, if less, the number of full fiscal quarters elapsed since the Initial Funding Date) to be less than the ratio set forth opposite the month in which such fiscal quarter ends: Quarter Ended Minimum Ratio January 1996 0.75 to 1.00 April 1996 1.00 to 1.00 July 1996 1.10 to 1.00 October 1996 1.15 to 1.00 January 1997 and thereafter 1.25 to 1.00 ARTICLE X Events of Default; Right and Remedies 10.01. Events of Default. Each of the following occurrences shall constitute an Event of Default under this Agreement: (a) Failure to Make Payments When Due. (i) The Borrower shall fail to pay when due any principal of any Loan or Reimbursement Obligation, or (ii) The Borrower shall fail to pay any interest on any Loan or Reimbursement Obligation, or any fee or other amount payable under this Agreement, within the earlier of (A) five Business Days after the same shall become due in accordance with terms hereof or (B) in the event that a principal or interest payment shall be due under the terms of the Subordinated Notes within such five Business Day period, one Business Day prior to such payment date in respect of the Subordinated Notes or if the payments are due on the same date, on such due date. (b) Breach of Certain Covenants. The Borrower shall fail duly and punctually to perform or observe (or cause ATSC to perform or observe) any agreement, covenant or obligation binding on the Borrower under Article VIII or Article IX or binding on the Borrower or ATSC under any section of the Collateral Documents (which failure continues after the expiration of any grace period specified under such section of the Collateral Documents). (c) Breach of Representation or Warranty. Any representation or warranty made or deemed made by the Borrower or ATSC to the Agent, the Issuing Bank or any Lender herein or in any of the other Loan Documents or in any written statement or certificate at any time given by the Borrower or ATSC pursuant to any of the Loan Documents shall be false or misleading in any material respect on the date as of which made or deemed made. (d) Other Defaults. Either the Borrower or ATSC shall fail duly and punctually to perform or observe any agreement, covenant or obligation arising under this Agreement (except those described in Sections 10.01(a), (b) and (c)) or under any of the other Loan Documents, and such failure shall continue for 20 days (or, in the case of Loan Documents other than this Agreement, any longer period of grace expressly set forth therein). (e) Default as to Other Indebtedness. ATSC, the Borrower or any Restricted Subsidiary shall fail to make any payment when due (whether by scheduled maturity, required prepay ment, acceleration, demand or otherwise) on any Indebtedness of ATSC, the Borrower or any such Subsidiary, other than an Obliga tion, if the aggregate amount of all such Indebtedness is $5,000,000 or more; or any breach, default or event of default shall occur, or any other event shall occur or condition shall exist, under any instrument, agreement or indenture pertaining thereto, if the effect thereof is to accelerate, or permit the holder(s) of such Indebtedness to accelerate, the maturity of any such Indebtedness; or any such Indebtedness shall be declared to be due and payable or required to be prepaid (other than by a regularly scheduled required prepayment prior to the stated maturity thereof), or the holder of any Lien (other than Liens upon property leased to ATSC, the Borrower or such Restricted Subsidiary which were created by the landlord prior to the commencement of the lease), in any amount, shall commence foreclosure of such Lien upon property of ATSC, the Borrower or any Restricted Subsidiary having a value in excess of $5,000,000 in the aggregate. (f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An involuntary case shall be commenced against the Borrower or ATSC or any Restricted Subsidiary, and the petition shall not be dismissed within 60 days after commencement of the case, or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Borrower or ATSC or any Restricted Subsidiary in an involuntary case, under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect; or any other similar relief shall be granted under any applicable federal, state or foreign law. (ii) A decree or order of a court having jurisdic tion in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over the Borrower or ATSC or any Restricted Subsidiary, or over all or a substantial part of the property of the Borrower or ATSC or any Restricted Subsidiary, shall be entered; or an interim receiver, trustee or other custodian of the Borrower or ATSC or any Restricted Subsidiary, or of all or a substantial part of the property of the Borrower or ATSC or any Restricted Subsidiary, shall be appointed or a warrant of attachment, execution or similar process against any substantial part of the property of the Borrower or ATSC or any Restricted Subsidiary, shall be issued and any such event shall not be stayed, vacated, dismissed, bonded or discharged within 60 days of entry, appointment or issuance. (g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or ATSC or any Restricted Subsidiary shall have an order for relief entered with respect to it or commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking of possession by a receiver, trustee or other custodian for all or a substantial part of its property; the Borrower or ATSC or any Restricted Subsidiary shall make any assignment for the benefit of creditors or shall be unable or generally fail, or admit in writing its inability, to pay its debts as such debts become due; or the Board of Directors (or any committee thereof) of the Borrower or ATSC or any Restricted Subsidiary adopts any resolution to approve any of the foregoing. (h) Judgments and Attachments. Any money judgment (other than a money judgment covered by insurance, but only if the insurer has admitted liability with respect to such money judgment), writ or warrant of attachment, or similar process involving in any case an amount in excess of $5,000,000 shall be entered or filed against the Borrower or ATSC or any Restricted Subsidiary or any of their Property, and shall remain undischarged, unvacated, unbonded or unstayed for a period of 60 days. (i) Dissolution. Any order, judgment or decree shall be entered against the Borrower or ATSC or any Restricted Subsidiary decreeing its involuntary dissolution or split-up and such order shall remain undischarged and unstayed for a period in excess of 60 days; or the Borrower or ATSC or any Restricted Subsidiary shall otherwise dissolve or cease to exist except as permitted by Section 8.08. (j) Collateral Documents; Failure of Security or Subordination. For any reason other than a release of Liens or the failure of the Agent and the Lenders to take any action unilaterally available to them to maintain the perfection of the Liens created in favor of the Agent pursuant to this Agreement and the Collateral Documents, any Collateral Document ceases to be in full force and effect or any Lien intended to be created thereby ceases to be or is not valid and perfected; or any Lien in favor of the Agent contemplated by this Agreement or any Collateral Document, or the subordination provisions of the Subordinated Notes shall, at any time, be invalidated or otherwise cease to be in full force and effect; or any such Lien or any Obligation shall be subordinated or shall not have the priority contemplated by this Agreement, the Collateral Documents or such subordination provisions, for any reason. (k) Change in Control. Any Change in Control shall occur. (l) ERISA Liabilities. Any Termination Event occurs which will or is reasonably likely to subject either the Borrower or an ERISA Affiliate to a liability which will or is reasonably expected to have a Material Adverse Effect. An Event of Default shall be deemed "continuing" until cured or waived in writing in accordance with Section 12.08. 10.02. Rights and Remedies. (a) Acceleration. Upon the occurrence of any Event of Default described in Section 10.01(f) or 10.01(q) with respect to the Borrower, the Commitments shall automatically and immediately terminate and the unpaid principal amount of and any and all accrued interest on the Loans and all Reimbursement Obligations shall automatically become immediately due and payable, with all additional interest from time to time accrued thereon and without presentment, demand, or protest or other requirements of any kind (including valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration), all of which are hereby expressly waived by the Borrower, and the obligation of each Lender to make any Loan hereunder and of the Issuing Bank to issue any Letter of Credit shall thereupon terminate; and upon the occurrence and during the continuance of any other Event of Default, the Agent shall at the request, or may with the consent, of the Requisite Lenders, by written notice to the Borrower, (i) declare that the Commitments are terminated, whereupon the Commitments and the obligation of each Lender to make any Loan hereunder and of the Issuing Bank to issue any Letter of Credit shall immediately terminate, and (ii) declare the unpaid principal amount of and any and all accrued and unpaid interest on the Loans and all Letter of Credit Obligations to be, and the same shall thereupon be, immediately due and payable with all additional interest from time to time accrued thereon and without presentment, demand, or protest or other requirements of any kind (including valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration), all of which are hereby expressly waived by the Borrower. (b) Deposit for Letters of Credit. In addition, upon demand by the Agent or the Issuing Bank after the occurrence and during the continuance of any Event of Default, the Borrower shall deposit with the Agent for the benefit of the Issuing Bank with respect to each Letter of Credit then outstanding, promptly upon the demand of the Agent, cash or Cash Equivalents in an amount equal to the greatest amount for which such Letter of Credit may be drawn. Such deposit shall be held by the Agent for the benefit of the Issuing Bank as security for, and to provide for the payment of, the Reimbursement Obligations. Pending the application of such deposit to payment of the Reimbursement Obligations, the Agent may invest such deposit in an open account or similar immediately available savings deposit and all interest accrued thereon shall be held with such deposit as additional security for the Reimbursement Obligations. (c) Rescission. If at any time after acceleration of the maturity of the Loans, the Borrower shall pay all arrears of interest and all payments on account of principal of the Loans and Reimbursement Obligations which shall have become due otherwise than by acceleration (with interest on principal and on overdue interest, at the rates specified in this Agreement) and all Events of Default and Potential Events of Default (other than nonpayment of principal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to Section 12.08, then by written notice to the Borrower, the Requisite Lenders may elect, in the sole discretion of such Requisite Lenders, to rescind and annul the acceleration and its consequences and thereupon shall release any deposit made pursuant to Section 10.02(b); provided, however, that no rescission shall occur after the earlier of 30 days after the date of acceleration or any Event of Default specified in paragraph (f) or (g) of Section 10.01, whichever is earlier. No action pursuant to this paragraph (c) shall affect any subsequent Event of Default or Potential Event of Default or impair any right or remedy consequent thereon. The provisions of the preceding sentence are intended merely to bind the Lenders to a decision which may be made at the election of the Requisite Lenders; they are not intended to benefit the Borrower and do not give the Borrower the right to require the Lenders to rescind or annul any acceleration hereunder, even if the conditions set forth herein are met. ARTICLE XI The Agent 11.01. Appointment and Authorization. Each Lender and the Issuing Bank hereby irrevocably appoints, designates and authorizes the Agent to take such action on its behalf under the provisions of this Agreement and each other Loan Document and to exercise such powers and perform such duties as are expressly delegated to it by the terms of this Agreement or any other Loan Document, together with such powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary contained elsewhere in this Agreement or in any other Loan Document, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Bank, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 11.02. Delegation of Duties. The Agent may execute any of its duties under this Agreement or any other Loan Document by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects with reasonable care. 11.03. Liability of Agent. None of the Agent-Related Persons shall (a) be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement or any other Loan Document (except for its own gross negligence or willful misconduct), or (b) be responsible in any manner to any of the Lenders or the Issuing Bank for any recital, statement, representation or warranty made by ATSC, Borrower or any Subsidiary or Affiliate of ATSC or the Borrower, or any officer thereof, contained in this Agreement or in any other Loan Document, or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document, or the validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document, or for any failure of ATSC, the Borrower or any other party to any Loan Document to perform its obligations hereunder or thereunder. No Agent-Related Person shall be under any obligation to any Lender or the Issuing Bank to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the Properties, books or records of ATSC, the Borrower or any of the Subsidiaries or Affiliates of ATSC or the Borrower. 11.04. Reliance by Agent. (a) The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, facsimile, telex or telephone message, statement or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons, and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Requisite Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement or any other Loan Document in accordance with a request or consent of the Requisite Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders and the Issuing Bank. (b) For purposes of determining compliance with the conditions specified in Section 4.01, each Lender that has executed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter either sent by the Agent to such Lender for consent, approval, acceptance or satisfaction, or required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender. 11.05. Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Event of Default or Event of Default, except with respect to defaults in the payment of principal, interest and fees required to be paid to the Agent for the account of the Lenders, unless the Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Potential Event of Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give notice thereof to the Lenders. The Agent shall take such action with respect to such Potential Event of Default or Event of Default as shall be requested by the Requisite Lenders; provided, however, that unless and until the Agent shall have received any such request, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Event of Default or Event of Default as it shall deem advisable or in the best interest of the Lenders. 11.06. Credit Decision. Each Lender expressly acknowledges that none of the Agent-Related Persons has made any representation or warranty to it and that no act by the Agent hereinafter taken, including any review of the affairs of ATSC and the Borrower and its Subsidiaries shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, prospects, operations, property, financial and other condition and creditworthiness of ATSC and the Borrower and its Subsidiaries, and all applicable bank regulatory laws relating to the transactions contemplated thereby, and made its own decision to enter into this Agreement and extend credit to the Borrower hereunder. Each Lender also represents that it will, independently and without reliance upon the Agent and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigations as it deems necessary to inform itself as to the business, prospects, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by the Agent, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, prospects, operations, property, financial and other condition or creditworthiness of the Borrower which may come into the possession of any of the Agent-Related Persons. 11.07. Indemnification. Whether or not the transactions contemplated hereby shall be consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrower and without limiting the obligation of the Borrower to do so), ratably from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including at any time following the repayment of the Loans and the termination or resignation of the related Agent) be imposed on, incurred by or asserted against any such Person any way relating to or arising out of this Agreement or any document contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by any such Person under or in connection with any of the foregoing; provided, however, that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Person's gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including legal fees and the allocated cost of staff counsel) incurred by the Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement, any other Loan Document, or any document contemplated by or referred to herein to the extent that the Agent is not reimbursed for such expenses by or on behalf of the Borrower. Without limiting the generality of the foregoing, if the IRS or any other Governmental Authority of the United States of America or other jurisdiction asserts a claim that the Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Agent of a change in circumstances which rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason) such Lender shall indemnify the Agent fully for all amounts paid, directly or indirectly, by the Agent as tax or otherwise, including penalties and interest, and including any taxes imposed by any jurisdiction on the amounts payable to the Agent under this Section 11.07, together with all costs and expenses and attorneys' fees (including legal fees and the allocated cost of staff counsel). The obligation of the Lenders in this Section shall survive the payment of all Obligations hereunder. 11.08. Agent in Individual Capacity. Bank of America and its Affiliates may make loans to, issue letters of credit for the account of, accept deposits from, acquire equity interests in and generally engage in any kind of banking, trust, financial advisory or other business with ATSC and the Borrower and its Subsidiaries and Affiliates as though Bank of America were not the Agent hereunder and without notice to or consent of the Lenders. With respect to its Loans, Bank of America shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" shall include Bank of America in its individual capacity. 11.09. Successor Agent. The Agent may resign as Agent upon 30 days' notice to the Lenders. If the Agent shall resign as Agent under this Agreement, the Requisite Lenders shall appoint from among the Lenders a successor agent for the Lenders which successor agent shall be approved by the Borrower. If no successor agent is appointed prior to the effective date of the resignation of the Agent, the Agent may appoint, after consulting with the Lenders and the Borrower, a successor agent from among the Lenders. Upon the acceptance of its appointment as successor agent hereunder, such successor agent shall succeed to all the rights, powers and duties of the retiring Agent and the term "Agent" shall mean such successor agent and the retiring Agent's appointment, powers and duties as Agent shall be terminated. After any retiring Agent's resignation hereunder as Agent, the provisions of this Article XI and Sections 12.03 and 12.04 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. If no successor agent has accepted appointment as Agent by the date which is 30 days following a retiring Agent's notice of resignation, the retiring Agent's resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the Agent hereunder until such time, if any, as the Requisite Lenders appoint a successor agent as provided for above except that the Agent shall remain as collateral agent for the purpose of the Collateral Documents until a successor agent has been appointed. 11.10. The Arranger. The Arranger shall have no right, power, obligation, liability, responsibility or duty under this Agreement other than the right to receive the fee referred to in Section 2.03(a) and the right to indemnity under Section 12.04 11.11. Co-Agents. None of the Lenders identified on the facing page or signature pages of this Agreement as a "Co-Agent" shall have any right or power, obligations, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as such. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders so identified in deciding to enter into this Agreement or in taking or not taking action hereunder. 11.12. Collateral Matters. (a) Each Lender and the Issuing Bank authorizes and directs the Agent to enter into the Collateral Documents for the benefit of the Lenders and the Issuing Bank. Each Lender and the Issuing Bank agrees that any action taken by the Agent or the Requisite Lenders in accordance with the provisions of this Agreement or the Collateral Documents, and the exercise by the Agent or the Requisite Lenders of the powers set forth herein or therein, together with such other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the Lenders and the Issuing Bank. (b) The Agent is hereby authorized on behalf of all of the Lenders and the Issuing Bank, without the necessity of any notice to or further consent from any Lender or the Issuing Bank from time to time prior to an Event of Default, to take any action with respect to any Collateral or Collateral Documents which may be necessary to perfect and maintain perfected the Liens upon the Collateral granted pursuant to the Collateral Documents. (c) Each Lender and the Issuing Bank hereby irrevoca bly authorize the Agent to release any Lien granted to or held by the Agent upon any Collateral upon (i) any sale of such Collateral permitted under this Agreement (or any waiver hereof), (ii) the consummation of the Distribution Center Financing or the Lease Financing to the extent that the indebtedness incurred in such transaction is secured by such Collateral as permitted by the definition of Distribution Center Financing or the Lease Financing, as the case may be, in Section 1.01 and (iii) termination of the Commitments and payment and satisfaction of all Loans, Reimbursement Obligations, other Letter of Credit Obligations (whether or not due) and all other Obligations which have matured and which the Agent has been notified in writing are then due and payable. 11.13. Relations Among Lenders. (a) Each Lender agrees that it will not take any action, nor institute any actions or proceedings, against the Borrower or any other obligor hereunder or any other Loan Document or with respect to any Collateral, without the prior written consent of the Requisite Lenders. (b) The Lenders are not partners or co-venturers, and no Lender shall be liable for the acts or omissions of, or (except as otherwise set forth herein in case of the Agent) authorized to act for, any other Lender. ARTICLE XII Miscellaneous 12.01. Assignments and Participations. (a) At any time after the Initial Funding Date, each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, Loans or interest in the Letters of Credit); provided, that (i) each such assignment in respect of Revolving Loan Commitments or Revolving Loans shall cover the same percentage of such Lender's Revolving Loan Commitment, Revolving Loans and Letter of Credit Obligations, (ii) unless the Agent and the Borrower otherwise consent, the aggregate amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than $5,000,000 and shall be an integral multiple of $100,000 (unless the assigning Lender's Commitment is less than $5,000,000, in which case the assignment may be in the amount of such Commitment) provided that assignments between Lenders shall have no minimum amount, (iii) the Borrower shall consent (which consent shall not be unreasonably withheld) and the Agent and the Issuing Bank shall consent to such assignment and (iv) the parties to each such assignment shall execute and deliver to the Agent an Assignment and Acceptance, together with processing and recordation fee of $3,000. From and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder as fully as if such assignee had been named as a Lender in accordance with the terms of this Agreement and (B) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement. (b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) the assignment made under such Assignment and Acceptance is made without recourse and, other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document or any other instrument or document furnished pursuant hereto; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under any Loan Document or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements delivered pursuant to Article VI and such other Loan Documents and other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers as are reasonably incidental thereto; and (vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender; and (vii) such an assignee is an Eligible Assignee. (c) Each Non-U.S. Lender that could become completely exempt from withholding of U.S. Taxes in respect of payment of any Obligations due to such Non-U.S. Lender if the Obligations were in registered form for U.S. Federal income tax purposes and that holds a Term Note (a "Noteholder") (or, if such Noteholder is not the beneficial owner thereof, such beneficial owner) shall deliver to the Borrower prior to or at the time such Non-U.S. Lender becomes a Noteholder a Form W-8 (Certificate of Foreign Status of the U.S. Department of Treasury) (or any successor or related form adopted by the U.S. taxing authorities), together with an annual certificate stating that such Noteholder or beneficial owner, as the case may be, (x) is not a "bank" for purposes of Section 881(c) of the Code (and is not subject to regulatory or other legal requirements as a bank in any jurisdiction, and has not been treated as a bank in any filing with or submission made to any Governmental Authority or rating agency), (y) is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the Borrower and (z) is not a controlled foreign corporation related to the Borrower (within the meaning of Section 864(d)(4) of the Code). Such Noteholder or beneficial owner, as the case may be, shall promptly notify the Borrower if at any time such Noteholder or beneficial owner, as the case may be, determines that it is no longer in a position to provide such certification to the Borrower (or any other form of certification adopted by the U.S. taxing authorities for such purposes). (d) A Term Note and the Obligation(s) evidenced thereby may be assigned or otherwise transferred in whole or in part only by registration of such assignment or transfer of such Term Note and the Obligation(s) evidenced thereby on the Register (and each Term Note shall expressly so provide). Any assignment or transfer of all or part of such Obligation(s) and the Term Note evidencing the same shall be registered on the Register only upon surrender for registration of assignment or transfer of the Term Note evidencing such Obligation(s), duly endorsed by (or accompanied by a written instrument of assignment or transfer duly executed by) the Noteholder thereof, and thereupon a new Term Note in the same aggregate principal amount shall be issued to the designated assignee(s), and the assignor shall cancel and return to the Agent, for the account of the Borrower, the Term Note replaced by such new Term Note. No assignment of a Term Note and the Obligation(s) evidenced thereby shall be effective unless it has been recorded in the Register as provided in this Section 12.01(d). (e) The Agent, on behalf of the Borrower, shall maintain at the address of the Agent referred to in Section 12.10 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders (including Noteholders) and the Commitments of, and principal amounts of the Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Agent and the Lenders may (and, in the case of any Loan or other obligation hereunder not evidenced by a Term Note, shall) treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Loan Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder not evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. (f) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender, the Agent shall, if such Assign ment and Acceptance has been properly completed and is in substan tially the form of Exhibit 12.01 and if the conditions for the assignment referred to in the Assignment and Acceptance set forth in Section 12.01(a) have been met, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and the Agent's Loan Account and (iii) give prompt notice thereof to the Borrower and the other Lenders. (g) Each Lender may sell participations to one or more banks or other entities as to all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, the Loans owing to it, the Letter of Credit Obligations); provided, that (i) such Lenders obligations under this Agreement (including its Commitment) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) the Borrower, the Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and with regard to any and all payments to be made under this Agreement, (iv) the holder of any such participation shall not be entitled to voting rights under this Agreement; provided, however, that the participation agreement between a Lender and any of its participants may provide that such Lender will obtain the approval of such participant prior to any amendment or waiver of any provisions of this Agreement which would (A) extend the maturity date of any Loan in which such participant holds a participation, (B) reduce the interest rate or any fees hereunder, or (C) increase the Commitment of the Lender granting the participation if such increase affects such participant, and (v) the sale of any such participations which require the Borrower to file a registration statement with the Commission or under the securities regulation laws of any state shall not be permitted. (h) The holder of any participation shall be entitled to the benefits of Sections 2.03(f), 2.08(d), 2.09 and 2.10 as though it were also a Lender hereunder; provided that no participant shall be entitled to receive any payment or compensation in excess of that to which such participant's selling Lender would have been entitled with respect to the amount of the participation if such Lender had not sold such participation. (i) Each Lender agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information identified as "confidential" by the Borrower and provided to it by ATSC or the Borrower or any Subsidiary of the Borrower, or by the Agent on ATSC's or the Borrower's or such Subsidiary's behalf, in connection with this Agreement or any other Loan Document, and neither it nor any of its Affiliates shall use any such information for any purpose or in any manner other than pursuant to the terms contemplated by this Agreement; except to the extent such information (i) was or becomes generally available to the public other than as a result of a disclosure by such Lender, or (ii) was or becomes available on a non-confidential basis from a source other than the Borrower, provided such source is not bound by a confidentiality agreement with the Borrower known to such Lender; provided further, however, that any Lender may disclose such information (A) at the request or pursuant to any requirement of any Governmental Authority to which such Lender is subject or in connection with an examination of such Lender by any such authority; (B) pursuant to subpoena or other court process; (C) when required to do so in accordance with the provisions of any applicable Requirement of Law; (D) to the extent reasonably required in connection with any litigation or proceeding to which the Agent, any Lender or their respective Affiliates may be party, (E) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document, and (F) to such Lender's independent auditors and other professional advisors which are required to keep such information confidential. Notwithstanding the foregoing, the Borrower authorizes each Lender to disclose to any participant or assignee and to any prospective participant or assignee, such financial and other information in such Lender's possession concerning ATSC or the Borrower or its Subsidiaries which has been delivered to Agent or the Lenders pursuant to this Agreement or which has been delivered to the Agent or the Lenders by the Borrower in connection with the Lenders' credit evaluation of the Borrower prior to entering into this Agreement; provided that, unless otherwise agreed by the Borrower, such participant or assignee agrees in writing to such Lender to keep such information confidential to the same extent required of the Lenders hereunder. 12.02. Assignments to Federal Reserve Banks. Nothing herein shall prohibit any Lender from pledging or assigning all or any portion of its Loans to any Federal Reserve Bank in accordance with applicable law. In order to facilitate such pledge or assignment, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, the Borrower shall provide to such Lender, at the Borrower's own expense, a promissory note evidencing the Loans owing to such Lender. 12.03. Expenses. (a) Generally. Whether or not any Funding Date shall have occurred, the Borrower agrees upon demand to pay, or reimburse the Agent for, all the Agent's and any of its Affiliates' costs and expenses of every type and nature (including the reasonable fees, expenses and disbursements of counsel to the Agent and each Co-Agent subject to the limitations set forth in the Fee Letter, including the allocated cost of staff counsel and other legal, travel, search and filing fees and expenses) and all fees, taxes (except income and franchise taxes), assessments and duties incurred by the Agent or its Affiliates in connection with (i) the negotiation, preparation and execution of this Agreement (including the satisfaction or attempted satisfaction of any of the conditions set forth in Article IV), the Collateral Documents and the other Loan Documents and the making of the Loans hereunder; (ii) the administration of this Agreement, the Loan Documents, the Loans and the Collateral; and (iii) the protection, collection or enforcement of any of the Obligations or the Collateral. (b) After Default. The Borrower further agrees to pay, or reimburse the Agent, the Issuing Bank and the Lenders for, all out-of-pocket costs and expenses, including the reasonable fees and disbursements of counsel to the Agent, the Lenders and the Issuing Bank (including the allocated cost of staff counsel) and also including all costs of settlement after the occurrence of an Event of Default, (i) in enforcing any Obligation or in foreclosing against the Collateral or exercising or enforcing any other right or remedy available by reason of such Event of Default; (ii) in connection with any refinancing or restructuring of the credit arrangements provided under this Agreement in the nature of a "work-out" or in any insolvency or bankruptcy proceeding, including any costs related to the hiring of consultants or experts; (iii) in commencing, defending or intervening in any litigation or in filing a petition, complaint, answer, motion or other pleadings in any legal proceeding relating to the Borrower and related to or arising out of the transactions contemplated hereby or by any of the Loan Documents; (iv) in taking any other action in or with respect to any suit or proceeding (whether in bankruptcy or otherwise); (v) in protecting, preserving, collecting, leasing, selling, taking possession of, or liquidating any of the Collateral; or (vi) attempting to enforce or enforcing any security interest in any of the Collateral or any other rights under the Collateral Documents. Any payments made by the Borrower or received by the Agent and applied as reimbursements for costs and expenses under this Section 12.03(b) shall be apportioned among the Agent, the Issuing Bank and the Lenders in the order of priority set forth in Section 2.05(b). 12.04. Indemnity. The Borrower further agrees to defend, protect, indemnify, and hold harmless the Agent, the Arranger, the Issuing Bank and each and all of the Lenders, each of their respective Affiliates and each of the respective officers, directors, employees and agents of each of the foregoing (collectively, the "Indemnified Parties") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the fees and disbursements of counsel (including the allocated cost of staff counsel) for such Indemnified Parties in connection with any investigative, administrative or judicial proceeding, whether or not such Indemnified Parties shall be designated a party thereto), imposed on, incurred by, or asserted against such Indemnified Parties in any manner relating to or arising out of the Commitment Letter, the transactions contemplated hereby (whether or not consummated), the capitalization of the Borrower, the Subordinated Notes, this Agreement, the Collateral Documents or any of the other Loan Documents, the Commitments, the making of and participation in the Loans or the Letters of Credit, or the use or intended use of the Letters of Credit and the proceeds of the Loans hereunder (collectively, the "Indemnified Matters"); provided, that the Borrower shall have no obligation to an Indemnified Party hereunder with respect to (a) matters for which such Indemnified Party has been compensated pursuant to or for which an exemption is provided in Section 2.03(f), 2.08(d) or any other provision of this Agreement and (b) Indemnified Matters caused by or resulting from the gross negligence or willful misconduct of that Indemnified Party, as determined by a final judgment of a court of competent jurisdiction. To the extent that the undertaking to indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Borrower shall contribute the maximum portion which it is permitted to pay and satisfy under applicable law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnified Parties. 12.05. Change in Accounting Principles. Except as otherwise provided herein, if any changes in accounting principles from those used by ATSC or the Borrower in the preparation of the financial statements dated as of April 30, 1994 are hereafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board of the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and are adopted by ATSC or the Borrower with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the financial covenants, standards or terms found in Articles VIII and IX hereof, the parties hereto agree to enter into negotiations in order to amend such provisions so as to reflect equitably such changes with the desired result that the criteria for evaluating ATSC's or the Borrower's financial condition shall be the same after such changes as if such changes had not been made; provided, however, that no change in generally accepted accounting principles that would affect the method of calculation of any of the financial covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to the Requisite Lenders, to so reflect such change in accounting principles. 12.06. Setoff. In addition to any Liens granted to the Agent, the Issuing Bank or the Lenders and any rights now or hereafter granted under applicable law and not by way of limitation of any such Lien or rights, upon the occurrence and during the continuance of any Event of Default, each Lender and the Issuing Bank is hereby authorized by the Borrower at any time or from time to time, without notice to the Borrower, or to any other Person (any such notice being hereby expressly waived) to set off and to appropriate and to apply any and all deposits (general or special, including indebtedness evidenced by certificates of deposit, whether matured or unmatured but not including trust accounts) and any other Indebtedness at any time held or owing by that Lender or the Issuing Bank to or for the credit or the account of the Borrower against and on account of the Obligations of the Borrower to that Lender or the Issuing Bank including, but not limited to, all Loans and Letter of Credit Obligations and all claims of any nature or description arising out of or connected with this Agreement or any of the other Loan Documents, irrespective of whether or not (a) that Lender or the Issuing Bank shall have made any demand hereunder or (b) the Agent shall have declared the principal of and interest on the Loans and other amounts due hereunder to be due and payable as permitted by Article X and although said obligations and liabilities, or any of them, may be contingent or unmatured. Each Lender and the Issuing Bank agrees that it shall not, without the express consent of the Agent, and that it shall, to the extent it is lawfully entitled to do so during the continuation of an Event of Default, upon the request of the Agent, exercise its set-off rights hereunder against any accounts of the Borrower now or hereafter maintained with such Lender or the Issuing Bank. 12.07. Ratable Sharing. Subject to Sections 2.05(c) and 2.06(b), the Lenders agree among themselves that (a) with respect to all amounts received by them which are applicable to the payment of the Obligations (excluding the fees described or referred to in Section 2.04), equitable adjustment will be made so that, in effect, all such amounts will be shared among them ratably in accordance with their Pro Rata Shares, whether received by voluntary payment, by the exercise of the right of set-off or banker's lien, by counterclaim or cross action or by the enforcement of any or all of the Obligations (excluding the fees described or referred to in Section 2.03) or the Collateral, (b) if any of them shall by voluntary payment or by the exercise of any right of counterclaim, setoff, banker's lien or otherwise, receive payment of a proportion of the aggregate amount of the Obligations held by it which is greater than its Pro Rata Share of the payments on account of the Obligations (excluding the fees described or referred to in Section 2.03), the one receiving such excess payment shall purchase, without recourse or warranty, an undivided interest and participation (which it shall be deemed to have done simultaneously upon the receipt of such payment) in such Obligations owed to the others so that all such recoveries with respect to such Obligations shall be applied ratably in accordance with their Pro Rata Shares; provided, however, that if all or part of such excess payment received by the purchasing party is thereafter recovered from it, those purchases shall be rescinded and the purchase prices paid for such participations shall be returned to that party to the extent necessary to adjust for such recovery, but without interest except to the extent the purchasing party is required to pay interest in connection with such recovery. The Borrower agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 12.07 may, to the fullest extent permitted by law, exercise all its rights of payment (including, subject to Section 12.06, the right of setoff) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. 12.08. Amendments and Waivers. (a) No amendment or modification of any provision of this Agreement shall be effective without the written agreement of the Requisite Lenders and the Borrower, and no termination or waiver of any provision of this Agreement, or consent to any departure by the Borrower therefrom, shall in any event be effective without the written concurrence of the Requisite Lenders, which the Requisite Lenders shall have the right to grant or withhold at their sole discretion provided, however, that no amendment, modification or waiver shall, unless evidenced by a writing signed by or on behalf of all the Lenders, do any of the following: (i) increase the Commitment of any Lender (other than by assignment); (ii) reduce the principal of, or rate of interest on, the Loans or the amount of any fees payable hereunder; (iii) extend the Final Maturity Date; (iv) release the ATSC Guaranty or release all or substantially all of the Collateral under the Collateral Documents (other than as specifically provided hereunder); (v) change the definitions of "Pro Rata Shares" or "Requisite Lenders"; or (vi) amend this Section 12.08(a). (b) No amendment, modification, termination, or waiver of any provision of this Agreement or any Loan Documents shall, unless in writing and signed by the Agent in addition to the Requisite Lenders or Lenders, as the case may be, affect the rights or duties of the Agent under this Agreement or any Loan Documents. The Agent may, but shall have no obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender. (c) Any waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances. (d) Any amendment, modification, termination, waiver or consent effected in accordance with this Section 12.08 shall be binding on each assignee, transferee, recipient of a Lender's Commitment or Loans, each future assignee, transferee, recipient of a Lender's Commitment or Loans and, if signed by the Borrower, on the Borrower. 12.09. Independence of Covenants. All covenants hereunder shall be given independent effect so that if a particular action or condition is not permitted by any of such covenants, the fact that it would be permitted by an exception to, or be otherwise within the limitations of, another covenant shall not avoid the occurrence of an Event of Default or Potential Event of Default if such action is taken or condition exists. 12.10. Notices. (a) Unless otherwise specifically provided herein, all notices, requests and other communications provided for hereunder shall be in writing (including by facsimile transmission, provided that any matter transmitted by the Borrower by facsimile shall be immediately confirmed by a telephone call to the recipient at the number specified in Schedule 1.01(a)) and mailed, faxed or delivered: if to the Borrower or the Agent, to the address or facsimile number specified on the signature pages hereof and, if to any Lender, to the address or facsimile number specified for notices in Schedule 1.01(a) or, as to the Borrower or the Agent, to such other address as shall be designated by such party in a written notice to the other parties, and as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Agent. (b) All such notices, requests and communications shall, when transmitted by overnight (next-day) delivery or faxed, be effective on the next day or when transmitted by facsimile machine, respectively; if mailed, be effective upon the third Business Day after the date deposited into the U.S. mail, or if delivered, be effective upon delivery; except that notices pursuant to Article II or XI shall not be effective until actually received by the Agent. (c) Any notice, request or communication permitted to be given by telephone shall be confirmed immediately in writing, including by facsimile. (d) The Borrower acknowledges and agrees that any agreement of the Agent and the Lenders to receive certain notices by telephone and facsimile is solely for the convenience and at the request of the Borrower. The Agent and the Lenders shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Borrower to give such notice and the Agent and the Lenders shall not have any liability to the Borrower or any other Person on account of any action taken or not taken by the Agent or the Lenders in reliance upon such telephonic or facsimile notice. The obligation of the Borrower to repay the Loans shall not be affected in any way or to any extent by any failure by the Agent and the Lenders to receive written confirmation of any telephonic or facsimile notice or the receipt by the Agent and the Lenders of a confirmation which is at variance with the terms understood by the Agent and the Lenders to be contained in the telephonic or facsimile notice. 12.11. Survival of Warranties and Agreements. All agreements, representations and warranties made herein shall survive the execution and delivery of this Agreement and the other Loan Documents and the making of the Loans hereunder. 12.12. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of the Agent, the Issuing Bank or any Lender in the exercise of any power, right or privilege under any of the Loan Documents shall impair such power, right or privilege or be construed to be a waiver of any default or acquiescence therein, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof or of any other right, power or privilege. All rights and remedies existing under the Loan Documents are cumulative to and not exclusive of any rights or remedies otherwise available. 12.13. Marshalling; Recourse to Security; Payments Set Aside. Neither any Lender nor the Agent shall be under any obligation to marshal any assets in favor of the Borrower or any other party or against or in payment of any or all of the Obligations. Recourse to security shall not be required at any time. To the extent that the Borrower makes a payment or payments to the Agent or the Lenders, or the Agent or the Lenders enforce their security interests or exercise their rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party under any bankruptcy law, state or federal law, common law or equitable cause, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, right and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 12.14. Severability. In case any provision in or obligation under this Agreement or the other Loan Documents shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 12.15. Headings. Article and Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. 12.16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 12.17. Successors and Assigns. This Agreement and the other Loan Documents shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and permitted assigns of the Lenders. The terms and provisions of this Agreement shall inure to the benefit of any assignee or transferee of the Loans and the Commitments of any Lender (to the extent such assignment or transfer is effected in accordance with Section 12.01), and in the event of such transfer or assignment, the rights and privileges herein conferred upon Lenders shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof. The Borrower's rights or any interest therein hereunder, and the Borrower's duties and Obligations hereunder, may not be assigned without the written consent of all the Lenders. 12.18. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS RESPECTIVE NOTICE ADDRESSES SPECIFIED ON THE SIGNATURE PAGES HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN DAYS AFTER SUCH MAILING. EACH OF THE BORROWER, THE AGENT, THE CO-AGENTS AND THE LENDERS IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. 12.19. Effect of Amendment and Restatement. On the Initial Funding Date, the Existing Credit Agreement, the ATSC Pledge Agreement (as defined in the Existing Credit Agreement) and the Borrower Pledge Agreement (as defined in the Existing Credit Agreement) shall be amended, restated and superseded in their entirety. The parties hereto acknowledge and agree that (a) this Agreement and the other Loan Documents, whether executed and delivered in connection herewith or otherwise, do not constitute a novation, payment and reborrowing, or termination of the "Obligations" (as defined in the Existing Credit Agreement) under the Existing Credit Agreement as in effect prior to the Initial Funding Date; (b) such "Obligations" are in all respects continuing (as amended and restated hereby) with only the terms thereof being modified as provided in this Agreement; (c) the Liens, guarantees and security interests as granted under the Collateral Documents securing payment of such "Obligations" are in all respects continuing and in full force and effect and secure the payment of the Obligations (as defined in this Agreement); and (d) upon the effectiveness of this Agreement all loans outstanding under the Existing Credit Agreement immediately before the effectiveness of this Agreement will be continued as Revolving Loans hereunder and all outstanding letters of credit under the Existing Credit Agreement will be continued as Letters of Credit hereunder, in each case on the terms and conditions set forth in this Agreement. 12.20. Counterparts; Effectiveness; Inconsistencies. (a) This Agreement and any amendments, waivers, consents, or supplements may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. (b) This Agreement shall become effective against each of the Borrower, each Lender, the Co-Agents and the Agent hereto on the date (the "Effective Date") when all of such parties have duly executed and delivered this Agreement to each other (delivery by the Borrower to the Co-Agents and the Lenders and by any Co-Agent or any Lender to the Borrower and any Co-Agent or any other Lender being deemed to have been made by delivery to the Agent). (c) This Agreement and each of the other Loan Documents shall be construed to the extent reasonable to be consistent one with the other, but to the extent that the terms and conditions of this Agreement are actually inconsistent with the terms and conditions of any other Loan Document, this Agreement shall govern. IN WITNESS WHEREOF, this Agreement has been duly executed on the date set forth above. ANNTAYLOR, INC., as Borrower By: /s/ Walter J. Parks _ Title: Senior Vice President -- Finance Address for Notices: 142 West 57th Street New York, New York 10019 Attention: Jocelyn Barandiaran, Vice President/Secretary and General Counsel Facsimile No.: (212) 541-3299 Telephone No.: (212) 541-3318 With a copy to: AnnTaylor, Inc. 414 Chapel Street New Haven, CT 06511 Attention: Walter J. Parks Vice President - Finance Facsimile No.: (203) 865-2756 Telephone No.: (203) 865-0811 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Dietmar Schiel _ Title: Vice President Address for Notices: Global Agency #5596 1455 Market Street, 12th Floor San Francisco, California 94103 Attention: Dietmar Schiel Facsimile No.: (415) 622-4894 Telephone No.: (415) 953-8501 Address for Payments: ABA #121-000-358SF 1850 Gateway Boulevard Concord, California 94502 Credit to Account Number: Reference: AnnTaylor BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Co-Agent By: /s/ Dietmar Schiel _ Title: Vice President FLEET BANK, NATIONAL ASSOCIATION, as Co-Agent By: /s/ Marlene K. Haddad _ Title: Vice President LENDERS BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION By: /s/ John Pocalyko _ Title: Vice President FLEET BANK, NATIONAL ASSOCIATION By: /s/ Marlene K. Haddad _ Title: Vice President LTCB TRUST COMPANY By: /s/ Rene O. LeBlanc _ Title: Senior Vice President PNC BANK, NATIONAL ASSOCIATION By: /s/ Mark Williams _ Title: Vice President SHAWMUT BANK, N.A. By: /s/ Linda Thomas _ Title: Managing Director SCHEDULE 1.01(a) Lending Offices Domestic Lending Office Eurodollar Lending Office BANK OF AMERICA NATIONAL TRUST Same AND SAVINGS ASSOCIATION PSO #5693 1850 Gateway Boulevard Concord, CA 94520 Attention: Robert Simpson Telephone: (510) 675-7340 Facsimile: (510) 675-7531/32 FLEET BANK, NATIONAL ASSOCIATION Same Secured Lending Dept. CT HM M02B One Constitution Plaza Hartford, CT 06115 Attention: Robert Tardiff Telephone: (203) 244-5748 Facsimile: (203) 244-6285 LTCB TRUST COMPANY Same 165 Broadway New York, NY 10006 Attention: Winston Brown Telephone: (212) 335-4854 Facsimile: (212) 608-3081 PNC BANK, NATIONAL ASSOCIATION Same 335 Madison Avenue New York, NY 10017 Attention: Anna Di Rocco Telephone: (212) 557-5442 Facsimile: (212) 557-5461 SHAWMUT BANK, N.A. Same One Federal Street Boston, MA 02211 Attention: Judi Whalen Telephone: (617) 292-3907 Facsimile: (617) 292-3241 SCHEDULE 1.01(b) Commitments Revolving Loan Term Loan Total Pro Bank Commitment Commitment Commitment Rata Share Bank of America Nat'l $33,333,333 $25,000,000 $58,333,333 38.88888867% Trust & Savings Assoc Fleet Bank, National $33,333,333 $0 $33,333,333 22.22222200% Association LTCB Trust Company $16,666,667 $0 $16,666,667 11.11111133% PNC Bank, National Assoc $16,666,667 $0 $16,666,667 11.11111133% Shawmut Bank, N.A. $25,000,000 $0 $25,000,000 16.66666667% TOTAL: $125,000,000 $25,000,000 $150,000,000 100.0000000% SCHEDULE 3.01 Existing Letters of Credit Bank of America L/C AnnTaylor Face Expiration Number L/C Number Amount Date Issued Date 45940 623067 $4,018.50 Sept. 26, 1995 Oct. 31, 1995 45941 623075 $32,729.50 Sept. 26, 1995 Oct. 31, 1995 45942 601896 $6,573.60 Sept. 26, 1995 Jan. 22, 1996 45943 601918 $40,768.20 Sept. 26, 1995 Jan. 22, 1996 45944 601888 $29,937.60 Sept. 26, 1995 April 5, 1996 136513s 47222 $263,262.51 April 15, 1995 April 15, 1996 136514s 57222 $1,375,000.00 June 23, 1995 March 7, 1996 806028s 27222 $4,000,000.00 May 17, 1994 April 30, 1996 Total: $5,752,289.91 SCHEDULE 4.01 UCC Filing Jurisdictions AnnTaylor, Inc. Alabama Secretary of State Arizona Secretary of State Arkansas Secretary of State Office of the Clerk of the Circuit Court and Ex Officio Recorder of Pulaski County California Secretary of State Colorado Secretary of State Connecticut Secretary of State Delaware Secretary of State District of Columbia Recorder of Deeds of the District of Columbia Florida Secretary of State Georgia Clerk of the Superior Court of Fulton County Hawaii Registrar of Conveyances Illinois Secretary of State Indiana Secretary of State Kentucky Secretary of State of the Commonwealth of Kentucky Office of the County Clerk of Jefferson County Louisiana Recorder of Mortgages of Orleans Parish Maryland Maryland State Department of Assessments and Taxation Massachusetts Secretary of Commonwealth Michigan Secretary of State Minnesota Secretary of State Mississippi Secretary of State Chancery Clerk of Madison County Missouri Secretary of State Nebraska Secretary of State Nevada Secretary of State New Hampshire Secretary of State New Jersey Secretary of State New Mexico Secretary of State New York Department of State North Carolina Secretary of State Ohio Secretary of State Oklahoma County Clerk of Oklahoma County Oregon Secretary of State Pennsylvania Secretary of the Commonwealth Rhode Island Secretary of State South Carolina Secretary of State Tennessee Secretary of State Texas Secretary of State Utah Division of Corporations and Commercial Code Vermont Secretary of State Town Clerk of Burlington Virginia State Corporation Commission Washington Department of Licensing Wisconsin Secretary of State AnnTaylor Stores Corporation New York Department of State New York County SCHEDULE 8.02(b) Permitted Existing Liens None. EXHIBIT 2.01 FORM OF NOTICE OF BORROWING To: Bank of America National Trust and Savings Association in its capacity as Agent (the "Agent") under that certain Amended and Restated Credit Agreement dated as of September 29, 1995 (the "Credit Agreement"), by and among AnnTaylor, Inc. (the "Borrower"), the financial institutions from time to time party thereto as lenders (the "Lenders"), BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, and the Agent. Pursuant to [Section 2.01(b)] [2.02(b)] of the Credit Agreement, this Notice of Borrowing (the "Notice") represents the Borrower's request to borrow on , 199_ (the "Funding Date") from the Lenders on a pro rata basis [Revolving Loans] [Term Loans] an aggregate principal amount of $ as [Base Rate Loans] [Eurodollar Rate Loans with an Interest Period of months]. Proceeds of such Loans are to be disbursed on the Funding Date in immediately available funds [to the Borrower's account at Bank of America National Trust and Savings Association, ABA No. , Account No. , Contact Person: ] [other payment instructions]. The Borrower hereby certifies that (i) its representation and warranties as set forth in Section 5.02 of the Credit Agreement and in any other Loan Document (other than representations and warranties which expressly speak only as of a different date and other than for changes permitted or contemplated by the Credit Agreement), shall be true and correct in all material respects on and as of the Funding Date; and (ii) no Event of Default or Potential Event of Default has occurred and is continuing or will result from the proposed Borrowing. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings in this Notice. Dated: , 199_. ANNTAYLOR, INC. By: _ Title: _ EXHIBIT 2.01(e) FORM OF TERM NOTE $ New York, New York , 199 _ FOR VALUE RECEIVED, the undersigned, ANNTAYLOR, INC., a Delaware corporation (the "Borrower"), hereby unconditionally promises to pay to (the "Lender") or its registered assigns at the office of Bank of America National Trust and Savings Association referred to as the Agent's Payment Office in the Credit Agreement described below, in lawful money of the United States of America and in immediately available funds, the principal amount of DOLLARS ($ ), or, if less, the unpaid principal amount of the Term Loan made by the Lender pursuant to the Credit Agreement. The principal amount shall be paid in the amounts and on the dates specified in the Credit Agreement. The Borrower further agrees to pay interest in like money at such office on the unpaid principal amount hereof from time to time outstanding at the rates and on the dates specified in the Credit Agreement. The holder of this Term Note is authorized to endorse on the schedules annexed hereto and made a part hereof or on a continuation thereof which shall be attached hereto and made a part hereof the date, amount and interest rate basis of the Term Loan and the date and amount of each payment or prepayment of principal with respect thereto, each conversion of all or a portion thereof to another interest rate basis, each continuation of all or a portion thereof as the same interest rate basis and, in the case of Eurodollar Loans, the length of each Interest Period with respect thereto. Each such endorsement shall constitute prima facie evidence of the accuracy of the information endorsed. The failure to make any such endorsement or any error in any such endorsement shall not affect the obligations of the Borrower in respect of the Term Loan. This Term Note (a) is one of the Term Notes referred to in the Amended and Restated Credit Agreement, dated as of September 29, 1995 (as amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), among the Borrower, Bank of America National Trust and Savings Association, as Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, the Lender and the other banks and financial institutions or entities from time to time parties thereto, (b) is subject to the provisions of the Credit Agreement and (c) is subject to optional and mandatory prepayment in whole or in part as provided in the Credit Agreement. This Note is secured and guaranteed as provided in the Loan Documents. Reference is hereby made to the Loan Documents for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security and the guarantees, the terms and conditions upon which the security interests and each guarantee were granted and the rights of the holder of this Term Note in respect thereof. Upon the occurrence of any one or more of the Events of Default, all amounts then remaining unpaid on this Term Note shall become, or may be declared to be, immediately due and payable, all as provided in the Credit Agreement. All parties now and hereafter liable with respect to this Term Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive presentment, demand, protest and all other notices of any kind. Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE CREDIT AGREEMENT, THIS TERM NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 12.01 OF THE CREDIT AGREEMENT. THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. ANNTAYLOR, INC. By: Name: Title: SCHEDULE A TO TERM NOTE LOANS, CONVERSIONS AND REPAYMENTS OF BASE RATE LOANS Amount of Amount Amount of Amount of Base Unpaid Date Base Rate Converted Principal of Rate Loans Principal Notation Loans to Base Base Rate Converted to Balance of Made By Rate Loans Eurodollar Base Rate Loans Repaid Loans Loans Schedule B to Term Note LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR LOANS Amount Interest Amount of Amount of Unpaid Amount of Converted Period and Principal Eurodollar Principal Notation Date Eurodollar to Eurodollar of Loans Balance of Made By Loans Eurodollar Rate with Eurodollar Converted Eurodollar Loans Respect Loans to Base Loans Thereto Repaid Rate Loans EXHIBIT 2.03 FORM OF NOTICE OF CONVERSION/CONTINUATION To: Bank of America National Trust and Savings Association in its capacity as Agent (the "Agent") under that certain Amended and Restated Credit Agreement dated as of September 29, 1995 (the "Credit Agreement"), by and among AnnTaylor, Inc. (the "Borrower"), the financial institutions from time to time party thereto as lenders (the "Lenders"), BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, and the Agent. Pursuant to Section 2.03(c) of the Credit Agreement, this Notice of Conversion/Continuation (the "Notice") represents the Borrower's irrevocable election to [insert one or more of the following]: 1 Convert $ in aggregate principal amount of Base Rate [Revolving] [Term] Loans to Eurodollar Rate [Revolving] [Term] Loans on , 199_. The initial Interest Period for such Eurodollar Rate Loans is requested to be a month period. 2 Convert $ in aggregate principal amount of Eurodollar Rate [Revolving] [Term] Loans with a current Interest Period ending ____________, 199_ to Base Rate [Revolving] [Term] Loans on , 199_. 3 Continue as Eurodollar Rate [Revolving] [Term] Loans $ in aggregate principal amount of Eurodollar Rate [Revolving] [Term] Loans with a current Interest Period ending , 199_. The succeeding Interest Period is requested to be a ( ) month period. 4 The Borrower hereby certifies that no Event of Default has occurred and is continuing under the Credit Agreement or will result from the proposed conversion/continuation. Unless otherwise defined herein, terms defined in the Credit Agreement shall have the same meanings in this Notice. Dated: 199_ ANNTAYLOR, INC. By: _ Title: _ EXHIBIT 4.01(a)(iii)(A) FORM OF BORROWER PLEDGE AGREEMENT THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Agreement"), dated as of September 29, 1995 is made by ANNTAYLOR, INC., a Delaware corporation, with its principal place of business located at 142 West 57th Street, New York, New York 10019 (the "Grantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455 Market Street, San Francisco, California 94103, in its capacity as Agent under the "Credit Agreement" (as defined below) (the "Agent"). R E C I T A L S : A. The Grantor, the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, and certain financial institutions currently and in the future to be the parties to the Credit Agreement (as defined below) (such financial institutions being collectively referred to as the "Lenders"), have entered into a certain Amended and Restated Credit Agreement, dated as of September 29, 1995 (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the capitalized terms not otherwise defined herein are being used as defined in the Credit Agreement); B. The Grantor and the Agent are parties to the Pledge Agreement, dated as of July 29, 1994 (the "Existing Pledge Agreement"); C. It is a condition precedent to the effectiveness of the Credit Agreement and to the making of the Loans by the Lenders and the issuing of the Letters of Credit by any Issuing Bank that the Existing Pledge Agreement shall be amended and restated as set forth herein; NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders to make the Loans and each Issuing Bank to issue the Letters of Credit under the Credit Agreement, the Grantor hereby agrees with the Agent for its benefit and for the benefit of the Lenders and the Issuing Banks, and the Agent, by acceptance hereof, hereby agrees, that the Existing Pledge Agreement is hereby amended and restated in its entirety as follows: Section 1. Grant of Security. To secure the prompt and complete payment, observance and performance when due (whether at the stated maturity, by acceleration or otherwise) of all the Obligations, the Grantor hereby assigns and pledges to the Agent, and hereby grants to the Agent, for its benefit and the benefit of the Lenders and the Issuing Banks, a security interest in all of the Grantor's right, title and interest in and to the following, whether now owned or existing or hereafter arising or acquired and wheresoever located (collectively, the "Collateral"): EQUIPMENT: All machinery and equipment, all manufacturing, distribution, selling, data processing and office equipment, all furniture, furnishings, appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of every type and description (other than "inventory", as such term is defined in the Uniform Commercial Code in effect on the date hereof in the State of New York (the "UCC")), in each instance whether now owned or hereafter acquired by the Grantor and wherever located (collectively, "Equipment"); GENERAL INTANGIBLES: All rights, interests, choses in action, causes of action, claims and all other intangible property of the Grantor of every kind and nature (other than "accounts", as such term is defined in the UCC), in each instance whether now owned or hereafter acquired by the Grantor, including, without limitation, all corporate and other business records; all loans, royalties, and other obligations receivable; all inventions, designs, patents, patent applications, service marks, trade names and trademarks (including any applications for the foregoing and whether or not registered) and the goodwill of the Grantor's business connected with and symbolized by such trademarks, trade secrets, computer programs, software, printouts and other computer materials, goodwill, registrations, U.S. registered copyrights, licenses relating to trademarks and U.S. registered copyrights, franchises, customer lists, credit files, correspondence and advertising materials; all customer and supplier contracts, firm sale orders, rights under license and franchise agreements, and other contracts and contract rights; all interests in partnerships, joint ventures and other entities; all tax refunds and tax refund claims; all right, title and interest under leases, subleases, licenses and concessions and other agreements relating to real or personal property; all pay ments due or made to the Grantor in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental authority; all deposit accounts (general or special) with any bank or other financial institution; all credits with and other claims against carriers and shippers; all rights to indemnification; all reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; all proceeds of insurance of which the Grantor is beneficiary; and all letters of credit, guaranties, liens, security interests and other security held by or granted to the Grantor; and all other intangible property, whether or not similar to the foregoing, including, without limitation, all "general intangibles", as such term is defined in the UCC (in each instance, however and wherever arising, collectively, "General Intangibles"); CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all instruments (including, without limitation, (a) the shares of stock described in Annex I-A hereto (the "Pledged Shares") and all dividends, instruments and other property from time to time distributed in respect thereof or in exchange therefor, and (b) the notes and debt instruments described in Annex I-B hereto (the "Pledged Debt") and all payments thereunder and instruments and other property from time to time delivered in respect thereof or in exchange therefor), and all bills of lading, warehouse receipts and other documents of title and documents, including, without limitation, all "chattel paper", "instruments" and "documents", as such terms are defined in the UCC, in each instance whether now owned or hereafter acquired by the Grantor, other than any promissory note in an amount less than $1,000,000 owing to the Grantor from a senior executive or key employee of the Grantor (an "Excluded Note") (collectively, "Chattel Paper, Instruments and Documents"); and OTHER PROPERTY: All property or interests in property now owned or hereafter acquired by the Grantor which now may be owned or hereafter may come into the possession, custody or control of the Agent, any of the Lenders, any Issuing Bank or any agent or Affiliate of any of them in any way or for any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all rights and interests of the Grantor, now existing or hereafter arising and however and wherever arising, in respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and debt and equity securities, whether or not certificated, and warrants, options, puts and calls and other rights to acquire or otherwise relating to the same; (ii) money; (iii) proceeds of loans, including without limitation, all the Loans made to the Grantor under the Credit Agreement; and (iv) insurance proceeds and books and records relating to any of the property covered by this Agreement (collectively, "Other Property"); together, in each instance, with all accessions and additions thereto, substitutions therefor, and replacements, proceeds and products thereof; provided, however, that (x) Collateral shall not include Receivables and (y) the foregoing grant of a security interest shall not include a security interest in any lease and any property subject to an enforceable lease which by its terms expressly prohibits the right of the Grantor to grant a security interest in such lease or property. The Borrower agrees to use its best commercially reasonable efforts to ensure that no future lease contains any restrictions on the Borrower's right to grant a security interest in any equipment placed on the leased premises. Section 2. Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a) the Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights hereunder shall not release the Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral (except to the extent that such exercise prevents the Grantor from satisfying such duties and obligations), and (c) the Agent shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Agent be obligated to perform any of the obligations or duties of the Grantor thereunder, to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by the Grantor or the sufficiency of any performance by any party under any such contract or agreement or to take any action to collect or enforce any claim for payment assigned hereunder. Section 3. Delivery of Pledged Collateral. All certificates, notes and other instruments representing or evidencing the Pledged Shares or the Pledged Debt and all other instruments now owned or at any time hereafter acquired by the Grantor other than any Excluded Notes (collectively, the "Pledged Collateral") shall be delivered to and held by or on behalf of the Agent pursuant hereto (except as otherwise provided in the last sentence of Section 4(f) hereof) and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Agent. Upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right, at any time in its discretion and without notice to the Grantor, to transfer to or to register in the name of the Agent or any nominee of the Agent any or all of the Pledged Collateral, subject only to the revocable rights specified in Section 8 hereof. In addition, upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. Section 4. Representations and Warranties. The Grantor represents and warrants as follows: (a) As of the date of this Agreement, the locations listed on Annex II constitute all locations at which Equipment is located, except for Equipment temporarily in transit. As of the date of this Agreement, the chief place of business and chief executive office of the Grantor are located at the address first specified above for the Grantor. (b) The Grantor is the legal and beneficial owner of the Collateral free and clear of all liens, security interests or other encumbrances, except as expressly permitted by subsection 8.02(b) of the Credit Agreement. For the past five years the business of the Grantor has been conducted only by the following corporations and under the following corporate names and not under any trade name or other name: 1) AnnTaylor, Inc. 2) AnnTaylor Factory Stores 3) AnnTaylor Loft 4) AnnTaylor Studio (c) The Grantor has exclusive possession and control of the Equipment, except for (i) Equipment in the possession and control of the Grantor's lessees and licensees under written lease and license agreements entered into in the ordinary course of business and consistent with past practice and (ii) Equipment in transit with common or other carriers. (d) The Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable. The Pledged Debt of Grantor's Subsidiaries (if any), and, to the best of the Grantor's knowledge, all other Pledged Debt, has been duly authorized, issued and delivered, and is the legal, valid, binding and enforceable obligation of the issuers thereof. (e) The Pledged Shares indicated on Annex I-A hereto constitute all of the shares of stock held by the Grantor of the respective issuers thereof. The Pledged Shares and the Pledged Debt constitute all of the Pledged Collateral except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business and with respect to which the Agent has not at any time requested possession and which are not a material portion of the Collateral under this Agreement or the Trademark Assignment executed by Grantor, taken as a whole (the "Personal Property Collateral") either singly or in the aggregate. (f) This Agreement creates a valid security interest in the Collateral (other than the Pledged Collateral), securing the payment of the Obligations, and all filings and other actions necessary or desirable to perfect such security interest under the Uniform Commercial Code as enacted in each jurisdiction listed on Annex III hereto have been duly taken or will be duly taken not later than five Business Days after the date hereof. The pledge and delivery of the Pledged Collateral pursuant to this Agreement and all other filings and other actions taken by the Grantor to perfect such security interest prior to the date hereof, create a valid and perfected first priority security interest in the Pledged Collateral, securing the payment of the Obligations except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business with respect to which the Agent has not at any time requested possession and which are not a material portion of the Personal Property Collateral either singly or in the aggregate. (g) Other than the filings with the United States Patent and Trademark Office and filings under the UCC, no authorization, approval or other action by, and no notice to or filing with, any federal, state or local governmental authority that have not already been taken or made and which are in full force and effect, is required (i) for the pledge by the Grantor of the Pledged Collateral or for the grant by the Grantor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by the Grantor, (ii) for the exercise by the Agent of the voting or other rights provided in this Agreement with respect to the Pledged Collateral or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with the disposition thereof by laws affecting the offering and sale of securities generally), or (iii) for the exercise by the Agent of any of its other rights or remedies hereunder. Section 5. Further Assurances. (a) The Grantor agrees that from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or reasonably desirable, or that the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral; provided, however, that the Grantor shall in no event be required to execute any leasehold mortgage with respect to any lease. Without limiting the generality of the foregoing, at the request of the Agent, the Grantor shall: (i) if an Event of Default shall have occurred and be continuing, mark conspicuously each document included in the Collateral and, at the request of the Agent made at any time, and whether or not an Event of Default shall have occurred, mark each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Agent, indicating that such document or Collateral is subject to the security interest granted hereby; and (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) The Grantor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Grantor where permitted by law. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c) The Grantor shall furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may request, all in reasonable detail. Section 6. As to Equipment. The Grantor shall: (a) Keep the Equipment (other than Equipment sold in accordance with Section 8.02(a) of the Credit Agreement) at the places specified in Section 4(a) hereof and deliver written notice to the Agent at least 30 days prior to establishing any other location at which it reasonably expects to maintain Equipment in which jurisdiction all action required by Section 5 hereof shall have been taken with respect to all such Equipment. (b) Maintain or cause to be maintained in good repair, working order and condition, excepting ordinary wear and tear and damage due to casualty, all of the Equipment, and make or cause to be made all appropriate repairs, renewals and replacements thereof, to the extent not obsolete and consistent with past practice of the Grantor, as quickly as practicable after the occurrence of any loss or damage thereto which are necessary or desirable to such end. The Grantor shall promptly furnish to the Agent a statement respecting any material loss or damage as a result of a single occurrence to any of the Equipment which has an aggregate fair market value exceeding $250,000. Section 7. As to the Pledged Collateral. (a) So long as no Event of Default shall have occurred and be continuing: (i) The Grantor and not the Agent shall be entitled to exercise any and all voting and other rights of consent or approval pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided, however, that the Grantor shall not exercise or refrain from exercising any such right without the consent of the Agent if such action or inaction would have a material adverse effect on the value of the Pledged Collateral or the benefits to the Agent, the Lenders and the Issuing Banks including, without limitation, the validity, priority or perfection of the security interest granted hereby or the remedies of the Agent hereunder. (ii) The Grantor and not the Agent shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral; provided, however, that any and all (A) dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, (B) dividends and other distributions paid or payable in cash in respect of any Pledged Collateral consisting of stock of any Subsidiary of the Grantor and dividends and other distributions paid or payable in cash in respect of any other Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Collateral, shall forthwith be delivered to the Agent, in the case of (A) above, to hold as Pledged Collateral and shall, if received by the Grantor, be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks, be segregated from the other property or funds of the Grantor, and be forthwith delivered to the Agent, as Pledged Collateral in the same form as so received (with any necessary indorsement) and, in the case of (B) and (C) above, to the extent required under the terms of the Credit Agreement, shall forthwith be delivered to the Agent to be applied to the Obligations in such order as provided in subsection 2.06(b) of the Credit Agreement. (iii) The Agent shall promptly execute and deliver (or cause to be executed and delivered) to the Grantor all such proxies and other instruments as the Grantor may reasonably request for the purpose of enabling the Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above. (b) Upon the occurrence and during the continuance of an Event of Default and at the Agent's option: (i) All rights of the Grantor to exercise the voting and other rights of consent or approval which it would otherwise be entitled to exercise pursuant to Section 8(a)(i) hereof and to receive the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) hereof shall cease, and all such rights shall thereupon become vested in the Agent, who shall thereupon have the sole right to exercise such voting and other rights of consent or approval and to receive and hold as Pledged Collateral such dividends and interest payments. (ii) All dividends and interest payments which are received by the Grantor contrary to the provisions of paragraph (i) of this Section 8(b) hereof shall be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks and shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Agent as Pledged Collateral in the same form as so received (with any necessary indorsement). Section 8. Additional Shares. The Grantor agrees that it will (i) cause each issuer of the Pledged Shares subject to its control not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to the Grantor or as otherwise permitted under the Credit Agreement, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of each issuer of the Pledged Shares. The Grantor hereby authorizes the Agent to modify this Agreement by amending Annex I to include such additional shares or other securities. Section 9. The Agent Appointed Attorney-in-Fact. The Grantor hereby irrevocably appoints the Agent the Grantor's attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Agent's discretion, to take, upon the occurrence and during the continuance of an Event of Default, any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Grantor under Section 7 hereof), including, without limitation: (i) to obtain and adjust insurance required to be paid to the Agent pursuant to Section 7.05 of the Credit Agreement, (ii) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (iii) to receive, indorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings which the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Agent with respect to any of the Collateral, and (v) to receive, indorse and collect all instruments made payable to the Grantor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. Nothing set forth in this Section 9 and no exercise by the Agent of the rights and powers granted in this Section 9 shall limit or impair the Grantor's rights under Section 7 hereof. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and shall be irrevocable until the Obligations are paid in full and the commitments of the Lenders to extend credit under the Credit Agreement are terminated. Section 10. The Agent May Perform. If the Grantor fails to perform any agreement contained herein, the Agent, upon written notice to the Grantor if practicable, may itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by the Grantor under Section 14 hereof. Section 11. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it, in the absence of willful misconduct or gross negligence, to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall be under no obligation to (i) ascertain or take action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, or (ii) take any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral, but may do so at its option, and all reasonable expenses incurred in connection therewith shall be for the sole account of the Grantor and shall be added to the Obligations. Section 12. Remedies. If any Event of Default shall have occurred and be continuing: (a) The Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the Uniform Commercial Code as in effect from time to time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral) and also may (i) require the Grantor to, and the Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or any part of the Collateral as directed by the Agent and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties and (ii) without notice except as specified below, sell, lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as may be commercially reasonable. The Agent may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale) and thereafter hold the same, absolutely, free from any right or claim of whatsoever kind. The Agent is authorized, at any such sale, if it deems it advisable so to do, to restrict the prospective bidders or purchasers of any of the Pledged Collateral to persons who will represent and agree that they are purchasing for their own account for investment, and not with a view to the distribution or sale of any such Pledged Collateral and to take such other actions as it may deem appropriate to exempt the offer and sale of the Collateral from any registration requirements of state or federal securities laws (including, if it deems it appropriate, actions to comply with Regulation D of the Securities and Exchange Commission under the Securities Act of 1933, as from time to time amended (the "Securities Act")). To the extent permitted by law, the Grantor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter in force. The Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' written notice to the Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Agent until the selling price is paid by the purchaser thereof, but the Agent shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. The Agent instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the security interests herein granted and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. (b) Any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as Collateral for, and/or then or at any time thereafter applied against (after payment of any amounts payable to the Agent pursuant to Section 15 hereof) in whole or in part by the Agent, for the benefit of the Agent, the Lenders and the Issuing Banks, all or any part of the Obligations in such order as is provided in Section 2.06(b) of the Credit Agreement. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Obligations under this Agreement and the termination of the commitments of the Lenders to extend credit under the Credit Agreement shall be promptly paid over to the Grantor or to whomsoever may be lawfully entitled to receive such surplus. Section 13. Registration Rights. (a) If the Agent shall determine to exercise its right to sell all or any of the Pledged Collateral pursuant to Section 12 hereof, the Grantor agrees that, upon request of the Agent, the Grantor will, at its own expense: (i) execute and deliver, and cause each issuer of the Pledged Collateral which is a Subsidiary contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Pledged Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (ii) use its best efforts to qualify the Pledged Collateral under the state securities or "Blue Sky" laws and to obtain all necessary approvals of all Governmental Authorities for the sale of the Pledged Collateral, as requested by the Agent; (iii) cause each such issuer to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 10 of the Securities Act; and (iv) do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law. (b) Determination by the Agent to exercise its right to sell any or all of the Pledged Collateral pursuant to Section 12 hereof without making a request of the Grantor pursuant to Section 13(a) hereof shall not by the sole fact of such sale be deemed to be commercially unreasonable. Section 14. Expenses. The Grantor shall upon written demand pay to the Agent the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, as provided in Section 12.03 of the Credit Agreement. Section 15. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Grantor herefrom shall in any event be effective unless the same shall be in writing and signed by the party to be charged therewith, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 16. Notices. All notices and other communications provided for hereunder shall be given in the manner set forth in the Credit Agreement and to the addresses first above written or, as to each party, at such other address as may be designated by such party in a written notice to the other party. Section 17. Continuing Security Interest; Termination. (a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until payment in full of the Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, (ii) be binding upon the Grantor, its successors and assigns and (iii) except to the extent that the rights of any transferor or assignor are limited by Section 12.01 (concerning assignments) of the Credit Agreement, inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and the Issuing Banks, subject to the terms and conditions of the Credit Agreement. Without limiting the generality of the foregoing clause (iii), any Lender may assign or otherwise transfer any interest in any Loan owing to such Lender to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Agent herein or otherwise, subject, however, to the provisions of Section 12.01 (concerning assignments) of the Credit Agreement. Nothing set forth herein or in any other Loan Document is intended or shall be construed to give the Grantor's successors and assigns any right, remedy or claim under, to or in respect of this Agreement, any other Loan Document or any Collateral. The Grantor's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession thereof or therefor. (b) Upon the payment in full of the Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon any such termination, the Agent shall promptly return to the Grantor, at the Grantor's expense, such of the Collateral held by the Agent as shall not have been sold or otherwise applied pursuant to the terms hereof. The Agent will, at the Grantor's expense, execute and deliver to the Grantor such other documents as the Grantor shall reasonably request to evidence such termination. (c) Upon any release of the Agent's security interest in any part of the Collateral expressly required to be given by the Agent pursuant to Section 11.12(c) of the Credit Agreement, the Agent shall execute and deliver to the Grantor, at the Grantor's expense, all termination statements, assignments and other documents and instruments as may be necessary or desirable to release fully the security interests in such Collateral granted hereby; provided, however, that (i) the Agent shall not be required to execute any such documents on terms which, in the Agent's opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such security interests without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interests, liens or other encumbrances upon (or obligations of the Grantor in respect of) all interests retained by the Grantor, including without limitation, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. Section 18. Applicable Law; Severability. This Agreement shall be construed in all respects in accordance with, and governed by, the laws of the State of New York. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. Section 19. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GRANTOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GRANTOR ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE GRANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE GRANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the day first above written. ANNTAYLOR, INC. By:_________________________ Name:_______________________ Title:______________________ Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _ Name: _ Title: _ ANNEX I-A PLEDGED SHARES Stock Class of Certificate No. of Issuer Stock No. Shares AnnTaylor Travel, Inc. Common 1 1 AnnTaylor Funding, Inc. Common 1 100 AnnTaylor Distribution Services, Inc. Common 1 1 CAT US Inc. Common 1 2,000 CAT US Inc. Common 11 2,000 C.A.T. (Far East) Limited Common 5 30,000 C.A.T. (Far East) Limited Common 8 30,000 ANNEX I-B PLEDGED DEBT NONE ANNEX II LOCATIONS OF EQUIPMENT See Attached. 3 15 280 MADISON SQUARE 5901 UNIVERSITY DRIVE HUNTSVILLE AL 358060000 2058372425 3 15 355 RIVERCHASE GALLERIA 2000 RIVERCHASE DR, SPE 208 BIRMINGHAM AL 352440000 3 15 273 LITTLE ROCK 2002 PK PLZ SHOPPING CTR LITTLE ROCK AR 722050000 5016639571 8 74 742 ARIZONA FACT SHOPS 4250 WEST BOW RD PHOENIX AZ 850270000 6024659540 4 18 127 TUCSON MALL 4500 N. 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BALDWIN AVE., SUITE 615 ARCADIA CA 910071904 8188214425 4 21 342 SHERMAN OAKS 14066 RIVERSIDE DRIVE SP268 SHERMAN OAKS CA 914230000 8187840553 4 21 395 NORTHRIDGE FASHION CTR 9301 TAMPA AVENUE SP124 NORTHRIDGE CA 913242501 4 22 90 SUTTER STREET 441 SUTTER STREET SAN FRANCISCO CA 941080000 4159895381 4 20 415 TOPANGA PLAZA CANOGA PARK CA 4 20 404 7TH MKTPL @ CITICORP PZ 735 SOUTH FIGUEROA LOS ANGELES CA 900170000 2136292932 4 22 291 DOWNTOWN PLAZA 545 DOWNTOWN PLAZA #2063 SACRAMENTO CA 958140000 9164431972 4 19 79 HORTON PLAZA 25 HORTON PLAZA SAN DIEGO CA 921010000 6192330705 4 19 172 MAIN PLACE 2800 N. MAIN STREET #548 SANTA ANA CA 927010000 7145437668 4 19 173 LA JOLLA 1205 PROSPECT STREET LA JOLLA CA 920370000 6194540158 4 19 179 BREA MALL 2117 BREA MALL BREA CA 926210000 7145299002 4 19 184 NORTH COUNTY FAIR 200 E. 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TORRANCE CA 905030000 3103716546 4 20 76 BEVERLY CENTER 8522 BEVERLY BLVD/S.782 LOS ANGELES CA 900480000 3106596655 4 20 171 CITICORP PLAZA 735 SOUTH FIGUEROA LOS ANGELES CA 900170000 2136292932 4 22 195 ARDEN FAIR 1689 ARDEN WAY SACRAMENTO CA 958150000 9165670290 4 20 182 PALOS VERDES 550 DEEP VALLEY ROAD ROLLING HILLS CA 902740000 3105414470 4 20 181 SANTA MONICA PLACE 175 SANTA MONICA PLACE SANTA MONICA CA 904010000 3103953650 8 74 741 CAMARILLO 850 VENTURA BLVD. CAMARILLO CA 930100000 8053830482 8 74 710 CASTLE ROCK FACT SHOPS 505 FACTORY SHOPS BLVD CASTLEROCK CO 801040000 3036883335 4 31 114 CHERRY CREEK 3000 E 1ST AVE, #249 DENVER CO 802060000 3033551324 4 31 112 SIENA SQUARE 2070 BROADWAY, STORE D BOULDER CO 803020000 3034493971 4 31 110 LARIMER SQUARE 1421 LARIMER SQUARE DENVER CO 802020000 3038920478 5 5 402 DANBURY FAIR 7 BACKUS AVENUE SP C-115 DANBURY CT 068100000 2037910761 5 24 23 HARTFORD 1 CIVIC CENTER PLAZA HARTFORD CT 061030000 2032784020 5 5 343 TRUMBULL SHOPPING PK 5065 MAIN STREET TRUMBULL CT 066110000 2033744234 5 24 353 SOMERSET SQUARE 140 GLASTONBURY BLVD. GLASTONBURY CT 060334402 2036599315 5 5 293 STAMFORD TOWN CTR 100 GREYROCK PLACE STAMFORD CT 069010000 2033591616 5 5 3 NEW CANAAN 81 ELM STREET NEW CANAAN CT 068400000 2039660354 5 24 143 WEST FARMS 216 WEST FARMS MALL FARMINGTON CT 060320000 2035218195 5 24 144 BUCKLAND HILLS 194 BUCKLAND HILLS DR. MANCHESTER CT 060400000 2036447217 5 5 2 WESTPORT 97 MAIN STREET WESTPORT CT 068800000 2032277557 5 5 4 GREENWICH 55 EAST PUTNAM AVENUE GREENWICH CT 068300000 2036616455 5 5 1 NEW HAVEN 968 CHAPEL STREET NEW HAVEN CT 065100000 2037772304 9 95 378 BOX & HOLD - SPRING '94 130 HAMILTON STREET NEW HAVEN CT 065110000 2037722516 7 91 95 ANN TAYLOR DIRECT 130 HAMILTON STREET NEW HAVEN CT 065110000 8002898295 1 7 134 UNION STATION 50 MASSACHUSETTS AVE. NE WASHINGTON DC 200020000 2023718010 1 7 21 GEORGETOWN PARK 3222 M STREET, N.W. WASHINGTON DC 200070000 2023385290 6 61 510 UNION STATION 40 MASSACHUSETTS AVE-- N E WASHINGTON DC 200020000 2022892631 1 7 36 MAZZA GALLERIE 5300 WISCONSIN AVENUE WASHINGTON DC 200150000 2022441940 1 7 334 K STREET 1720 K STREET, N.W. WASHINGTON DC 200060000 2024663544 6 61 506 GEORGETOWN PARK 3222 M STREET NW-SP 23 WASHINGTON DC 200070000 2023381061 8 71 737 REHOBOTH BEACH REHOBOTH OUTLET CTR REHOBOTH BEACH DE 199710000 3 16 101 FASHION MALL 321 N. UNIVERSITY DR. PLANTATION FL 333240000 3054246707 3 16 303 DADELAND MALL 7415 SOUTHWEST 88TH ST MIAMI FL 331560000 3056626612 3 16 102 BOYNTON BEACH MALL 801 N. CONGRESS AVENUE BOYNTON BEACH FL 334260000 4073641211 3 16 304 BOCA RATON TOWN CENTER MALL BOCA RATON FL 334310000 4073910785 3 16 311 FT. LAUDERDALE 2486B E. SUNRISE BLVD. FT. LAUDERDALE FL 333040000 3055665801 3 16 317 BAL HARBOUR SHOPS 9700 COLLINS AVENUE BAL HARBOUR FL 331540000 3058684455 3 16 363 THE FALLS 8888 HOWARD DRIVE MIAMI FL 331760000 3053254047 3 16 63 COCONUT GROVE 3399 VIRGINIA STREET COCONUT GROVE FL 331330000 3054440146 3 16 398 THE GARDENS 3101 PGA BLVD.-S K-20 PALM BCH GARDENS FL 334100000 8 72 744 SAWGRASS MILLS 12801 WEST SUNRISE BLVD. SUNRISE FL 333230000 3 15 69 ALTAMONTE MALL 451 ALTAMONTE AVENUE ALTAMONTE SPRGS FL 322010000 4078343909 8 72 731 ORLANDO 5225 INTERNATIONAL DR ORLANDO FL 328190000 8 72 722 VERO BEACH 1850 94TH DRIVE SPACE 160 VERO BEACH FL 329660000 4077782337 8 72 716 ST. 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BRANDON BLVD.-S 555 BRANDON FL 335114720 3 15 310 WATERSIDE SHOPS 5475 TAMIAMI TRAIL N., STE 60 NAPLES FL 339630000 8135984454 3 15 391 SEMINOLE TOWNE CTR 117 TOWNE CENTER CIRCLE SANFORD FL 327710000 4073213886 3 15 104 UNIVERSITY MALL 2200 FOWLER AVENUE TAMPA FL 336120000 8139715200 8 72 743 MAGNOLIA BLUFF RT. 1 BOX 1160 DARIEN GA 313050000 3 13 302 NORTH POINT MALL 1180 NORTH POINT CIRCLE ALPHARETTA GA 302020000 4016644915 3 13 284 PERIMETER MALL 4400 ASHFORD DUNWOODY RD ATLANTA GA 303460000 4046718874 3 13 163 CUMBERLAND MALL 1216 CUMBERLAND MALL ATLANTA GA 303390000 4043196363 3 13 165 AUGUSTA MALL 3450 WRIGHTBORO RD AUGUSTA GA 309090000 7066670471 3 13 414 PHIPP'S PLAZA ATLANTA GA 3 13 294 LENOX SQUARE 3303 PEACHTREE ROAD ATLANTA GA 303260000 4042640450 4 30 178 ALA MOANA CENTER 1450 ALA MOANA BLVD #3220 HONOLULU HI 968140000 8089450028 4 30 327 PEARLRIDGE CENTER 981005 MOANA LUA RD. #121 AIEA HI 967010000 8084878486 2 10 333 OLD ORCHARD CENTER 74 OLD ORCHARD ROAD-S74 SKOKIE IL 600770000 7086797370 2 10 48 NORTH CLARK STREET 1750 NORTH CLARK ST. 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LOUIS GALLERIA 1418 ST. LOUIS GALLERIA ST. LOUIS MO 631170000 3148632014 8 73 718 OSAGE BEACH FACTORY OUT E HGWY 54,G11 OSAGE BEACH MO 650650000 3143483191 2 11 125 ST LOUIS GALLERIA 1418 ST. LOUIS GALLERIA ST. LOUIS MO 631170000 3148632014 2 11 120 CLOSED-PLAZA FRONTENAC 38 PLAZA FRONTENAC ST. LOUIS MO 631310000 3149911956 2 11 124 COUNTRY CLUB PLAZA 4728 BROADWAY KANSAS CITY MO 641120000 8165616300 2 11 122 WEST COUNTY CENTER WEST COUNTY CENTER DES PERES MO 631310000 3148220095 2 11 121 ST. LOUIS CENTER 515 NORTH 6TH STREET ST. LOUIS MO 631010000 3142319356 6 62 508 PLAZA FRONTENAC 1701 SOUTH LINDBURGH BLVD. ST. LOUIS MO 631310000 3144324001 3 15 406 NORTHPARK MALL 1200 E. COUNTY LINE RD-S 1116 RIDGELAND MS 391570000 6019579417 3 28 277 ASHEVILLE 800 BREVARD RM 850 ASHEVILLE NC 288060000 7046658350 3 28 352 SOUTHPARK MALL 4400 SHARON ROAD CHARLOTTE NC 282110000 7043647500 3 28 271 HANES MALL 3320 SILAS CREEK PKWY #756 WINSTON-SALEM NC 271030000 9106599744 3 28 359 FOUR SEASONS 210 4 SEASONS TWN CTR MALL GREENSBORO NC 274040000 9102999118 3 28 328 CRABTREE VALLEY MALL 4325 GLENWOOD AVE RALEIGH NC 276120000 9195719888 3 28 336 NORTHGATE MALL 1058 W CLUB BLVD. DURHAM NC 277010000 9194169526 2 11 364 OAKVIEW MALL 3001 SOUTH 144TH ST OMAHA NE 681440000 2 11 123 PACIFIC PLACE 10341 PACIFIC STREET OMAHA NE 681140000 4023909002 5 6 13 PHEASANT LANE 310 DANIEL WEBSTER H'WAY S. NASHUA NH 030630000 6038910050 5 6 129 ROCKINGHAM PARK MALL 99 ROCKINGHAM BLVD SALEM NH 030790000 6038906062 1 26 59 MENLO PARK 307 MENLO PARK EDISON NJ 088300000 9084943866 1 26 20 RIVERSIDE SQUARE 143 RIVERSIDE SQUARE HACKENSACK NJ 076010000 2014892590 1 26 369 PALISADES AVENUE 23-25-27 PALISADES AVE ENGLEWOOD NJ 076310000 1 26 323 BRIDGEWATER COMMONS 400 COMMONS WAY BRIDGEWATER NJ 088070000 9087070907 1 26 297 RIDGEWOOD 240 RIDGEWOOD AVE RIDGEWOOD NJ 074510000 2016121117 1 26 313 SHORT HILLS MALL AT SHORT HILLS SHORT HILLS NJ 070780000 2014674290 1 4 105 CHERRY HILL MALL 839 CHERRY HILL MALL CHERRY HILL NJ 080020000 6096657450 6 61 507 THE GROVE AT SHREWSBURY 553 RT 53 - SP N-J SHREWSBURY NJ 077020000 9085307266 1 4 366 PALMER SQUARE 17 PALMER SQUARE WEST PRINCETON NJ 085400000 1 4 296 THE GROVE AT SHREWSBURY 559 RT. 35 N-10A SHREWSBURY NJ 077020000 9082248803 1 4 128 FREEHOLD RACEWAY MALL 3710 RT. 9/C140-J FREEHOLD NJ 077280000 9084620073 1 4 118 OCEAN COUNTY MALL 1201 HOOPER AVE./RM. 451 TOMS RIVER NJ 087530000 9082403669 1 4 58 WOODBRIDGE CENTER 249 WOODBRIDGE CTR DR. WOODBRIDGE NJ 070950000 9088551774 4 18 117 LINCOLN PLACE 130 LINCOLN AVENUE SANTA FE NM 875010000 5059840101 4 18 337 CORONADO CENTER 6600 MENAUL BLVD. NE #225 ALBUQUERQUE NM 871100000 5058817480 4 18 119 FORUM 3500 LAS VEGAS BLVD LAS VEGAS NV 891090000 7027940494 4 18 341 FASHION SHOW 3200 LAS VEGAS BLVD. SO. LAS VEGAS NV 891090000 7027348614 5 5 349 THE WESTCHESTER 125 WESTCHESTER AVE WHITE PLAINS NY 106010000 9146448380 5 5 387 LARCHMONT (PALMER AVE) 1919 PALMER AVENUE LARCHMONT NY 105380000 9148343637 5 5 416 THE WESTCHESTER 125 WESTCHESTER AVENUE WHITE PLAINS NY 106014522 1 25 19 SOUTH STREET SEAPORT 25 FULTON STREET NEW YORK NY 100380000 2126085612 9 95 38 NYO SAMPLES 142 WEST 57TH STREET NEW YORK NY 100190000 5 5 57 NANUET MALL 75 W. ROUTE 59, SUITE 2032 NANUET NY 109540000 9146230390 1 2 145 75TH & 3RD 1320 THIRD AVENUE NEW YORK NY 100210000 2128613392 8 71 734 NIAGARA FALLS 1900 MILITARY RD NIAGARA FALLS NY 143040000 1 2 203 UPPER WEST SIDE 2015-17 BROADWAY(@ 69TH ST NEW YORK NY 100230000 2128737344 5 5 15 EASTCHESTER 696 WHITE PLAINS RD. SCARSDALE NY 105830000 9147230500 5 3 338 CAROUSEL CENTER 320 HIAWATHA BLVD. WEST SYRACUSE NY 132099501 3154664001 8 71 709 WOODBURY COMMONS ROUTE 32 C-3 CENTRAL VALLEY NY 109170000 9149284586 1 2 208 87TH & BROADWAY 2380 BROADWAY NEW YORK NY 100240000 2127213130 1 2 49 THIRD AVENUE (@ 50TH ST. 805 THIRD AVENUE NEW YORK NY 100220000 2123085333 1 25 309 WORLD FINANCIAL CTR 225 LIBERTY STREET NEW YORK NY 102810000 2129451991 1 25 207 MANHATTAN MALL @ 33RD ST 901 AVE OF AMERICAS NEW YORK NY 100010000 2125643992 1 2 14 80TH & MADISON 1055 MADISON AVENUE NEW YORK NY 100280000 2129888930 1 25 200 FIFTH AVENUE 575 FIFTH AVENUE NEW YORK NY 100170000 2129223621 5 3 29 MANHASSET 1990 NORTHERN BLVD. MANHASSET NY 110300000 5166271028 1 1 362 645 MADISON AVENUE 645 MADISON AVENUE NEW YORK NY 100220000 1 25 99 STATEN ISLAND MALL 2655 RICHMOND AVE. STATEN ISLAND NY 103140000 7189837744 1 25 397 SOUTH STREET SEAPORT 25 FULTON STREET NEW YORK NY 100380000 5 3 140 WOODBURY COMMONS 8285 JERICHO T'PIKE WOODBURY NY 117970000 5163674142 8 71 723 RIVERHEAD TANGER DRIVE STE 512 RIVERHEAD NY 119010000 5163698800 5 3 201 CEDARHURST 445 CENTRAL AVENUE CEDARHURST NY 115160000 5163740420 5 3 209 ROOSEVELT FIELD MALL RSVLT FIELD MALL/S-1208 GARDEN CITY NY 115300000 5167413700 5 3 205 WALDEN GALLERIA 2000 WALDEN AVENUE BUFFALO NY 142250000 7166846117 5 3 405 BRIDGEHAMPTON COMMONS BRIDGEHAMPTON NY 119320000 5 3 396 WALT WHITMAN MALL 160-5 RTE HUNTINGTON NY 117460000 5164234443 5 3 204 CROSSGATE MALL 120 WASHINGTON AVE. EXT. ALBANY NY 122030000 5184564433 5 3 393 EASTVIEW MALL 7979 PITTSFORD-VICTOR RD VICTOR NY 145640000 7164259650 2 14 321 TOWER CITY CENTER 230 HURON ROAD NW CLEVELAND OH 441130000 2162411290 6 62 503 COLUMBUS CITY CENTER 315 COLUMBUS CITY DRIVE COLUMBUS OH 432150000 6142286688 2 14 295 WORTHINGTON MALL 111 WORTHINGTON MALL COLUMBUS OH 430850000 6148484557 6 62 502 KENWOOD TOWN CENTER 7875 MONTGOMERY ROAD CINCINNATI OH 452360000 5137940040 2 14 354 BEACHWOOD PLACE 26300 CEDAR ROAD, SPACE 152 BEACHWOOD OH 441220000 2 14 386 ERIEVIEW GALLERIA 1301 EAST 9TH STREET CLEVELAND OH 441140000 2162416622 2 14 292 FAIRFIELD COMMONS 2727 FAIRFIELD COMMONS BEAVER CREEK OH 454310000 5133200040 2 14 244 KENWOOD TOWN CENTRE 7875 MONTGOMERY ROAD CINCINNATI OH 452360000 5137917544 8 73 727 AURORA FARMS 549 S. CHILLICOTHE RD. STE 400 AURORA OH 442020000 2165625115 2 14 126 TOWER PLACE 28 WEST 4TH ST/B-33 CINCINNATI OH 452020000 5136514590 2 14 245 COLUMBUS CITY CENTER 303 CITY CENTER DRIVE COLUMBUS OH 432150000 6142213335 2 14 248 WESTGATE MALL 3190 WESTGATE MALL FAIRVIEW PK OH 441260000 2163333351 8 73 712 OHIO FACTORY SHOPS 8000 FACTORY SHOPS BLVD. JEFFERSONVILLE OH 431280000 6149482100 3 17 262 OKLAHOMA CITY 50 PENN PLACE OKLAHOMA CITY OK 731180000 4058433557 3 17 263 UTICA SQUARE 1948 UTICA SQUARE TULSA OK 741140000 9187445073 3 17 346 WOODLAND HILLS 7021 S. MEMORIAL DR. -S 158 TULSA OK 741330000 4 30 196 PIONEER PLACE 700 SW 5TH AVENUE PORTLAND OR 972040000 5032220125 4 30 388 WASHINGTON SQ SHOPPING CT 9585 WEST WASHINGTON SQ PORTLAND OR 972230000 8 71 735 THE CROSSINGS 285 CROSSINGS FACTORY TANNERSVILLE PA 183720000 7176889605 8 72 706 MILLSTREAM 201 OUTLET DRIVE LANCASTER PA 176020000 7173932074 2 9 44 KING-OF-PRUSSIA PLAZA 432 GODDARD BLVD. KING-OF-PRUSSIA PA 194060000 2153370143 8 71 700 FRANKLIN MILLS 1556 FRANKLIN MILLS CI PHILADELPHIA PA 191540000 2156379410 2 9 55 MT. LEBANON 1500 WASHINGTON ROAD MT. LEBANON PA 152280000 4125618753 2 9 46 OXFORD CENTER 301 GRANT STREET PITTSBURGH PA 152190000 4122614772 2 9 51 ROSS PARK MALL 1000 ROSS PARK MALL DR. PITTSBURGH PA 152370000 4123640170 2 9 52 WALNUT STREET 1713 WALNUT STREET PHILADELPHIA PA 191030000 2159779336 2 9 400 KING-OF-PRUSSIA PLAZA 160 GULPH MILLS RD KING OF PRUSSIA PA 194060000 6103540770 2 9 56 GLEN EAGLE SQUARE 539 WILMINGTON-W. US202 GLEN MILLS PA 193420000 2155583660 2 9 361 WILLOW GROVE PARK 2500 MORELAND ROAD WILLOW GROVE PA 190900000 2 9 348 SHADYSIDE 5407 WALNUT STREET PITTSBURGH PA 152320000 8 73 719 GROVE CITY I-79 AND RT 208, SUITE 350 GROVE CITY PA 161270000 4127485101 2 9 43 ARDMORE 23 PARKING PLAZA ARDMORE PA 190030000 2156424293 5 24 6 WARWICK 117 WARWICK MALL WARWICK RI 028860000 4017379220 3 28 382 HAYWOOD MALL 700 HAYWOOD ROAD S1058 GREENVILLE SC 296070000 8036273857 3 28 351 MALL AT SHELTER COVE 24 SHELTER COVE LANE HILTON HEAD SC 299280000 8038422388 8 72 736 MYRTLE BEACH MYRTLE BEACH SC 3 28 325 KING STREET (CHARLESTON) 265-267 KING STREET CHARLESTON SC 294010000 8037228231 3 13 380 WEST TOWN MALL 7600 KINGSTON PIKE-S 1582 KNOXVILLE TN 379190000 3 13 279 COOL SPRINGS GALLERIA 1800 GALLERIA BLVD/S. 1530 FRANKLIN TN 370640000 6147717232 3 13 384 THE MALL @ GREEN HILLS 2126 ABBOT MARTIN ROAD NASHVILLE TN 372150000 3 13 278 HAMILTON PLACE MALL 2100 HAMILTON PL BLVD CHATTANOOGA TN 374210000 6158947694 3 13 261 BELLEVUE CENTER 7620 US HWY 70 SO. NASHVILLE TN 372210000 6156467692 3 13 260 SADDLECREEK 7614 W. FARMINGTON BLVD GERMANTOWN TN 381380000 9017567996 3 17 320 NORTH PARK CENTER 425 NORTH PARK CENTER DALLAS TX 752250000 2146915544 3 17 283 DALLAS GALLERIA 13350 DALLAS PARKWAY DALLAS TX 752400000 2143864548 8 72 707 SAN MARCOS 3939 INTERSTATE HIGHWAY 35 SAN MARCOS TX 786660000 5127546754 8 72 726 GAINESVILLE 4321 I-H 35 NORTH, SPACE 600 GAINESVILLE TX 762400000 8176886650 3 17 86 NORTH STAR MALL 7400 SAN PEDRO - SUITE 620 SAN ANTONIO TX 782160000 2103664742 3 17 350 COLLIN CREEK 811 NORTH CENTRAL EXPWY PLANO TX 750758815 3 17 344 ARBORETUM MARKET 9722 GREAT HILLS TRAIL AUSTIN TX 787590000 5123458307 3 17 356 HIGHLAND MALL 6001 AIRPORT ROAD AUSTIN TX 787520000 3 17 357 HULEN MALL 4800 SOUTH HULEN ST.-S 130 FORT WORTH TX 761320000 3 29 83 TOWN & COUNTRY 800 WEST BELT HOUSTON TX 770240000 7139731196 3 29 368 BAYBROOK MALL 1029 BAYBROOK MALL FRIENDSWOOD TX 775460000 7132808331 3 29 281 HOUSTON GALLERIA 5085 WESTHEIMER SUITE 2880 HOUSTON TX 770560000 7136273722 3 29 266 WILLOWBROOK MALL 7925 FM 1960 W PH 1096 WILWBR HOUSTON TX 770700000 7134696792 3 29 300 RIVER OAKS 1992 WEST GRAY SP609 HOUSTON TX 770190000 7139427345 3 17 417 PRESTON PARK VILLAGE 1900 PRESTON RD PLANO TX 75093000 3 17 390 UNIVERSITY VILLAGE 1620 S UNIVERSITY DRIVE FORT WORTH TX 761070000 3 17 385 HIGHLAND PARK VILLAGE 47 HIGHLAND PARK VILLAGE DALLAS TX 752050000 2145224700 3 17 411 COLLECTION @ BWY & SUNSET 7959 BROADWAY SAN ANTONIO TX 782090000 4 31 115 TROLLEY SQUARE 392 TROLLEY SQUARE SALT LAKE CITY UT 841020000 8013221061 4 31 340 FASHION PLACE 6191 SOUTH STATE #201 MURRAY UT 841070000 8012611071 1 8 381 FASHION SQUARE 1554 EAST RIO ROAD CHARLOTTESVILLE VA 229010000 1 8 130 REGENCY SQUARE 1404 PARHAM ROAD RICHMOND VA 232290000 8047412797 1 8 159 SPRINGFIELD MALL 6453 SPRINGFIELD MALL SPRINGFIELD VA 221500000 7039719108 1 8 133 CHESTERFIELD TOWN CENTER 11500 MIDLOTHIAN T'PIKE RICHMOND VA 232350000 8047941780 1 8 407 PENTAGON CITY 1100 SOUTH HAYES ARLINGTON VA 222020000 7034153170 1 7 312 TYSONS GALLERIA 2001 INTERNATIONAL DRIVE MCLEAN VA 221020000 7039179854 8 72 705 POTOMAC MILLS 2700 POTOMAC MILS CIR STE 933 PRINCE WILLIAM VA 221920000 7034915308 1 7 30 TYSON'S CORNER TYSON'S CORNER CENTER MCLEAN VA 221020000 7038930777 1 8 136 RESTON TOWN CTR 11850 MARKET STREET RESTON VA 220900000 7037874602 5 6 367 CHURCH ST. MARKET PLACE ONE CHURCH STREET BURLINGTON VT 054020000 8028604746 4 30 413 SOUTHCENTER MALL 633 SOUTHCENTER TUKWILA WA 981880000 4 30 285 BELLEVUE SQUARE BELLEVUE SQUARE # 1001 BELLEVUE WA 980040000 2064553470 4 30 194 CITY CENTRE 1420 FIFTH AVENUE SEATTLE WA 981010000 2066234818 8 74 738 SUPERMALL 1101 SUPERMALL WAY SEATTLE WA 980010000 2 27 401 MAYFAIR MALL 2500 N. MAYFAIR ROAD-SP 0- 28 WAUWATOSA WI 532260000 4147749222 ANNEX III UCC FILINGS See Attached. UCC Filing Jurisdictions AnnTylor, Inc. Alabama Secretary of State Arizona Secretary of State Arkansas Secretary of State Office of the Clerk of the Circuit Court and Ex Officio Recorder of Pulaski County California Secretary of State Colorado Secretary of State Connecticut Secretary of State Delaware Secretary of State District of Columbia Recorder of Deeds of the District of Columbia Florida Secretary of State Georgia Clerk of the Superior Court of Fulton County Hawaii Registrar of Conveyances Illinois Secretary of State Indiana Secretary of State Kentucky Secretary of State of the Commonwealth of Kentucky Office of the County Clerk of Jefferson County Louisiana Recorder of Mortgages of Orleans Parish Maryland Maryland State Department of Assessments and Taxation Massachusetts Secretary of Commonwealth Michigan Secretary of State Minnesota Secretary of State Mississippi Secretary of State Chancery Clerk of Madison County Missouri Secretary of State Nebraska Secretary of State Nevada Secretary of State New Hampshire Secretary of State New Jersey Secretary of State New Mexico Secretary of State New York Department of State North Carolina Secretary of State Ohio Secretary of State Oklahoma County Clerk of Oklahoma County Oregon Secretary of State Pennsulvania Secretary of the Commonwealth Rhode Island Secretary of State South Carolina Secretary of State Tennessee Secretary of State Texas Secretary of State Utah Division of Corporations and Commercial Code Vermont Secretary of State Town Clerk of Burlington Virginia State Corporation Commission Washington Department of Licensing Wisconsin Secretary of State EXHIBIT 4.01(a)(iii)(B) FORM OF TRADEMARK SECURITY AGREEMENT THIS TRADEMARK SECURITY AGREEMENT (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Trademark Security Agreement") made as of the 29th day of September, 1995, by ANNTAYLOR, INC., a corporation having its principal place of business located at 142 West 57th Street, New York, New York 10019 (the "Borrower") in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455 Market Street, San Francisco, California 94103, in its capacity as the Agent under the "Credit Agreement" (as defined below) (the "Agent"). R E C I T A L S: The Borrower, the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association as Co-Agents, and certain financial institutions currently and in the future to be parties to the Credit Agreement (as defined below) (such financial institutions being collectively, the "Lenders") have entered into a certain Amended and Restated Credit Agreement dated as of September 29, 1995 (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), which provides (i) for the Lenders to make Loans to the Borrower and for the Issuing Banks to issue the Letters of Credit and (ii) that as a condition precedent to the making of the Loans and the issuance of the Letters of Credit, the Borrower enter into this Trademark Security Agreement to secure the Obligations. NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders to make the Loans and each Issuing Bank to issue the Letters of Credit under the Credit Agreement, the Borrower hereby agrees with the Agent for its benefit, for the benefit of the Lenders and the Issuing Banks as follows: 1. Defined Terms. (a) Unless otherwise defined herein, the capitalized terms used herein which are defined in the Credit Agreement shall have the meanings specified in the Credit Agreement. (b) The words "hereof," "herein" and "hereunder" and words of like import when used in this Trademark Security Agreement shall refer to this Trademark Security Agreement as a whole and not to any particular provision of this Trademark Security Agreement, and section references are to sections in this Trademark Security Agreement unless otherwise specified. (c) All terms defined in this Trademark Security Agreement in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified. 2. Security Interest in Trademarks. To secure the complete and timely payment, performance and satisfaction of the Obligations, the Borrower hereby grants to the Agent for the benefit of the Agent, the Lenders and the Issuing Banks a security interest in, with power of sale to the extent permitted by applicable law, all of the Borrower's now-owned or existing and filed and hereafter acquired or arising and filed: (a) trademarks, trademark registrations, trade names and trademark applications for any of the foregoing in the United States Patent and Trademark Office or in any other office or with any other official anywhere in the world or which are used in the United States or any state, territory or possession thereof, or in any other place, nation or jurisdiction anywhere in the world, including, without limitation, the trademarks, trademark registrations, service marks, service mark registrations and applications listed on Annex I, attached hereto and made a part hereof, and (i) all renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all rights corresponding thereto throughout the world (all of the foregoing trademarks, and trademark registrations, trade names, service marks, service mark registration and applications, together with the items described in clauses (i) through (iv) in this subparagraph (a), are sometimes hereinafter individually and/or collectively referred to as the "Trademarks"); (b) license agreements with any other party in connection with any Trademarks or such other party's trademarks or trademark applications, whether the Borrower is a licensor or licensee under any such license agreement, including, but not limited to, the license agreements listed on Annex II attached hereto and made a part hereof, and the right to prepare for sale, sell and advertise for sale, all of the inventory now or hereafter owned by the Borrower and now or hereafter covered by such license agreements (all of the foregoing being hereinafter referred to collectively as the "Licenses"). (c) the goodwill of the Borrower's business connected with and symbolized by the Trademarks; The Trademarks, Licenses and the goodwill referred to above are hereinafter collectively called the "Collateral". 3. Restrictions on Future Agreements. The Borrower agrees that until all the Obligations shall have been satisfied in full and the Credit Agreement shall have been terminated, the Borrower will not, without the Agent's prior written consent, abandon any Trademark, except as would not have a material adverse effect on the business of the Borrower, or enter into any agreement, including, without limitation, any license agreement (other than as necessary to maintain or protect any Trademark), which is inconsistent with the Borrower's obligations under this Trademark Security Agreement, and the Borrower further agrees that it will not take any action, or permit any action to be taken by any other Persons to the extent that such Persons are subject to its control, including licensees, or fail to take any action, which would affect the validity, priority, perfection or enforcement of the rights transferred to the Agent under this Trademark Security Agreement, and any such agreement or action if it shall take place shall be null and void and of no effect whatsoever. Nothing in this Section 3 shall be deemed to prevent the Borrower from engaging in transactions permitted under Section 8.02(a)(v) of the Credit Agreement. 4. New Trademarks. The Borrower represents and warrants that the Trademarks and Licenses listed on Annexes I and II constitute all of the significant trademarks, applications, trade names, service marks, service mark registrations and trademark registrations now owned and license agreements entered into by the Borrower. If, before the Obligations shall have been satisfied in full, the commitments of the Lenders to extend credit under the Credit Agreement shall have been terminated and the Credit Agreement shall have been terminated, the Borrower shall, after the date hereof, (i) obtain rights to any new trademarks, trademark registrations, trademark applications, service marks, service mark registrations, or trade names, (ii) become entitled to the benefit of any trademarks, trademark registrations, trademark applications, trade names, service marks, service mark registrations, trademark licenses or trademark license renewals or (iii) enter into any new trademark license agreements, the provisions of paragraph 2 above shall automatically apply thereto, and the Borrower shall give to the Agent prompt written notice thereof. The Borrower hereby authorizes the Agent to modify this Trademark Security Agreement by amending Annex I or II to include any future trademarks, trademark applications, trade names, service marks, service mark registrations, trademark registrations or license agreements that are the Trademark or the Licenses, under paragraph 2 above or under this paragraph 4. 5. Additional Representations and Warranties. The Borrower hereby represents, warrants, covenants and agrees that: (a) Except as otherwise provided or permitted herein or in the Credit Agreement, it is and will continue to be the owner of all its right, title and interest in the Collateral so long as the Trademarks and Licenses shall continue in force. The Trademarks and Licenses are and shall continue to be free from any Lien in favor of a Person except for those Liens permitted by Section 8.02 of the Credit Agreement. (b) It has the full right and power to grant the security interest in the Collateral made hereby. (c) It has made no previous assignment, transfer or agreements in conflict herewith or constituting a present or future assignment, transfer, or encumbrance on any of the Collateral. (d) So long as any Obligations remain outstanding under the Credit Agreement, the commitments of the Lenders to extend credit under the Credit Agreement have not been terminated and the Credit Agreement has not terminated, it will not execute, and there will not be on file in any public office, any financing statement or other document or instrument covering the Collateral except as otherwise contemplated or permitted hereby or by the Credit Agreement and the other Loan Documents. (e) Subject to any limitation stated therein or in connection therewith, all information furnished to the Agent concerning the Collateral and proceeds thereof, for the purpose of obtaining credit or an extension of credit, is, or will be at the time the same is furnished, accurate and correct in all material respects. (f) To the best of the Borrower's knowledge and belief following diligent inquiry, no infringement or unauthorized use presently is being made of any of the Trademarks or Licenses which has or may reasonably be expected to have, alone or in the aggregate, a Material Adverse Effect. The Borrower has advised the Agent of (i) the existence of restrictions on the use of the Trademark and Licenses as may be contained in the Borrower's franchise agreements and license agreements relating to the use of the Trademarks and Licenses and (ii) its trademark monitoring and enforcement practice. 6. Royalties; Term. The Borrower hereby agrees that any rights granted hereunder to the Agent for the benefit of the Agent, the Lenders and the Issuing Banks with respect all the Collateral as described above shall be worldwide and without any liability for royalties or other related charges from the Agent to the Borrower. The term of the security interest granted herein shall extend until the earlier of (i) the expiration or abandonment of each of the Trademarks and Licenses subject to this Trademark Security Agreement, or (ii) the date on which all the Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and the Credit Agreement has been terminated. 7. The Agent's Right to Inspect. The Agent and the Lenders shall have the right, at any time and from time to time, to inspect the Borrower's premises and to examine the Borrower's books, records and operations, including, without limitation, the Borrower's merchandise quality control processes upon reasonable notice and at such reasonable times and as often as may be reasonably requested. The Borrower agrees (i) not to sell or assign its interest in, or grant any license under, the Collateral without the prior written consent of the Agent except as otherwise permitted under Sections 8.02 and 8.03 of the Credit Agreement; and (ii) to maintain the quality of any and all merchandise in connection with which the Trademarks are used, consistent with or better than the quality of said merchandise as of the date hereof. 8. Termination of Security Interest. This Trademark Security Agreement is made for collateral purposes only. Upon payment in full of the Obligations and upon termination of the Credit Agreement, the Agent shall, at the Borrower's sole cost and expense, execute and deliver to the Borrower all termination statements or other instruments as may be necessary or proper to re-vest in the Borrower (without recourse to or warranty by the Agent) full title to the Collateral granted hereby, subject to any disposition thereof which may have been made by the Agent pursuant hereto or pursuant to the Credit Agreement. 9. Duties of the Borrower. The Borrower shall have the duty (i) to prosecute diligently any trademark application that is part of the Trademarks pending as of the date hereof or thereafter until the obligations shall have been paid in full, (ii) to make applications on trademarks, as appropriate, and (iii) to preserve and maintain all rights in trademark applications, trademarks, trademark registrations, service marks, and service mark registrations, that are part of the Trademarks except, in the case of (i) or (iii), where the failure to do so would not have or be reasonably expected to have a Material Adverse Effect. Any expenses incurred in connection with such applications shall be borne by the Borrower. The Borrower agrees to retain an experienced trademark attorney for the filing and prosecution of all such applications and other proceedings. The Borrower shall not abandon any right to file a trademark application in the United States or any pending trademark application in any country without the prior written consent of the Agent except as would not have or be reasonably expected to have a Material Adverse Effect. If the Borrower fails to comply with any of the foregoing duties, the Agent shall have the right (but shall not be obligated) to do so in the Borrower's name to the extent permitted by law, but at the Borrower's expense, and the Borrower hereby agrees to reimburse the Agent in full for all expenses, including the fees and disbursements of counsel incurred by the Agent in protecting, defending and maintaining the Collateral. In the event that the Borrower shall fail to pay when due any fees required to be paid by it hereunder, or shall fail to discharge any Lien prohibited hereby, or shall fail to comply with any other duty hereunder, the Agent may, but shall not be required to, pay, satisfy, discharge or bond the same for the account of the Borrower, and all monies so paid out shall be Obligations of the Borrower repayable on demand, together with interest at the fluctuating rate applicable to Base Rate Loans under the Credit Agreement. 10. The Agent's Right to Sue. From and after the occurrence and during continuance of an Event of Default, the Agent shall have the right, but shall in no way be obligated, to bring suit in its own name for its own benefit and for the benefit of the Lenders and the Issuing Banks to enforce the Trademarks and Licenses, and if the Agent shall commence any such suit, the Borrower shall, at the request of the Agent, do any and all lawful acts and execute any and all proper documents required by the Agent in aid of such enforcement. The Borrower shall, upon demand, promptly reimburse the Agent for all costs and expenses incurred by Agent pursuant to the terms of the Credit Agreement. 11. Waivers. No course of dealing among the Borrower, the Agent, the Lenders, the Issuing Banks or any of them, and no failure to exercise, nor any delay in exercising, on the part of the Agent, the Lenders or the Issuing Banks, any right, power or privilege hereunder or under the Credit Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof the exercise of any other right, power or privilege. 12. Severability. The provisions of this Trademark Security Agreement are severable, and if any clause or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision or part thereof, in such jurisdiction, and shall not in an manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Trademark Security Agreement in any jurisdiction. 13. Modification. This Trademark Security Agreement cannot be altered, amended or modified in any way, except as specifically provided in paragraph 4 hereof or by a writing signed by the parties hereto. 14. Cumulative Remedies; Power of Attorney; Effect On Other Agreements. All of the Agent's rights and remedies with respect to the Collateral, whether established hereby, by the Credit Agreement, by the Collateral Documents, by any other agreements or by law shall be cumulative and may be exercised singularly or concurrently. Upon the occurrence and during the continuance of an Event of Default and the giving by the Agent of written notice to the Borrower of the Agent's intention to enforce its right and claims against the Borrower, the Borrower hereby authorizes the Agent to make, constitute and appoint any officer or agent of the Agent as the Agent may select, in its sole discretion, as the Borrower's true and lawful attorney-in-fact, with power (but not the obligation) to (i) endorse the Borrower's name on all applications, documents, papers and instruments necessary or desirable for the Agent in the use of the Collateral, or (ii) take any other actions with respect to the Collateral as the Agent deems in the best interest of the Agent, the Lenders and the Issuing Banks or (iii) grant or issue any exclusive or non-exclusive license under the Collateral to anyone, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of the Collateral to anyone free and clear of any encumbrance upon title thereof (other than any encumbrance created hereby). The Borrower hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney shall be irrevocable until the Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and the Credit Agreement has been terminated. The Borrower acknowledges and agrees that this Trademark Security Agreement is not intended to limit or restrict in any way the rights and remedies of the Agent and the Lender under the Loan Documents but rather is intended to facilitate the exercise of such rights and remedies. The Agent, the Lenders and the Issuing Banks shall have, in addition to all other rights and remedies given it by the terms of this Trademark Security Agreement, all rights and remedies allowed by law and the rights and remedies of a secured party under the Uniform Commercial Code as enacted in any jurisdiction in which the Collateral may be located. Recourse to security will not be required at any time. 15. Binding Effect; Benefits. This Trademark Security Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Agent, the Lenders and the Issuing Banks. The Borrower's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower. 16. Notices. Any notices and other communications hereunder shall be given in the manner and to the addresses set forth in the Credit Agreement. 17. Choice of Law. This Trademark Security Agreement shall be governed by and construed in accordance with the laws of the State of New York. 18. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS TRADEMARK SECURITY AGREEMENT OR ANY NOTE OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS TRADEMARK SECURITY AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS TRADEMARK SECURITY AGREEMENT OR ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS TRADEMARK SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS TRADEMARK SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. 19. Waiver of Notice, Hearing and Bond. THE BORROWER WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OR THE LENDERS OF ITS RIGHTS, FROM AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL. THE BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE AGENT OR THE LENDERS IN CONNECTION WITH THE JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE AGENT OR THE LENDER OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER PRELIMINARY OR PERMANENT INJUNCTION, THIS TRADEMARK SECURITY AGREEMENT. 20. Advice of Counsel. THE BORROWER REPRESENTS TO THE AGENT THAT IT HAS DISCUSSED THIS TRADEMARK SECURITY AGREEMENT WITH ITS ATTORNEYS. 21. Governing Provisions. To the extent any provisions of this Trademark Security Agreement are inconsistent with any provisions in the Borrower Security Agreement, the provisions of this Trademark Security Agreement shall govern. 22. Section Titles. The section titles herein are for convenience and reference only and shall not affect in any way the-interpretation of any of the provisions hereof. IN WITNESS WHEREOF, the Borrower has duly executed this Agreement as of the day first above written. ANNTAYLOR, INC. By: _ Title: _ Attest: _________________________ Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _ Title: _ STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) The foregoing Trademark Security Agreement was executed and acknowledged before me this _____ day of __________, 1995, by _________________________ personally known to me to be the _________________________ of AnnTaylor, Inc., a Delaware corporation, on behalf of such corporation. (SEAL) _________________________ Notary Public ________ County, ________ My Commission Expires: _________________________ STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) The foregoing Trademark Security Agreement was executed and acknowledged before me this _____ day of __________, 1995, by _________________________ personally known to me to be the _________________________ of Bank of America National Trust and Savings Association, a national banking association, on behalf of such corporation. (SEAL) _________________________ Notary Public ________ County, ________ My Commission Expires: _________________________ Annex I to Trademark Security Agreement _______________ Dated as of September 29, 1995 Trademarks and Trademark Applications U.S. Registered Trademarks: Trademark Registration No. Issue Date Expiration/Renewal Date ANNTAYLOR. (Stylized) 1,770,157 05/11/93 05/11/03 ANN TAYLOR 1,444,585 06/23/87 06/23/07 ANN TAYLOR 1,251,717 09/20/83 09/20/03 ANNTAYLOR. 1,789,470 08/24/93 08/24/03 (Stylized) ANNTAYLOR. 1,832,503 04/19/94 04/19/04 (Stylized) AnnTaylor. 1,854,221 09/13/94 09/13/04 (Stylized) ANNTAYLOR. 1,881,093 02/28/95 02/28/05 DESTINATION 1,875,773 01/24/95 01/24/05 (not stylized) DESTINATION ANNTAYLOR 1,804,908 11/16/93 11/16/03 (not stylized) destination ANNTAYLOR. 1,811,236 12/14/93 12/14/03 (stylized) AT denim (logo design) 1,817,468 01/18/94 01/18/04 AT DENIM. 1,826,976 03/15/94 03/15/04 ANNTAYLOR. 1,782,601 07/20/93 07/20/03 ANNTAYLOR. 1,832,187 04/19/94 04/19/04 (stylized) U.S. Trademark Applications: Trademark Serial No. File Date AT ANNTAYLOR. ORIGINALS - CLASSIC 74/304,148 08/12/92 STYLE (and design) AT ANNTAYLOR. ORIGINALS - CLASSIC 74/304/144 8/12/92 STYLE (and design) DESTINATION 74/493,760 02/23/94 ACTION 74/601,938 11/22/94 ACTION 74/601,976 11/22/94 ACTION (and Design) 74/601,941 11/22/94 ACTION (and Design) 74/601,937 11/22/94 ACTION (and Design) 74/601,939 11/22/94 ANNTAYLOR. LOFT (stylized) 74/585,175 10/13/94 THE SHOE LOFT (stylized) 74/654,336 03/31/95 Foreign Registered Trademarks: Trademark and Country Registration No. Issue Date Expiration/Renewal Date Ann Taylor/Canada TMA381,405 03/20/86 03/20/01 Ann Taylor1/Japan 1973145 07/23/87 07/23/97 Ann Taylor/Japan 2322093 07/31/91 07/31/01 Ann Taylor1/Japan 2322094 07/31/91 07/31/01 Ann Taylor./Japan 2461709 09/30/92 09/30/02 Ann Taylor1/Japan 2461710 09/30/92 09/30/02 Ann Taylor./Japan 2451513 08/31/92 08/31/02 Ann Taylor1/Japan 2451514 08/31/92 08/31/02 Ann Taylor./Japan 2389850 03/31/92 03/31/02 Ann Taylor1/Japan 2389851 03/31/92 03/31/02 AnnTaylor./Brazil 817167129 11/15/94 11/15/04 ATDENIM./Brazil 817401985 01/24/95 01/23/05 ATDENIM/Canada 08/18/95 AnnTaylor/Hong Kong 01800/1995 06/25/93 06/25/14 AnnTaylor 2700331 11/30/94 11/30/04 (English)/Japan AmmTaylor 2700332 11/30/94 11/30/04 (Katakana)/Japan AnnTaylor 316507 06/30/95 06/30/05 (Korean)/Korea ANN TAYLOR/Taiwan 521793 05/01/91 04/30/01 Foreign Trademark Applications: Trademark and Country Serial No. File Date Ann Taylor/Taiwan2 79/48075 11/05/90 AnnTaylor/Japan 15005/1989 02/10/89 AnnTaylor1/Japan 15006/1989 02/10/89 Ann Taylor/Hong Kong3 9156/90 11/13/90 AnnTaylor./Brazil4 817167129 04/01/93 1 In Katakana. 2 Updating status on application. 3 Application for "Ann Taylor" in Hong Kong is being withdrawn and refiled pursuant to the requirements of the Hong Kong trademark authority. 4 Application for "Ann Taylor" in Brazil is being amended to show mark as "AnnTaylor.". If it cannot be amended, it will be withdrawn and refiled. Annex II to Trademark Security Agreement Dated as of September 29, 1995 License Agreements None. EXHIBIT 4.01 (a)(iv) FORM OF ATSC GUARANTY THIS AMENDED AND RESTATED GUARANTY (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Guaranty") dated as of September 29, 1995 is made by ANNTAYLOR STORES CORPORATION, a Delaware corporation, with its principal place of business at 142 West 57th Street, New York, New York 10019 (the "Guarantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office at 1455 Market Street, San Francisco, California 94103, in its capacity as Agent under the "Credit Agreement" (as defined below) (the "Agent"). R E C I T A L S: ANNTAYLOR, INC., a Subsidiary of the Guarantor, (the "Borrower"), the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, and certain financial institutions currently and in the future parties to the Credit Agreement (such financial institutions being collectively, the "Lenders") have entered into a certain Amended and Restated Credit Agreement dated as of September 29, 1995 (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the capitalized terms not otherwise defined herein are being used herein as defined in the Credit Agreement), which provides for the Lenders to make Loans to the Borrower and for the Issuing Banks to issue Letters of Credit. The Credit Agreement amends and restates the existing credit agreement, dated as of July 29, 1994, as amended, among the parties thereto, which existing credit agreement is guaranteed by the Guaranty, dated as of July 29, 1994 (the "Existing Guaranty"). It is a condition precedent to the effectiveness of the Credit Agreement that the Existing Guaranty be amended and restated as set forth herein. NOW, THEREFORE, in consideration of the above premises, and in order to induce the Lenders to make the Loans and the Issuing Banks to issue the Letters of Credit under the Credit Agreement, the Guarantor agrees, and the Agent, by acceptance hereof, hereby agrees, that the Existing Guaranty is hereby amended and restated in its entirety as follows: 1. Guaranty. (a) The Guarantor hereby unconditionally and irrevocably guarantees to the Agent, for its benefit and the benefit of the Lenders and the Issuing Banks, the full and prompt payment when due, whether at maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise, and in accordance with the terms and conditions of the Credit Agreement, of all of the Obligations, whether or not from time to time reduced or extinguished or hereafter increased or incurred, whether or not recovery may be or hereafter may become barred by any statute of limitations, and whether enforceable or unenforceable as against the Borrower, now or hereafter existing, or due or to become due (all such indebtedness, liabilities and obligations being hereinafter collectively referred to as the "Guaranteed Obligations"). (b) The Guarantor further agrees that, if any payment made by the Borrower or any other person and applied to the Guaranteed Obligations is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by the Agent, any of the Lenders or the Issuing Banks to the Borrower, its estate, trustee, receiver or any other party, including, without limitation, the Guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, the Guarantor's liability hereunder (and any lien, security interest or other collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, or, if prior thereto this Guaranty shall have been cancelled or surrendered (and if any lien, security interest or other collateral securing Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such lien, security interest or other collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of the Guarantor in respect of the amount of such payment (or any lien, security interest or other collateral securing such obligation). (c) The Guarantor further agrees to pay all costs and expenses upon demand including, without limitation, all court costs and reasonable attorneys' fees and expenses paid or incurred by the Agent (i) in endeavoring to collect all or any part of the Guaranteed Obligations after the same become due and owing from, or in prosecuting any action against, the Guarantor or any other guarantor of all or any part of the Guaranteed Obligations or (ii) in endeavoring to realize upon (whether by judicial, non-judicial or other proceedings) any Collateral or any other collateral securing Guarantor's liabilities under this Guaranty. 2. Representations and Warranties. The Guarantor hereby represents and warrants to the Agent that each representation and warranty made by Borrower in Article V of the Credit Agreement applicable to the Guarantor is true and correct, which representations and warranties (except such representations and warranties which are expressly made as of a different date) shall survive the execution and delivery of this Guaranty, and shall, except to the extent that the same have been modified by a writing delivered to and accepted in writing by the Agent, and, other than with respect to changes permitted or contemplated by the Credit Agreement, continue to be true and correct on the date of each Loan, and on the date of issuance of each Letter of Credit. 3. Waivers; Other Agreements. (a) The Agent is hereby authorized, without notice to or demand upon the Guarantor, which notice or demand is expressly waived hereby, and without discharging or otherwise affecting the obligations of the Guarantor hereunder (which shall remain absolute and unconditional notwithstanding any such action or omission to act), from time to time, to: (i) supplement, renew, extend, accelerate or otherwise change the time for payment of, or other terms relating to, the Guaranteed Obligations, or otherwise modify, amend or change the terms of any promissory note or other agreement, document or instrument (including the Credit Agreement and the other Loan Documents) now or hereafter executed by the Borrower and delivered to the Agent, including, without limitation, any increase or decrease of the rate of interest thereon; (ii) waive or otherwise consent to noncompliance with any provision of any instrument evidencing the Guaranteed Obligations, or any part thereof, or any other instrument or agreement in respect of the Guaranteed Obligations (including the Credit Agreement and the other Loan Documents) now or hereafter executed by the Borrower and delivered to the Agent; (iii) accept partial payments on the Guaranteed Obligations; (iv) receive, take and hold additional security or collateral for the payment of the Guaranteed Obligations, or for the payment of any other guaranties of the Guaranteed Obligations or other liabilities of the Borrower, and exchange, enforce, waive, substitute, liquidate, terminate, abandon, fail to perfect, subordinate, transfer, otherwise alter and release any such additional security or collateral; (v) apply any and all such security or collateral and direct the order or manner of sale thereof as the Agent may determine in its sole discretion; (vi) settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations or accept, substitute, release, exchange or otherwise alter, affect or impair any security or collateral for the Guaranteed Obligations or any other guaranty therefor, in any manner; (vii) add, release or substitute any one or more other guarantors, makers or endorsers of the Guaranteed Obligations and otherwise deal with the Borrower or any other guarantor, maker or endorser as the Agent may elect in its sole discretion; (viii) apply any and all payments or recoveries from the Borrower, from any other guarantor, maker or endorser of the Guaranteed Obligations or from the Guarantor to the Guaranteed Obligations to the Obligations in such order as provided in subsection 2.06(b) of the Credit Agreement, whether such Guaranteed Obligations are secured or unsecured or guaranteed or not guaranteed by others; (ix) apply any and all payments or recoveries from the Guarantor or any other guarantor, maker or endorser of the Guaranteed Obligations or sums realized from security furnished by any of them upon any of their indebtedness or obligations to the Agent as the Agent in its sole discretion, may determine, whether or not such indebtedness or obligations relate to the Guaranteed Obligations; and (x) refund at any time, at the Agent's sole discretion, any payment received by the Agent in respect of any Guaranteed Obligations, and payment to the Agent of the amount so refunded shall be fully guaranteed hereby even though prior thereto this Guaranty shall have been cancelled or surrendered (or any release or termination of any collateral by virtue thereof) by the Agent, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of the Guarantor hereunder in respect of the amount so refunded (and any collateral so released or terminated shall be reinstated with respect to such obligations); even if any right of reimbursement or subrogation or other right or remedy of the Guarantor is extinguished, affected or impaired by any of the foregoing (including, without limitation, any election of remedies by reason of any judicial, non-judicial or other proceeding in respect of the Guaranteed Obligations which impairs any subrogation, reimbursement or other right of Guarantor). (b) The Guarantor hereby agrees that its obligations under this Guaranty are absolute and unconditional and shall not be discharged or otherwise affected as a result of: (i) the invalidity or unenforceability of any security for or other guaranty of the Guaranteed Obligations or of any promissory note or other document (including, without limitation, the Credit Agreement) evidencing all or any part of the Guaranteed Obligations, or the lack of perfection or continuing perfection or failure of priority of any security for the Guaranteed Obligations or any other guaranty therefor; (ii) the absence of any attempt to collect the Guaranteed Obligations from the Borrower or any other guarantor or other action to enforce the same; (iii) failure by the Agent to take any steps to perfect and maintain any security interest in, or to preserve any rights to, any security or collateral for the Guaranteed Obligations or any other guaranty therefor; (iv) the Agent's election, in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et seq.) (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code; (v) any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, or extension of credit, under Section 364 of the Bankruptcy Code; (vi) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of the Agent's claim(s) for repayment of the Guaranteed Obligations; (vii) any use of cash collateral under Section 363 of the Bankruptcy Code; (viii) any agreement or stipulation as to the provision of adequate protection in any bankruptcy proceeding; (ix) the avoidance of any lien in favor of the Agent for any reason; (x) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against Borrower, the Guarantor or any other guarantor, maker or endorser, including without limitation, any discharge of, or bar or stay against collecting, all or any of the Guaranteed Obligations (or any interest thereon) in or as a result of any such proceeding; (xi) failure by the Agent to file or enforce a claim against the Borrower or its estate in any bankruptcy or insolvency case or proceeding; (xii) any action taken by the Agent that is authorized by this Guaranty; (xiii) any election by the Agent under Section 9-501(4) of the Uniform Commercial Code as enacted in any relevant jurisdiction (the "Code") as to any security for the Guaranteed Obligations or any guaranty of the Guaranteed Obligations; or (xiv) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The Guarantor hereby waives: (i) any requirements of diligence or promptness on the part of the Agent; (ii) presentment, demand for payment or performance and protest and notice of protest with respect to the Guaranteed Obligations; (iii) notices (A) of nonperformance, (B) of acceptance of this Guaranty, (C) of default in respect of the Guaranteed Obligations, (D) of the existence, creation or incurrence of new or additional indebtedness, arising either from additional loans extended to the Borrower or otherwise, (E) that the principal amount, or any portion thereof, and/or any interest on any instrument or document evidencing all or any part of the Guaranteed Obligations is due, (F) of any and all proceedings to collect from the Borrower, any endorser or any other guarantor of all or any part of the Guaranteed Obligations, or from anyone else, and (G) of exchange, sale, surrender or other handling of any security or collateral given to the Agent to secure payment of the Guaranteed Obligations or any guaranty therefor; (iv) any right to require the Agent to (a) proceed first against the Borrower, or any other person whatsoever, (b) proceed against or exhaust any security given to or held by the Agent in connection with the Guaranteed Obligations, or (c) pursue any other remedy in the Agent's power whatsoever; (v) any defense arising by reason of (a) any disability or other defense of the Borrower, (b) the cessation from any cause whatsoever of the liability of the Borrower, (c) any act or omission of the Agent or others which directly or indirectly, by operation of law or otherwise, results in or aids the discharge or release of the Borrower or any security given to or held by the Agent in connection with the Guaranteed Obligations; (vi) any and all other suretyship defenses under applicable law; and (vii) the benefit of any statute of limitations affecting the Guaranteed Obligations or the Guarantor's liability hereunder or the enforcement hereof. In connection with the foregoing, the Guarantor covenants that this Guaranty shall not be discharged, except by complete performance of the obligations contained herein. (d) The Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower, of any and all endorsers and/or other guarantors of any instrument or document evidencing all or any part of the Guaranteed Obligations and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations or any part thereof that diligent inquiry would reveal and the Guarantor hereby agrees that the Agent shall not have any duty to advise the Guarantor of information known to the Agent regarding such condition or any such circumstances. (e) Notwithstanding anything to the contrary in this Guaranty, the Guarantor hereby irrevocably waives all rights which may have arisen in connection with this Guaranty to be subrogated to any of the rights (whether contractual, under the Bankruptcy Code, including Section 509 thereof, under common law or otherwise) of the Agent, the Lenders or the Issuing Banks against the Borrower or against any collateral security or guarantee or right of offset held by such Person for the payment of the Obligations. The Guarantor hereby further irrevocably waives all contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Borrower or any other Person which may have arisen in connection with this Guaranty. So long as the Obligations remain outstanding, if any amount shall be paid by or on behalf of the Borrower to the Guarantor on account of any of the rights waived in this paragraph, such amount shall be held by the Guarantor in trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Agent in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Agent may determine. The provisions of this paragraph shall survive the term of this Guaranty and the payment in full of the Obligations and the termination of the commitments of the Lenders to extend credit under the Credit Agreement. (f) The Guarantor hereby agrees that any indebtedness of the Borrower now or hereafter owing to the Guarantor is hereby subordinated to all of the Guaranteed Obligations, whether heretofore, now or hereafter created (the "Subordinated Debt"), and that without the prior consent of the Agent, the Subordinated Debt shall not be paid in whole or in part until the Guaranteed Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and the Credit Agreement has been terminated and is of no further force or effect, except that payments of principal and interest on the Subordinated Debt shall be permitted so long as no Potential Event of Default or Event of Default shall have occurred and be continuing to the extent such payments would not render the Borrower incapable of performing the Guaranteed Obligations. The Guarantor will not accept any payment of or on account of any Subordinated Debt at any time in contravention of the foregoing. At the request of the Agent, the Borrower shall pay to the Agent all or any part of the Subordinated Debt and any amount so paid to the Agent shall be applied to payment of the Guaranteed Obligations. Each payment on the Subordinated Debt received in violation of any of the provisions hereof shall be deemed to have been received by Guarantor as trustee for the Agent and shall be paid over to the Agent immediately on account of the Guaranteed Obligations, but without otherwise affecting in any manner the Guarantor's liability under any of the provisions of this Guaranty. The Guarantor agrees to file all claims against the Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in respect of any Subordinated Debt, and the Agent shall be entitled to all of the Guarantor's right thereunder. If for any reason the Guarantor fails to file such claim at least thirty (30) days prior to the last date on which such claim should be filed, the Agent, as the Guarantor's attorney-in-fact, is hereby authorized to do so in the Guarantor's name or, in the Agent's discretion, to assign such claim to and cause proof of claim to be filed in the name of the Agent or its nominee. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to the Agent the full amount payable on the claim in the proceeding, and, to the full extent necessary for that purpose, the Guarantor hereby assigns to the Agent all Guarantor's rights to any payments or distributions to which the Guarantor otherwise would be entitled. If the amount so paid is greater than the Guarantor's liability hereunder, the Agent will pay the excess amount to the party entitled thereto. In addition, the Guarantor hereby appoints Agent as its attorney-in-fact to exercise all of the Guarantor's voting rights in connection with any bankruptcy proceeding or any plan for the reorganization of the Borrower. (g) The Guarantor shall comply with all covenants applicable to it under the Credit Agreement and shall otherwise take no action which will cause an Event of Default or Potential Event of Default under the Credit Agreement. The Guarantor shall also cause the Borrower to comply with all covenants applicable to the Borrower under the Credit Agreement. 4. Default, Remedies. (a) The obligations of the Guarantor hereunder are independent of and separate from the Guaranteed Obligations and the obligations of any other guarantor of the Guaranteed Obligations. If any of the Guaranteed Obligations are not paid when due, or upon any Event of Default or any default by Borrower as provided in any other instrument or document evidencing all or any part of the Guaranteed Obligations, the Agent may, at its sole election, proceed directly and at once, without notice, against the Guarantor to collect and recover the full amount or any portion of the Guaranteed Obligations, without first proceeding against the Borrower or any other guarantor of the Guaranteed Obligations, or against any Collateral for the Guaranteed Obligations under the ATSC Pledge Agreement or otherwise against any Collateral under other Collateral Documents. (b) At any time after maturity of the Guaranteed Obligations, the Agent may, without notice to the Guarantor and regardless of the acceptance of any security or collateral for the payment hereof, appropriate and apply toward the payment of the Guaranteed Obligations (i) any indebtedness due or to become due from the Agent to the Guarantor and (ii) any moneys, credits or other property belonging to the Guarantor at any time held by or coming into the possession of the Agent or any of its affiliates. (c) The Guarantor hereby authorizes and empowers the Agent, in its sole discretion, without any notice (except notices required by law to the extent such notice as a matter of law may not be waived) or demand to the Guarantor whatsoever and without affecting the liability of the Guarantor hereunder, to exercise any right or remedy which the Agent may have available to it, including but not limited to, foreclosure by one or more judicial or nonjudicial sales, and the Guarantor hereby waives any defense to the recovery by the Agent against the Guarantor of any deficiency after such action, notwithstanding any impairment or loss of any right of reimbursement, contribution, subrogation or other right or remedy against the Borrower, or any other guarantor, maker or endorser, or against any security for the Guaranteed Obligations or for any guaranty of the Guaranteed Obligations. No exercise by the Agent of, and no omission of the Agent to exercise, any power or authority recognized herein and no impairment or suspension of any right or remedy of the Agent against the Guarantor, any other guarantor, maker or endorser or any security shall in any way suspend, discharge, release, exonerate or otherwise affect any of the Guarantor's obligations hereunder or give to the Guarantor any right of recourse against the Agent, the Lenders or the Issuing Banks. (d) The Guarantor consents and agrees that the Agent shall not be under any obligation to make any demand upon or pursue or exhaust any of its rights or remedies against the Borrower or any guarantor or others with respect to the payment of the Guaranteed Obligations, or to pursue or exhaust any of its rights or remedies with respect to any security therefor, or any direct or indirect guaranty thereof or any security for any such guaranty, or to marshal any assets in favor of the Guarantor or against or in payment of any or all of the Guaranteed Obligations or to resort to any security or any such guaranty in any particular order, and all of its rights hereunder, under the ATSC Pledge Agreement and the other Loan Documents shall be cumulative. The Guarantor hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of, and does hereby covenant not to assert against the Agent any valuation, stay, appraisal, extension or redemption laws now existing or which may hereafter exist which, but for this provision, might be applicable to any sale made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Guaranty or the ATSC Pledge Agreement. Without limiting the generality of the foregoing, the Guarantor hereby agrees that it will not invoke or utilize any law which might cause delay in or impede the enforcement of the rights under this Guaranty, the ATSC Pledge Agreement or any of the other Loan Documents. 5. Miscellaneous. (a) This Guaranty shall be irrevocable as to any and all of the Guaranteed Obligations until the Credit Agreement has been terminated, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and all Guaranteed Obligations then outstanding have been repaid. (b) This Guaranty shall be binding upon the Guarantor and upon its successors and assigns, heirs and legal representatives and shall inure to the benefit of the Agent, the Lenders and the Issuing Banks; all references herein to the Borrower and to the Guarantor shall be deemed to include their successors and assigns, heirs and legal representatives as applicable. The Borrower's successors and assigns shall include a receiver, trustee or debtor-in-possession of or for the Borrower. All references to the singular shall be deemed to include the plural where the context so requires. The Guarantor acknowledges the Agent's acceptance hereof and reliance hereon. (c) No delay on the part of the Agent in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent of any right or remedy shall preclude any further exercise thereof; nor shall any modification or waiver of any of the provisions of this Guaranty be binding upon the Agent, except as expressly set forth in a writing duly signed and delivered by the Agent or on the Agent's behalf by an authorized officer or agent of the Agent. The Agent's failure at any time or times hereafter to require strict performance by the Borrower or of the Guarantor or any other guarantor of any of the provisions, warranties, terms and conditions contained in any promissory note, security agreement, agreement, guaranty, instrument or document now or at any time or times hereafter executed by the Borrower or the Guarantor or any other guarantor and delivered to the Agent shall not waive, affect or diminish any right of the Agent at any time or times hereafter to demand strict performance thereof and such right shall not be deemed to have been waived by any act or knowledge of the Agent, its agents, officers or employees, unless such waiver is contained in an instrument in writing signed by an officer or agent of the Agent and directed to the Borrower or the Guarantor, or either of them (as the case may be) specifying such waiver. No waiver by the Agent of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by the Agent permitted hereunder shall in any way affect or impair the Agent's rights or the obligations of the Guarantor under this Guaranty. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest owing by the Borrower to the Agent shall be conclusive and binding on the Guarantor irrespective of whether it was a party to the suit or action in which such determination was made. (d) THIS GUARANTY SHALL BE CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. Whenever possible, each provision of this Guaranty shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Guaranty. (e) Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GUARANTOR WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE GUARANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. (f) This Guaranty (and any instrument or agreement granting or creating any security for this Guaranty) contains all the terms and conditions of the agreement between the Agent and the Guarantor relating to the subject matter hereof. The terms or provisions of this Guaranty may not be waived, altered, modified or amended except in writing duly executed by the party to be charged thereby. (g) Neither the Agent nor its Affiliates, directors, officers, agents, attorneys or employees shall be liable to the Guarantor for any action taken, or omitted to be taken, by it or them or any of them under this Guaranty, or the other Loan Documents or in connection therewith except that no person shall be relieved of any liability for gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (h) The Guarantor warrants and agrees that each of the waivers set forth in this Guaranty are made with full knowledge of their significance and consequences, and that under the circumstances, the waivers are reasonable. If any of said waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective only to the maximum extent permitted by law. Should any one or more provisions of this Guaranty be determined to be illegal or unenforceable, all other provisions hereof shall nevertheless remain effective. (i) Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Guaranty. (j) Captions are for convenience only and shall not affect the meaning of any term or provision of this Guaranty. (k) All notices and other communications provided for hereunder shall be given in the manner set forth in the Credit Agreement and to the addresses set forth in the Credit Agreement or, in the case of the Guarantor, at its addresses set forth above. IN WITNESS WHEREOF, undersigned have made this Guaranty as of the date first above written. ANNTAYLOR STORES CORPORATION By: _ Title: Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _ Title: EXHIBIT 4.01(a)(v) FORM OF ATSC PLEDGE AGREEMENT THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Agreement"), dated as of September 29, 1995, is made by ANNTAYLOR STORES CORPORATION, a Delaware corporation, with its principal place of business located at 142 West 57th Street, New York, New York 10019 (the "Grantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455 Market Street, San Francisco, California 94103, in its capacity as Agent under the Credit Agreement (as defined below) (the "Agent"). R E C I T A L S: ANNTAYLOR, INC., a Subsidiary of the Grantor, (the "Borrower"), the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Fleet Bank, National Association, as Co-Agents, and certain financial institutions currently and in the future to be parties to the Credit Agreement (such financial institutions being collectively the "Lenders") have entered into a certain Amended and Restated Credit Agreement dated as of September 29, 1995, (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the capitalized terms not otherwise defined herein are being used herein as defined in the Credit Agreement), which provides for the Lenders to make the Loans and the Issuing Banks to issue the Letters of Credit. The Credit Agreement amends and restates an existing credit agreement among the parties thereto, which existing credit agreement was guaranteed by the Grantor pursuant to the Guaranty, dated as of July 29, 1994 (the "Existing Guaranty"). The Existing Guaranty was secured pursuant to the Pledge Agreement, dated as of July 29, 1994 (the "Existing Pledge Agreement"), between the Grantor and the Agent. As a condition precedent to the effectiveness of the Credit Agreement (i) the Existing Guaranty is being amended and restated by the Guaranty, dated as of the date hereof, by the Grantor in favor of the Agent (as amended, supplemented or otherwise modified from time to time, the "Guaranty") and (ii) the Existing Pledge Agreement is being amended and restated in its entirety hereby. NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders to make the Loans and each Issuing Bank to issue the Letters of Credit under the Credit Agreement, the Grantor hereby agrees with the Agent for its benefit, and for the benefit of the Lenders and the Issuing Banks, and the Agent, by acceptance hereof, hereby agrees, that the Existing Pledge Agreement is hereby amended and restated in its entirety as follows: Section 1. Grant of Security. To secure the prompt and complete payment, observance and performance when due (whether at the stated maturity, by acceleration or otherwise) of all the Guaranteed Obligations (as defined in the Guaranty) and all other obligations of the Grantor under the Guaranty, the Grantor hereby assigns and pledges to the Agent, and hereby grants to the Agent, for its benefit and the benefit of the Lenders and the Issuing Banks, a security interest in, all of the Grantor's right, title and interest in and to the following, whether now owned or existing or hereafter arising or acquired and wheresoever located (collectively, the "Collateral"): EQUIPMENT: All machinery and equipment, all manufacturing, distribution, selling, data processing and office equipment, all furniture, furnishings, appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of every type and description (other than "inventory", as such term is defined in the Uniform Commercial Code in effect on the date hereof in the State of New York (the "UCC")), in each instance whether now owned or hereafter acquired by the Grantor and wherever located (collectively, "Equipment"); GENERAL INTANGIBLES: All rights, interests, choses in action, causes of action, claims and all other intangible property of the Grantor of every kind and nature (other than "accounts", as such term is defined in the UCC), in each instance whether now owned or hereafter acquired by the Grantor, including, without limitation, all corporate and other business records; all loans, royalties, and other obligations receivable; all inventions, designs, patents, patent applications, service marks, trade names and trademarks (including any applications for the foregoing and whether or not registered) and the goodwill of the Grantor's business connected with and symbolized by such trademarks, trade secrets, computer programs, software, printouts and other computer materials, goodwill, registrations, U.S. registered copyrights, licenses relating to trademarks and U.S. registered copyrights, franchises, customer lists, credit files, correspondence and advertising materials; all customer and supplier contracts, firm sale orders, rights under license and franchise agreements, and other contracts and contract rights; all interests in partnerships, joint ventures and other entities; all tax refunds and tax refund claims; all right, title and interest under leases, subleases, licenses and concessions and other agreements relating to real or personal property; all pay ments due or made to the Grantor in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental authority; all deposit accounts (general or special) with any bank or other financial institution; all credits with and other claims against carriers and shippers; all rights to indemnification; all reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; all proceeds of insurance of which the Grantor is beneficiary; and all letters of credit, guaranties, liens, security interests and other security held by or granted to the Grantor; and all other intangible property, whether or not similar to the foregoing, including, without limitation, all "general intangibles", as such term is defined in the UCC (in each instance, however and wherever arising, collectively, "General Intangibles"); CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all instruments (including, without limitation, (a) the shares of stock described in Annex I-A hereto (the "Pledged Shares") and all dividends, instruments and other property from time to time distributed in respect thereof or in exchange therefor, and (b) the notes and debt instruments described in Annex I-B hereto (the "Pledged Debt") and all payments thereunder and instruments and other property from time to time delivered in respect thereof or in exchange therefor), and all bills of lading, warehouse receipts and other documents of title and documents, including, without limitation, all "chattel paper", "instruments" and documents", as such terms are defined in the UCC, in each instance whether now owned or hereafter acquired by the Grantor, other than any promissory note in an amount less than $1,000,000 owing to the Grantor from a senior executive or key employee of the Grantor (an "Excluded Note") (collectively, "Chattel Paper, Instruments and Documents"); and OTHER PROPERTY: All property or interests in property now owned or hereafter acquired by the Grantor which now may be owned or hereafter may come into the possession, custody or control of the Agent, any of the Lenders, any Issuing Bank or any agent or Affiliate of any of them in any way or for any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all rights and interests of the Grantor, now existing or hereafter arising and however and wherever arising, in respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and debt and equity securities, whether or not certificated, and warrants, options, puts and calls and other rights to acquire or otherwise relating to the same; (ii) money; (iii) proceeds of loans; and (iv) insurance proceeds and books and records relating to any of the property covered by this Agreement (collectively, "Other Property"); together, in each instance, with all accessions and additions thereto, substitutions therefor, and replacements, proceeds and products thereof. Section 2. Grantor Remains Liable. Anything herein to the contrary notwithstanding, the Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights hereunder shall not release the Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral (except to the extent that such exercise prevents the Grantor from satisfying such duties and obligations), and (c) the Agent shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Agent be obligated to perform any of the obligations or duties of the Grantor thereunder, to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by the Grantor or the sufficiency of any performance by any party under any such contract or agreement or to take any action to collect or enforce any claim for payment assigned hereunder. Section 3. Delivery of Pledged Collateral. All certificates, notes and other instruments representing or evidencing the Pledged Shares or the Pledged Debt and all other instruments now owned or at anytime hereafter acquired by the Grantor other than any Excluded Notes (collectively, the "Pledged Collateral") shall be delivered to and held by or on behalf of the Agent pursuant hereto (except as otherwise provided in the last sentence of Section 4(f) hereof) and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Agent. Upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right, at any time in its discretion and without notice to the Grantor, to transfer to or to register in the name of the Agent or any nominee of the Agent any or all of the Pledged Collateral, subject only to the revocable rights specified in Section 8 hereof. In addition, upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. Section 4. Representations and Warranties. The Grantor represents and warrants as follows: (a) As of the date of this Agreement, the locations listed on Annex II to this Agreement constitute all locations at which Equipment is located, except for Equipment temporarily in transit. As of the date of this Agreement, the chief place of business and chief executive office of the Grantor are located at the address first specified above for the Grantor. (b) The Grantor is the legal and beneficial owner of the Collateral free and clear of all liens, security interests or other encumbrances, except (other than in respect of Pledged Collateral described in (e) below) as expressly permitted by subsection 8.02(b) of the Credit Agreement. Since the date of its incorporation, Grantor has conducted business only under its own corporate name (including its former corporate name, AnnTaylor Holdings, Inc.) and not under any trade name or other name. (c) The Grantor has exclusive possession and control of the Equipment, except for (i) Equipment in the possession and control of the Grantor's lessees and licensees under written lease and license agreements entered into in the ordinary course of business and consistent with past practice and (ii) Equipment in transit with common or other carriers. (d) The Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable. The Pledged Debt of Grantor's Subsidiaries (if any), and, to the best of the Grantor's knowledge, all other Pledged Debt, has been duly authorized, issued and delivered, and is the legal, valid, binding and enforceable obligation of the issuers thereof. (e) The Pledged Shares indicated on Annex I-A hereto constitute all of the shares held by the Grantor of the respective issuers thereof. The Pledged Shares and the Pledged Debt constitute all of the Pledged Collateral except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business and with respect to which the Agent has not at any time requested possession and which are not a material portion of the Collateral under this Agreement (the "Personal Property Collateral") either singly or in the aggregate. (f) This Agreement creates a valid security interest in the Collateral (other than the Pledged Collateral), securing the payment of the Guaranteed Obligations, and all filings and other actions necessary or desirable to perfect such security interest under the Uniform Commercial Code as enacted in any relevant jurisdiction have been duly taken or will be duly taken not later than five Business Days after the date hereof (all such actions being the filing of financing statements in the filing offices listed on Annex III hereto). The pledge and delivery of the Pledged Collateral pursuant to this Agreement and all other filings and other actions taken by the Grantor to perfect such security interest prior to the date hereof, create a valid and perfected first priority security interest in the Pledged Collateral, securing the payment of the Guaranteed Obligations except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business with respect to which the Agent has not at any time requested possession and which are not a material portion of the Personal Property Collateral either singly or in the aggregate. (g) Other than filings under the UCC, no authorization, approval or other action by, and no notice to or filing with, any federal, state or local governmental authority that have not already been taken or made and which are in full force and effect, is required (i) for the pledge by the Grantor of the Pledged Collateral or for the grant by the Grantor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by the Grantor, (ii) for the exercise by the Agent of the voting or other rights provided in this Agreement with respect to the Pledged Collateral or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with the disposition thereof by laws affecting the offering and sale of securities generally), or (iii) for the exercise by the Agent of any of its other rights or remedies hereunder. Section 5. Further Assurances. (a) The Grantor agrees that from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, at the request of the Agent, the Grantor shall: (i) if an Event of Default shall have occurred and be continuing, mark conspicuously each document included in the Collateral at the request of the Agent made at any time, and whether or not an Event of Default shall have occurred, mark each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Agent, indicating that such document or Collateral is subject to the security interest granted hereby; and (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) The Grantor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Grantor where permitted by law. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c) The Grantor shall furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may request, all in reasonable detail. Section 6. As to Equipment. The Grantor shall: (a) Keep the Equipment (other than Equipment sold in accordance with Section 8.02 of the Credit Agreement) at the places specified in Section 4(a) hereof and deliver written notice to the Agent at least 30 days prior to establishing any other location at which it reasonably expects to maintain Equipment in which jurisdiction all action required by Section 5 hereof shall have been taken with respect to all such Equipment. (b) Maintain or cause to be maintained in good repair, working order and condition, excepting ordinary wear and tear and damage due to casualty, all of the Equipment, and make or cause to be made all appropriate repairs, renewals and replacements thereof, to the extent not obsolete and consistent with past practice of the Grantor, as quickly as practicable after the occurrence of any loss or damage thereto which are necessary or desirable to such end. The Grantor shall promptly furnish to the Agent a statement respecting any material loss or damage as a result of a single occurrence to any of the Equipment which has an aggregate fair market value exceeding $250,000. (c) Maintain the same or substantially the same insurance with respect to its properties as Borrower may be required to maintain under Section 7.05 of the Credit Agreement with respect to its properties and to comply with the terms thereof. Section 7. As to the Pledged Collateral. (a) So long as no Event of Default shall have occurred and be continuing: (i) The Grantor and not the Agent shall be entitled to exercise any and all voting and other rights of consent or approval pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided, however, that the Grantor shall not exercise or refrain from exercising any such right without the consent of the Agent if such action or inaction would have a material adverse effect on the value of the Pledged Collateral or the benefits to the Agent, the Lenders and the Issuing Banks including, without limitation, the validity, priority or perfection of the security interest granted hereby or the remedies of the Agent hereunder. (ii) The Grantor and not the Agent shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral; provided, however, that any and all (A) dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, (B) dividends and other distributions paid or payable in cash in respect of any Pledged Collateral consisting of stock of any Subsidiary of the Grantor and dividends and other distributions paid or payable in cash in respect of any other Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital,surplus or paid-in-surplus, and (C) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Collateral, shall forthwith be delivered to the Agent, in the case of (A) above, to hold as Pledged Collateral and shall, if received by the Grantor, be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks, be segregated from the other property or funds of the Grantor, and be forthwith delivered to the Agent, as Pledged Collateral in the same form as so received (with any necessary indorsement) and, in the case of (B) and (C) above, to the extent required under the terms of the Credit Agreement, shall forthwith be delivered to the Agent to be applied to the Guaranteed Obligations in such order as provided in subsection 2.06(b) of the Credit Agreement. (iii) The Agent shall promptly execute and deliver (or cause to be executed and delivered) to the Grantor all such proxies and other instruments as the Grantor may reasonably request for the purpose of enabling the Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above. (b) Upon the occurrence and during the continuance of an Event of Default and at the Agent's option: (i) All rights of the Grantor to exercise the voting and other rights of consent or approval which it would otherwise be entitled to exercise pursuant to Section 8(a)(i) hereof and to receive the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) hereof shall cease, and all such rights shall thereupon become vested in the Agent, who shall thereupon have the sole right to exercise such voting and other rights of consent or approval and to receive and hold as Pledged Collateral such dividends and interest payments. (ii) All dividends and interest payments which are received by the Grantor contrary to the provisions of paragraph (i) of this Section 8(b) hereof shall be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks and shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Agent as Pledged Collateral in the same form as so received (with any necessary indorsement). Section 8. Additional Shares. The Grantor agrees that it will (i) cause each issuer of the Pledged Shares subject to its control not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to the Grantor or as otherwise permitted under the Credit Agreement, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of each issuer of the Pledged Shares. The Grantor hereby authorizes the Agent to modify this Agreement by amending Annex I to include such additional shares or other securities. Section 9. Payment of Taxes and Claims. The Grantor shall pay (i) all taxes, assessments and other charges of any Governmental Authority imposed upon it or on any of the Collateral before any penalty or interest accrues thereon, and (ii) all claims (including, without limitation, claims for labor, services, materials and supplies) for sums materially adversely affecting the Collateral, which have become due and payable and which by law have or may become a lien or other encumbrance upon any of the Collateral prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such taxes, assessments and charges of any such governmental authority referred to in clause (i) above or claims referred to in clause (ii) above need to be paid if being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and enforcement thereof is stayed and if a reserve or other appropriate provision required in conformity with GAAP shall have been made therefor. Section 10. The Agent Appointed Attorney-in-Fact. The Grantor hereby irrevocably appoints the Agent the Grantor's attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Agent's discretion, to take, upon the occurrence and during the continuance of an Event of Default, any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Grantor under Section 7 hereof), including, without limitation: (a) to obtain and adjust insurance required to be paid to the Agent pursuant to Section 6(c) hereof, (i) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (ii) to receive, indorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) or (ii) above, (iii) to sell or assign any Account upon such terms, for such amount and at such time or times as Agent deems advisable, to settle, adjust, compromise, extend or renew any Account or to discharge and release any Account, (iv) to file any claims or take any action or institute any proceedings which the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Agent with respect to any of the Collateral, and (v) to receive, indorse and collect all instruments made payable to the Grantor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. Nothing set forth in this Section 10 and no exercise by the Agent of the rights and powers granted in this Section 10 shall limit or impair the Grantor's rights under Section 7 hereof. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and shall be irrevocable until the Obligations are paid in full and the commitments of the Lenders to extend credit under the Credit Agreement are terminated. Section 11. The Agent May Perform. If the Grantor fails to perform any agreement contained herein, the Agent, upon written notice to the Grantor if practicable, may itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by the Grantor under Section 15 hereof. Section 12. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon any of them, in the absence of willful misconduct or gross negligence, to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall be under no obligation to (i) ascertain or take action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, or (ii) take any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral, but may do so at its option, and all reasonable expenses incurred in connection therewith shall be for the sole account of the Grantor and shall be added to the Guaranteed Obligations. Section 13. Remedies. If any Event of Default shall have occurred and be continuing: (a) The Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the Uniform Commercial Code as in effect from time to time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral) and also may (i) require the Grantor to, and the Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or any part of the Collateral as directed by the Agent and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties and (ii) without notice except as specified below, sell, lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as may be commercially reasonable. The Agent may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale) and thereafter hold the same, absolutely, free from any right or claim of whatsoever kind. The Agent is authorized, at any such sale, if it deems it advisable so to do, to restrict the prospective bidders or purchasers of any of the Pledged Collateral to persons who will represent and agree that they are purchasing for their own account for investment, and not with a view to the distribution or sale of any Pledged Collateral, and to take such other actions as it may deem appropriate to exempt the offer and sale of the Collateral from any registration requirements of state or federal securities laws (including, if it deems it appropriate, actions to comply with Regulation D of the Securities and Exchange Commission under the Securities Act of 1933, as from time to time amended (the "Securities Act")). To the extent permitted by law, the Grantor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter in force. The Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' written notice to the Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Agent until the selling price is paid by the purchaser thereof, but the Agent shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. The Agent instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the security interests herein granted and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. (b) Any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as Collateral for, and/or then or at any time thereafter applied against (after payment of any amounts payable to the Agent pursuant to Section 16 hereof) in whole or in part by the Agent, for the benefit of the Agent, the Lenders and the Issuing Banks, all or any part of the Guaranteed Obligations. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Guaranteed Obligations under this Agreement and the termination of the commitments of the Lenders to extend credit under the Credit Agreement shall be promptly paid over to the Grantor or to whomsoever may be lawfully entitled to receive such surplus. Section 14. Registration Rights. (a) If the Agent shall determine to exercise its right to sell all or any of the Pledged Collateral pursuant to Section 13 hereof, the Grantor agrees that, upon request of the Agent, the Grantor will, at its own expense: (i) execute and deliver, and cause each issuer of the Pledged Collateral which is a Subsidiary contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Pledged Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (ii) use its best efforts to qualify the Pledged Collateral under the state securities or "Blue Sky" laws and to obtain all necessary approvals of all Governmental Authorities for the sale of the Pledged Collateral, as requested by the Agent; (iii) cause each such issuer to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 10 of the Securities Act; and (iv) do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law. (b) Determination by the Agent to exercise its right to sell any or all of the Pledged Collateral pursuant to Section 13 hereof without making a request of the Grantor pursuant to Section 14(a) hereof shall not by the sole fact of such sale be deemed to be commercially unreasonable. Section 15. Expenses. The Grantor shall upon written demand pay to the Agent the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, as provided in Section 12.03 of the Credit Agreement. Section 16. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Grantor herefrom shall in any event be effective unless the same shall be in writing and signed by the party to be charged therewith, and they such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 17. Notices. All notices and other communications provided for hereunder shall be given in the manner set forth in the Credit Agreement and to the address first above written or, as to each party, at such other address as may be designated by such party in a written notice to the other party. Section 18. Continuing Security Interest; Termination. (a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until payment in full of the Guaranteed Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, (ii) be binding upon the Grantor, its successors and assigns and (iii) except to the extent that the rights of any transferor or assignor are limited by Section 12.01 (concerning assignments) of the Credit Agreement, inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and the Issuing Banks, subject to the terms and conditions of the Credit Agreement. Without limiting the generality of the foregoing clause (iii), any Lender may assign or otherwise transfer any interest in any Loan owing to such Lender to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Agent herein or otherwise, subject, however, to the provisions of Section 12.01 (concerning assignments) of the Credit Agreement. Nothing set forth herein or in any other Loan Document is intended or shall be construed to give the Grantor's successors and assigns any right, remedy or claim under, to or in respect of this Agreement, any other Loan Document or any Collateral. The Grantor's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession thereof or therefor. (b) Upon the payment in full of the Guaranteed Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon any such termination, the Agent shall promptly return to the Grantor, at the Grantor's expense, such of the Collateral held by the Agent as shall not have been sold or otherwise applied pursuant to the terms hereof. The Agent will, at the Grantor's expense, execute and deliver to the Grantor such other documents as the Grantor shall reasonably request to evidence such termination. Section 19. Applicable Law; Severability. This Agreement shall be construed in all respects in accordance with, and governed by, the laws of the State of New York. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. Section 20. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GRANTOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GRANTOR ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE GRANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE GRANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the day first above written. ANNTAYLOR STORES CORPORATION By:_________________________ Name:_______________________ Title:______________________ Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: _ Name: _ Title: _ ANNEX I-A PLEDGED SHARES Stock Class of Certificate No. of Issuer Stock No. Shares AnnTaylor, Inc. Common 2 1 ANNEX I-B PLEDGED DEBT NONE ANNEX II LOCATIONS OF EQUIPMENT 142 West 57th Street New York, NY 10019 ANNEX III UCC FILINGS Jurisdiction Filing Office New York Secretary of State New York New York County EXHIBIT 6.01(d)(i) FORM OF COMPLIANCE CERTIFICATE This Compliance Certificate is delivered to you pursuant to Section 6.01(d)(i) of the Amended and Restated Credit Agreement, dated as of September 29, 1995, as amended, supplemented or modified from time to time (the "Credit Agreement"), among AnnTaylor, Inc. (the "Borrower"), Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, the financial institutions from time to time party thereto as lenders (the "Lenders"), BA Securities, Inc., as Arranger, and Bank of America National Trust and Savings Association, as agent for the Lenders (in such capacity, the "Agent"). Terms defined in the Credit Agreement and not otherwise defined herein are used herein with the meanings so defined. 1. I am the duly elected, qualified and acting [Chief Financial Officer] [Vice President - Finance] of the Borrower. 2. I have reviewed and are familiar with the contents of this Certificate. I am providing this Certificate solely in my capacity as officer of the Borrower. The matters set forth herein are true to the best of my knowledge after diligent inquiry, but I express no personal opinion as to any conclusions of law or other legal matters. 3. I have reviewed the terms of the Credit Agreement and the principal Loan Documents referred to in Section 6.01(d) of the Credit Agreement and have made or caused to be made under my supervision, a review in reasonable detail of the transactions and condition of the Borrower during the accounting period covered by the financial statements attached hereto as Attachment 1 (the "Financial Statements"). Such review did not disclose the existence during or at the end of the accounting period covered by the Financial Statements, and I have no knowledge of the existence, as of the date of this Certificate, of any condition or event which constitutes an Event of Default or a Potential Event of Default [, except as set forth below]. 4. Attached hereto as Attachment 2 are the computations showing compliance with the covenants specified therein. IN WITNESS WHEREOF, I execute this Certificate this _____ day of , 199__. ANNTAYLOR, INC. By: _ Title: _ Attachment 2 to Exhibit 6.01 The information described herein is as of , 199_, and pertains to the period from , 19_ to ________________ __, 19__. I. Negative Covenants A. Indebtedness (Section 8.01) Section Amount 8.01(e) $__________ 8.01(m) $__________ B. Sales (Section 8.02(a)) Section Amount 8.02(a)(ii) $__________ 8.02(a)(iii) $__________ 8.02(a)(iv) $__________ C. Investments (Section 8.03) Section Amount 8.03(d) $__________ 8.03(e) $__________ 8.03(i)(i) $__________ 8.03(i)(ii) $__________ D. Restricted Payments (Section 8.05) Section Amount 8.05(b)(i) $__________ 8.05(b)(ii) $__________ 8.05(b)(iii) $__________ II Financial Covenants A. Minimum Net Worth (Section 9.01) Net Worth on the last day of the period covered by this Certificate $_____ B. Funded Debt to Total Capitalization (Section 9.02) 1. Funded Debt on the last day of the period covered by this Certificate $_____ 2. a. Total Capitalization on the last day of the period covered by this Certificate $_____ b. expenses related to payments under Section 8.05(b)(iii) $_____ 3. Sum of items a. and b. $_______ 4. Ratio of line 1 to line 3 _____:1 5. Funded Debt to Total Capitalization for previous fiscal quarter _____:1 C. Fixed Charge Coverage Ratio (Section 9.03) 1. EBITDA for the twelve-month period ending on the last day covered by this Certificate or, if it has been less than twelve months since the Initial Funding Date, such lesser period (the "Prior Period") $_____ 2. a. Capital Expenditures (excluding Capital Expenditures in respect of the Distribution Center) paid or accrued during the Prior Period $_____ b. Scheduled payments of principal made during the Prior Period excluding any payment made upon termination of a Receivables Transaction $_____ c. Cash Interest Expense during the Prior Period d. Tax Expense during the Prior Period $_____ 3. Sum of items a., b., c. and d. $_____ 4. Ratio of line 1 to line 3 _____:1 EXHIBIT 6.01(d)(ii) FORM OF PRICING RATIO CERTIFICATE Pursuant to Section 6.01(d)(ii) of the Amended and Restated Credit Agreement, dated as of September 29, 1995, among AnnTaylor, Inc., the several banks and other financial institutions from time to time parties thereto as Lenders, Bank of America National Trust and Savings Association, in its capacity as Agent for such Lenders, BA Securities, Inc. as Arranger and Bank of America National Trust and Savings Association and Fleet Bank, National Association as Co-Agents, the undersigned hereby certifies that set forth below is the calculation of the Pricing Ratio in effect for the fiscal quarter following the fiscal quarter in respect of which this Certificate is issued: (Four fiscal quarters ended__________________) Net Income, plus $ _ amortization of intangibles and depreciation, plus _ Interest Expense, plus _ income tax expense, plus _ extraordinary losses, minus _ extraordinary gains (net of taxes) _ _ EBITDA $ _ Funded Debt at end of last fiscal quarter $ _ Pricing = Funded Debt $ = _ Ratio EBITDA $ IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the date set forth below. Dated: _ ANNTAYLOR, INC. By: _ Title: EXHIBIT 12.01 FORM OF ASSIGNMENT AND ACCEPTANCE Dated _____________, 19__ Reference is made to the Amended and Restated Credit Agreement dated as of September 29, 1995 (as amended, supplemented or modified from time to time, the "Credit Agreement") among AnnTaylor, Inc., a Delaware corporation ("Borrower"), Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, the Lenders (as defined in the Credit Agreement), Bank of America National Trust and Savings Association ("Bank of America"), as Agent for the Lenders (the "Agent"), and BA Securities, Inc., as Arranger. Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings. ___________________ (the "Assignor") and __________________ (the "Assignee"), agree as follows: 1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, WITHOUT RECOURSE, a ______%1 interest in and to all of the Assignor's rights and obligations under the Credit Agreement in respect of the Assigned Facility described in Schedule I hereto as of the Effective Date (as defined below) including, without limitation, such percentage interest in the Assignor's Commitment as in effect on the Effective Date, the Loans owing to the Assignor on the Effective Date and the Assignor's interest in Letter of Credit Obligations on the Effective Date, in each case to the extent included in the Assigned Facility described in Schedule I. 2. The Assignor (i) represents and warrants that, as of the date hereof, its Revolving Loan Commitment and Term Loan Commitment (without giving effect to assignments thereof which have not yet become effective) are $__________ and $__________, respectively, and the aggregate outstanding principal amount of Revolving Loans and Term Loans owing to it (without giving effect to assignments thereof which have not yet become effective) are $__________ and $__________, respectively; (ii) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or any of the Loan Documents or the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any of the Loan Documents or any other instrument or document furnished pursuant thereto; and (iv) makes no representation or warranty and assumes no responsibility with respect to the financial condition of Borrower or the performance or observance by Borrower of any of its obligations under the Credit Agreement or any of the Loan Documents or any other instrument or document furnished pursuant thereto. 3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 6.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent, the Arranger, the Assignor, the Issuing Bank or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement; (iii) appoints and authorizes the Agent to take such actions on its behalf and to exercise such powers under the Loan Documents as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will become a party to the Credit Agreement on the Effective Date and perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement are required to be performed by it as a Lender; and (v) specifies as its address for notices the office set forth beneath its name on the signature pages hereof. 4. The effective date of this Agreement and Acceptance shall be ____________ (the "Effective Date").2 Following the execution of this Assignment and Acceptance and receipt of Borrower's [and the Issuing Bank's] consent thereto, it will be delivered to the Agent for acceptance and recording by the Agent. 5. Upon such acceptance, consent and recording, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and under the Loan Documents and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement. 6. Upon such acceptance, consent and recording, from and after the Effective Date, the Agent shall make all payments under the Credit Agreement in respect of the interest assigned hereby (including, without limitation, all payments of principal, interest and commitment fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement for periods prior to the Effective Date directly between themselves. 7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York. [NAME OF ASSIGNOR] By __________________________ Name: Title: After the Effective Date: Commitment: $______ Outstanding Loans: $______ [Pro Rata Revolving Loan Share of Letter of Credit Obligations] $______ [NAME OF ASSIGNEE] By __________________________ Name: Title: Notice Address: After the Effective Date: Commitment: $______ Outstanding Loans: $______ [Pro Rata Revolving Loan Share of Letter of Credit Obligations] $______ Consented to this ___ day of ____________, 19 __ ANNTAYLOR, INC. By ________________________ Name: Title: [[NAME OF ISSUING BANK] By ________________________ Name: Title:] Accepted this ___ day of _______________, 19 _ BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION as Agent By ________________________ Name: Title: Schedule I to Assignment and Acceptance Assigned Facilities: (i) Term Loan Commitment Assigned: $_____________ (ii) Revolving Loan Commitment Assigned: $_____________ _______________________________ 1 Specify percentage in no more than 4 decimal points. 2 Such date shall be at least five Business Days after the execution of this Assignment and Acceptance. EX-10 3 EXHIBIT 10.2 098888\0048\01864\959NC8U9.SCD 10/13/95 2:25PM 098888\0048\01864\959NC8U9.SCD 10/13/95 2:25PM EXECUTION COPY BORROWER PLEDGE AGREEMENT THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Agreement"), dated as of September 29, 1995 is made by ANNTAYLOR, INC., a Delaware corporation, with its principal place of business located at 142 West 57th Street, New York, New York 10019 (the "Grantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455 Market Street, San Francisco, California 94103, in its capacity as Agent under the "Credit Agreement" (as defined below) (the "Agent"). R E C I T A L S : A. The Grantor, the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, and certain financial institutions currently and in the future to be the parties to the Credit Agreement (as defined below) (such financial institutions being collectively referred to as the "Lenders"), have entered into a certain Amended and Restated Credit Agreement, dated as of September 29, 1995 (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the capitalized terms not otherwise defined herein are being used as defined in the Credit Agreement); B. The Grantor and the Agent are parties to the Pledge Agreement, dated as of July 29, 1994 (the "Existing Pledge Agreement"); C. It is a condition precedent to the effectiveness of the Credit Agreement and to the making of the Loans by the Lenders and the issuing of the Letters of Credit by any Issuing Bank that the Existing Pledge Agreement shall be amended and restated as set forth herein; NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders to make the Loans and each Issuing Bank to issue the Letters of Credit under the Credit Agreement, the Grantor hereby agrees with the Agent for its benefit and for the benefit of the Lenders and the Issuing Banks, and the Agent, by acceptance hereof, hereby agrees, that the Existing Pledge Agreement is hereby amended and restated in its entirety as follows: Section 1. Grant of Security. To secure the prompt and complete payment, observance and performance when due (whether at the stated maturity, by acceleration or otherwise) of all the Obligations, the Grantor hereby assigns and pledges to the Agent, and hereby grants to the Agent, for its benefit and the benefit of the Lenders and the Issuing Banks, a security interest in all of the Grantor's right, title and interest in and to the following, whether now owned or existing or hereafter arising or acquired and wheresoever located (collectively, the "Collateral"): EQUIPMENT: All machinery and equipment, all manufacturing, distribution, selling, data processing and office equipment, all furniture, furnishings, appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of every type and description (other than "inventory", as such term is defined in the Uniform Commercial Code in effect on the date hereof in the State of New York (the "UCC")), in each instance whether now owned or hereafter acquired by the Grantor and wherever located (collectively, "Equipment"); GENERAL INTANGIBLES: All rights, interests, choses in action, causes of action, claims and all other intangible property of the Grantor of every kind and nature (other than "accounts", as such term is defined in the UCC), in each instance whether now owned or hereafter acquired by the Grantor, including, without limitation, all corporate and other business records; all loans, royalties, and other obligations receivable; all inventions, designs, patents, patent applications, service marks, trade names and trademarks (including any applications for the foregoing and whether or not registered) and the goodwill of the Grantor's business connected with and symbolized by such trademarks, trade secrets, computer programs, software, printouts and other computer materials, goodwill, registrations, U.S. registered copyrights, licenses relating to trademarks and U.S. registered copyrights, franchises, customer lists, credit files, correspondence and advertising materials; all customer and supplier contracts, firm sale orders, rights under license and franchise agreements, and other contracts and contract rights; all interests in partnerships, joint ventures and other entities; all tax refunds and tax refund claims; all right, title and interest under leases, subleases, licenses and concessions and other agreements relating to real or personal property; all pay ments due or made to the Grantor in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental authority; all deposit accounts (general or special) with any bank or other financial institution; all credits with and other claims against carriers and shippers; all rights to indemnification; all reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; all proceeds of insurance of which the Grantor is beneficiary; and all letters of credit, guaranties, liens, security interests and other security held by or granted to the Grantor; and all other intangible property, whether or not similar to the foregoing, including, without limitation, all "general intangibles", as such term is defined in the UCC (in each instance, however and wherever arising, collectively, "General Intangibles"); CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all instruments (including, without limitation, (a) the shares of stock described in Annex I-A hereto (the "Pledged Shares") and all dividends, instruments and other property from time to time distributed in respect thereof or in exchange therefor, and (b) the notes and debt instruments described in Annex I-B hereto (the "Pledged Debt") and all payments thereunder and instruments and other property from time to time delivered in respect thereof or in exchange therefor), and all bills of lading, warehouse receipts and other documents of title and documents, including, without limitation, all "chattel paper", "instruments" and "documents", as such terms are defined in the UCC, in each instance whether now owned or hereafter acquired by the Grantor, other than any promissory note in an amount less than $1,000,000 owing to the Grantor from a senior executive or key employee of the Grantor (an "Excluded Note") (collectively, "Chattel Paper, Instruments and Documents"); and OTHER PROPERTY: All property or interests in property now owned or hereafter acquired by the Grantor which now may be owned or hereafter may come into the possession, custody or control of the Agent, any of the Lenders, any Issuing Bank or any agent or Affiliate of any of them in any way or for any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all rights and interests of the Grantor, now existing or hereafter arising and however and wherever arising, in respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and debt and equity securities, whether or not certificated, and warrants, options, puts and calls and other rights to acquire or otherwise relating to the same; (ii) money; (iii) proceeds of loans, including without limitation, all the Loans made to the Grantor under the Credit Agreement; and (iv) insurance proceeds and books and records relating to any of the property covered by this Agreement (collectively, "Other Property"); together, in each instance, with all accessions and additions thereto, substitutions therefor, and replacements, proceeds and products thereof; provided, however, that (x) Collateral shall not include Receivables and (y) the foregoing grant of a security interest shall not include a security interest in any lease and any property subject to an enforceable lease which by its terms expressly prohibits the right of the Grantor to grant a security interest in such lease or property. The Borrower agrees to use its best commercially reasonable efforts to ensure that no future lease contains any restrictions on the Borrower's right to grant a security interest in any equipment placed on the leased premises. Section 2. Grantor Remains Liable. Anything herein to the contrary notwithstanding, (a) the Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights hereunder shall not release the Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral (except to the extent that such exercise prevents the Grantor from satisfying such duties and obligations), and (c) the Agent shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Agent be obligated to perform any of the obligations or duties of the Grantor thereunder, to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by the Grantor or the sufficiency of any performance by any party under any such contract or agreement or to take any action to collect or enforce any claim for payment assigned hereunder. Section 3. Delivery of Pledged Collateral. All certificates, notes and other instruments representing or evidencing the Pledged Shares or the Pledged Debt and all other instruments now owned or at any time hereafter acquired by the Grantor other than any Excluded Notes (collectively, the "Pledged Collateral") shall be delivered to and held by or on behalf of the Agent pursuant hereto (except as otherwise provided in the last sentence of Section 4(f) hereof) and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Agent. Upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right, at any time in its discretion and without notice to the Grantor, to transfer to or to register in the name of the Agent or any nominee of the Agent any or all of the Pledged Collateral, subject only to the revocable rights specified in Section 8 hereof. In addition, upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. Section 4. Representations and Warranties. The Grantor represents and warrants as follows: (a) As of the date of this Agreement, the locations listed on Annex II constitute all locations at which Equipment is located, except for Equipment temporarily in transit. As of the date of this Agreement, the chief place of business and chief executive office of the Grantor are located at the address first specified above for the Grantor. (b) The Grantor is the legal and beneficial owner of the Collateral free and clear of all liens, security interests or other encumbrances, except as expressly permitted by subsection 8.02(b) of the Credit Agreement. For the past five years the business of the Grantor has been conducted only by the following corporations and under the following corporate names and not under any trade name or other name: 1) AnnTaylor, Inc. 2) AnnTaylor Factory Stores 3) AnnTaylor Loft 4) AnnTaylor Studio (c) The Grantor has exclusive possession and control of the Equipment, except for (i) Equipment in the possession and control of the Grantor's lessees and licensees under written lease and license agreements entered into in the ordinary course of business and consistent with past practice and (ii) Equipment in transit with common or other carriers. (d) The Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable. The Pledged Debt of Grantor's Subsidiaries (if any), and, to the best of the Grantor's knowledge, all other Pledged Debt, has been duly authorized, issued and delivered, and is the legal, valid, binding and enforceable obligation of the issuers thereof. (e) The Pledged Shares indicated on Annex I-A hereto constitute all of the shares of stock held by the Grantor of the respective issuers thereof. The Pledged Shares and the Pledged Debt constitute all of the Pledged Collateral except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business and with respect to which the Agent has not at any time requested possession and which are not a material portion of the Collateral under this Agreement or the Trademark Assignment executed by Grantor, taken as a whole (the "Personal Property Collateral") either singly or in the aggregate. (f) This Agreement creates a valid security interest in the Collateral (other than the Pledged Collateral), securing the payment of the Obligations, and all filings and other actions necessary or desirable to perfect such security interest under the Uniform Commercial Code as enacted in each jurisdiction listed on Annex III hereto have been duly taken or will be duly taken not later than five Business Days after the date hereof. The pledge and delivery of the Pledged Collateral pursuant to this Agreement and all other filings and other actions taken by the Grantor to perfect such security interest prior to the date hereof, create a valid and perfected first priority security interest in the Pledged Collateral, securing the payment of the Obligations except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business with respect to which the Agent has not at any time requested possession and which are not a material portion of the Personal Property Collateral either singly or in the aggregate. (g) Other than the filings with the United States Patent and Trademark Office and filings under the UCC, no authorization, approval or other action by, and no notice to or filing with, any federal, state or local governmental authority that have not already been taken or made and which are in full force and effect, is required (i) for the pledge by the Grantor of the Pledged Collateral or for the grant by the Grantor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by the Grantor, (ii) for the exercise by the Agent of the voting or other rights provided in this Agreement with respect to the Pledged Collateral or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with the disposition thereof by laws affecting the offering and sale of securities generally), or (iii) for the exercise by the Agent of any of its other rights or remedies hereunder. Section 5. Further Assurances. (a) The Grantor agrees that from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or reasonably desirable, or that the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral; provided, however, that the Grantor shall in no event be required to execute any leasehold mortgage with respect to any lease. Without limiting the generality of the foregoing, at the request of the Agent, the Grantor shall: (i) if an Event of Default shall have occurred and be continuing, mark conspicuously each document included in the Collateral and, at the request of the Agent made at any time, and whether or not an Event of Default shall have occurred, mark each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Agent, indicating that such document or Collateral is subject to the security interest granted hereby; and (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) The Grantor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Grantor where permitted by law. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c) The Grantor shall furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may request, all in reasonable detail. Section 6. As to Equipment. The Grantor shall: (a) Keep the Equipment (other than Equipment sold in accordance with Section 8.02(a) of the Credit Agreement) at the places specified in Section 4(a) hereof and deliver written notice to the Agent at least 30 days prior to establishing any other location at which it reasonably expects to maintain Equipment in which jurisdiction all action required by Section 5 hereof shall have been taken with respect to all such Equipment. (b) Maintain or cause to be maintained in good repair, working order and condition, excepting ordinary wear and tear and damage due to casualty, all of the Equipment, and make or cause to be made all appropriate repairs, renewals and replacements thereof, to the extent not obsolete and consistent with past practice of the Grantor, as quickly as practicable after the occurrence of any loss or damage thereto which are necessary or desirable to such end. The Grantor shall promptly furnish to the Agent a statement respecting any material loss or damage as a result of a single occurrence to any of the Equipment which has an aggregate fair market value exceeding $250,000. Section 7. As to the Pledged Collateral. (a) So long as no Event of Default shall have occurred and be continuing: (i) The Grantor and not the Agent shall be entitled to exercise any and all voting and other rights of consent or approval pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided, however, that the Grantor shall not exercise or refrain from exercising any such right without the consent of the Agent if such action or inaction would have a material adverse effect on the value of the Pledged Collateral or the benefits to the Agent, the Lenders and the Issuing Banks including, without limitation, the validity, priority or perfection of the security interest granted hereby or the remedies of the Agent hereunder. (ii) The Grantor and not the Agent shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral; provided, however, that any and all (A) dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, (B) dividends and other distributions paid or payable in cash in respect of any Pledged Collateral consisting of stock of any Subsidiary of the Grantor and dividends and other distributions paid or payable in cash in respect of any other Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Collateral, shall forthwith be delivered to the Agent, in the case of (A) above, to hold as Pledged Collateral and shall, if received by the Grantor, be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks, be segregated from the other property or funds of the Grantor, and be forthwith delivered to the Agent, as Pledged Collateral in the same form as so received (with any necessary indorsement) and, in the case of (B) and (C) above, to the extent required under the terms of the Credit Agreement, shall forthwith be delivered to the Agent to be applied to the Obligations in such order as provided in subsection 2.06(b) of the Credit Agreement. (iii) The Agent shall promptly execute and deliver (or cause to be executed and delivered) to the Grantor all such proxies and other instruments as the Grantor may reasonably request for the purpose of enabling the Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above. (b) Upon the occurrence and during the continuance of an Event of Default and at the Agent's option: (i) All rights of the Grantor to exercise the voting and other rights of consent or approval which it would otherwise be entitled to exercise pursuant to Section 8(a)(i) hereof and to receive the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) hereof shall cease, and all such rights shall thereupon become vested in the Agent, who shall thereupon have the sole right to exercise such voting and other rights of consent or approval and to receive and hold as Pledged Collateral such dividends and interest payments. (ii) All dividends and interest payments which are received by the Grantor contrary to the provisions of paragraph (i) of this Section 8(b) hereof shall be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks and shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Agent as Pledged Collateral in the same form as so received (with any necessary indorsement). Section 8. Additional Shares. The Grantor agrees that it will (i) cause each issuer of the Pledged Shares subject to its control not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to the Grantor or as otherwise permitted under the Credit Agreement, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of each issuer of the Pledged Shares. The Grantor hereby authorizes the Agent to modify this Agreement by amending Annex I to include such additional shares or other securities. Section 9. The Agent Appointed Attorney-in-Fact. The Grantor hereby irrevocably appoints the Agent the Grantor's attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Agent's discretion, to take, upon the occurrence and during the continuance of an Event of Default, any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Grantor under Section 7 hereof), including, without limitation: (i) to obtain and adjust insurance required to be paid to the Agent pursuant to Section 7.05 of the Credit Agreement, (ii) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (iii) to receive, indorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any proceedings which the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Agent with respect to any of the Collateral, and (v) to receive, indorse and collect all instruments made payable to the Grantor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. Nothing set forth in this Section 9 and no exercise by the Agent of the rights and powers granted in this Section 9 shall limit or impair the Grantor's rights under Section 7 hereof. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and shall be irrevocable until the Obligations are paid in full and the commitments of the Lenders to extend credit under the Credit Agreement are terminated. Section 10. The Agent May Perform. If the Grantor fails to perform any agreement contained herein, the Agent, upon written notice to the Grantor if practicable, may itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by the Grantor under Section 14 hereof. Section 11. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it, in the absence of willful misconduct or gross negligence, to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall be under no obligation to (i) ascertain or take action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, or (ii) take any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral, but may do so at its option, and all reasonable expenses incurred in connection therewith shall be for the sole account of the Grantor and shall be added to the Obligations. Section 12. Remedies. If any Event of Default shall have occurred and be continuing: (a) The Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the Uniform Commercial Code as in effect from time to time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral) and also may (i) require the Grantor to, and the Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or any part of the Collateral as directed by the Agent and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties and (ii) without notice except as specified below, sell, lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as may be commercially reasonable. The Agent may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale) and thereafter hold the same, absolutely, free from any right or claim of whatsoever kind. The Agent is authorized, at any such sale, if it deems it advisable so to do, to restrict the prospective bidders or purchasers of any of the Pledged Collateral to persons who will represent and agree that they are purchasing for their own account for investment, and not with a view to the distribution or sale of any such Pledged Collateral and to take such other actions as it may deem appropriate to exempt the offer and sale of the Collateral from any registration requirements of state or federal securities laws (including, if it deems it appropriate, actions to comply with Regulation D of the Securities and Exchange Commission under the Securities Act of 1933, as from time to time amended (the "Securities Act")). To the extent permitted by law, the Grantor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter in force. The Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' written notice to the Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Agent until the selling price is paid by the purchaser thereof, but the Agent shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. The Agent instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the security interests herein granted and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. (b) Any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as Collateral for, and/or then or at any time thereafter applied against (after payment of any amounts payable to the Agent pursuant to Section 15 hereof) in whole or in part by the Agent, for the benefit of the Agent, the Lenders and the Issuing Banks, all or any part of the Obligations in such order as is provided in Section 2.06(b) of the Credit Agreement. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Obligations under this Agreement and the termination of the commitments of the Lenders to extend credit under the Credit Agreement shall be promptly paid over to the Grantor or to whomsoever may be lawfully entitled to receive such surplus. Section 13. Registration Rights. (a) If the Agent shall determine to exercise its right to sell all or any of the Pledged Collateral pursuant to Section 12 hereof, the Grantor agrees that, upon request of the Agent, the Grantor will, at its own expense: (i) execute and deliver, and cause each issuer of the Pledged Collateral which is a Subsidiary contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Pledged Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (ii) use its best efforts to qualify the Pledged Collateral under the state securities or "Blue Sky" laws and to obtain all necessary approvals of all Governmental Authorities for the sale of the Pledged Collateral, as requested by the Agent; (iii) cause each such issuer to make available to its security holders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 10 of the Securities Act; and (iv) do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law. (b) Determination by the Agent to exercise its right to sell any or all of the Pledged Collateral pursuant to Section 12 hereof without making a request of the Grantor pursuant to Section 13(a) hereof shall not by the sole fact of such sale be deemed to be commercially unreasonable. Section 14. Expenses. The Grantor shall upon written demand pay to the Agent the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, as provided in Section 12.03 of the Credit Agreement. Section 15. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Grantor herefrom shall in any event be effective unless the same shall be in writing and signed by the party to be charged therewith, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 16. Notices. All notices and other communications provided for hereunder shall be given in the manner set forth in the Credit Agreement and to the addresses first above written or, as to each party, at such other address as may be designated by such party in a written notice to the other party. Section 17. Continuing Security Interest; Termination. (a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until payment in full of the Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, (ii) be binding upon the Grantor, its successors and assigns and (iii) except to the extent that the rights of any transferor or assignor are limited by Section 12.01 (concerning assignments) of the Credit Agreement, inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and the Issuing Banks, subject to the terms and conditions of the Credit Agreement. Without limiting the generality of the foregoing clause (iii), any Lender may assign or otherwise transfer any interest in any Loan owing to such Lender to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Agent herein or otherwise, subject, however, to the provisions of Section 12.01 (concerning assignments) of the Credit Agreement. Nothing set forth herein or in any other Loan Document is intended or shall be construed to give the Grantor's successors and assigns any right, remedy or claim under, to or in respect of this Agreement, any other Loan Document or any Collateral. The Grantor's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession thereof or therefor. (b) Upon the payment in full of the Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon any such termination, the Agent shall promptly return to the Grantor, at the Grantor's expense, such of the Collateral held by the Agent as shall not have been sold or otherwise applied pursuant to the terms hereof. The Agent will, at the Grantor's expense, execute and deliver to the Grantor such other documents as the Grantor shall reasonably request to evidence such termination. (c) Upon any release of the Agent's security interest in any part of the Collateral expressly required to be given by the Agent pursuant to Section 11.12(c) of the Credit Agreement, the Agent shall execute and deliver to the Grantor, at the Grantor's expense, all termination statements, assignments and other documents and instruments as may be necessary or desirable to release fully the security interests in such Collateral granted hereby; provided, however, that (i) the Agent shall not be required to execute any such documents on terms which, in the Agent's opinion, would expose the Agent to liability or create any obligation or entail any consequence other than the release of such security interests without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any security interests, liens or other encumbrances upon (or obligations of the Grantor in respect of) all interests retained by the Grantor, including without limitation, the proceeds of any sale, all of which shall continue to constitute part of the Collateral. Section 18. Applicable Law; Severability. This Agreement shall be construed in all respects in accordance with, and governed by, the laws of the State of New York. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. Section 19. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GRANTOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GRANTOR ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE GRANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE GRANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION. IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the day first above written. ANNTAYLOR, INC. By: /s/Walter J. Parks Name: Walter J. Parks Title: Sr. V.P. - Finance Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Dietmar Schiel Name: Dietmar Schiel Title: Vice President ANNEX I-A PLEDGED SHARES Stock Class of Certificate No. of Issuer Stock No. Shares AnnTaylor Travel, Inc. Common 1 1 AnnTaylor Funding, Inc. Common 1 100 AnnTaylor Distribution Services, Inc. Common 1 1 CAT US Inc. Common 1 2,000 CAT US Inc. Common 11 2,000 C.A.T. (Far East) Limited Common 5 30,000 C.A.T. (Far East) Limited Common 8 30,000 ANNEX I-B PLEDGED DEBT NONE ANNEX II LOCATIONS OF EQUIPMENT See Attached. 3 15 280 MADISON SQUARE 5901 UNIVERSITY DRIVE HUNTSVILLE AL 358060000 2058372425 3 15 355 RIVERCHASE GALLERIA 2000 RIVERCHASE DR, SPE 208 BIRMINGHAM AL 352440000 3 15 273 LITTLE ROCK 2002 PK PLZ SHOPPING CTR LITTLE ROCK AR 722050000 5016639571 8 74 742 ARIZONA FACT SHOPS 4250 WEST BOW RD PHOENIX AZ 850270000 6024659540 4 18 127 TUCSON MALL 4500 N. ORACLE SUITE 455 TUCSON AZ 857050000 6028884080 4 18 174 BILTMORE FASHION PARK 2560 E. CAMELBACK RD PHOENIX AZ 850160000 6024683339 4 18 331 SCOTTSDALE FASHION SQ 7014 E CAMELBACK ROAD SCOTTSDALE AZ 852510000 6024238093 8 74 732 DESERT HILLS (CABAZON) 48400 SEMINOLE DRIVE STE 5000 CABAZON CA 922300000 8 74 740 MARINA SQ (SAN LEANDRO) MARINA SQUARE SAN LEANDRO CA 945770000 8 74 739 NAPA 681 FACTORY STORE DRIVE NAPA CA 945580000 8 74 717 CITADEL 100 CITADEL DR, STE 114 COMMERCE CA 900400000 2137257033 8 74 725 BARSTOW 2796 TANGER WAY, SPACE 213 BARSTOW CA 923110000 6192532999 4 22 383 CARMEL PLAZA 213 OCEAN AVE. + MISSION AVE CARMEL CA 939210000 4086269565 8 74 715 GILROY 681 LEAVESLEY ROAD, STE 10 GILROY CA 950200000 4088481188 8 74 714 PETALUMA 2220 PETALUMA BLVD. NORTH PETALUMA CA 949520000 7077669592 8 79 799 GILROY 8300 ARROYO CIRCLE GILROY CA 950200000 4 22 399 POST STREET 240 POST STREET SAN FRANCISCO CA 941080000 4 23 299 BROADWAY PLAZA 1170 BROADWAY PLAZA WALNUT CREEK CA 945960000 5109370606 6 64 505 LA CUMBRE II 120 S. HOPE AVE, #F16 SANTA BARBARA CA 931050000 8055631346 4 23 408 GALLERIA @ SOUTH BAY HAWTHORN BLVD. REDONDO BEACH CA 902780000 4 23 330 CORTE MADERA 1616 REDWOOD HIGHWAY CORTE MADERA CA 949250000 4159270577 4 23 324 EMBARCADERO CENTER EMBARCADERO CENTER #3 SAN FRANCISCO CA 941110000 4159895355 4 23 197 STONERIDGE MALL 2511 STONERIDGE MALL PLEASANTON CA 945880000 5104633240 4 23 94 PALO ALTO 18 STANFORD SHPNG. CTR. PALO ALTO CA 943040000 4158530433 4 23 193 SAN FRANSISCO CENTER 865 MARKET STREET SAN FRANCISCO CA 941030000 4155432487 6 64 509 BROADWAY PLAZA 1275 BROADWAY PLAZA WALNUT CREEK CA 945960000 5109338551 8 79 798 MILPITAS GREAT MALL OF BAY AREA MILPITAS CA 950350000 6 64 504 BEVERLY CENTER 131 NO. 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VIA RANCHO PKY/S319 ESCONDIDO CA 920250000 6197379195 4 19 185 UNIVERSITY TOWN CTR 4417 LA JOLLA VILLAGE DR., N-9 SAN DIEGO CA 921221206 6194506550 4 19 286 SOUTH COAST PLAZA 3333 BRISTOL STREET COSTA MESA CA 926260000 7147541915 4 20 70 WESTWOOD 1031 WESTWOOD BLVD LOS ANGELES CA 900240000 3102086549 4 19 319 FASHION VALLEY 324 FASHION VALLEY SAN DIEGO CA 921080000 6196832090 4 20 289 CENTURY CITY 10250 SANTA MONICA DR LOS ANGELES CA 900670000 3102773041 4 20 73 BEVERLY HILLS 357 N. CAMDEN DRIVE BEVERLY HILLS CA 902100000 3108587840 4 22 282 HILLSDALE SHOPPING CTR 276 HILLSDALE MALL SAN MATEO CA 944030000 4155711030 4 20 75 DEL AMO FASHION CTR 239 DEL AMO FASHION CTR. TORRANCE CA 905030000 3103716546 4 20 76 BEVERLY CENTER 8522 BEVERLY BLVD/S.782 LOS ANGELES CA 900480000 3106596655 4 20 171 CITICORP PLAZA 735 SOUTH FIGUEROA LOS ANGELES CA 900170000 2136292932 4 22 195 ARDEN FAIR 1689 ARDEN WAY SACRAMENTO CA 958150000 9165670290 4 20 182 PALOS VERDES 550 DEEP VALLEY ROAD ROLLING HILLS CA 902740000 3105414470 4 20 181 SANTA MONICA PLACE 175 SANTA MONICA PLACE SANTA MONICA CA 904010000 3103953650 8 74 741 CAMARILLO 850 VENTURA BLVD. 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MANCHESTER CT 060400000 2036447217 5 5 2 WESTPORT 97 MAIN STREET WESTPORT CT 068800000 2032277557 5 5 4 GREENWICH 55 EAST PUTNAM AVENUE GREENWICH CT 068300000 2036616455 5 5 1 NEW HAVEN 968 CHAPEL STREET NEW HAVEN CT 065100000 2037772304 9 95 378 BOX & HOLD - SPRING '94 130 HAMILTON STREET NEW HAVEN CT 065110000 2037722516 7 91 95 ANN TAYLOR DIRECT 130 HAMILTON STREET NEW HAVEN CT 065110000 8002898295 1 7 134 UNION STATION 50 MASSACHUSETTS AVE. NE WASHINGTON DC 200020000 2023718010 1 7 21 GEORGETOWN PARK 3222 M STREET, N.W. WASHINGTON DC 200070000 2023385290 6 61 510 UNION STATION 40 MASSACHUSETTS AVE-- N E WASHINGTON DC 200020000 2022892631 1 7 36 MAZZA GALLERIE 5300 WISCONSIN AVENUE WASHINGTON DC 200150000 2022441940 1 7 334 K STREET 1720 K STREET, N.W. WASHINGTON DC 200060000 2024663544 6 61 506 GEORGETOWN PARK 3222 M STREET NW-SP 23 WASHINGTON DC 200070000 2023381061 8 71 737 REHOBOTH BEACH REHOBOTH OUTLET CTR REHOBOTH BEACH DE 199710000 3 16 101 FASHION MALL 321 N. UNIVERSITY DR. 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ROUTE 59, SUITE 2032 NANUET NY 109540000 9146230390 1 2 145 75TH & 3RD 1320 THIRD AVENUE NEW YORK NY 100210000 2128613392 8 71 734 NIAGARA FALLS 1900 MILITARY RD NIAGARA FALLS NY 143040000 1 2 203 UPPER WEST SIDE 2015-17 BROADWAY(@ 69TH ST NEW YORK NY 100230000 2128737344 5 5 15 EASTCHESTER 696 WHITE PLAINS RD. SCARSDALE NY 105830000 9147230500 5 3 338 CAROUSEL CENTER 320 HIAWATHA BLVD. WEST SYRACUSE NY 132099501 3154664001 8 71 709 WOODBURY COMMONS ROUTE 32 C-3 CENTRAL VALLEY NY 109170000 9149284586 1 2 208 87TH & BROADWAY 2380 BROADWAY NEW YORK NY 100240000 2127213130 1 2 49 THIRD AVENUE (@ 50TH ST. 805 THIRD AVENUE NEW YORK NY 100220000 2123085333 1 25 309 WORLD FINANCIAL CTR 225 LIBERTY STREET NEW YORK NY 102810000 2129451991 1 25 207 MANHATTAN MALL @ 33RD ST 901 AVE OF AMERICAS NEW YORK NY 100010000 2125643992 1 2 14 80TH & MADISON 1055 MADISON AVENUE NEW YORK NY 100280000 2129888930 1 25 200 FIFTH AVENUE 575 FIFTH AVENUE NEW YORK NY 100170000 2129223621 5 3 29 MANHASSET 1990 NORTHERN BLVD. MANHASSET NY 110300000 5166271028 1 1 362 645 MADISON AVENUE 645 MADISON AVENUE NEW YORK NY 100220000 1 25 99 STATEN ISLAND MALL 2655 RICHMOND AVE. STATEN ISLAND NY 103140000 7189837744 1 25 397 SOUTH STREET SEAPORT 25 FULTON STREET NEW YORK NY 100380000 5 3 140 WOODBURY COMMONS 8285 JERICHO T'PIKE WOODBURY NY 117970000 5163674142 8 71 723 RIVERHEAD TANGER DRIVE STE 512 RIVERHEAD NY 119010000 5163698800 5 3 201 CEDARHURST 445 CENTRAL AVENUE CEDARHURST NY 115160000 5163740420 5 3 209 ROOSEVELT FIELD MALL RSVLT FIELD MALL/S-1208 GARDEN CITY NY 115300000 5167413700 5 3 205 WALDEN GALLERIA 2000 WALDEN AVENUE BUFFALO NY 142250000 7166846117 5 3 405 BRIDGEHAMPTON COMMONS BRIDGEHAMPTON NY 119320000 5 3 396 WALT WHITMAN MALL 160-5 RTE HUNTINGTON NY 117460000 5164234443 5 3 204 CROSSGATE MALL 120 WASHINGTON AVE. EXT. ALBANY NY 122030000 5184564433 5 3 393 EASTVIEW MALL 7979 PITTSFORD-VICTOR RD VICTOR NY 145640000 7164259650 2 14 321 TOWER CITY CENTER 230 HURON ROAD NW CLEVELAND OH 441130000 2162411290 6 62 503 COLUMBUS CITY CENTER 315 COLUMBUS CITY DRIVE COLUMBUS OH 432150000 6142286688 2 14 295 WORTHINGTON MALL 111 WORTHINGTON MALL COLUMBUS OH 430850000 6148484557 6 62 502 KENWOOD TOWN CENTER 7875 MONTGOMERY ROAD CINCINNATI OH 452360000 5137940040 2 14 354 BEACHWOOD PLACE 26300 CEDAR ROAD, SPACE 152 BEACHWOOD OH 441220000 2 14 386 ERIEVIEW GALLERIA 1301 EAST 9TH STREET CLEVELAND OH 441140000 2162416622 2 14 292 FAIRFIELD COMMONS 2727 FAIRFIELD COMMONS BEAVER CREEK OH 454310000 5133200040 2 14 244 KENWOOD TOWN CENTRE 7875 MONTGOMERY ROAD CINCINNATI OH 452360000 5137917544 8 73 727 AURORA FARMS 549 S. CHILLICOTHE RD. STE 400 AURORA OH 442020000 2165625115 2 14 126 TOWER PLACE 28 WEST 4TH ST/B-33 CINCINNATI OH 452020000 5136514590 2 14 245 COLUMBUS CITY CENTER 303 CITY CENTER DRIVE COLUMBUS OH 432150000 6142213335 2 14 248 WESTGATE MALL 3190 WESTGATE MALL FAIRVIEW PK OH 441260000 2163333351 8 73 712 OHIO FACTORY SHOPS 8000 FACTORY SHOPS BLVD. JEFFERSONVILLE OH 431280000 6149482100 3 17 262 OKLAHOMA CITY 50 PENN PLACE OKLAHOMA CITY OK 731180000 4058433557 3 17 263 UTICA SQUARE 1948 UTICA SQUARE TULSA OK 741140000 9187445073 3 17 346 WOODLAND HILLS 7021 S. MEMORIAL DR. -S 158 TULSA OK 741330000 4 30 196 PIONEER PLACE 700 SW 5TH AVENUE PORTLAND OR 972040000 5032220125 4 30 388 WASHINGTON SQ SHOPPING CT 9585 WEST WASHINGTON SQ PORTLAND OR 972230000 8 71 735 THE CROSSINGS 285 CROSSINGS FACTORY TANNERSVILLE PA 183720000 7176889605 8 72 706 MILLSTREAM 201 OUTLET DRIVE LANCASTER PA 176020000 7173932074 2 9 44 KING-OF-PRUSSIA PLAZA 432 GODDARD BLVD. KING-OF-PRUSSIA PA 194060000 2153370143 8 71 700 FRANKLIN MILLS 1556 FRANKLIN MILLS CI PHILADELPHIA PA 191540000 2156379410 2 9 55 MT. LEBANON 1500 WASHINGTON ROAD MT. LEBANON PA 152280000 4125618753 2 9 46 OXFORD CENTER 301 GRANT STREET PITTSBURGH PA 152190000 4122614772 2 9 51 ROSS PARK MALL 1000 ROSS PARK MALL DR. PITTSBURGH PA 152370000 4123640170 2 9 52 WALNUT STREET 1713 WALNUT STREET PHILADELPHIA PA 191030000 2159779336 2 9 400 KING-OF-PRUSSIA PLAZA 160 GULPH MILLS RD KING OF PRUSSIA PA 194060000 6103540770 2 9 56 GLEN EAGLE SQUARE 539 WILMINGTON-W. US202 GLEN MILLS PA 193420000 2155583660 2 9 361 WILLOW GROVE PARK 2500 MORELAND ROAD WILLOW GROVE PA 190900000 2 9 348 SHADYSIDE 5407 WALNUT STREET PITTSBURGH PA 152320000 8 73 719 GROVE CITY I-79 AND RT 208, SUITE 350 GROVE CITY PA 161270000 4127485101 2 9 43 ARDMORE 23 PARKING PLAZA ARDMORE PA 190030000 2156424293 5 24 6 WARWICK 117 WARWICK MALL WARWICK RI 028860000 4017379220 3 28 382 HAYWOOD MALL 700 HAYWOOD ROAD S1058 GREENVILLE SC 296070000 8036273857 3 28 351 MALL AT SHELTER COVE 24 SHELTER COVE LANE HILTON HEAD SC 299280000 8038422388 8 72 736 MYRTLE BEACH MYRTLE BEACH SC 3 28 325 KING STREET (CHARLESTON) 265-267 KING STREET CHARLESTON SC 294010000 8037228231 3 13 380 WEST TOWN MALL 7600 KINGSTON PIKE-S 1582 KNOXVILLE TN 379190000 3 13 279 COOL SPRINGS GALLERIA 1800 GALLERIA BLVD/S. 1530 FRANKLIN TN 370640000 6147717232 3 13 384 THE MALL @ GREEN HILLS 2126 ABBOT MARTIN ROAD NASHVILLE TN 372150000 3 13 278 HAMILTON PLACE MALL 2100 HAMILTON PL BLVD CHATTANOOGA TN 374210000 6158947694 3 13 261 BELLEVUE CENTER 7620 US HWY 70 SO. NASHVILLE TN 372210000 6156467692 3 13 260 SADDLECREEK 7614 W. FARMINGTON BLVD GERMANTOWN TN 381380000 9017567996 3 17 320 NORTH PARK CENTER 425 NORTH PARK CENTER DALLAS TX 752250000 2146915544 3 17 283 DALLAS GALLERIA 13350 DALLAS PARKWAY DALLAS TX 752400000 2143864548 8 72 707 SAN MARCOS 3939 INTERSTATE HIGHWAY 35 SAN MARCOS TX 786660000 5127546754 8 72 726 GAINESVILLE 4321 I-H 35 NORTH, SPACE 600 GAINESVILLE TX 762400000 8176886650 3 17 86 NORTH STAR MALL 7400 SAN PEDRO - SUITE 620 SAN ANTONIO TX 782160000 2103664742 3 17 350 COLLIN CREEK 811 NORTH CENTRAL EXPWY PLANO TX 750758815 3 17 344 ARBORETUM MARKET 9722 GREAT HILLS TRAIL AUSTIN TX 787590000 5123458307 3 17 356 HIGHLAND MALL 6001 AIRPORT ROAD AUSTIN TX 787520000 3 17 357 HULEN MALL 4800 SOUTH HULEN ST.-S 130 FORT WORTH TX 761320000 3 29 83 TOWN & COUNTRY 800 WEST BELT HOUSTON TX 770240000 7139731196 3 29 368 BAYBROOK MALL 1029 BAYBROOK MALL FRIENDSWOOD TX 775460000 7132808331 3 29 281 HOUSTON GALLERIA 5085 WESTHEIMER SUITE 2880 HOUSTON TX 770560000 7136273722 3 29 266 WILLOWBROOK MALL 7925 FM 1960 W PH 1096 WILWBR HOUSTON TX 770700000 7134696792 3 29 300 RIVER OAKS 1992 WEST GRAY SP609 HOUSTON TX 770190000 7139427345 3 17 417 PRESTON PARK VILLAGE 1900 PRESTON RD PLANO TX 75093000 3 17 390 UNIVERSITY VILLAGE 1620 SUNIVERSITY DRIVE FORT WORTH TX 761070000 3 17 385 HIGHLAND PARK VILLAGE 47 HIGHLAND PARK VILLAGE DALLAS TX 752050000 2145224700 3 17 411 COLLECTION @ BWY & SUNSET 7959 BROADWAY SAN ANTONIO TX 782090000 4 31 115 TROLLEY SQUARE 392 TROLLEY SQUARE SALT LAKE CITY UT 841020000 8013221061 4 31 340 FASHION PLACE 6191 SOUTH STATE #201 MURRAY UT 841070000 8012611071 1 8 381 FASHION SQUARE 1554 EAST RIO ROAD CHARLOTTESVILLE VA 229010000 1 8 130 REGENCY SQUARE 1404 PARHAM ROAD RICHMOND VA 232290000 8047412797 1 8 159 SPRINGFIELD MALL 6453 SPRINGFIELD MALL SPRINGFIELD VA 221500000 7039719108 1 8 133 CHESTERFIELD TOWN CENTER 11500 MIDLOTHIAN T'PIKE RICHMOND VA 232350000 8047941780 1 8 407 PENTAGON CITY 1100 SOUTH HAYES ARLINGTON VA 222020000 7034153170 1 7 312 TYSONS GALLERIA 2001 INTERNATIONAL DRIVE MCLEAN VA 221020000 7039179854 8 72 705 POTOMAC MILLS 2700 POTOMAC MILS CIR STE 933 PRINCE WILLIAM VA 221920000 7034915308 1 7 30 TYSON'S CORNER TYSON'S CORNER CENTER MCLEAN VA 221020000 7038930777 1 8 136 RESTON TOWN CTR 11850 MARKET STREET RESTON VA 220900000 7037874602 5 6 367 CHURCH ST. MARKET PLACE ONE CHURCH STREET BURLINGTON VT 054020000 8028604746 4 30 413 SOUTHCENTER MALL 633 SOUTHCENTER TUKWILA WA 981880000 4 30 285 BELLEVUE SQUARE BELLEVUE SQUARE # 1001 BELLEVUE WA 980040000 2064553470 4 30 194 CITY CENTRE 1420 FIFTH AVENUE SEATTLE WA 981010000 2066234818 8 74 738 SUPERMALL 1101 SUPERMALL WAY SEATTLE WA 980010000 2 27 401 MAYFAIR MALL 2500 N. MAYFAIR ROAD-SP 0-28 WAUWATOSA WI 532260000 4147749222 ANNEX III UCC FILINGS See Attached. UCC Filing Jurisdictions AnnTaylor, Inc. Alabama Secretary of State Arizona Secretary of State Arkansas Secretary of State Office of the Clerk of the Circuit Court and Ex Officio Recorder of Pulaski County California Secretary of State Colorado Secretary of State Connecticut Secretary of State Delaware Secretary of State District of Columbia Recorder of Deeds of the District of Columbia Florida Secretary of State Georgia Clerk of the Superior Court of Fulton County Hawaii Registrar of Conveyances Illinois Secretary of State Indiana Secretary of State Kentucky Secretary of State of the Commonwealth of Kentucky Office of the County Clerk of Jefferson County Louisiana Recorder of Mortgages of Orleans Parish Maryland Maryland State Department of Assessments and Taxation Massachusetts Secretary of Commonwealth Michigan Secretary of State Minnesota Secretary of State Mississippi Secretary of State Chancery Clerk of Madison County Missouri Secretary of State Nebraska Secretary of State Nevada Secretary of State New Hampshire Secretary of State New Jersey Secretary of State New Mexico Secretary of State New York Department of State North Carolina Secretary of State Ohio Secretary of State Oklahoma County Clerk of Oklahoma County Oregon Secretary of State Pennsylvania Secretary of the Commonwealth Rhode Island Secretary of State South Carolina Secretary of State Tennessee Secretary of State Texas Secretary of State Utah Division of Corporations and Commercial Code Vermont Secretary of State Town Clerk of Burlington Virginia State Corporation Commission Washington Department of Licensing Wisconsin Secretary of State EX-10 4 EXHIBIT 10.3 098888\0048\00067\959LG33V.OTH -- 098888\0048\00067\959LG33V.OTH -- EXECUTION COPY TRADEMARK SECURITY AGREEMENT THIS TRADEMARK SECURITY AGREEMENT (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Trademark Security Agreement") made as of the 29th day of September, 1995, by ANNTAYLOR, INC., a corporation having its principal place of business located at 142 West 57th Street, New York, New York 10019 (the "Borrower") in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455 Market Street, San Francisco, California 94103, in its capacity as the Agent under the "Credit Agreement" (as defined below) (the "Agent"). R E C I T A L S: The Borrower, the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association as Co-Agents, and certain financial institutions currently and in the future to be parties to the Credit Agreement (as defined below) (such financial institutions being collectively, the "Lenders") have entered into a certain Amended and Restated Credit Agreement dated as of September 29, 1995 (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"), which provides (i) for the Lenders to make Loans to the Borrower and for the Issuing Banks to issue the Letters of Credit and (ii) that as a condition precedent to the making of the Loans and the issuance of the Letters of Credit, the Borrower enter into this Trademark Security Agreement to secure the Obligations. NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders to make the Loans and each Issuing Bank to issue the Letters of Credit under the Credit Agreement, the Borrower hereby agrees with the Agent for its benefit, for the benefit of the Lenders and the Issuing Banks as follows: 1. Defined Terms. (a) Unless otherwise defined herein, the capitalized terms used herein which are defined in the Credit Agreement shall have the meanings specified in the Credit Agreement. (b) The words "hereof," "herein" and "hereunder" and words of like import when used in this Trademark Security Agreement shall refer to this Trademark Security Agreement as a whole and not to any particular provision of this Trademark Security Agreement, and section references are to sections in this Trademark Security Agreement unless otherwise specified. (c) All terms defined in this Trademark Security Agreement in the singular shall have comparable meanings when used in the plural, and vice versa, unless otherwise specified. 2. Security Interest in Trademarks. To secure the complete and timely payment, performance and satisfaction of the Obligations, the Borrower hereby grants to the Agent for the benefit of the Agent, the Lenders and the Issuing Banks a security interest in, with power of sale to the extent permitted by applicable law, all of the Borrower's now-owned or existing and filed and hereafter acquired or arising and filed: (a) trademarks, trademark registrations, trade names and trademark applications for any of the foregoing in the United States Patent and Trademark Office or in any other office or with any other official anywhere in the world or which are used in the United States or any state, territory or possession thereof, or in any other place, nation or jurisdiction anywhere in the world, including, without limitation, the trademarks, trademark registrations, service marks, service mark registrations and applications listed on Annex I, attached hereto and made a part hereof, and (i) all renewals thereof, (ii) all income, royalties, damages and payments now and hereafter due and/or payable with respect thereto, including, without limitation, payments under all licenses entered into in connection therewith and damages and payments for past or future infringements thereof, (iii) the right to sue for past, present and future infringements thereof, and (iv) all rights corresponding thereto throughout the world (all of the foregoing trademarks, and trademark registrations, trade names, service marks, service mark registration and applications, together with the items described in clauses (i) through (iv) in this subparagraph (a), are sometimes hereinafter individually and/or collectively referred to as the "Trademarks"); (b) license agreements with any other party in connection with any Trademarks or such other party's trademarks or trademark applications, whether the Borrower is a licensor or licensee under any such license agreement, including, but not limited to, the license agreements listed on Annex II attached hereto and made a part hereof, and the right to prepare for sale, sell and advertise for sale, all of the inventory now or hereafter owned by the Borrower and now or hereafter covered by such license agreements (all of the foregoing being hereinafter referred to collectively as the "Licenses"). (c) the goodwill of the Borrower's business connected with and symbolized by the Trademarks; The Trademarks, Licenses and the goodwill referred to above are hereinafter collectively called the "Collateral". 3. Restrictions on Future Agreements. The Borrower agrees that until all the Obligations shall have been satisfied in full and the Credit Agreement shall have been terminated, the Borrower will not, without the Agent's prior written consent, abandon any Trademark, except as would not have a material adverse effect on the business of the Borrower, or enter into any agreement, including, without limitation, any license agreement (other than as necessary to maintain or protect any Trademark), which is inconsistent with the Borrower's obligations under this Trademark Security Agreement, and the Borrower further agrees that it will not take any action, or permit any action to be taken by any other Persons to the extent that such Persons are subject to its control, including licensees, or fail to take any action, which would affect the validity, priority, perfection or enforcement of the rights transferred to the Agent under this Trademark Security Agreement, and any such agreement or action if it shall take place shall be null and void and of no effect whatsoever. Nothing in this Section 3 shall be deemed to prevent the Borrower from engaging in transactions permitted under Section 8.02(a)(v) of the Credit Agreement. 4. New Trademarks. The Borrower represents and warrants that the Trademarks and Licenses listed on Annexes I and II constitute all of the significant trademarks, applications, trade names, service marks, service mark registrations and trademark registrations now owned and license agreements entered into by the Borrower. If, before the Obligations shall have been satisfied in full, the commitments of the Lenders to extend credit under the Credit Agreement shall have been terminated and the Credit Agreement shall have been terminated, the Borrower shall, after the date hereof, (i) obtain rights to any new trademarks, trademark registrations, trademark applications, service marks, service mark registrations, or trade names, (ii) become entitled to the benefit of any trademarks, trademark registrations, trademark applications, trade names, service marks, service mark registrations, trademark licenses or trademark license renewals or (iii) enter into any new trademark license agreements, the provisions of paragraph 2 above shall automatically apply thereto, and the Borrower shall give to the Agent prompt written notice thereof. The Borrower hereby authorizes the Agent to modify this Trademark Security Agreement by amending Annex I or II to include any future trademarks, trademark applications, trade names, service marks, service mark registrations, trademark registrations or license agreements that are the Trademark or the Licenses, under paragraph 2 above or under this paragraph 4. 5. Additional Representations and Warranties. The Borrower hereby represents, warrants, covenants and agrees that: (a) Except as otherwise provided or permitted herein or in the Credit Agreement, it is and will continue to be the owner of all its right, title and interest in the Collateral so long as the Trademarks and Licenses shall continue in force. The Trademarks and Licenses are and shall continue to be free from any Lien in favor of a Person except for those Liens permitted by Section 8.02 of the Credit Agreement. (b) It has the full right and power to grant the security interest in the Collateral made hereby. (c) It has made no previous assignment, transfer or agreements in conflict herewith or constituting a present or future assignment, transfer, or encumbrance on any of the Collateral. (d) So long as any Obligations remain outstanding under the Credit Agreement, the commitments of the Lenders to extend credit under the Credit Agreement have not been terminated and the Credit Agreement has not terminated, it will not execute, and there will not be on file in any public office, any financing statement or other document or instrument covering the Collateral except as otherwise contemplated or permitted hereby or by the Credit Agreement and the other Loan Documents. (e) Subject to any limitation stated therein or in connection therewith, all information furnished to the Agent concerning the Collateral and proceeds thereof, for the purpose of obtaining credit or an extension of credit, is, or will be at the time the same is furnished, accurate and correct in all material respects. (f) To the best of the Borrower's knowledge and belief following diligent inquiry, no infringement or unauthorized use presently is being made of any of the Trademarks or Licenses which has or may reasonably be expected to have, alone or in the aggregate, a Material Adverse Effect. The Borrower has advised the Agent of (i) the existence of restrictions on the use of the Trademark and Licenses as may be contained in the Borrower's franchise agreements and license agreements relating to the use of the Trademarks and Licenses and (ii) its trademark monitoring and enforcement practice. 6. Royalties; Term. The Borrower hereby agrees that any rights granted hereunder to the Agent for the benefit of the Agent, the Lenders and the Issuing Banks with respect all the Collateral as described above shall be worldwide and without any liability for royalties or other related charges from the Agent to the Borrower. The term of the security interest granted herein shall extend until the earlier of (i) the expiration or abandonment of each of the Trademarks and Licenses subject to this Trademark Security Agreement, or (ii) the date on which all the Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and the Credit Agreement has been terminated. 7. The Agent's Right to Inspect. The Agent and the Lenders shall have the right, at any time and from time to time, to inspect the Borrower's premises and to examine the Borrower's books, records and operations, including, without limitation, the Borrower's merchandise quality control processes upon reasonable notice and at such reasonable times and as often as may be reasonably requested. The Borrower agrees (i) not to sell or assign its interest in, or grant any license under, the Collateral without the prior written consent of the Agent except as otherwise permitted under Sections 8.02 and 8.03 of the Credit Agreement; and (ii) to maintain the quality of any and all merchandise in connection with which the Trademarks are used, consistent with or better than the quality of said merchandise as of the date hereof. 8. Termination of Security Interest. This Trademark Security Agreement is made for collateral purposes only. Upon payment in full of the Obligations and upon termination of the Credit Agreement, the Agent shall, at the Borrower's sole cost and expense, execute and deliver to the Borrower all termination statements or other instruments as may be necessary or proper to re-vest in the Borrower (without recourse to or warranty by the Agent) full title to the Collateral granted hereby, subject to any disposition thereof which may have been made by the Agent pursuant hereto or pursuant to the Credit Agreement. 9. Duties of the Borrower. The Borrower shall have the duty (i) to prosecute diligently any trademark application that is part of the Trademarks pending as of the date hereof or thereafter until the obligations shall have been paid in full, (ii) to make applications on trademarks, as appropriate, and (iii) to preserve and maintain all rights in trademark applications, trademarks, trademark registrations, service marks, and service mark registrations, that are part of the Trademarks except, in the case of (i) or (iii), where the failure to do so would not have or be reasonably expected to have a Material Adverse Effect. Any expenses incurred in connection with such applications shall be borne by the Borrower. The Borrower agrees to retain an experienced trademark attorney for the filing and prosecution of all such applications and other proceedings. The Borrower shall not abandon any right to file a trademark application in the United States or any pending trademark application in any country without the prior written consent of the Agent except as would not have or be reasonably expected to have a Material Adverse Effect. If the Borrower fails to comply with any of the foregoing duties, the Agent shall have the right (but shall not be obligated) to do so in the Borrower's name to the extent permitted by law, but at the Borrower's expense, and the Borrower hereby agrees to reimburse the Agent in full for all expenses, including the fees and disbursements of counsel incurred by the Agent in protecting, defending and maintaining the Collateral. In the event that the Borrower shall fail to pay when due any fees required to be paid by it hereunder, or shall fail to discharge any Lien prohibited hereby, or shall fail to comply with any other duty hereunder, the Agent may, but shall not be required to, pay, satisfy, discharge or bond the same for the account of the Borrower, and all monies so paid out shall be Obligations of the Borrower repayable on demand, together with interest at the fluctuating rate applicable to Base Rate Loans under the Credit Agreement. 10. The Agent's Right to Sue. From and after the occurrence and during continuance of an Event of Default, the Agent shall have the right, but shall in no way be obligated, to bring suit in its own name for its own benefit and for the benefit of the Lenders and the Issuing Banks to enforce the Trademarks and Licenses, and if the Agent shall commence any such suit, the Borrower shall, at the request of the Agent, do any and all lawful acts and execute any and all proper documents required by the Agent in aid of such enforcement. The Borrower shall, upon demand, promptly reimburse the Agent for all costs and expenses incurred by Agent pursuant to the terms of the Credit Agreement. 11. Waivers. No course of dealing among the Borrower, the Agent, the Lenders, the Issuing Banks or any of them, and no failure to exercise, nor any delay in exercising, on the part of the Agent, the Lenders or the Issuing Banks, any right, power or privilege hereunder or under the Credit Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof the exercise of any other right, power or privilege. 12. Severability. The provisions of this Trademark Security Agreement are severable, and if any clause or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision or part thereof, in such jurisdiction, and shall not in an manner affect such clause or provision in any other jurisdiction, or any other clause or provision of this Trademark Security Agreement in any jurisdiction. 13. Modification. This Trademark Security Agreement cannot be altered, amended or modified in any way, except as specifically provided in paragraph 4 hereof or by a writing signed by the parties hereto. 14. Cumulative Remedies; Power of Attorney; Effect On Other Agreements. All of the Agent's rights and remedies with respect to the Collateral, whether established hereby, by the Credit Agreement, by the Collateral Documents, by any other agreements or by law shall be cumulative and may be exercised singularly or concurrently. Upon the occurrence and during the continuance of an Event of Default and the giving by the Agent of written notice to the Borrower of the Agent's intention to enforce its right and claims against the Borrower, the Borrower hereby authorizes the Agent to make, constitute and appoint any officer or agent of the Agent as the Agent may select, in its sole discretion, as the Borrower's true and lawful attorney-in-fact, with power (but not the obligation) to (i) endorse the Borrower's name on all applications, documents, papers and instruments necessary or desirable for the Agent in the use of the Collateral, or (ii) take any other actions with respect to the Collateral as the Agent deems in the best interest of the Agent, the Lenders and the Issuing Banks or (iii) grant or issue any exclusive or non-exclusive license under the Collateral to anyone, or (iv) assign, pledge, convey or otherwise transfer title in or dispose of the Collateral to anyone free and clear of any encumbrance upon title thereof (other than any encumbrance created hereby). The Borrower hereby ratifies all that such attorney shall lawfully do or cause to be done by virtue hereof. This power of attorney shall be irrevocable until the Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and the Credit Agreement has been terminated. The Borrower acknowledges and agrees that this Trademark Security Agreement is not intended to limit or restrict in any way the rights and remedies of the Agent and the Lender under the Loan Documents but rather is intended to facilitate the exercise of such rights and remedies. The Agent, the Lenders and the Issuing Banks shall have, in addition to all other rights and remedies given it by the terms of this Trademark Security Agreement, all rights and remedies allowed by law and the rights and remedies of a secured party under the Uniform Commercial Code as enacted in any jurisdiction in which the Collateral may be located. Recourse to security will not be required at any time. 15. Binding Effect; Benefits. This Trademark Security Agreement shall be binding upon the Borrower and its successors and assigns, and shall inure to the benefit of the Agent, the Lenders and the Issuing Banks. The Borrower's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession of or for the Borrower. 16. Notices. Any notices and other communications hereunder shall be given in the manner and to the addresses set forth in the Credit Agreement. 17. Choice of Law. This Trademark Security Agreement shall be governed by and construed in accordance with the laws of the State of New York. 18. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE BORROWER WITH RESPECT TO THIS TRADEMARK SECURITY AGREEMENT OR ANY NOTE OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS TRADEMARK SECURITY AGREEMENT, THE BORROWER ACCEPTS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS TRADEMARK SECURITY AGREEMENT OR ANY NOTE OR ANY OF THE OTHER LOAN DOCUMENTS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS TRADEMARK SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS TRADEMARK SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF ANY LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. 19. Waiver of Notice, Hearing and Bond. THE BORROWER WAIVES ALL RIGHTS TO NOTICE AND HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE AGENT OR THE LENDERS OF ITS RIGHTS, FROM AND AFTER THE OCCURRENCE OF AN EVENT OF DEFAULT, TO REPOSSESS THE COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE COLLATERAL. THE BORROWER WAIVES THE POSTING OF ANY BOND OTHERWISE REQUIRED OF THE AGENT OR THE LENDERS IN CONNECTION WITH THE JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF, REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF THE AGENT OR THE LENDER OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY RESTRAINING ORDER PRELIMINARY OR PERMANENT INJUNCTION, THIS TRADEMARK SECURITY AGREEMENT. 20. Advice of Counsel. THE BORROWER REPRESENTS TO THE AGENT THAT IT HAS DISCUSSED THIS TRADEMARK SECURITY AGREEMENT WITH ITS ATTORNEYS. 21. Governing Provisions. To the extent any provisions of this Trademark Security Agreement are inconsistent with any provisions in the Borrower Security Agreement, the provisions of this Trademark Security Agreement shall govern. 22. Section Titles. The section titles herein are for convenience and reference only and shall not affect in any way the-interpretation of any of the provisions hereof. IN WITNESS WHEREOF, the Borrower has duly executed this Agreement as of the day first above written. ANNTAYLOR, INC. By: /s/ Walter J. Parks _ Title:Sr. Vice President - Finance Attest: /s/Charles M. Fox __________________ Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Dietmas Schiel _ Title: Vice President _ STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) The foregoing Trademark Security Agreement was executed and acknowledged before me this 29th day of September, 1995, by Walter J. Parks personally known to me to be the Senior Vice President - Finance of AnnTaylor, Inc., a Delaware corporation, on behalf of such corporation. (SEAL) /s/ Lars J. Hanson ------------------------ Notary Public New York County, New York My Commission Expires: September 8, 1996 STATE OF NEW YORK ) ) ss.: COUNTY OF NEW YORK ) The foregoing Trademark Security Agreement was executed and acknowledged before me this 29th day of September, 1995, by Dietmas Schiel personally known to me to be the Vice President of Bank of America National Trust and Savings Association, a national banking association, on behalf of such corporation. (SEAL) /s/ Lars J. Hanson ------------------------ Notary Public New York County, New York My Commission Expires: September 8, 1996 Annex I to Trademark Security Agreement _______________ Dated as of September 29, 1995 Trademarks and Trademark Applications U.S. Registered Trademarks: Trademark Registration No. Issue Date Expiration/Renewal Date ANNTAYLOR. (Stylized) 1,770,157 05/11/93 05/11/03 ANN TAYLOR 1,444,585 06/23/87 06/23/07 ANN TAYLOR 1,251,717 09/20/83 09/20/03 ANNTAYLOR. 1,789,470 08/24/93 08/24/03 (Stylized) ANNTAYLOR. 1,832,503 04/19/94 04/19/04 (Stylized) AnnTaylor. 1,854,221 09/13/94 09/13/04 (Stylized) ANNTAYLOR. 1,881,093 02/28/95 02/28/05 DESTINATION 1,875,773 01/24/95 01/24/05 (not stylized) DESTINATION ANNTAYLOR 1,804,908 11/16/93 11/16/03 (not stylized) destination ANNTAYLOR. 1,811,236 12/14/93 12/14/03 (stylized) AT denim (logo design) 1,817,468 01/18/94 01/18/04 AT DENIM. 1,826,976 03/15/94 03/15/04 ANNTAYLOR. 1,782,601 07/20/93 07/20/03 ANNTAYLOR. 1,832,187 04/19/94 04/19/04 (stylized) U.S. Trademark Applications: Trademark Serial No. File Date AT ANNTAYLOR. ORIGINALS - CLASSIC 74/304,148 08/12/92 STYLE (and design) AT ANNTAYLOR. IRIGINALS - CLASSIC 74/304/144 8/12/92 STYLE (and design) DESTINATION 74/493,760 02/23/94 ACTION 74/601,938 11/22/94 ACTION 74/601,976 11/22/94 ACTION (and Design) 74/601,941 11/22/94 ACTION (and Design) 74/601,937 11/22/94 ACTION (and Design) 74/601,939 11/22/94 ANNTAYLOR. LOFT (stylized) 74/585,175 10/13/94 THE SHOE LOFT (stylized) 74/654,336 03/31/95 Foreign Registered Trademarks: Trademark and Country Registration No. Issue Date Expiration/Renewal Date Ann Taylor/Canada TMA381,405 03/20/86 03/20/01 Ann Taylor1/Japan 1973145 07/23/87 07/23/97 Ann Taylor/Japan 2322093 07/31/91 07/31/01 Ann Taylor1/Japan 2322094 07/31/91 07/31/01 Ann Taylor./Japan 2461709 09/30/92 09/30/02 Ann Taylor1/Japan 2461710 09/30/92 09/30/02 Ann Taylor./Japan 2451513 08/31/92 08/31/02 Ann Taylor1/Japan 2451514 08/31/92 08/31/02 Ann Taylor./Japan 2389850 03/31/92 03/31/02 Ann Taylor1/Japan 2389851 03/31/92 03/31/02 AnnTaylor./Brazil 817167129 11/15/94 11/15/04 ATDENIM./Brazil 817401985 01/24/95 01/23/05 ATDENIM/Canada 08/18/95 AnnTaylor/Hong Kong 01800/1995 06/25/93 06/25/14 AnnTaylor 2700331 11/30/94 11/30/04 (English)/Japan AmmTaylor 2700332 11/30/94 11/30/04 (Katakana)/Japan AnnTaylor 316507 06/30/95 06/30/05 (Korean)/Korea ANN TAYLOR/Taiwan 521793 05/01/91 04/30/01 Foreign Trademark Applications: Trademark and Country Serial No. File Date Ann Taylor/Taiwan2 79/48075 11/05/90 AnnTaylor/Japan 15005/1989 02/10/89 AnnTaylor1/Japan 15006/1989 02/10/89 Ann Taylor/Hong Kong3 9156/90 11/13/90 AnnTaylor./Brazil4 817167129 04/01/93 1 In Katakana. 2 Updating status on application. 3 Application for "Ann Taylor" in Hong Kong is being withdrawn and refiled pursuant to the requirements of the Hong Kong trademark authority. 4 Application for "Ann Taylor" in Brazil is being amended to show mark as "AnnTaylor.". If it cannot be amended, it will be withdrawn and refiled. Annex II to Trademark Security Agreement Dated as of September 29, 1995 License Agreements None. EX-10 5 EXHIBIT 10.4 098888\0048\00067\959LG3XD.GUA - - 098888\0048\00067\959LG3XD.GUA - - EXECUTION COPY ATSC GUARANTY THIS AMENDED AND RESTATED GUARANTY (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Guaranty") dated as of September 29, 1995 is made by ANNTAYLOR STORES CORPORATION, a Delaware corporation, with its principal place of business at 142 West 57th Street, New York, New York 10019 (the "Guarantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office at 1455 Market Street, San Francisco, California 94103, in its capacity as Agent under the "Credit Agreement" (as defined below) (the "Agent"). R E C I T A L S: ANNTAYLOR, INC., a Subsidiary of the Guarantor, (the "Borrower"), the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Savings Association and Fleet Bank, National Association, as Co-Agents, and certain financial institutions currently and in the future parties to the Credit Agreement (such financial institutions being collectively, the "Lenders") have entered into a certain Amended and Restated Credit Agreement dated as of September 29, 1995 (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the capitalized terms not otherwise defined herein are being used herein as defined in the Credit Agreement), which provides for the Lenders to make Loans to the Borrower and for the Issuing Banks to issue Letters of Credit. The Credit Agreement amends and restates the existing credit agreement, dated as of July 29, 1994, as amended, among the parties thereto, which existing credit agreement is guaranteed by the Guaranty, dated as of July 29, 1994 (the "Existing Guaranty"). It is a condition precedent to the effectiveness of the Credit Agreement that the Existing Guaranty be amended and restated as set forth herein. NOW, THEREFORE, in consideration of the above premises, and in order to induce the Lenders to make the Loans and the Issuing Banks to issue the Letters of Credit under the Credit Agreement, the Guarantor agrees, and the Agent, by acceptance hereof, hereby agrees, that the Existing Guaranty is hereby amended and restated in its entirety as follows: 1. Guaranty. (a) The Guarantor hereby unconditionally and irrevocably guarantees to the Agent, for its benefit and the benefit of the Lenders and the Issuing Banks, the full and prompt payment when due, whether at maturity or earlier, by reason of acceleration, mandatory prepayment or otherwise, and in accordance with the terms and conditions of the Credit Agreement, of all of the Obligations, whether or not from time to time reduced or extinguished or hereafter increased or incurred, whether or not recovery may be or hereafter may become barred by any statute of limitations, and whether enforceable or unenforceable as against the Borrower, now or hereafter existing, or due or to become due (all such indebtedness, liabilities and obligations being hereinafter collectively referred to as the "Guaranteed Obligations"). (b) The Guarantor further agrees that, if any payment made by the Borrower or any other person and applied to the Guaranteed Obligations is at any time annulled, set aside, rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of Collateral are required to be returned by the Agent, any of the Lenders or the Issuing Banks to the Borrower, its estate, trustee, receiver or any other party, including, without limitation, the Guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, the Guarantor's liability hereunder (and any lien, security interest or other collateral securing such liability) shall be and remain in full force and effect, as fully as if such payment had never been made, or, if prior thereto this Guaranty shall have been cancelled or surrendered (and if any lien, security interest or other collateral securing Guarantor's liability hereunder shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty (and such lien, security interest or other collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of the Guarantor in respect of the amount of such payment (or any lien, security interest or other collateral securing such obligation). (c) The Guarantor further agrees to pay all costs and expenses upon demand including, without limitation, all court costs and reasonable attorneys' fees and expenses paid or incurred by the Agent (i) in endeavoring to collect all or any part of the Guaranteed Obligations after the same become due and owing from, or in prosecuting any action against, the Guarantor or any other guarantor of all or any part of the Guaranteed Obligations or (ii) in endeavoring to realize upon (whether by judicial, non-judicial or other proceedings) any Collateral or any other collateral securing Guarantor's liabilities under this Guaranty. 2. Representations and Warranties. The Guarantor hereby represents and warrants to the Agent that each representation and warranty made by Borrower in Article V of the Credit Agreement applicable to the Guarantor is true and correct, which representations and warranties (except such representations and warranties which are expressly made as of a different date) shall survive the execution and delivery of this Guaranty, and shall, except to the extent that the same have been modified by a writing delivered to and accepted in writing by the Agent, and, other than with respect to changes permitted or contemplated by the Credit Agreement, continue to be true and correct on the date of each Loan, and on the date of issuance of each Letter of Credit. 3. Waivers; Other Agreements. (a) The Agent is hereby authorized, without notice to or demand upon the Guarantor, which notice or demand is expressly waived hereby, and without discharging or otherwise affecting the obligations of the Guarantor hereunder (which shall remain absolute and unconditional notwithstanding any such action or omission to act), from time to time, to: (i) supplement, renew, extend, accelerate or otherwise change the time for payment of, or other terms relating to, the Guaranteed Obligations, or otherwise modify, amend or change the terms of any promissory note or other agreement, document or instrument (including the Credit Agreement and the other Loan Documents) now or hereafter executed by the Borrower and delivered to the Agent, including, without limitation, any increase or decrease of the rate of interest thereon; (ii) waive or otherwise consent to noncompliance with any provision of any instrument evidencing the Guaranteed Obligations, or any part thereof, or any other instrument or agreement in respect of the Guaranteed Obligations (including the Credit Agreement and the other Loan Documents) now or hereafter executed by the Borrower and delivered to the Agent; (iii) accept partial payments on the Guaranteed Obligations; (iv) receive, take and hold additional security or collateral for the payment of the Guaranteed Obligations, or for the payment of any other guaranties of the Guaranteed Obligations or other liabilities of the Borrower, and exchange, enforce, waive, substitute, liquidate, terminate, abandon, fail to perfect, subordinate, transfer, otherwise alter and release any such additional security or collateral; (v) apply any and all such security or collateral and direct the order or manner of sale thereof as the Agent may determine in its sole discretion; (vi) settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations or accept, substitute, release, exchange or otherwise alter, affect or impair any security or collateral for the Guaranteed Obligations or any other guaranty therefor, in any manner; (vii) add, release or substitute any one or more other guarantors, makers or endorsers of the Guaranteed Obligations and otherwise deal with the Borrower or any other guarantor, maker or endorser as the Agent may elect in its sole discretion; (viii) apply any and all payments or recoveries from the Borrower, from any other guarantor, maker or endorser of the Guaranteed Obligations or from the Guarantor to the Guaranteed Obligations to the Obligations in such order as provided in subsection 2.06(b) of the Credit Agreement, whether such Guaranteed Obligations are secured or unsecured or guaranteed or not guaranteed by others; (ix) apply any and all payments or recoveries from the Guarantor or any other guarantor, maker or endorser of the Guaranteed Obligations or sums realized from security furnished by any of them upon any of their indebtedness or obligations to the Agent as the Agent in its sole discretion, may determine, whether or not such indebtedness or obligations relate to the Guaranteed Obligations; and (x) refund at any time, at the Agent's sole discretion, any payment received by the Agent in respect of any Guaranteed Obligations, and payment to the Agent of the amount so refunded shall be fully guaranteed hereby even though prior thereto this Guaranty shall have been cancelled or surrendered (or any release or termination of any collateral by virtue thereof) by the Agent, and such prior cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of the Guarantor hereunder in respect of the amount so refunded (and any collateral so released or terminated shall be reinstated with respect to such obligations); even if any right of reimbursement or subrogation or other right or remedy of the Guarantor is extinguished, affected or impaired by any of the foregoing (including, without limitation, any election of remedies by reason of any judicial, non-judicial or other proceeding in respect of the Guaranteed Obligations which impairs any subrogation, reimbursement or other right of Guarantor). (b) The Guarantor hereby agrees that its obligations under this Guaranty are absolute and unconditional and shall not be discharged or otherwise affected as a result of: (i) the invalidity or unenforceability of any security for or other guaranty of the Guaranteed Obligations or of any promissory note or other document (including, without limitation, the Credit Agreement) evidencing all or any part of the Guaranteed Obligations, or the lack of perfection or continuing perfection or failure of priority of any security for the Guaranteed Obligations or any other guaranty therefor; (ii) the absence of any attempt to collect the Guaranteed Obligations from the Borrower or any other guarantor or other action to enforce the same; (iii) failure by the Agent to take any steps to perfect and maintain any security interest in, or to preserve any rights to, any security or collateral for the Guaranteed Obligations or any other guaranty therefor; (iv) the Agent's election, in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (11 U.S.C. 101 et seq.) (the "Bankruptcy Code"), of the application of Section 1111(b)(2) of the Bankruptcy Code; (v) any borrowing or grant of a security interest by the Borrower, as debtor-in-possession, or extension of credit, under Section 364 of the Bankruptcy Code; (vi) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of the Agent's claim(s) for repayment of the Guaranteed Obligations; (vii) any use of cash collateral under Section 363 of the Bankruptcy Code; (viii) any agreement or stipulation as to the provision of adequate protection in any bankruptcy proceeding; (ix) the avoidance of any lien in favor of the Agent for any reason; (x) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against Borrower, the Guarantor or any other guarantor, maker or endorser, including without limitation, any discharge of, or bar or stay against collecting, all or any of the Guaranteed Obligations (or any interest thereon) in or as a result of any such proceeding; (xi) failure by the Agent to file or enforce a claim against the Borrower or its estate in any bankruptcy or insolvency case or proceeding; (xii) any action taken by the Agent that is authorized by this Guaranty; (xiii) any election by the Agent under Section 9-501(4) of the Uniform Commercial Code as enacted in any relevant jurisdiction (the "Code") as to any security for the Guaranteed Obligations or any guaranty of the Guaranteed Obligations; or (xiv) any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. (c) The Guarantor hereby waives: (i) any requirements of diligence or promptness on the part of the Agent; (ii) presentment, demand for payment or performance and protest and notice of protest with respect to the Guaranteed Obligations; (iii) notices (A) of nonperformance, (B) of acceptance of this Guaranty, (C) of default in respect of the Guaranteed Obligations, (D) of the existence, creation or incurrence of new or additional indebtedness, arising either from additional loans extended to the Borrower or otherwise, (E) that the principal amount, or any portion thereof, and/or any interest on any instrument or document evidencing all or any part of the Guaranteed Obligations is due, (F) of any and all proceedings to collect from the Borrower, any endorser or any other guarantor of all or any part of the Guaranteed Obligations, or from anyone else, and (G) of exchange, sale, surrender or other handling of any security or collateral given to the Agent to secure payment of the Guaranteed Obligations or any guaranty therefor; (iv) any right to require the Agent to (a) proceed first against the Borrower, or any other person whatsoever, (b) proceed against or exhaust any security given to or held by the Agent in connection with the Guaranteed Obligations, or (c) pursue any other remedy in the Agent's power whatsoever; (v) any defense arising by reason of (a) any disability or other defense of the Borrower, (b) the cessation from any cause whatsoever of the liability of the Borrower, (c) any act or omission of the Agent or others which directly or indirectly, by operation of law or otherwise, results in or aids the discharge or release of the Borrower or any security given to or held by the Agent in connection with the Guaranteed Obligations; (vi) any and all other suretyship defenses under applicable law; and (vii) the benefit of any statute of limitations affecting the Guaranteed Obligations or the Guarantor's liability hereunder or the enforcement hereof. In connection with the foregoing, the Guarantor covenants that this Guaranty shall not be discharged, except by complete performance of the obligations contained herein. (d) The Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of the Borrower, of any and all endorsers and/or other guarantors of any instrument or document evidencing all or any part of the Guaranteed Obligations and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations or any part thereof that diligent inquiry would reveal and the Guarantor hereby agrees that the Agent shall not have any duty to advise the Guarantor of information known to the Agent regarding such condition or any such circumstances. (e) Notwithstanding anything to the contrary in this Guaranty, the Guarantor hereby irrevocably waives all rights which may have arisen in connection with this Guaranty to be subrogated to any of the rights (whether contractual, under the Bankruptcy Code, including Section 509 thereof, under common law or otherwise) of the Agent, the Lenders or the Issuing Banks against the Borrower or against any collateral security or guarantee or right of offset held by such Person for the payment of the Obligations. The Guarantor hereby further irrevocably waives all contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or indemnity (or any similar right) from or against the Borrower or any other Person which may have arisen in connection with this Guaranty. So long as the Obligations remain outstanding, if any amount shall be paid by or on behalf of the Borrower to the Guarantor on account of any of the rights waived in this paragraph, such amount shall be held by the Guarantor in trust, segregated from other funds of such Guarantor, and shall, forthwith upon receipt by such Guarantor, be turned over to the Agent in the exact form received by the Guarantor (duly indorsed by the Guarantor to the Agent, if required), to be applied against the Obligations, whether matured or unmatured, in such order as the Agent may determine. The provisions of this paragraph shall survive the term of this Guaranty and the payment in full of the Obligations and the termination of the commitments of the Lenders to extend credit under the Credit Agreement. (f) The Guarantor hereby agrees that any indebtedness of the Borrower now or hereafter owing to the Guarantor is hereby subordinated to all of the Guaranteed Obligations, whether heretofore, now or hereafter created (the "Subordinated Debt"), and that without the prior consent of the Agent, the Subordinated Debt shall not be paid in whole or in part until the Guaranteed Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and the Credit Agreement has been terminated and is of no further force or effect, except that payments of principal and interest on the Subordinated Debt shall be permitted so long as no Potential Event of Default or Event of Default shall have occurred and be continuing to the extent such payments would not render the Borrower incapable of performing the Guaranteed Obligations. The Guarantor will not accept any payment of or on account of any Subordinated Debt at any time in contravention of the foregoing. At the request of the Agent, the Borrower shall pay to the Agent all or any part of the Subordinated Debt and any amount so paid to the Agent shall be applied to payment of the Guaranteed Obligations. Each payment on the Subordinated Debt received in violation of any of the provisions hereof shall be deemed to have been received by Guarantor as trustee for the Agent and shall be paid over to the Agent immediately on account of the Guaranteed Obligations, but without otherwise affecting in any manner the Guarantor's liability under any of the provisions of this Guaranty. The Guarantor agrees to file all claims against the Borrower in any bankruptcy or other proceeding in which the filing of claims is required by law in respect of any Subordinated Debt, and the Agent shall be entitled to all of the Guarantor's right thereunder. If for any reason the Guarantor fails to file such claim at least thirty (30) days prior to the last date on which such claim should be filed, the Agent, as the Guarantor's attorney-in-fact, is hereby authorized to do so in the Guarantor's name or, in the Agent's discretion, to assign such claim to and cause proof of claim to be filed in the name of the Agent or its nominee. In all such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to pay such claim shall pay to the Agent the full amount payable on the claim in the proceeding, and, to the full extent necessary for that purpose, the Guarantor hereby assigns to the Agent all Guarantor's rights to any payments or distributions to which the Guarantor otherwise would be entitled. If the amount so paid is greater than the Guarantor's liability hereunder, the Agent will pay the excess amount to the party entitled thereto. In addition, the Guarantor hereby appoints Agent as its attorney-in-fact to exercise all of the Guarantor's voting rights in connection with any bankruptcy proceeding or any plan for the reorganization of the Borrower. (g) The Guarantor shall comply with all covenants applicable to it under the Credit Agreement and shall otherwise take no action which will cause an Event of Default or Potential Event of Default under the Credit Agreement. The Guarantor shall also cause the Borrower to comply with all covenants applicable to the Borrower under the Credit Agreement. 4. Default, Remedies. (a) The obligations of the Guarantor hereunder are independent of and separate from the Guaranteed Obligations and the obligations of any other guarantor of the Guaranteed Obligations. If any of the Guaranteed Obligations are not paid when due, or upon any Event of Default or any default by Borrower as provided in any other instrument or document evidencing all or any part of the Guaranteed Obligations, the Agent may, at its sole election, proceed directly and at once, without notice, against the Guarantor to collect and recover the full amount or any portion of the Guaranteed Obligations, without first proceeding against the Borrower or any other guarantor of the Guaranteed Obligations, or against any Collateral for the Guaranteed Obligations under the ATSC Pledge Agreement or otherwise against any Collateral under other Collateral Documents. (b) At any time after maturity of the Guaranteed Obligations, the Agent may, without notice to the Guarantor and regardless of the acceptance of any security or collateral for the payment hereof, appropriate and apply toward the payment of the Guaranteed Obligations (i) any indebtedness due or to become due from the Agent to the Guarantor and (ii) any moneys, credits or other property belonging to the Guarantor at any time held by or coming into the possession of the Agent or any of its affiliates. (c) The Guarantor hereby authorizes and empowers the Agent, in its sole discretion, without any notice (except notices required by law to the extent such notice as a matter of law may not be waived) or demand to the Guarantor whatsoever and without affecting the liability of the Guarantor hereunder, to exercise any right or remedy which the Agent may have available to it, including but not limited to, foreclosure by one or more judicial or nonjudicial sales, and the Guarantor hereby waives any defense to the recovery by the Agent against the Guarantor of any deficiency after such action, notwithstanding any impairment or loss of any right of reimbursement, contribution, subrogation or other right or remedy against the Borrower, or any other guarantor, maker or endorser, or against any security for the Guaranteed Obligations or for any guaranty of the Guaranteed Obligations. No exercise by the Agent of, and no omission of the Agent to exercise, any power or authority recognized herein and no impairment or suspension of any right or remedy of the Agent against the Guarantor, any other guarantor, maker or endorser or any security shall in any way suspend, discharge, release, exonerate or otherwise affect any of the Guarantor's obligations hereunder or give to the Guarantor any right of recourse against the Agent, the Lenders or the Issuing Banks. (d) The Guarantor consents and agrees that the Agent shall not be under any obligation to make any demand upon or pursue or exhaust any of its rights or remedies against the Borrower or any guarantor or others with respect to the payment of the Guaranteed Obligations, or to pursue or exhaust any of its rights or remedies with respect to any security therefor, or any direct or indirect guaranty thereof or any security for any such guaranty, or to marshal any assets in favor of the Guarantor or against or in payment of any or all of the Guaranteed Obligations or to resort to any security or any such guaranty in any particular order, and all of its rights hereunder, under the ATSC Pledge Agreement and the other Loan Documents shall be cumulative. The Guarantor hereby agrees to waive, and does hereby absolutely and irrevocably waive and relinquish the benefit and advantage of, and does hereby covenant not to assert against the Agent any valuation, stay, appraisal, extension or redemption laws now existing or which may hereafter exist which, but for this provision, might be applicable to any sale made under the judgment, order or decree of any court, or privately under the power of sale conferred by this Guaranty or the ATSC Pledge Agreement. Without limiting the generality of the foregoing, the Guarantor hereby agrees that it will not invoke or utilize any law which might cause delay in or impede the enforcement of the rights under this Guaranty, the ATSC Pledge Agreement or any of the other Loan Documents. 5. Miscellaneous. (a) This Guaranty shall be irrevocable as to any and all of the Guaranteed Obligations until the Credit Agreement has been terminated, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated and all Guaranteed Obligations then outstanding have been repaid. (b) This Guaranty shall be binding upon the Guarantor and upon its successors and assigns, heirs and legal representatives and shall inure to the benefit of the Agent, the Lenders and the Issuing Banks; all references herein to the Borrower and to the Guarantor shall be deemed to include their successors and assigns, heirs and legal representatives as applicable. The Borrower's successors and assigns shall include a receiver, trustee or debtor-in-possession of or for the Borrower. All references to the singular shall be deemed to include the plural where the context so requires. The Guarantor acknowledges the Agent's acceptance hereof and reliance hereon. (c) No delay on the part of the Agent in the exercise of any right or remedy shall operate as a waiver thereof, and no single or partial exercise by the Agent of any right or remedy shall preclude any further exercise thereof; nor shall any modification or waiver of any of the provisions of this Guaranty be binding upon the Agent, except as expressly set forth in a writing duly signed and delivered by the Agent or on the Agent's behalf by an authorized officer or agent of the Agent. The Agent's failure at any time or times hereafter to require strict performance by the Borrower or of the Guarantor or any other guarantor of any of the provisions, warranties, terms and conditions contained in any promissory note, security agreement, agreement, guaranty, instrument or document now or at any time or times hereafter executed by the Borrower or the Guarantor or any other guarantor and delivered to the Agent shall not waive, affect or diminish any right of the Agent at any time or times hereafter to demand strict performance thereof and such right shall not be deemed to have been waived by any act or knowledge of the Agent, its agents, officers or employees, unless such waiver is contained in an instrument in writing signed by an officer or agent of the Agent and directed to the Borrower or the Guarantor, or either of them (as the case may be) specifying such waiver. No waiver by the Agent of any default shall operate as a waiver of any other default or the same default on a future occasion, and no action by the Agent permitted hereunder shall in any way affect or impair the Agent's rights or the obligations of the Guarantor under this Guaranty. Any determination by a court of competent jurisdiction of the amount of any principal and/or interest owing by the Borrower to the Agent shall be conclusive and binding on the Guarantor irrespective of whether it was a party to the suit or action in which such determination was made. (d) THIS GUARANTY SHALL BE CONSTRUED IN ALL RESPECTS IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK. Whenever possible, each provision of this Guaranty shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Guaranty. (e) Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GUARANTOR WITH RESPECT TO THIS GUARANTY MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS GUARANTY, THE GUARANTOR ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE GUARANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE GUARANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. (f) This Guaranty (and any instrument or agreement granting or creating any security for this Guaranty) contains all the terms and conditions of the agreement between the Agent and the Guarantor relating to the subject matter hereof. The terms or provisions of this Guaranty may not be waived, altered, modified or amended except in writing duly executed by the party to be charged thereby. (g) Neither the Agent nor its Affiliates, directors, officers, agents, attorneys or employees shall be liable to the Guarantor for any action taken, or omitted to be taken, by it or them or any of them under this Guaranty, or the other Loan Documents or in connection therewith except that no person shall be relieved of any liability for gross negligence or willful misconduct as determined by a final judgment of a court of competent jurisdiction. (h) The Guarantor warrants and agrees that each of the waivers set forth in this Guaranty are made with full knowledge of their significance and consequences, and that under the circumstances, the waivers are reasonable. If any of said waivers are determined to be contrary to any applicable law or public policy, such waivers shall be effective only to the maximum extent permitted by law. Should any one or more provisions of this Guaranty be determined to be illegal or unenforceable, all other provisions hereof shall nevertheless remain effective. (i) Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Guaranty. (j) Captions are for convenience only and shall not affect the meaning of any term or provision of this Guaranty. (k) All notices and other communications provided for hereunder shall be given in the manner set forth in the Credit Agreement and to the addresses set forth in the Credit Agreement or, in the case of the Guarantor, at its addresses set forth above. IN WITNESS WHEREOF, undersigned have made this Guaranty as of the date first above written. ANNTAYLOR STORES CORPORATION By: /s/ Walter J. Parks Title: Sr. V.P. - Finance Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Dietmar Schiel Title: Vice President EX-10 6 EXHIBIT 10.5 098888\0048\00067\959LG5H6.SCA - 20 - 098888\0048\00067\959LG5H6.SCA - 21 - EXECUTETION COPY ATSC PLEDGE AGREEMENT THIS AMENDED AND RESTATED SECURITY AND PLEDGE AGREEMENT (as such agreement may be amended, supplemented or otherwise modified from time to time, this "Agreement"), dated as of September 29, 1995, is made by ANNTAYLOR STORES CORPORATION, a Delaware corporation, with its principal place of business located at 142 West 57th Street, New York, New York 10019 (the "Grantor"), in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, with an office located at 1455 Market Street, San Francisco, California 94103, in its capacity as Agent under the Credit Agreement (as defined below) (the "Agent"). R E C I T A L S: ANNTAYLOR, INC., a Subsidiary of the Grantor, (the "Borrower"), the Agent, BA Securities, Inc., as Arranger, Bank of America National Trust and Fleet Bank, National Association, as Co-Agents, and certain financial institutions currently and in the future to be parties to the Credit Agreement (such financial institutions being collectively the "Lenders") have entered into a certain Amended and Restated Credit Agreement dated as of September 29, 1995, (as such agreement may be amended, supplemented or otherwise modified from time to time, the "Credit Agreement"; the capitalized terms not otherwise defined herein are being used herein as defined in the Credit Agreement), which provides for the Lenders to make the Loans and the Issuing Banks to issue the Letters of Credit. The Credit Agreement amends and restates an existing credit agreement among the parties thereto, which existing credit agreement was guaranteed by the Grantor pursuant to the Guaranty, dated as of July 29, 1994 (the "Existing Guaranty"). The Existing Guaranty was secured pursuant to the Pledge Agreement, dated as of July 29, 1994 (the "Existing Pledge Agreement"), between the Grantor and the Agent. As a condition precedent to the effectiveness of the Credit Agreement (i) the Existing Guaranty is being amended and restated by the Guaranty, dated as of the date hereof, by the Grantor in favor of the Agent (as amended, supplemented or otherwise modified from time to time, the "Guaranty") and (ii) the Existing Pledge Agreement is being amended and restated in its entirety hereby. NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders to make the Loans and each Issuing Bank to issue the Letters of Credit under the Credit Agreement, the Grantor hereby agrees with the Agent for its benefit, and for the benefit of the Lenders and the Issuing Banks, and the Agent, by acceptance hereof, hereby agrees, that the Existing Pledge Agreement is hereby amended and restated in its entirety as follows: Section 1. Grant of Security. To secure the prompt and complete payment, observance and performance when due (whether at the stated maturity, by acceleration or otherwise) of all the Guaranteed Obligations (as defined in the Guaranty) and all other obligations of the Grantor under the Guaranty, the Grantor hereby assigns and pledges to the Agent, and hereby grants to the Agent, for its benefit and the benefit of the Lenders and the Issuing Banks, a security interest in, all of the Grantor's right, title and interest in and to the following, whether now owned or existing or hereafter arising or acquired and wheresoever located (collectively, the "Collateral"): EQUIPMENT: All machinery and equipment, all manufacturing, distribution, selling, data processing and office equipment, all furniture, furnishings, appliances, fixtures and trade fixtures, tools, tooling, molds, dies, vehicles, vessels, aircraft and all other goods of every type and description (other than "inventory", as such term is defined in the Uniform Commercial Code in effect on the date hereof in the State of New York (the "UCC")), in each instance whether now owned or hereafter acquired by the Grantor and wherever located (collectively, "Equipment"); GENERAL INTANGIBLES: All rights, interests, choses in action, causes of action, claims and all other intangible property of the Grantor of every kind and nature (other than "accounts", as such term is defined in the UCC), in each instance whether now owned or hereafter acquired by the Grantor, including, without limitation, all corporate and other business records; all loans, royalties, and other obligations receivable; all inventions, designs, patents, patent applications, service marks, trade names and trademarks (including any applications for the foregoing and whether or not registered) and the goodwill of the Grantor's business connected with and symbolized by such trademarks, trade secrets, computer programs, software, printouts and other computer materials, goodwill, registrations, U.S. registered copyrights, licenses relating to trademarks and U.S. registered copyrights, franchises, customer lists, credit files, correspondence and advertising materials; all customer and supplier contracts, firm sale orders, rights under license and franchise agreements, and other contracts and contract rights; all interests in partnerships, joint ventures and other entities; all tax refunds and tax refund claims; all right, title and interest under leases, subleases, licenses and concessions and other agreements relating to real or personal property; all pay ments due or made to the Grantor in connection with any requisition, confiscation, condemnation, seizure or forfeiture of any property by any person or governmental authority; all deposit accounts (general or special) with any bank or other financial institution; all credits with and other claims against carriers and shippers; all rights to indemnification; all reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interest in trusts; all proceeds of insurance of which the Grantor is beneficiary; and all letters of credit, guaranties, liens, security interests and other security held by or granted to the Grantor; and all other intangible property, whether or not similar to the foregoing, including, without limitation, all "general intangibles", as such term is defined in the UCC (in each instance, however and wherever arising, collectively, "General Intangibles"); CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all instruments (including, without limitation, (a) the shares of stock described in Annex I-A hereto (the "Pledged Shares") and all dividends, instruments and other property from time to time distributed in respect thereof or in exchange therefor, and (b) the notes and debt instruments described in Annex I-B hereto (the "Pledged Debt") and all payments thereunder and instruments and other property from time to time delivered in respect thereof or in exchange therefor), and all bills of lading, warehouse receipts and other documents of title and documents, including, without limitation, all "chattel paper", "instruments" and documents", as such terms are defined in the UCC, in each instance whether now owned or hereafter acquired by the Grantor, other than any promissory note in an amount less than $1,000,000 owing to the Grantor from a senior executive or key employee of the Grantor (an "Excluded Note") (collectively, "Chattel Paper, Instruments and Documents"); and OTHER PROPERTY: All property or interests in property now owned or hereafter acquired by the Grantor which now may be owned or hereafter may come into the possession, custody or control of the Agent, any of the Lenders, any Issuing Bank or any agent or Affiliate of any of them in any way or for any purpose (whether for safekeeping, deposit, custody, pledge, transmission, collection or otherwise); and all rights and interests of the Grantor, now existing or hereafter arising and however and wherever arising, in respect of any and all (i) notes, drafts, letters of credit, stocks, bonds, and debt and equity securities, whether or not certificated, and warrants, options, puts and calls and other rights to acquire or otherwise relating to the same; (ii) money; (iii) proceeds of loans; and (iv) insurance proceeds and books and records relating to any of the property covered by this Agreement (collectively, "Other Property"); together, in each instance, with all accessions and additions thereto, substitutions therefor, and replacements, proceeds and products thereof. Section 2. Grantor Remains Liable. Anything herein to the contrary notwithstanding, the Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein to perform its duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Agent of any of its rights hereunder shall not release the Grantor from any of its duties or obligations under the contracts and agreements included in the Collateral (except to the extent that such exercise prevents the Grantor from satisfying such duties and obligations), and (c) the Agent shall not have any obligation or liability under the contracts and agreements included in the Collateral by reason of this Agreement, nor shall the Agent be obligated to perform any of the obligations or duties of the Grantor thereunder, to make any payment, to make any inquiry as to the nature or sufficiency of any payment received by the Grantor or the sufficiency of any performance by any party under any such contract or agreement or to take any action to collect or enforce any claim for payment assigned hereunder. Section 3. Delivery of Pledged Collateral. All certificates, notes and other instruments representing or evidencing the Pledged Shares or the Pledged Debt and all other instruments now owned or at anytime hereafter acquired by the Grantor other than any Excluded Notes (collectively, the "Pledged Collateral") shall be delivered to and held by or on behalf of the Agent pursuant hereto (except as otherwise provided in the last sentence of Section 4(f) hereof) and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, all in form and substance satisfactory to the Agent. Upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right, at any time in its discretion and without notice to the Grantor, to transfer to or to register in the name of the Agent or any nominee of the Agent any or all of the Pledged Collateral, subject only to the revocable rights specified in Section 8 hereof. In addition, upon the occurrence and during the continuance of an Event of Default, the Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations. Section 4. Representations and Warranties. The Grantor represents and warrants as follows: (a) As of the date of this Agreement, the locations listed on Annex II to this Agreement constitute all locations at which Equipment is located, except for Equipment temporarily in transit. As of the date of this Agreement, the chief place of business and chief executive office of the Grantor are located at the address first specified above for the Grantor. (b) The Grantor is the legal and beneficial owner of the Collateral free and clear of all liens, security inter ests or other encumbrances, except (other than in respect of Pledged Collateral described in (e) below) as expressly permitted by subsection 8.02(b) of the Credit Agreement. Since the date of its incorporation, Grantor has conducted business only under its own corporate name (including its former corporate name, AnnTaylor Holdings, Inc.) and not under any trade name or other name. (c) The Grantor has exclusive possession and control of the Equipment, except for (i) Equipment in the possession and control of the Grantor's lessees and licensees under written lease and license agreements entered into in the ordinary course of business and consistent with past practice and (ii) Equipment in transit with common or other carriers. (d) The Pledged Shares have been duly authorized and validly issued and are fully paid and non-assessable. The Pledged Debt of Grantor's Subsidiaries (if any), and, to the best of the Grantor's knowledge, all other Pledged Debt, has been duly authorized, issued and delivered, and is the legal, valid, binding and enforceable obligation of the issuers thereof. (e) The Pledged Shares indicated on Annex I-A hereto constitute all of the shares held by the Grantor of the respective issuers thereof. The Pledged Shares and the Pledged Debt constitute all of the Pledged Collateral except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business and with respect to which the Agent has not at any time requested possession and which are not a material portion of the Collateral under this Agreement (the "Personal Property Collateral") either singly or in the aggregate. (f) This Agreement creates a valid security interest in the Collateral (other than the Pledged Collateral), securing the payment of the Guaranteed Obligations, and all filings and other actions necessary or desirable to perfect such security interest under the Uniform Commercial Code as enacted in any relevant jurisdiction have been duly taken or will be duly taken not later than five Business Days after the date hereof (all such actions being the filing of financing statements in the filing offices listed on Annex III hereto). The pledge and delivery of the Pledged Collateral pursuant to this Agreement and all other filings and other actions taken by the Grantor to perfect such security interest prior to the date hereof, create a valid and perfected first priority security interest in the Pledged Collateral, securing the payment of the Guaranteed Obligations except for Pledged Collateral consisting of checks and drafts received in the ordinary course of business with respect to which the Agent has not at any time requested possession and which are not a material portion of the Personal Property Collateral either singly or in the aggregate. (g) Other than filings under the UCC, no authorization, approval or other action by, and no notice to or filing with, any federal, state or local governmental authority that have not already been taken or made and which are in full force and effect, is required (i) for the pledge by the Grantor of the Pledged Collateral or for the grant by the Grantor of the security interest in the Collateral granted hereby or for the execution, delivery or performance of this Agreement by the Grantor, (ii) for the exercise by the Agent of the voting or other rights provided in this Agreement with respect to the Pledged Collateral or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with the disposition thereof by laws affecting the offering and sale of securities generally), or (iii) for the exercise by the Agent of any of its other rights or remedies hereunder. Section 5. Further Assurances. (a) The Grantor agrees that from time to time, at the expense of the Grantor, the Grantor will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or desirable, or that the Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without limiting the generality of the foregoing, at the request of the Agent, the Grantor shall: (i) if an Event of Default shall have occurred and be continuing, mark conspicuously each document included in the Collateral at the request of the Agent made at any time, and whether or not an Event of Default shall have occurred, mark each of its records pertaining to the Collateral with a legend, in form and substance satisfactory to the Agent, indicating that such document or Collateral is subject to the security interest granted hereby; and (ii) execute and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. (b) The Grantor hereby authorizes the Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of the Grantor where permitted by law. A carbon, photographic or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law. (c) The Grantor shall furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may request, all in reasonable detail. Section 6. As to Equipment. The Grantor shall: (a) Keep the Equipment (other than Equipment sold in accordance with Section 8.02 of the Credit Agreement) at the places specified in Section 4(a) hereof and deliver written notice to the Agent at least 30 days prior to establishing any other location at which it reasonably expects to maintain Equipment in which jurisdiction all action required by Section 5 hereof shall have been taken with respect to all such Equipment. (b) Maintain or cause to be maintained in good repair, working order and condition, excepting ordinary wear and tear and damage due to casualty, all of the Equipment, and make or cause to be made all appropriate repairs, renewals and replacements thereof, to the extent not obsolete and consistent with past practice of the Grantor, as quickly as practicable after the occurrence of any loss or damage thereto which are necessary or desirable to such end. The Grantor shall promptly furnish to the Agent a statement respecting any material loss or damage as a result of a single occurrence to any of the Equipment which has an aggregate fair market value exceeding $250,000. (c) Maintain the same or substantially the same insurance with respect to its properties as Borrower may be required to maintain under Section 7.05 of the Credit Agreement with respect to its properties and to comply with the terms thereof. Section 7. As to the Pledged Collateral. (a) So long as no Event of Default shall have occurred and be continuing: (i) The Grantor and not the Agent shall be entitled to exercise any and all voting and other rights of consent or approval pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Agreement or the Credit Agreement; provided, however, that the Grantor shall not exercise or refrain from exercising any such right without the consent of the Agent if such action or inaction would have a material adverse effect on the value of the Pledged Collateral or the benefits to the Agent, the Lenders and the Issuing Banks including, without limitation, the validity, priority or perfection of the security interest granted hereby or the remedies of the Agent hereunder. (ii) The Grantor and not the Agent shall be entitled to receive and retain any and all dividends and interest paid in respect of the Pledged Collateral; provided, however, that any and all (A) dividends and interest paid or payable other than in cash in respect of, and instruments and other property received, receivable or otherwise distributed in respect of, or in exchange for, any Pledged Collateral, (B) dividends and other distributions paid or payable in cash in respect of any Pledged Collateral consisting of stock of any Subsidiary of the Grantor and dividends and other distributions paid or payable in cash in respect of any other Pledged Collateral in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital,surplus or paid-in-surplus, and (C) cash paid, payable or otherwise distributed in respect of principal of, or in redemption of, or in exchange for, any Pledged Collateral, shall forthwith be delivered to the Agent, in the case of (A) above, to hold as Pledged Collateral and shall, if received by the Grantor, be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks, be segregated from the other property or funds of the Grantor, and be forthwith delivered to the Agent, as Pledged Collateral in the same form as so received (with any necessary indorsement) and, in the case of (B) and (C) above, to the extent required under the terms of the Credit Agreement, shall forthwith be delivered to the Agent to be applied to the Guaranteed Obligations in such order as provided in subsection 2.06(b) of the Credit Agreement. (iii) The Agent shall promptly execute and deliver (or cause to be executed and delivered) to the Grantor all such proxies and other instruments as the Grantor may reasonably request for the purpose of enabling the Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the dividends or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above. (b) Upon the occurrence and during the continuance of an Event of Default and at the Agent's option: (i) All rights of the Grantor to exercise the voting and other rights of consent or approval which it would otherwise be entitled to exercise pursuant to Section 8(a)(i) hereof and to receive the dividends and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 8(a)(ii) hereof shall cease, and all such rights shall thereupon become vested in the Agent, who shall thereupon have the sole right to exercise such voting and other rights of consent or approval and to receive and hold as Pledged Collateral such dividends and interest payments. (ii) All dividends and interest payments which are received by the Grantor contrary to the provisions of paragraph (i) of this Section 8(b) hereof shall be received in trust for the benefit of the Agent, the Lenders and the Issuing Banks and shall be segregated from other funds of the Grantor and shall be forthwith paid over to the Agent as Pledged Collateral in the same form as so received (with any necessary indorsement). Section 8. Additional Shares. The Grantor agrees that it will (i) cause each issuer of the Pledged Shares subject to its control not to issue any stock or other securities in addition to or in substitution for the Pledged Shares issued by such issuer, except to the Grantor or as otherwise permitted under the Credit Agreement, and (ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional shares of stock or other securities of each issuer of the Pledged Shares. The Grantor hereby authorizes the Agent to modify this Agreement by amending Annex I to include such additional shares or other securities. Section 9. Payment of Taxes and Claims. The Grantor shall pay (i) all taxes, assessments and other charges of any Governmental Authority imposed upon it or on any of the Collateral before any penalty or interest accrues thereon, and (ii) all claims (including, without limitation, claims for labor, services, materials and supplies) for sums materially adversely affecting the Collateral, which have become due and payable and which by law have or may become a lien or other encumbrance upon any of the Collateral prior to the time when any penalty or fine shall be incurred with respect thereto; provided that no such taxes, assessments and charges of any such governmental authority referred to in clause (i) above or claims referred to in clause (ii) above need to be paid if being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and enforcement thereof is stayed and if a reserve or other appropriate provision required in conformity with GAAP shall have been made therefor. Section 10. The Agent Appointed Attorney-in-Fact. The Grantor hereby irrevocably appoints the Agent the Grantor's attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, from time to time in the Agent's discretion, to take, upon the occurrence and during the continuance of an Event of Default, any action and to execute any instrument which the Agent may deem necessary or advisable to accomplish the purposes of this Agreement (subject to the rights of the Grantor under Section 7 hereof), including, without limitation: (a) to obtain and adjust insurance required to be paid to the Agent pursuant to Section 6(c) hereof, (i) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Collateral, (ii) to receive, indorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (i) or (ii) above, (iii) to sell or assign any Account upon such terms, for such amount and at such time or times as Agent deems advisable, to settle, adjust, compromise, extend or renew any Account or to discharge and release any Account, (iv) to file any claims or take any action or institute any proceedings which the Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of the Agent with respect to any of the Collateral, and (v) to receive, indorse and collect all instruments made payable to the Grantor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same. Nothing set forth in this Section 10 and no exercise by the Agent of the rights and powers granted in this Section 10 shall limit or impair the Grantor's rights under Section 7 hereof. The Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled with an interest and shall be irrevocable until the Obligations are paid in full and the commitments of the Lenders to extend credit under the Credit Agreement are terminated. Section 11. The Agent May Perform. If the Grantor fails to perform any agreement contained herein, the Agent, upon written notice to the Grantor if practicable, may itself perform, or cause performance of, such agreement, and the expenses of the Agent incurred in connection therewith shall be payable by the Grantor under Section 15 hereof. Section 12. The Agent's Duties. The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon any of them, in the absence of willful misconduct or gross negligence, to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall be under no obligation to (i) ascertain or take action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Collateral, whether or not the Agent has or is deemed to have knowledge of such matters, or (ii) take any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral, but may do so at its option, and all reasonable expenses incurred in connection therewith shall be for the sole account of the Grantor and shall be added to the Guaranteed Obligations. Section 13. Remedies. If any Event of Default shall have occurred and be continuing: (a) The Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party upon default under the Uniform Commercial Code as in effect from time to time in the State of New York (the "Code") (whether or not the Code applies to the affected Collateral) and also may (i) require the Grantor to, and the Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or any part of the Collateral as directed by the Agent and make it available to the Agent at a place to be designated by the Agent which is reasonably convenient to both parties and (ii) without notice except as specified below, sell, lease, assign, grant an option or options to purchase or otherwise dispose of the Collateral or any part thereof in one or more parcels at public or private sale, at any exchange, broker's board or at any of the Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as may be commercially reasonable. The Agent may be the purchaser of any or all of the Collateral so sold at any public sale (or, if the Collateral is of a type customarily sold in a recognized market or is of a type which is the subject of widely distributed standard price quotations, at any private sale) and thereafter hold the same, absolutely, free from any right or claim of whatsoever kind. The Agent is authorized, at any such sale, if it deems it advisable so to do, to restrict the prospective bidders or purchasers of any of the Pledged Collateral to persons who will represent and agree that they are purchasing for their own account for investment, and not with a view to the distribution or sale of any Pledged Collateral, and to take such other actions as it may deem appropriate to exempt the offer and sale of the Collateral from any registration requirements of state or federal securities laws (including, if it deems it appropriate, actions to comply with Regulation D of the Securities and Exchange Commission under the Securities Act of 1933, as from time to time amended (the "Securities Act")). To the extent permitted by law, the Grantor hereby specifically waives all rights of redemption, stay or appraisal which it has or may have under any rule of law or statute now existing or hereafter in force. The Grantor agrees that, to the extent notice of sale shall be required by law, at least ten days' written notice to the Grantor of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by the Agent until the selling price is paid by the purchaser thereof, but the Agent shall not incur any liability in case of the failure of such purchaser to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. The Agent instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the security interests herein granted and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. (b) Any cash held by the Agent as Collateral and all cash proceeds received by the Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent as Collateral for, and/or then or at any time thereafter applied against (after payment of any amounts payable to the Agent pursuant to Section 16 hereof) in whole or in part by the Agent, for the benefit of the Agent, the Lenders and the Issuing Banks, all or any part of the Guaranteed Obligations. Any surplus of such cash or cash proceeds held by the Agent and remaining after payment in full of all the Guaranteed Obligations under this Agreement and the termination of the commitments of the Lenders to extend credit under the Credit Agreement shall be promptly paid over to the Grantor or to whomsoever may be lawfully entitled to receive such surplus. Section 14. Registration Rights. (a) If the Agent shall determine to exercise its right to sell all or any of the Pledged Collateral pursuant to Section 13 hereof, the Grantor agrees that, upon request of the Agent, the Grantor will, at its own expense: (i) execute and deliver, and cause each issuer of the Pledged Collateral which is a Subsidiary contemplated to be sold and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Agent, advisable to register such Pledged Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; (ii) use its best efforts to qualify the Pledged Collateral under the state securities or "Blue Sky" laws and to obtain all necessary approvals of all Governmental Authorities for the sale of the Pledged Collateral, as requested by the Agent; (iii) cause each such issuer to make available to its security holders, as soon as practicable, an earnings state ment which will satisfy the provisions of Section 10 of the Securities Act; and (iv) do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law. (b) Determination by the Agent to exercise its right to sell any or all of the Pledged Collateral pursuant to Section 13 hereof without making a request of the Grantor pursuant to Section 14(a) hereof shall not by the sole fact of such sale be deemed to be commercially unreasonable. Section 15. Expenses. The Grantor shall upon written demand pay to the Agent the amount of any and all expenses, including the fees and disbursements of its counsel and of any experts and agents, as provided in Section 12.03 of the Credit Agreement. Section 16. Amendments, Etc. No amendment or waiver of any provision of this Agreement nor consent to any departure by the Grantor herefrom shall in any event be effective unless the same shall be in writing and signed by the party to be charged therewith, and they such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Section 17. Notices. All notices and other communications provided for hereunder shall be given in the manner set forth in the Credit Agreement and to the address first above written or, as to each party, at such other address as may be designated by such party in a written notice to the other party. Section 18. Continuing Security Interest; Termination. (a) This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect until payment in full of the Guaranteed Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, (ii) be binding upon the Grantor, its successors and assigns and (iii) except to the extent that the rights of any transferor or assignor are limited by Section 12.01 (concerning assignments) of the Credit Agreement, inure, together with the rights and remedies of the Agent hereunder, to the benefit of the Agent, the Lenders and the Issuing Banks, subject to the terms and conditions of the Credit Agreement. Without limiting the generality of the foregoing clause (iii), any Lender may assign or otherwise transfer any interest in any Loan owing to such Lender to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to the Agent herein or otherwise, subject, however, to the provisions of Section 12.01 (concerning assignments) of the Credit Agreement. Nothing set forth herein or in any other Loan Document is intended or shall be construed to give the Grantor's successors and assigns any right, remedy or claim under, to or in respect of this Agreement, any other Loan Document or any Collateral. The Grantor's successors and assigns shall include, without limitation, a receiver, trustee or debtor-in-possession thereof or therefor. (b) Upon the payment in full of the Guaranteed Obligations, the termination of the commitments of the Lenders to extend credit under the Credit Agreement and the termination of the Credit Agreement, the security interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantor. Upon any such termination, the Agent shall promptly return to the Grantor, at the Grantor's expense, such of the Collateral held by the Agent as shall not have been sold or otherwise applied pursuant to the terms hereof. The Agent will, at the Grantor's expense, execute and deliver to the Grantor such other documents as the Grantor shall reasonably request to evidence such termination. Section 19. Applicable Law; Severability. This Agreement shall be construed in all respects in accordance with, and governed by, the laws of the State of New York. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Agreement. Section 20. Consent to Jurisdiction and Service of Process; Waiver of Jury Trial. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GRANTOR WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE GRANTOR ACCEPTS, FOR ITSELF IN AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT FROM WHICH NO APPEAL HAS BEEN TAKEN OR IS AVAILABLE. THE GRANTOR IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO ITS NOTICE ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. EACH OF THE GRANTOR AND, BY ACCEPTANCE HEREOF, THE AGENT AND THE LENDERS, IRREVOCABLY WAIVES (A) TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT, AND (B) ANY OBJECTION (INCLUDING WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the day first above written. ANNTAYLOR STORES CORPORATION By: /s/ Walter J. Parks Name: Walter J. Parks Title: Sr. V.P. - Finance Agreed and accepted to as of the date first above written: BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /s/ Dietmar Schiel Name: Dietmar Schiel Title: Vice President ANNEX I-A PLEDGED SHARES Stock Class of Certificate No. of Issuer Stock No. Shares AnnTaylor, Inc. Common 2 1 ANNEX I-B PLEDGED DEBT NONE ANNEX II LOCATIONS OF EQUIPMENT 142 West 57th Street New York, NY 10019 ANNEX III UCC FILINGS Jurisdiction Filing Office New York Secretary of State New York New York County -----END PRIVACY-ENHANCED MESSAGE-----