10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 2, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 1-10738

ANN INC.

(Exact name of registrant as specified in its charter)

DELAWARE	13-3499319
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
7 Times Square, New York, NY	10036
(Address of principal executive offices)	(Zip Code)

(212) 541-3300

(Registrant’s telephone number, including area code)

_________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of each exchange on which registered
Common Stock, $.0068 Par Value	The New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None.

_________________________________________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No  ¨.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes ¨    No  ý.

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No  ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No  ¨.

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ý            Accelerated filer  ¨            Non-accelerated filer  ¨            Smaller reporting company  ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  ý.

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant as of July 28, 2012 was $1,252,248,299.

The number of shares of the registrant’s common stock outstanding as of March 1, 2013 was 46,604,419.

Documents Incorporated by Reference:

Portions of the Registrant’s Proxy Statement for the Registrant’s 2013 Annual Meeting of Stockholders to be held on May 30, 2013 are incorporated by reference into Part III.

ANN INC.

ANNUAL REPORT ON FORM 10-K INDEX

		Page No.
PART I.
ITEM 1.	Business	2
ITEM 1A.	Risk Factors	7
ITEM 1B.	Unresolved Staff Comments	13
ITEM 2.	Properties	14
ITEM 3.	Legal Proceedings	14
ITEM 4.	Mine Safety Disclosures	14
PART II.
ITEM 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	15
ITEM 6.	Selected Financial Data	17
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	31
ITEM 8.	Financial Statements and Supplementary Data	31
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	31
ITEM 9A.	Controls and Procedures	32
ITEM 9B.	Other Information	32
PART III.
ITEM 10.	Directors, Executive Officers and Corporate Governance	32
ITEM 11.	Executive Compensation	32
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	32
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	33
ITEM 14.	Principal Accounting Fees and Services	33
PART IV.
ITEM 15.	Exhibits and Financial Statement Schedules	33
SIGNATURES		34
CONSOLIDATED FINANCIAL STATEMENTS		35
EXHIBIT INDEX		65

1

Statement Regarding Forward-Looking Disclosures

This Annual Report on Form 10-K (this “Report”) includes, and incorporates by reference, certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The forward-looking statements may use the words “expect,” “anticipate,” “plan,” “intend,” “project,” “may,” “believe” and similar expressions. These forward-looking statements reflect the current expectations of ANN INC. concerning future events and actual results may differ materially from current expectations or historical results. Any such forward-looking statements are subject to various risks and uncertainties, including without limitation those discussed in the sections of this Report entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ANN INC. does not assume any obligation to publicly update or revise any forward-looking statements at any time for any reason.

PART I

ITEM 1. Business.

Overview

ANN INC., through its wholly-owned subsidiaries, is a leading national specialty retailer of women's apparel, shoes and accessories, sold primarily under the “Ann Taylor” and “LOFT” brands. We were incorporated in the State of Delaware in 1988 and changed our name to ANN INC. in March 2011. For more than half a century, we have evolved with the needs of real women who live full, active lives. Our values are her values. We understand that a woman expresses herself through what she wears - at work, at home and at play. To meet her needs, we design pieces for her life and her changing roles to help her look and feel confident and beautiful. We create rich experiences that connect with her wherever she is, inspire her style and simplify her choices.

We are committed to and driven by a simple but important mission - “to inspire and connect with our clients to put their best selves forward every day.” This is evident in our strong brands as well as in our commitment to operate our business responsibly and thoughtfully. This commitment means that our clients can look and feel great about the clothes that they wear, and that as a business, we are holding ourselves to high standards. It means forging strong partnerships with our suppliers so that our products are made ethically. It means investing in new programs and innovation to minimize our impact on the environment. And it means making meaningful contributions to our communities.

Our rich heritage dates back to 1954, when we opened our first Ann Taylor store in New Haven, Connecticut. Back then, “Ann Taylor” represented a best-selling dress style that embodied the well-dressed woman. Today, we operate 984 retail stores in 47 states, the District of Columbia, Puerto Rico and Canada, comprised of 275 Ann Taylor stores, 512 LOFT stores, 101 Ann Taylor Factory stores and 96 LOFT Outlet stores. In addition to our stores, our clients can shop online at www.anntaylor.com and www.LOFT.com (together, our “Online Stores”) or by phone at 1-800-DIAL-ANN and 1-888-LOFT-444.

Unless the context indicates otherwise, all references to “we,” “our,” “us,” and “the Company” refer to ANN INC. and its wholly-owned subsidiaries.

Brands

Ann Taylor

At Ann Taylor, we champion the modern working woman and her love of fashion in everything we do. For generations, we have striven to be her go-to style destination for every aspect of her life. Ann Taylor competes in the affordable luxury price category, and offers clients a high-quality collection of beautiful, wear-now pieces and a unique combination of fashion, work and flattering fit. The goal at Ann Taylor is to help our clients feel confident, feminine and successful.

LOFT

At LOFT, we believe the best relationships are built on trust and an amazing wardrobe. Originally established in 1996 as an extension of the Ann Taylor brand, LOFT has evolved into a national brand that competes in the “upper-moderate” price category, and has become a trusted personal stylist to its clients by connecting with them on a genuine level - equal parts expert, confidante and friend who tells it like it is. We give our clients fashion advice, ideas and inspiration that make her style aspirations attainable. We believe in offering versatile, accessible and affordable fashion with undeniably feminine appeal, special and unexpected details and a flattering fit.

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Business Strategy

We are committed to growing our business through a multi-channel retail strategy. Our goal is to assist our clients in accessing our brands whenever, wherever and however they choose to shop. In support of this, we successfully launched the first phase of our multi-channel initiative during the third quarter of Fiscal 2012, allowing store order fulfillment of internet sales. In Fall 2012, we also opened our first stores in Canada, building on strong brand awareness across the border and marking the first step in expanding our brands internationally. In the early part of Fiscal 2013, we plan to build on this momentum by continuing to open stores in Canada and by adding international shipping capabilities to our Online Stores, providing clients in certain countries outside the United States access to our brands and enabling us to assess further potential international expansion opportunities.

Our efforts thus far have been focused on increasing sales, gross margin rate performance and the overall profitability of our existing brands. In addition to the above actions, we have focused considerable attention on optimizing our store portfolio in order to improve 4-wall profitability and better serve our clients. This, combined with a focus on improving the brand aesthetic in our stores and building on our exceptional client service, will allow us to provide an optimal in-store shopping experience for our Ann Taylor and LOFT clients.

Over the longer term, we will continue to evaluate organic growth opportunities, including new merchandise offerings and brand extensions, as we successfully did with LOFT and our Ann Taylor wedding and LOFT maternity merchandise collections. In addition, we will continue to evaluate inorganic opportunities, such as acquisitions, when our research indicates that such an opportunity will complement our current brands and merchandise offerings and is in the best interest of our associates, clients and shareholders. Our primary focus, however, remains on our core Ann Taylor and LOFT brands.

Retail Stores

Our stores are located in malls, specialty or lifestyle centers, downtown or village locations and destination shopping centers. We open new stores in markets that we believe have a sufficient concentration of our target clients. We also optimize the size and/or location of existing stores as demographic conditions warrant and sites become available. In addition, we regularly evaluate and invest in our current store base and elevate and modernize the in-store experience we provide to our clients.

Store locations are determined on the basis of various factors, including geographic location, demographic studies, anchor tenants in a mall location, other specialty stores in a mall or specialty center location or in the vicinity of a village location and the proximity to professional offices in a downtown or village location. We open our Ann Taylor Factory and LOFT Outlet stores in outlet centers with co-tenants that generally include a significant number of outlet or discount stores operated under nationally recognized upscale brand names. Store size is determined on the basis of various factors, including merchandise needs, geographic location, demographic studies and space availability.

In Fiscal 2012, we continued to execute a more aggressive store growth program, opening 60 new stores in the United States and, for the first time, three new stores in Canada. We also continued to amend and renegotiate existing leases at more favorable occupancy rates and evaluate expiring leases for renewal based on strategic financial guidelines. In Fiscal 2013, we plan to open approximately 65 stores in the United States and Canada, and close approximately 30 U.S. stores, leading to net store growth of approximately 35 stores.

An average Ann Taylor store is approximately 5,100 square feet. During Fiscal 2012, we continued to roll out our new smaller format Ann Taylor stores, adding 11 new smaller-format stores, downsizing or remodeling another 21 stores, and updating an additional 100 stores. As a result of these capital investments, approximately two-thirds of our store fleet reflects our modern aspirational brand aesthetic. In Fiscal 2013, we plan to further this by opening approximately five new Ann Taylor stores and downsizing and/or remodeling approximately 20 existing stores.

Ann Taylor Factory stores average approximately 6,900 square feet. In Fiscal 2012, we opened three Ann Taylor Factory stores and downsized four existing stores. In Fiscal 2013, we plan to open approximately seven Ann Taylor Factory stores.

An average LOFT store is approximately 5,800 square feet. We also operate one LOFT flagship store on the ground floor of 7 Times Square, our corporate headquarters, in New York City. In Fiscal 2012, we opened 26 LOFT stores and we plan to open approximately 40 LOFT stores and downsize and/or remodel approximately 25 existing stores in Fiscal 2013.

LOFT Outlet stores average approximately 6,800 square feet. In Fiscal 2012, we continued to grow our fleet of LOFT Outlet stores by opening 23 new stores and we plan to open approximately 15 LOFT Outlet stores in Fiscal 2013.

Our stores typically have approximately 25% of their total square footage allocated to stockroom and other non-selling space.

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We believe that our stores are located in some of the most productive retail centers in the United States and that our existing store base is a significant strategic asset of our business. During the past three years, we have invested approximately $258 million in our store base and approximately 51% of our stores are either new or have been expanded, downsized, remodeled or refurbished in the last three years.

The following table sets forth certain information regarding our Ann Taylor (“ATS”), LOFT (“LOFT”), Ann Taylor Factory (“ATF”) and LOFT Outlet (“LOS”) retail stores over the past three fiscal years:

Store Count	Ann Taylor Brand						LOFT Brand
	ATS		ATF		Total		LOFT		LOS		Total		Total
January 30, 2010	291		92		383		506		18		524		907
New	—		—		—		10		14		24		24
Converted	(6	)	—		(6	)	2		4		6		—
Closed	(19	)	—		(19	)	(16	)	—		(16	)	(35	)
January 29, 2011	266		92		358		502		36		538		896
New	17		7		24		14		38		52		76
Closed	(3	)	—		(3	)	(16	)	—		(16	)	(19	)
January 28, 2012	280		99		379		500		74		574		953
New	11		3		14		26		23		49		63
Closed	(16	)	(1	)	(17	)	(14	)	(1	)	(15	)	(32	)
February 2, 2013	275		101		376		512		96		608		984

In Fiscal 2012, total square footage increased by approximately 101,000 square feet, or approximately 2%, from Fiscal 2011, to approximately 5.7 million square feet. During Fiscal 2013, we plan to open approximately 65 stores, close approximately 30 stores, and optimize the size of an existing 25 stores, resulting in a net increase in total square footage of approximately 135,000 square feet, or approximately 2% from Fiscal 2012.

In Fiscal 2012, capital expenditures related to new stores totaled approximately $76.6 million and expenditures for store remodeling and refurbishment totaled approximately $45.5 million. In Fiscal 2013, we expect that capital expenditures for new stores will be approximately $55 million, and expenditures for store remodeling and refurbishment will be approximately $85 million.

Our store expansion and refurbishment plans are dependent upon, among other things, general economic and business conditions affecting consumer confidence and spending, the availability of desirable locations and the negotiation of acceptable lease terms. See “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources.”

Online Stores

Growing our Online Stores remains one of our top strategic priorities. Our Online Stores reinforce the unique aesthetic of our Ann Taylor and LOFT brands and are designed to complement the in-store experience we deliver to our clients. We offer our clients a high-quality online shopping experience, from merchandise availability and website design to fulfillment and client service. We are committed to building a seamless, multi-channel experience for our clients and view our Online Stores as a key enabler of this strategy. As such, in Fiscal 2012, we implemented the first phase of our multi-channel initiative, enabling store order fulfillment of online sales. We plan to further evolve and integrate our Online Stores by making additional enhancements to website functionality and continued investments in infrastructure. To that end, in early Fiscal 2013, we plan to launch international shipping capabilities at our Online Stores, thereby providing clients in certain countries outside the United States access to our brands.

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Merchandise Design and Production

Substantially all of our merchandise is developed by our in-house product design and development teams, who design merchandise exclusively for us. Our merchandising groups determine inventory needs for the upcoming season, edit the assortments developed by the design teams, plan merchandise flows and arrange for the production of merchandise by independent manufacturers, primarily through our in-house sourcing group. A small percentage of our merchandise is purchased through branded vendors and is selected to complement our in-house assortments.

Our production management and quality assurance departments establish the technical specifications for all merchandise and inspect our merchandise for quality, including periodic in-line inspections while goods are in production, to identify potential problems prior to shipment. Upon receipt, merchandise is inspected on a test basis for uniformity of size and color, as well as for conformity with specifications and overall quality of manufacturing.

In Fiscal 2012, we sourced merchandise from approximately 139 manufacturers and vendors in 16 countries, and no single supplier accounted for more than 10% of merchandise purchased on either a unit or cost basis. Approximately 39% of our merchandise unit purchases originated in China (representing approximately 43% of total merchandise cost), 16% in Vietnam (9% of total merchandise cost), 15% in India (14% of total merchandise cost), 15% in Indonesia (15% of total merchandise cost), and 10% in the Philippines (14% of total merchandise cost). Any event causing a sudden disruption of manufacturing or imports from any of these countries, including the imposition of additional import restrictions, could have a material adverse effect on our operations. We generally do not maintain any long-term or exclusive commitments or arrangements to purchase merchandise with any single supplier. All of our foreign purchases are negotiated and paid for in U.S. dollars.

We have a supply chain compliance program that requires our suppliers, factories and authorized subcontractors to comply with our Global Supplier Principles and Guidelines, as well as the local laws and regulations in the country of manufacture. We conduct unannounced third-party audits to confirm manufacturer adherence to our compliance standards. We are also a certified and validated member of the United States Customs and Border Protection’s Customs-Trade Partnership Against Terrorism (“C-TPAT”) program and expect all of our suppliers shipping to the United States to adhere to our C-TPAT requirements. These include standards relating to facility security, procedural security, personnel security, cargo security and the overall protection of the supply chain. Third-party audits are conducted to confirm supplier compliance with our standards.

We believe we have solid relationships with our suppliers and that, subject to the discussion in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources,” we will continue to have adequate sources to produce a sufficient supply of quality merchandise in a timely manner and on satisfactory economic terms.

Inventory Control and Merchandise Allocation

Our planning departments analyze relevant historical product demand data (i.e., sales, margins, sales and inventory history of store clusters, etc.) by brand, size and store location, including our Online Stores, to assist in determining the quantity of merchandise to be purchased for, and the allocation of merchandise to, our channels. Merchandise is allocated to achieve an emphasis that is suited to each store’s client base, including our Online Stores. We also consider the effect our multi-channel initiative has had on in-store and online inventory levels in order to better inform our merchandise purchases and inventory allocation.

Merchandise is typically sold at its original marked price for several weeks, with the length of time varying by individual style or color choice and dependent on client acceptance. From time to time, we also run point-of-sale promotions which may apply to both full-price and markdown merchandise and temporarily reduce the merchandise selling price. We review inventory levels on an ongoing basis to identify slow-moving merchandise styles and broken assortments (items no longer in stock in a sufficient range of sizes) and use markdowns to clear this merchandise. Markdowns may also be used if inventory levels exceed client demand for reasons of design, seasonal adaptation or changes in client preference. Substantially all of our merchandise inventory is cleared in-store or through our Online Stores.

Our core merchandising system is the central repository for inventory data and related business activities that affect inventory levels, such as purchasing, receiving, allocation and distribution. Our primary distribution center is located in Louisville, Kentucky, as discussed further in "Properties." The majority of our merchandise is processed through our Louisville facility, which we own and operate. Additionally, we contract with third-party fulfillment vendors, utilizing a Bolingbrook, IL facility to fulfill online orders and a Toronto, Ontario facility for merchandise allocation to our Canadian stores. We also utilize a third-party distribution center bypass facility in Industry, CA. While a portion of our merchandise is processed through this bypass facility for direct distribution to our stores, it serves primarily as a trans-loading facility and a back-up distribution center in the event of a disaster.

5

Brand Building and Marketing

We believe that our Ann Taylor and LOFT brands are among our most important assets and that these brands and their relationship with our clients are key to our competitive advantage. We continually evolve these brands to appeal to the changing needs of our target clients and to stay competitive in the market.

We control all aspects of brand development for our retail concepts, including product design, store merchandising and design, channels of distribution and marketing and advertising. We continue to invest in the development of these brands through, among other things, client research, advertising, in-store and direct marketing and our online sites and online marketing initiatives. We also make investments to enhance the overall client experience through the opening of new stores, the expansion and remodeling of existing stores and a focus on client service. In addition, we are strategically focused on building a multi-channel brand strategy and continue to make investments to support this initiative.

We believe it is strategically important to communicate on a regular basis directly with our current client base and with potential clients, through national and regional advertising, as well as through direct mail marketing and in-store presentation. Marketing expenditures as a percentage of net sales were 4.1% in Fiscal 2012, and 4.0% in both Fiscal 2011 and Fiscal 2010.

Client Loyalty Programs

We have a credit card program that offers eligible clients in the United States the choice of a private label or co-branded credit card. All new cardmembers are automatically enrolled in our exclusive rewards program, which is designed to recognize and promote client loyalty. Both cards can be used at any Ann Taylor or LOFT location or channel of distribution, including Ann Taylor Factory, LOFT Outlet and our Online Stores. The co-branded credit card can also be used at any other business where the card is accepted. Both the private label and co-branded credit cards are offered in an Ann Taylor and LOFT version, depending upon where a client enrolls in the program; however, the core benefits offered to clients are the same.

To encourage clients to apply for a credit card, we provide a discount to approved cardmembers on all purchases made with a new card on the day of application acceptance. Rewards points are earned on purchases made with the credit card at any of our brands through any of our channels. Co-branded cardmembers also earn points on purchases made at other businesses where our card is accepted. Cardmembers who accumulate the requisite number of points are issued a Rewards Card redeemable toward a future purchase. In addition to earning points, all participants in the credit card program receive exclusive offers throughout the year. These offers include a Birthday Bonus and exclusive access to shopping events and periodic opportunities to earn bonus points.

Information Systems

During Fiscal 2012, we continued our investment in information services and technology, enhancing the systems we use to support our Online Stores and multi-channel capabilities, as well as our international expansion, merchandise procurement, inventory management and order fulfillment processes. These enhancements are generally aimed at driving sales, improving client access to merchandise assortments, and back office efficiencies.

Trademarks, Domain Names and Service Marks

The “AnnTaylor®,” “LOFT®,” “AnnTaylor Loft®” and other proprietary marks are registered with the United States Patent and Trademark Office and with the trademark registries of many foreign countries. Our rights in these marks are a significant part of our business, as we believe they are famous and well-known in the women’s apparel industry. Accordingly, we intend to maintain our trademarks and related registrations and vigorously protect them against infringement.

Competition

The women’s retail apparel industry is highly competitive. We compete with certain departments in international, national and local department stores and with other specialty stores, catalog and Internet businesses that offer similar categories of merchandise. We believe that our focused merchandise selection, versatile fashions and client service distinguish us from other apparel retailers. Our competitors range from smaller, growing companies to considerably larger players with substantially greater financial, marketing and other resources. While we are vigilant to maintain our competitiveness, there is, of course, no assurance that we will be able to compete successfully with them in the future. See “Risk Factors.”

Associate Relations

As of February 2, 2013, we had approximately 19,600 employees, of which approximately 2,050 were full-time salaried employees, 2,250 were full-time hourly employees and 15,300 were part-time hourly employees working less than 30 hours per week. None of our employees are represented by a labor union. We believe that our relationship with our employees is good.

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Responsibly ANN

We are committed to operating our business responsibly and thoughtfully, and continue to set high standards and forge strong partnerships with our suppliers to ensure that our products are made in a socially and environmentally responsible manner. In addition, we try to make meaningful contributions to our communities and seek to minimize our impact on the environment by investing in new programs and innovations. Our brands reflect our passion for playing an active role in making the world a better place and we take pride in supporting causes that are important to our clients and our associates.

Available Information

We make available free of charge on our website, http://investor.anninc.com, copies of our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after such reports are filed electronically with, or otherwise furnished to, the United States Securities and Exchange Commission. Copies of the charters of each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, as well as our Corporate Governance Guidelines and Business Conduct Guidelines, are also available on our website.

ITEM 1A. Risk Factors.

Set forth below is a summary of the material risks to an investment in our securities, which should be considered carefully in evaluating such an investment. The risks described below are not the only risks our business faces. We may also be adversely affected by additional risks not presently known to us or that we currently deem immaterial. If any of the below risks actually occur, our business, results of operations, cash flows or financial condition could suffer, which might cause the value of our securities to decline. Please also see “Statement Regarding Forward-Looking Disclosures” in the section immediately preceding Item 1 of this Report.

Our ability to anticipate and respond to changing client preferences and fashion trends in a timely manner

Our success largely depends on our ability to consistently gauge fashion trends and provide a balanced assortment of merchandise that satisfies client demands for each of our brands in a timely manner. Any missteps may affect inventory levels, since we enter into agreements to manufacture and purchase our merchandise well in advance of the applicable selling season. Our failure to anticipate, identify or react appropriately in a timely manner to changes in fashion trends and economic conditions could lead to lower sales, missed opportunities, excess inventories and more frequent markdowns, which could have a material adverse impact on our business. Merchandise missteps could also negatively impact our image with our clients and result in diminished brand loyalty.

Our ability to maintain the value of our brands and engage new and existing clients

Our success depends on the value of our Ann Taylor and LOFT brands. The Ann Taylor and LOFT names are integral to our business, as well as to the implementation of strategies for expanding our business. Maintaining, promoting and growing our brands will depend largely on the success of our design, merchandising and marketing efforts and our ability to provide a consistent, high quality client experience. In addition, while our brands are mature and we have extensive client lists, our success depends, in part, on our ability to keep existing clients engaged and attract new clients to shop our brands. Our business could be adversely affected if we fail to achieve these objectives for one or both of our brands and our public image and reputation could be tarnished by negative publicity. Any of these events could negatively impact sales and profitability.

Our ability to manage inventory levels and changes in merchandise mix

The long lead times required for a substantial portion of our merchandise make client demand difficult to predict and responding quickly to changes challenging. Though we have the ability to source certain product categories with shorter lead times, we enter into contracts for a substantial portion of our merchandise well in advance of the applicable selling season. Our financial condition could be materially adversely affected if we are unable to manage inventory levels and respond to short-term shifts in client demand patterns. In addition, our multi-channel fulfillment strategy, which aims to help optimize merchandising decisions, improve client service and support our multi-channel operations, creates additional complexities in our ability to manage inventory levels. Inventory levels in excess of client demand may result in excessive markdowns and, therefore, lower than planned gross margin. On the other hand, if we underestimate demand for our merchandise, we may experience inventory shortages resulting in missed sales and lost revenues. Either of these events could significantly affect our operating results and brand image. In addition, our margins may be impacted by changes in our merchandise mix and a shift toward merchandise with lower selling prices. These changes could have a material adverse effect on our operating results.

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Our reliance on key management and our ability to attract and retain qualified associates

Our success depends to a significant extent upon both the continued services of our current executive and senior management team, as well as our ability to attract, hire, motivate and retain qualified management talent in the future. Our senior executive officers have substantial experience and expertise in the retail business and have made significant contributions to the growth and success of our brands. Competition for key executives in the retail industry is intense, and our operations could be adversely affected if we cannot retain our key executives or if we fail to attract additional qualified individuals.

Our performance also depends in large part on the talents and contributions of engaged and skilled associates in all areas of our organization. If we are unable to identify, hire, develop, motivate and retain talented individuals, we may be unable to compete effectively and our business could be adversely impacted.

Our ability to execute brand extensions and other growth strategies, including international expansion

Part of our business strategy is to grow our existing brands and identify and develop new growth opportunities. The launch of new merchandise offerings or concepts may require significant capital expenditures and management oversight. Any such plan is subject to risks such as client acceptance, competition and product differentiation. There is no assurance that these merchandise offerings or concepts will be successful or that our overall profitability will increase as a result.

Our growth strategy may also include plans to expand our presence in both new and existing markets, as well as internationally, as we did in late 2012 with the opening of our first stores in Canada. We have no prior experience operating outside of the United States, including Canada, where we may face established competitors. International markets also present unique risks, including different operational characteristics in the areas of employment and labor, transportation, logistics, real estate, finance and law. Furthermore, consumer demand and behavior, as well as preferences and purchasing trends, may differ. Other challenges may include general economic conditions in specific countries or markets, disruptions or delays in shipments, changes in diplomatic and trade relationships, political instability and foreign governmental regulation. As a result of these and other factors, sales of our merchandise in other markets may not be successful, or the margins on those sales may not be in line with those we anticipate. In addition, any difficulties that we may encounter if we were to expand to other international markets may divert financial, operational and managerial resources from our existing operations, which could adversely impact our financial condition and results of operations.

Our ability to successfully upgrade and maintain our information systems in a timely and secure manner to support the needs of the organization

We rely heavily on information systems to manage our operations, including a full range of retail, financial, sourcing and merchandising systems, and regularly make investments to upgrade, enhance or replace these systems. The reliability and capacity of our information systems are critical. Despite our preventative efforts, our systems are vulnerable from time to time to damage or interruption from, among other things, natural disasters, technical malfunctions, inadequate systems capacity, power outages, computer viruses, and security breaches. Any disruptions affecting our information systems, or any delays or difficulties in transitioning to new systems or in integrating them with current systems, could have a material adverse impact on our business. Any failure to maintain adequate system security controls to protect our computer assets and sensitive data, including client data, from unauthorized access, disclosure or use could also damage our reputation with our clients. In addition, our ability to continue to operate our business without significant interruption in the event of a disaster or other disruption depends in part on the ability of our information systems to operate in accordance with our disaster recovery and business continuity plans.

As a component of our ongoing strategy to increase efficiencies, monitor costs and improve our information technology capabilities, we rely on third parties for the implementation and/or management of certain aspects of our information technology infrastructure. Many of the functions that are performed by third parties are performed in their offshore locations. Our agreements with those third parties require them to maintain certain levels of care and security with respect to our information systems and our data. However, failure by any of these third parties to implement and/or manage our information technology infrastructure effectively and securely could disrupt our operations, adversely affect our clients' shopping experience and negatively impact our profitability. Furthermore, the use of offshore service providers may expose us to risks related to local political, economic, social or environmental conditions (including acts of terrorism, the outbreak of war, or the occurrence of natural disaster), restrictive actions by foreign governments or changes in United States laws and regulations.

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In addition, we are implementing enterprise-wide initiatives intended to standardize business processes across brands and functions and optimize performance. There can be no assurances that these initiatives will deliver the expected benefits or that there will not be delays in the expected timing of implementation. It is possible that the costs to complete any related system conversions may exceed current expectations, which could result in a significant additional investment of time and resources and add increased implementation risk. In addition, although we strive to ensure the orderly implementation of these initiatives, the risk of disruption to key operations is increased when complex system changes are undertaken. If our business transformation initiatives fail or are significantly delayed, our ability to improve existing operations and support future growth could be impaired or delayed, which could adversely impact our business and results of operations.

Our ability to secure and protect trademarks and other intellectual property rights

We believe that our “AnnTaylor,” “LOFT” and “AnnTaylor Loft” trademarks are critical to our success. Even though we register and defend our trademarks and other intellectual property rights, there is no assurance that our actions will protect us from the prior registration by others or prevent others from infringing our trademarks and intellectual property rights or seeking to block sales of our products as infringements of their trademarks and intellectual property rights. Further, the laws of foreign countries may not protect intellectual property rights to the same extent as do the laws of the United States. Because we have not registered without opposition all of our trademarks in all categories, or in all foreign countries in which we currently manufacture merchandise or may manufacture or sell merchandise in the future, our ability to source merchandise from international suppliers or pursue international expansion could be negatively impacted.

Effects of natural disasters, war, terrorism, public health concerns or other catastrophes

Natural disasters and public health concerns, including severe infectious diseases, could impact our ability to open and run our corporate offices and stores in affected areas and/or negatively impact our foreign sourcing offices and the manufacturing operations of our vendors. In addition, our ability to continue to operate our business without significant interruption in the event of a disaster or other disruption depends, in part, on the ability of our information systems to operate in accordance with our disaster recovery and business continuity plans. Lower client traffic due to the effect of natural disasters, security concerns, war or the threat of war and public health concerns could result in decreased sales that could have a material adverse impact on our business, financial condition and results of operations. In addition, threat of terrorist attacks or actual terrorist events in the United States and world-wide could cause damage or disruption to international commerce and the global economy, disrupt the production, shipment or receipt of our merchandise or lead to lower client traffic in regional shopping centers. Our ability to mitigate the adverse impact of these events depends, in part, upon the effectiveness of our disaster preparedness and response planning as well as business continuity planning. However, we cannot be certain that our plans will be adequate or implemented properly in the event of an actual disaster or other catastrophic situation.

Risks associated with Internet sales

We sell merchandise over the Internet through our Online Stores, www.anntaylor.com and www.LOFT.com. Our Internet operations are subject to numerous risks, including:

• the successful implementation of new systems, system enhancements and Internet platforms, including our multi-channel and online international order fulfillment and enhanced mobile capability;

• the failure of the computer systems that operate our websites and their related support systems, causing, among other things, website downtimes and other technical failures;

• reliance on third-party computer hardware/software;

• reliance on third-party order fulfillment providers;

• rapid technological change;

• diversion of sales from our stores;

• liability for online content;

• violations of federal, state or other applicable laws, including those relating to online privacy;

• credit card fraud; and

• telecommunications failures and vulnerability to electronic break-ins and similar disruptions.

Our failure to successfully address and respond to these risks could reduce Internet sales, increase costs and damage the reputation of our brands.

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Our reliance on third-party manufacturers and key vendors

We do not own or operate any manufacturing facilities and depend on independent third parties to manufacture our merchandise. We are at risk for increases in manufacturing costs and we cannot be certain that we will not experience operational difficulties with our manufacturers, such as reductions in the availability of production capacity, errors in complying with merchandise specifications, insufficient quality control and failure to meet production deadlines. In addition, we source our merchandise from a select group of manufacturers and we continue to strengthen our relationships with these key vendors. While this strategy has benefits, it also has risks. If one or more of our key vendors were to cease working with us, the flow of merchandise to our stores could be impacted, which could have a material adverse effect on our sales and results of operations. In addition, world-wide economic conditions continue to negatively impact businesses around the world, and the impact of those conditions on our major suppliers cannot be predicted. Our suppliers may be unable to obtain adequate credit or access liquidity to finance their operations. While we have contingency plans for such potential interruptions, a manufacturer's failure to continue working with us, to ship merchandise to us on a timely basis or to meet the required product safety, quality and social compliance standards could cause supply shortages, failure to meet client expectations and damage to our brands.

The effect of fluctuations in sourcing costs

The raw materials used to manufacture our merchandise are subject to availability constraints and price volatility caused by high demand for fabrics, labor conditions, transportation or freight costs, currency fluctuations, weather conditions, supply conditions, government regulations, economic climate and other unpredictable factors. We take steps to mitigate sourcing pressures from fluctuating raw material costs by making advance commitments on key core fabrics when required, leveraging our strong vendor relationships and using country sourcing flexibility. Despite these measures, an increase in the demand for, the price of and/or a decrease in the availability of the raw materials used to manufacture our merchandise could have a material adverse effect on our cost of sales or our ability to meet our clients' needs. Additionally, increases in labor costs as well as a shortage of labor in certain areas of China, may also impact our sourcing costs. We may not be able to pass all or a portion of such higher sourcing costs onto our clients, which could negatively impact our profitability.

Our reliance on foreign sources of production

We purchase a significant portion of our merchandise from foreign suppliers. As a result, we are subject to various risks of doing business in foreign markets and importing merchandise from abroad, such as:

• fluctuation in the value of the U.S. dollar against foreign currencies or restrictions on the transfer of funds;

• imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our merchandise that may be imported into the United States or Canada from countries in regions where we do business;

• significant delays in the delivery of cargo due to port security considerations;

• imposition of duties, taxes, and other charges on imports;

• imposition of anti-dumping or countervailing duties in response to an investigation as to whether a particular product being sold in the United States or Canada at less than fair value may cause (or threaten to cause) material injury to the relevant domestic industry;

• financial or political instability in any of the countries in which our merchandise is manufactured or the transportation channels through which it passes;

• impact of natural disasters and public health concerns on our foreign sourcing offices and vendor manufacturing operations;

• potential cancellation of orders or recalls of any merchandise that does not meet our product safety and quality standards or is not manufactured in accordance with our social compliance requirements; and

• disruption of imports by labor disputes and local business practices.

Any sudden disruptions in the manufacture or import of our merchandise caused by adverse changes in these or any other factors could increase the cost or reduce the supply of merchandise available to us and adversely affect our business, financial condition, results of operations and liquidity.

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Our ability to successfully manage store growth and optimize the productivity and profitability of our store portfolio

Our continued growth and success depend, in part, on our ability to successfully open and operate new stores, enhance and remodel existing stores on a timely and profitable basis, and optimize store performance by closing under-performing stores. Accomplishing our store expansion goals in the United States and planned expansion into other markets, such as Canada, depends upon a number of factors, including locating suitable sites and negotiating favorable lease terms. We must also be able to effectively renew and renegotiate lease terms for existing stores. Managing the profitability of our stores and optimizing store productivity also depends, in large part, on the continued success and client acceptance of our new Ann Taylor and LOFT store formats, as well as our ability to achieve planned store growth for our brands in Fiscal 2013 and beyond. Hiring and training qualified associates, particularly at the store management level, and maintaining overall good relations with our associates, is also important to our store operations. There is no assurance that we will achieve our store expansion goals, manage our growth effectively or operate our stores profitably.

The impact of a privacy breach and the resulting effect on our business and reputation

We rely heavily on digital technologies for the successful operation of our business, including electronic messaging, digital marketing efforts, collection and retention of client data and employee information, processing of credit card transactions, online e-commerce and social media activities and retention of data relating to the Company's financial position and strategic initiatives. Despite the robust security measures we have in place, our facilities and systems, and those of our third-party service providers, may be vulnerable to cyber-security breaches, acts of vandalism, computer viruses, misplaced or lost data, programming and/or human errors or other similar events. Any misappropriation, loss or other unauthorized disclosure of confidential or personally identifiable information, whether by us or by our third-party service providers, could adversely affect our business and operations, including severely damaging our reputation and our relationships with our clients, employees and investors and exposing us to risks of litigation and liability.

In addition, we may incur significant remediation costs in the event of a cyber-security breach or incident, including liability for stolen client or associate information, repairing system damage or providing credit monitoring or other benefits to affected clients. We may also incur increased costs to comply with various applicable laws regarding unauthorized disclosure of personal information. These and other cyber-security-related compliance, prevention and remediation costs, may adversely impact our financial condition and results of operations.

Manufacturer compliance with our social compliance program requirements

We require our independent manufacturers to comply with our Global Supplier Principles and Guidelines, which cover many areas including labor, health and safety and environmental standards. We monitor compliance with these Guidelines using third-party monitoring firms. Although we have an active program to provide training for our independent manufacturers and monitor their compliance with these standards, we do not control the manufacturers or their practices. Any failure of our independent manufacturers to comply with our Global Supplier Principles and Guidelines or local laws in the country of manufacture could disrupt the shipment of merchandise to our stores, force us to locate alternative manufacturing sources, reduce demand for our merchandise and/or damage our reputation.

Failure to comply with legal and regulatory requirements

Our business is subject to legal and regulatory requirements in the U.S. and abroad, including securities, employment and anti-bribery laws and regulations.  In addition, in the future there may be new legal or regulatory requirements or more stringent interpretations of applicable requirements, which could increase the complexity of the regulatory environment in which we operate and the related cost of compliance.

 While it is our policy and practice to comply with all legal and regulatory requirements and while our procedures and internal controls are designed to ensure such compliance, a finding that we are out of compliance with applicable laws and regulations could subject us to civil remedies or criminal sanctions, which could materially adversely impact our business.  In addition, even the claim of a violation of applicable laws or regulations could negatively affect our reputation.

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The effect of general economic conditions

Our financial performance is subject to world-wide economic conditions and the resulting impact on consumer confidence and levels of consumer spending, which may remain volatile for the foreseeable future. Some of the factors impacting discretionary consumer spending include general economic conditions, wages and unemployment, consumer debt, reductions in net worth based on market declines, residential real estate and mortgage markets, tax policies, increases in fuel and energy prices, consumer confidence, failure to increase the debt ceiling in the U.S. and other macroeconomic factors. Consumer purchases of discretionary items, including our merchandise, generally decline during recessionary periods and other periods where disposable income is adversely affected. A downturn in the economy could affect consumer purchases of our merchandise and adversely impact our results of operations and continued growth.

In addition, as a result of the instability in the global financial markets, there is continued diminished liquidity and credit availability and there can be no assurance that our liquidity will not be affected or that our capital resources will at all times be sufficient to satisfy our liquidity needs. Although we believe that our existing cash and cash equivalents, cash provided by operations and available borrowing capacity under our $250 million Fourth Amended and Restated Credit Agreement (the “Credit Facility”) will be adequate to satisfy our capital needs for the foreseeable future, any renewed tightening of the credit markets could make it more difficult for us to access funds, enter into agreements for new indebtedness or obtain funding through the issuance of our securities. Our Credit Facility also has financial covenants which, if not met, may further impede our ability to access funds under the Credit Facility.

We also have significant amounts of cash and cash equivalents on deposit at FDIC-insured financial institutions that are currently in excess of federally insured limits. Since the deposit insurance provisions of the Dodd-Frank Wall Street Reform Act expired on December 31, 2012, and because our Credit Facility contains certain restrictions on permitted investments, we cannot be assured that we will not experience losses with respect to cash on deposit in excess of federally insured limits.

The effect of competitive pressures from other retailers

The specialty retail industry is highly competitive. We compete with local, national and international department stores, specialty and discount stores, catalogs and internet businesses offering similar categories of merchandise. Many of our competitors are companies with substantially greater financial, marketing and other resources. Increased levels of promotional activity by our competitors, some of which may be able to adopt more aggressive pricing policies than we can, both online and in stores, may negatively impact our sales and profitability. There is no assurance that we can compete successfully with these companies in the future.

In addition to competing for sales, we compete for favorable store locations, lease terms and qualified associates. Increased competition in these areas may result in higher costs, which could reduce our sales and operating margins and adversely affect our results of operations.

Our dependence on our Louisville distribution center and other third-party distribution and transportation providers

Our wholly-owned and operated distribution center in Louisville, Kentucky, manages the receipt, storage, sorting, packing and distribution of the majority of merchandise to our stores. We also utilize third-party distribution facilities in Industry, California and Toronto, Canada for distribution support to our stores. In addition, sales at our Online Stores are primarily processed by a third-party fulfillment provider with facilities in Bolingbrook, Illinois. Independent third-party transportation companies then deliver merchandise from these facilities to our stores and/or our clients. Any significant interruption in the operation of our Louisville distribution center, the third-party distribution facilities that we utilize or the domestic transportation infrastructure due to natural disasters, accidents, inclement weather, system failures, work stoppages, slowdowns or strikes, or other unforeseen causes, could delay or impair our ability to distribute merchandise to our stores and/or our clients, which could result in lower sales, a loss of loyalty to our brands and excess inventory. Furthermore, we are susceptible to increases in fuel and other transportation costs that we may not be able to pass on to our clients, which could also adversely affect our results of operations.

Our dependence on shopping malls and other retail centers to attract clients to our stores

Many of our stores are located in shopping malls and other retail centers that benefit from the ability of “anchor” retail tenants, generally large department stores, and other attractions, to generate sufficient levels of consumer traffic in the vicinity of our stores. Any decline in the volume of consumer traffic at shopping centers, whether because of the economic slowdown, a decline in the popularity of shopping centers, the closing of anchor stores or otherwise, could result in reduced sales at our stores and excess inventory. We may have to respond by increasing markdowns or initiating marketing promotions to reduce excess inventory, which could have a material adverse effect on our margins and operating results.

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In addition, continued consolidation in the commercial retail real estate market could affect our ability to successfully negotiate favorable rental terms for our stores in the future. Should significant consolidation continue, a large proportion of our store base could be concentrated with one or a few entities that could then be in a position to dictate unfavorable terms to us due to their significant negotiating leverage. If we are unable to negotiate favorable lease terms with these entities, this could affect our ability to profitably operate our stores, which could adversely impact our business, financial condition and results of operations.

The impact on our stock price relating to our level of sales and earnings growth

A variety of factors have historically affected, and will continue to affect, our comparable sales results and profit margins. These factors include fashion trends and client preferences, changes in our merchandise mix, competition, economic conditions, weather, effective inventory management and new store openings, among other things. There is no assurance that we will achieve positive levels of sales and earnings growth, and any decline in our future growth or performance could have a material adverse effect on the market price of our common stock.

Our stock price has experienced, and could continue to experience in the future, substantial volatility as a result of many factors, including global economic conditions, broad market fluctuations, our operating performance and public perception of the prospects for our brands or for the women's apparel industry in general. Failure to meet market expectations, particularly with respect to comparable sales, net revenue, operating margins and earnings per share, would likely result in a decline in the market value of our stock.

Our ability to realize deferred tax assets

Deferred tax assets represent the tax effect of the differences between the book and tax bases of assets and liabilities. Deferred tax assets are assessed periodically by management to determine whether they are realizable. Factors in management's determination consist of the performance of the business, including the ability to generate taxable income from operations, and tax-planning strategies. If, based on available information, it is more likely than not that a deferred tax asset will not be realized, we may be required to establish a valuation allowance against our deferred tax assets, which could have an adverse effect on our results of operations and financial condition.

The effect of external economic factors on our Pension Plan

Our future funding obligations with respect to our defined benefit Pension Plan, which was frozen in 2007, will depend upon the future performance of the Pension Plan assets, interest rates used to determine funding levels, actuarial data and experience and any changes in government laws and regulations. Our Pension Plan assets are held in common collective trusts and mutual funds that invest in equity and debt securities. Our ongoing pension expense and contribution obligations under our Pension Plan could be adversely impacted by changes in the net market value of our Pension Plan assets, fluctuating interest rates and/or declining asset returns, which could negatively affect our financial condition and results of operations.

The impact of climate change on our business

There is growing concern that a gradual increase in global average temperatures due to an increased concentration of carbon dioxide and other greenhouse gases (GHG) in the atmosphere have caused and will continue to cause significant changes in weather patterns. Increased frequency or duration of extreme weather conditions could result in a shortage of raw materials used to produce our merchandise, disrupt our supply chain, deplete natural resources and/or impact demand for our merchandise. We do not have any operations that are currently subject to any government-enforced GHG emissions caps, trading programs or reporting requirements. In Fiscal 2011, we completed a carbon footprint estimation study to better understand the impact of our emissions sources from our U.S. corporate offices, distribution center and retail stores, and continue to take steps in our climate change mitigation efforts, such as implementing energy saving and carbon reduction technologies in our operations.

Although the effects, if any, of climate change on our business and results of operations are currently difficult to ascertain or quantify, public expectations for reductions in GHG emissions could result in increased energy, transportation and raw material costs and may require us and our third-party suppliers to make additional investments in facilities and equipment. In addition, our operations may be impacted by regulatory changes related to climate change and GHG emissions, which may increase our compliance costs and adversely impact our profitability.

ITEM 1B. Unresolved Staff Comments.

None.

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ITEM 2. Properties.

As of February 2, 2013, we operated 984 retail stores in 47 states, the District of Columbia, Puerto Rico and Canada, all of which were leased. Store leases typically provide for initial terms of 10 years, although some leases have shorter or longer initial periods. A majority of our store leases grant us the right to extend the term for one or two additional five-year periods, and also contain early termination options, which can be exercised by us under specific conditions. Most of the store leases also require us to pay a specified minimum rent, plus a contingent rent based on a percentage of the store’s net sales in excess of a specified threshold. In addition, most of the leases require us to pay real estate taxes, insurance and certain common area and maintenance costs. The current terms of our leases expire as follows:

Fiscal Years Lease Terms Expire	Number of Stores
2013 - 2015	435
2016 - 2018	315
2019 - 2021	148
2022 and later	86

We lease our corporate offices at 7 Times Square in New York City (approximately 308,000 square feet) under a lease expiring in 2020. In addition, in Milford, Connecticut, we maintain 42,000 square feet of office space under a lease that expires in 2019.

The Company’s wholly-owned subsidiary, AnnTaylor Distribution Services, Inc., owns our 256,000 square foot distribution center located in Louisville, Kentucky. The distribution center is located on approximately 27 acres, which could accommodate possible future expansion of the facility. The majority of our merchandise is distributed to stores through this facility.

ITEM 3. Legal Proceedings.

We are subject to various legal proceedings and claims that arise in the ordinary course of our business. Although the amount of any liability that could arise with respect to these actions cannot be determined with certainty, in our opinion, any such liability will not have a material adverse effect on our consolidated financial position, consolidated results of operations or liquidity.

ITEM 4. Mine Safety Disclosures.

Not applicable.

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PART II

ITEM 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common stock is listed and traded on the New York Stock Exchange under the symbol “ANN.” The number of holders of record of common stock at March 1, 2013 was 1,912. The following table sets forth the high and low sale prices per share of our common stock on the New York Stock Exchange for the periods indicated:

	Market Price
	High		Low
Fiscal Year 2012
Fourth quarter	$	36.29	$	29.98
Third quarter	39.78		26.36
Second quarter	28.85		23.93
First quarter	29.81		22.14
Fiscal Year 2011
Fourth quarter	$	27.53	$	21.74
Third quarter	28.31		19.00
Second quarter	32.49		24.98
First quarter	32.11		21.43

STOCK PERFORMANCE GRAPH

The following graph compares the percentage changes in the cumulative total stockholder return on the Company’s Common Stock for the five-year period ended February 2, 2013, with the cumulative total return on the Standard & Poor’s 500 Stock Index (“S&P 500”) and the Dow Jones U.S. Retailers, Apparel Index for the same period. In accordance with the rules of the Securities and Exchange Commission, the returns are indexed to a value of $100 at February 2, 2008 and assume that all dividends, if any, were reinvested. This performance graph shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.

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We have never paid cash dividends on our common stock. Any determination to pay cash dividends is at the discretion of our Board of Directors, which considers it on a periodic basis. In addition, as a holding company, our ability to pay dividends is dependent upon the receipt of dividends or other payments from our subsidiaries, including our wholly-owned subsidiary AnnTaylor, Inc. The payment of dividends by AnnTaylor, Inc. to us is subject to certain restrictions under our Credit Facility. We are also subject to certain restrictions contained in the Credit Facility on the payment of cash dividends on our common stock. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.”

The following table sets forth information concerning purchases of our common stock for the periods indicated, which upon repurchase, are classified as treasury shares available for general corporate purposes:

	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program (2)	Approximate Dollar  Value of Shares that May  Yet Be Purchased Under  Publicly Announced Program
					(in thousands)
October 28, 2012 to November 24, 2012	6,356	$	33.57	—	$	109,084
November 25, 2012 to December 29, 2012	638,106	33.00		637,000	88,063
December 30, 2012 to February 2, 2013	1,190,350	32.76		1,189,925	49,084
	1,834,812			1,826,925

(1) Includes a total of 7,887 shares of restricted stock purchased in connection with employee tax withholding obligations under employee equity compensation plans, which are not purchases under the Company’s publicly announced program.

(2) On March 8, 2011, our Board of Directors approved a $200 million expansion of our existing securities repurchase program (the “Repurchase Program”) to a total of $600 million. The Repurchase Program will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. We repurchased 1,826,925 shares under the Repurchase Program during the fourth quarter of Fiscal 2012. As of February 2, 2013, and as of March 8, 2013, the date of this Report, approximately $49.1 million remained available under the Repurchase Program.

The information called for by this item relating to “Securities Authorized for Issuance under Equity Compensation Plans” is provided in Item 12.

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ITEM 6. Selected Financial Data.

The following historical Consolidated Statements of Operations and Consolidated Balance Sheet information has been derived from our audited consolidated financial statements. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto included elsewhere in this document. All references to years are to our fiscal year, which ends on the Saturday nearest January 31 in the following calendar year. All fiscal years for which financial information is set forth below contain 52 weeks, except for the fiscal year ended February 2, 2013, which includes 53 weeks.

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011			January 30, 2010			January 31, 2009
	(in thousands, except earnings per share and store count information)
Consolidated Statements of Operations:
Net sales	$	2,375,509		$	2,212,493		$	1,980,195		$	1,828,523		$	2,194,559
Cost of sales	1,073,167			1,004,350			876,201			834,188			1,139,753
Gross margin	1,302,342			1,208,143			1,103,994			994,335			1,054,806
Selling, general and administrative expenses	1,135,551			1,062,644			978,580			966,603			1,050,560
Restructuring charges	—			—			5,624			36,368			59,714
Asset impairment charges	—			—			—			15,318			29,590
Goodwill impairment charge	—			—			—			—			286,579
Operating income/(loss)	166,791			145,499			119,790			(23,954		)	(371,637		)
Interest and investment income/(expense), net	1,051			(1,052		)	(668		)	(2,156		)	215
Other non-operating income/(expense), net (1)	(189		)	—			—			—			—
Income/(loss) before income taxes	167,653			144,447			119,122			(26,110		)	(371,422		)
Income tax provision/(benefit)	65,068			57,881			45,725			(7,902		)	(37,516		)
Net income/(loss)	$	102,585		$	86,566		$	73,397		$	(18,208	)	$	(333,906	)
Basic earnings/(loss) per share	$	2.13		$	1.66		$	1.26		$	(0.32	)	$	(5.82	)
Diluted earnings/(loss) per share	$	2.10		$	1.64		$	1.24		$	(0.32	)	$	(5.82	)
Weighted average shares outstanding	47,494			51,200			57,203			56,782			57,366
Weighted average shares outstanding, assuming dilution	48,094			52,029			58,110			56,782			57,366
Consolidated Operating Information:
Percentage increase/(decrease) in comparable sales (2)	3.3		%	6.8		%	10.7		%	(17.4		)%	(13.4		)%
Number of stores:
Open at beginning of period	953			896			907			935			929
Opened during the period	63			76			24			14			66
Closed during the period	(32		)	(19		)	(35		)	(42		)	(60		)
Open at the end of the period	984			953			896			907			935
Total store square footage at end of period	5,685			5,584			5,284			5,348			5,492
Capital expenditures (3)	$	149,737		$	124,448		$	64,367		$	35,736		$	100,195
Depreciation and amortization	$	97,829		$	94,187		$	95,523		$	104,351		$	122,222
Working capital turnover (4)	13.2		x	9.7		x	8.0		x	10.5x			14.0x
Inventory turnover (5)	5.0		x	4.9		x	4.8		x	4.9		x	5.4		x
Consolidated Balance Sheet Information:
Working capital	$	169,275		$	189,420		$	268,005		$	229,521		$	118,013
Total assets	942,205			887,681			926,820			902,141			960,439
Total stockholders’ equity	385,110			363,877			423,445			417,186			416,512

(Footnotes on following page)

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(Footnotes for preceding page)

(1) Other non-operating income/(expense), net consists of foreign currency transaction gains or losses.

(2) Comparable sales provide a measure of existing store sales performance. A store is included in comparable sales in its thirteenth month of operation. A store with a square footage change of more than 15% is treated as a new store for the first year following its reopening. Sales from our Online Stores are also included in comparable sales. In a fiscal year with 53 weeks, such as in Fiscal 2012, sales in the last week of that fiscal year are excluded from comparable sales.

(3) Capital expenditures are accounted for on the accrual basis and include net non-cash transactions totaling $2.5 million, $5.5 million, $3.2 million, $(2.8) million and $(10.1) million, in Fiscal 2012, 2011, 2010, 2009 and 2008, respectively. The non-cash transactions are primarily related to the purchase of property and equipment on account.

(4) Working capital turnover is determined by dividing net sales by the average of the amount of working capital at the beginning and end of the period.

(5) Inventory turnover is determined by dividing cost of sales by the average of the cost of inventory at the beginning and end of the period.

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read together with our consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

Management Overview

Fiscal 2012 was a very strong year for ANN INC., reflecting solid top-line growth, improved gross margin performance and double-digit percentage increases in operating income, net income and diluted earnings per share compared with Fiscal 2011. These results were driven by strong client response to our product offering throughout much of the year, as well as the positive effects of our strategic growth initiatives. We provided our clients with seamless access to our Ann Taylor and LOFT merchandise through the first-phase launch of our multi-channel initiative in Fall 2012. In addition, we successfully executed our real estate strategy, adding 63 new stores across the fleet, which included three new stores in Toronto, Canada, marking the first step in growing our brands internationally.

At the Ann Taylor brand, overall comparable sales increased 1.1%, on top of a 5.2% increase in Fiscal 2011. At our multi-channel Ann Taylor business, which includes Ann Taylor stores and anntaylor.com, comparable sales increased 1.8%, while at Ann Taylor Factory, comparable sales declined 0.5%. Results at Ann Taylor reflected the impact of our 2012 strategies for the brand, which included offering a better balance of fashion and basics within each merchandise category, more depth in key fashion items and a greater breadth of the assortment at opening price points. In addition, we continued efforts to create a more engaging and personalized in-store experience for our client and lowered our promotional stance, which resulted in higher gross margin rate performance as compared to Fiscal 2011.

The LOFT brand delivered a comparable sales increase of 4.8% in Fiscal 2012, on top of an 8.0% increase in Fiscal 2011. At our multi-channel LOFT business, which includes LOFT stores and LOFT.com, comparable sales increased 5.8%, which was partially offset by a decrease of 1.5% in the LOFT Outlet channel. Clients responded positively to LOFT's merchandise assortments, which contributed to an overall increase in full price sell-through as compared to Fiscal 2011, despite the effect of a fourth quarter merchandise offering that was overinvested in bright colors. Gross margin rate performance was slightly below Fiscal 2011 levels, due in part to a higher promotional stance during the fourth quarter of Fiscal 2012.

Our Fiscal 2012 real estate strategy was focused on expanding our store presence at both brands, enhancing store productivity across the entire fleet and opening our first international stores in Canada, as well as continued execution of selective store closures.  At the Ann Taylor brand, we opened 11 new Ann Taylor stores, including two stores in Canada, and updated or right-sized an additional 121 existing stores to reflect our new brand aesthetic. As a result of these capital investments, nearly two-thirds of the Ann Taylor store fleet now reflects our new brand aesthetic. At Ann Taylor Factory, we opened three new stores during Fiscal 2012. At LOFT, we continued to move forward with the expansion of our LOFT brand store fleet, opening 26 new LOFT stores, primarily in small- to mid-markets, including our first international LOFT store in Canada. We also opened 23 new LOFT Outlet stores in Fiscal 2012.

Throughout Fiscal 2012, we demonstrated our commitment to enhance shareholder value and maintain a healthy balance sheet and cash position. We repurchased 4.9 million shares of our common stock, representing nearly 10% of outstanding shares, at a cost of $135 million, closing the year with $167 million in cash and no bank debt. We also continued to closely manage inventory levels throughout the year, and ended the year with total inventory per square foot flat as compared to Fiscal 2011.

Looking ahead, our focus in Fiscal 2013 is to continue to move forward with our initiatives to strengthen our connection to our client, both by keeping existing loyal clients engaged and attracting new clients to shop our brands.  We plan to continue efforts to optimize our store portfolio and enhance our in-store shopping experience, as well as further our Canadian expansion.  We also expect to continue to grow our e-commerce business by further capitalizing on our recently launched multi-channel capabilities, offering our clients a more personalized online shopping experience and adding international shipping capabilities in certain countries outside the United States at both of our Online Stores.  Finally, we intend to use our strong free cash flow to invest in the profitable growth of ANN INC. as a means of delivering value to our shareholders.

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Key Performance Indicators

In evaluating our performance, senior management reviews certain key performance indicators, including:

• Comparable sales – Comparable sales ("comps") provide a measure of existing store sales performance. A store is included in comparable sales in its thirteenth month of operation. A store with a square footage change of more than 15% is treated as a new store for the first year following its reopening. Sales from our Online Stores are also included in comparable sales. In a fiscal year with 53 weeks, such as Fiscal 2012, sales in the last week of that fiscal year are excluded from comparable sales.

• Gross margin – Gross margin measures our ability to control the direct costs of merchandise sold during the period. Gross margin is the difference between net sales and cost of sales, which includes the cost of merchandise sold; costs to transport merchandise from third-party suppliers to our distribution center, including customs costs; costs associated with our sourcing operations; costs associated with the fulfillment and shipment of online and multi-channel sales; depreciation related to merchandise management systems; sample development costs; and the direct costs of our credit card loyalty program. Buying and occupancy costs are excluded from cost of sales.

• Operating income – Because retailers do not uniformly record supply chain, buying and/or occupancy costs as components of cost of sales or selling, general and administrative expenses, operating income allows us to benchmark our performance relative to other retailers. Operating income represents earnings before interest and income taxes and measures our earnings power from ongoing operations.

• Store productivity – Store productivity, including sales per square foot, average unit retail price ("AUR"), units per transaction ("UPT"), dollars per transaction ("DPT"), traffic and conversion, is evaluated by management in assessing our operating performance.

• Inventory turnover – Inventory turnover measures our ability to sell our merchandise and how many times it is replaced over time. This ratio is important in determining the need for markdowns, planning future inventory levels and assessing client response to our merchandise.

• Quality of merchandise offerings – To monitor and maintain client acceptance of our merchandise offerings, we monitor sell-through levels, inventory turnover, gross margin, returns and markdown rates at a class and style level. This analysis helps identify merchandise issues at an early date and helps us plan future product development and buying.

Results of Operations

The following table sets forth data from our Consolidated Statements of Operations expressed as a percentage of net sales. All fiscal years presented contain 52 weeks, except for the fiscal year ended February 2, 2013, which includes 53 weeks:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Net sales	100.0	%	100.0	%	100.0	%
Cost of sales	45.2	%	45.4	%	44.2	%
Gross margin	54.8	%	54.6	%	55.8	%
Selling, general and administrative expenses	47.8	%	48.0	%	49.4	%
Restructuring	—	%	—	%	0.3	%
Operating income	7.0	%	6.6	%	6.1	%
Interest and investment income/(expense), net	—	%	(0.1	)%	(0.1	)%
Other non-operating expense, net	—	%	—	%	—	%
Income before income taxes	7.0	%	6.5	%	6.0	%
Income tax provision	2.7	%	2.6	%	2.3	%
Net income	4.3	%	3.9	%	3.7	%

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The following table sets forth selected data from our Consolidated Statements of Operations expressed as a percentage change from the prior period. All fiscal years presented contain 52 weeks, except for the fiscal year ended February 2, 2013, which includes 53 weeks:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Net sales	7.4	%	11.7	%	8.3	%
Gross margin	7.8	%	9.4	%	11.0	%
Operating income	14.6	%	21.5	%	600.1	%
Net income	18.5	%	17.9	%	503.1	%

Sales and Sales Metrics

During Fiscal 2012, we revised the presentation of certain sales data from a channel-specific approach that segregated store sales from online sales at a brand level, to an approach that considers the impact of our multi-channel initiative on total brand sales. All prior year sales, comparable sales and sales-related metrics have been adjusted to conform to the current year presentation. In addition, all fiscal years presented contain 52 weeks, except for the fiscal year ended February 2, 2013, which includes 53 weeks.

	Fiscal Year Ended
	February 2, 2013				January 28, 2012				January 29, 2011
	Sales		Comp %		Sales		Comp %		Sales		Comp %
	($ in thousands)
Sales and Comparable Sales
Ann Taylor brand
Ann Taylor (1)	$	644,486	1.8	%	$	618,446	4.9	%	$	595,670	23.5	%
Ann Taylor Factory	300,738		(0.5	)%	289,406		5.7	%	268,016		9.3	%
Total Ann Taylor brand	945,224		1.1	%	907,852		5.2	%	863,686		18.7	%
LOFT brand
LOFT (2)	1,202,244		5.8	%	1,114,911		7.5	%	1,040,246		4.2	%
LOFT Outlet	228,041		(1.5	)%	189,730		14.2	%	76,263		21.2	%
Total LOFT brand	1,430,285		4.8	%	1,304,641		8.0	%	1,116,509		5.0	%
Total Company	$	2,375,509	3.3	%	$	2,212,493	6.8	%	$	1,980,195	10.7	%

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Sales-Related Metrics
Average Dollars Per Transaction ("DPT")
Ann Taylor brand	$	77.67	$	78.90	$	80.22
LOFT brand	60.38		62.20		60.17
Average Units Per Transaction ("UPT")
Ann Taylor brand	2.36		2.34		2.29
LOFT brand	2.55		2.58		2.40
Average Unit Retail ("AUR")
Ann Taylor brand	$	32.91	$	33.72	$	35.03
LOFT brand	23.68		24.11		25.07

(1) Includes sales at Ann Taylor stores and anntaylor.com.

(2) Includes sales at LOFT stores and LOFT.com.

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Store Data

The following table sets forth certain store data:

	Fiscal Year Ended
	February 2, 2013				January 28, 2012				January 29, 2011
	Stores		Square Feet		Stores		Square Feet		Stores		Square Feet
	(square feet in thousands)
Stores and Square Footage
Ann Taylor brand
Ann Taylor	275		1,389		280		1,460		266		1,453
Ann Taylor Factory	101		696		99		700		92		668
Total Ann Taylor brand	376		2,085		379		2,160		358		2,121
LOFT brand
LOFT	512		2,950		500		2,904		502		2,930
LOFT Outlet	96		650		74		520		36		233
Total LOFT brand	608		3,600		574		3,424		538		3,163
Total Company	984		5,685		953		5,584		896		5,284
Number of:
Stores open at beginning of period	953		5,584		896		5,284		907		5,348
New stores	63		340		76		473		24		138
Downsized/expanded stores, net (1)	—		(69	)	—		(58	)	—		(14	)
Closed stores	(32	)	(170	)	(19	)	(115	)	(35	)	(188	)
Stores open at end of period	984		5,685		953		5,584		896		5,284
Converted stores (2)	—		—		—		—		10		—

(1) During Fiscal 2012, we downsized 18 Ann Taylor stores, four Ann Taylor Factory stores, five LOFT stores and one LOFT Outlet store. During Fiscal 2011, we downsized 11 Ann Taylor stores and three Ann Taylor Factory stores. During Fiscal 2010, we downsized five Ann Taylor stores and two LOFT stores and expanded one Ann Taylor store.

(2) During Fiscal 2010, we converted six Ann Taylor stores to LOFT stores and four LOFT stores to LOFT Outlet stores. There were no store conversions in Fiscal 2012 or Fiscal 2011.

Comparison of Fiscal Years 2012 and 2011

Total net sales increased approximately $163.0 million, or 7.4%, in Fiscal 2012 as compared with Fiscal 2011, with comparable sales increasing 3.3%. Approximately $25.4 million of the increase in total net sales was due to the effect of the 53rd week in Fiscal 2012. Despite challenges in the back half of the year, due, in part, to the lingering effects of Superstorm Sandy in the Northeast region, both brands experienced increases in total net sales and comparable sales in Fiscal 2012. Both brands also benefited from the third-quarter launch of the first phase of our multi-channel initiative, which enabled store order fulfillment of internet sales, and contributed to higher traffic and conversion. In addition, during Fiscal 2012, we recognized $6.6 million in revenue related to gift card and merchandise credit breakage, where we determined there was no legal obligation to escheat the value of the cards under unclaimed property laws and the likelihood of redemption was considered remote. Fiscal 2012 is the first period during which we recognized gift card and merchandise credit “breakage,” and therefore includes the breakage income related to gift cards sold and merchandise credits issued since inception of these programs.

At the Ann Taylor brand, total net sales increased approximately $37.4 million, or 4.1%, in Fiscal 2012 as compared with Fiscal 2011, with comparable sales increasing 1.1%. Sales at our multi-channel Ann Taylor business, which includes Ann Taylor stores and anntaylor.com, benefited from a merchandise mix that reflected the brand's updated assortment and pricing strategies. In addition, beginning in late Spring, our merchandise assortments offered a much higher penetration of color and a broader range of relevant fashion at opening price points, contributing to higher traffic, conversion and UPTs. At Ann Taylor Factory, we experienced a 3.9% increase in total net sales, due to higher UPTs, an increase in conversion and the addition of three new stores, partially offset by the effect of a decrease in traffic.

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At the LOFT brand, total net sales increased $125.6 million, or 9.6%, in Fiscal 2012 as compared with Fiscal 2011, with comparable sales up 4.8%. At our multi-channel LOFT business, which includes LOFT stores and LOFT.com, clients responded positively to the brand's entire merchandise assortment, however, our full-year results were impacted by a fourth-quarter investment in bright colors that did not resonate with our clients during the holiday season. While this impacted our fourth quarter top-line results, for the full-year period, we experienced increases in both traffic and conversion, which contributed to higher full-price sell-through. At LOFT Outlet, we experienced higher conversion and an increase in UPTs, however, inventory levels were constrained in the back half of Fiscal 2012, which contributed to a comparable sales decrease of 1.5% for the full-year period.

Comparison of Fiscal Years 2011 and 2010

Total net sales increased approximately $232.3 million, or 11.7%, in Fiscal 2011 as compared with Fiscal 2010 with comparable sales increasing 6.8%. Full-price sell-through increased over last year at both brands, with significant increases in the LOFT Stores channel. Both brands experienced comparable sales gains for the year, with significant double-digit comparable sales percentage growth at our Online Stores and at LOFT Outlet. By brand, Ann Taylor’s net sales increased approximately $44.2 million, or 5.1% in Fiscal 2011 as compared with Fiscal 2010, as comparable sales increased 5.2%. At the LOFT brand, net sales increased $188.1 million, or 16.9%, in Fiscal 2011 as compared with Fiscal 2010, with comparable sales up 8.0%.

Ann Taylor’s Fiscal 2011 results were impacted by a miss in the print and novelty components of the Ann Taylor stores channel merchandise assortment in late Spring and a merchandise mix during the Fall season that lacked depth in fashion and did not offer enough choices at opening price points. Although traffic remained steady across all channels, we were more promotional than planned in the Ann Taylor stores channel, particularly during the back half of the year. This resulted in lower AURs and DPTs and contributed to a 1.2% decrease in comparable sales. At anntaylor.com, we experienced significant top-line growth over last year, with comparable sales increasing 36.8%, driven by increases in traffic, conversion and average order value. Sales at Ann Taylor Factory stores were also up, reflecting a 5.7% increase in comparable sales and the addition of seven new stores.

LOFT's Fiscal 2011 results reflected client acceptance of the brand's feminine, casual fashion and value proposition, particularly in the LOFT stores channel, where comparable sales increased 5.4%. The brand also experienced higher levels of full-price sell-through, as well as year-over-year increases in DPTs and UPTs. LOFT also experienced strong top-line growth at LOFT.com, reflecting increases in traffic, conversion, and average order value. In addition, sales at LOFT Outlet increased significantly as a result of a 14.2% increase in comparable sales and our accelerated Spring 2011 expansion in this channel.

Our net sales do not show significant seasonal variation. As a result, we have not had significant overhead and other costs generally associated with large seasonal variations.

Cost of Sales and Gross Margin

Because retailers do not uniformly record supply chain, buying and/or occupancy costs as cost of sales or selling, general and administrative expenses, our gross margin and selling, general and administrative expenses, both in dollars and as a percentage of net sales, may not be comparable to other retailers. For additional information regarding costs classified in “Cost of sales” and “Selling, general and administrative expenses,” on our Consolidated Statements of Operations, refer to Note 1, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements.

The following table presents cost of sales and gross margin in dollars and as a percentage of net sales:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(dollars in thousands)
Cost of sales	$	1,073,167		$	1,004,350		$	876,201
Gross margin	$	1,302,342		$	1,208,143		$	1,103,994
Percentage of net sales	54.8		%	54.6		%	55.8		%

Gross margin as a percentage of net sales was 54.8% in Fiscal 2012, an increase from 54.6% in Fiscal 2011. Our full-year gross margin results were positively impacted by favorable client response to our merchandise offerings, which enabled fewer store-wide promotions and more targeted promotional activity during most of the year.  This contributed to higher merchandise gross margin rate performance as compared to Fiscal 2011.  In addition, our full-year gross margin rate performance was positively impacted by the gross margin effect of gift card and merchandise credit breakage. These improvements were partially offset by a period-over-period increase in client shipping costs during the back half of Fiscal 2012, due, in part, to the effect of our multi-channel initiative.

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Gross margin as a percentage of net sales was 54.6% in Fiscal 2011, down from 55.8% in Fiscal 2010. At Ann Taylor, full-price sell-through was negatively impacted by a miss in the print and novelty components in our Spring 2011 merchandise assortment at Ann Taylor stores, as well as a lack of depth in fashion and breadth at opening price points in the back half of the year. This, combined with the highly promotional retail environment we faced late in the year, also impacted the brand's overall gross margin rate performance. At LOFT, strong client acceptance of the brand's merchandise offering contributed to higher levels of full-price sell-through in the LOFT stores channel, which also drove higher gross margin rate performance. LOFT was also able to maintain its planned promotional strategy despite the highly competitive retail environment.

Selling, General and Administrative Expenses

The following table presents selling, general and administrative expenses in dollars and as a percentage of net sales:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(dollars in thousands)
Selling, general and administrative expenses	$	1,135,551		$	1,062,644		$	978,580
Percentage of net sales	47.8		%	48.0		%	49.4		%

Selling, general and administrative expenses in Fiscal 2012 increased approximately $72.9 million compared with Fiscal 2011. This increase was primarily due to higher payroll and occupancy costs associated with our store growth, an overall increase in variable costs related to higher net sales and other expenses to support the expansion of our business. These increases were partially offset by a decrease in certain performance-based compensation expense. As a percentage of net sales, selling, general and administrative expenses decreased 0.2% as compared to Fiscal 2011, primarily due to fixed cost leveraging as a result of higher net sales and a reduction in certain performance-based compensation expense, partially offset by an increase in expenses supporting the expansion of our business.

Selling, general and administrative expenses in Fiscal 2011 increased approximately $84.1 million compared with Fiscal 2010. This increase was primarily due to higher payroll and occupancy costs associated with our store growth, primarily in the factory outlet channel, an overall increase in variable costs related to higher net sales, an increase in marketing expenses and severance and related costs associated with the separation of the former Brand President, Ann Taylor division. These increases were partially offset by a decrease in performance-based compensation expense. The decrease in selling, general and administrative expenses as a percentage of net sales in Fiscal 2011 as compared to Fiscal 2010 was primarily due to fixed cost leveraging as a result of higher net sales, restructuring savings and our continued focus on expense management.

Income Taxes

The following table presents our income tax provision/(benefit) and effective income tax rate:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(dollars in thousands)
Income tax provision	$	65,068		$	57,881		$	45,725
Effective income tax rate	38.8		%	40.1		%	38.4		%

Our effective income tax rate decreased in Fiscal 2012 as compared with Fiscal 2011, primarily due to tax positions that were considered effectively settled during Fiscal 2012, partially offset by a change in the mix of earnings in various state taxing jurisdictions. Our effective income tax rate increased in Fiscal 2011 as compared with Fiscal 2010, primarily due to a change in the mix of earnings in various state taxing jurisdictions and certain other discrete items. See Note 8, “Income Taxes” in the Notes to the Consolidated Financial Statements for further discussion.

Liquidity and Capital Resources

Our primary source of working capital is cash flow from operations. Our primary ongoing cash requirements relate to the purchase of inventory and property and equipment.

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The following table sets forth certain measures of our liquidity:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
	(dollars in thousands)
Cash provided by operating activities	$	258,909	$	207,828	$	164,311
Working capital	$	169,275	$	189,420	$	268,005
Current ratio	1.50:1		1.66:1		1.95:1

Operating Activities

Cash provided by operating activities increased $51.1 million, to $258.9 million, in Fiscal 2012 as compared to Fiscal 2011. This increase was primarily due to the result of higher net income adjusted for non-cash expenses and changes in merchandise inventories, accounts payable and accrued expenses, with the latter driven by changes in short-term compensation accruals.  These increases were partially offset by changes in prepaid expenses and other current assets, primarily related to the timing of February rent payments.

Cash provided by operating activities increased $43.5 million to $207.8 million in Fiscal 2011 as compared to Fiscal 2010 due to higher net income adjusted for non-cash expenses, changes in long-term compensation and prepaid expenses. These increases were partially offset by an increase in accounts receivable driven by higher sales and reductions in current compensation-related accruals.

Merchandise inventories increased approximately $3.4 million, or 1.6%, in Fiscal 2012 from Fiscal 2011, consistent with our comparable sales increase and our increase in the number of stores. On a per-square-foot basis, merchandise inventories remained flat at approximately $34 at the end of both periods. Inventory turned 5.0 times in Fiscal 2012 compared with 4.9 times in Fiscal 2011.

Investing Activities

Cash used for investing activities was $149.9 million in Fiscal 2012, compared with $120.5 million in Fiscal 2011. Cash used for investing activities in Fiscal 2012 was primarily related to capital expenditures associated with new store openings, store refurbishment projects and investments in technology.

Cash used for investing activities was $120.5 million in Fiscal 2011, compared with $57.2 million in Fiscal 2010. Cash used for investing activities in Fiscal 2011 was primarily related to capital expenditures associated with new store openings, store refurbishment projects and investments in technology. During Fiscal 2011, we opened 76 new stores, as compared with 24 new stores in Fiscal 2010.

The following table sets forth a breakdown of our accrual-basis capital expenditures:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
	(in thousands)
New store construction	$	76,631	$	59,336	$	25,433
Store renovation/refurbishment	45,524		36,505		14,172
Information systems	23,298		26,747		22,953
Corporate offices/distribution center	3,792		1,380		779
Other	492		480		1,030
Total	$	149,737	$	124,448	$	64,367

We expect our total capital expenditure requirements in Fiscal 2013 will be approximately $165 million. Of this amount, approximately $55 million will be spent on new store construction, driven by the planned opening of approximately 65 stores. Approximately $85 million will be spent on 45 planned downsizes and remodels and other store renovation and refurbishment programs. This is expected to result in a net increase in total square footage of approximately 135,000 square feet, or approximately 2% from Fiscal 2012. In addition, approximately $25 million is planned for continued investments in information systems, technology and further integration of our Online Stores through additional enhancements to website functionality. The actual amount of our capital expenditures will depend in part on the number of stores opened, expanded and refurbished. To finance our capital requirements, we expect to use internally generated funds. See “Business - Retail Stores” for further discussion.

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Financing Activities

Cash used for financing activities was $92.2 million in Fiscal 2012, compared with $163.8 million in Fiscal 2011. Cash used for financing activities in Fiscal 2012 was primarily due to the repurchase of $140.8 million of our common stock, partially offset by cash inflows related to an increase in stock option exercise activity.

Cash used for financing activities was $163.8 million in Fiscal 2011, compared with $84.9 million in Fiscal 2010. Cash used for financing activities in Fiscal 2011 was primarily due to the repurchase of $180.3 million of our common stock, partially offset by excess tax benefits related to stock-based compensation and cash inflows related to stock option exercises.

Revolving Credit Facility

On December 19, 2012, the Company’s wholly-owned subsidiary, AnnTaylor, Inc., and certain of its subsidiaries, entered into a Fourth Amended and Restated $250 million senior secured revolving credit facility with Bank of America, N.A. and a syndicate of lenders, which amended the existing senior secured revolving credit facility due to expire in April 2013. The Credit Facility extended the maturity date to December 19, 2017, established a $75 million sub-facility solely for loans and letters of credit to be provided to ANN Canada Inc., and increased our option to expand the total facility and the aggregate commitments thereunder up to $400 million, subject to the lenders' agreement to increase their commitment for the requested amount. In addition, the margin added to the LIBOR rate for borrowing under the Credit Facility was reduced to between 1.25% - 1.50% from a previous range of 1.25% - 1.75%, depending upon the Average Daily Availability as defined in the Credit Facility and the monthly commitment fee on the unused revolving loan commitment was reduced to between 0.20% - 0.25% per annum, where it was previously 0.325% - 0.375% per annum. The Credit Facility may be used for working capital, letters of credit and other corporate purposes and contains an acceleration clause which, upon the occurrence of an Event of Default, which includes, but is not limited to, a Material Adverse Effect, as defined in the Credit Facility, may cause any outstanding borrowings to become immediately due and payable.

The maximum availability for loans and letters of credit under the Credit Facility is governed by a quarterly borrowing base, determined by the application of specified percentages to certain eligible assets, primarily accounts receivable and inventory. Commercial and standby letters of credit outstanding under the Credit Facility totaled approximately $14.1 million, $16.7 million and $17.6 million as of February 2, 2013, January 28, 2012 and January 29, 2011, respectively, leaving a remaining available balance for loans and letters of credit of $150.8 million, $146.4 million and $120.2 million as of February 2, 2013, January 28, 2012 and January 29, 2011, respectively. There were no borrowings outstanding under the Credit Facility at February 2, 2013, January 28, 2012, or as of March 8, 2013, the date of this Report.

The Credit Facility permits us to pay cash dividends (and permits dividends by AnnTaylor, Inc. to fund such cash dividends) subject to certain Liquidity requirements (as defined in the Credit Facility) and other conditions as set forth in the Credit Facility. Subject, in some cases, to certain exceptions, certain of our subsidiaries are also permitted to pay dividends to us to fund certain taxes owed by us; fund ordinary operating expenses not in excess of $500,000 in any fiscal year; repurchase common stock held by employees not in excess of $100,000 in any fiscal year; and for certain other stated purposes. See Note 4, “Revolving Credit Facility,” in the Notes to the Consolidated Financial Statements for further discussion of the Credit Facility.

Repurchase Program

On March 8, 2011, our Board of Directors approved a $200 million expansion of our Repurchase Program, bringing the total authorized under the Repurchase Program to $600 million. The Repurchase Program will expire when we have repurchased all securities authorized for repurchase thereunder, unless terminated earlier by our Board of Directors. Purchases of shares of common stock may be made from time to time, subject to market conditions and at prevailing market prices, through open market purchases or in privately negotiated transactions. Repurchased shares of common stock increase treasury shares available for general corporate purposes. During Fiscal 2012, Fiscal 2011 and Fiscal 2010, we repurchased 4.9 million, 7.3 million and 4.2 million shares of our common stock, respectively, through open market purchases under the Repurchase Program, at a cost of $135 million, $175 million, and $100 million, respectively. As of February 2, 2013 and March 8, 2013, the date of this Report, approximately $49.1 million remained available under the Repurchase Program.

Other

We have significant amounts of cash and cash equivalents on deposit at FDIC-insured financial institutions that are currently in excess of federally insured limits. Since the deposit insurance provisions of the Dodd-Frank Wall Street Reform Act expired on December 31, 2012, and because our Credit Facility contains certain restrictions on permitted investments, we cannot be assured that we will not experience losses with respect to cash on deposit. We continually evaluate our deposit investment options in accordance with our corporate investment policy.

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As of February 2, 2013 , we had $3.0 million invested in foreign bank accounts, of which the majority was held in Canadian dollars. As of January 28, 2012, we had $0.5 million invested in foreign bank accounts. As we continue to expand outside of the United States, we expect to continue to generate cash from non-U.S. operations. We expect to manage our worldwide cash requirements considering available funds generated by the foreign subsidiaries through which we conduct business and the cost effectiveness with which those funds can be accessed. We may transfer cash from certain international subsidiaries to the U.S. and other international subsidiaries when it is cost effective to do so. Our intent is to indefinitely reinvest all of these funds outside of the United States, however, we will continually review our domestic and foreign cash profile, expected future cash generation and investment opportunities and reassess whether there is a demonstrated need to repatriate funds held internationally to support our U.S. operations.

We have a credit card program that offers eligible clients in the United States the choice of a private label or co-branded credit card. All cardholders are automatically enrolled in our exclusive rewards program, which is designed to recognize and promote client loyalty. We provide the sponsoring bank with marketing support of the program, and use our sales force to process credit card applications for both the private label and co-branded credit cards. As part of the program, which began in October 2008 and has a 6.5 year term, we received an upfront signing bonus from the sponsoring bank. We also receive ongoing payments for new accounts activated, as well as a share of finance charges collected by the sponsoring bank. These revenue streams are accounted for as a single unit of accounting and accordingly, are recognized as revenue ratably based on the total projected revenues over the term of the agreement.

Certain judgments and estimates underlie our projected revenues and related expenses under the credit card program, including projected future store counts, the number of applications processed, our projected sales growth and points breakage, among other things. During Fiscal 2012, Fiscal 2011 and Fiscal 2010, we recognized approximately $17.8 million, $16.5 million and $14.8 million of revenue related to the credit card program, respectively. At February 2, 2013, January 28, 2012 and January 29, 2011, approximately $3.0 million, $4.4 million and $5.8 million, respectively, of deferred credit card income is included in “Accrued expenses and other current liabilities” on our Consolidated Balance Sheets. Partially offsetting the income from the credit card program are costs, net of points breakage, related to the client loyalty program. These costs are included in either “Cost of sales” or in “Net sales” as a sales discount, as appropriate. The cost of sales impact, net of points breakage, was approximately $5.7 million, $3.8 million and $0.3 million and the sales discount impact was approximately $6.8 million, $5.5 million and $3.0 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

On October 1, 2007, we froze our non-contributory defined benefit pension plan (the “Pension Plan”). As a result of the freeze, only those associates who were eligible under the Pension Plan on or before September 30, 2007 (substantially all associates of the Company who completed 1,000 hours of service during a consecutive 12-month period prior to that date) are eligible to receive benefits from the Pension Plan once they have completed the five years of service required to become fully vested. No associate may become a participant in the Pension Plan on or after October 1, 2007 and no additional benefits have been earned under the Pension Plan since October 1, 2007.

Our funding obligations and liability under the terms of the Pension Plan are determined using certain actuarial assumptions, including a discount rate and an expected long-term rate of return on Pension Plan assets. The discount rate enables us to state expected future cash payments for pension benefits as a present value on the measurement date. A lower discount rate increases the present value of the benefit obligations and increases pension expense. The discount rate selected was based on a yield curve which uses expected cash flows from the Pension Plan and then discounts those cash flows with the bond rate for that period. This resulted in a discount rate of 4.35%. A one percent decrease in the assumed discount rate would increase total net periodic pension expense for Fiscal 2013 by $1.3 million and would increase the liability for pension benefits at February 2, 2013 by $8.9 million. A one percent increase in the assumed discount rate would decrease total net periodic pension expense for Fiscal 2013 by $0.7 million and would decrease the liability for pension benefits at February 2, 2013 by $6.6 million.

Pension Plan assets as of February 2, 2013 were allocated 36% in equities, and 64% in bond-related funds. For the purposes of developing long-term rates of return, it was assumed that the short-term investments were reallocated to equities and bond-related funds, yielding assumed long-term rates of return of 7.8% and 3.9%, respectively. To develop the expected long-term rate of return on Pension Plan assets, we considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. A lower expected rate of return on Pension Plan assets would increase pension expense. Our expected long-term rate of return on Pension Plan assets was 5.10% and 6.25% for Fiscal 2012 and Fiscal 2011. A one percent change in the long-term rate of return assumption would impact Fiscal 2013 pension expense by approximately $0.3 million.

27

Pension costs, excluding settlement charges, in Fiscal 2012 were $1 million higher than Fiscal 2011 due to a lower discount rate and a lower expected rate of return. Pension costs in Fiscal 2011 were $0.4 million lower than pension costs in Fiscal 2010 as a result of our Pension Plan assets experiencing gains in Fiscal 2010. Due to the large amount of lump sum distributions in 2012, pension expense for Fiscal 2013, excluding any potential settlement charges, is projected to be approximately $0.8 million, or $0.2 million lower than pension expense, excluding settlement charges, in Fiscal 2012. Our Pension Plan is invested in readily-liquid investments, primarily equity and debt securities. Although we were not required to make a contribution to the Pension Plan in Fiscal 2012 or Fiscal 2011, any deterioration in the financial markets or changes in discount rates may require us to make a contribution to our Pension Plan in Fiscal 2013.

In Fiscal 2012, we initiated a communication to certain eligible Pension Plan participants with vested benefits to elect a lump-sum distribution. As a result of this effort, we made $8.7 million in lump-sum distribution payments, which resulted in a $1.5 million pension settlement charge in the fourth quarter of Fiscal 2012. In addition, since the total amount of lump sum pension distribution payments made to Pension Plan participants in the normal course of business exceeded the interest component of pension expense during Fiscal 2012 and Fiscal 2010, we recognized additional non-cash settlement charges of $0.3 million in both fiscal years. All such Pension Plan settlement charges were included in “Selling, general and administrative expenses” in our Consolidated Statements of Operations. There were no such settlement charges in Fiscal 2011.

We are self-insured for expenses related to our employee point of service medical plan, our workers’ compensation plan, general liability plan and for short-term and long-term disability, up to certain thresholds. Claims filed, as well as claims incurred but not reported, are accrued based on management’s estimates, using information received from plan administrators, third-party actuaries, historical analysis and other relevant data. We believe we have taken reasonable steps to ensure that we are adequately accrued for incurred costs related to these programs at February 2, 2013.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements as defined by Item 303 (a) (4) of Regulation S-K.

Contractual Obligations

We have various contractual obligations, some of which are recorded as liabilities in our Consolidated Balance Sheets if the related goods or services were received prior to February 2, 2013. Other items, such as leases, purchase commitments and other contractual obligations represent future liabilities and may not be recognized as liabilities in our Consolidated Balance Sheets.

The following table sets forth our significant contractual obligations as of February 2, 2013:

	Payments Due by Fiscal Year
	Total		2013		2014-2015		2016-2017		2018 And After
	(in thousands)
Long-term debt (1)	$	1,030	$	824	$	206	$	—	$	—
Capital leases (2)	560		448		112		—		—
Operating leases (3)	1,356,649		210,553		387,223		300,566		458,307
Purchase obligations:
New store construction (4)	2,795		2,795		—		—		—
Merchandise (5)	234,522		234,522		—		—		—
Information services (6)	51,707		20,412		31,295		—		—
Other (7)	30,760		28,195		2,559		6		—
Total	$	1,678,023	$	497,749	$	421,395	$	300,572	$	458,307

(Footnotes on following page)

28

(1) Represents finance arrangements relating to support and maintenance associated with certain computer equipment on our Consolidated Balance Sheet.

(2) Represents capital leases with four-year terms relating to certain computer equipment recorded on our Consolidated Balance Sheet as of February 2, 2013.

(3) Represents future minimum lease payments under non-cancelable operating leases in effect as of February 2, 2013. The minimum lease payments above also do not include common area maintenance ("CAM") charges or real estate taxes, which are required contractual obligations under our store and office operating leases but are generally not fixed and can fluctuate from year to year. Total CAM charges and real estate taxes for Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $78.8 million, $70.4 million and $68.6 million, respectively.

(4) Represents purchase commitments for Fiscal 2013 store construction not recorded on our Consolidated Balance Sheet as of February 2, 2013.

(5) Represents open purchase orders with vendors for merchandise not yet received or recorded on our Consolidated Balance Sheet as of February 2, 2013.

(6) Represents outsourcing of certain back-office functions, consulting, maintenance and license agreements for services to be provided and/or software not yet received or recorded on our Consolidated Balance Sheet as of February 2, 2013.

(7) Represents contractual commitments or open purchase orders for non-merchandise goods or services not received or recorded on our Consolidated Balance Sheet as of February 2, 2013.

There were no borrowings outstanding under the Credit Facility as of February 2, 2013. The Credit Facility contains a provision for commitment fees related to the unused revolving loan commitment and outstanding letters of credit, which are not included in the above table because these charges are not fixed and can fluctuate from year to year due to various circumstances. Total commitment fees were $0.9 million in each of Fiscal 2012, Fiscal 2011 and Fiscal 2010.

The table above also excludes approximately $3.9 million of tax reserves accounted for under ASC 740-10, Income Taxes, as we are unable to reasonably estimate the ultimate amount or timing of any settlement. See Note 8, “Income Taxes,” in the Notes to the Consolidated Financial Statements for further discussion. In addition, as discussed in Note 9, “Retirement Plans,” in the Notes to the Consolidated Financial Statements, we have a long-term liability for our Pension Plan. Minimum pension funding requirements are not included in the table above as such amounts are not readily determinable.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income. ASU 2011-05 amended ASC 220-10, Comprehensive Income, and requires that all changes in comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements, and also requires the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, Presentation of Comprehensive Income, which indefinitely deferred the requirement of ASU 2011-05 related to presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements.  In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which sets forth additional disclosure requirements for items reclassified out of accumulated other comprehensive income and into net income that will be effective for annual reporting periods beginning after December 15, 2012. We adopted ASU 2011-05, as modified by ASU 2011-12, in the first quarter of Fiscal 2012, by presenting separate but consecutive statements. See the Consolidated Statements of Comprehensive Income. We will adopt the disclosures required by ASU 2013-02 in the first quarter of Fiscal 2013.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. Our significant accounting policies are more fully described in Note 1, “Summary of Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities. Actual results could differ from these estimates.

Based on the above, we have determined that our most critical accounting policies are those related to merchandise inventory valuation, asset impairment, income taxes and stock and incentive-based compensation. These policies are also discussed in the Notes to the Consolidated Financial Statements and in relevant sections of this discussion and analysis.

29

Merchandise Inventory Valuation

Merchandise inventories are valued at the lower of average cost or market, at the individual item level. Market is determined based on the estimated net realizable value, which is generally the merchandise selling price. Merchandise inventory levels are monitored to identify slow-moving items and broken assortments (items no longer in stock in a sufficient range of sizes) and markdowns are used to clear such merchandise. A reserve is established to account for situations where the current selling price or future estimated selling price is less than cost. Physical inventory counts are performed annually in January and estimates are made for any shortage between the date of the physical inventory count and the balance sheet date.

Asset Impairment

Long-lived tangible assets are accounted for under ASC 360-10, Property, Plant, and Equipment. Long-lived assets are reviewed periodically for impairment or when events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. Management estimates future pre-tax cash flows at a store level (undiscounted and without interest charges) based on historical experience, knowledge and market data. Estimates of future cash flows require that we make assumptions and apply judgment, including forecasting future sales and expenses and estimating useful lives of the assets. These estimates can be affected by factors such as future store results, real estate demand, and economic conditions that can be difficult to predict, as well as other factors such as those outlined in “Risk Factors.” If the expected future cash flows related to the long-lived assets are less than the assets’ carrying value, an impairment loss would be recognized for the difference between estimated fair value and carrying value.

Income Taxes

We account for income taxes in accordance with ASC 740-10, Income Taxes, which requires the use of the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates and laws expected to be in effect when the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Inherent in the measurement of these deferred balances are certain judgments and interpretations of existing tax law and other published guidance as applied to our operations. A valuation allowance has been established for deferred tax assets relating to certain tax credits in non-U.S. jurisdictions, since we anticipate that it is not more likely than not that these assets will be realized. In determining the need for a valuation allowance, we are required to make assumptions and to apply judgment, including forecasting future earnings, taxable income, and the mix of earnings in the jurisdictions in which we operate. Our effective tax rate considers our judgment of expected tax liabilities in the various jurisdictions within which we are subject to tax.

The tax effects of uncertain tax positions taken or expected to be taken in income tax returns are recognized only if they are “more likely-than-not” to be sustained on examination by the taxing authorities, based on the technical merits as of the reporting date. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. We recognize estimated accrued interest and penalties related to uncertain tax positions in income tax expense.

We are currently under examination by certain state and local taxing jurisdictions. Further, at any given time, multiple tax years may be subject to examination by various taxing authorities. The recorded amounts of income tax are subject to adjustment upon examination, changes in interpretation and changes in judgment utilized in determining estimates. While no adjustments to recorded amounts are anticipated, a 1% variance in our effective tax rate would affect net income after taxes by approximately $1.7 million in Fiscal 2012.

Stock and Incentive-based Compensation

The calculation of stock-based compensation expense requires the input of subjective assumptions, including the expected term of the stock-based awards, stock price volatility and pre-vesting forfeitures. We estimate the expected life of shares granted in connection with stock-based awards using historical exercise patterns, which we believe are representative of future behavior. We estimate the volatility of our common stock at the date of grant based on an average of our historical volatility and the implied volatility of publicly traded options on our common stock, if the latter is available. We estimate forfeitures based on our historical experience of stock-based awards granted, exercised and cancelled, as well as future expected behavior.

Similarly, the calculation of long-term performance compensation expense related to our Restricted Cash Program (“RCP”) requires the input of subjective assumptions, including the expected forfeiture of earned and banked awards and forecasts of our future income growth. We estimate forfeitures based on historical RCP forfeiture patterns, as well as current and future trends of expected behavior. We estimate future income growth based on past performance, future business trends and new business initiatives.

30

The assumptions used to calculate the fair value of stock-based awards and long-term performance compensation expense represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we were to use different assumptions, the expense recorded could be materially different. For stock-based awards, if we were to adjust our forfeiture rate estimates by 5%, the impact to stock-based compensation cost would be approximately $0.5 million. Similarly, if we were to adjust RCP forfeiture rate estimates by 5%, the impact to long-term incentive compensation expense would be approximately $1.8 million. Finally, if we were to adjust the interest rate factors applied to amounts banked under the RCP by five percentage points, the impact to long-term incentive compensation expense would be approximately $1.1 million. See Note 7, “Equity and Incentive Compensation Plans,” in the Notes to the Consolidated Financial Statements for additional information.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.

We have significant amounts of cash and cash equivalents on deposit at FDIC-insured financial institutions that are currently in excess of federally insured limits. Since the deposit insurance provisions of the Dodd-Frank Wall Street Reform Act expired on December 31, 2012, and because our Credit Facility contains certain restrictions on permitted investments, we cannot be assured that we will not experience losses with respect to cash on deposit in excess of federally insured limits. We continually evaluate our deposit investment options in accordance with our corporate investment policy.

We are exposed to limited market risk, primarily related to foreign currency exchange. We have exchange rate exposure primarily with respect to certain revenues and costs denominated in the Canadian dollar. As of February 2, 2013, our monetary assets and liabilities that are subject to this exposure are immaterial, therefore, the potential immediate loss to us that would result from a hypothetical 10% change in foreign currency exchange rates would not be expected to have a material impact on our earnings or cash flows.

AnnTaylor Inc.’s Credit Facility allows for investments in financial instruments with original maturity dates of up to 360 days. As of February 2, 2013, we did not hold any investments that did not qualify as cash and cash equivalents.

ITEM 8. Financial Statements and Supplementary Data.

The following Consolidated Financial Statements of the Company for the years ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks) are included as part of this Report (See Item 15):

Consolidated Statements of Operations for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks).

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks).

Consolidated Balance Sheets as of February 2, 2013 and January 28, 2012.

Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks).

Consolidated Statements of Cash Flows for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks).

Notes to the Consolidated Financial Statements.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

31

ITEM 9A. Controls and Procedures.

Disclosure Controls and Procedures

The Company conducted an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this Report.

Management’s Report on Internal Control over Financial Reporting

The management of ANN INC. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of February 2, 2013 based on the framework and criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of February 2, 2013.

There were no changes in the Company's internal control over financial reporting during the Company's fourth fiscal quarter that havematerially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company’s Independent Registered Public Accounting Firm, Deloitte & Touche LLP, issued a report on the Company’s internal control over financial reporting, which is included in the Report of Independent Registered Public Accounting Firm, on page 36.

ITEM 9B. Other Information.

None.

PART III

ITEM 10. Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated herein by reference to the Sections entitled “Election of Class I Directors,” “Executive Officers,” “Corporate Governance,” “Stockholder Proposals for the 2014 Annual Meeting” and “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s Proxy Statement for its 2013 Annual Meeting of Stockholders.

The Company has Business Conduct Guidelines that apply to all its associates, including its chief executive officer, chief financial officer, principal accounting officer and controller, as well as members of the Company’s Board of Directors. The Business Conduct Guidelines are available on the Company’s website at http://investor.anninc.com. Any updates or amendments to the Business Conduct Guidelines, as well as any waiver from the Business Conduct Guidelines granted to an executive officer (including the Company’s chief executive officer, chief financial officer, principal accounting officer and controller), will also be posted on the website.

ITEM 11. Executive Compensation.

The information required by this item is incorporated herein by reference to the Sections entitled “Executive Compensation,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report” in the Company’s Proxy Statement for its 2013 Annual Meeting of Stockholders.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated herein by reference to the Sections entitled “Beneficial Ownership of Common Stock” and “Equity Compensation Plans” in the Company’s Proxy Statement for its 2013 Annual Meeting of Stockholders.

32

ITEM 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated herein by reference to the Sections entitled “Related Person Transactions,” “Related Person Transactions Policy and Procedures” and “Corporate Governance” in the Company’s Proxy Statement for its 2013 Annual Meeting of Stockholders. 

ITEM 14. Principal Accounting Fees and Services.

The information required by this item is incorporated herein by reference to the Section entitled “Ratification of the Appointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement for its 2013 Annual Meeting of Stockholders.

PART IV

ITEM 15. Exhibits and Financial Statement Schedules.

(a) List of documents filed as part of this Annual Report:

1.The following Consolidated Financial Statements of the Company are filed as part of this Annual Report:

Report of Independent Registered Public Accounting Firm;

Consolidated Statements of Operations for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks);

Consolidated Statements of Comprehensive Income for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks);

Consolidated Balance Sheets as of February 2, 2013 and January 28, 2012;

Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks);

Consolidated Statements of Cash Flows for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks); and

Notes to the Consolidated Financial Statements.

2.Schedules other than the above have been omitted because they are not applicable.

3.The exhibits filed as a part of this Annual Report are listed in the Exhibit Index.

(b) The exhibits listed in the Exhibit Index attached hereto are filed as part of this Annual Report and incorporated herein by reference.

(c) Not applicable.

33

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ANN INC.
By:	/s/     Kay Krill
	Kay Krill
	President and Chief Executive Officer

Date: March 8, 2013

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/   Kay Krill	President, Chief Executive Officer and Director (Principal Executive Officer)	March 8, 2013
Kay Krill		Date
/s/   Michael J Nicholson	Executive Vice President, Chief Operating Officer, Chief Financial Officer, and Treasurer (Principal Financial Officer and Principal Accounting Officer)	March 8, 2013
Michael J. Nicholson		Date
/s/   Ronald W. Hovsepian	Non-Executive Chairman of the Board and Director	March 8, 2013
Ronald W. Hovsepian		Date
/s/   James J. Burke, Jr.	Director	March 8, 2013
James J. Burke, Jr.		Date
/s/    Michelle Gass	Director	March 8, 2013
Michelle Gass		Date
/s/    Dale W. Hilpert	Director	March 8, 2013
Dale W. Hilpert		Date
/s/    Linda A. Huett	Director	March 8, 2013
Linda A. Huett		Date
/s/    Michael C. Plansky	Director	March 8, 2013
Michael C. Plansky		Date
/s/    Stacey Rauch	Director	March 8, 2013
Stacey Rauch		Date
/s/    Michael W. Trapp	Director	March 8, 2013
Michael W. Trapp		Date
/s/    Daniel W. Yih	Director	March 8, 2013
Daniel W. Yih		Date

34

ANN INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page No.
Report of Independent Registered Public Accounting Firm	36
Consolidated Financial Statements:
Consolidated Statements of Operations for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks)	37
Consolidated Statements of Comprehensive Income for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks)	38
Consolidated Balance Sheets as of January 28, 2012 and January 29, 2011	39
Consolidated Statements of Stockholders’ Equity for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks)	40
Consolidated Statements of Cash Flows for the Fiscal Years Ended February 2, 2013 (53 weeks), January 28, 2012 (52 weeks) and January 29, 2011 (52 weeks)	41
Notes to the Consolidated Financial Statements	42

35

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

ANN INC.

New York, NY

We have audited the accompanying consolidated balance sheets of ANN INC. and its subsidiaries (the “Company”) as of February 2, 2013 and January 28, 2012, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the three fiscal years in the period ended February 2, 2013. We also have audited the Company’s internal control over financial reporting as of February 2, 2013, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ANN INC. and its subsidiaries as of February 2, 2013 and January 28, 2012, and the results of its operations and its cash flows for each of the three years in the period ended February 2, 2013, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 2, 2013, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/    DELOITTE & TOUCHE LLP

New York, New York

March 8, 2013

36

ANN INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

For Fiscal Years Ended February 2, 2013, January 28, 2012 and January 29, 2011

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands, except per share amounts)
Net sales	$	2,375,509		$	2,212,493		$	1,980,195
Cost of sales	1,073,167			1,004,350			876,201
Gross margin	1,302,342			1,208,143			1,103,994
Selling, general and administrative expenses	1,135,551			1,062,644			978,580
Restructuring charges	—			—			5,624
Operating income	166,791			145,499			119,790
Interest and investment income/(expense), net	1,051			(1,052		)	(668		)
Other non-operating income/(expense), net	(189		)	—			—
Income before income taxes	167,653			144,447			119,122
Income tax provision	65,068			57,881			45,725
Net income	$	102,585		$	86,566		$	73,397
Earnings per share:
Basic earnings per share	$	2.13		$	1.66		$	1.26
Weighted average shares outstanding	47,494			51,200			57,203
Diluted earnings per share	$	2.10		$	1.64		$	1.24
Weighted average shares outstanding, assuming dilution	48,094			52,029			58,110

See accompanying Notes to Consolidated Financial Statements.

37

ANN INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For Fiscal Years Ended February 2, 2013, January 28, 2012 and January 29, 2011

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
Net income	$	102,585		$	86,566		$	73,397
Other comprehensive income/(loss):
Foreign currency translation adjustment	19			—			—
Net change in employee benefit plans:
Pension settlement charge	1,760			—			338
Net actuarial (loss)/gain	(1,153		)	(4,932		)	2,317
Amortization of net actuarial loss	726			62			300
Other comprehensive income/(loss), before tax	1,352			(4,870		)	2,955
Income tax expense/(benefit) on other comprehensive income items	531			(1,930		)	1,175
Other comprehensive income/(loss), net of tax	821			(2,940		)	1,780
Comprehensive income	$	103,406		$	83,626		$	75,177

See accompanying Notes to Consolidated Financial Statements.

38

ANN INC.

CONSOLIDATED BALANCE SHEETS

February 2, 2013 and January 28, 2012

	February 2, 2013			January 28, 2012
	(in thousands, except share amounts)
Assets
Current assets
Cash and cash equivalents	$	167,011		$	150,208
Accounts receivable	17,856			19,591
Merchandise inventories	216,848			213,447
Refundable income taxes	9,201			11,965
Deferred income taxes	30,397			30,999
Prepaid expenses and other current assets	64,716			49,107
Total current assets	506,029			475,317
Property and equipment, net	409,703			360,890
Deferred income taxes	7,841			39,134
Other assets	18,632			12,340
Total assets	$	942,205		$	887,681
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	105,691		$	94,157
Accrued salaries and bonus	23,969			16,122
Current portion of long-term performance compensation	34,233			19,373
Accrued tenancy	38,647			41,435
Gift certificates and merchandise credits redeemable	47,268			50,750
Accrued expenses and other current liabilities	86,946			64,060
Total current liabilities	336,754			285,897
Deferred lease costs	162,620			159,435
Deferred income taxes	228			1,320
Long-term performance compensation, less current portion	26,368			42,122
Other liabilities	31,125			35,030
Commitments and contingencies (see Note 5)
Stockholders’ equity
Common stock, $.0068 par value; 200,000,000 shares authorized; 82,563,516 shares issued	561			561
Additional paid-in capital	768,215			776,658
Retained earnings	676,842			574,257
Accumulated other comprehensive loss	(4,497		)	(5,318		)
Treasury stock, 35,958,318 and 33,284,631 shares, respectively, at cost	(1,056,011		)	(982,281		)
Total stockholders’ equity	385,110			363,877
Total liabilities and stockholders’ equity	$	942,205		$	887,681

See accompanying Notes to Consolidated Financial Statements.

39

ANN INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For Fiscal Years Ended February 2, 2013, January 28, 2012 and January 29, 2011

				Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive Loss
	Common Stock											Treasury Stock
	Shares	Amount										Shares		Amount			Total
	(in thousands)
Balance at January 30, 2010	82,476	$	561	$	760,166		$	414,294	$	(4,158	)	23,702		$	(753,677	)	$	417,186
Net income	—	—		—			73,397		—			—		—			73,397
Other comprehensive income, net of tax	—	—		—			—		1,780			—		—			1,780
Exercise of stock options, related tax deficiency and tax effect of expirations of $3,274	79	—		(6,409		)	—		—			(670	)	16,266			9,857
Stock-based compensation	—	—		21,210			—		—			—		—			21,210
Issuance of restricted stock, net of forfeitures and related tax benefit of $3,577	—	—		(743		)	—		—			(167	)	4,320			3,577
Repurchase of common and restricted stock	—	—		—			—		—			4,493		(105,708		)	(105,708		)
Issuance of common stock pursuant to Associate Discount Stock Purchase Plan and related tax benefit of disqualifying dispositions of $117	—	—		(1,650		)	—		—			(152	)	3,796			2,146
Balance at January 29, 2011	82,555	561		772,574			487,691		(2,378		)	27,206		(835,003		)	423,445
Net income	—	—		—			86,566		—			—		—			86,566
Other comprehensive loss, net of tax	—	—		—			—		(2,940		)	—		—			(2,940		)
Exercise of stock options, related tax benefit and tax effect of expirations of $4,454	9	—		(10,675		)	—		—			(804	)	18,850			8,175
Stock-based compensation	—	—		20,710			—		—			—		—			20,710
Issuance of restricted stock and vesting of restricted units, net of forfeitures and related tax benefits of $3,001	—	—		(5,896		)	—		—			(511	)	11,986			6,090
Repurchase of common and restricted stock	—	—		—			—		—			7,490		(180,298		)	(180,298		)
Issuance of common stock pursuant to Associate Discount Stock Purchase Plan and related tax benefit of disqualifying dispositions of $66	—	—		(55		)	—		—			(96	)	2,184			2,129
Balance at January 28, 2012	82,564	561		776,658			574,257		(5,318		)	33,285		(982,281		)	363,877
Net income	—	—		—			102,585		—			—		—			102,585
Other comprehensive income, net of tax	—	—		—			—		821			—		—			821
Exercise of stock options, related tax benefits and tax effect of expirations of $1,986		—		(17,441		)	—		—			(1,925	)	54,190			36,749
Stock-based compensation	—	—		16,998			—		—			—		—			16,998
Issuance of restricted stock and vesting of restricted units, net of forfeitures and related tax benefits of $2,859	—	—		(7,465		)	—		—			(428	)	10,325			2,860
Repurchase of common and restricted stock	—	—		—			—		—			5,113		(140,752		)	(140,752		)
Issuance of common stock pursuant to Associate Discount Stock Purchase Plan and related tax benefit of disqualifying dispositions of $35	—	—		(535		)	—		—			(87	)	2,507			1,972
Balance at February 2, 2013	82,564	$	561	$	768,215		$	676,842	$	(4,497	)	35,958		$	(1,056,011	)	$	385,110

See accompanying Notes to Consolidated Financial Statements.

40

ANN INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For Fiscal Years Ended February 2, 2013, January 28, 2012 and January 29, 2011

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Operating activities:
Net income	$	102,585		$	86,566		$	73,397
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	30,272			7,343			(1,796		)
Depreciation and amortization	97,829			94,187			95,523
Recognition of gift card and merchandise credit breakage	6,602			—			—
Loss on disposal and write-down of property and equipment	3,040			2,287			1,459
Stock-based compensation	16,998			20,710			21,210
Non-cash interest and other non-cash items	(341		)	287			(1,931		)
Non-cash restructuring charges	—			—			617
Tax benefit from exercise/vesting of stock awards	7,871			7,522			6,967
Changes in assets and liabilities:
Accounts receivable	1,324			(2,060		)	5,130
Merchandise inventories	(3,401		)	(19,822		)	(25,919		)
Prepaid expenses and other current assets	(9,624		)	7,063			(12,104		)
Refundable income taxes	2,764			362			(1,702		)
Other non-current assets and liabilities, net	10,563			28,032			11,140
Accounts payable and accrued expenses	(7,573		)	(24,649		)	(7,680		)
Net cash provided by operating activities	258,909			207,828			164,311
Investing activities:
Purchases of marketable securities	(2,246		)	(1,379		)	(834		)
Sales of marketable securities and short-term investments	269			91			6,156
Purchases of property and equipment	(147,286		)	(118,918		)	(61,213		)
Other, net	(649		)	(250		)	(1,331		)
Net cash used for investing activities	(149,912		)	(120,456		)	(57,222		)
Financing activities:
Proceeds from the issuance of common stock pursuant to Associate Discount Stock Purchase Plan	1,938			2,063			2,032
Proceeds from exercise of stock options	34,762			8,499			6,582
Excess tax benefits from stock-based compensation	9,229			7,627			7,159
Repurchases of common and restricted stock	(140,752		)	(180,298		)	(105,708		)
Proceeds from fixed asset financing and capital leases	—			—			2,678
Repayments of fixed asset financing and capital lease obligations	(1,460		)	(1,511		)	(1,056		)
Payments of deferred financing costs	(1,341		)	—			—
Change in trade payable program obligation, net	5,449			(188		)	3,377
Net cash used for financing activities	(92,175		)	(163,808		)	(84,936		)
Effect of exchange rate changes on cash and cash equivalents	(19		)	—			—
Net increase/(decrease) in cash	16,803			(76,436		)	22,153
Cash and cash equivalents, beginning of year	150,208			226,644			204,491
Cash and cash equivalents, end of year	$	167,011		$	150,208		$	226,644
Supplemental disclosures of cash flow information:
Cash paid during the year for interest	$	1,207		$	1,350		$	1,333
Cash paid during the year for income taxes	$	40,454		$	37,491		$	58,194
Property and equipment acquired through capital leases	$	—		$	—		$	767
Accrual for purchases of property and equipment	$	20,394		$	17,998		$	12,041

See accompanying Notes to Consolidated Financial Statements.

41

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

ANN INC. (the “Company”) is a leading national specialty retailer of women’s apparel, shoes and accessories sold primarily under the “Ann Taylor” and “LOFT” brands. Its principal markets consist of the United States and Canada. The Company sells its products through traditional retail stores and on the Internet at www.anntaylor.com and www.LOFT.com (together, the “Online Stores”) or by phone at 1-800-DIAL-ANN and 1-888-LOFT-444.

Basis of Presentation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, including its wholly-owned subsidiary, AnnTaylor, Inc. The Company has no material assets other than the common stock of AnnTaylor, Inc. and conducts no business other than the management of AnnTaylor, Inc. All intercompany accounts have been eliminated in consolidation.

Fiscal Year

The Company follows the standard fiscal year of the retail industry, which is a 52- or 53-week period ending on the Saturday closest to January 31. All fiscal years presented in these Consolidated Financial Statements include 52 weeks, except the fiscal year ended February 2, 2013, which includes 53 weeks.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The significant estimates and assumptions used by management affect the fair value of stock based compensation, the reserve for sales returns, the valuation of inventories, the expense associated with short-and long-term performance-based compensation, the carrying value of long-lived assets and the valuation of deferred income taxes. Actual results could differ from these estimates.

Revenue Recognition

The Company records revenue as merchandise is sold to clients. Sales from the Company's Online Stores are recorded as merchandise is shipped to clients based on the date clients are expected to receive the merchandise. Amounts related to shipping and handling billed to clients in a sales transaction are classified as revenue and the costs related to shipping product to clients (billed and accrued) are classified as Cost of sales. A reserve for estimated returns is established when sales are recorded. The Company excludes sales taxes collected from clients from "Net sales" in its Consolidated Statements of Operations.

Gift cards and merchandise credits issued by the Company do not have expiration dates and the Company honors all gift cards and merchandise credits presented by clients, regardless of the length of time that passes from issuance to redemption.  The Company records a liability for unredeemed gift cards and merchandise credits at the time gift cards are sold or merchandise credits are issued.  The Company recognizes revenue and relieves the corresponding gift card and/or merchandise credit liability when the cards are redeemed by clients.

In cases where the Company has determined that it has a legal obligation to remit the value of unredeemed gift cards and merchandise credits to any state, the value of these cards is escheated to the appropriate state in accordance with that state's unclaimed property laws.  In certain jurisdictions, the Company is permitted to retain a portion of the escheated value of unredeemed gift cards and merchandise credits, which is immaterial and is recorded in "Net sales" in the Company's Consolidated Statements of Operations.

During Fiscal 2012, the Company recognized $6.6 million in revenue for the portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.  Fiscal 2012 is the first period during which the Company recognized gift card and merchandise credit “breakage,” and therefore includes breakage income related to gift cards sold and merchandise credits issued since inception of these programs.  Such gift card and merchandise credit “breakage” is estimated based upon an analysis of actual historical redemption patterns and is included in "Net sales" in the Company's Consolidated Statements of Operations.

42

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (continued)

The Company has a credit card program which offers eligible clients in the United States the choice of a private label or co-branded credit card. All cardholders are automatically enrolled in the Company’s exclusive rewards program, which is designed to recognize and promote client loyalty. The Company provides the sponsoring bank with marketing support of the program, and uses its sales force to process credit card applications for both the private label and co-branded credit cards. As part of the program, which began in October 2008 and has a six and one-half year term, the Company received an upfront signing bonus from the sponsoring bank. The Company also receives ongoing payments for new accounts activated, as well as a share of finance charges collected by the sponsoring bank. These revenue streams are accounted for as a single unit of accounting under Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition, and accordingly, are recognized as revenue ratably based on the total projected revenues over the term of the agreement.

Certain judgments and estimates underlie the Company’s projected revenues and related expenses under the credit card program, including projected future store counts, the number of applications processed, the Company’s projected sales growth and points breakage, among other things. During Fiscal 2012, Fiscal 2011 and Fiscal 2010, the Company recognized approximately $17.8 million, $16.5 million, and $14.8 million of revenue related to the credit card program, respectively. Partially offsetting the income from the credit card program are costs, net of points breakage, related to the client loyalty program. These costs are included in either “Cost of sales” or in “Net sales” as a sales discount, as appropriate. The cost of sales impact, net of points breakage, was approximately $5.7 million, $3.8 million and $0.3 million and the sales discount impact was approximately $6.8 million, $5.5 million and $3.0 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Cost of Sales and Selling, General and Administrative Expenses

The following table illustrates the primary costs classified in each major expense category:

	Cost of Sales		Selling, General and Administrative Expenses
Ÿ	Cost of merchandise sold;	Ÿ	Payroll, bonus and benefit costs for retail and corporate associates;
Ÿ	Costs associated with the Company’s sourcing operations;	Ÿ	Design and merchandising costs;
Ÿ	Freight costs associated with moving merchandise from suppliers to the Company’s distribution center;	Ÿ	Occupancy costs for retail and corporate facilities;
Ÿ	Costs associated with the movement of merchandise through customs;	Ÿ	Depreciation related to retail and corporate assets;
Ÿ	Costs associated with the fulfillment and shipment of client orders from the Company's Online Stores, including multi-channel sales;	Ÿ	Advertising and marketing costs;
Ÿ	Depreciation related to merchandise management systems;	Ÿ	Occupancy and other costs associated with operating the Company’s distribution center;
Ÿ	Sample development costs;	Ÿ	Freight expenses associated with moving merchandise from the Company's distribution center to its retail stores or from store to store; and
Ÿ	Direct costs of the credit card client loyalty program;	Ÿ	Legal, finance, information systems and other corporate overhead costs.
Ÿ	Merchandise shortage; and
Ÿ	Client shipping costs for store merchandise shipments.

Cash and Cash Equivalents

Cash and short-term highly liquid investments with original maturity dates of three months or less at time of purchase and no redemption restrictions are considered cash or cash equivalents. The Company has significant amounts of cash and cash equivalents invested in deposit accounts at FDIC-insured financial institutions that are currently in excess of federally insured limits.

43

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. Summary of Significant Accounting Policies (Continued)

Merchandise Inventories

Merchandise inventories are valued at the lower of average cost or market, at the individual item level. A reserve is established to account for situations where the current selling price or future estimated selling price is less than cost. Physical inventory counts are performed annually in January, and estimates are made for any shortage between the date of the physical inventory count and the balance sheet date.

Property and Equipment

Property and equipment are presented at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the following estimated useful lives:

Building	40 years
Leasehold improvements	10 years or term of lease, if shorter
Furniture, fixtures and equipment	2-10 years
Software	5 years

When assets are sold or retired, the related cost and accumulated depreciation are removed from their respective accounts and any resulting gain or loss is recorded to “Selling, general and administrative expenses,” unless the amounts were associated with the Company’s multi-year strategic restructuring program, in which case they are included in "Restructuring charges" in the Company's Consolidated Statements of Operations. Expenditures for maintenance and repairs which do not improve or extend the useful lives of the respective assets are expensed as incurred.

Store Pre-Opening Costs

Non-capital expenditures, such as rent, advertising and payroll costs incurred prior to the opening of a new store are charged to expense in the period they are incurred.

Internal-Use Software Development Costs

As required by ASC 350-40, Internal-Use Software, the Company capitalizes certain external and internal computer software and software development costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Capitalized costs include only external direct cost of materials and services consumed in developing or obtaining internal-use software, and payroll and payroll-related costs for employees who are directly associated with and devote time to the internal-use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized software costs are depreciated on a straight-line basis over five years.

Deferred Rent Obligations

Rent expense under non-cancelable operating leases with scheduled rent increases or free rent periods is accounted for on a straight-line basis over the initial lease term beginning on the date of initial possession, which is generally when the Company has access to the space and begins construction build-out. Any reasonably assured renewals are considered. The amount of the excess of straight-line rent expense over scheduled payments is recorded as a deferred liability. Construction allowances and other such lease incentives are recorded as deferred credits and are amortized on a straight-line basis as a reduction of rent expense beginning in the period they are deemed to be earned, which often is subsequent to the date of initial possession and generally coincides with the store opening date. The current portion of unamortized deferred lease costs and construction allowances is included in “Accrued tenancy” and the long-term portion is included in “Deferred lease costs” on the Company’s Consolidated Balance Sheets.

Lease Termination Costs

Contractual penalties associated with lease terminations are accounted for in accordance with the requirements of ASC 840-20, Leases – Operating Leases, which requires that the amount of the penalty be recognized on either an undiscounted or discounted basis, with consistent application. The Company recognizes such penalties on an undiscounted basis at the time notification to terminate the lease is provided to the lessor.

44

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. Summary of Significant Accounting Policies (Continued)

Long-Lived Assets

The Company accounts for long-lived tangible assets under ASC 360-10, Property, Plant, and Equipment. Long-lived assets are reviewed periodically for impairment or when events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. Assessment for possible impairment is based on the Company’s ability to recover the carrying value of the long-lived asset from the expected future pre-tax cash flows at a store level (undiscounted and without interest charges). The expected future pre-tax cash flows are estimated based on historical experience, knowledge and market data. Estimates of future cash flows require the Company to make assumptions and to apply judgment, including forecasting future sales and expenses and estimating the useful lives of assets. These estimates can be affected by factors such as, but not necessarily limited to, future store results, real estate demand, and economic conditions that can be difficult to predict. If the expected future cash flows related to the long-lived assets are less than the assets’ carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value. There were no material impairment charges in Fiscal 2012, Fiscal 2011 or Fiscal 2010.

Advertising

Costs associated with the production of advertising, such as print and other costs, as well as costs associated with communicating advertising that has been produced, such as magazine ads, are expensed when the advertising first appears in public. Costs of direct mail catalogs and postcards are fully expensed when the advertising is scheduled to first arrive in clients’ homes. Advertising costs were approximately $96.2 million, $88.4 million and $79.3 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Stock-based Awards

The Company accounts for stock-based awards in accordance with ASC 718-10, Compensation – Stock Compensation. ASC 718-10 requires the Company to estimate the grant-date fair value and recognize that estimated value as compensation expense over the requisite service period, which is generally the vesting period, adjusted for estimated forfeitures. The Company estimates the fair value of non-qualified stock options on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock awards is determined using the closing price of the Company's common stock on date of grant.

Long-Term Performance Compensation Expense

The Company recognizes the compensation cost associated with its Restricted Cash Program (“RCP”) over the mandatory service period, adjusted for estimated forfeitures.  The service period includes the fiscal year in which amounts earned under the program are banked, plus a mandatory three-year deferral period. The calculation of long-term performance compensation expense related to the RCP requires the input of subjective assumptions, including the expected forfeiture of earned and banked awards and forecasts of our future income growth. The Company estimates forfeitures based on historical RCP forfeiture patterns, as well as current and future trends of expected behavior, and estimates future income growth based on past performance, future business trends and new business initiatives.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. ASC 740-10 requires the use of the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. A valuation allowance has been established for deferred tax assets relating to certain tax credits in non-U.S. jurisdictions, since management anticipates that it is not more likely than not that these assets will be realized. In determining the need for a valuation allowance, management is required to make assumptions and to apply judgment, including forecasting future earnings, taxable income, and the mix of earnings in the jurisdictions in which the Company operates.

The tax effects of uncertain tax positions taken or expected to be taken in income tax returns are recognized only if they are “more likely-than-not” to be sustained on examination by the taxing authorities, based on the technical merits as of the reporting date. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes estimated accrued interest and penalties related to uncertain tax positions in income tax expense.

45

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. Summary of Significant Accounting Policies (Continued)

Income Taxes (continued)

The Company derecognizes an uncertain tax position in the period when it is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

The Company and its domestic subsidiaries file a consolidated Federal income tax return, while the Company’s foreign subsidiaries file in their respective local jurisdictions.

Segments

The Company has determined that it has four operating segments, as defined under ASC 280-10, Segment Reporting, including Ann Taylor, LOFT, Ann Taylor Factory and LOFT Outlet. The Company has aggregated its operating segments based on the aggregation criteria outlined in ASC 280-10, which states that two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the objective and basic principles of ASC 280-10, if the segments have similar economic characteristics, similar product, similar production processes, similar clients and similar methods of distribution.

The Company’s operating segments have similar economic characteristics and similar operating, financial and competitive risks. They are similar in nature of product, as they all offer women’s apparel, shoes and accessories. Merchandise inventory for the Company’s operating segments is sourced from the same countries and some of the same vendors, using similar production processes. Clients of the Company’s operating segments have similar characteristics. Merchandise for the Company’s operating segments is distributed to retail stores in a similar manner, primarily through the Company’s Louisville Distribution Center, and is subsequently distributed to clients in a similar manner, through its retail and outlet stores. The Company’s Ann Taylor and LOFT operating segments also sell merchandise through the Company’s Online Stores.

Fair Value of Financial Instruments

ASC 825-10, Financial Instruments, requires management to disclose the estimated fair value of certain assets and liabilities defined by ASC 825-10 as financial instruments. The Company did not have any non-financial assets or non-financial liabilities that are recognized at fair value on a recurring basis at February 2, 2013 or January 28, 2012. At February 2, 2013 and January 28, 2012, management believes that the carrying value of cash and cash equivalents, short-term investments, receivables and payables approximates fair value, due to the short maturity of these financial instruments.

Self-Insurance

The Company is self-insured for certain losses related to its employee point of service medical plan, its workers’ compensation plan, general liability and for short-term and long-term disability, up to certain thresholds. Costs for self-insurance claims filed, as well as claims incurred but not reported, are accrued based on estimates using information received from plan administrators, third-party actuaries, historical analysis and other relevant data. Management believes that it has adequately reserved for its self-insurance liability, which is capped through the use of stop loss contracts with insurance companies. Any significant variation from historical trends in claims incurred but not paid could cause actual expense to differ from the accrued liability.

Foreign Currency Translation

Balance Sheet accounts of the Company's Canadian operations, which commenced during the third quarter of Fiscal 2012, are translated at the exchange rate in effect at the end of each period. Statement of Operations accounts are translated using the weighted average of the prevailing exchange rates during each period. Gains or losses resulting from foreign currency transactions are included in the Company's Consolidated Statements of Operations under the caption “Other non-operating income/(expense),” whereas, translation adjustments are reflected in the Consolidated Statements of Comprehensive Income under the caption “Foreign currency translation adjustment.”

46

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

1. Summary of Significant Accounting Policies (Continued)

Immaterial Correction of Balance Sheet Equity Accounts and Consolidated Statements of Stockholders' Equity

Subsequent to the issuance of its Fiscal 2011 consolidated financial statements, the Company determined that, beginning in Fiscal 2009, it has been incorrectly recording the dollar impact of shares issued out of Treasury Stock in connection with the exercise of stock options, the issuance of restricted stock grants and the vesting, in shares, of restricted unit grants. In connection with these share issuances, the Company inappropriately reduced its Treasury Stock balance in an amount equal to the exercise price of shares issued in connection with stock options exercised or the incorrect cost basis of shares issued in connection with restricted stock grants and the vesting, in shares, of restricted unit grants. The Company should have reduced Treasury Stock by the cost basis of the shares issued, with any difference being charged or credited to Additional Paid-in Capital. As a result, the Company has restated previously presented balances to appropriately reflect the impact of these transactions in its Consolidated Statements of Stockholders' Equity and Consolidated Balance Sheets. The cumulative impact of these corrections has the effect of reducing both Treasury Stock and Additional Paid-in Capital by $17.6 million, $28.5 million and $35.0 million as of January 30, 2010, January 29, 2011 and January 28, 2012, respectively. These adjustments had no effect on any other accounts or financial statements.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income. ASU 2011-05 amended ASC 220-10, Comprehensive Income, and requires that all changes in comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements, and also requires the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, Presentation of Comprehensive Income, which indefinitely deferred the requirement of ASU 2011-05 related to presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements.  In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which sets forth additional disclosure requirements for items reclassified out of accumulated other comprehensive income and into net income that will be effective for annual reporting periods beginning after December 15, 2012. The Company adopted ASU 2011-05, as modified by ASU 2011-12, in the first quarter of Fiscal 2012, by presenting separate but consecutive statements. See the Consolidated Statements of Comprehensive Income. The Company will adopt the disclosures required by ASU 2013-02 in the first quarter of Fiscal 2013.

2. Fair Value Measurements

At February 2, 2013, the Company had $8.1 million invested in a self-directed non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for certain executives at the vice-president level and above, which is structured as a rabbi trust. These investments are classified as trading securities and are recorded as a long-term asset, included in “Other assets,” on the Company’s Consolidated Balance Sheets. The investments are valued based on quoted market prices. Unrealized holding gains and losses are included in “Interest income/(expense)” on the Company’s Consolidated Statements of Operations. See Note 9, “Retirement Plans,” for further discussion of the Deferred Compensation Plan.

ASC 820-10, Fair Value Measurements and Disclosures, establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

47

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2. Fair Value Measurements (Continued)

The following tables segregate all financial assets and liabilities as of February 2, 2013 and January 28, 2012 that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine fair value at the measurement date:

	February 2, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Non-qualified deferred compensation plan assets (1)	$	8,123	$	3,868	$	4,255	$	—
Total assets	$	8,123	$	3,868	$	4,255	$	—
	January 28, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Non-qualified deferred compensation plan assets (1)	$	4,149	$	1,309	$	2,840	$	—
Total assets	$	4,149	$	1,309	$	2,840	$	—

(1) The Company maintains a self-directed, non-qualified deferred compensation plan structured as a rabbi trust for certain

executives at the vice-president level and above. Certain of the investment assets of the rabbi trust are valued based on quoted market prices, which are considered Level 1 inputs, with the remainder valued based on the net asset value determined by the value of the underlying assets, which are considered Level 2 inputs.

At February 2, 2013, the Company believes that the carrying value of cash and cash equivalents, receivables and payables approximates fair value, due to the short maturity of these financial instruments.

3. Property and Equipment

Property and equipment consists of the following:

	February 2, 2013			January 28, 2012
	(in thousands)
Land	$	1,056		$	1,056
Buildings	13,393			13,363
Leasehold improvements	593,578			555,813
Furniture and fixtures	300,604			299,794
Computer equipment and software	248,103			241,562
Assets under construction	22,522			22,133
	1,179,256			1,133,721
Less accumulated depreciation and amortization	(769,553		)	(772,831		)
Net property and equipment	$	409,703		$	360,890

Depreciation and amortization expense was approximately $97.8 million, $94.2 million and $95.5 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

48

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

4. Revolving Credit Facility

On December 19, 2012, the Company’s wholly-owned subsidiary, AnnTaylor, Inc., and certain of its subsidiaries, entered into a Fourth Amended and Restated $250 million senior secured revolving credit facility with Bank of America, N.A. and a syndicate of lenders (the "Credit Facility"), which amended the existing senior secured revolving credit facility due to expire in April 2013. The Credit Facility extended the maturity date to December 19, 2017, established a $75 million sub-facility solely for loans and letters of credit to be provided to ANN Canada Inc., a wholly owned subsidiary of AnnTaylor, Inc., and increased our option to expand the total facility and the aggregate commitments thereunder up to $400 million, subject to the lenders' agreement to increase their commitment for the requested amount. In addition, as of the date of the amendment, the margin added to the LIBOR rate was reduced to between 1.25% - 1.50% from a previous range of 1.25% - 1.75% depending upon the Average Daily Availability as defined in the Credit Facility and the monthly commitment fee on the unused revolving loan commitment was reduced to between 0.20% - 0.25% per annum, where it was previously 0.325% - 0.375% per annum. The Credit Facility may be used for working capital, letters of credit and other corporate purposes, and contains an acceleration clause which, upon the occurrence of an Event of Default, including but not limited to, a Material Adverse Effect, as defined in the Credit Facility, may cause any outstanding borrowings to become immediately due and payable.

The maximum availability for loans and letters of credit under the Credit Facility is governed by a quarterly borrowing base, determined by the application of specified percentages to certain eligible assets, primarily accounts receivable and inventory. Commercial and standby letters of credit outstanding under the Credit Facility totaled approximately $14.1 million, $16.7 million and $17.6 million as of February 2, 2013, January 28, 2012 and January 29, 2011, respectively, leaving a remaining available balance for loans and letters of credit of $150.8 million, $146.4 million and $120.2 million as of February 2, 2013, January 28, 2012 and January 29, 2011, respectively. There were no borrowings outstanding under the Credit Facility at February 2, 2013, January 28, 2012, or as of March 8, 2013, the date of this Report.

Amounts outstanding under the Credit Facility bear interest at a rate equal to, at the option of AnnTaylor, Inc., 1) the Base Rate, defined as the higher of (i) the federal funds rate plus a margin of 0.50% and (ii) the Bank of America prime rate, or 2) the LIBOR Rate (as defined in the Credit Facility); plus in each case, an applicable margin, which is between 0.25% and 0.50% for Base Rate loans, and between 1.25% and 1.50% for LIBOR loans, depending on the Average Daily Availability as defined in the Credit Facility. In addition, AnnTaylor, Inc. is required to pay the lenders a monthly commitment fee on the unused revolving loan commitment at a rate ranging from 0.20% to 0.25% per annum. Fees for outstanding commercial and standby letters of credit range from 0.50% to 0.625% and from 1.25% to 1.50%, respectively. The Credit Facility contains financial and other covenants, including limitations on indebtedness and liens, and a fixed charge coverage ratio covenant that is triggered if certain liquidity thresholds are not met.

The Credit Facility permits the Company to pay cash dividends (and permits dividends by AnnTaylor, Inc. to fund such cash dividends) subject to certain Liquidity requirements (as defined in the Credit Facility) and other conditions as set forth in the Credit Facility. Subject, in some cases, to specific exceptions, certain subsidiaries of the Company are also permitted to pay dividends to the Company to fund certain taxes owed by the Company, fund ordinary operating expenses of the Company not in excess of $500,000 in any fiscal year, repurchase common stock held by employees not in excess of 100,000 in any fiscal year and for certain other stated purposes.

The lenders have been granted a security interest in the inventory and accounts receivable of AnnTaylor, Inc. and certain of its subsidiaries, as collateral for the obligations under the Credit Facility.

5. Commitments and Contingencies

Operating Leases

The Company occupies its retail stores and administrative facilities under operating leases, most of which are non-cancelable. Most of the store leases grant the Company the right to extend the term for one or two additional five-year periods under substantially the same terms and conditions as the original leases. Most store leases also contain early termination options, which can be exercised by the Company under specific conditions. Most of the store leases require payment of a specified minimum rent, plus contingent rent based on a percentage of the store’s net sales in excess of a specified threshold. In addition, most of the leases require payment of real estate taxes, insurance and certain common area maintenance (“CAM”) costs in addition to the future minimum lease payments. The Company also leases certain office equipment for its corporate offices and store locations under non-cancelable operating leases, which generally have three-year terms.

49

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

5. Commitments and Contingencies (Continued)

Operating Leases (continued)

Future minimum lease payments under non-cancelable operating leases as of February 2, 2013 are as follows:

Fiscal Year	(in thousands)
2013	$	210,553
2014	202,295
2015	184,928
2016	158,181
2017	142,385
Thereafter	458,307
Total	1,356,649
Less sublease rentals	(14,715		)
Net rentals	$	1,341,934

The minimum lease payments presented above do not include CAM charges or real estate taxes, which are also contractual obligations under the Company’s store and office operating leases, but are generally not fixed and can fluctuate from year to year. Total CAM charges and real estate taxes for Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $78.8 million, $70.4 million and $68.6 million, respectively.

Rent expense, excluding CAM charges and real estate taxes, for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was as follows:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
	(in thousands)
Minimum rent	$	212,947	$	200,825	$	194,331
Percentage rent	2,911		2,460		986
Total	$	215,858	$	203,285	$	195,317

Legal Proceedings

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the amount of any liability that could arise with respect to these actions cannot be determined with certainty, in the Company’s opinion, any such liability will not have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

6. Earnings per Share

Basic earnings per share is calculated by dividing net income associated with common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method discussed in ASC 260-10, Earnings Per Share.

The determination and reporting of earnings per share requires the inclusion of time- and performance-based restricted stock as participating securities, since they have the right to share in dividends, if declared, equally with common shareholders. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net income, participating securities have the effect of diluting both basic and diluted earnings per share. During periods of net loss, no effect is given to participating securities, since they do not share in the losses of the Company.

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ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

6. Earnings per Share (Continued)

The following table presents a reconciliation of basic and diluted earnings per share for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, respectively.

	Fiscal Year Ended
	February 2, 2013					January 28, 2012					January 29, 2011
	(in thousands, except per share amounts)
Basic Earnings per Share	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Net income	$	102,585				$	86,566				$	73,397
Less net income associated with participating securities	1,470					1,455					1,300
Basic earnings per share	$	101,115	47,494	$	2.13	$	85,111	51,200	$	1.66	$	72,097	57,203	$	1.26
Diluted Earnings per Share
Net income	$	102,585				$	86,566				$	73,397
Less net income associated with participating securities	1,452					1,432					1,280
Effect of dilutive securities			600					829					907
Diluted earnings per share	$	101,133	48,094	$	2.10	$	85,134	52,029	$	1.64	$	72,117	58,110	$	1.24

Non-participating securities (stock options) representing 1,381,750, 2,028,204 and 2,878,825 shares of common stock were excluded from the above computation of weighted average shares for diluted earnings per share for Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively, due to their antidilutive effect, since their exercise prices exceeded the average market price of the common shares during the periods. In addition, non-participating securities (performance-based restricted units) representing 11,918, 14,125 and 7,063 shares of common stock were excluded from the above computations of weighted-average shares for diluted earnings per share for Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively, due to the fact that they are contingently issuable securities whose measurement period had not concluded as of the end of the fiscal year.

7. Equity and Incentive Compensation Plans

Preferred Stock

At February 2, 2013, January 28, 2012 and January 29, 2011, there were two million shares of preferred stock, par value $0.01, authorized and unissued.

Repurchase Program

On August 19, 2010, the Company’s Board of Directors approved a $100 million expansion of the Company's existing securities repurchase program (the “Repurchase Program”), bringing the total authorized under the Repurchase Program to $400 million. On March 8, 2011, the Company’s Board of Directors approved an additional $200 million expansion of the Repurchase Program, bringing the total authorized under the Repurchase Program to $600 million. The Repurchase Program will expire when the Company has repurchased all securities authorized for repurchase thereunder, unless terminated earlier by the Company’s Board of Directors. Purchases of shares of common stock may be made from time to time, subject to market conditions and at prevailing market prices, through open market purchases or in privately negotiated transactions. Repurchased shares of common stock increase treasury shares available for general corporate purposes. During Fiscal 2012, the Company repurchased 4.9 million shares of its common stock through open market purchases under the Repurchase Program at a cost of $135 million. During Fiscal 2011, the Company repurchased 7.3 million shares of its common stock under the Repurchase Program, at a cost of $175 million. During Fiscal 2010, the Company repurchased 4.2 million shares of its common stock under the Repurchase Program at a cost of $100 million. As of February 2, 2013 and March 8, 2013, the date of this Report, $49.1 million remained available under the Repurchase Program.

51

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. Equity and Incentive Compensation Plans (Continued)

Associate Discount Stock Purchase Plan

In Fiscal 1999, the Company established an Associate Discount Stock Purchase Plan (the “Stock Purchase Plan”). Under the terms of the Stock Purchase Plan, as amended, eligible employees may purchase shares of the Company’s common stock quarterly, at a price equal to 85% of the lower of the closing price of the Company’s common stock at the beginning or end of each quarterly stock purchase period. Participating employees pay for their stock purchases under the Stock Purchase Plan by authorizing limited payroll deductions of up to a maximum of 15% of their compensation. On May 19, 2010 and May 15, 2008, the Company’s stockholders approved an increase in the number of shares available for purchase under the Stock Purchase Plan by 1,500,000 and 650,000 shares, respectively. During Fiscal 2012, 87,082 shares were issued pursuant to the Stock Purchase Plan, at an average discount of $3.93 per share. At February 2, 2013, there were 1,428,496 shares available for future issuance under the Stock Purchase Plan. The Company recorded approximately $0.6 million, $0.6 million and $0.7 million in compensation expense related to the Stock Purchase Plan during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Stock Incentive Plans

The Company has three active stock incentive plans (the “Plans”), which are summarized below:

		Shares Reserved		Shares  Reserved for Issuance at February 2, 2013	Shares Available for Future Grant
Defined Name	Plan Name	Restricted Stock/Units (1)	Total Authorized
2000 Plan	2000 Stock Option and Restricted Stock Award Plan	562,500	2,250,000	1,000	—
2002 Plan	2002 Stock Option and Restricted Stock and Unit Award Plan	787,500	4,500,000	369,025	—
2003 Plan	2003 Equity Incentive Plan	5,760,000	11,750,000	4,165,645	1,750,568

(1) Included in the number of total authorized shares. The Company may issue restricted stock or restricted unit grants up to the levels provided under each plan, however shares not used for this purpose are available for issuance as stock option grants.

On May 19, 2010, the Company’s stockholders approved certain amendments to the Company's 2003 Plan, including increasing the total authorized shares reserved for issuance from 8.75 million to 11.75 million shares.

Stock option awards outstanding under the Company’s Plans are granted at exercise prices which are equal to the market value of the Company’s common stock on the grant date (determined in accordance with the applicable Plan), generally vest over three or four years and expire no later than ten years after the grant date. Each of the Plans also includes an acceleration clause by which all options not exercisable by their terms will, upon the occurrence of certain contingent events, become exercisable. Shares underlying stock award grants are generally issued out of treasury stock. All the Plans allow for restricted stock awards, and the 2002 Plan and 2003 Plan also allow for restricted unit awards. A restricted unit represents the right to receive a share of common stock and/or the cash value of a share of common stock on the date the restrictions on the restricted unit lapse. The restrictions on restricted stock or restricted unit grants generally lapse over a three- or four-year period from the date of the grant. Certain executives also receive performance-based restricted stock or restricted unit grants, which generally vest over three years if certain pre-established goals are met. In the event a grantee terminates employment with the Company, any unvested stock options and any restricted stock or restricted units still subject to restrictions are generally forfeited.

General

ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. In Fiscal 2012, Fiscal 2011 and Fiscal 2010, stock-based compensation expense was recorded net of estimated forfeitures, such that expense was recorded only for those stock-based awards that are expected to vest.

52

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. Equity and Incentive Compensation Plans (Continued)

During the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, the Company recognized approximately $17.0 million, $20.7 million and $21.2 million, respectively, in total stock-based compensation expense. This stock-based compensation expense is included on the same income statement line as the cash compensation paid to the recipient of the stock-based award. The associated tax benefit recognized in the Consolidated Statements of Operations for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was approximately $7.9 million, $10.0 million and $6.7 million, respectively.

ASC 718-10 also requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for stock-based compensation arrangements (“excess tax benefits”) be classified as financing cash flows. For the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, excess tax benefits realized from stock-based compensation arrangements were $9.2 million, $7.6 million, and $7.2 million, respectively. The Company received $34.8 million, $8.5 million and $6.6 million in cash from the exercise of stock options during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, respectively.

Stock Options

In accordance with ASC 718-10, Compensation – Stock Compensation, the Company recognizes stock option expense equal to the grant date fair value of a stock option on a straight-line basis over the requisite service period, which is generally the vesting period, net of estimated forfeitures. As of February 2, 2013, there was $6.6 million of unrecognized compensation cost related to unvested options, which is expected to be recognized over a remaining weighted average vesting period of 1.8 years. The total intrinsic value of options exercised was approximately $26.1 million, $13.3 million and $11.2 million during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

The following table summarizes stock option activity for the fiscal year ended February 2, 2013:

	Shares		Weighted Average Exercise Price
Options outstanding at January 28, 2012	4,498,817		$	22.18
Granted (1)	530,750		28.10
Exercised	(1,925,199	)	18.06
Forfeited or expired	(319,266	)	26.98
Options outstanding at February 2, 2013	2,785,102		$	25.61
Vested and exercisable at February 2, 2013	1,876,984		$	25.19
Options expected to vest in the future as of February 2, 2013	794,441		$	26.48

(1) Options granted during Fiscal 2012 vest annually over a three-year period, and expire ten years after the grant date.

The weighted average fair value of options granted during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, estimated as of the grant date using the Black-Scholes option pricing model, was $12.47, $13.20 and $9.29 per share, respectively. The weighted average remaining contractual term for options outstanding at February 2, 2013 and January 28, 2012 was 5.9 and 6.0 years, respectively. The weighted average remaining contractual term for options vested and exercisable at February 2, 2013 was 4.6 years. The weighted average remaining contractual term for options expected to vest in the future at February 2, 2013 was 8.5 years. At February 2, 2013, the aggregate intrinsic value of options outstanding, options vested and exercisable and options expected to vest was $17.6 million, $13.5 million, and $3.6 million, respectively.

Option valuation models require the input of highly subjective assumptions, including expected stock price volatility. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. The fair value of options granted under the Company’s Plans was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

53

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. Equity and Incentive Compensation Plans (Continued)

Stock Options (continued)

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Expected volatility	54.6	%	57.2	%	54.9	%
Risk-free interest rate	0.9	%	1.7	%	2.2	%
Expected life (years)	4.4		4.5		4.7
Dividend yield	—		—		—

The risk-free rate is based on a zero-coupon U.S. Treasury rate in effect at the time of grant with maturity dates that coincide with the expected life of the options. The expected life of the options is based on a calculation of the Company’s historical exercise patterns to estimate future exercise patterns. The expected volatility for grants is based on a simple average of (i) historical volatility of stock price returns using daily closing prices and (ii) the volatility implied by exchange-traded call options to purchase the Company’s common stock, to the extent sufficient data for the latter is available. Historical volatility was calculated as of the grant date using stock price data over periods of time equal in duration to the expected life of the options granted. In assessing implied volatility data, the Company analyzed call option market activity during the three-month period preceding the grant date. The Company also considered the volume of market activity of the underlying shares and traded options, the similarity of the exercise prices of traded options to the exercise price of employee stock options during the period and traded options whose terms are close to the expected term of the employee stock options.

Restricted Stock

In accordance with ASC 718-10, the fair value of restricted stock awards is based on the market price of the Company’s stock on the date of grant (determined in accordance with the applicable Plan) and is amortized to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period, net of estimated forfeitures. As of February 2, 2013, there was $8.5 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted average vesting period of 1.9 years. The weighted average grant date fair value of restricted stock awards granted during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was $28.18, $27.65, and $19.82, respectively. The total fair value of restricted stock awards vested during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was $11.7 million, $14.2 million and $15.2 million, respectively.

The following table summarizes restricted stock activity for the fiscal year ended February 2, 2013:

	Time - Based					Performance - Based
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock awards at January 28, 2012	523,096			$	18.40	247,003			$	17.13
Granted	335,562		(1)	28.33		146,500		(2)	27.85
Vested	(337,005	)		13.78		(81,364	)		10.44
Forfeited	(60,257	)		26.34		(108,468	)		16.57
Restricted stock awards at February 2, 2013	461,396			27.96		203,671			27.81

(1) Of this amount, 257,375 shares vest equally in each of March 2013, 2014 and 2015; 5,000 shares vest equally in each of September 2013, 2014 and 2015; 4,000 shares vest equally in each of March 2013 and 2014; 41,187 shares vest in May 2013; 3,000 shares vest equally in each of December 2013, 2014 and 2015; and the remaining 25,000 shares vest in December 2015.

(2) These shares vest over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 150% of the shares granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such shares, grantees will not earn any shares with respect to that tranche.

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ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. Equity and Incentive Compensation Plans (Continued)

Restricted Units

In March 2010, the Company granted time- and performance-vesting restricted unit awards with a grant date fair value of $19.58. The time-vesting restricted unit awards vest annually over three years. The performance-vesting restricted unit awards vest annually over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 150% of the units granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such grants, grantees will not earn any units with respect to that tranche. Management’s estimates of the probability and level of achievement related to the performance-vesting restricted unit awards is considered in the compensation cost recorded during Fiscal 2012, Fiscal 2011 and Fiscal 2010.

Since there were insufficient shares available to settle these restricted unit awards in stock as of the date of grant, they were classified and accounted for as liability awards and were marked-to-market through May 19, 2010. Under mark-to-market accounting, the liability for these awards was remeasured periodically during the period through May 19, 2010 based upon the closing market price of the Company’s common stock. On May 19, 2010, the Company’s shareholders approved an additional 3,000,000 shares under the Company’s 2003 Plan. As such, the Company reserved shares sufficient to cover these restricted unit awards, reclassified the liability of approximately $0.5 million recognized through that date into equity and began accounting for these awards as equity awards as of May 19, 2010. The per share fair value of the restricted unit awards as of May 19, 2010 was $21.10.

In accordance with ASC 718-10, the fair value of restricted units is based on the market price of the Company’s stock on the date of grant (determined in accordance with the applicable Plan) and is amortized to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period, net of estimated forfeitures. The total fair value of restricted unit awards vested during the fiscal year ended February 2, 2013 was $3.2 million. As of February 2, 2013, there was $0.3 million of unrecognized compensation cost related to unvested restricted units, which is expected to be recognized over a remaining weighted average vesting period of 0.1 years.

The following table summarizes restricted unit activity for the fiscal year ended February 2, 2013:

	Time - Based				Performance - Based
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Restricted unit awards at January 28, 2012	175,353		$	19.58	98,670		$	19.58
Vested	(86,165	)	19.58		(27,871	)	19.58
Forfeited	(14,172	)	19.58		(24,796	)	19.58
Restricted unit awards at February 2, 2013	75,016		19.58		46,003		19.58

Long-Term Performance Compensation

The Company maintains a long-term cash incentive program, the RCP, for vice-presidents and above. Corporate operating profit is the performance metric applied in determining amounts earned under the RCP, and any such earnings are banked and mandatorily deferred until the end of the third fiscal year following the earnings period. Amounts banked are adjusted upwards or downwards by the average percentage increase or decrease, as the case may be, of the Company's corporate net income performance over the mandatory three-year deferral period. Such corporate net income performance may be modified for certain unusual or infrequently occurring events to avoid distorting operating fundamentals and thereby benefiting or penalizing management for the financial impact of such unusual or infrequent events. The Company estimates corporate net income performance based on past results, future business trends and new business initiatives.

In order to receive payments under the RCP, participants must be employed by the Company at the end of the mandatory three-year deferral period, except in limited circumstances. Accordingly, amounts banked under the RCP are recorded as compensation expense on a pro-rata basis over the service period, net of estimated forfeitures. The service period includes the fiscal year in which amounts earned under the program are banked, plus the mandatory three-year deferral period. The Company estimates forfeitures based on historical RCP forfeiture patterns, as well as current and future trends of expected behavior. Any adjustments to compensation expense associated with changes in corporate net income performance or estimated forfeiture rates during the service period are accounted for as changes in estimate.

55

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

7. Equity and Incentive Compensation Plans (Continued)

Long-Term Performance Compensation (continued)

During the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, the Company recognized $18.5 million, $29.2 million and $22.8 million in compensation expense under the RCP, a portion of which applies to changes in estimates. As of February 2, 2013, there was $29.3 million of unrecognized compensation cost under the RCP, which is expected to be recognized over a remaining weighted average deferral period of 2.3 years.

8. Income Taxes

The provision for income taxes for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 consists of the following:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Federal:
Current	$	30,404		$	37,956		$	45,440
Deferred	24,276			12,361			(1,465		)
Total federal	54,680			50,317			43,975
State and local:
Current	5,174			11,809			1,300
Deferred	5,421			(4,702		)	(515		)
Total state and local	10,595			7,107			785
Foreign:
Current	702			773			780
Deferred	(909		)	(316		)	185
Total foreign	(207		)	457			965
Total	$	65,068		$	57,881		$	45,725

The reconciliation between the provision for income taxes and the expected provision for income taxes at the U.S. federal statutory rate of 35% for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 is as follows:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(dollars in thousands)
U.S. operations	$	170,896		$	143,562		$	118,007
Foreign operations	(3,243		)	885			1,115
Income before income taxes	$	167,653		$	144,447		$	119,122
Federal statutory rate	35		%	35		%	35		%
Provision for income taxes at federal statutory rate	58,679			50,556			41,693
State and local income taxes, net of federal income tax benefit	6,886			4,620			3,031
Non-deductible expenses	2,341			1,700			1,677
Settlements of tax examinations	(4,113		)	267			—
Other	1,275			738			(676		)
Provision for income taxes	$	65,068		$	57,881		$	45,725

56

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

8. Income Taxes (Continued)

The income tax provision reflects the current and deferred tax consequences of events that have been recognized in the Company's Consolidated Financial Statements or tax returns. U.S. federal income taxes are provided on unremitted foreign earnings, except those that are considered indefinitely reinvested, which at February 2, 2013 amounted to approximately $3.6 million. However, if these earnings were not considered indefinitely reinvested, under current law the incremental tax on such undistributed earnings would be approximately $0.5 million. The Company considers the earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside the United States and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.

The tax effects of significant items comprising the Company’s deferred tax assets/(liabilities) as of February 2, 2013 and January 28, 2012 are as follows:

	As of
	February 2, 2013			January 28, 2012
	(in thousands)
Current:
Inventory	$	8,261		$	8,331
Accrued expenses and other	15,559			15,011
Deferred rent and lease incentives	6,593			7,657
Total gross deferred tax assets - current	30,413			30,999
Less: valuation allowance	(16		)	—
Total net deferred tax assets - current	$	30,397		$	30,999
Non-current:
Depreciation and amortization	$	(91,062	)	$	(66,271	)
Deferred rent and lease incentives	67,650			64,074
Benefits related	22,337			29,109
Other	6,058			7,579
Amounts included in accumulated other comprehensive loss	2,788			3,323
Total gross deferred tax assets - non-current	7,771			37,814
Less: valuation allowance	(158		)	—
Total net deferred tax assets - non-current	$	7,613		$	37,814

The valuation allowance for deferred tax assets as of February 2, 2013 was approximately $0.2 million. There was no valuation allowance as of January 28, 2012. The valuation allowance is primarily related to certain non-U.S. alternative minimum tax credits that, in the judgment of management, are not more likely than not to be realized prior to expiration. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.

At February 2, 2013, the Company has net operating loss carry-forwards of $3.0 million for state income tax purposes and $0.2 million for income tax of certain non-U.S. jurisdictions. In addition, the Company has $0.2 million of alternative minimum tax credits in non-U.S. jurisdictions, which are available to reduce future income taxes, if any, over an indefinite period.

57

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

8. Income Taxes (Continued)

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	(in thousands)
Balance at January 30, 2010	$	3,070
Additions based on tax positions related to the current year	478
Additions for tax positions of prior years	3,925
Reductions for tax positions of prior years	(514		)
Balance at January 29, 2011	6,959
Additions based on tax positions related to the current year	708
Additions for tax positions of prior years	786
Reductions for tax positions of prior years	(144		)
Lapses in statutes of limitation	(512		)
Balance at January 28, 2012	7,797
Additions based on tax positions related to the current year	383
Additions for tax positions of prior years	396
Reductions for tax positions of prior years	(148		)
Settlements	(4,579		)
Lapses in statutes of limitation	(51		)
Balance at February 2, 2013	$	3,798

To the extent these unrecognized tax benefits are ultimately recognized, approximately $3.1 million will impact the Company’s effective tax rate in a future period. The Company anticipates that the amount of unrecognized tax benefits may be reduced within the next twelve months by approximately $0.5 million to $1.0 million as a result of the settlement of certain tax examinations, lapses in statutes of limitations, and voluntary tax filings for certain prior tax years.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its provision for income taxes. During Fiscal 2012, the Company recognized $1.8 million in net interest income in its provision for income taxes, primarily due to the interest benefit associated with settlement of a U.S. federal tax examination. During Fiscal 2011, the Company recognized approximately $0.7 million in interest and penalties, net of related deferred tax assets, on unrecognized tax benefits. The Company had approximately $1.9 million and $4.8 million for the payment of interest and penalties accrued at February 2, 2013 and January 28, 2012, respectively.

The Company files income tax returns in the U.S. Federal jurisdiction, and various state and local jurisdictions and generally remains open to income tax examinations by relevant tax authorities for tax years beginning with Fiscal 2009. The Company also files income tax returns in foreign jurisdictions and generally remains open to income tax examinations for tax years beginning with Fiscal 2005. The Company is under examination by certain state and local jurisdictions. Although the outcome of these matters cannot currently be determined, the Company believes adequate provision has been made for any potential unfavorable financial statement impact.

9. Retirement Plans

Savings Plan

Substantially all employees of the Company and its subsidiaries who are regular full-time employees or who work 1,000 hours during a 12-month period are eligible to participate in the Company’s 401(k) Plan. Beginning October 1, 2007, participants could contribute up to 100% of their annual earnings to the 401(k) Plan in any combination of pre-tax or after-tax contributions, and after January 1, 2012 to a Roth 401(k), as well, subject to certain limitations. The Company matches 100% with respect to the first 3% and 50% with respect to the second 3% of each participant’s contributions to the 401(k) Plan. Participants are 100% vested in the company matching contributions after two years of service. Effective January 1, 2010, the Company suspended its matching contributions under the 401(k) Plan, however the Company match was reinstated effective January 1, 2011. The Company’s contributions to the 401(k) Plan for Fiscal 2012, Fiscal 2011 and Fiscal 2010 were approximately $7.5 million, $6.8 million and $0.1 million, respectively.

58

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. Retirement Plans (Continued)

Pension Plan

The Company froze its non-contributory defined benefit pension plan (the “Pension Plan”) in October 2007. As a result, no additional associates became participants in the Pension Plan, and no additional benefits were earned under the Pension Plan on or after October 1, 2007.

The following table provides information for the Pension Plan as of February 2, 2013 and January 28, 2012:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012
	(in thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	38,609		$	31,338
Interest cost	1,752			1,667
Actuarial loss/(gain)	2,825			7,123
Benefits paid	(8,936		)	(1,519		)
Projected benefit obligation at end of year	34,250			38,609
Change in plan assets:
Fair value of plan assets at beginning of year	32,181			29,780
Actual return on plan assets	3,172			3,920
Benefits paid	(8,936		)	(1,519		)
Fair value of plan assets at end of year	26,417			32,181
Funded status at end of year	(7,833		)	(6,428		)
Net amount included in "Other liabilities"	$	(7,833	)	$	(6,428	)

The accumulated benefit obligation for the Company’s Pension Plan was approximately $34.3 million and $38.6 million at February 2, 2013 and January 28, 2012, respectively. As a result of the Pension Plan freeze, the accumulated benefit obligation equals the projected benefit obligation.

The following table summarizes the components of net periodic benefit cost and other amounts recognized in accumulated other comprehensive loss:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Net periodic benefit cost:
Interest cost	$	1,752		$	1,667		$	1,787
Expected return on plan assets	(1,500		)	(1,729		)	(1,673		)
Amortization of net loss	726			62			300
Settlement loss recognized	1,760			—			338
Net periodic benefit cost	2,738			—			752
Other changes in plan assets and benefit obligations recognized in other comprehensive loss:
Net loss/(gain) arising during the year	1,153			4,932			(2,317		)
Settlement charge	(1,760		)	—			(338		)
Amortization of net loss	(726		)	(62		)	(300		)
Total recognized in other comprehensive loss/(income)	(1,333		)	4,870			(2,955		)
Total recognized in net periodic benefit cost and other comprehensive loss/(income)	$	1,405		$	4,870		$	(2,203	)

59

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. Retirement Plans (Continued)

Pension Plan (continued)

As a result of the Pension Plan freeze, the Company has no remaining prior service cost that will be amortized from accumulated other comprehensive loss into net periodic benefit cost. When the total amount of lump sum payments made to Pension Plan participants exceeds the interest cost for the fiscal year, a non-cash settlement charge is recorded. Since the total amount of lump sum payments made to plan participants was greater than the interest component of pension expense during Fiscal 2012 and Fiscal 2010, non-cash settlement charges of $1.8 million and $0.3 million, respectively, were recorded and included in “Selling, general and administrative expenses” in our Consolidated Statements of Operations. There were no such settlement charges in Fiscal 2011.

Amounts recognized in accumulated other comprehensive loss consist of:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012
	(in thousands)
Net actuarial loss	$	7,307	$	8,641
Total	$	7,307	$	8,641

For the fiscal years ended February 2, 2013 and January 28, 2012 the following weighted average assumptions were used to determine benefit obligations at the end of the fiscal year:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012
Discount rate	4.35	%	4.85	%

For the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 the following weighted average assumptions were used to determine net periodic benefit cost:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Discount rate	4.85	%	5.75	%	6.15	%
Long-term rate of return on assets	5.10	%	6.25	%	6.25	%

To develop the expected long-term rate of return on Pension Plan assets, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the Pension Plan portfolio. The Company assumes that all employees will take lump-sum payouts based on historical payout trends. The discount rate was developed using a yield curve which consists of spot interest rates for each of the next 30 years and is developed based on pricing and yield information for high quality corporate bonds, whose cash flows mirror the anticipated timing of future benefit payments.

Since the Pension Plan was frozen in October 2007, its goal is to provide all plan benefits and expenses through growth and income from the Pension Plan assets, with such employer contributions as may be required in accordance with applicable rules and regulations. Accordingly, the Company sets recommended asset allocation percentages based upon the funded status of the Pension Plan. If the funded status is less than 100%, the recommended allocation of Pension Plan Assets is 45% equity securities and 55% debt securities. If the funded status is greater than 100% but less than 110%, the recommended allocation of Pension Plan assets is 25% equity securities and 75% debt securities. If the funded status is greater than 110%, the recommended allocation of Pension Plan assets is 100% debt securities. The Company's Investment Committee has the authority to override the target asset allocation or adjust the timing of asset allocation changes to the extent considered necessary.

60

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. Retirement Plans (Continued)

Pension Plan (continued)

Pension Plan assets consist primarily of equity and fixed income funds or cash and cash equivalents. The equity securities do not include any of the Company's common stock. The Pension Plan's principal investment objectives are: to minimize the volatility of the funding ratio and achieve a satisfactory rate of return based on that objective, incur a reasonable pension cost in the long-term and satisfy its benefit obligations. The Pension Plan's investment performance guidelines are set and measured against appropriate portfolio benchmarks. The Pension Plan's goals, objectives, asset allocation policies and funding forecasts are reviewed periodically within any given plan year, or when significant changes have occurred in Pension Plan benefits, participant demographics or funded status.

As discussed in Note 2, “Fair Value Measurements,” ASC 820-10 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The investments held by the Company’s Pension Plan, as well as their associated level within the fair value hierarchy, are shown below:

Mutual funds, money market funds and common collective trusts:

These investments are valued using the Net Asset Value provided by the administrators of the funds. The Net Asset Value is based on the value of the underlying assets owned by the fund or trust, minus its liabilities, and then divided by the number of shares outstanding. The unit price of this investment is not quoted in an active market. However, the unit price is based on underlying investments which are either traded in an active market or are valued based on observable inputs such as market interest rates and quoted prices for similar securities and, therefore, are classified in Level 2 of the fair value hierarchy.

The following tables segregate all financial assets and liabilities held by the Company’s Pension Plan as of February 2, 2013 and January 28, 2012 measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy, based on the inputs used to determine fair value at the measurement date:

61

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. Retirement Plans (Continued)

Pension Plan (continued)

	February 2, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Mutual funds:
Real estate	534		—		534		—
Total mutual funds	534		—		534		—
Common collective trusts:
Small blend	1,010		—		1,010		—
Mid cap blend	983		—		983		—
Large value	2,496		—		2,496		—
Large growth	2,971		—		2,971		—
Foreign large blend	1,543		—		1,543		—
Long-term bond	16,445		—		16,445		—
Total common collective trusts	25,448		—		25,448		—
Money market funds	435				435		—
Total assets	$	26,417	$	—	$	26,417	$	—
	January 28, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Mutual funds:
Foreign large blend	$	986	$	—	$	986	$	—
Large growth	2,590		—		2,590		—
Mid cap blend	953		—		953		—
Real estate	669		—		669		—
Mid cap growth	493		—		493		—
Total mutual funds	5,691		—		5,691		—
Small blend	500		—		500		—
Large value	2,503		—		2,503		—
Foreign large growth	495		—		495		—
Long-term bond	22,464		—		22,464		—
Total common collective trusts	25,962		—		25,962		—
Money market funds	528		—		528		—
Total assets	$	32,181	$	—	$	32,181	$	—

62

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

9. Retirement Plans (Continued)

Pension Plan (continued)

The benefits expected to be paid under the Pension Plan as of February 2, 2013 are as follows:

Fiscal Year	(in thousands)
2013	$	2,128
2014	1,977
2015	1,674
2016	2,055
2017	1,786
2018-2022	7,031

The Company made no contributions to the Pension Plan in Fiscal 2012, Fiscal 2011 or Fiscal 2010. Although the Company was not required to make a contribution to the Pension Plan during these periods, any deterioration in the financial markets or changes in discount rates may require the Company to make a contribution to its Pension Plan in Fiscal 2013.

Non-Qualified Deferred Compensation Plan

Under the Company’s Deferred Compensation Plan, certain executives at the vice-president level and above may defer up to 50% of their salary and, prior to January 2011, up to 100% of cash-based performance compensation earned during a calendar year. Beginning in January 2011, those executives may only defer up to 95% of cash-based performance compensation earned during a calendar year. Under the Deferred Compensation Plan, the Company matches the amount of the base and bonus compensation deferred by the executive during the Plan year above the Internal Revenue Code Section 401(a)(17) qualified plan compensation limit as indexed on an annual basis (“Eligible Compensation”). The Company matches 100% on the first 3% of a participant's deferred Eligible Compensation, and 50% of a participant’s deferred Eligible Compensation over 3% and up to 6%. Effective January 1, 2010, the Company suspended the match on amounts deferred under the Deferred Compensation Plan on or after that date, however, the match was reinstated effective January 1, 2011. Amounts deferred and credited to the executive’s deferred compensation account are at all times fully vested. The Company’s matching contribution vests upon the second anniversary of the executive’s date of hire, or earlier upon a change in control (as defined under the Deferred Compensation Plan). The value of the Company's matching contributions during Fiscal 2012, Fiscal 2011, and Fiscal 2010 was immaterial.

63

ANN INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

10. Selected Quarterly Financial Data - Unaudited

	Quarter
Fiscal 2012	First		Second		Third		Fourth
	(in thousands, except per share amounts)
Net sales (1)	$	560,411	$	594,872	$	612,548	$	607,678
Gross margin	$	317,371	$	332,401	$	354,399	$	298,171
Net income	$	28,732	$	30,735	$	40,748	$	2,370
Basic earnings per share (3)	$	0.59	$	0.64	$	0.85	$	0.05
Diluted earnings per share (3)	$	0.58	$	0.63	$	0.84	$	0.05
	Quarter
Fiscal 2011	First		Second		Third		Fourth
	(in thousands, except per share amounts)
Net sales	$	523,628	$	558,201	$	564,003	$	566,661
Gross margin	$	299,952	$	306,801	$	324,240	$	277,150
Net income (2)	$	27,314	$	24,792	$	32,280	$	2,180
Basic earnings per share (3)	$	0.52	$	0.48	$	0.62	$	0.04
Diluted earnings per share (3)	$	0.51	$	0.47	$	0.61	$	0.04

(1) Includes $6.2 million in pre-tax revenue recorded during the third quarter of Fiscal 2012 for a portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.

(2) Includes approximately $5.5 million in pre-tax charges recorded during the fourth quarter of Fiscal 2011 for severance and related costs associated with the separation of the former Brand President, Ann Taylor division.

(3) The sum of the quarterly per share data may not equal the annual amounts due to quarterly changes in the weighted average shares and share equivalents outstanding.

64

ANN INC.

EXHIBIT INDEX

Document

3.1 Restated Certificate of Incorporation of the Company (as amended through March 15, 2011). Incorporated by reference to Exhibit 3.1 to the Form 10-Q of the Company for the Quarter ended April 30, 2011 filed on May 20, 2011.

3.2 Bylaws of the Company (as amended through March 15, 2011). Incorporated by reference to Exhibit 3.2 to the Form 8-K of the Company filed on March 16, 2011.

10.1* Fourth Amended and Restated Credit Agreement, dated as of December 19, 2012, by and among AnnTaylor, Inc., Annco, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc., Ann Card Services, Inc., ANN Canada Inc., the financial institutions from time to time parties thereto, Bank of America, N.A., as administrative and collateral agent, JPMorgan Chase Bank, N.A., as syndication agent and Wells Fargo Bank, National Association as documentation agent (the “Credit Agreement”).

10.2* Fourth Amended and Restated Pledge and Security Agreement, dated as of December 19, 2012, by AnnTaylor, Inc., ANN INC., Annco, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc. and Ann Card Services, Inc. in favor of Bank of America, N.A., in its capacity as administrative agent for each of the lenders party to the Credit Agreement.

10.3* Fourth Amended and Restated Parent Guaranty, dated as of December 19, 2012, made by ANN INC. in favor of Bank of America, N.A., in its capacity as administrative agent for each of the lenders party to the Credit Agreement.

10.4 Agreement of Lease, dated as of August 3, 2004, between the Company and No. 1 Times Square Development LLC. Incorporated by reference to Exhibit 10.5 to the Form 10-Q of the Company for the Quarter ended July 31, 2004 filed on September 8, 2004.

10.5 Amended and Restated Tax Sharing Agreement, dated as of November 10, 2003, between the Company and AnnTaylor, Inc. Incorporated by reference to Exhibit 10.2 to the Form 10-K of the Company filed on March 25, 2004.

10.6† The AnnTaylor Stores Corporation 1992 Stock Option and Restricted Stock and Unit Award Plan, Amended and Restated as of February 23, 1994 (the “1992 Plan”). Incorporated by reference to Exhibit 10.15 to the Form 10-K of the Company filed on May 1, 1997.

10.6.1† First Amendment to the 1992 Plan, amended as of February 20, 1997. Incorporated by reference to Exhibit 10.15.1 to the Form 10-Q of the Company for the Quarter ended August 2, 1997 filed on September 12, 1997.

10.6.2† January 16, 1998 Amendment to the 1992 Plan, as amended. Incorporated by reference to Exhibit 10 to the Form 8-K of the Company filed on March 13, 1998.

10.6.3† May 12, 1998 Amendment to the 1992 Plan, as amended. Incorporated by reference to Exhibit 10.16.3 to the Form 10-Q of the Company for the Quarter ended May 2, 1998 filed on June 16, 1998.

10.6.4† Amendment to the 1992 Plan, effective as of March 10, 2000. Incorporated by reference to Exhibit 10.8.4 to the Form 10-K of the Company filed on April 18, 2000.

10.6.5† Second Restated Amendment to the 1992 Plan, effective as of March 9, 2004. Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the Quarter ended July 31, 2004 filed on September 8, 2004.

10.6.6† Amendment to the 1992 Plan, effective as of January 26, 2006. Incorporated by reference to Exhibit 10.4.8 to the Form 10-K of the Company filed on March 23, 2006.

10.7† The AnnTaylor Stores Corporation 2000 Stock Option and Restricted Stock Award Plan (the “2000 Plan”). Incorporated by reference to Exhibit 10.4 to the Form 10-K of the Company filed on April 1, 2003.

10.7.1† First Amendment to the 2000 Plan, effective as of January 29, 2002. Incorporated by reference to Exhibit 10.18.1 to the Form 10-K of the Company filed on April 4, 2002.

10.7.2† Second Restated Second Amendment to the 2000 Plan, effective as of March 9, 2004. Incorporated by reference to Exhibit 10.2 to the Form 10-Q of the Company for the Quarter ended July 31, 2004 filed on September 8, 2004.

65

10.7.3† Third Amendment to the 2000 Plan, effective as of January 26, 2006. Incorporated by reference to Exhibit 10.5.5 to the Form 10-K of the Company filed on March 23, 2006.

10.7.4† Fourth Amendment to the 2000 Plan, effective as of March 13, 2008. Incorporated by reference to Exhibit 10.8 to the Form 10-Q of the Company for the Quarter ended May 3, 2008 filed on May 29, 2008.

10.8† The AnnTaylor Stores Corporation 2002 Stock Option and Restricted Stock and Unit Award Plan (the “2002 Plan”). Incorporated by reference to Exhibit 10.9 to the Form 10-K of the Company filed on April 4, 2002.

10.8.1† First Amendment to the 2002 Plan, effective as of March 11, 2003. Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the Quarter ended May 3, 2003 filed on June 13, 2003.

10.8.2† Second Restated Second Amendment to the 2002 Plan, effective as of March 9, 2004. Incorporated by reference to Exhibit 10.3 to the Form 10-Q of the Company for the Quarter ended July 31, 2004 filed on September 8, 2004.

10.8.3† Third Amendment to the 2002 Plan, effective as of January 26, 2006. Incorporated by reference to Exhibit 10.6.5 to the Form 10-K of the Company filed on March 23, 2006.

10.8.4† Fourth Amendment to the 2002 Plan, effective as of March 13, 2008. Incorporated by reference to Exhibit 10.9 to the Form 10-Q of the Company for the Quarter ended May 3, 2008 filed on May 29, 2008.

10.9† The AnnTaylor Stores Corporation 2003 Equity Incentive Plan (the “2003 Plan”), as amended through March 10, 2010. Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the Quarter ended May 1, 2010 filed on May 21, 2010.

10.10† Amended and Restated AnnTaylor Stores Corporation Management Performance Compensation Plan (the “ATIP”). Incorporated by reference to Exhibit 10.1 to the Form 8-K filed on May 18, 2007.

10.10.1† Amendment to the ATIP, effective as of March 13, 2008. Incorporated by reference to Exhibit 10.7 to the Form 10-Q of the Company for the Quarter ended May 3, 2008 filed on May 29, 2008.

10.10.2† Second Amendment to the ATIP, effective as of March 5, 2009. Incorporated by reference to Exhibit 10.12.2 to the Form 10-K of the Company filed on March 9, 2009.

10.11† Amended and Restated ANN INC. Management Performance Compensation Plan. Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the Quarter ended July 28, 2012 filed on August 17, 2012.

10.12† AnnTaylor Stores Corporation Deferred Compensation Plan, as amended through August 18, 2005. Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company filed on August 24, 2005.

10.13† ANN INC. Non-Qualified Deferred Compensation Plan, as amended and restated as of November 16, 2011.

10.14† AnnTaylor Stores Corporation Special Severance Plan (the “Special Severance Plan”), as amended through August 21, 2008. Incorporated by reference to Exhibit 10.4 to the Form 10-Q of the Company for the Quarter ended November 1, 2008 filed on November 21, 2008.

10.14.1*† Amendment to the Special Severance Plan, effective as of November 13, 2012.

10.15† Form of 2002 Plan Non-Qualified Stock Option Agreement (Time-Vesting Options for Directors). Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company filed on October 29, 2004.

10.16† Form of 2003 Plan Non-Statutory Stock Option Agreement (Time-Vesting Options for Directors). Incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company filed on October 29, 2004.

10.17† Form of 2003 Plan Restricted Stock Award Agreement for Non-Employee Directors (Time-Vesting Restricted Stock). Incorporated by reference to Exhibit 10.3 to the Form 8-K of the Company filed on May 16, 2006.

10.18† Form of 2000 Plan Non-Qualified Stock Option Agreement (Time-Vesting Options). Incorporated by reference to Exhibit 10.5 to the Form 10-Q of the Company for the Quarter ended May 5, 2007 filed on June 8, 2007.

10.19† Form of 2002 Plan Non-Qualified Stock Option Agreement (Time-Vesting Options). Incorporated by reference to Exhibit 10.6 to the Form 10-Q of the Company for the Quarter ended May 5, 2007 filed on June 8, 2007.

10.20† Form of 2003 Plan Non-Statutory Stock Option Agreement (Time-Vesting Options). Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company filed on May 16, 2006.

10.21† Form of 2000 Plan Restricted Stock Award Agreement (Time-Vesting Restricted Stock). Incorporated by reference to Exhibit 10.9 to the Form 10-Q of the Company for the Quarter ended April 29, 2006 filed on June 7, 2006.

66

10.22† Form of 2002 Plan Restricted Stock Award Agreement (Time-Vesting Restricted Stock). Incorporated by reference to Exhibit 10.7 to the Form 10-Q of the Company for the Quarter ended April 29, 2006 filed on June 7, 2006.

10.23† Form of 2003 Plan Restricted Stock Award Agreement (Time-Vesting Restricted Stock). Incorporated by reference to Exhibit 10.2 to the Form 8-K of the Company filed on May 16, 2006.

10.24† Form of 2002 Plan Restricted Stock Award Agreement (Performance-Vesting Restricted Stock). Incorporated by reference to Exhibit 10.29 to the Form 10-K of the Company filed on April 1, 2005.

10.25† Form of 2003 Plan Restricted Stock Award Agreement (Performance-Vesting Restricted Stock). Incorporated by reference to Exhibit 10.30 to the Form 10-K of the Company filed on April 1, 2005.

10.26† Form of Indemnification Agreement. Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the Quarter ended July 30, 2011 filed on August 19, 2011.

10.27*† Summary of Compensation Arrangements for Non-Employee Directors.

10.28† Employment Agreement, effective as of October 1, 2005, between the Company and Katherine Lawther Krill. Incorporated by reference to Exhibit 10 to the Form 8-K of the Company filed on November 23, 2005.

10.28.1† Amendment to Employment Agreement, effective as of December 19, 2008, between the Company and Katherine Lawther Krill. Incorporated by reference to Exhibit 10.32.1 to the Form 10-K of the Company filed on March 9, 2009.

10.29† Letter Agreement, executed November 1, 2008, between the Company and Gary Muto. Incorporated by reference to Exhibit 10.2 to the Form 10-Q of the Company for the Quarter ended November 1, 2008 filed on November 21, 2008.

10.30† Letter Agreement, executed September 10, 2007, between the Company and Michael J. Nicholson. Incorporated by reference to Exhibit 10.1 to the Form 8-K of the Company filed on September 17, 2007.

10.31*† Confidentiality, Non-solicitation of Associates and Non-competition Agreement, dated January 14, 2013, between the Company and Katherine Hargrove Ramundo.

10.32† Confidentiality, Non-solicitation of Associates and Non-competition Agreement, dated November 6, 2008, between the Company and Gary Muto. Incorporated by reference to Exhibit 10.1 to the Form 10-Q of the Company for the Quarter ended November 1, 2008 filed on November 21, 2008.

10.32.1† Amendment to Confidentiality, Non-solicitation of Associates and Non-competition Agreement between the Company and Gary Muto, effective November 24, 2008. Incorporated by reference to Exhibit 10.37.1 to the Form 10-K of the Company filed on March 9, 2009.

10.32.2*† Amendment to Confidentiality, Non-solicitation of Associates and Non-competition Agreement between the Company and Gary Muto, effective December 18, 2012.

10.33† Confidentiality, Non-solicitation of Associates and Non-competition Agreement, dated June 9, 2008, between the Company and Brian Lynch. Incorporated by reference to Exhibit 10.5 to the Form 10-Q of the Company for the Quarter ended August 2, 2008 filed on August 22, 2008.

10.33.1† Amendment to Confidentiality, Non-solicitation of Associates and Non-competition Agreement between the Company and Brian Lynch, effective December 18, 2008. Incorporated by reference to Exhibit 10.38.1 to the Form 10-K of the Company filed on March 9, 2009.

10.33.2† Second Amendment to Confidentiality, Non-solicitation of Associates and Non-competition Agreement between the Company and Brian Lynch, effective January 30, 2012.

10.33.3*† Third Amendment to Confidentiality, Non-solicitation of Associates and Non-competition Agreement between the Company and Brian Lynch, effective December 19, 2012.

10.34† Confidentiality, Non-solicitation of Associates and Non-competition Agreement, dated June 9, 2008, between the Company and Michael Nicholson. Incorporated by reference to Exhibit 10.6 to the Form 10-Q of the Company for the Quarter ended August 2, 2008 filed on August 22, 2008.

10.35.1*† Amendment to Confidentiality, Non-solicitation of Associates and Non-competition Agreement between the Company and Michael Nicholson, effective December 20, 2012.

10.36† Form of 2003 Plan Restricted Unit Award Agreement (Time-Vesting Restricted Units). Incorporated by reference to Exhibit 10.41 to the Form 10-K of the Company filed on March 12, 2010.

67

10.37† Form of 2003 Plan Restricted Unit Award Agreement (Performance-Vesting Restricted Units). Incorporated by reference to Exhibit 10.5 to the Form 10-Q of the Company for the Quarter ended October 30, 2010 filed on November 19, 2010.

10.38† Confidentiality, Non-solicitation of Associates and Non-competition Agreement, dated June 9, 2008, between the Company and Barbara Eisenberg. Incorporated by reference to Exhibit 10.3 to the Form 10-Q of the Company for the Quarter ended August 2, 2008 filed on August 22, 2008.

21 Subsidiaries of the Company. Incorporated by reference to Exhibit 21 to the Form 10-K of the Company filed on March 9, 2012.

23* Consent of Independent Registered Public Accounting Firm.

31.1* Certification of chief executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of chief financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1^O  Certification of chief executive officer and chief financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance

101.SCH XBRL Taxonomy Extension Schema

101.CAL XBRL Taxonomy Extension Calculation

101.DEF XBRL Taxonomy Extension Definition

101.LAB XBRL Taxonomy Extension Labels

101.PRE XBRL Taxonomy Extension Presentation

* Filed electronically herewith.

O Furnished electronically herewith.

† Management contract or compensatory plan or arrangement.

68

EX-10.1

Exhibit 10.1

$250,000,000

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

December 19, 2012

ANNTAYLOR, INC.,

ANNCO, INC.,

ANNTAYLOR DISTRIBUTION SERVICES, INC.,

ANNTAYLOR RETAIL, INC.

and

ANN CARD SERVICES, INC.,

as the U.S. Borrowers,

ANN CANADA INC.,

as the Canadian Borrower,

BANK OF AMERICA, N.A.,

as Administrative Agent and as Collateral Agent,

JPMORGAN CHASE BANK, N.A.,

as Syndication Agent,

WELLS FARGO BANK, NATIONAL ASSOCIATION,

as Documentation Agent

and

THE FINANCIAL INSTITUTIONS NAMED HEREIN,

as Lenders

BANK OF AMERICA MERRILL LYNCH,

J.P. MORGAN SECURITIES LLC,

as Joint Lead Arrangers

TABLE OF CONTENTS

Page

ARTICLE 1 LOANS AND LETTERS OF CREDIT    2

1.1 Total Facility    2

1.2 Revolving Loans    2

1.3 Letters of Credit    5

1.4 Bank Products    10

1.5 Increase in U.S. Commitments    10

ARTICLE 2 INTEREST AND FEES    12

2.1 Interest    12

2.2 Continuation and Conversion Elections    13

2.3 Maximum Interest Rate    14

2.4 Fees    15

2.5 Unused Line Fee    15

2.6 Letter of Credit Fees    16

ARTICLE 3 PAYMENTS AND PREPAYMENTS    17

3.1 Revolving Loans    17

3.2 Termination of Facility    17

3.3 Payments by the Borrowers    18

3.4 Payments as Revolving Loans    18

3.5 Apportionment, Application and Reversal of Payments    18

3.6 Indemnity for Returned Payments    19

3.7 Agent’s and Lenders’ Books and Records; Monthly Statements    20

3.8 Currency Matters    20

3.9 Currency Fluctuations    21

ARTICLE 4 TAXES, YIELD PROTECTION AND ILLEGALITY    21

4.1 Taxes    21

4.2 Illegality    24

4.3 Inability to Determine Rates    25

4.4 Increased Costs    25

4.5 Compensation for Losses    27

4.6 Mitigation Obligations    27

4.7 Survival    28

4.8 Replacement of Lenders    28

ARTICLE 5 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES    28

5.1 Books and Records    28

5.2 Financial Information    29

5.3 Notices to the Lenders    32

ARTICLE 6 GENERAL WARRANTIES AND REPRESENTATIONS    34

6.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents    34

6.2 Validity and Priority of Security Interest    35

6.3 Organization and Qualification    35

6.4 Corporate Name; Prior Transactions    35

6.5 Subsidiaries and Affiliates    35

6.6 Financial Statements and Projections    35

6.7 Capitalization    36

6.8 Solvency    36

i

TABLE OF CONTENTS

(continued)

Page

6.9 Debt    36

6.10 Distributions    36

6.11 Real Estate; Store Locations    36

6.12 Trade Names    37

6.13 Litigation    37

6.14 Labor Disputes    37

6.15 Environmental Laws    37

6.16 No Violation of Law    38

6.17 No Default    38

6.18 ERISA Compliance; Canadian Pension Plans    38

6.19 Taxes    39

6.20 Regulated Entities    39

6.21 Use of Proceeds; Margin Regulations    39

6.22 Copyrights, Patents, Trademarks and Licenses, etc    39

6.23 No Material Adverse Effect    40

6.24 Full Disclosure    40

6.25 Bank Accounts and Credit Card Processors    40

6.26 Governmental Authorization    40

6.27 Tax Shelter Regulations    40

6.28 OFAC    41

ARTICLE 7 AFFIRMATIVE AND NEGATIVE COVENANTS    41

7.1 Taxes and Other Obligations    41

7.2 Legal Existence and Good Standing    42

7.3 Compliance with Law and Agreements; Maintenance of Licenses    42

7.4 Maintenance of Property; Appraisals and Inspection of Property    42

7.5 Insurance    43

7.6 Insurance and Condemnation Proceeds    43

7.7 Environmental Laws    43

7.8 Compliance with ERISA; Canadian Pension Plans    44

7.9 Debt    44

7.10 Sales of Assets; Liens    46

7.11 Investments    48

7.12 Accommodation Obligations    50

7.13 Restricted Payments    50

7.14 Conduct of Business    51

7.15 Transactions with Affiliates    51

7.16 Restriction on Fundamental Changes    52

7.17 ERISA    52

7.18 Sales and Leasebacks    53

7.19 Margin Regulations    53

7.20 Change of Fiscal Year    53

7.21 Subsidiaries    53

7.22 Fixed Charge Coverage Ratio    53

7.23 Further Assurances    54

7.24 Pledge of After-Acquired Property; Additional Borrowers    54

7.25 Cash Collateral and Deposit Accounts    55

7.26 Restrictions on Payment of Certain Debt    57

ARTICLE 8 CONDITIONS OF LENDING    57

8.1 Conditions Precedent to Making of Credit Extensions on the Effective Date    57

8.2 Conditions Precedent to Each Credit Extension    59

ARTICLE 9 DEFAULT; REMEDIES    60

9.1 Events of Default    60

9.2 Remedies    62

ii

TABLE OF CONTENTS

(continued)

Page

ARTICLE 10 TERM AND TERMINATION    63

10.1 Term and Termination    63

ARTICLE 11 AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS    64

11.1 Amendments and Waivers    64

11.2 Assignments; Participations    65

ARTICLE 12 THE AGENT    68

12.1 Appointment and Authorization    68

12.2 Delegation of Duties    69

12.3 Liability of Agent    69

12.4 Reliance by Agent    69

12.5 Notice of Default    69

12.6 Credit Decision    70

12.7 Indemnification    70

12.8 Agent in Individual Capacity    71

12.9 Successor Agent    71

12.10 Collateral Matters    71

12.11 Restrictions on Actions by Lenders; Sharing of Payments    72

12.12 Agency for Perfection    73

12.13 Payments by Agent to Lenders    73

12.14 Settlement    73

12.15 Letters of Credit; Intra-Lender Issues    76

12.16 Concerning the Collateral and the Related Loan Documents    78

12.17 Field Audit and Examination Reports; Disclaimer by Lenders    78

12.18 Relation Among Lenders    79

12.19 Co-Agents    79

12.20 Defaulting Lenders    79

ARTICLE 13 GUARANTEES    82

13.1 Guaranty    82

13.2 Contribution    83

13.3 Waivers; Other Agreements    84

13.4 Guarantee Absolute and Unconditional    87

13.5 Reinstatement    88

13.6 Payment    88

ARTICLE 14 MISCELLANEOUS    89

14.1 No Waivers; Cumulative Remedies    89

14.2 Severability    89

14.3 Governing Law; Choice of Forum; Service of Process    89

14.4 WAIVER OF JURY TRIAL    90

14.5 Survival of Representations and Warranties    90

14.6 Other Security and Guaranties    91

14.7 Fees and Expenses    91

14.8 Notices    91

14.9 Waiver of Notices    92

14.10 Binding Effect    93

14.11 Indemnity of the Agent and the Lenders by the Borrowers    93

14.12 Limitation of Liability    95

14.13 Final Agreement    95

14.14 Counterparts    95

14.15 Captions    95

14.16 Right of Setoff    95

14.17 Confidentiality    96

14.18 Conflicts with Other Loan Documents    97

iii

TABLE OF CONTENTS

(continued)

Page

14.19 No Lender Reliance on Margin Stock    97

14.20 Judgment Currency    97

14.21 Canadian Anti-Money Laundering Legislation    98

14.22 Canadian Obligations    98

14.23 USA PATRIOT Act    98

ARTICLE 15 AMENDMENT AND RESTATEMENT    98

15.1 Amendment and Restatement    98

15.2 Assignment and Acceptance    99

iv

ANNEXES, EXHIBITS AND SCHEDULES

ANNEX A    -     DEFINITIONS

EXHIBIT A    -     FORM OF COMPLIANCE CERTIFICATE

EXHIBIT B     -     FORM OF BORROWING BASE CERTIFICATE

EXHIBIT C     -     [INTENTIONALLY OMITTED]

EXHIBIT D     -     FORM OF NOTICE OF BORROWING

EXHIBIT E     -     FORM OF NOTICE OF CONTINUATION/CONVERSION

EXHIBIT F     -     FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

EXHIBIT G     -     FORM OF SECURITY AGREEMENT

EXHIBIT H     -     FORM OF PARENT GUARANTY

SCHEDULE 1.1     –     COMMITMENTS

SCHEDULE 1.3     –     EXISTING LETTERS OF CREDIT

SCHEDULE 5.2(j) –     ADDITIONAL FINANCIAL AND COLLATERAL REPORTS

SCHEDULE 6.5     –     SUBSIDIARIES AND AFFILIATES

SCHEDULE 6.7     –     SUBSIDIARY CAPITALIZATION

SCHEDULE 6.9     –     DEBT

SCHEDULE 6.10 –     DISTRIBUTIONS

SCHEDULE 6.11 –     REAL ESTATE

SCHEDULE 6.12 –     TRADE NAMES

SCHEDULE 6.13 –     LITIGATION

SCHEDULE 6.15 –     ENVIRONMENTAL LAW

SCHEDULE 6.18 –     ERISA COMPLIANCE

SCHEDULE 6.25 –     BANK ACCOUNTS AND CREDIT CARD PROCESSORS

SCHEDULE 7.10(b) – PERMITTED EXISTING LIENS

SCHEDULE 7.11 –     INVESTMENTS

v

FOURTH AMENDED AND RESTATED CREDIT AGREEMENT

This FOURTH AMENDED AND RESTATED CREDIT AGREEMENT, dated as of December 19, 2012 (this “Agreement”), is made by and among the financial institutions from time to time parties hereto (such financial institutions, together with their respective successors and assigns, are referred to hereinafter each individually as a “Lender” and collectively as the “Lenders”), BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent for the Lenders (in such capacities, the “Agent”), JPMORGAN CHASE BANK, N.A., as Syndication Agent, WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent, ANNTAYLOR, INC., a Delaware corporation (“ATI”), ANNCO, INC., a Delaware corporation (“ANNCO”), ANNTAYLOR DISTRIBUTION SERVICES, INC., a Delaware corporation (“AT Distribution”), ANNTAYLOR RETAIL, INC., a Florida corporation (“AT Retail”) and ANN CARD SERVICES, INC., a Florida corporation (“ACS”; ATI, ANNCO, AT Distribution, AT Retail and ACS may be referred to individually herein as a “U.S. Borrower” or collectively as the “U.S. Borrowers”) and ANN CANADA INC., a Canadian corporation (the “Canadian Borrower” and together with the U.S. Borrowers, collectively, the “Borrowers”).

WITNESSETH:

WHEREAS, ATI, ANNCO, AT Distribution and AT Retail, the lenders referred to therein, the syndication agents named therein, the issuing banks named therein and the administrative agent named therein have entered into that certain Original Credit Agreement (as defined in Annex A hereto);

WHEREAS, the Borrowers have requested that the Lenders continue to make available to them a revolving line of credit for loans and letters of credit in an amount not to exceed $250,000,000 (subject to increase to $400,000,000 pursuant to the terms set forth herein) by amending the terms of the Original Credit Agreement, and restating such terms in their entirety, as set forth herein;

WHEREAS, capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings ascribed thereto in Annex A which is attached hereto and incorporated herein; the rules of construction contained therein shall govern the interpretation of this Agreement and the other Loan Documents (except as otherwise provided for therein), and all Annexes, Exhibits and Schedules attached hereto are incorporated herein by reference; and

WHEREAS, the Lenders have agreed to continue to make available to the Borrowers a revolving credit facility upon the terms and conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth in this Agreement, and for good and valuable consideration, the receipt of which is hereby acknowledged, the Lenders, the Agent and the Borrowers hereby agree that the Original Credit Agreement is hereby amended and restated in its entirety, effective as of the Effective Date, as follows.

ARTICLE 1

1.1Total Facility. Subject to all of the terms and conditions of this Agreement, the Lenders agree to make available a credit facility (the “Facility”) of up to $250,000,000, with a subfacility of up to $75,000,000 for Canadian Loans and Canadian Letters of Credit (the “Canadian Subfacility Amount”) or such greater amount as may be established pursuant to Section 1.5 (the “Total Facility Amount”), to the Borrowers from time to time during the term of this Agreement. The Facility shall be composed of a revolving line of credit consisting of Revolving Loans and Letters of Credit.

1.2Revolving Loans.

(a)Amounts. Subject to the satisfaction of the conditions precedent set forth in Article 8, each U.S. Lender severally, but not jointly, agrees, upon any U.S. Borrower’s request from time to time on any Business Day during the period from the Effective Date to the Termination Date and each Canadian Lender severally, but not jointly, agrees, upon the Canadian Borrower’s request for Canadian Loans from time to time on any Business Day during such period, to make revolving loans (the “Revolving Loans”) (i) to the applicable U.S. Borrower in Dollars only and (ii) to the Canadian Borrower in Canadian Dollars only, in each case in amounts not to exceed such Lender’s Pro Rata Share of Availability, except for Non-Ratable Loans and Agent Advances. The Lenders, however, in their unanimous discretion, may elect to make Revolving Loans or issue or arrange to have issued Letters of Credit in excess of the Borrowing Base on one or more occasions, but if they do so, neither the Agent nor the Lenders shall be deemed thereby to have changed the limits of the Borrowing Base or to be obligated to exceed such limits on any other occasion. If any Borrowing would exceed Availability or if any Borrowing by the Canadian Borrower would cause the aggregate outstanding Dollar Equivalent of all Credit Extensions made to the Canadian Borrower to exceed the Canadian Subfacility Amount, the applicable Lenders may refuse to make or may otherwise restrict the making of Revolving Loans as the applicable Lenders determine until such excess has been eliminated, subject to the Agent’s authority, in its sole discretion, to make Agent Advances pursuant to the terms of Section 1.2(i).

(b)Procedure for Borrowing.

(i)Each Borrowing (other than an L/C Borrowing or Agent Advance) shall be made upon a Borrower’s irrevocable written notice delivered to the Agent in the form of a notice of borrowing (“Notice of Borrowing”), which must be received by the Agent prior to (i) 11:00 a.m. (New York City time) three Business Days prior to the requested Funding Date, in the case of LIBOR Loans or Canadian BA Rate Loans, (ii) 11:00 a.m. (New York City time) one Business Day prior to the requested Funding Date, in the case of Canadian Prime Rate Loans and (iii) 11:00 a.m. (New York City time) on the requested Funding Date, in the case of Base Rate Loans, specifying:

(A)the amount of the Borrowing, which in the case of a LIBOR Loan or Canadian BA Rate Loan must equal $1,000,000 (CDN$1,000,000 for Canadian BA ___

2

Rate Loans) and increments of $1,000,000 (CDN$1,000,000 for Canadian BA Rate Loans) in excess of such amount;

(B)the requested Funding Date, which must be a Business Day;

(C)whether the Revolving Loans requested are to be Base Rate Loans, Canadian Prime Rate Loans, LIBOR Loans or Canadian BA Rate Loans (and if not specified, it shall be deemed a request for a Base Rate Loan or Canadian Prime Rate Loan, as applicable); and

(D)the duration of the Interest Period for LIBOR Loans and Canadian BA Rate Loans (and if not specified, it shall be deemed a request for an Interest Period of one month);

provided, however, that with respect to the Borrowing to be made on the Effective Date, such Borrowings will consist of Base Rate Loans or Canadian Prime Rate Loans, as applicable, only.

(ii)In lieu of delivering a Notice of Borrowing, any Borrower may give the Agent telephonic notice of such request for advances to the Designated Account on or before the deadline set forth above. The Agent at all times shall be entitled to rely on such telephonic notice in making such Revolving Loans, regardless of whether any written confirmation is received.

(c)Reliance upon Authority. Prior to the Effective Date, each Borrower shall deliver to the Agent, a notice setting forth the account of such Borrower (“Designated Account”) to which the Agent is authorized to transfer the proceeds of the Revolving Loans requested hereunder. Any Borrower may designate a replacement account from time to time by written notice from a Responsible Officer. All such Designated Accounts must be reasonably satisfactory to the Agent. The Agent is entitled to rely conclusively on any person’s request for Revolving Loans on behalf of such Borrower, so long as the proceeds thereof are to be transferred to the Designated Account. The Agent has no duty to verify the identity of any individual representing himself or herself as a person authorized by such Borrower to make such requests on its behalf.

(d)No Liability. The Agent shall not incur any liability to any Borrower as a result of acting upon any notice referred to in Sections 1.2(b) and (c), which the Agent reasonably believes in good faith to have been given by an officer or other person duly authorized by such Borrower to request Revolving Loans on its behalf. The crediting of Revolving Loans to the Designated Account conclusively establishes the obligation of such Borrower to repay such Revolving Loans as provided herein.

(e)Notice Irrevocable. Any Notice of Borrowing (or telephonic notice in lieu thereof) made pursuant to Section 1.2(b) shall be irrevocable. The applicable Borrower shall be bound to borrow the funds requested therein in accordance therewith.

(f)Agent’s Election. Promptly after receipt of a Notice of Borrowing (or telephonic notice in lieu thereof), the Agent shall elect to have the terms of Section 1.2(g) or the terms of Section 1.2(h) apply to such requested Borrowing. If the Bank declines in its sole __

3

discretion to make a Non-Ratable Loan pursuant to Section 1.2(h), the terms of Section 1.2(g) shall apply to the requested Borrowing.

(g)Making of Revolving Loans. If Agent elects to have the terms of this Section 1.2(g) apply to a requested Borrowing, then promptly after receipt of a Notice of Borrowing or telephonic notice in lieu thereof, the Agent shall notify the applicable Lenders by telecopy, telephone or e-mail of the requested Borrowing. Each applicable Lender shall transfer its Pro Rata Share of the requested Borrowing available to the Agent in immediately available funds, to the account from time to time designated by the Agent, not later than 12:00 noon (New York City time) on the applicable Funding Date. After the Agent’s receipt of all proceeds of such Revolving Loans, the Agent shall make the proceeds of such Revolving Loans available to the applicable Borrower on the applicable Funding Date by transferring same day funds to the applicable Designated Account; provided, however, that the amount of Revolving Loans so made on any date shall not exceed the Availability on such date.

(h)Making of Non-Ratable Loans.

(i)If Agent elects, with the consent of the Bank, to have the terms of this Section 1.2(h) apply to a requested Borrowing, the Bank shall, in its sole discretion, make a Revolving Loan in the amount of that Borrowing available to the applicable U.S. Borrower on the applicable Funding Date by transferring same day funds to such U.S. Borrower’s Designated Account. Each Revolving Loan made solely by the Bank pursuant to this Section is herein referred to as a “Non-Ratable Loan”, and such Revolving Loans are collectively referred to as the “Non-Ratable Loans.” Each Non-Ratable Loan shall be subject to all the terms and conditions applicable to other Revolving Loans except that all payments thereon shall be payable to the Bank solely for its own account. The aggregate amount of Non-Ratable Loans outstanding at any time shall not exceed ten percent (10%) of the Total Facility Amount. The Agent shall not request the Bank to make any Non-Ratable Loan if (A) the Agent has received written notice from any U.S. Borrower or any Lender that one or more of the applicable conditions precedent set forth in Article 8 will not be satisfied on the requested Funding Date for the applicable Borrowing, or (B) the requested Borrowing would exceed Availability on that Funding Date.

(ii)The Non-Ratable Loans shall be secured by the Agent’s Liens in and to the Collateral and shall constitute Base Rate Loans and Obligations hereunder.

(iii)Each U.S. Lender shall automatically be deemed to have irrevocably and unconditionally purchased, without recourse or warranty, a participation in each Non-Ratable Loan when made based on such U.S. Lender’s Pro Rata Share.

(i)Agent Advances.

(i)Subject to the limitations set forth below, the Agent is authorized by the U.S. Borrowers and the U.S. Lenders, from time to time in the Agent’s sole discretion after notice to and consultation with ATI, (A) after the occurrence of a Default or an Event of Default, or (B) at any time that any of the conditions precedent set forth in Article 8 have not been satisfied, to make Base Rate Loans to one or more of the U.S. Borrowers on behalf

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of the U.S. Lenders which the Agent, in its reasonable business judgment, deems necessary or desirable (1) to preserve or protect the Collateral, or any portion thereof, (2) to enhance the likelihood of, or maximize the amount of, repayment of the Revolving Loans, Letter of Credit Outstandings and other Obligations (other than Bank Product Obligations) (including to provide cash collateral for outstanding Letters of Credit to the extent not otherwise Fully Supported by the U.S. Borrowers in accordance with Section 1.3(b) or (g)), or (3) to pay any other amount chargeable to any U.S. Borrower pursuant to the terms of this Agreement, including costs, fees and expenses as described in Section 14.7 (any of such advances are herein referred to as “Agent Advances”); provided, that (A) the aggregate amount of Agent Advances shall not exceed 10% of the Borrowing Base on the date any Agent Advance is made, (B) at no time shall the aggregate amount of Agent Advances plus Aggregate Outstandings exceed the Total Facility Amount, and (C) the Required Lenders may at any time revoke the Agent’s authorization to make Agent Advances. Any such revocation must be in writing and shall become effective prospectively upon the Agent’s receipt thereof.

(ii)As of the date of any Agent Advance made hereunder, the Agent shall have made arrangements with the U.S. Borrowers intended to eliminate or repay such Agent Advance within a reasonable time thereafter but in no event later than sixty (60) days following the date such Agent Advance is made.

(iii)The Agent Advances shall be secured by the Agent’s Liens in and to the Collateral and shall constitute Base Rate Loans and Obligations hereunder.

(iv)Each U.S. Lender shall automatically be deemed to have irrevocably and unconditionally purchased, without recourse or warranty, a participation in each Agent Advance when made based on such U.S. Lender’s Pro Rata Share.

1.3Letters of Credit.

(a)Agreement to Issue or Cause To Issue. Subject to the terms and conditions of this Agreement and the applicable Issuing Bank Agreement, upon request of any Borrower an applicable Letter of Credit Issuer will issue for the account of any Borrower, the Parent or any Subsidiary thereof one or more Letters of Credit.

(b)Amounts; Outside Expiration Date; Automatic Renewal. No Letter of Credit Issuer shall have any obligation to issue any Letter of Credit at any time if: (i) the maximum face amount of the requested Letter of Credit is greater than the Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn amount of the requested Letter of Credit and all commissions, fees, and charges due from such Borrower in connection with the opening thereof would exceed Availability at such time; (iii) such Letter of Credit has an expiration date less than four (4) Business Days prior to the Stated Termination Date or more than 12 months from the date of issuance for Standby Letters of Credit and 180 days (subject to extension for a maximum period of sixty (60) days) for Commercial Letters of Credit; (iv) any applicable condition precedent in Article 8 has not been satisfied; or (v) any Lender is at such time a Defaulting Lender hereunder, unless (A) after giving effect to the requested issuance, the Aggregate Outstandings would not exceed the aggregate Commitments of all Lenders other than such Defaulting Lender or (B) the applicable Letter of Credit Issuer has entered into satisfactory

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arrangements with the Borrowers or such Lender to eliminate the Letter of Credit Issuer’s risk with respect to such Lender. If the Dollar Equivalent of Letter of Credit Outstandings at any time exceeds the lesser of the Borrowing Base or the applicable Letter of Credit Subfacility, the Borrowers shall immediately upon notice cause Letters of Credit to be Fully Supported in the amount of such excess to be held by the Agent until such time that no such excess amount exists.

The Letter of Credit Issuers and the Lenders agree that, while a Standby Letter of Credit is outstanding and prior to the Termination Date, at the option of the applicable Borrower and upon the written request of the applicable Borrower received by the applicable Letter of Credit Issuer at least five (5) days (or such shorter time as such Letter of Credit Issuer may agree in a particular instance in its sole discretion) prior to the proposed date of notification of renewal, such Letter of Credit Issuer shall be entitled to authorize the automatic renewal of any Standby Letter of Credit issued by it so long as, immediately after the renewal thereof, (i) the aggregate Dollar Equivalent amount of Letter of Credit Outstandings does not exceed the Letter of Credit Subfacility, (ii) Letter of Credit Outstandings attributable to Canadian Letters of Credit, together with the outstanding amount of all Canadian Loans, do not exceed the Canadian Subfacility Amount and (iii) Aggregate Outstandings do not exceed the lesser of the Total Facility Amount or the Borrowing Base. Each such request for renewal of a Letter of Credit shall specify in form and detail satisfactory to the applicable Letter of Credit Issuer (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 such Letter of Credit Issuer may require. No Letter of Credit Issuer shall so renew any Letter of Credit if (A) such Letter of Credit Issuer has actual knowledge that it would have no obligation at such time to issue or amend a Letter of Credit under the terms ofSection 1.3(b) or (c) or Section 8.2, or (B) the beneficiary of any such Letter of Credit does not accept the proposed renewal of the Letter of Credit.

(c)Other Conditions. In addition to conditions precedent contained in Article 8, the obligation of any Letter of Credit Issuer to issue any Letter of Credit is subject to the following conditions precedent having been satisfied in a manner reasonably satisfactory to such Letter of Credit Issuer and the Agent:

(i)The applicable Borrower shall have delivered to the applicable Letter of Credit Issuer, at such times and in such manner as such Letter of Credit Issuer may prescribe, an application in form and substance reasonably satisfactory to such Letter of Credit Issuer and reasonably satisfactory to the Agent for the issuance of the Letter of Credit and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit shall be reasonably satisfactory to the Agent and such Letter of Credit Issuer; and

(ii)As of the date of issuance, no order of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed Letter

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of Credit Issuer refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit.

(d)Issuance of Letters of Credit.

(i)Request for Issuance. The Borrower for whose account the Letter of Credit is to be issued must notify the Agent and the applicable Letter of Credit Issuer of a requested Letter of Credit on or prior to the proposed issuance date. Such notice shall be irrevocable and must specify the original face amount of the Letter of Credit requested, whether such Letter of Credit is to be denominated in Dollars or Canadian Dollars, the Business Day of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the Business Day on which the requested Letter of Credit is to expire, the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. 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 shall be delivered to the applicable Letter of Credit Issuer on the date of such request. Such notice shall comply with any additional requirements as are set forth in the relevant Issuing Bank Agreement or as the relevant Letter of Credit Issuer may require. Such Borrower shall attach to such notice the proposed form of the Letter of Credit.

(ii)Responsibilities of the Borrowers; Issuance. As of the requested issuance date of the Letter of Credit, the requesting Borrower shall determine the amount of the Unused Letter of Credit Subfacility and Availability and that all conditions to the obligation of any Letter of Credit Issuer to issue a Letter of Credit under Sections 1.3(b) and (c) and Section 8.2 have been satisfied. If (i) the face amount of the requested Letter of Credit is less than the Unused Letter of Credit Subfacility and (ii) the amount of such requested Letter of Credit and all commissions, fees, and charges due from the requesting Borrower in connection with the opening thereof would not exceed Availability, such Borrower may apply to an applicable Letter of Credit Issuer to issue the requested Letter of Credit on the requested issuance date so long as the other conditions hereof and under the applicable Issuing Bank Agreement are met.

(e)Payments Pursuant to Letters of Credit. Not later than 3:00 p.m. on the Business Day of any payment made by a Letter of Credit Issuer in respect of a drawing under a Letter of Credit, the U.S. Borrowers or the Canadian Borrower, as applicable, shall reimburse the applicable Letter of Credit Issuer for such draw under any Letter of Credit issued for the account of such Borrower and pay the applicable Letter of Credit Issuer the amount of all other charges and fees payable to such Letter of Credit Issuer in connection with such Letter of Credit immediately when due, irrespective of any claim, setoff, defense or other right which such Borrower may have at any time against such Letter of Credit Issuer or any other Person; provided, that such payment obligation may be discharged and replaced by a Revolving Loan incurred in accordance with the following sentence. Upon notice by a Borrower, or otherwise if not reimbursed by the U.S. Borrowers or the Canadian Borrower, as applicable, in accordance with the foregoing sentence, the drawing under such Letter of Credit shall give rise to a Borrowing of a Base Rate Loan or Canadian Prime Rate Loan, as applicable, in the amount or Canadian Dollar Equivalent amount, as applicable, of such drawing; provided that if the conditions precedent set forth in Section 8.2 cannot be satisfied as of such date, the U.S.

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Borrowers or the Canadian Borrower, as applicable, shall be deemed to have incurred from the applicable Letter of Credit Issuer an L/C Borrowing in the unreimbursed amount of each unreimbursed payment under such Letter of Credit, which L/C Borrowing shall be due and payable on demand (together with interest). In any such event described in the proviso to the preceding sentence, each Lender’s payment to the Agent for the account of the applicable Letter of Credit Issuer pursuant to this Section 1.3(e) shall be deemed to be a payment in respect of its participation in such L/C Borrowing and shall constitute an L/C Advance from such Lender in satisfaction of its participation obligations under this Section 1.3. The Funding Date with respect to such borrowing shall be the date of such drawing.

(f)Indemnification; Exoneration; Power of Attorney.

(i)Indemnification. In addition to amounts payable as elsewhere provided in this Section 1.3, each Borrower agrees to protect, indemnify, pay and save the Lenders and the Agent harmless from and against any and all claims, demands, liabilities, damages, losses, costs, charges and expenses (including reasonable attorneys’ fees) which any Lender or the Agent (other than the Agent or any Lender in its capacity as a Letter of Credit Issuer) may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit for the account of such Borrower, except to the extent it is determined in a final, non-appealable judgment of a court of competent jurisdiction that such amounts arose as a direct result of the gross negligence or willful misconduct of the Agent or such Lender. The Borrowers’ obligations under this Section shall survive payment of all other Obligations (other than Bank Product Obligations).

(ii)Assumption of Risk by the Borrowers. As among the Borrowers, the Lenders, and the Agent, each Borrower assumes all risks of the acts and omissions of, or misuse of any of the Letters of Credit by, the respective beneficiaries of such Letters of Credit; provided the Canadian Borrower only assumes such risk with respect to beneficiaries of Canadian Letters of Credit. In furtherance and not in limitation of the foregoing, the Lenders (other than the Agent or any Lender in its capacity as a Letter of Credit Issuer) and the Agent shall not be responsible for: (A) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any of the Letters of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (B) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any 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; (C) the failure of the beneficiary of any Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions, or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) 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; (G) the misapplication by the beneficiary of any Letter of Credit of the proceeds of any drawing under such Letter of Credit; (H) any consequences arising from causes beyond the control of the Lenders or the Agent, including any act or omission, whether rightful or wrongful, of any present or future dejure or defacto Governmental Authority or (I) a Letter of Credit Issuer’s honor of a draw for which the draw or any certificate fails to comply in any

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respect with the terms of the Letter of Credit. None of the foregoing shall affect, impair or prevent the vesting of any rights or powers of the Agent or any Lender under this Section 1.3(f).

(iii)Exoneration. Without limiting the foregoing, no action or omission whatsoever by the Agent or any Lender (excluding the Agent or any Lender in its capacity as a Letter of Credit Issuer) shall result in any liability of the Agent or any such Lender to any Borrower as of the result of or in connection with the issuance of any Letter of Credit, or relieve any Borrower of any of its obligations hereunder to any such Person under any Letter of Credit; provided, however, that anything in this Agreement to the contrary notwithstanding, the Borrowers may have a claim against the Agent or any Lender in its capacity as a Letter of Credit Issuer to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by a Borrower which were caused by the such Letter of Credit issuer’s willful misconduct or gross negligence or such Letter of Credit Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit. In furtherance and not in limitation of the foregoing, any Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and no Letter of Credit Issuer shall be responsible 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.

(iv)Rights Against Letter of Credit Issuers. Nothing contained in this Agreement is intended to limit or increase any Borrower’s rights, if any, with respect to a Letter of Credit Issuer which arise as a result of the Issuing Bank Agreement, the letter of credit application and related documents executed by and between such Borrower and a Letter of Credit Issuer.

(v)Account Party. Each Borrower hereby authorizes and directs any Letter of Credit Issuer to name such Borrower as the “account party” in a Letter of Credit requested by such Borrower and to deliver to the Agent all instruments, documents and other writings and property received by such Letter of Credit Issuer pursuant to the Letter of Credit, and to accept and rely upon the Agent’s instructions and agreements with respect to compliance with all matters relating to this Agreement arising in connection with the Letter of Credit or the application therefor.

(g)Support of Letters of Credit. If, notwithstanding the provisions of Section 1.3(b) and Section 10.1, any Letter of Credit is outstanding 30 days prior to the termination of this Agreement, or upon such termination of this Agreement, then each applicable Borrower shall cause such Letter of Credit to be Fully Supported.

(h)Letter of Credit Reporting. Each Letter of Credit Issuer shall notify the Agent and the Agent shall notify the Lenders on the first Business Day of each week of the Dollar Equivalent of the total face amount of all of the Letters of Credit issued by it during the preceding week; provided however, the failure of any Letter of Credit Issuer or the Agent to deliver such notice shall not affect the obligations of the Lenders under Section 12.16.

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1.4Bank Products. Each U.S. Borrower and the Canadian Borrower may request and the Bank and each other Lender (or their respective Affiliates or branches) may, in its sole and absolute discretion, arrange for such Borrower to obtain from the Bank or such Lender (or their respective Affiliates or branches) Bank Products, although a Borrower is not required to do so. If Bank Products are provided by an Affiliate or branch of the Bank or a Lender to a Borrower, the U.S. Borrowers, jointly and severally, agree, and in respect of Canadian Bank Products only, the Canadian Borrower, severally, agrees, to indemnify and hold harmless the Agent, the Bank and the other Lenders from any and all costs and obligations now or hereafter incurred by the Agent, the Bank or any of the Lenders which arise from any indemnity (which shall not extend to gross negligence or willful misconduct of such Affiliates or branches) given by the Bank or such Lender to their respective Affiliates or branches related to such Bank Products; provided, however, nothing contained in this Section 1.4 is intended to limit any Borrower’s rights with respect to any Lender, the Bank or their respective Affiliates or branches, if any, which arise as a result of the execution of documents by and between such Borrower and a Lender or the Bank or their respective Affiliates or branches which relate to Bank Products and to the extent the terms of indemnity of such documents are different from the terms of indemnity set forth above, the terms of such documents shall control; and providedfurther, that nothing contained in this Section 1.4 is intended to obligate any Lender, the Bank or their respective Affiliates or branches or any Borrower to provide any indemnity in connection with any Bank Products other than the indemnity of the Borrowers specifically provided for above. The agreement contained in this Section shall survive termination of this Agreement. Each Borrower acknowledges and agrees that the obtaining of Bank Products from a Lender, the Bank or their respective Affiliates or branches (a) is in the sole and absolute discretion of such Lender, the Bank or their respective Affiliates or branches, and (b) is subject to all rules and regulations of such Lender, the Bank or their respective Affiliates or branches.

1.5Increase in U.S. Commitments

(a)Provided no Default or Event of Default exists, upon written notice to the Agent (which shall promptly notify the Lenders), the U.S. Borrowers may from time to time, request an increase in the Facility and the aggregate U.S. Commitments hereunder by an amount (for all such requests that are satisfied) not exceeding $150,000,000. Such notice shall specify the time period within which each U.S. Lender is requested to respond (which shall in no event be less than ten (10) Business Days from the date of delivery of such notice to the Lenders). Each U.S. Lender shall notify the Agent within such time period whether or not it agrees to increase its U.S. Commitment and, if so, whether by an amount equal to, greater than, or less than its Pro Rata Share of such requested increase. Any U.S. Lender not responding within such time period shall be deemed to have declined to increase its U.S. Commitment. No U.S. Lender declining to increase its U.S. Commitment in connection with such a request shall be entitled to fees, if any, paid in connection with such U.S. Commitment increase. The Agent shall notify the U.S. Borrowers and each Lender of the U.S. Lenders’ responses to each request made hereunder. To achieve the full amount of a requested increase, the U.S. Borrowers may also invite additional Eligible Assignees to become Lenders pursuant to a joinder agreement in form and substance acceptable to the Agent and subject to a $5,000,000 minimum U.S. Commitment amount for each such Eligible Assignee. Any increase in the aggregate U.S. Commitments may require the agreement of the U.S. Borrowers to pay additional arrangement, upfront and/or Agent’s fees to the Agent or the U.S. Lenders, as applicable, and may require a

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proportionate increase in all Liquidity and Availability thresholds hereunder, including, without limitation, the Availability threshold for the Applicable Margin and the Liquidity thresholds for reporting requirements, covenant limitations and cash dominion triggers under the Collection Account Control Agreement.

(b)If the aggregate U.S. Commitments are increased in accordance with this Section, the Agent and the U.S. Borrowers shall determine the effective date (the “Increase Effective Date”) and the final allocation of such increase. The Agent shall promptly notify the U.S. Borrowers and the Lenders of the final allocation of such increase and the Increase Effective Date. As a condition precedent to such increase, the U.S. Borrowers shall deliver to the Agent a certificate of each Credit Party dated as of the Increase Effective Date (in sufficient copies for each U.S. Lender) signed by a Responsible Officer of such Credit Party (i) certifying and attaching the resolutions adopted by such Credit Party approving or consenting to such increase, and (ii) in the case of the U.S. Borrowers, certifying that, before and after giving effect to such increase, (A) the representations and warranties made to the Agent, the Letter of Credit Issuers or the Lenders by any Credit Party contained in Article 6 and the other Loan Documents are true and correct on and as of the Extension Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and except that for purposes of this Section 1.5, the representations and warranties contained in subsection (a) of Section 6.6 shall be deemed to refer to the most recent statements furnished pursuant to subsections (a) and (b), of Section 5.2, and (B) no Default or Event of Default exists. On the Increase Effective Date, Schedule 1.1 shall be deemed to be deleted in its entirety and replaced with a new Schedule 1.1 reflecting the increased Commitments. The respective U.S. Lenders shall fund and/or be pre-paid, as applicable, any Revolving Loans outstanding on the Increase Effective Date (and the U.S. Borrowers shall pay any additional amounts required pursuant to Section 4.4) to the extent necessary to keep the outstanding Revolving Loans ratable with any revised Pro Rata Shares arising from any non-ratable increase in the U.S. Commitments under this Section.

(c)This Section shall supersede any provisions in Sections 11.1 or Section 12.11(b) to the contrary.

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ARTICLE 2INTEREST AND FEES

2.1Interest.

(a)Interest Rates. Except as otherwise provided herein, all outstanding Obligations (other than Bank Product Obligations) shall bear interest on the unpaid principal amount thereof (including, to the extent permitted by law, on interest thereon not paid when due) from the date made (or due, in the case of Obligations other than Revolving Loans) until paid in full in cash at a rate determined by reference to the Base Rate, Canadian Prime Rate, LIBOR Rate or Canadian BA Rate plus the Applicable Margins as set forth below, but not to exceed the Maximum Rate. If at any time Revolving Loans are outstanding with respect to which the applicable Borrower has not delivered to the Agent a notice specifying the basis for determining the interest rate applicable thereto in accordance herewith, those Revolving Loans shall bear interest at a rate determined by reference to the Base Rate or the Canadian Prime Rate, as applicable, until notice to the contrary has been given to the Agent in accordance with this Agreement and such notice has become effective. Except as otherwise provided herein, the outstanding Obligations (other than Bank Product Obligations) shall bear interest as follows:

(i)For all Base Rate Loans and Canadian Prime Rate Loans, at a fluctuating per annum rate equal to the applicable Base Rate or Canadian Prime Rate, as applicable, plus the Applicable Margin; and

(ii)For all LIBOR Loans and Canadian BA Rate Loans at a per annum rate equal to the LIBOR Rate or Canadian BA Rate, as applicable, plus the Applicable Margin.

Each change in the Base Rate or Canadian Prime Rate shall be reflected in the interest rate applicable to Base Rate Loans or Canadian Prime Rate Loans as of the effective date of such change. All interest charges with respect to Base Rate Loans, Canadian Prime Rate Loans and Canadian BA Rate Loans shall be computed on the basis of a year of 365 or 366 days, as applicable, and actual days elapsed. All interest charges with respect to LIBOR Loans shall be computed on the basis of a year of 360 days and actual days elapsed.

For the purpose of complying with the Interest Act (Canada), it is expressly stated that where interest is calculated pursuant hereto at a rate based upon a 360-day period or any other period of time that is less than a calendar year (for the purposes of this Section, the “first rate”), the yearly rate or percentage of interest to which the first rate is equivalent is the first rate multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360, or such other number of days, as the case may be, and the parties hereto acknowledge that there is a material distinction between the nominal and effective rates of interest and that they are capable of making the calculations necessary to compare such rates and that the calculations herein are to be made using the nominal rate method and not on any basis that gives effect to the principle of deemed reinvestment of interest.

(b)Payment of Interest. The applicable Borrowers shall pay to the Agent, for the ratable benefit of the applicable Lenders, interest accrued on all Base Rate Loans

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and Canadian Prime Rate Loans in arrears on the first Business Day of each month hereafter and on the Termination Date. The applicable Borrowers shall pay to the Agent, for the ratable benefit of the applicable Lenders, interest on all LIBOR Loans and Canadian BA Rate Loans in arrears on each applicable Interest Payment Date. Interest on Revolving Loans shall be payable in the currency (i.e. Dollars or Canadian Dollars, as the case may be) of the underlying Revolving Loan.

(c)Default Rate. Notwithstanding the rates of interest specified in Section 2.1(a) and the payment dates specified in Section 2.1(b), effective at the direction of the Agent after the occurrence of any Event of Default or after acceleration of maturity pursuant to Section 9.2(a) and for so long thereafter as any such Event of Default or acceleration shall be continuing, the principal balance of all Obligations (other than Bank Product Obligations) then due and payable (including all amounts due and payable pursuant to Section 9.2(a)), shall bear interest payable upon demand at the applicable Default Rate.

2.2Continuation and Conversion Elections.

(a)Each applicable Borrower may, except to the extent an Event of Default has occurred and is continuing:

(i)elect, as of any Business Day, in the case of Base Rate Loans to convert any Base Rate Loans (or any part thereof in an amount not less than $1,000,000, or that is in an integral multiple of $1,000,000 in excess thereof) into LIBOR Loans;

(ii)elect, as of any Business Day, in the case of Canadian Prime Rate Loans to convert any Canadian Prime Rate Loans (or any part thereof in an amount not less than CDN$1,000,000, or that is in an integral multiple of CDN$1,000,000 in excess thereof) into Canadian BA Rate Loans; or

(iii)elect, as of the last day of the applicable Interest Period, to continue any LIBOR Loans or Canadian BA Rate Loans, as applicable, having Interest Periods expiring on such day (or any part thereof in an amount not less than $1,000,000 (or CDN$1,000,000 with respect to Canadian BA Rate Loans), or that is in an integral multiple of $1,000,000 (or CDN$1,000,000 with respect to Canadian BA Rate Loans) in excess thereof);

provided, that if at any time the aggregate amount of LIBOR Loans or Canadian BA Rate Loans in respect of any Borrowing is reduced, by payment, prepayment, or conversion of part thereof to be less than $1,000,000 (or CDN$1,000,000 with respect to Canadian BA Rate Loans), such LIBOR Loans or Canadian BA Rate Loans shall automatically convert into Base Rate Loans or Canadian Prime Rate Loans, respectively; providedfurther that if the notice shall fail to specify the duration of the Interest Period, such Interest Period shall be one month.

(b)The applicable Borrower shall deliver a notice of continuation/conversion (“Notice of Continuation/Conversion”) to the Agent not later than 12:00 noon (New York City time) at least three (3) Business Days in advance of the Continuation/Conversion Date, if the Revolving Loans are to be converted into or continued as LIBOR Loans or Canadian BA Rate Loans, as applicable, and specifying:

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(i)the proposed Continuation/Conversion Date;

(ii)the aggregate amount of Revolving Loans to be converted or renewed;

(iii)the type of Revolving Loans resulting from the proposed conversion or continuation; and

(iv)the duration of the requested Interest Period, provided, however, such Borrower may not select an Interest Period that ends after the Stated Termination Date.

(c)If upon the expiration of any Interest Period applicable to any LIBOR Loans or Canadian BA Rate Loans, as applicable, the applicable Borrower has failed to select timely a new Interest Period to be applicable to such LIBOR Loans or Canadian BA Rate Loans, as applicable, and no Event of Default has occurred and is continuing, such Borrower shall be deemed to have elected to convert such LIBOR Loans or Canadian BA Rate Loans into LIBOR Loans or Canadian BA Rate Loans, respectively, having a one-month Interest Period effective as of the expiration date of such Interest Period. At any time during the continuation of an Event of Default, each Borrower shall be deemed to have elected to convert all LIBOR Loans and Canadian BA Rate Loans into Base Rate Loans and Canadian Prime Rate Loans, respectively, effective as of the expiration date of their respective Interest Periods.

(d)The Agent will promptly notify each Lender of its receipt of a Notice of Continuation/Conversion. All conversions and continuations shall be made ratably according to the respective outstanding principal amounts of the Revolving Loans with respect to which the notice was given held by each Lender.

(e)There may not be more than five (5) different LIBOR Loans and not more than three (3) different Canadian BA Rate Loans in effect hereunder at any time.

(f)The conversion of any Borrowing pursuant to this Section 2.2 shall not be, and shall not be deemed to be, a discharge, rescission, extinguishment, novation or substitution of such Borrowing and, following such conversion, the Borrowing shall continue to be the same obligation and not a new obligation .

2.3Maximum Interest Rate. In no event shall any interest rate provided for hereunder exceed the maximum rate legally chargeable by any Lender under applicable Requirements of Law for such Lender with respect to loans of the type provided for hereunder (the “Maximum Rate”). If, in any month, any interest rate, absent such limitation, would have exceeded the Maximum Rate, then the interest rate for that month shall be the Maximum Rate, and, if in future months, that interest rate would otherwise be less than the Maximum Rate, then that interest rate shall remain at the Maximum Rate until such time as the amount of interest paid hereunder equals the amount of interest which would have been paid if the same had not been limited by the Maximum Rate. In the event that, upon payment in full of the Obligations (other than Bank Product Obligations), the total amount of interest paid or accrued under the terms of this Agreement is less than the total amount of interest which would, but for this Section 2.3,

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have been paid or accrued if the interest rate otherwise set forth in this Agreement had at all times been in effect, then such Borrower shall, to the extent permitted by applicable law, pay the Agent, for the account of the applicable Lenders, an amount equal to the excess of (a) the lesser of (i) the amount of interest which would have been charged if the Maximum Rate had, at all times, been in effect or (ii) the amount of interest which would have accrued had the interest rate otherwise set forth in this Agreement, at all times, been in effect over (b) the amount of interest actually paid or accrued under this Agreement. If a court of competent jurisdiction determines that the Agent and/or any Lender has received interest and other charges hereunder in excess of the Maximum Rate, such excess shall be deemed received on account of, and shall automatically be applied to reduce, the Obligations (other than Bank Product Obligations) other than interest, and if there are no Obligations (other than Bank Product Obligations) outstanding, the Agent and/or such Lender shall refund to such Borrower such excess. Without limiting the generality of the foregoing provisions of this Section 2.3, if any provision of any of the Loan Documents would obligate the Canadian Borrower to make any payment of interest with respect to the Canadian Obligations in an amount or calculated at a rate which would be prohibited by Requirement of Law or would result in the receipt of interest with respect to the Canadian Obligations at a criminal rate (as such terms are construed under the Criminal Code (Canada)), then notwithstanding such provision, such amount or rates shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by law or so result in a receipt by the applicable recipient of interest with respect to the Canadian Obligations at a criminal rate, such adjustment to be effected, to the extent necessary, as follows: (i) first, by reducing the amount or rates of interest required to be paid to the applicable recipient under the Loan Documents; and (ii) thereafter, by reducing any fees, commissions, premiums and other amounts required to be paid to the applicable recipient which would constitute interest with respect to the Canadian Obligations for purposes of Section 347 of the Criminal Code (Canada). Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if the applicable recipient shall have received an amount in excess of the maximum permitted by that section of the Criminal Code (Canada), then the Canadian Borrower shall be entitled, by notice in writing to the Agent, to obtain reimbursement from the applicable recipient in an amount equal to such excess, and pending such reimbursement, such amount shall be deemed to be an amount payable by the applicable recipient to the Canadian Borrower. Any amount or rate of interest with respect to the Canadian Obligations referred to in this Section 2.3 shall be determined in accordance with generally accepted actuarial practices and principles as an effective annual rate of interest over the term that any Canadian Loans or Canadian Letters of Credit to the Canadian Borrower remains outstanding on the assumption that any charges, fees or expenses that fall within the meaning of “interest” (as defined in the Criminal Code (Canada)) shall, if they relate to a specific period of time, be pro rated over that period of time and otherwise be pro rated over the period from the Effective Date to the date of payment in full of the Canadian Obligations, and, in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by the Agent shall be conclusive for the purposes of such determination.

2.4Fees. The U.S. Borrowers agree, jointly and severally, to pay the Agent the fees payable as set forth in the fee letter dated November 28, 2012, between the Agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated and ATI (the “Fee Letter”).

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2.5Unused Line Fee. On the first day of each month and on the Termination Date the U.S. Borrowers agree, jointly and severally, to pay to the Agent, for the account of the Lenders, in accordance with their respective Pro Rata Shares, an unused line fee (the “Unused Line Fee”) equal to (a) 0.25% times the amount by which the Total Facility Amount exceeded the sum of the average daily outstanding amount of Revolving Loans made to the Borrowers and the average daily undrawn face amount of outstanding Letters of Credit issued to the Borrowers if less than fifty percent (50%) of the Total Facility Amount has been used during the applicable month or (b) 0.20% times the amount by which the Total Facility Amount exceeded the sum of the average daily outstanding amount of Revolving Loans made to the Borrowers and the average daily undrawn face amount of outstanding Letters of Credit issued to the Borrowers if fifty percent (50%) or more of the Total Facility Amount has been used during the applicable month, and in each case, during the immediately preceding month or shorter period if calculated for the first month hereafter or on the Termination Date. The Unused Line Fee shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed. All principal payments received by the Agent shall be deemed to be credited to the applicable Borrower’s Loan Account immediately upon receipt for purposes of calculating the Unused Line Fee pursuant to this Section 2.5.

2.6Letter of Credit Fees.

(a)The U.S. Borrowers, jointly and severally, agree (i) to pay to the Agent, for the account of the U.S. Lenders, in accordance with their respective Pro Rata Shares, (A) for each Commercial Letter of Credit issued for the account of such U.S. Borrower, a fee (the “U.S. Commercial Letter of Credit Fee”) at a per annum rate equal to the Applicable Margin for the U.S. Commercial Letter of Credit Fee multiplied by the average daily undrawn amount available to be drawn on such Commercial Letter of Credit during the immediately preceding month and (B) for each Standby Letter of Credit issued for the account of such U.S. Borrower, a fee (the “U.S. Standby Letter of Credit Fee”) at a per annum rate equal to the Applicable Margin for LIBOR Loans multiplied by the average daily undrawn amount available to be drawn on such Standby Letter of Credit during the immediately preceding month, (ii) to pay to the applicable Letter of Credit Issuer a fronting fee (the “U.S. Fronting Fee”) of one-eighth of one percent (.125%) of the undrawn face amount of each Letter of Credit issued for the account of such U.S. Borrower, and (iii) to pay to the applicable Letter of Credit Issuer, such out-of-pocket costs, fees and expenses incurred by each Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit issued for the account of such U.S. Borrower, as the applicable Letter of Credit Issuer and such U.S. Borrower shall agree upon, but which costs, fees and expenses shall not include the U.S. Fronting Fee. The U.S. Commercial Letter of Credit Fee and the U.S. Standby Letter of Credit Fee shall be payable monthly in arrears on the first day of each month following any month in which such a Letter of Credit is outstanding and on the Termination Date. The U.S. Fronting Fee shall be payable on each date of issuance or renewal (automatic or otherwise) of each Letter of Credit. All fees described in this Section 2.6 shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed.

(b)The Canadian Borrower agrees (i) to pay to the Agent, for the account of the Canadian Lenders, in accordance with their respective Pro Rata Shares, (A) for each Commercial Letter of Credit issued for the account of the Canadian Borrower, a fee (the ___

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“Canadian Commercial Letter of Credit Fee”) at a per annum rate equal to the Applicable Margin for the Canadian Commercial Letter of Credit Fee multiplied by the average daily undrawn amount available to be drawn on such Commercial Letter of Credit during the immediately preceding month and (B) for each Standby Letter of Credit issued for the account of the Canadian Borrower, a fee (the “Canadian Standby Letter of Credit Fee”) at a per annum rate equal to the Applicable Margin for Canadian BA Rate Loans multiplied by the average daily undrawn amount available to be drawn on such Standby Letter of Credit during the immediately preceding month, (ii) to pay to the applicable Letter of Credit Issuer a fronting fee (the “Canadian Fronting Fee”) of one-eighth of one percent (.125%) of the undrawn face amount of each Letter of Credit issued for the account of the Canadian Borrower, and (iii) to pay to the applicable Letter of Credit Issuer, such out-of-pocket costs, fees and expenses incurred by each Letter of Credit Issuer in connection with the application for, processing of, issuance of, or amendment to any Letter of Credit issued for the account of the Canadian Borrower, as the applicable Letter of Credit Issuer and the Canadian Borrower shall agree upon, but which costs, fees and expenses shall not include the Canadian Fronting Fee. The Canadian Commercial Letter of Credit Fee and the Canadian Standby Letter of Credit Fee shall be payable monthly in arrears on the first day of each month following any month in which such a Letter of Credit is outstanding and on the Termination Date. The Canadian Fronting Fee shall be payable on each date of issuance or renewal (automatic or otherwise) of each Letter of Credit. All fees described in this Section 2.6 shall be computed on the basis of a year of 365 or 366 days, as applicable, for the actual number of days elapsed.

(c)Notwithstanding the calculation of the Letter of Credit Fees specified in Section 2.6, effective at the direction of the Agent after the occurrence of any Event of Default or after acceleration of maturity pursuant to Section 9.2(a) and for so long thereafter as any such Event of Default or acceleration shall be continuing, such Letter of Credit Fees shall be determined at the applicable Default Rate.

ARTICLE 3PAYMENTS AND PREPAYMENTS

3.1Revolving Loans. The Borrowers shall repay the outstanding principal balance of the Revolving Loans made to them, plus all accrued but unpaid interest thereon, on the Termination Date. Any Borrower may prepay Revolving Loans at any time, and reborrow subject to the terms of this Agreement. In addition, and without limiting the generality of the foregoing, upon demand by the Agent (a) the U.S. Borrowers shall repay the principal amount of Revolving Loans to the Agent, for account of the U.S. Lenders, in the amount, without duplication, by which the Aggregate Outstandings exceeds the lesser of the Borrowing Base or the Total Facility Amount and (b) the Canadian Borrower shall repay the principal amount of Canadian Loans to the Agent, for the account of the Canadian Lenders, in the amount, without duplication, by which the outstanding principal amount of Canadian Loans and outstanding Canadian Letters of Credit exceeds the Canadian Subfacility Amount.

3.2Termination of Facility. The Borrowers may terminate this Agreement upon at least five (5) Business Days’ notice to the Agent and the Lenders, upon (a) the payment in full of all outstanding Revolving Loans, together with accrued interest thereon, and the cancellation and return of all outstanding Letters of Credit or such Letters of Credit being Fully

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Supported, (b) the payment in full in cash of all reimbursable expenses and other Obligations, and (c) with respect to any LIBOR Loans or Canadian BA Rate Loans prepaid, payment of the amounts due under Section 4.4, if any, in each case on or prior to the Termination Date.

3.3Payments by the Borrowers.

(a)All payments to be made by the Borrowers shall be made without set-off, recoupment or counterclaim. Except as otherwise expressly provided herein, all payments by the Borrowers shall be made to the Agent for the account of the applicable Lenders, at the account designated by the Agent and shall be made in Dollars (with respect to the U.S. Obligations) and Canadian Dollars (with respect to the Canadian Obligations) and in immediately available funds, no later than 12:00 noon (New York City time) on the date specified herein. Any payment received by the Agent after such time shall be deemed (for purposes of calculating interest only) to have been received on the following Business Day and any applicable interest shall continue to accrue.

(b)Subject to the provisions set forth in the definition of “Interest Period”, whenever any payment is due on a day other than a Business Day, such payment shall be due on the following Business Day, and such extension of time shall in such case be included in the computation of interest or fees, as the case may be.

(c)If any LIBOR Loans or Canadian BA Rate Loans are repaid prior to the expiration date of the Interest Period applicable thereto, the applicable Borrowers shall pay to the applicable Lenders the amounts described in Section 4.4.

3.4Payments as Revolving Loans. At the election of the Agent, all payments of principal, interest, reimbursement obligations in connection with Letters of Credit, fees, premiums, reimbursable expenses and other sums payable hereunder that are due but have not been paid by the Borrowers at the date and time specified herein, may be paid from the proceeds of Revolving Loans made hereunder. Each Borrower hereby irrevocably authorizes the Agent to charge the Loan Account of such Borrower for the purpose of paying all amounts from time to time due hereunder in respect of principal, interest or fees (or, during the continuance of an Event of Default, all other Obligations (other than Bank Product Obligations)) and agrees that all such amounts charged shall constitute Revolving Loans.

3.5Apportionment, Application and Reversal of Payments.

(a)Principal and interest payments shall be apportioned ratably among the applicable Lenders (according to the unpaid principal balance of the Credit Extensions to which such payments relate held by each Lender) and payments of the fees shall, as applicable, be apportioned ratably among the Lenders, except for fees payable solely to the Agent and the applicable Letter of Credit Issuers and except as provided in Section 11.1(b).

(b)After the occurrence of an Event of Default and the exercise of any of the remedies provided for in Section 9.2(a)(v), (vi), (vii) or (viii) or 9.2(b) (or after the Revolving Loans have automatically become immediately due and payable and the Letter of Credit Obligations have been required to be Fully Supported), any amounts received on account

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of the Obligations shall be applied by the Agent in the following order: first, to pay any fees, indemnities or expense reimbursements then due to the Agent; second, to pay interest and principal due to the Bank in respect of all Non-Ratable Loans; third, to pay all fees, expenses and indemnities due to the Letter of Credit Issuers; fourth, to pay any Obligations constituting fees due to the Lenders (other than fees relating to Bank Products) ratably; fifth, to pay interest due to the Lenders in respect of all Revolving Loans (other than Non-Ratable Loans) ratably; sixth, to pay or prepay principal of all Revolving Loans (other than Non-Ratable Loans) to the Lenders ratably and unpaid reimbursement obligations in respect of Letters of Credit; seventh, to pay an amount to the Agent equal to all Letter of Credit Outstandings to be held as cash collateral for such Obligations; and eighth, to the payment of any other Obligation due to the Agent, any Letter of Credit Issuer, any Lender or any Affiliate or branch of the Bank (including any Obligations arising under Bank Products).

(c)Amounts distributed with respect to any Bank Product Obligations shall be the lesser of the applicable Bank Product Amount last reported to the Agent or the actual Bank Product Amount as calculated by the methodology reported to the Agent for determining the amount due. The Agent shall have no obligation to calculate the amount to be distributed with respect to any Bank Products, but may rely upon written notice of the amount (setting forth a reasonably detailed calculation) from the applicable Lender. In the absence of such notice, the Agent may assume the amount to be distributed is the Bank Product Amount last reported to it.

(d)Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Borrowers, or unless an Event of Default has occurred and is continuing, neither the Agent nor any Lender shall apply any payments which it receives to any LIBOR Loan or Canadian BA Rate Loan, as applicable, except (a) on the expiration date of the Interest Period applicable to any such LIBOR Loan or Canadian BA Rate Loan, as applicable, or (b) in the event, and only to the extent, that there are no outstanding Base Rate Loans or Canadian Prime Rate Loans, as applicable.

The Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations in accordance with Section 3.5(b).The allocations set forth in Section 3.5(b) are solely to determine the rights and priorities of the Agent and the applicable Lenders as among themselves, and may be changed by agreement among them without the consent of any Credit Party; providedthat all such amounts received by the Agent shall be (i) credited upon receipt to the Loan Account and applied towards payment of Obligations hereunder and (ii) shall not be applied to the payment of Bank Product Obligations prior to the payment in full of all other amounts specified in clauses first through sixth of Section 3.5(b).

3.6Indemnity for Returned Payments. If after receipt of any payment which is applied to the payment of all or any part of the Obligations, the Agent, any Lender, any Letter of Credit Issuer, the Bank or any Affiliate or branch of the Bank (each an “Affected Payee”) is for any reason compelled to surrender such payment or proceeds to any Person because such payment or application of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a preference, transaction at undervalue, impermissible setoff, or a diversion of trust funds, or for any other reason, then the Obligations or part thereof intended to be satisfied shall be revived and continued and this Agreement shall continue in full force as if __

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such payment or proceeds had not been received by the Affected Payee and the applicable Borrower or Borrowers shall be liable to pay to the Affected Payee, and hereby does indemnify the Affected Payee and holds harmless the Affected Payee, for the amount of such payment or proceeds surrendered. The provisions of this Section 3.9 shall be and remain effective notwithstanding any contrary action which may have been taken by the Affected Payee in reliance upon such payment or application of proceeds, and any such contrary action so taken shall be without prejudice to the Affected Payee’s rights under this Agreement and shall be deemed to have been conditioned upon such payment or application of proceeds having become final and irrevocable. The provisions of this Section 3.9 shall survive the termination of this Agreement.

3.7Agent’s and Lenders’ Books and Records; Monthly Statements. The Agent shall record the principal amount of the Revolving Loans owing to each Lender, the undrawn face amount of all outstanding Letters of Credit and the aggregate amount of unpaid reimbursement obligations outstanding with respect to the Letters of Credit from time to time on its books. In addition, each Lender may note the date and amount of each payment or prepayment of principal of such Lender’s Loans in its books and records. Failure by the Agent or any Lender to make such notation shall not affect the obligations of the Borrowers with respect to the Revolving Loans or the Letters of Credit. Each Borrower agrees that the Agent’s and each Lender’s books and records showing the Obligations and the transactions pursuant to this Agreement and the other Loan Documents shall be admissible in any action or proceeding arising therefrom, and shall constitute rebuttably presumptive proof thereof (absent manifest error), irrespective of whether any Obligation is also evidenced by a promissory note or other instrument. The Agent will provide to ATI, on behalf of the Borrowers, a monthly statement of Credit Extensions, payments, and other transactions pursuant to this Agreement. Such statement shall be deemed presumptively correct, accurate, and binding on the Borrowers and an account stated (except for reversals and reapplications of payments made as provided in Section 3.5 and corrections of errors discovered by the Agent), unless the Borrowers (or ATI on their behalf) notify the Agent in writing to the contrary within thirty (30) days after such statement is rendered. In the event a timely written notice of objections is given by a Borrower (or ATI on behalf of such Borrower), only the items to which exception is expressly made will be considered to be disputed by such Borrower.

3.8Currency Matters. Dollars are the currency of account and payment for each and every sum at any time due from U.S. Borrowers hereunder and Canadian Dollars are the currency of account and payment for each and every sum at any time due from the Canadian Borrower hereunder, unless otherwise specifically provided in this Agreement, any other Loan Document or otherwise agreed to by the Agent. Notwithstanding the foregoing:

(a)Each repayment of a Revolving Loan or Letter of Credit or a part thereof shall be made in the currency in which such Revolving Loan or Letter of Credit is denominated at the time of that repayment;

(b)Each payment of interest shall be made in the currency in which the principal or other sum in respect of which such interest is denominated;

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(c)Each payment of fees by a U.S. Borrower pursuant to Section 2.4shall be in Dollars;

(d)Each payment in respect of any costs, expenses and indemnities shall be made in the currency in which the same were incurred by the party to whom payment is to be made; and

(e)Any amount expressed to be payable in Canadian Dollars shall be paid in Canadian Dollars.

No payment to any Lender (whether under any judgment or court order or otherwise) shall discharge the obligation or liability of the Credit Party in respect of which it was made unless and until such Lender shall have received payment in full in the currency in which such obligation or liability is payable pursuant to the above provisions of this Section 3.8.

3.9Currency Fluctuations. On any Business Day determined by the Agent (the “Calculation Date”), the Agent shall determine the Exchange Rate as of such date. The Exchange Rate so determined shall become effective on the first Business Day immediately following such determination (a “Reset Date”) and shall remain effective until the next succeeding Reset Date. On each Reset Date, the Agent shall determine the Dollar Equivalent of the amount of outstanding Canadian Loans made to, and Canadian Letters of Credit issued to, the Canadian Borrower (the “Canadian Revolver Exposure”). If, on any Reset Date, the Aggregate Outstandings exceeds the total amount of the Commitments on such date or the Dollar Equivalent of Canadian Revolver Exposure on such date exceeds the Canadian Commitments on such date (the amount of any such excess referred to herein as the “Excess Amount”) then (i) the Agent shall give notice thereof to the Canadian Borrower and the Canadian Lenders and (ii) within one  Business Day thereafter (if such notice is given prior to 11:00 a.m., and if later, two Business Days thereafter), the Canadian Borrower shall cause such excess to be eliminated, either by repayment of Revolving Loans or depositing of cash collateral with the Agent with respect to Canadian Letters of Credit and until such Excess Amount is repaid, Canadian Lenders shall not have any obligation to make any Revolving Loans to the Canadian Borrower.

ARTICLE 4TAXES, YIELD PROTECTION AND ILLEGALITY

4.1Taxes.

(a)Payments Free of Taxes. Any and all payments made to the Agent, the Letter of Credit Issuers or any Lender by or on account of any obligation of the Borrowers hereunder or under any other Loan Document shall be made free and clear of and without deduction or withholding for any Taxes, except as required by applicable Requirements of Law, provided that if any Borrower shall be required by applicable Requirements of Law to deduct any Indemnified Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Agent, a Lender or a Letter of Credit Issuer, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower

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shall timely pay or remit the full amount deducted to the relevant Governmental Authority in accordance with applicable Requirements of Law.

(b)Payment of Other Taxes by the Borrowers. Without limiting the provisions of subsection (a) above, the Borrowers shall timely pay or remit any Other Taxes to the relevant Governmental Authority in accordance with applicable Requirements of Law.

(c)Indemnification by the Borrowers. The U.S. Borrowers shall indemnify the Agent, each U.S. Lender and each Letter of Credit Issuer that issues Letters of Credit to U.S. Borrowers and the Canadian Borrower shall (provided with respect to the Canadian Borrower, solely to the extent of the Canadian Borrower’s obligations) indemnify the Agent, each Canadian Lender and each Letter of Credit Issuer that issues Canadian Letters of Credit, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this Section) paid or remitted by the Agent, such Lender or such Letter of Credit Issuer, as the case may be, and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment, remittance or liability and in reasonable detail the basis and calculation of such amounts, delivered to any Borrower by a Lender or a Letter of Credit Issuer (with a copy to the Agent), or by the Agent on its own behalf or on behalf of a Lender or a Letter of Credit Issuer, shall be conclusive absent manifest error.

(d)Evidence of Payments. As soon as practicable after any payment or remittance of Taxes by the Borrowers to a Governmental Authority, the Borrowers shall deliver to the Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment or remittance, a copy of the return reporting such payment or remittance or other evidence of such payment or remittance reasonably satisfactory to the Agent.

(e)Status of Lenders and Letter of Credit Issuers. Any Lender or Letter of Credit Issuer that is entitled to an exemption from or reduction of withholding tax under the Requirements of Law of the jurisdiction in which any Borrower is resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the applicable Borrower (with a copy to the Agent), at the time or times prescribed by applicable Requirements of Law or reasonably requested by such Borrower or the Agent, such properly completed and executed documentation prescribed by applicable Requirements of Law as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender or Letter of Credit Issuer, if requested by such Borrower or the Agent, shall deliver such other documentation prescribed by applicable Requirements of Law or reasonably requested by such Borrower or the Agent as will enable such Borrower or the Agent to determine whether or not such Lender or Letter of Credit Issuer is subject to backup withholding or information reporting requirements.

Without limiting the generality of the foregoing, any Foreign Lender or Foreign Letter of Credit Issuer shall deliver to the applicable Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which, in the case of a Foreign Lender, such Foreign Lender becomes a Lender under this Agreement, or, in the case of a _______

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Foreign Letter of Credit Issuer, such Foreign Letter of Credit Issuer becomes a Letter of Credit Issuer under this Agreement, (and from time to time thereafter upon the request of such Borrower or the Agent, but only if such Foreign Lender or Foreign Letter of Credit Issuer is legally entitled to do so), whichever of the following is applicable:

(i)duly completed and executed copies of Internal Revenue Service Form W-8BEN, or any successor form, and any required attachments thereto, claiming eligibility for benefits of an income tax treaty to which the United States is a party,

(ii)duly completed and executed copies of Internal Revenue Service Form W-8ECI, or any successor form, and any required attachments thereto,

(iii)in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the applicable Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed and executed copies of Internal Revenue Service Form W-8BEN, or any successor form, and any required attachments thereto, or

(iv)any other documentation prescribed by the U.S. law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed and executed together with such supplementary documentation as may be prescribed by the U.S. law to permit the applicable Borrower to determine the withholding or deduction required to be made.

Without limiting the generality of this Section 4.1(e), any Lender that is not a Foreign Lender or any Letter of Credit Issuer that is not a Foreign Letter of Credit Issuer shall complete and deliver to the applicable Borrower and the Agent (in such number of copies as shall be requested by the recipient) a statement signed by an authorized signatory of the Lender or the Letter of Credit Issuer to the effect that it is a United States person, for U.S. federal income tax purposes, together with duly completed and executed copies of Internal Revenue Service Form W-9, or successor form, and any required attachments thereto, establishing that the Lender or the Letter of Credit Issuer is not subject to U.S. backup withholding tax.

If a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the applicable Borrower and the Agent at the time or times prescribed by law and at such time or times reasonably requested by the applicable Borrower or the Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Agent as may be necessary for the applicable Borrower and the Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender’s obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this

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paragraph, “FATCA” shall include any amendments made to FATCA after the date of this Agreement.

Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the applicable Borrower and the Agent in writing of its legal inability to do so.

(f)Mitigation. Each Lender and Letter of Credit Issuer shall use reasonable efforts (in the case of a Lender, including reasonable efforts to change its applicable Lending Office) to avoid the imposition of any Indemnified Taxes; provided, however, that such efforts would not subject such Lender or Letter of Credit Issuer to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender or Letter of Credit Issuer. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender or Letter of Credit Issuer in connection with such mitigation efforts.

(g)Treatment of Certain Refunds. If the Agent, any Lender or any Letter of Credit Issuer determines, in its sole discretion, that it is entitled to receive a refund of any Taxes as to which it has been indemnified by the Borrowers or with respect to which any Borrower has paid additional amounts pursuant to this Section 4.1, it shall use reasonable best efforts to obtain such refund and upon receipt of any such refund shall promptly pay to the Borrowers an amount equal to such refund (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrowers under this Section 4.1 with respect to the Taxes giving rise to such refund, plus any interest included in such refund by the relevant Governmental Authority attributable thereto), net of all reasonable out-of-pocket expenses of the Agent, such Lender or such Letter of Credit Issuer, as the case may be, and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund), provided that the Borrowers, upon the request of the Agent, such Lender or such Letter of Credit Issuer, agree to repay the amount paid over to the Borrowers (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Agent, such Lender or such Letter of Credit Issuer in the event the Agent, such Lender or such Letter of Credit Issuer is required to repay such refund to such Governmental Authority. This subsection shall not be construed to require the Agent, any Lender or such Letter of Credit Issuer to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrowers or any other Person.

4.2Illegality. If any Lender determines that any Requirement of Law has made it unlawful, or that any Governmental Authority has asserted that it is unlawful, for any Lender or its applicable Lending Office to make, maintain or fund LIBOR Loans or Canadian BA Rate Loans, as applicable, or to determine or charge interest rates based upon the Eurodollar Rate or Canadian BA Rate, as applicable, or any Governmental Authority has imposed material restrictions on the authority of such Lender to purchase or sell, or to take deposits of, Dollars in the London interbank market or Canadian Dollars through bankers’ acceptances, then, on notice thereof by such Lender to the Borrowers through the Agent, any obligation of such Lender to make or continue LIBOR Loans or Canadian BA Rate Loans, respectively, or to convert Base Rate Loans or Canadian Prime Rate Loans to LIBOR Loans or Canadian BA Rate Loans, respectively, shall be suspended until such Lender notifies the Agent and the Borrowers that the circumstances giving rise to such determination no longer exist. Upon receipt of such notice, the

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applicable Borrowers shall, upon demand from such Lender (with a copy to the Agent), prepay or, if applicable, convert all LIBOR Loans or Canadian BA Rate Loans of such Lender to Base Rate Loans or Canadian Prime Rate Loans, respectively, either on the last day of the Interest Period therefor, if such Lender may lawfully continue to maintain such LIBOR Loans or Canadian BA Rate Loans to such day, or immediately, if such Lender may not lawfully continue to maintain such LIBOR Loans or Canadian BA Rate Loans. Upon any such prepayment or conversion, the applicable Borrowers shall also pay accrued interest on the amount so prepaid or converted.

4.3Inability to Determine Rates. If the Required Lenders determine that for any reason in connection with any request for a LIBOR Loan or a Canadian BA Rate Loan or a conversion to or continuation thereof that (a) Dollar deposits are not being offered to banks in the London interbank eurodollar market for the applicable amount and Interest Period of such LIBOR Loan, (b) Canadian Dollar deposits are not being offered through bankers’ acceptances for the applicable amount and Interest Period of such Canadian BA Rate Loan, (c) adequate and reasonable means do not exist for determining the Offshore Base Rate for any requested Interest Period with respect to a proposed LIBOR Loan or for determining the Canadian BA Rate for a proposed Canadian BA Rate Loan, or (c) that the Offshore Base Rate for any requested Interest Period with respect to a proposed LIBOR Loan or the Canadian BA Rate for a proposed Canadian BA Rate Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the Agent will promptly so notify the Borrowers and each Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR Loans or Canadian BA Rate Loans shall be suspended until the Agent (upon the instruction of the Required Lenders) revokes such notice. Upon receipt of such notice, the Borrowers may revoke any pending request for a Borrowing of, conversion to or continuation of LIBOR Loans and Canadian BA Rate Loans or, failing that, will be deemed to have converted such request into a request for a Borrowing of Base Rate Loans or Canadian Prime Rate Loans in the amount specified therein.

4.4Increased Costs.

(a)Increased Costs Generally. If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve or similar requirement reflected in the LIBOR Rate or Canadian BA Rate) or any Letter of Credit Issuer;

(ii)subject any Lender or any Letter of Credit Issuer to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any LIBOR Loan or Canadian BA Rate Loan made by it, or change the basis of taxation of payments to such Lender or such Letter of Credit Issuer in respect thereof (except for Indemnified Taxes covered by Section 4.1 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or such Letter of Credit Issuer); or

(iii)impose on any Lender or any Letter of Credit Issuer or the London interbank market or the Canadian bankers’ acceptances market any other condition, cost

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or expense affecting this Agreement or LIBOR Loans or Canadian BA Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any LIBOR Loan or Canadian BA Rate Loan (or of maintaining its obligation to make any such Revolving Loan), or to increase the cost to such Lender or such Letter of Credit Issuer of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender or such Letter of Credit Issuer hereunder (whether of principal, interest or any other amount) then, upon request of such Lender or such Letter of Credit Issuer, the applicable Borrowers will pay to such Lender or such Letter of Credit Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such Letter of Credit Issuer, as the case may be, for such additional costs incurred or reduction suffered.

(b)Capital Requirements. If any Lender or any Letter of Credit Issuer determines that any Change in Law affecting such Lender or such Letter of Credit Issuer or any Lending Office of such Lender or such Lender’s or such Letter of Credit Issuer’s holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or such Letter of Credit Issuer’s capital or on the capital of such Lender’s or such Letter of Credit Issuer’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Revolving Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by such Letter of Credit Issuer, to a level below that which such Lender or such Letter of Credit Issuer or such Lender’s or such Letter of Credit Issuer’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or such Letter of Credit Issuer’s policies and the policies of such Lender’s or such Letter of Credit Issuer’s holding company with respect to capital adequacy and liquidity), then from time to time the applicable Borrowers will pay to such Lender or such Letter of Credit Issuer, as the case may be, such additional amount or amounts as will compensate such Lender or such Letter of Credit Issuer or such Lender’s or such Letter of Credit Issuer’s holding company for any such reduction suffered.

(c)Certificates for Reimbursement. A certificate of a Lender or any Letter of Credit Issuer setting forth the amount or amounts necessary to compensate such Lender or such Letter of Credit Issuer or its holding company, as the case may be, as specified in subsection (a) or (b) of this Section and delivered to the Borrowers shall be conclusive absent manifest error. The applicable Borrowers shall pay such Lender or such Letter of Credit Issuer, as the case may be, the amount shown as due on any such certificate within 30 days after receipt thereof.

(d)Delay in Requests. Failure or delay on the part of any Lender or such Letter of Credit Issuer to demand compensation pursuant to the foregoing provisions of this Section shall not constitute a waiver of such Lender’s or such Letter of Credit Issuer’s right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or such Letter of Credit Issuer pursuant to the foregoing provisions of this Section for any increased costs incurred or reductions suffered more than one hundred eighty (180) days prior to the date that such Lender or such Letter of Credit Issuer, as the case may be, notifies the __________

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Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or such Letter of Credit Issuer’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to above shall be extended to include the period of retroactive effect thereof).

4.5Compensation for Losses. Upon demand of any Lender (with a copy to the Agent) from time to time, the applicable Borrowers shall promptly compensate such Lender for and hold such Lender harmless from any loss, cost or expense incurred by it as a result of:

(a)any conversion, payment or prepayment of any Revolving Loan other than a Base Rate Loan or Canadian Prime Rate Loan on a day other than the last day of the Interest Period for such Revolving Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or otherwise);

(b)any failure by the Borrowers (for a reason other than the failure of such Lender to make a Loan) to prepay, borrow, continue or convert any Revolving Loan other than a Base Rate Loan or Canadian Prime Rate Loan on the date or in the amount notified by the Borrowers; or

(c)any assignment of a LIBOR Loan or Canadian BA Rate Loan on a day other than the last day of the Interest Period therefor as a result of a request by the Borrowers pursuant to Section 4.8;

including any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Revolving Loan or from fees payable to terminate the deposits from which such funds were obtained. The Borrowers shall also pay any customary administrative fees charged by such Lender in connection with the foregoing.

For purposes of calculating amounts payable by the Borrowers to the Lenders under this Section 4.5, each U.S. Lender shall be deemed to have funded each LIBOR Loan made by it at the LIBOR Rate for such Revolving Loan by a matching deposit or other borrowing in the London interbank eurodollar market for a comparable amount and for a comparable period, whether or not such LIBOR Loan was in fact so funded and each Canadian Lender shall be deemed to have funded each Canadian BA Rate Loan made by it at the Canadian BA Rate for such Revolving Loan by a matching deposit or other borrowing through bankers’ acceptances for a comparable amount and for a comparable period, whether or not such Canadian BA Rate Loan was in fact so funded.

4.6Mitigation Obligations. If any Lender requests compensation under Section 4.4, or if any Lender gives a notice pursuant to Section 4.2, then such Lender shall use reasonable efforts to designate a different Lending Office for funding or booking its Revolving Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, provided that it would be an Eligible Assignee, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 4.4, as the case may be, in the future, or eliminate the need for the notice pursuant to Section 4.2, as applicable, and (ii) in each case, would not subject such Lender to any

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unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

4.7Survival. All of the Borrowers’ obligations under this Article 4 shall survive termination of the Commitments and repayment of all other Obligations (other than Bank Product Obligations) hereunder.

4.8Replacement of Lenders. (a) If and with respect to each occasion that a Lender other than the Agent either makes a demand for compensation pursuant to Sections 4.1 or 4.4 or is unable to fund LIBOR Loans or Canadian BA Rate Loans pursuant to Section 4.2 or such Lender is a Defaulting Lender, the Borrowers may, upon at least five (5) Business Days’ prior irrevocable written notice to each of such Lender and Agent, in whole permanently replace the Commitment of such Lender; provided that (i) no Event of Default has occurred and is continuing at the time of such proposed replacement of the Commitment of such Lender, and (ii) the Borrowers shall replace such Commitment with the Commitment of a financial institution reasonably satisfactory to Agent (and such consent of the Agent shall not be unreasonably withheld or delayed). Such replacement Lender shall upon the effective date of replacement purchase the Revolving Loans owed to such replaced Lender for the aggregate amount thereof and shall thereupon for all purposes become a “Lender” hereunder. Such notice from the Borrowers shall specify an effective date for the replacement of such Lender’s Commitment, which date shall not be later than the thirtieth (30^th) day after the day such notice is given. On the effective date of any replacement of such Lender’s Commitment pursuant to this Section 4.8, the Borrowers (in the case of the Canadian Borrower, only in respect of any Canadian Lender) shall pay to Agent for the account of such Lender (a) any fees due to such Lender to the date of such replacement; (b) accrued interest on the principal amount of outstanding Revolving Loans held by such Lender to the date of such replacement, and (c) the amount or amounts requested by such Lender pursuant to Article 4. On or before the effective date for the replacement of such Lender’s Commitment, the Borrowers will cause any Letter of Credit issued by such replaced Lender to be terminated or transferred to the replacement Lender or to another Lender. Upon the effective date of repayment of any Lender’s Revolving Loans, the termination or transfer of such Lender’s Letters of Credit and termination of such Lender’s Commitment pursuant to this Section 4.8, such Lender shall cease to be a Lender hereunder. No such termination of any such Lender’s Commitment and the purchase of such Lender’s Revolving Loans and termination or transfer of such Lender’s Letters of Credit pursuant to this Section 4.8 shall affect (i) any liability or obligation of the Borrowers or any other Lender to such terminated Lender which accrued on or prior to the date of such termination or which by the terms of this Agreement expressly survive termination hereof or (ii) such terminated Lender’s rights hereunder in respect of any such liability or obligation.

ARTICLE 5

BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES

5.1Books and Records. Each Borrower shall, and shall cause its Subsidiaries to, maintain, at all times, correct and complete books, records and accounts in which complete, correct and timely entries are made of its transactions in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section

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5.2(a). Each Borrower shall, and shall cause its Subsidiaries to, by means of appropriate entries, reflect in such accounts and in all Financial Statements proper liabilities and reserves for all taxes and proper provision for depreciation and amortization of property and bad debts, all in accordance with GAAP. Each U.S. Borrower shall, and shall cause its Restricted Subsidiaries to, maintain at all times books and records pertaining to the Collateral in such detail, form and scope as the Agent shall reasonably require, including, but not limited to, records of (a) all payments received and all credits and extensions granted with respect to the Accounts; (b) the return, rejection, repossession, stoppage in transit, loss, damage, or destruction of any Inventory; and (c) all other dealings affecting the Collateral.

5.2Financial Information. Each Borrower will furnish, or cause to be furnished, to the Agent, in sufficient copies for distribution by the Agent to each Lender, in such detail as the Agent or the Lenders shall reasonably request, the following:

(a)As soon as available, but in any event not later than ninety (90) days after the close of each Fiscal Year, a consolidated audited balance sheet, income statement, cash flow statement and statement of change in stockholders’ equity for the Parent and its consolidated Subsidiaries for such Fiscal Year, and the accompanying notes thereto, setting forth in each case in comparative form figures for the previous Fiscal Year, all in reasonable detail, fairly presenting the financial position and the results of operations of the Parent and its consolidated Subsidiaries as at the date thereof and for the Fiscal Year then ended, and prepared in accordance with GAAP. Such statements shall be examined in accordance with generally accepted auditing standards by and, in the case of such statements performed on a consolidated basis, accompanied by a report thereon unqualified in any respect of independent certified public accountants selected by the Borrowers and reasonably satisfactory to the Agent. Each Borrower hereby authorizes the Agent to communicate directly with its certified public or chartered accountants and, by this provision, authorizes those accountants to disclose to the Agent any and all financial statements and other supporting financial documents and schedules relating to such Borrower and to discuss directly with the Agent the finances and affairs of such Borrower; provided, however, the Agent shall give ATI not less than five (5) days prior written notice of any such communication, disclosure or discussion and nothing in this Section 5.2(a) shall limit the right of any of the Borrowers to be present during any such discussions; provided, further, that the requirements set forth in this clause (a) may be fulfilled by providing the Agent and each Lender the report of the Parent to the SEC on Form 10-K for the applicable Fiscal Year.

(b)As soon as available, but in any event not later than forty-five (45) days after the end of each fiscal quarter (other than the last fiscal quarter of any Fiscal Year), a consolidated unaudited balance sheet as of the end of such period, income statement and cash flow statement for the Parent and its consolidated Subsidiaries for such fiscal quarter and for the period from the beginning of the Fiscal Year to the end of such fiscal quarter, all in reasonable detail, fairly presenting the financial position and results of operations of the Parent and its consolidated Subsidiaries as at the date thereof and for such periods, and in each case in comparative form, figures for the corresponding period in the prior Fiscal Year, and prepared in accordance with GAAP applied consistently with the audited Financial Statements required to be delivered pursuant to Section 5.2(a) (subject to normal year-end adjustments), together with a report identifying all Unrestricted Subsidiaries; provided, however, if Liquidity shall be less than the greater of (i) $27,500,000 and (ii) fifteen percent (15%) of the Line Cap at any time, the _______

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Financial Statements described in this Section 5.2(b) shall thereafter (until Liquidity exceeds the greater of (i) $27,500,000 and (ii) fifteen percent (15%) of the Line Cap for 90 consecutive days) be provided monthly no later than 30 days after the end of each month and be prepared on a monthly basis. Each Borrower shall certify by a certificate signed by a Responsible Officer that all such statements have been prepared in accordance with GAAP and present fairly the consolidated financial position of the Parent and its consolidated Subsidiaries as at the dates thereof and results of operations for the periods then ended, subject to normal year-end adjustments; provided that the quarterly reporting requirements set forth in this clause (b) may be fulfilled by providing the Agent and each Lender the report of the Parent to the SEC on Form 10-Q for the applicable quarterly period.

(c)Concurrently with the delivery of the items in clause (b) above, a certificate of a Responsible Officer of ATI in the form of Exhibit A hereto setting forth in reasonable detail the calculations required to establish that the Borrowers were in compliance with the applicable covenants set forth therein at the end of such fiscal quarter or month, as applicable, and stating that, except as explained in reasonable detail in such certificate, (i) all of the representations and warranties of the Borrowers contained in this Agreement and the other principal Loan Documents are correct and complete in all material respects as at the date of such certificate as if made at such time, except for those that speak as of a particular date, (ii) the Borrowers are, at the date of such certificate, in compliance in all material respects with all of their respective covenants and agreements in this Agreement and the other principal Loan Documents, (iii) no Default or Event of Default then exists, and (iv) whether or not a Fixed Charge Trigger Period has arisen or been in effect during such fiscal quarter or month, as applicable, and setting forth in reasonable detail a calculation of Liquidity as of the end of such fiscal quarter or month, as applicable. If such certificate discloses that a representation or warranty is not correct or complete, or that a covenant has not been complied with, or that a Default or Event of Default existed or exists, such certificate shall set forth what action the Borrowers have taken or proposes to take with respect thereto.

(d)Upon the occurrence of a Fixed Charge Trigger Period and within fifteen (15) days after the end of each month during which any portion of a Fixed Charge Trigger Period shall be in effect, a certificate of a Responsible Officer of ATI in the form of the applicable portion of Exhibit A hereto setting forth in reasonable detail the calculations required to establish that the Borrowers were in compliance with the covenant set forth in Section 7.22 at the end of the most recently completed Twelve-Month Period and each month thereafter.

(e)Within forty-five (45) days after the end of each Fiscal Year, annual projections (to include a projected consolidated balance sheet, income statement and cash flow statement) for the Parent and its consolidated Subsidiaries as at the end of and for each month of the current Fiscal Year, including a calculation, satisfactory to the Agent and certified by ATI (the “Restricted Payment Certification”), of projected Liquidity for each month of such Fiscal Year and all anticipated Restricted Payments for the acquisition of Common Stock of the Parent described in Section 7.13(d) for each month of such Fiscal Year, demonstrating, in a manner satisfactory to the Agent, compliance with Section 7.13(d) for each such month and such Fiscal Year on a pro forma basis assuming that the applicable Restricted Payments, individually and in the aggregate, were made as of the first day of each such month during such Fiscal Year.

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(f)Upon request of the Agent, copies of all reports on Forms 10-Q or 10-K and definitive proxy statements filed by the Parent or any of its Subsidiaries with the SEC under the Exchange Act.

(g)As soon as available, but in any event not later than 15 days after any Borrower’s receipt thereof, a copy of each annual management report prepared for the Parent or any Borrower by any independent certified public or chartered accountants.

(h)Upon request of the Agent, copies of any and all proxy statements, financial statements, and reports which the Parent makes available to its shareholders.

(i)Upon request of the Agent, within 30 days after filing with the IRS or other applicable Governmental Authority, a copy of each federal and provincial income tax return filed by the Parent or by any of its Subsidiaries.

(j)So long as there are no outstanding Revolving Loans, within fifteen (15) days following the end of each fiscal quarter, (i) a Borrowing Base Certificate for such fiscal quarter, together with (A) a detailed calculation of Eligible Credit Card Accounts and Eligible Inventory, (B) a calculation of Liquidity for such fiscal quarter and (C) a calculation of all Parent Share Repurchases for such fiscal quarter and (ii) a separately prepared summary stock ledger report with reconciliation to the corresponding Inventory reporting in the Borrowing Base Certificate; provided, however, if Liquidity shall at such time be less than $100,000,000, the Borrowing Base Certificate shall be accompanied by (A) a schedule of Eligible Credit Card Accounts; (B) an aging of all U.S. Borrowers’ accounts payable; (C) Inventory reports by category and location, together with a reconciliation to the corresponding Borrowing Base and to the Borrowers’ general stock ledger; (D) each of the financial and collateral reports described on Schedule 5.2(j), at the times set forth in such Schedule, (E) such other reports as to the Collateral as the Agent shall reasonably request from time to time; and (F) with the delivery of the foregoing, a certificate of a Responsible Officer of ATI certifying as to the accuracy and completeness of the foregoing; provided further, however, if there are outstanding Revolving Loans, the Borrowing Base Certificate and other information described in this Section 5.2(j) shall thereafter be provided within fifteen (15) days following the end of each month; provided further, however, if Liquidity shall at any time be less than the greater of (x) $27,500,000 and (y) fifteen percent (15%) of the Line Cap, the Borrowing Base Certificate and, to the extent requested by the Agent, other information described in this Section 5.2(j) shall thereafter (until Liquidity exceeds the greater of (x) $27,500,000 and (y) fifteen percent (15%) of the Line Cap for 90 consecutive days) be provided weekly. Notwithstanding the foregoing, if an Event of Default shall have occurred and be continuing, the documents and information required to be provided under this Section 5.2(j) shall be provided on a more frequent basis than set forth herein if and as requested by the Agent. If records or reports of the Collateral of the type required to be delivered hereunder are prepared by an accounting service or other agent, each Borrower hereby authorizes such service or agent to deliver such records, reports, and related documents (but only to the extent necessary to satisfy the foregoing reporting requirements) to the Agent, for distribution to the Lenders; provided, however, the Agent shall give written notice to ATI not less than five (5) days prior to any such contact with such accounting service or agent. Furthermore, upon the request of a Borrower to withdraw Qualified Cash from the non-operating

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account subject to the sole dominion and control of the Agent, the Borrowers shall deliver a revised Borrowing Base Certificate reflecting such requested withdrawal.

(k)Promptly after a Borrower has notified the Agent of any intention by such Borrower to treat the Revolving Loans and/or Letters of Credit and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4), a duly completed copy of IRS Form 8886 or any successor form.

(l)Such additional information as the Agent and/or any Lender may from time to time reasonably request regarding the financial and business affairs of the Parent, the Borrowers or any Subsidiary.

5.3Notices to the Lenders. ATI shall notify the Agent in writing of the following matters at the following times:

(a)As promptly as practicable but no later than three (3) Business Days after any Borrower becomes aware (i) of any Default or Event of Default, (ii) of the commencement of any Fixed Charge Trigger Period, (iii) that Liquidity has become less than (A) the greater of (x) $25,000,000 and (y) twelve and a half percent (12.5%) of the Line Cap (as set forth in Sections 7.11(i), 7.13(d), 7.25(a) and 7.26), (B) the greater of (x) $27,500,000 and (y) fifteen percent (15%) of the Line Cap (as set forth in Sections 5.2(b) and 5.2(j)) or (C) twenty-five percent (25%) of the Line Cap (as set forth in Section 7.4(b)) or (iv) that outstanding Revolving Loans are greater than thirty percent (30%) of the Line Cap (as set forth in Section 7.4(b));

(b)As promptly as practicable but no later than three (3) Business Days after any Borrower becomes aware of any event or circumstance which could reasonably be expected to have a Material Adverse Effect;

(c)As promptly as practicable but no later than three (3) Business Days after any Borrower becomes aware of any pending or threatened action, suit, or proceeding, by any Person, or any pending or threatened investigation by a Governmental Authority, which could reasonably be expected to have a Material Adverse Effect;

(d)As promptly as practicable but no later than three (3) Business Days after any Borrower becomes aware of any pending or threatened strike, work stoppage, unfair labor practice claim, or other labor dispute affecting the Parent, any Borrower or any of its Subsidiaries in a manner which could reasonably be expected to have a Material Adverse Effect;

(e)As promptly as practicable but no later than three (3) Business Days after any Borrower becomes aware of any violation of any Requirement of Law by the Parent, any Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect;

(f)As promptly as practicable but no later than three (3) Business Days after receipt of any notice of any violation by the Parent, any Borrower or any of its Subsidiaries of any Environmental Law which could reasonably be expected to have a Material Adverse Effect or that any Governmental Authority has asserted in writing that the Parent, any

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Borrower or any Subsidiary is not in compliance with any Environmental Law or is investigating the Parent, any Borrower’s or such Subsidiary’s compliance therewith to the extent any such non-compliance or investigation could reasonably be expected to have a Material Adverse Effect;

(g)As promptly as practicable but no later than three (3) Business Days after receipt of any written notice that the Parent, any Borrower or any of its Subsidiaries is or may be liable to any Person as a result of the Release or threatened Release of any Contaminant or that the Parent, any Borrower or any Subsidiary is subject to investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to the Release or threatened Release of any Contaminant which, in either case, is reasonably likely to give rise to liability in excess of $5,000,000;

(h)As promptly as practicable but no later than three (3) Business Days after receipt of any written notice of the imposition of any Environmental Lien against any property of the Parent, any Borrower or any of its Subsidiaries;

(i)At least thirty (30) days prior to any change in (i) any Credit Party’s name as it appears in the jurisdiction of its incorporation or other organization, or (ii) any Credit Party’s jurisdiction of incorporation or organization, the jurisdiction in which its chief executive office or registered office is located, type of entity or form of organization, organizational identification number, or trade names under which any Borrower will sell Inventory or create Accounts or to which instruments in payment of Accounts may be made payable;

(j)Within ten (10) Business Days after any Borrower or any ERISA Affiliate knows or has reason to know, that an ERISA Event, Canadian Pension Event or a prohibited transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has occurred, and, when known, any action taken or threatened by the IRS, the DOL, the PBGC or any other Governmental Authority with respect thereto;

(k)Upon request, or, in the event that such filing reflects a significant change with respect to the matters covered thereby which could reasonably be expected to have a Material Adverse Effect, within ten (10) Business Days after the filing thereof with the PBGC, the DOL, the IRS or any other Governmental Authority, as applicable, copies of the following: (i) each annual report (form 5500 series), including Schedule B thereto, filed with the PBGC, the DOL or the IRS with respect to each Plan, (ii) a copy of each funding waiver request filed with the PBGC, the DOL, the IRS or any other Governmental Authority with respect to any Plan, Canadian Pension Plan or Canadian MEPP and all communications received by the Parent, any Borrower or any ERISA Affiliate from the PBGC, the DOL, the IRS or any other Governmental Authority with respect to such request, and (iii) a copy of each other filing or notice filed with the PBGC, the DOL, the IRS or any other Governmental Authority, with respect to each Plan, Canadian Pension Plan or Canadian MEPP by the Parent, any Borrower or any ERISA Affiliate;

(l)Upon request, copies of each actuarial report for any Plan, Canadian Pension Plan or Multi-employer Plan and annual report for any Multi-employer Plan; and within ten (10) Business Days after receipt thereof by any Borrower or any ERISA Affiliate,

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copies of the following: (i) any notices of the PBGC’s or other Governmental Authority’s intention to terminate a Plan, Canadian Pension Plan or Canadian MEPP or to have a trustee appointed to administer such Plan or Canadian Pension Plan or Canadian MEPP; (ii) any unfavorable determination letter from the IRS or other Governmental Authority regarding the qualification of a Plan under Section 401(a) of the Code or of a Canadian Pension Plan or Canadian MEPP pursuant to the Requirements of Law; or (iii) any notice from a Multi-employer Plan or Canadian MEPP regarding the imposition of withdrawal liability;

(m)In relation to any Canadian MEPP, upon request, shall cause the applicable Credit Party to request the administrator of the Canadian MEPP to provide to such Credit Party a copy of the actuarial report for such Canadian MEPP and shall cause such Credit Party to provide such actuarial report upon receipt from the administrator of the Canadian MEPP;

(n)Within ten (10) Business Days after the occurrence thereof: (i) any changes in the benefits of any existing Plan, Canadian Pension Plan or Canadian MEPP which increase any Borrower’s annual costs with respect thereto by an amount in excess of $5,000,000, or the establishment of any new Plan, Canadian Pension Plan or Canadian MEPP or the commencement of contributions to any Plan to which any Borrower or any ERISA Affiliate was not previously contributing; or (ii) any failure by any Borrower or any ERISA Affiliate to make a required installment or any other required payment under Section 412 of the Code or a regular contribution to a Canadian Pension Plan or Canadian MEPP on or before or within ten (10) days after the due date for such installment, contribution or payment; or

(o)Within ten (10) Business Days after any Borrower or any ERISA Affiliate knows or has reason to know that any of the following events has or will occur: (i) a Multi-employer Plan, Canadian Pension Plan or Canadian MEPP has been or will be terminated; (ii) the administrator or plan sponsor of a Multi-employer Plan, Canadian Pension Plan or Canadian MEPP intends to terminate a Multi-employer Plan, Canadian Pension Plan or Canadian MEPP; or (iii) the PBGC has instituted or will institute proceedings under Section 4042 of ERISA or other applicable law to terminate a Multi-employer Plan, Canadian Pension Plan or Canadian MEPP.

Each notice given under this Section shall describe the subject matter thereof in reasonable detail, and, to the extent applicable, shall set forth the action that the Parent, such Borrower, its Subsidiaries, or any ERISA Affiliate, as applicable, has taken or proposes to take with respect thereto.

ARTICLE 6

GENERAL WARRANTIES AND REPRESENTATIONS

Each Borrower warrants and represents to the Agent and the Lenders that except as hereafter disclosed to and accepted by the Agent and the Required Lenders in writing:

6.1Authorization, Validity, and Enforceability of this Agreement and the Loan Documents. Each Credit Party has the power and authority to execute, deliver and perform each of the Loan Documents to which it is a party, to incur the Obligations hereunder or under _________

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the Parent Guaranty, as applicable, and to grant to the Agent Liens upon and security interests in the Collateral. Each Credit Party has taken all necessary action (including obtaining approval of its stockholders or other equityholders, if necessary) to authorize its execution, delivery, and performance of the Loan Documents to which it is a party. The Loan Documents (other than those not required to be in effect on the date of this representation) to which it is a party have been duly executed and delivered by each Credit Party, and constitute the legal, valid and binding obligations of each Credit Party, enforceable against it in accordance with their respective terms, except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting the enforcement of creditors’ rights or by the effect of general equitable principles. Each Credit Party’s execution, delivery, and performance of the Loan Documents to which it is a party do not and will not conflict with, or constitute a violation or breach of, or result in the imposition of any Lien upon the property of each Credit Party or any of its Subsidiaries, by reason of the terms of (a) any material contract, mortgage, lease, agreement, indenture, or instrument to which any Borrower is a party or which is binding upon it, (b) any Requirement of Law applicable to any Credit Party or any of its Subsidiaries, or (c) the certificate or articles of incorporation or bylaws or the limited liability company or limited partnership agreement of any Credit Party or any of its Subsidiaries.

6.2Validity and Priority of Security Interest. The provisions of this Agreement and the other Loan Documents create legal and valid Liens on all the Collateral in favor of the Agent, for the ratable benefit of the Agent and the Lenders, and such Liens constitute perfected and continuing Liens on all the Collateral, having priority over all other Liens on the Collateral (except for those Liens identified in clauses (a), (b), (c), (d) and (f) of the definition of Permitted Liens and Liens permitted by clauses (b)(iv) through (viii) of Section 7.10 hereof) securing all the Obligations, and enforceable against each Credit Party (other than the Canadian Borrower) and all third parties.

6.3Organization and Qualification. Each Credit Party (a) is duly organized or incorporated and validly existing in good standing under the laws of the jurisdiction of its organization or incorporation, (b) is qualified to do business and is in good standing in each jurisdiction in which qualification is necessary in order for it to own or lease its property and conduct its business, except to the extent any such failure to be so qualified would not have a Material Adverse Effect on such Credit Party and (c) has all requisite power and authority to conduct its business and to own its property.

6.4Corporate Name; Prior Transactions. As of the Effective Date, no Credit Party has, during the past five (5) years, been known by or used any other corporate or fictitious name other than AnnTaylor Stores Corporation and ANN ANNTAYLOR LOFT, or been a party to any merger, amalgamation or consolidation, or acquired all or substantially all of the assets of any Person, or acquired any of its property outside of the ordinary course of business.

6.5Subsidiaries and Affiliates. Schedule 6.5 is a correct and complete list of the name and relationship to the Parent of each and all of the Parent’s Subsidiaries and other Affiliates as of the Effective Date.

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6.6Financial Statements and Projections.

(a)The audited balance sheet and related statements of income, retained earnings, cash flows, and changes in stockholders equity for the Parent and its consolidated Subsidiaries as of January 28, 2012, and for the Fiscal Year then ended, together with the report thereon of its independent certified public accountants, Deloitte & Touche LLC, have been prepared in accordance with GAAP (subject to normal year-end adjustments) and present accurately and fairly in all material respects the financial position of the Parent and its consolidated Subsidiaries as at the dates thereof and their results of operations for the periods then ended.

(b)The Latest Projections when submitted to the Lenders as required herein represent the Borrowers’ best estimate of the future financial performance of the Parent and its consolidated Subsidiaries for the periods set forth therein and the Latest Projections have been prepared on the basis of the assumptions set forth therein, which the Borrowers believe are fair and reasonable in light of current and reasonably foreseeable business conditions at the time submitted to the Lenders (it being understood that the forecasts and forward looking statements are subject to significant uncertainties and contingencies, many of which are beyond the Borrowers’ control and that no guaranty can be given that the Latest Projections will be realized as further described in the Parent’s SEC filings).

6.7Capitalization. As of the Effective Date, the authorized and issued capital stock of each Subsidiary (other than Subsidiaries of AnnTaylor Sourcing Far East) of the Parent is set forth on Schedule 6.7 and all such issued shares are validly issued and outstanding, fully paid and non-assessable and are owned beneficially and of record as set forth in Schedule 6.7 hereto.

6.8Solvency. Each of (a) the Parent and its Subsidiaries on a consolidated basis are, and (b) each Borrower is, Solvent prior to and after giving effect to each Credit Extension.

6.9Debt. After giving effect to the making of the Revolving Loans to be made on the Effective Date, the Parent and its Subsidiaries have no Debt as of the Effective Date, except (a) the Obligations, and (b) Debt described on Schedule 6.9.

6.10Distributions. As of the Effective Date, except as set forth on Schedule 6.10, since January 28, 2012, no Restricted Payment has been declared, paid, or made upon or in respect of any capital stock or other securities of the Parent or any Borrower.

6.11Real Estate; Store Locations. Schedule 6.11 sets forth, as of the Effective Date, a correct and complete list of all Real Estate owned by the Parent and the Borrowers and all store locations operated by the Parent and the Borrowers. As of the Effective Date, each material lease and sublease of the Parent and the Borrowers is valid and enforceable in accordance with its terms and is in full force and effect, and no material default by any Credit Party party to any such lease or sublease exists. As of the Effective Date, the Parent and each U.S. Borrower has good and marketable title in fee simple to its owned Real Estate, or valid leasehold interests in all material leasehold properties and the Parent and each U.S. Borrower has

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good, indefeasible, and merchantable title to all of its other property reflected on the January 28, 2012 Financial Statements delivered to the Agent and the Lenders, except as disposed of in the ordinary course of business since the date thereof, free of all Liens except Permitted Liens.

6.12Trade Names. As of the Effective Date, all material trade names or styles under which any Borrower creates Accounts in the United States, or to which instruments in payment of Accounts may be made payable, are listed on Schedule 6.12.

6.13Litigation. Except as set forth on Schedule 6.13, there is no pending, or to the best of each Borrower’s knowledge threatened, action, suit, proceeding, or counterclaim by any Person, or to the best of each Borrower’s knowledge, investigation by any Governmental Authority, which could reasonably be expected to have a Material Adverse Effect.

6.14Labor Disputes. Except as to matters that could not reasonably be expected to have a Material Adverse Effect, as of the Effective Date (a) there is no collective bargaining agreement or other labor contract covering employees of the Credit Parties, (b) no such collective bargaining agreement or other labor contract is scheduled to expire during the term of this Agreement, (c) no union or other labor organization is seeking to organize, or to be recognized as, a collective bargaining unit of employees of the Credit Parties or for any similar purpose, and (d) there is no pending or (to the best of each Borrower’s knowledge) threatened, strike, work stoppage, material unfair labor practice claim, or other material labor dispute against or affecting the Credit Parties or their employees that could reasonably be expected to have a Material Adverse Effect.

6.15Environmental Laws. Except for matters that could not reasonably be expected to have a Material Adverse Effect or as otherwise disclosed on Schedule 6.15:

(a)The Parent, each Borrower and its respective Subsidiaries have complied in all material respects with all Environmental Laws and none of the Parent, the Borrowers or their Subsidiaries nor any of their presently owned real property or presently conducted operations, nor their previously owned real property or prior operations to the extent relating to their ownership of or their operations on any property at the time of such ownership or operations on such property, is subject to any enforcement order from or liability agreement with any Governmental Authority or private Person respecting (i) compliance with any Environmental Law or (ii) any potential liabilities and costs or remedial action arising from the Release or threatened Release of a Contaminant.

(b)The Parent, each Borrower and its respective Subsidiaries have obtained all permits necessary for their current operations under Environmental Laws, and all such permits are in good standing and the Parent, each Borrower and its respective Subsidiaries are in compliance with all material terms and conditions of such permits.

(c)None of the Parent, any Borrower or its respective Subsidiaries nor, to the best of each Borrower’s knowledge, any of its predecessors in interest, has in violation of applicable law stored, treated or disposed of any hazardous waste.

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(d)None of the Parent, any Borrower or its respective Subsidiaries has received any summons, complaint, order or similar written notice indicating that it is not currently in compliance with, or that any Governmental Authority is investigating its compliance with, any Environmental Laws or that it is or may be liable to any other Person as a result of a Release or threatened Release of a Contaminant.

(e)To the best of each Borrower’s knowledge, none of the present or past operations of the Parent, any Borrower or its respective Subsidiaries is the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a Release or threatened Release of a Contaminant.

(f)None of the Parent, any Borrower or its respective Subsidiaries has filed any notice under any requirement of Environmental Law reporting a spill or accidental and unpermitted Release or discharge of a Contaminant into the environment.

(g)None of the Parent, any Borrower or its respective Subsidiaries has entered into any negotiations or settlement agreements with any Person (including the prior owner of its property) imposing material obligations or liabilities on any Credit Party with respect to any remedial action in response to the Release of a Contaminant or environmentally related claim.

(h)None of the products manufactured, distributed or sold by any of the Parent, any Borrower or its respective Subsidiaries contain asbestos containing material.

6.16No Violation of Law. None of the Parent, any Borrower nor any of their respective Subsidiaries is in violation of any Requirements of Law applicable to it which violation could reasonably be expected to have a Material Adverse Effect.

6.17No Default. As of the Effective Date, none of the Parent, any Borrower nor any of their respective Subsidiaries is in default with respect to any note, indenture, loan agreement, mortgage, lease, deed, or other agreement to which such Borrower or such Subsidiary is a party or by which it is bound, which default could reasonably be expected to have a Material Adverse Effect.

6.18ERISA Compliance; Canadian Pension Plans. Except for matters that could not reasonably be expected to have a Material Adverse Effect or as specifically disclosed in Schedule 6.18:

(a)Each Plan is in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state laws. Each Plan which is intended to qualify under Section 401(a) of the Code has received a favorable determination letter from the IRS and to the knowledge of each Borrower, nothing has occurred which would cause the loss of such qualification. Each Borrower and each ERISA Affiliate has made all required contributions to any Plan subject to Section 412 of the Code, and no application for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has been made with respect to any Plan.

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(b)There are no pending or, to the best knowledge of each Borrower, threatened claims, actions or lawsuits, or action by any Governmental Authority, with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect. There has been no non-exempt prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan which has resulted or could reasonably be expected to result in a Material Adverse Effect.

(c)(i) No ERISA Event has occurred or is reasonably expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability as of January 1, 2003; (iii) neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 or 4243 of ERISA with respect to a Multi-employer Plan; and (v) neither any Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to Section 4069 or 4212(c) of ERISA.

(d)The Credit Parties are in compliance in all material respects with the requirements of the PBA and of any binding requirements of general application of a Governmental Authority with respect to each Canadian Pension Plan and are in compliance with any directive or order of a Governmental Authority directed specifically at a Canadian Pension Plan. No fact or situation that may reasonably be expected to result in a Material Adverse Effect exists in connection with any Canadian Pension Plan. No Credit Party or an Affiliate thereof maintains, contributes or has any liability with respect to a Canadian Pension Plan which provides benefits on a defined benefit basis other than a Canadian MEPP. No Canadian Pension Event has occurred that when taken together with all other Canadian Pension Events, Termination Events and ERISA Events for which liability is reasonably expected to occur, would reasonably be expected to result in a Material Adverse Effect. All contributions required to be made by any Credit Party or its Subsidiary to any Canadian Pension Plan have been made in a timely fashion in accordance with the terms of such Canadian Pension Plan and the PBA. No Lien has arisen, choate or inchoate, in respect of any Credit Party or their property in connection with any Canadian Pension Plan (save for contribution amounts not yet due).

6.19Taxes. The Credit Parties have filed all federal, provincial and other material tax returns and reports required to be filed, and have paid and remitted all federal, provincial and other material taxes, assessments, fees and other governmental charges levied or imposed upon them or their properties, income or assets otherwise due and payable except as permitted under Section 7.1.

6.20Regulated Entities. None of the Credit Parties is an “Investment Company” within the meaning of the Investment Company Act of 1940, and none of the Credit Parties is subject to regulation under Requirements of Law limiting its ability to incur indebtedness.

6.21Use of Proceeds; Margin Regulations. The proceeds of the Credit Extensions are to be used solely for working capital and other corporate purposes. Neither the

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Parent, any Borrower nor any Subsidiary is engaged, principally or as one of its important activities, in the business of purchasing or selling Margin Stock or extending credit for the purpose of purchasing or carrying Margin Stock.

6.22Copyrights, Patents, Trademarks and Licenses, etc. The Parent and each Borrower owns, is licensed or otherwise has the lawful right to use, all patents, trademarks, service marks, trade names, copyrights, technology, know-how and processes (collectively the “Intellectual Property”) 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. To the knowledge of the Borrowers, the use of such Intellectual Property by the Parent or the Borrowers 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 Intellectual Property by the Parent or any Borrower in any manner which has or might have a Material Adverse Effect.

6.23No Material Adverse Effect. No Material Adverse Effect has occurred since the date of the audited Financial Statements referred to in Section 6.6(a) or the date of the most recent audited Financial Statements delivered to the Lenders pursuant to Section 5.2(a).

6.24Full Disclosure. None of the representations or warranties made to the Agent, the Letter of Credit Issuers or the Lenders by any Credit Party in the Loan Documents as of the date such representations and warranties are made or deemed made, and none of the statements contained in any written exhibit, report, statement or certificate furnished to the Agent, the Letter of Credit Issuers or the Lenders by or on behalf of any Credit Party in connection with the Loan Documents (including the offering and disclosure materials delivered by or on behalf of any Borrower to the Lenders prior to the Effective Date), contains any untrue statement of a material fact or omits any material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they are made, not misleading as of the time when made or delivered (as the case may be); it being understood that for the purpose of this Section 6.24, such information and data shall not include projections and pro forma financial information or information of a general outlook or general industry nature.

6.25Bank Accounts and Credit Card Processors. Schedule 6.25 contains as of the Effective Date (a) a complete and accurate list of all Deposit Accounts and Securities Accounts maintained by all Credit Parties with any bank or other financial institution and (b) a complete list of all credit card processors or issuers of the Borrowers.

6.26Governmental Authorization. The Parent and the Borrowers hold all licenses, permits and other approvals of Governmental Authorities necessary for the conduct of their business as currently conducted. No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority or other Person is necessary or required in connection with the execution, delivery or performance by, or enforcement against, any Credit Party of any Loan Document to which it is a party, except such as have been obtained, given or made, as applicable.

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6.27Tax Shelter Regulations. No Borrower intends to treat the Revolving Loans and/or Letters of Credit and related transactions as being a “reportable transaction” (within the meaning of Treasury Regulation Section 1.6011-4). In the event any Borrower determines to take any action inconsistent with such intention, it will promptly notify the Agent thereof. If any Borrower so notifies the Agent, such Borrower acknowledges that one or more of the Lenders may treat its Revolving Loans and/or its interest in Non-Ratable Loans and/or Agent Advances and/or Letters of Credit as part of a transaction that is subject to Treasury Regulation Section 301.6112-1, and such Lender or Lenders, as applicable, will maintain the lists and other records required by such Treasury Regulation

6.28OFAC. Each Credit Party is and will remain in compliance in all material respects with all applicable U.S. and Canadian economic sanctions laws and implementing regulations as promulgated by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), the Criminal Code (Canada), and all applicable anti-money laundering and counter-terrorism financing provisions of the Bank Secrecy Act and all regulations issued pursuant to any of the foregoing. No Credit Party and no Subsidiary or Affiliate of a Credit Party (i) is a Person designated by the U.S. government on the list of the Specially Designated Nationals and Blocked Persons (the “SDN List”) with which a Person cannot deal with or otherwise engage in business transactions, (ii) is a Person designated by the Canadian government on any list set out in the United Nations Al-Qaida and Taliban Regulations, the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism or the Criminal Code (collectively, the “Terrorist Lists”) with which a Person cannot deal or otherwise engage in business transactions, (iii) is a Person who is otherwise the target of U.S. economic sanctions laws such that a Person cannot deal or otherwise engage in business transactions with such Person or (iii) is controlled by (including without limitation by virtue of such person being a director or owning voting shares or interests), or acts, directly or indirectly, for or on behalf of, any person or entity on the SDN List, a Terrorist List or a foreign government that is the target of U.S. or Canadian sanctions such that the entry into, or performance under, this Agreement or any other Loan Document would be prohibited under U.S. law or Canadian law.

ARTICLE 7

AFFIRMATIVE AND NEGATIVE COVENANTS

Each Borrower covenants to the Agent and each Lender that so long as any of the Obligations (other than Bank Product Obligations) remain outstanding or this Agreement is in effect:

7.1Taxes and Other Obligations. Each Borrower shall, and shall cause the Parent to, as applicable, (a) file when due all Canadian and U.S. federal, provincial and state income tax returns and other material returns (including with respect to provincial sales taxes, harmonized sales taxes and goods and services taxes) and reports which it is required to file; and (b) pay, remit or provide for the payment, when due, of all Canadian and U.S. federal and provincial taxes and other material taxes, fees, assessments and other charges of Governmental Authorities against it or upon its property, income and franchises, make all required withholding and other tax deposits and remittances, and establish adequate reserves for the payment and remittance of all such items, and provide to the Agent and the Lenders, upon request, satisfactory

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evidence of its timely compliance with the foregoing; provided, however, so long as ATI has notified the Agent in writing, none of the Parent or the Borrowers need pay any tax, fee, assessment, or governmental charge (i) it is contesting in good faith by appropriate proceedings diligently pursued, (ii) as to which the Parent or such Borrower, as the case may be, has established proper reserves as required under GAAP, and (iii) the nonpayment or non‑remittance of which does not result in the imposition of a Lien (other than a Permitted Lien).

7.2Legal Existence and Good Standing. Except as otherwise permitted under Sections 7.10(a)(ix) or 7.16(a), each Borrower shall, and shall cause the Parent to, maintain its legal existence and its qualification and good standing in all jurisdictions in which the failure to maintain such existence and qualification or good standing could reasonably be expected to have a Material Adverse Effect.

7.3Compliance with Law and Agreements; Maintenance of Licenses. Each Borrower shall comply, and shall cause the Parent to comply, in all material respects with all Requirements of Law of any Governmental Authority having jurisdiction over it or its business (including the Federal Fair Labor Standards Act (with respect to the U.S. Borrowers), and all Environmental Laws) where the failure to so comply could reasonably be expected to have a Material Adverse Effect. Each Borrower shall obtain and maintain, and shall cause the Parent to obtain and maintain, all material licenses, permits, franchises, and governmental authorizations necessary to own its property and to conduct its business as conducted from time to time in compliance with the terms hereof. No Borrower shall modify, amend or alter, or permit the Parent to modify, amend or alter, its certificate or articles of incorporation, or its limited liability company operating agreement or limited partnership agreement, as applicable, other than in a manner which does not adversely affect the rights and interests of the Lenders or the Agent.

7.4Maintenance of Property; Appraisals and Inspection of Property.

(a)Each Borrower shall maintain, and shall cause the Parent to maintain, all of its property material to the operation of its business in good operating condition and repair, ordinary wear and tear and, subject to Section 7.6, loss or damage from casualty, expropriation or condemnation excepted.

(b)Each Borrower shall permit, and shall cause the Parent to permit, representatives and independent contractors of the Agent to visit and inspect any of its or the other Credit Parties’ properties and, with respect to the U.S. Borrowers only, to conduct appraisals and audits of Collateral, and, with respect to all Borrowers, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom and to discuss its affairs, finances and accounts with its directors, officers and independent public accountants, at reasonable times during normal business hours; provided, however, that (i) if outstanding Revolving Loans at any time during any Fiscal Year are greater than thirty percent (30%) of the Line Cap, the Agent shall only be permitted to conduct one field exam and one inventory appraisal during such Fiscal Year at the Borrowers’ expense (ii) if Liquidity is less than twenty-five percent (25%) of the Line Cap at any time during any Fiscal Year, the Agent shall only be permitted to conduct two field exams and two inventory appraisals during such Fiscal Year at the Borrowers’ expense, and (iii) if any Event of Default described in Section 9.1(a), (b), (c)(i) or (ii), (d), (e), (f), (g), (h), (i), (k), (l) or (m) shall have occurred and be continuing, the foregoing

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frequency limitations in clauses (i) and (ii) of this Section 7.4(b) shall not apply and all visits, inspections, appraisals and audits shall be at the applicable Borrower’s expense. Appraisals of the Tradename Collateral shall be completed and acceptable to the Agent prior to such tradenames becoming Eligible Tradenames under the Borrowing Base and such Tradename Collateral shall only be subject to re-appraisal at the applicable Borrower’s expense one time per Fiscal Year so long as Availability is less than forty percent (40%) of the Line Cap at any time during such Fiscal Year; provided, however, that if any Event of Default described in Section 9.1(a), (b), (c)(i) or (ii), (d), (e), (f), (g), (h), (i), (k), (l) or (m) shall have occurred and be continuing, the foregoing frequency limitation with respect to appraisals of Tradename Collateral shall not apply and all appraisals shall be at the applicable Borrower’s expense. Notwithstanding the foregoing, the Agent may conduct, at its own expense, one field exam, one inventory appraisal and one tradename appraisal per Fiscal Year.

7.5Insurance.

(a)Each Borrower shall maintain, and shall cause the Parent to maintain, with financially sound and reputable insurers having a rating of at least A- or better by Best Rating Guide, insurance of such types as is customary for Persons of similar size engaged in the same or similar business in amounts and under policies reasonably acceptable to the Agent and otherwise as is customary for Persons of similar size engaged in the same or similar types of business.

(b)Each U.S. Borrower shall cause the Agent, for the ratable benefit of the Agent and the Lenders, to be named as secured party or mortgagee and sole loss payee or additional insured with respect to each policy described in the foregoing clause (a) of this Section 7.5, in a manner reasonably acceptable to the Agent. Each such policy of insurance shall contain a clause or endorsement requiring the insurer to give not less than thirty (30) days’ prior written notice to the Agent in the event of cancellation of the policy for any reason whatsoever and such other clauses or endorsements as the Agent shall reasonably request. All premiums for such insurance shall be paid by the U.S. Borrowers when due, and certificates of insurance and, if reasonably requested by the Agent, photocopies of the policies, shall be delivered to the Agent, in each case in sufficient quantity for distribution by the Agent to each of the Lenders. If any U.S. Borrower fails to procure such insurance or to pay the premiums therefor when due, the Agent may, and at the direction of the Required Lenders shall, do so from the proceeds of Revolving Loans.

7.6Insurance and Condemnation Proceeds. Each U.S. Borrower shall promptly notify the Agent and the Lenders of any material loss, damage, or destruction to the Collateral, whether or not covered by insurance. The Agent is hereby authorized to collect all property insurance and condemnation or expropriation proceeds in respect of Collateral in an amount in excess of (a) $2,000,000 if an Activation Period is in effect or (b) $5,000,000 if no Activation Period is in effect, in either case for any incident (“Excess Proceeds”) directly and, after deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the collection or handling thereof, the Agent may in its discretion remit such proceeds to the Borrowers or apply such proceeds to the reduction of the Obligations in the order provided for in Section 7.25 or, if applicable, Section 3.5. Any such proceeds other than Excess Proceeds may be retained by the Borrowers.

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7.7Environmental Laws.

(a)Each Borrower shall, and shall cause the Parent and each of its Subsidiaries to, conduct its business in compliance with all Environmental Laws applicable to it, including those relating to the generation, handling, use, storage, and disposal of any Contaminant unless the failure to do so could not reasonably be expected to have a Material Adverse Effect and the Borrowers shall, and shall cause the Parent and each of its Subsidiaries to, take prompt and appropriate action to respond to any such non-compliance with Environmental Laws and shall regularly report to the Agent on such response.

(b)Without limiting the generality of the foregoing, ATI shall submit to the Agent and the Lenders annually, commencing on the date that occurs one year after the Effective Date, and on each such anniversary date of the Effective Date thereafter, copies of any material notices received by the Borrowers from any Governmental Authority under any Environmental Law, if any, and copies of any environmental reports prepared by the Borrowers, in each case prepared by or received by the Borrowers during such prior year, if any. The Agent or any Lender may request copies of technical reports prepared by any Borrower and its communications with any Governmental Authority to determine whether such Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure or contest in good faith any alleged non-compliance or environmental liability.

7.8Compliance with ERISA; Canadian Pension Plans. (a) Each U.S. Borrower shall, and shall cause each of its ERISA Affiliates to: (i) maintain each Plan in compliance in all material respects with the applicable provisions of ERISA, the Code and other federal or state law; (ii) cause each Plan which is qualified under Section 401(a) of the Code to maintain such qualification; (iii) make all required contributions to any Plan subject to Section 412 of the Code; (iv) not engage in a non-exempt prohibited transaction or violation of the fiduciary responsibility rules with respect to any Plan; and (v) not engage in a transaction that could reasonably be expected to be subject to Section 4069 or 4212(c) of ERISA.

(b)The Canadian Borrower shall (i) maintain each Canadian Pension Plan in compliance in all material respects with the applicable Requirements of Law; (ii) cause each Canadian Pension Plan which is qualified under applicable Requirements of Law to maintain such qualification; (iii) make all required contributions to any Canadian Pension Plan subject to applicable Requirements of Law; and (iv) not become liable under, or contribute to, any Canadian Pension Plan that provides benefits on a defined benefit basis, other than a Canadian MEPP.

(c)The Canadian Borrower shall, in relation to any Canadian MEPP, make all contributions it is required to make and shall, in all material respects, comply with its obligations as a participating employer under any such Canadian MEPP.

7.9Debt. No Borrower shall, nor permit the Parent to, create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Debt, except:

(a)the Obligations;

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(b)Debt in the form of bank overdrafts in the ordinary course of business;

(c)(i) Debt incurred by any Borrower to finance Capital Expenditures and (ii) Capital Lease obligations of any Borrower;

(d)Debt in respect of Accommodation Obligations permitted under Section 7.12;

(e)Debt of the Parent to ATI in connection with any advances made pursuant to Section 7.11(b);

(f)Debt in respect of Hedge Agreements and Foreign Currency Exchange Contracts entered into in the ordinary course of business and not for speculative purposes;

(g)(i) intercompany Debt among the U.S. Borrowers and (ii) Debt incurred by the Canadian Borrower in connection with an Investment in the Canadian Borrower permitted under Section 7.11(i);

(h)Permitted Existing Debt and refinancings, renewals or extensions thereof so long as (A) no Default or Event of Default exists or would be caused thereby, (B) the principal amount of any such Permitted Existing Debt is not increased (other than by an amount equal to the reasonable amount of fees and expenses payable in connection with such refinancing, renewal or extension); (C) the maturity date thereof is not accelerated as a result of any such refinancing, renewal or extension and (D) no such refinancing, renewal or extension would be otherwise detrimental in any material respect to the rights of or benefits to the Borrowers, the Agent or the Lenders;

(i)Debt in an aggregate amount of up to $25,000,000 of any Person assumed from the acquired entity (or, if applicable, its Affiliates) in connection with an Acquisition of such Person permitted under Section 7.11(i) if such Person becomes a Borrower after the date hereof; provided, that such Debt exists at the time such Person becomes a Borrower and was not created in anticipation of such acquisition;

(j)Debt consisting of (A) unsecured deferred payment obligations of a Borrower owing to sellers in permitted Acquisitions and (B) customary purchase price adjustments, earn-outs, indemnification obligations and similar items of the Borrowers in connection with permitted Acquisitions and asset sales;

(k)the AT Sourcing Obligation;

(l)unsecured Debt of the Credit Parties; provided that (i) no Default or Event of Default exists immediately prior to or immediately following the incurrence of such Debt, (ii) the aggregate outstanding principal amount thereof, together with the aggregate outstanding principal amount of Debt permitted under Sections 7.9(m) and (n), shall not exceed $400,000,000 at any time, (iii) the final maturity of such Debt shall not be earlier than 180 days

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following the Stated Termination Date and (iv) mandatory prepayments and scheduled amortization of such Debt shall not exceed 1% of the original principal amount thereof annually;

(m)Permitted Secured Debt; provided that (x) no Default or Event of Default exists immediately prior to or immediately following the incurrence of such Debt and (y) the aggregate outstanding principal amount of such Debt, together with the aggregate outstanding principal amount Debt permitted under Sections 7.9(l) and (n), shall not exceed $400,000,000 at any time; and

(n)other unsecured Debt of the Credit Parties (i) consisting of uncommitted letter of credit facilities for the issuance of letters of credit with an aggregate maximum face amount not exceeding $25,000,000 at any time and (ii) consisting of other unsecured Debt not exceeding in the aggregate a principal amount of $25,000,000 at any one time outstanding; provided that with respect to any Debt permitted under clauses (i) and (ii) immediately above, (x) no Default or Event of Default exists immediately prior to or immediately following the incurrence of such Debt and (y) the aggregate outstanding principal amount of such Debt, together with the aggregate outstanding principal amount of Debt permitted under Sections 7.9(l) and (m), shall not exceed $400,000,000 at any time.

7.10Sales of Assets; Liens.

(a)Sales. No Borrower shall, nor permit the Parent to, sell, assign, transfer, lease, convey or otherwise dispose of, any properties or assets, whether now owned or hereafter acquired, or any income or profits therefrom, except among the Credit Parties (other than the Canadian Borrower) and except:

(i)sales of inventory in the ordinary course of business;

(ii)subleases of real property;

(iii)sales or other dispositions of equipment that is obsolete, unused or, in the judgment of such Borrower, no longer best used or useful in its business;

(iv)bulk sales or other dispositions of the Inventory of a Borrower not in the ordinary course of business in connection with store closings, at arm’s length, provided, that such store closures and related Inventory dispositions shall not exceed (i) in any Fiscal Year of the Parent and its Subsidiaries, ten percent (10%) of the number of the Borrowers’ stores as of the beginning of such Fiscal Year (net of new store openings) and (ii) in the aggregate from and after the Effective Date, twenty-five percent (25%) of the number of the Borrowers’ stores in existence as of the Effective Date (net of new store openings), provided that, in all events, (A) if an Activation Period is in effect, the proceeds from such disposition shall be applied to the reduction of the Obligations in the order provided for in Section 7.25 or, if applicable, Section 3.5, and (B) no Event of Default shall exist immediately prior to or after giving effect to such disposition, and (C) all sales of Inventory in connection with any store closings (in a single or series of related transactions) of five percent (5%) or more of the number of the Borrowers’ stores then in existence, shall be in accordance with liquidation agreements and with professional liquidators reasonably acceptable to the Agent;

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(v)license or sublicense agreements or marketing agreements with third parties in the ordinary course of business, provided, however that no such license or sublicense or marketing agreement shall materially impair the ability of the Agent to dispose of the Collateral;

(vi)sales or dispositions of Cash Equivalents;

(vii)sales or other dispositions of assets to the Canadian Borrower, subject to Section 7.11(i) and Section 7.15;

(viii)sales of Investments permitted under clauses (j) or (k) of Section 7.11; and

(ix)so long as no Event of Default shall have then occurred and be continuing or would result therefrom, transfer of cash or property (A) to a charitable foundation established by any Borrower or the Parent in an amount not to exceed $1,000,000 (or, if Liquidity is in excess of $37,500,000 both before and after giving effect thereto, $20,000,000) for each Fiscal Year or (B) to a charitable foundation not established by any Borrower or the Parent in the ordinary course of business and consistent with industry practice;

(x)dispositions as the result of any taking or condemnation so long as insurance, expropriation or condemnation proceeds are received in connection therewith and are applied as required by Section 7.6;

(xi)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 $15,000,000 pursuant to any one single disposition or $20,000,000 in the aggregate pursuant to several dispositions in any one Fiscal Year; and

(xii)a sale of the Louisville, Kentucky distribution center as part of a sale-leaseback transaction in accordance with Section 7.18;

provided, that no disposition permitted above (other than transfers permitted by clause (i), (vii), (viii), (ix) or (xi)) in excess of $1,000,000 per transaction 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 (other than in the case of subleases or license or sublicense or marketing arrangements) at least 70% of the price is to be paid in cash at the closing of the disposition.

(b)Liens. No Borrower shall, nor permit the Parent 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 granted to the Agent securing the Obligations;

(ii)Liens upon (A) the interest or title of a lessor or secured by a lessor’s interest under any lease under which any Borrower is the lessee or (B) the interest of a lessee under any lease under which any Borrower is the lessor;

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(iii)Permitted Liens;

(iv)Liens granted by any Borrower (including the interest of a lessor under a Capital Lease) and Liens on property existing at the time of acquisition thereof by such Borrower, in each case securing Debt permitted by Section 7.9(c), provided that such Liens are limited to the assets financed with such Debt;

(v)Permitted Existing Liens and any extensions, renewals and replacements thereof so long as (i) the amount of the obligations secured thereby is not increased in connection with any such extension, renewal or replacement and (ii) such Lien is limited to the property subject thereto prior to such extension, renewal or replacement;

(vi)Liens on assets other than Collateral in respect of Debt of a Person permitted pursuant to Section 7.9(i) so long as such Liens attach only to assets of such Person existing prior to the Acquisition, amalgamation or merger of such Person;

(vii)to the extent Debt 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 (vi) 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;

(viii)Liens on cash earnest money deposits in connection with Acquisitions otherwise permitted by this Agreement in an aggregate amount not to exceed $2,500,000 at any time outstanding; and

(ix)Liens in respect of Debt permitted pursuant to Section 7.9(m).

7.11Investments. No Borrower shall, nor permit the Parent to, make or own, directly or indirectly, any Investment in any Person except:

(a)Investments by the Parent and the Borrowers in Cash Equivalents;

(b)Investments by any Borrower resulting from advances to the Parent to fund any of the items set forth in Section 7.13(a);

(c)Investments by the Parent in ATI;

(d)Investments by any U.S. Borrower in any other U.S. Borrower (other than any Investment made in connection with the Acquisition of any U.S. Borrower);

(e)Investments by the Borrowers in joint ventures (in the form of corporations, partnerships or otherwise) and Unrestricted Subsidiaries; provided that, after giving effect to such Investment (i) the aggregate amount then outstanding of all such Investments (other than the AT Sourcing Obligation) in excess of the amount of Investments in joint ventures and Unrestricted Subsidiaries existing on the Effective Date by the Borrowers (including

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Investments in the nature of sales and transfers of assets for less than fair market value and Accommodation Obligations) shall not exceed $75,000,000, (ii) Liquidity shall not be less than $37,500,000 both after giving effect to such Investment and on a projected basis for a period of twelve months following such Investment and (ii) no Event of Default shall exist or will occur as a result of such Investment;

(f)Investments not exceeding $10,000,000 at any one time outstanding in respect of loans to senior executives and key employees of the Parent or any Borrower; provided that after giving effect to such Investment, (i) Liquidity shall not be less than $37,500,000 both after giving effect to such Investment and on a projected basis for a period of twelvemonths following such Investment, and (ii) no Event of Default shall exist or will occur as a result of such Investment;

(g)[reserved];

(h)Investments in respect of Hedge Agreements and Foreign Currency Exchange contracts entered into in the ordinary course of business and not for speculative purposes;

(i)other Investments by the Borrowers, including Acquisitions, provided that (i) the Person to be (or whose assets are to be) acquired does not oppose such Acquisition, (ii) the Person to be acquired will immediately become, directly or indirectly, a Wholly-Owned Subsidiary of ATI, (iii) the line or lines of business of the Person to be acquired are substantially the same as one or more line or lines of business conducted by the Borrowers at the time such Acquisition is consummated or is permitted to be conducted by the Borrowers pursuant to Section 7.14, (iv) immediately after giving effect to any such Investment (including reasonable estimates of any indemnification or purchase price adjustment obligations), Liquidity shall not be less than the greater of (A) $25,000,000 and (B) twelve and a half percent (12.5%) of the Line Cap both after giving effect to such Investment and on a projected pro forma basis for a period of six months following such Investment, (v) immediately after giving effect to such Investment, no Event of Default shall exist or will occur as a result of such Investment and (vi) solely to the extent the Liquidity in the foregoing clause (iv) is less than the greater of (A) $35,000,000 and (B) twenty percent (20%) of the Line Cap, the Fixed Charge Coverage Ratio for the Twelve-Month Period most recently completed prior to such Investment, calculated on a pro forma basis as if such Investment were made at the beginning of such Twelve-Month Period, shall be at least 1.00 to 1.00;

(j)promissory notes and other similar non-cash consideration received by any Borrower in connection with dispositions of assets permitted by Section 7.10(a);

(k)Investments in securities of account debtors received pursuant to any proposal, plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such account debtors;

(l)Investments consisting of Accommodation Obligations permitted under Section 7.12 and the exercise thereof;

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(m)Investments in joint ventures and Unrestricted Subsidiaries existing on the Effective Date and set forth on Schedule 7.11; and

(n)Investments in the form of progress payments in connection with the development of software and related hardware made in the ordinary course of business and consistent with past practice of the Parent and the Borrowers.

The Borrowers hereby agree to provide to the Agent on the date of consummation of any Investment over $2,000,000 in the aggregate in any Fiscal Year permitted under clauses (e), (f), (g) and (i) above, a certificate of a Responsible Officer of ATI that each of the conditions contained in the provisos to such clauses have been met and demonstrating in a manner satisfactory to the Agent the required projected and pro forma Liquidity.

7.12Accommodation Obligations. No Borrower shall, nor permit the Parent 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 Debt 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 any Borrower or such Subsidiary;

(c)Accommodation Obligations of ATI in connection with obligations of the other Credit Parties to fund (A) income and franchise taxes payable in any Fiscal Year owed by the Credit Parties pursuant to the Amended and Restated Tax Sharing Agreement dated as of November 10, 2003 between the Parent and ATI; (B) other ordinary operating expenses of the Parent not in excess of $500,000 in any Fiscal Year; (C) purchases of capital stock of the Parent held by employees of any Credit Party to enable such employee to pay withholding taxes in connection with the vesting of such stock and (D) the Parent’s share of expenses incurred in connection with any public offering of Common Stock;

(d)Accommodation Obligations of the Parent or any Borrower in respect of any obligations of any U.S. Borrower otherwise permitted hereunder;

(e)Accommodation Obligations with respect to obligations of Unrestricted Subsidiaries to the extent such Accommodation Obligations constitute Investments permitted by Section 7.11(e);

(f)Accommodation Obligations in respect of customary indemnification and purchase price adjustment obligations incurred in connection with Acquisitions or asset sales permitted by this Agreement; and

(g)Accommodation Obligations in respect of performance bonds, surety bonds, appeal bonds or custom bonds required in the ordinary course of business or in connection with judgments that do not result in an Event of Default.

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7.13Restricted Payments. No Borrower shall, nor permit the Parent to, declare or make any Restricted Payment except:

(a)dividends paid and declared in any Fiscal Year by any U.S. Borrower to the Parent or ATI to fund (i) income and franchise taxes payable in such Fiscal Year owed by ATI pursuant to the Amended and Restated Tax Sharing Agreement dated as of November 10, 2003between the Parent and ATI; (ii) other ordinary operating expenses of the Parent not in excess of $500,000 in any Fiscal Year; (iii) purchases of Common Stock of the Parent held by employees of any Credit Party to enable such employee to pay withholding taxes in connection with the vesting of such stock and (iv) the Parent’s share of expenses incurred in connection with any public offering of Common Stock;

(b)any Restricted Payment made by any Borrower (other than ATI) on its capital stock;

(c)Restricted Payments by the Parent or any Borrower (in addition to payments made pursuant to clause (a)(iii) of this Section) to acquire shares of Common Stock from employees of the Parent or any Borrower in an aggregate amount not exceeding $100,000 in any Fiscal Year; and

(d)Restricted Payments by ATI to the Parent to concurrently fund any dividend, redemption, retirement, sinking fund, or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of Common Stock of the Parent now or hereafter outstanding and Restricted Payments by the Parent for such purpose; provided that after giving effect to any such Restricted Payment (i) Liquidity shall not be less than the greater of (A) $25,000,000 and (B) twelve and a half percent (12.5%) of the Line Cap on the date of such Restricted Payment and on a projected pro forma basis (calculated assuming that such Restricted Payment was made on the first day of the then current month) for the following six-month period, including the month in which such Restricted Payment is made, (ii) no Default or Event of Default shall exist or will occur as a result of such Restricted Payment and (iii) solely to the extent the Liquidity in the foregoing clause (i) is less than the greater of (A) $35,000,000 and (B) twenty percent (20%) of the Line Cap, the Fixed Charge Coverage Ratio for the Twelve-Month Period most recently completed prior to such Restricted Payment, calculated on a pro forma basis as if such Restricted Payment were made at the beginning of such Twelve-Month Period, shall be at least 1.10 to 1.00.

The Borrowers hereby agree to provide to the Agent on the date of consummation of each such Restricted Payment over $2,000,000 in the aggregate in any Fiscal Year, a certificate of a Responsible Officer of ATI certifying that each of the conditions contained in Section 7.13(d) have been met and demonstrating in a manner satisfactory to the Agent such compliance.

7.14Conduct of Business. No Borrower shall, nor permit any of its Restricted Subsidiaries to, engage in any business other than (a) the business engaged in by such Borrower or such Subsidiary on the date hereof and other businesses similar or related thereto; and (b) any business activities related to the home furnishings industry.

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7.15Transactions with Affiliates. No Borrower shall, nor permit the Parent to, at any time after the Effective 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 outside the ordinary course of its business or inconsistent with past practices or on terms that are less favorable to it than those fair and reasonable terms that might be obtained in a comparable arms-length transaction at the time; provided that the foregoing restriction shall not apply to transactions among any U.S. Borrower and any other Credit Party (other than the Canadian Borrower), customary fees paid to members of the Board of Directors of any Borrower or the Parent or arrangements permitted under Section 7.11(f) or the business contemplated by the joint ventures permitted under Section 7.11(e).

7.16Restriction on Fundamental Changes. No Borrower shall, nor permit the Parent to, enter into any merger, amalgamation 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 7.10(a), (ii) that any U.S. Borrower may merge into, amalgamate with, or convey, sell, lease or transfer all or substantially all of its assets to, any other U.S. Borrower, (iii) that the Canadian Borrower may convey, sell, lease or transfer all or substantially all of its assets to any U.S. Borrower, (iv) that nothing contained herein shall prohibit any Subsidiary of ATI from voluntarily dissolving or liquidating if in the reasonable opinion of ATI’s senior management such dissolution or liquidation has no reasonable likelihood of having a Material Adverse Effect and (v) the merger or amalgamation of any Person with or into a Borrower if the Acquisition of the capital stock of such Person by such Borrower would have been permitted under Section 7.11(i); provided, that with respect to the foregoing clauses (ii) and (v), (x) in the case of ATI, ATI shall be the continuing or surviving Person and (y) if a Borrower (other than ATI) is not the surviving or continuing Person, the surviving or continuing Person becomes a Borrower and a party to this Agreement and all other applicable Loan Documents in accordance with Section 7.24(c).

7.17ERISA. No Borrower shall, nor 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 Code 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 Code), whether or not waived;

(c)terminate, or permit any ERISA Affiliate to terminate, any Benefit Plan which would result in any liability of any Borrower or any ERISA Affiliate under Title IV of ERISA;

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(d)fail, or permit any ERISA Affiliate to fail, to make any contribution or payment to any Multiemployer Plan which any Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any Requirement of 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 Code 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 any Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the Code.

7.18Sales and Leasebacks. Except with respect to any sale-leaseback of the Borrowers’ main distribution center in Louisville, Kentucky approved by the Required Lenders, no Borrower shall, nor permit the Parent 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 any Borrower has sold or transferred or is to sell or transfer to any other Person, or (b) which such Borrower 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.

7.19Margin Regulations. No portion of the proceeds of any credit extended under this Agreement shall be used, directly or indirectly, in any manner which would cause any Credit Extension or the application of such proceeds to violate Regulation U or X of the Federal Reserve Board, in each case as in effect on the date or dates of such Credit Extension and such use of proceeds.

7.20Change of Fiscal Year. Neither the Parent nor any Borrower shall change its Fiscal Year.

7.21Subsidiaries.

(a)No Borrower shall, nor permit the Parent to, hereafter (i) become a general partner in any general partnership or limited partnership or (ii) organize or acquire any other Person, except (A) any Borrower may organize or acquire any new Wholly Owned Subsidiary that becomes a Borrower pursuant to the terms of Section 7.24(c) and (B) subject to the provisions of Section 7.24(d), any Borrower may organize, acquire or participate in any new joint venture (other than a general partnership) or Unrestricted Subsidiary permitted pursuant to Section 7.11(e).

(b)No Borrower shall create or otherwise permit to become effective any consensual encumbrance or restriction of any kind, other than those contemplated in or permitted under the Loan Documents (including, without limitation, Liens permitted under Section 7.10(b)(iv) hereof), on the ability of any Borrower to pay dividends or make any other distribution in respect of its stock or make any other Restricted Payment, pay any Debt or other obligation owed to any other Borrower, make loans or advances or other Investments in any

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other Borrower or sell, transfer or otherwise convey any of its property to any other Borrower except in any lease the terms of which prohibit the transfer of such lease to any Credit Party or otherwise.

7.22Fixed Charge Coverage Ratio. Upon the occurrence of a Fixed Charge Trigger Period, the Borrowers shall not permit the Fixed Charge Coverage Ratio to be less than 1.00 to 1.00 determined as of (a) the last day of any Twelve-Month Period most recently ended before the commencement of a Fixed Charge Trigger Period and (b) the last day of each Twelve-Month Period ending during any Fixed Charge Trigger Period.

7.23Further Assurances. The Credit Parties shall execute and deliver, or cause to be executed and delivered, to the Agent and/or the Lenders such documents and agreements, and shall take or cause to be taken such actions, as the Agent or any Lender may, from time to time, reasonably request to carry out the terms and conditions of this Agreement and the other Loan Documents. The Credit Parties shall also deliver to Agent, upon request, written detail with respect to Existing Letters of Credit, intercompany Debt, Deposit Accounts, Credit Card Processors and Trademarks as the Agent may reasonably request, all certified by a Responsible Officer of Borrower as true and correct.

7.24Pledge of After-Acquired Property; Additional Borrowers. (a) With respect to any property acquired after the Effective Date by the Parent or any U.S. Borrower (other than (1) any property described in paragraph (b) or (c) below, (2) any property subject to a Lien expressly permitted by Section 7.10(b)(iv), (vi), (vii) and (viii), (3) leasehold interests, motor vehicles and other property excluded from the Collateral pursuant to Section 2(a) of the Security Agreement, (4) any shares of Parent’s capital stock or (5) any Margin Stock, unless the Parent or the Borrowers in aggregate own at any time Margin Stock (other than shares of Parent’s capital stock) with an aggregate value over $1,000,000, in which case this Section will apply to Margin Stock (other than shares of Parent’s capital stock) to the extent not promptly disposed of for Cash Equivalents to be included as Collateral) as to which the Agent, for the benefit of the Lenders, does not have a perfected Lien, the applicable U.S. Borrower shall, or shall cause the Parent to, promptly (i) execute and deliver to the Agent such amendments to the Pledge and Security Agreement or such other documents as the Agent deems necessary or advisable to grant to the Agent, for the benefit of the Lenders, a security interest in such property and (ii) take all actions necessary or advisable to grant to the Agent, for the benefit of the Lenders, a perfected first priority (subject to prior Liens permitted under the Loan Documents) security interest in such property, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Collateral Documents or by any Requirement of Law or as may be requested by the Agent; provided, that the U.S. Borrowers shall not be required to update (or reimburse the Agent for any update of) any filings with the U.S. Patent & Trademark Office more frequently than once per year.

(b)[reserved].

(c)With respect to any Subsidiary other than an Unrestricted Subsidiary created or acquired after the Effective Date, the applicable Credit Party shall promptly (i) cause such new Subsidiary (A) to become a party to this Agreement as a “Borrower” hereunder and the Security Agreement as “Grantor”, (B) to take such actions _________

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necessary or advisable to grant to the Agent for the benefit of the Lenders a perfected first priority (subject to prior Liens permitted under the Loan Documents) security interest in the Collateral described in the Security Instruments with respect to such new Subsidiary, including the filing of Uniform Commercial Code financing statements in such jurisdictions as may be required by the Security Instruments or by Requirement of Law or as may be requested by the Agent and (C) to deliver to the Agent a certificate of such Subsidiary of the type delivered on the Effective Date with respect to other Borrowers in form and substance satisfactory to the Agent, (ii) execute and deliver to the Agent such amendments to the Security Instruments and UCC‑1 financing statements as the Agent deems necessary or advisable to grant to the Agent, for the benefit of the Lenders, a perfected first priority (subject to prior Liens permitted under the Loan Documents) security interest in the Securities of such new Subsidiary that are owned by any Credit Party, (iii) deliver to the Agent the certificates, if any, representing such Securities, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of such Credit Party, and (iv) if requested by the Agent, deliver to the Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Agent.

7.25Cash Collateral and Deposit Accounts.

(a)Until the Agent notifies ATI to the contrary, the Credit Parties (other than the Canadian Borrower) shall make collection of all Accounts and other Collateral for the Agent, shall receive all payments as the Agent’s trustee, and shall immediately deliver all payments in their original form duly endorsed in blank into one or more Approved Deposit Accounts established in the name of such Credit Party. All amounts deposited into such Approved Deposit Accounts shall be swept on a daily basis and transferred to the Payment Account for further dispersal subject to the Collection Account Control Agreement. None of the Borrowers shall make any material change in their cash management practices, including any change that would cause amounts held in any Approved Deposit Account not to be swept on a daily basis to the Payment Account. Following receipt of written notice from the Agent that an Activation Period (as defined below) exists and until receipt of written notice from the Agent that all Activation Periods have terminated, the Clearing Bank shall not permit any Credit Party to make any withdrawals from the Payment Account or other Controlled Account. Prior to or after the termination of an Activation Period, the Credit Parties shall have the right to operate and transact business through the Payment Account in normal fashion, including making withdrawals from the Payment Account, but covenants to the Agent it will not close the Payment Account. No later than two (2) Business Days following the commencement of the Activation Period, and continuing on each Business Day thereafter, the Clearing Bank shall transfer all collected and available balances in the Payment Account to the Agent as the Agent shall direct. The “Activation Period” means each period which (a) commences upon the day that either (i) Liquidity is less than the greater of (A) $25,000,000 and (B) twelve and a half percent (12.5%) of the Line Cap or (ii) an Event of Default has occurred and is continuing, and (b) terminates on the day Liquidity is in excess of the greater of (i) $25,000,000 and (ii) twelve and a half percent (12.5%) of the Line Cap for a period of forty-five (45) consecutive days or such Event of Default has been waived, as applicable.

(b)On or prior to the Effective Date, the U.S. Borrowers shall have delivered to the Agent (i) notifications executed by each of the U.S. Borrowers to each

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depository institution identified on Schedule 6.25 with which a Deposit Account is maintained, in form and substance reasonably satisfactory to the Agent, of the Agent’s interest in each related Deposit Account (each, a “DDA Notification”), which DDA Notifications shall be held in escrow by the Agent until the occurrence of an Activation Period, at which time the Agent may, in its discretion, forward such DDA Notifications to the applicable institutions, and (ii) notifications executed on behalf of the U.S. Borrowers to each credit card processor identified on Schedule 6.25 in form and substance reasonably satisfactory to the Agent of the Agent’s interest in all related credit card receivable proceeds (each, a “Credit Card Notification”), which Credit Card Notifications the Agent may, in its discretion, forward to the applicable credit card processors at any time. The DDA Notifications and the Credit Card Notifications shall require during the continuance of an Activation Period, the sweep on each Business Day of all available cash receipts and other proceeds from the sale or disposition of any Collateral, including, without limitation, the proceeds of all credit card receivables (all such cash receipts and proceeds, “Cash Receipts”) (and with respect to institutions which maintain a Deposit Account net of a minimum balance not to exceed $10,000) to the Payment Account. The Agent may request at any time that the U.S. Borrowers provide or cause to be provided to the Agent Control Agreements with respect to each Deposit Account and Securities Accounts, all as identified on Schedule 6.25 or hereafter maintained by the Credit Parties, which the Agent determines contains from time to time any material amount of cash or other property of the Credit Parties (other than the Canadian Borrower).

(c)The U.S. Borrowers may close Deposit Accounts or Securities Accounts and/or open new Deposit Accounts or Securities Accounts, subject to (i) written quarterly notification to the Agent in the case of any closure of an Approved Deposit Account and (ii) the execution and delivery to the Agent of appropriate DDA Notifications or Control Agreements, as applicable, consistent with the provisions of this Section 7.25. Unless consented to in writing by the Agent, the U.S. Borrowers may not enter into any agreements with additional credit card processors unless, contemporaneously therewith, a Credit Card Notification is executed and delivered to the Agent.

(d)If at any time during the continuance of an Activation Period, any cash or cash equivalents owned by the U.S. Borrowers and constituting proceeds of Collateral are deposited to any account, or held or invested in any manner, other than in an Approved Deposit Account, the Agent may require the U.S. Borrowers to close such account and have all funds therein transferred to the Payment Account, or such other Approved Deposit Account as the Agent may direct.

(e)In the event that, notwithstanding the provisions of this Section 7.25, during the continuance of an Activation Period, the U.S. Borrowers receive or otherwise have dominion and control of any such proceeds or collections of Collateral, such proceeds and collections shall be held in trust by the U.S. Borrowers for the Agent and shall not be commingled with any of the U.S. Borrowers’ other funds or deposited in any account of any U.S. Borrower other than as instructed by the Agent.

(f)All payments received by the Agent during an Activation Period at a bank account designated by it, will be the Agent’s sole property for its benefit and the benefit of the Lenders and, provided no Event of Default shall have occurred and be continuing, will be

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credited to the Loan Account immediately (conditional upon final collection) if received no later than 12:00 noon (New York City time) and otherwise on the next Business Day and shall be applied to outstanding Obligations as follows: first, to pay any fees, indemnities or expense reimbursements then due to the Agent; second, to pay interest and principal due to the Bank in respect of all Non-Ratable Loans; third, to pay all fees, expenses and indemnities due to the Letter of Credit Issuers in respect of Letters of Credit; fourth, to pay any Obligations constituting fees due to the Lenders (other than fees relating to Bank Products); fifth, to pay interest due in respect of all Revolving Loans (other than Non-Ratable Loans); and sixth, to pay or prepay principal of all Revolving Loans (other than Non-Ratable Loans) and unpaid reimbursement obligations in respect of Letters of Credit; with any excess after all such applications of payment being released to the Borrowers.

7.26Restrictions on Payment of Certain Debt. No Credit Party shall, nor permit any of its Restricted Subsidiaries to, make any voluntary prepayments with respect to any Debt unless, after giving effect to any such payment (a) Liquidity shall not be less than (i) $25,000,000 and (ii) twelve and a half percent (12.5%) of the Line Cap on the date of such payment and on a pro forma basis (calculated assuming that such payment was made on the first day of the then current month) for the following six-month period, including the month in which such payment is made, (b) no Default or Event of Default shall exist or will occur as a result of such payment and (c) solely to the extent the Liquidity in the foregoing clause (a) is less than the greater of (i) $35,000,000 and (iii) twenty percent (20%) of the Line Cap, the Fixed Charge Coverage Ratio, calculated on a pro forma basis, shall be at least 1.00 to 1.00. The Credit Parties hereby agree to provide to the Agent on the date of consummation of each such payment over $2,000,000 in the aggregate in any Fiscal Year, a certificate of a Responsible Officer of ATI certifying that each of the conditions contained in Section 7.26 have been met and demonstrating in a manner satisfactory to the Agent such compliance.

ARTICLE 8

CONDITIONS OF LENDING

8.1Conditions Precedent to Making of Credit Extensions on the Effective Date. The obligation of the Lenders to make the initial Revolving Loans, if any, on the Effective Date, and the obligation of the Agent to cause any Letter of Credit Issuer to initially issue any Letter of Credit on the Effective Date (including for purposes hereof, the inclusion of each letter of credit set forth on Schedule 1.3 hereto as a Letter of Credit governed by this Agreement), are subject to the following conditions precedent having been satisfied in a manner satisfactory to the Agent and each Lender:

(a)This Agreement and the other Loan Documents shall have been executed by each party thereto and the Borrowers shall have performed and complied with all covenants, agreements and conditions contained herein and the other Loan Documents which are required to be performed or complied with by the Borrowers before or on such Effective Date.

(b)Immediately after making the Revolving Loans (including such Revolving Loans made to pay fees, costs and expenses then payable under this Agreement), if any, on the Effective Date and after giving effect to any Letters of Credit issued or outstanding on the Effective Date, the Borrowers shall have Availability of at least $150,000,000.

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(c)The Agent and the Lenders shall have received such opinions of counsel for the Borrowers and the other Credit Parties as the Agent shall request, each such opinion to be in a form, scope, and substance satisfactory to the Agent, the Lenders, and their respective counsel.

(d)The Agent shall have received:

(i)fully completed financing statements to be filed under the UCC of all jurisdictions that the Agent may deem necessary or desirable in order to perfect the Agent’s Liens; and

(ii)duly executed UCC-3 Termination Statements and such other instruments, in form and substance satisfactory to the Agent, as shall be necessary to terminate and satisfy all Liens on the property of the Credit Parties other than Liens permitted hereunder.

(e)The U.S. Borrowers shall have paid all fees and expenses of the Agent (and all other fees required to be paid hereunder) and the Attorney Costs of single counsel to the Agent and the Lenders incurred by the Agent in connection with any of the Loan Documents and the transactions contemplated thereby to the extent invoiced.

(f)The Agent shall have received, in form, scope, and substance, reasonably satisfactory to the Agent, evidence of all insurance coverage as required by this Agreement.

(g)The Agent shall have completed all due diligence, including receipt of completed appraisals and field examinations, with results reasonably satisfactory to the Agent.

(h)The Agent shall have received financial projections consisting of (i) income statements, balance sheets and statements of cash flow (including a monthly model of Availability) for Fiscal Year 2013 prepared on a quarterly and an annual basis and (ii) income statements, balance sheets and statements of cash flow (without any model of Availability) for Fiscal Years 2012, 2014 and 2015 prepared on an annual basis, each of which shall be in form and substance reasonably satisfactory to the Agent.

(i)The parties hereto shall have executed and delivered all documents, certificates and instruments necessary to evidence the release of the Agent’s security interest in certain assets of the U.S. Borrowers under the Original Credit Agreement that no longer constitute Collateral.

(j)All proceedings taken in connection with the execution of this Agreement, all other Loan Documents and all documents and papers relating thereto shall be reasonably satisfactory in form, scope, and substance to the Agent and the Lenders.

(k)Without limiting the generality of the items described above, each Borrower and each Person guarantying or securing payment of the Obligations shall have delivered or caused to be delivered to the Agent (in form and substance reasonably satisfactory

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to the Agent), the financial statements, instruments, resolutions, documents, agreements, certificates, opinions and other items set forth on the “Closing Checklist” delivered by the Agent to ATI prior to the Effective Date.

The acceptance by the Borrowers of any Credit Extension made on the Effective Date shall be deemed to be a representation and warranty made by the Borrowers to the effect that all of the conditions precedent to the making of such Credit Extension have been satisfied, with the same effect as delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer of each Borrower, dated the Effective Date, to such effect.

Execution and delivery to the Agent by a Lender of a counterpart of this Agreement shall be deemed confirmation by such Lender that (i) all conditions precedent in this Section 8.1 have been fulfilled to the satisfaction of such Lender, (ii) the decision of such Lender to execute and deliver to the Agent an executed counterpart of this Agreement was made by such Lender independently and without reliance on the Agent or any other Lender as to the satisfaction of any condition precedent set forth in this Section 8.1, and (iii) all documents sent to such Lender for approval, consent, or satisfaction were acceptable to such Lender.

8.2Conditions Precedent to Each Credit Extension. The obligation of the Lenders to make each Credit Extension, including the initial Revolving Loans on or after the Effective Date, and the obligation of any Letter of Credit Issuer to issue or permit the renewal (automatic or otherwise) of any Letter of Credit shall be subject to the further conditions precedent that on and as of the date of any such Credit Extension:

(a)The following statements shall be true, and the acceptance by any Borrower of any Credit Extension shall be deemed to be a statement to the effect set forth in clauses (i), (ii) and (iii) with the same effect as the delivery to the Agent and the Lenders of a certificate signed by a Responsible Officer of such Borrower, dated the date of such Credit Extension, stating that:

(i)The representations and warranties of the Credit Parties contained in this Agreement and the other principal Loan Documents are correct in all material respects on and as of the date of such Credit Extension and are deemed made on and as of such date, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agent and the Lenders have been notified in writing by any Borrower that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty; and

(ii)No event has occurred and is continuing, or would result from such Credit Extension, which constitutes a Default or an Event of Default; and

(iii)No event has occurred and is continuing, or would result from such Credit Extension, which has had or would have a Material Adverse Effect.

(b)No such Credit Extension shall exceed Availability, provided, however, that the foregoing conditions precedent are not conditions to each Lender participating in or reimbursing the Bank or the Agent for such Lenders’ Pro Rata Share of any Non-Ratable

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Loan or Agent Advance made in accordance with the provisions of Sections 1.2(h) or (i) or any Revolving Loan made to reimburse any drawing under a Letter of Credit pursuant to Section 1.3(e).

(c)The Agent shall have received a Borrowing Base Certificate giving effect to such Credit Extension.

ARTICLE 9

DEFAULT; REMEDIES

9.1Events of Default. It shall constitute an event of default (“Event of Default”) if any one or more of the following shall occur for any reason:

(a)any failure by any Borrower to pay (i) the principal of the Revolving Loans or reimbursement obligation under any Letter of Credit when due, (ii) the interest on any of the Obligations (other than Bank Product Obligations) or any fee hereunder when due, whether upon demand or otherwise and such failure under this clause (ii) shall continue for a period of three (3) or more Business Days, or (iii) any other amount owing hereunder when due, whether upon demand or otherwise and such failure under this clause (iii) shall continue for a period of five (5) or more Business Days;

(b)any representation or warranty made or deemed made to the Agent, the Letter of Credit Issuers or the Lenders by any Borrower in this Agreement or by any Credit Party in any of the other Loan Documents, any Financial Statement, or any certificate furnished by any Borrower or any of its Subsidiaries at any time to the Agent, the Letter of Credit Issuers or any Lender shall prove to be untrue in any material respect as of the date on which made, deemed made, or furnished;

(c)(i) any default by a Credit Party shall occur in the observance or performance of any of the covenants and agreements contained in Sections 5.2(j), 7.2, 7.9 through 7.22 or 7.25 (including any corresponding default of the Parent under Section 4(g) of the Parent Guaranty), (ii) any default by a Credit Party shall occur in the observance or performance of any of the covenants and agreements contained in Sections 5.2 (other than 5.2(j)), 5.3 or 7.5 (including any corresponding default of the Parent under Section 4(g) of the Parent Guaranty) and such default shall continue for five (5) Business Days or more after written notice thereof from the Agent or any Lender or actual knowledge thereof by a Responsible Officer of any Borrower; or (iii) any default by a Credit Party shall occur in the observance or performance of any of the other covenants or agreements contained in any other Section of this Agreement or any other principal Loan Document, and such default shall continue for thirty (30) days or more after written notice thereof from the Agent or any Lender or actual knowledge thereof by a Responsible Officer of any Borrower;

(d)any default shall occur with respect to any Debt (other than the Obligations but including Bank Product Obligations) of any Borrower or any of its Subsidiaries in an outstanding principal amount which exceeds $5,000,000 (“Material Debt”), or under any agreement or instrument under or pursuant to which any such Material Debt may have been issued, created, assumed, or guaranteed by any Borrower or any of its Subsidiaries, and such _____

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default shall continue for more than the period of grace, if any, therein specified, if the effect thereof (with or without the giving of notice or further lapse of time or both) is to accelerate, or to permit the holders of any such Material Debt to accelerate, the maturity of any such Material Debt; or any such Material Debt shall be declared due and payable or be required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof;

(e)any Credit Party shall (i) file a voluntary petition in bankruptcy or file a voluntary petition, a notice of intention to make a proposal, a proposal or an answer or otherwise commence any action or proceeding seeking reorganization, arrangement, compromise or readjustment of its debts or for any other relief under any Debtor Relief Law, or consent to, approve of, or acquiesce in, any such petition, action or proceeding; (ii) apply for or acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for it or for all or any part of its property; (iii) make an assignment for the benefit of creditors; or (iv) be unable generally to pay its debts as they become due;

(f)an involuntary petition shall be filed or an action or proceeding otherwise commenced seeking reorganization, arrangement, consolidation, compromise or readjustment of the debts of any Credit Party or for any other relief under any Debtor Relief Law and such petition or proceeding shall continue in effect and not be dismissed or stayed for a period of sixty (60) consecutive days after the filing or commencement thereof, or an order of relief shall be entered with respect thereto under any Debtor Relief Law;

(g)a receiver, interim receiver, assignee, liquidator, sequestrator, custodian, monitor, trustee or similar officer for any Credit Party or for all or any material part of its property shall be appointed or a warrant of attachment, execution or similar process shall be issued against any material part of the property of any Credit Party;

(h)any Credit Party shall file a certificate of dissolution under applicable law or shall be liquidated, dissolved or wound-up or shall commence or have commenced against it any action or proceeding for dissolution, winding-up or liquidation, or shall take any corporate action in furtherance thereof except as permitted by Section 7.16(a)(iii);

(i)any Unrestricted Subsidiary shall be subject to any event described in the foregoing clauses (e), (f), (g) or (h) of this Section 9.1 and such event would reasonably be expected to result in a Material Adverse Effect;

(j)all or any material part of the property of any Credit Party shall be nationalized, expropriated or condemned, seized, expropriated or otherwise appropriated, or custody or control of such property or of such Credit Party shall be assumed by any Governmental Authority or any court of competent jurisdiction at the instance of any Governmental Authority, except where contested in good faith by proper proceedings diligently pursued where a stay of enforcement is in effect;

(k)any material Loan Document shall be revoked or declared void, invalid or unenforceable or any Credit Party shall reject or deny its obligations under any Loan Document;

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(l)one or more judgments, orders, decrees or arbitration awards is entered against any Credit Party involving in the aggregate liability (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) as to any single or related or unrelated series of transactions, incidents or conditions, of $5,000,000 or more, and the same shall remain unsatisfied, unvacated and unstayed pending appeal for a period of sixty (60) days after the entry thereof;

(m)any loss, theft, damage or destruction of any item or items of Collateral or other property of any Credit Party occurs which would reasonably be expected to cause a Material Adverse Effect and is not adequately covered by insurance;

(n)for any reason other than any failure of the Agent to take any action available to it to maintain perfection of the Agent’s Liens, pursuant to the Loan Documents, any material Loan Document ceases to be in full force and effect (other than in accordance with its terms) or any Lien with respect to any material portion of the Collateral intended to be secured thereby ceases to be, or is not, valid, perfected and prior to all other Liens (other than Permitted Liens) or is terminated, revoked or declared void;

(o)any Termination Event or Canadian Pension Event occurs which will or is reasonably likely to subject either ATI or an ERISA Affiliate or the Canadian Borrower to a liability which will or is reasonably expected to have a Material Adverse Effect; or

(p)there occurs a Change in Control.

9.2Remedies.

(a)Upon the occurrence and during the continuation of any Event of Default, the Agent may, in its discretion, and shall, at the direction of the Required Lenders, do one or more of the following at any time or times and in any order, without notice to or demand on the Borrowers: (i) reduce advance rates against any amounts used in calculating the Borrowing Base or otherwise reduce one or more other elements of the Borrowing Base, effective only for so long as such Event of Default continues without being waived; (ii) reduce the Total Facility Amount, effective only for so long as such Event of Default continues without being waived; (iii) restrict the amount of or refuse to make Revolving Loans, effective only for so long as such Event of Default continues without being waived; and (iv) restrict or refuse to provide Letters of Credit, effective only for so long as such Event of Default continues without being waived; (v) terminate the Commitments; (vi) declare any or all Obligations (other than Bank Product Obligations) to be immediately due and payable; provided, however, that upon the occurrence of any Event of Default described in Sections 9.1(e), 9.1(f), 9.1(g), or 9.1(h) as to any Credit Party, the Commitments shall automatically and immediately expire and all Obligations (other than Bank Product Obligations) shall automatically become immediately due and payable without notice or demand of any kind; (vii) require (A) the U.S. Borrowers to Fully Support all outstanding U.S. Letter of Credit Obligations and (B) the Canadian Borrower to Fully Support all outstanding Canadian Letter of Credit Obligations; and/or (viii) pursue its other rights and remedies under the Loan Documents and applicable law. Agent will use commercially reasonable efforts to provide notice to ATI of any remedy or other action described under this Section 9.2(a), but the failure to give such notice shall not impair any right or remedy otherwise

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available to the Agent or create any right or remedy in favor of any Credit Party or liability of the Agent or any Lender.

(b)If an Event of Default has occurred and is continuing: (i) the Agent shall have for the benefit of the Lenders, in addition to all other rights of the Agent and the Lenders, the rights and remedies of a secured party under the Loan Documents and the UCC; (ii) the Agent may, at any time, take possession of the Collateral and keep it on the applicable Borrower’s premises, at no cost to the Agent or any Lender, or remove any part of it to such other place or places as the Agent may desire, or the applicable Borrower shall, upon the Agent’s demand, at such Borrower’s cost, assemble the Collateral and make it available to the Agent at a place reasonably convenient to the Agent; and (iii) the Agent may sell and deliver any Collateral at public or private sales, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable in its sole discretion and may, if the Agent deems it reasonable, postpone or adjourn any sale of the Collateral by an announcement at the time and place of sale or of such postponed or adjourned sale without giving a new notice of sale. Without in any way requiring notice to be given in the following manner, each U.S. Borrower agrees that any notice by the Agent of sale, disposition or other intended action hereunder or in connection herewith, whether required by the UCC or otherwise, shall constitute reasonable notice to such Borrower if such notice is mailed by registered or certified mail, return receipt requested, postage prepaid, or is delivered personally against receipt, at least ten (10) Business Days prior to such action to such Borrower’s address specified in or pursuant to Section 14.8. If any Collateral is sold on terms other than payment in full at the time of sale, no credit shall be given against the Obligations until the Agent or the Lenders receive payment, and if the buyer defaults in payment, the Agent may resell the Collateral without further notice to such Borrower. In the event the Agent seeks to take possession of all or any portion of the Collateral by judicial process, each U.S. Borrower irrevocably waives: (A) the posting of any bond, surety or security with respect thereto which might otherwise be required; (B) any demand for possession prior to the commencement of any suit or action to recover the Collateral; and (C) any requirement that the Agent retain possession and not dispose of any Collateral until after trial or final judgment. Each U.S. Borrower agrees that the Agent has no obligation to preserve rights to the Collateral or marshal any Collateral for the benefit of any Person. To the extent not prohibited by applicable Requirements of Law or by any material contract of any Credit Party, the Agent is hereby granted a license or other right to use, without charge, such Borrower’s labels, patents, copyrights, name, trade secrets, trade names, trademarks, and advertising matter, or any similar property, in completing production of, advertising or selling any Collateral, and such Borrower’s rights under all licenses and all franchise agreements shall inure to the Agent’s benefit for such purpose. The proceeds of sale shall be applied first to all expenses of sale, including attorneys’ fees, and then to the Obligations. The Agent will return any excess to such Borrower and such Borrower shall remain liable for any deficiency.

(c)If an Event of Default occurs and is continuing, each U.S. Borrower hereby waives all rights to notice and hearing prior to the exercise by the Agent of the Agent’s rights to repossess the Collateral without judicial process or to reply, attach or levy upon the Collateral without notice or hearing.

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ARTICLE 10

TERM AND TERMINATION

10.1Term and Termination. The term of this Agreement shall end on the Stated Termination Date unless sooner terminated in accordance with the terms hereof. Upon the effective date of termination of this Agreement for any reason whatsoever, all Obligations (other than Bank Product Obligations) (including all unpaid principal, accrued and unpaid interest and any early termination or prepayment fees or penalties) shall become immediately due and payable and the Borrowers shall immediately arrange for the Letters of Credit then outstanding to be Fully Supported.

ARTICLE 11

AMENDMENTS; WAIVERS; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS

11.1Amendments and Waivers.

(a)Except as otherwise provided for herein or in such other Loan Documents, no amendment or waiver of any provision of this Agreement or any other Loan Document, and no consent with respect to any departure by any Borrower or any other Credit Party therefrom, shall be effective unless the same shall be in writing and signed by the Required Lenders (or by the Agent at the written request of the Required Lenders) and each Borrower and then any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, however, that no such waiver, amendment, or consent shall, unless in writing and signed by all the Lenders and each Borrower and acknowledged by the Agent, do any of the following:

(i)increase or extend the Commitment, Canadian Commitment or U.S. Commitment of the Lenders (provided that if any Lender desires to increase its Commitment and such increase would not result in an increase in the aggregate Commitments, only the consent of such Lender shall be required for such increase);

(ii)postpone or delay any date fixed by this Agreement or any other Loan Document for any payment of principal, interest, fees or other amounts due to the Lenders (or any of them) hereunder or under any other Loan Document;

(iii)reduce the principal of, or the rate of interest specified herein on any Revolving Loan, or any fees or other amounts payable to the Agent, the Letter of Credit Issuers or the Lenders hereunder or under any other Loan Document;

(iv)change the percentage of the Commitments, Canadian Commitments or U.S. Commitments or of the aggregate unpaid principal amount of the Revolving Loans which is required for the Lenders or any of them to take any action hereunder;

(v)increase any of the percentages set forth in the definition of the Borrowing Base or in the proviso to Section 1.2(i)(i);

(vi)amend this Section or any provision of this Agreement providing for consent or other action by all Lenders;

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(vii)release any Borrower or any Guarantor or release Collateral other than as otherwise expressly permitted by the Loan Documents;

(viii)change the definition of “Required Lenders”;

(ix)increase the Total Facility Amount, Letter of Credit Subfacility or Canadian Subfacility Amount; or

(x)change Section 3.5 in any manner that would alter the ratable sharing of payments among Lenders;

provided, however, the Agent may, in its sole discretion and notwithstanding the limitations contained in clauses (v) and (ix) above and any other terms of this Agreement, make Agent Advances in accordance with Section 1.2(i) and, providedfurther, that no amendment, waiver or consent shall, unless in writing and signed by the Agent, affect the rights or duties of the Agent under this Agreement or any other Loan Document and providedfurther, that no amendment, waiver or consent shall, unless in writing and signed by the applicable Letter of Credit Issuer, affect the rights or duties of such Letter of Credit Issuer with regard to Letters of Credit under this Agreement or any other Loan Document and providedfurther, that Schedule 1.1 hereto (Commitments) may be amended from time to time by Agent alone to reflect assignments of Commitments in accordance herewith. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Defaulting Lender and (y) any waiver, amendment or modification requiring the consent of all Lenders that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender.

(b)If any fees are paid to the Lenders as consideration for amendments, waivers or consents with respect to this Agreement, at Agent’s election, such fees may be paid only to those Lenders that agree to such amendments, waivers or consents within the time specified for submission thereof.

(c)If, in connection with any proposed amendment, waiver or consent (a “Proposed Change”) requiring the consent of all Lenders, the consent of Required Lenders is obtained, but the consent of other Lenders is not obtained (any such Lender whose consent is not obtained as described in this clause (c) being referred to as a “Non-Consenting Lender”), then, so long as the Agent is not a Non-Consenting Lender, at the Borrowers’ request, the Agent or an Eligible Assignee shall have the right (but not the obligation) with the Agent’s approval, to purchase from the Non-Consenting Lenders, and the Non-Consenting Lenders agree that they shall sell, all the Non-Consenting Lenders’ Commitments for an amount equal to the principal balances thereof and all accrued interest and fees with respect thereto through the date of sale pursuant to Assignment and Acceptance Agreement(s), without premium or discount.

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11.2Assignments; Participations.

(a)Any Lender may assign and delegate to one or more Eligible Assignees (each an “Assignee”) all, or any ratable part of all, of the Revolving Loans and risk participations in Letters of Credit, the Commitments and the other rights and obligations of such Lender hereunder, in a minimum amount of $1,000,000 (provided that, unless an assignor Lender has assigned and delegated all of its Revolving Loans and risk participations in Letters of Credit and Commitments, no such assignment and/or delegation shall be permitted unless, after giving effect thereto, such assignor Lender retains a Commitment in a minimum amount of $5,000,000); provided, however, that the Borrowers and the Agent may continue to deal solely and directly with such Lender in connection with the interest so assigned to an Assignee until (i) written notice of such assignment, together with payment instructions, addresses and related information with respect to the Assignee, shall have been given to the Borrowers (or ATI on behalf of the Borrowers) and the Agent by such Lender and the Assignee; (ii) such Lender and its Assignee shall have delivered to the Borrowers (or ATI on behalf of the Borrowers) and the Agent an Assignment and Acceptance in the form of Exhibit F (“Assignment and Acceptance”) together with any note or notes subject to such assignment and (iii) the assignor Lender or Assignee has paid to the Agent a processing fee in the amount of $3,500. Each Borrower agrees to promptly execute and deliver promissory notes and replacement promissory notes as reasonably requested by the Agent or any Lender to evidence assignments of the Revolving Loans and risk participations in Letters of Credit and Commitments in accordance herewith. The Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at one of its offices in the United States a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the commitments of, and principal amounts (and stated interest) of the loans owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrowers, the Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

(b)From and after the date that the Agent notifies the assignor Lender that it has received an executed Assignment and Acceptance and payment of the above-referenced processing fee, (i) the Assignee thereunder shall be a party hereto and, to the extent that rights and obligations, including, but not limited to, the obligation to participate in Letters of Credit have been assigned to it pursuant to such Assignment and Acceptance, shall have the rights and obligations of a Lender under the Loan Documents, and (ii) the assignor Lender shall, to the extent that rights and obligations hereunder and under the other Loan Documents have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(c)By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the Assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no ___________

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responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other Loan Document furnished pursuant hereto or the attachment, perfection, or priority of any Lien granted by any U.S. Borrower to the Agent or any Lender in the Collateral; (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Borrower or the performance or observance by any Borrower of any of its obligations under this Agreement or any other Loan Document furnished pursuant hereto; (iii) such Assignee confirms that it has received a copy of this Agreement, together with such 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 as are delegated to the Agent by the terms hereof, together with such powers, including the discretionary rights and incidental power, 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.

(d)Immediately upon satisfaction of the requirements of Section 11.2(a), this Agreement shall be deemed to be amended to the extent, but only to the extent, necessary to reflect the addition of the Assignee and the resulting adjustment of the Commitments arising therefrom. The Commitment allocated to each Assignee shall reduce such Commitments of the assigning Lender protanto.

(e)Any Lender may at any time sell to one or more commercial banks, financial institutions, or other Persons not Affiliates of any Borrower (a “Participant”) participating interests in any Revolving Loans and risk participations in Letters of Credit, the Commitment of that Lender and the other interests of that Lender (the “originating Lender”) hereunder and under the other Loan Documents; provided, however, that (i) the originating Lender’s obligations under this Agreement shall remain unchanged, (ii) the originating Lender shall remain solely responsible for the performance of such obligations, (iii) the Borrowers and the Agent shall continue to deal solely and directly with the originating Lender in connection with the originating Lender’s rights and obligations under this Agreement and the other Loan Documents, (iv) no Lender shall transfer or grant any participating interest under which the Participant has rights to approve any amendment to, or any consent or waiver with respect to, this Agreement or any other Loan Document except the matters set forth in Section 11.1(a)(i), (ii) and (iii), and (v) all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation; except that, if amounts outstanding under this Agreement are due and unpaid, or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall be deemed to have the right of set-off in respect of its participating interest in amounts owing under this Agreement to the same extent and subject to the same limitation as if the amount of its participating interest were owing directly to it as a Lender under this Agreement. If a Lender sells a participating interest in its Revolving Loans and risk participations in Letters of Credit, commitments or other interests hereunder as described above, such Lender shall, acting solely for this purpose as an agent of the Borrowers,

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maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant’s interest in the Revolving Loans or other obligations under the Loan Documents (the “Participation Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participation Register (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participation Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participation Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Agent (in its capacity as Agent) shall have no responsibility for maintaining a Participation Register. A Participant may not, with respect to such participation, enter into any subparticipation or otherwise subdivide, sell, transfer or assign any of its rights therein without prior written consent of the applicable Lender, which consent shall not be unreasonably withheld or delayed. In the event that the Lender consents to the proposed subparticipation, sale, transfer or assignment of or with respect to any participation (any such subdivision, sale, transfer or assignment, a “Transfer”), the Lender shall thereafter maintain a copy of the written consent to such Transfer and shall record the names and addresses of each transferee (a “Transferee”) and the principal amount (and stated interest) of each such Transfer in the Participation Register. A Participant shall not be entitled to receive any greater payment under Section 4.1 or 4.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant shall not be entitled to the benefits of Section 4.1 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 4.1(e) as though it were a Lender.

(f)Notwithstanding any other provision in this Agreement, any Lender may at any time create a security interest in, or pledge, all or any portion of its rights under and interest in this Agreement in favor of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury Regulation 31 CFR §203.14, and such Federal Reserve Bank may enforce such pledge or security interest in any manner permitted under applicable law.

ARTICLE 12 THE AGENT

12.1Appointment and Authorization. Each Lender hereby designates and appoints Bank as its Agent under this Agreement and the other Loan Documents and each Lender hereby irrevocably 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. The Agent agrees to act as such on the express conditions contained in this Article 12. 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 or

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therein, nor shall the Agent have or be deemed to have any fiduciary relationship with any Lender, 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. Without limiting the generality of the foregoing sentence, the use of the term “agent” in this Agreement with reference to the Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any applicable law. Instead, such term is used merely as a matter of market custom, and is intended to create or reflect only an administrative relationship between independent contracting parties. Except as expressly otherwise provided in this Agreement, the Agent shall have and may use its sole discretion with respect to exercising or refraining from exercising any discretionary rights or taking or refraining from taking any actions which the Agent is expressly entitled to take or assert under this Agreement and the other Loan Documents, including (a) the determination of the applicability of ineligibility criteria with respect to the calculation of the Borrowing Base, (b) the making of Agent Advances pursuant to Section 1.2(i), and (c) the exercise of remedies pursuant to Section 9.2, and any action so taken or not taken shall be deemed consented to by the Lenders.

12.2Delegation 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 as long as such selection was made without gross negligence or willful misconduct.

12.3Liability of Agent. None of the Agent-Related Persons shall (i) 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 or the transactions contemplated hereby (except for its own gross negligence or willful misconduct), or (ii) be responsible in any manner to any of the Lenders for any recital, statement, representation or warranty made by any Borrower or any Subsidiary or Affiliate of any 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 any 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 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 any Borrower or any of any Borrower’s Subsidiaries or Affiliates.

12.4Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telegram, 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 Borrowers), 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 Required Lenders as it deems appropriate and, if it so requests, it shall first be indemnified to its satisfaction by the

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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 Required Lenders (or all Lenders if so required by Section 11.1) and such request and any action taken or failure to act pursuant thereto shall be binding upon all of the Lenders.

12.5Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless the Agent shall have received written notice from a Lender or any Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be requested by the Required Lenders in accordance with Article 9; provided, however, that unless and until the Agent has 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 Default or Event of Default as it shall deem advisable.

12.6Credit Decision. Each Lender 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 any Borrower and its respective Affiliates, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon any Agent-Related Person 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 each Borrower and its respective Affiliates, and all applicable bank regulatory laws relating to the transactions contemplated hereby, and made its own decision to enter into this Agreement and to extend credit to the Borrowers. Each Lender also represents that it will, independently and without reliance upon any Agent-Related Person 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 Borrowers. 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 any Borrower which may come into the possession of any of the Agent-Related Persons.

12.7Indemnification. Whether or not the transactions contemplated hereby are consummated, the Lenders shall indemnify upon demand the Agent-Related Persons (to the extent not reimbursed by or on behalf of the Borrowers and without limiting the obligation of the Borrowers to do so), in accordance with their Pro Rata Shares, from and against any and all Indemnified Liabilities as such term is defined in Section 14.11; provided, however, that no Lender shall be liable for the payment to the Agent-Related Persons of any portion of such Indemnified Liabilities resulting directly from such Agent-Related Person’s gross negligence or willful misconduct. Without limitation of the foregoing, each Lender shall reimburse the Agent

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upon demand for its Pro Rata Share of any costs or out-of-pocket expenses (including Attorney Costs) 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 Borrowers. The undertaking in this Section shall survive the payment of all Obligations (other than Bank Product Obligations) hereunder and the resignation or replacement of the Agent.

12.8Agent in Individual Capacity. The Bank 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, underwriting or other business with any Borrower and its respective Subsidiaries and Affiliates as though the Bank were not the Agent hereunder and without notice to or consent of the Lenders. The Bank or its Affiliates may receive information regarding any Borrower, its respective Affiliates and Account Debtors (including information that may be subject to confidentiality obligations in favor of such Borrower or such Subsidiary) and acknowledge that the Agent and the Bank shall be under no obligation to provide such information to them. With respect to its Revolving Loans, the Bank 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” include the Bank in its individual capacity.

12.9Successor Agent. The Agent may resign as Agent upon at least 30 days’ prior notice to the Lenders and the Borrowers (or to ATI on behalf of the Borrowers), such resignation to be effective upon the acceptance of a successor agent to its appointment as Agent. In the event the Bank sells all of its Commitment and Revolving Loans as part of a sale, transfer or other disposition by the Bank of substantially all of its loan portfolio, the Bank shall resign as Agent and such purchaser or transferee shall become the successor Agent hereunder. Subject to the foregoing, if the Agent resigns under this Agreement, the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders reasonably acceptable to the Borrowers. 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 Borrowers, 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 12 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement.

12.10Collateral Matters.

(a)The Lenders hereby irrevocably authorize the Agent, at its option and in its sole discretion, to release any Agent’s Liens upon any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full by the Borrowers of all Revolving Loans and reimbursement obligations in respect of Letters of Credit, and the termination of all outstanding Letters of Credit (whether or not any of such obligations are due)

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and all other Obligations; (ii) constituting property being sold or disposed of if such U.S. Borrower certifies to the Agent that the sale or disposition is made in compliance with Section 7.10 (and the Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting property in which such U.S. Borrower owned no interest at the time the Lien was granted or at any time thereafter; or (iv) constituting property leased to such U.S. Borrower under a lease which has expired or been terminated in a transaction permitted under this Agreement. Except as provided above, the Agent will not release any of the Agent’s Liens without the prior written authorization of the Lenders; provided that the Agent may, in its discretion, release the Agent’s Liens on Collateral valued in the aggregate not in excess of $5,000,000 during each Fiscal Year without the prior written authorization of the Lenders and the Agent may release the Agent’s Liens on Collateral valued in the aggregate not in excess of $10,000,000 during each Fiscal Year with the prior written authorization of Required Lenders. Upon request by the Agent or the U.S. Borrowers at any time, the Lenders will confirm in writing the Agent’s authority to release any Agent’s Liens upon particular types or items of Collateral pursuant to this Section 12.10.

(b)Upon receipt by the Agent of any authorization required pursuant to Section 12.10(a) from the Lenders of the Agent’s authority to release Agent’s Liens upon particular types or items of Collateral, and upon at least five (5) Business Days prior written request by the U.S. Borrowers, the Agent shall (and is hereby irrevocably authorized by the Lenders to) execute such documents as may be necessary to evidence the release of the Agent’s Liens upon such Collateral; provided, however, that (i) the Agent shall not be required to execute any such document 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 Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Borrowers in respect of) all interests retained by such U.S. Borrower, including the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(c)The Agent shall have no obligation whatsoever to any of the Lenders to assure that the Collateral exists or is owned by any U.S. Borrower or is cared for, protected or insured or has been encumbered, or that the Agent’s Liens have been properly or sufficiently or lawfully created, perfected, protected or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related thereto, the Agent may act in any manner it may deem appropriate, in its sole discretion given the Agent’s own interest in the Collateral in its capacity as one of the Lenders and that the Agent shall have no other duty or liability whatsoever to any Lender as to any of the foregoing.

12.11Restrictions on Actions by Lenders; Sharing of Payments.

(a)Each of the Lenders agrees that it shall not, without the express consent of the Agent and the Required Lenders, and that it shall, to the extent it is lawfully entitled to do so, upon the request of the Agent and the Required Lenders, set off against the Obligations (other than Bank Product Obligations), any amounts owing by such Lender to any

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Borrower or any accounts of any Borrower now or hereafter maintained with such Lender. Each of the Lenders further agrees that it shall not, unless specifically requested to do so by the Agent, take or cause to be taken any action to enforce its rights under this Agreement or any other Loan Document against any Borrower, including the commencement of any legal or equitable proceedings, to foreclose any Lien on, or otherwise enforce any security interest in, any of the Collateral.

(b)If at any time or times any Lender shall receive (i) by payment, foreclosure, setoff or otherwise, any proceeds of Collateral or any payments with respect to the Obligations (other than Bank Product Obligations) of any Borrower to such Lender arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Lender from the Agent pursuant to the terms of this Agreement, or (ii) payments from the Agent in excess of such Lender’s ratable portion of all such distributions by the Agent, such Lender shall promptly (1) turn the same over to the Agent, in kind, and with such endorsements as may be required to negotiate the same to the Agent, or in same day funds, as applicable, for the account of all of the U.S. Lenders or Canadian Lenders, as applicable, and for application to the Obligations in accordance with the applicable provisions of this Agreement, or (2) purchase, without recourse or warranty, an undivided interest and participation in the Obligations owed to the other U.S. Lenders or Canadian Lenders, as applicable, so that such excess payment received shall be applied ratably as among the Lenders 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 of participations shall be rescinded in whole or in part, as applicable, and the applicable portion of the purchase price paid therefor shall be returned to such purchasing party, but without interest except to the extent that such purchasing party is required to pay interest in connection with the recovery of the excess payment. Notwithstanding the foregoing, any amounts of the Canadian Borrower so offset shall be applied solely to the Canadian Obligations and any adjustments with respect thereto shall be made solely among Canadian Lenders.

12.12Agency for Perfection. Each U.S. Lender hereby appoints the Agent and each other U.S. Lender as agent for the purpose of perfecting the U.S. Lenders’ security interest in assets which, in accordance with Article 9 of the UCC can be perfected only by possession. Should any U.S. Lender (other than the Agent) obtain possession of any such Collateral, such U.S. Lender shall notify the Agent thereof, and, promptly upon the Agent’s request therefor shall deliver such Collateral to the Agent or in accordance with the Agent’s instructions.

12.13Payments by Agent to Lenders. All payments to be made by the Agent to the Lenders shall be made promptly in accordance with the terms of this Agreement by bank wire transfer or internal transfer of immediately available funds to each Lender pursuant to wire transfer instructions delivered in writing to the Agent on or prior to the Effective Date (or if such Lender is an Assignee, on the applicable Assignment and Acceptance), or pursuant to such other wire transfer instructions as each party may designate for itself by written notice to the Agent. Concurrently with each such payment, the Agent shall identify whether such payment (or any portion thereof) represents principal, premium or interest on the Revolving Loans or otherwise. Unless the Agent receives notice from any Borrower prior to the date on which any payment is due to the Lenders that such Borrower will not make such payment in full as and when required, the Agent may assume that such Borrower has made such payment in full to the Agent on such

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date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent such Borrower has not made such payment in full to the Agent, each Lender shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate (with respect to Canadian Lenders, the Bank of Canada Rate) for each day from the date such amount is distributed to such Lender until the date repaid.

12.14Settlement.

(a)(i) Each Lender’s funded portion of the Revolving Loans is intended by the Lenders to be equal at all times to such Lender’s Pro Rata Share of the outstanding Revolving Loans. Notwithstanding such agreement, the Agent, the Bank, and the other Lenders agree (which agreement shall not be for the benefit of or enforceable by the Borrowers) that in order to facilitate the administration of this Agreement and the other Loan Documents, settlement among them as to the Revolving Loans, the Non-Ratable Loans and the Agent Advances shall take place on a periodic basis in accordance with the following provisions:

(ii)The Agent shall request settlement (“Settlement”) with the U.S. Lenders and Canadian Lenders, as applicable, on at least a weekly basis, or on a more frequent basis at Agent’s election, (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan, (B) for itself, with respect to each Agent Advance, and (C) with respect to collections received, in each case, by notifying the Lenders of such requested Settlement by telecopy, telephone or other similar form of transmission, of such requested Settlement, no later than 12:00 noon (New York City time) on the date of such requested Settlement (the “Settlement Date”). Each U.S. Lender or Canadian Lender, as applicable (other than the Bank, in the case of Non-Ratable Loans and the Agent in the case of Agent Advances) shall transfer the amount of such Lender’s Pro Rata Share of the outstanding principal amount of the Non-Ratable Loans and Agent Advances with respect to each Settlement to the Agent, to Agent’s account, not later than 2:00 p.m. (New York City time), on the Settlement Date applicable thereto. Settlements may occur during the continuation of a Default or an Event of Default and whether or not the applicable conditions precedent set forth in Article 8 have then been satisfied. Such amounts made available to the Agent shall be applied against the amounts of the applicable Non-Ratable Loan or Agent Advance and, together with the portion of such Non-Ratable Loan or Agent Advance representing the Bank’s Pro Rata Share thereof, shall constitute Revolving Loans of such Lenders. If any such amount required hereunder to be so transferred is not transferred to the Agent by any Lender on the Settlement Date applicable thereto, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate (with respect to Canadian Lenders, the Bank of Canada Rate) for the first three (3) days from and after the Settlement Date and thereafter at the Interest Rate then applicable to the Revolving Loans (A) on behalf of the Bank, with respect to each outstanding Non-Ratable Loan, and (B) for itself, with respect to each Agent Advance, but only to the extent such amount is not paid by such Borrower.

(iii)Notwithstanding the foregoing, not more than one (1) Business Day after demand is made by the Agent (whether before or after the occurrence of a Default or an Event of Default and regardless of whether the Agent has requested a Settlement

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with respect to a Non-Ratable Loan or Agent Advance), each other U.S. Lender or Canadian Lender, as applicable, (A) shall irrevocably and unconditionally purchase and receive from the Bank or the Agent, as applicable, without recourse or warranty, an undivided interest and participation in such Non-Ratable Loan or Agent Advance equal to such Lender’s Pro Rata Share of such Non-Ratable Loan or Agent Advance and (B) if Settlement has not previously occurred with respect to such Non-Ratable Loans or Agent Advances, upon demand by Bank or Agent, as applicable, shall pay to Bank or Agent, as applicable, as the purchase price of such participation an amount equal to one-hundred percent (100%) of such Lender’s Pro Rata Share of such Non-Ratable Loans or Agent Advances. If such amount is not in fact made available to the Agent by any U.S. Lender or Canadian Lender, as applicable, the Agent shall be entitled to recover such amount on demand from such Lender together with interest thereon at the Federal Funds Rate (with respect to Canadian Lenders, the Bank of Canada Rate) for the first three (3) days from and after such demand and thereafter at the Interest Rate then applicable to Base Rate Loans or Canadian Prime Rate Loans, as applicable, but only to the extent such amount is not paid by such Borrower.

(iv)From and after the date, if any, on which any U.S. Lender or Canadian Lender, as applicable, purchases an undivided interest and participation in any Non-Ratable Loan or Agent Advance pursuant to clause (iii) above, the Agent shall promptly distribute to such Lender, such Lender’s Pro Rata Share of all payments of principal and interest and all proceeds of Collateral received by the Agent in respect of such Non-Ratable Loan or Agent Advance.

(v)Between Settlement Dates, the Agent, to the extent no Agent Advances are outstanding, may pay over to the Bank any payments received by the Agent, which in accordance with the terms of this Agreement would be applied to the reduction of the Revolving Loans, for application to the Bank’s Revolving Loans including Non-Ratable Loans. If, as of any Settlement Date, collections received since the then immediately preceding Settlement Date have been applied to the Bank’s Revolving Loans (other than to Non-Ratable Loans or Agent Advances in which such Lender has not yet funded its purchase of a participation pursuant to clause (iii) above), as provided for in the previous sentence, the Bank shall pay to the Agent for the accounts of the U.S. Lenders or Canadian Lenders, as applicable, to be applied to the outstanding Revolving Loans of such Lenders, an amount such that each U.S. Lender or Canadian Lender, as applicable, shall, upon receipt of such amount, have, as of such Settlement Date, its Pro Rata Share of the Revolving Loans. During the period between Settlement Dates, the Bank with respect to Non-Ratable Loans, the Agent with respect to Agent Advances, and each Lender with respect to the Revolving Loans other than Non-Ratable Loans and Agent Advances, shall be entitled to interest at the applicable rate or rates payable under this Agreement on the actual average daily amount of funds employed by the Bank, the Agent and the other Lenders.

(vi)Unless the Agent has received written notice from a Lender to the contrary, the Agent may assume that the applicable conditions precedent set forth in Article 8 have been satisfied and the requested Borrowing will not exceed Availability on any Funding Date for a Revolving Loan or Non-Ratable Loan.

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(b)Lenders’ Failure to Perform. All Revolving Loans (other than Non-Ratable Loans and Agent Advances) shall be made by the U.S. Lenders or Canadian Lenders, as applicable, simultaneously and in accordance with their Pro Rata Shares. It is understood that (i) no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, nor shall any Commitment of any Lender be increased or decreased as a result of any failure by any other Lender to perform its obligation to make any Revolving Loans hereunder, (ii) no failure by any Lender to perform its obligation to make any Revolving Loans hereunder shall excuse any other Lender from its obligation to make any Revolving Loans hereunder, and (iii) the obligations of each Lender hereunder shall be several, not joint and several.

(c)Agent Assumptions. Unless the Agent receives notice from a Lender on or prior to the Effective Date or, with respect to any Borrowing after the Effective Date, at least one Business Day prior to the date of such Borrowing, that such Lender will not make available as and when required hereunder to the Agent that Lender’s Pro Rata Share of a Borrowing, the Agent may assume that each Lender has made such amount available to the Agent in immediately available funds on the Funding Date. Furthermore, the Agent may, in reliance upon such assumption, make available to the applicable Borrower on such date a corresponding amount. If any Lender has not transferred, on the date required hereunder, its full Pro Rata Share of any required funding to the Agent in immediately available funds and the Agent has transferred the corresponding amount to a Borrower, such Lender, on the Business Day following such date, shall make such amount available to the Agent, together with interest at the Federal Funds Rate (with respect to Canadian Loans, the Bank of Canada Rate) for that day. A notice by the Agent submitted to any Lender with respect to amounts owing shall be conclusive, absent manifest error. If a Lender’s full Pro Rata Share is transferred to the Agent as required, the amount transferred to the Agent shall constitute that Lender’s Revolving Loan for all purposes of this Agreement. If that amount is not transferred to the Agent on the Business Day following the Funding Date, the Agent will notify the applicable Borrower of such failure to fund and, upon demand by the Agent, such Borrower shall pay such amount to the Agent for the Agent’s account, together with interest thereon for each day elapsed since the date of such Borrowing, at a rate per annum equal to the Interest Rate applicable at the time to the Revolving Loans comprising that particular Borrowing.

12.15Letters of Credit; Intra-Lender Issues.

(a)Notice of Letter of Credit Balance. On each Settlement Date the Agent shall notify each Lender of the issuance of all Letters of Credit since the prior Settlement Date.

(b)Participations in Letters of Credit.

(i)Purchase of Participations. Immediately upon issuance of any Letter of Credit or the making of any L/C Borrowing in accordance with Section 1.3(d) or (e), as applicable, each U.S. Lender and each Canadian Lender, as applicable, shall be deemed to have irrevocably and unconditionally purchased and received without recourse or warranty, an undivided interest and participation equal to such Lender’s Pro Rata Share of the face amount of such Letter of Credit (including all obligations of the applicable Borrower with respect thereto,

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and any security therefor or guaranty pertaining thereto) or the amount of such L/C Borrowing, as applicable.

(ii)Sharing of Reimbursement Obligation Payments. Whenever the Agent receives a payment from a Borrower on account of reimbursement obligations in respect of a Letter of Credit or L/C Borrowing as to which the Agent has previously received for the account of a Letter of Credit Issuer thereof payment from a Lender, the Agent shall promptly pay to such Lender such Lender’s Pro Rata Share of such payment from such Borrower. Each such payment shall be made by the Agent on the next Settlement Date.

(iii)Documentation. Upon the request of any Lender, the Agent shall, to the extent delivered to the Agent by the applicable Letter of Credit Issuer, furnish to such Lender copies of any Letter of Credit, reimbursement agreements executed in connection therewith, applications for any Letter of Credit, and such other documentation as may reasonably be requested by such Lender.

(iv)Obligations Irrevocable. The obligations of each U.S. Lender and each Canadian Lender, as applicable, to make payments to the Agent with respect to any Letter of Credit or with respect to their participation therein or with respect to the Revolving Loans made as a result of a drawing under a Letter of Credit and the obligations of any Borrower for whose account the Letter of Credit was issued to make payments in respect thereof in accordance with the terms thereof and hereof, shall be irrevocable and shall not be subject to any qualification or exception whatsoever, including any of the following circumstances:

(1)    any lack of validity or enforceability of this Agreement or any of the other Loan Documents;

(2)    the existence of any claim, setoff, defense or other right which such 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), any Lender, the Agent, the issuer of such Letter of Credit, 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 such Borrower or any other Person and the beneficiary named in any Letter of Credit);

(3)    any draft, certificate or 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;

(4)    the surrender or impairment of any security for the performance or observance of any of the terms of any of the Loan Documents;

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(5)    the occurrence of any Default or Event of Default; or

(6)    the failure of such Borrower to satisfy the applicable conditions precedent set forth in Article 8.

(c)Recovery or Avoidance of Payments; Refund of Payments In Error. In the event any payment by or on behalf of a Borrower received by the Agent with respect to any Letter of Credit or L/C Borrowing and distributed by the Agent to the U.S. Lenders or Canadian Lenders, as applicable, on account of their respective participations therein is thereafter set aside, avoided or recovered from the Agent in connection with any receivership, liquidation, insolvency or bankruptcy proceeding, the U.S. Lenders or Canadian Lenders, as applicable, shall, upon demand by the Agent, pay to the Agent their respective Pro Rata Shares of such amount set aside, avoided or recovered, together with interest at the rate required to be paid by the Agent upon the amount required to be repaid by it. Unless the Agent receives notice from the applicable Borrower prior to the date on which any payment is due to the Lenders that such Borrower will not make such payment in full as and when required, the Agent may assume that such Borrower has made such payment in full to the Agent on such date in immediately available funds and the Agent may (but shall not be so required), in reliance upon such assumption, distribute to each U.S. Lender or Canadian Lender, as applicable, on such due date an amount equal to the amount then due such Lender. If and to the extent such Borrower has not made such payment in full to the Agent, each U.S. Lender or Canadian Lender, as applicable, shall repay to the Agent on demand such amount distributed to such Lender, together with interest thereon at the Federal Funds Rate (with respect to Canadian Lenders, the Bank of Canada Rate) for each day from the date such amount is distributed to such Lender until the date repaid.

(d)Indemnification by Lenders. To the extent not reimbursed by the Borrowers and without limiting the obligations of the Borrowers hereunder, the U.S. Lenders or Canadian Lenders, as applicable, agree to indemnify the Letter of Credit Issuers ratably in accordance with their respective Pro Rata Shares, for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses (including attorneys’ fees) or disbursements of any kind and nature whatsoever that may be imposed on, incurred by or asserted against any Letter of Credit Issuer in any way relating to or arising out of any Letter of Credit or the transactions contemplated thereby or any action taken or omitted by such Letter of Credit Issuer under any Letter of Credit or any Loan Document in connection therewith; provided that no Lender shall be liable for any of the foregoing to the extent it arises from the gross negligence or willful misconduct of such Letter of Credit Issuer to be indemnified. Without limitation of the foregoing, each Lender agrees to reimburse each Letter of Credit Issuer promptly upon demand for its Pro Rata Share of any costs or expenses payable by any Borrower to such Letter of Credit Issuer, to the extent that any Letter of Credit Issuer is not promptly reimbursed for such costs and expenses by such Borrower. The agreement contained in this Section shall survive payment in full of all other Obligations (other than Bank Product Obligations).

12.16Concerning the Collateral and the Related Loan Documents. Each Lender authorizes and directs the Agent to enter into the other Loan Documents, for the ratable benefit

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and obligation of the Agent and the Lenders. Each Lender agrees that any action taken by the Agent or the Required Lenders, as applicable, in accordance with the terms of this Agreement or the other Loan Documents, and the exercise by the Agent or the Required Lenders, as applicable, of their respective powers set forth therein or herein, together with such other powers that are reasonably incidental thereto, shall be binding upon all of the Lenders. The U.S. Lenders acknowledge that the Revolving Loans made to the U.S. Borrowers, reimbursement obligations under Letters of Credit issued to the U.S. Borrowers, Agent Advances, Non-Ratable Loans, Bank Products and all interest, fees and expenses hereunder constitute one Debt, secured pari passu by all of the Collateral.

12.17Field Audit and Examination Reports; Disclaimer by Lenders. By signing this Agreement, each Lender:

(a)is deemed to have requested that the Agent furnish such Lender, promptly after it becomes available, a copy of each field audit or examination report (each a “Report” and collectively, “Reports”) prepared by or on behalf of the Agent;

(b)expressly agrees and acknowledges that neither the Bank nor the Agent (i) makes any representation or warranty as to the accuracy of any Report, or (ii) shall be liable for any information contained in any Report;

(c)expressly agrees and acknowledges that the Reports are not comprehensive audits or examinations, that the Agent or the Bank or other party performing any audit or examination will inspect only specific information regarding the Borrowers and will rely significantly upon the Borrowers’ books and records, as well as on representations of the Borrowers’ personnel; and

(d)without limiting the generality of any other indemnification provision contained in this Agreement, agrees: (i) to hold the Agent and any such other Lender preparing a Report harmless from any action the indemnifying Lender may take or conclusion the indemnifying Lender may reach or draw from any Report in connection with any loans or other credit accommodations that the indemnifying Lender has made or may make to the Borrowers, or the indemnifying Lender’s participation in, or the indemnifying Lender’s purchase of, a loan or loans of any Borrower; and (ii) to pay and protect, and indemnify, defend and hold the Agent and any such other Lender preparing a Report harmless from and against, the claims, actions, proceedings, damages, costs, expenses and other amounts (including Attorney Costs) incurred by the Agent and any such other Lender preparing a Report as the direct or indirect result of any third parties who might obtain all or part of any Report through the indemnifying Lender.

12.18Relation Among Lenders. 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.

12.19Co-Agents. None of the Lenders identified on the facing page or signature pages of this Agreement as a “syndication agent” shall have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders as

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such. Without limiting the foregoing, none of the Lenders so identified as a “co-agent” shall have or be deemed to have any fiduciary relationship with any Lender. 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.

12.20Defaulting Lenders.

(a)Adjustments. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as that Lender is no longer a Defaulting Lender, to the extent permitted by applicable Requirements of Law:

(i)Waivers and Amendments. Such Defaulting Lender’s right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in the definition of “Required Lenders” and Section 11.1.

(ii)Defaulting Lender Waterfall. Any payment of principal, interest, fees or other amounts received by the Agent for the account of such Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 9 or otherwise) or received by the Agent from a Defaulting Lender pursuant to Section 14.16 shall be applied at such time or times as may be determined by the Agent as follows: first, to the payment of any amounts owing by such Defaulting Lender to the Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such Defaulting Lender to the applicable Letter of Credit Issuer hereunder; third, to cash collateralize the applicable Letter of Credit Issuer’s risk with respect to such Defaulting Lender in accordance with Section 1.3(b); fourth, as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Revolving Loan in respect of which such Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Agent; fifth, if so determined by the Agent and the Borrowers, to be held in a deposit account and released pro ratain order to (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to Revolving Loans under this Agreement and (y) cash collateralize the applicable Letter of Credit Issuer’s future risk with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with Section 1.3(b); sixth, to the payment of any amounts owing to the other Lenders (including the Letter of Credit Issuers) as a result of any judgment of a court of competent jurisdiction obtained by any Lender (including the Letter of Credit Issuers) against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against such Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Revolving Loans or L/C Borrowings in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Revolving Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 8.2 were satisfied or waived, such payment shall be applied solely to pay the Revolving Loans of, and Letter of Credit Outstandings owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Revolving Loans of, or Letter of Credit

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Outstandings owed to, such Defaulting Lender until such time as all Revolving Loans and funded and unfunded participations in Letter of Credit Outstandings and Non-Ratable Loans are held by the Lenders pro rata in accordance with the Commitments hereunder without giving effect to Section 12.20(a)(iv). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to this Section 12.20(a)(ii) shall be deemed paid to and redirected by such Defaulting Lender, and each Lender irrevocably consents hereto.

(iii)Certain Fees.

(A)    No Defaulting Lender shall be entitled to receive any fee payable under Section 2.5 for any period during which that Lender is a Defaulting Lender (and the U.S. Borrowers shall not be required to pay any such fee that otherwise would have been required to have been paid to that Defaulting Lender).

(B)    Each Defaulting Lender shall be entitled to receive Letter of Credit fees payable under Section 2.6 for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Pro Rata Share of the stated amount of Letters of Credit for which it has provided cash collateral.

(C)    With respect to any Letter of Credit fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the U.S. Borrowers shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in outstanding Letters of Credit that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the applicable Letter of Credit Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Letter of Credit Issuer’s risk with respect to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(D)    With respect to any Canadian Letter of Credit fee not required to be paid to any Defaulting Lender pursuant to clause (A) or (B) above, the Canadian Borrower shall (x) pay to each Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting Lender with respect to such Defaulting Lender’s participation in outstanding Canadian Letters of Credit that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the applicable Letter of Credit Issuer the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Letter of Credit Issuer’s risk with respect to such Defaulting Lender, and (z) not be required to pay the remaining amount of any such fee.

(iv)Reallocation of Pro Rata Shares to Reduce Risk. All or any part of such Defaulting Lender’s participation in Letter of Credit Outstandings and Non-Ratable

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Loans shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Pro Rata Shares (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 8.2 are satisfied at the time of such reallocation (and, unless the Borrowers shall have otherwise notified the Agent at such time, the Borrowers shall be deemed to have represented and warranted that such conditions are satisfied at such time), and (y) such reallocation does not cause the aggregate principal amount of any Non-Defaulting Lender’s outstanding Revolving Loans and such Non-Defaulting Lender’s participation in outstanding Letters of Credit and Non-Ratable Loans to exceed such Non-Defaulting Lender’s Commitment. No reallocation hereunder shall constitute a waiver or release of any claim of any party hereunder against a Defaulting Lender arising from that Lender having become a Defaulting Lender, including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s increased exposure following such reallocation. Notwithstanding the foregoing provisions of this Section 12.20(a)(iv), (A) obligations in respect of Letter of Credit Outstandings of a Canadian Lender that is a Defaulting Lender shall only be reallocated among other Canadian Lenders and (B) obligations in respect of Letter of Credit Outstandings or Non-Ratable Loans of a U.S. Lender that is a Defaulting Lender shall only be reallocated among other U.S. Lenders.

(v)Cash Collateral, Repayment of Non-Ratable Loans. If the reallocation described in clause (a)(iv) above cannot, or can only partially, be effected, (A) the U.S. Borrowers shall, without prejudice to any right or remedy available to it hereunder or under applicable Requirement of Law, (x) first, prepay Non-Ratable Loans in an amount equal to the Agent’s risk and (y) second, cash collateralize the Letter of Credit Issuers’ risk with respect to the Defaulting Lender in accordance with Section 1.3(b) and (B) the Canadian Borrower shall, with respect to any Canadian Letter of Credit and without prejudice to any right or remedy available to it hereunder or under applicable Requirement of Law, cash collateralize the Letter of Credit Issuers’ risk with respect to the Defaulting Lender in accordance with Section 1.3(b).

(b)Defaulting Lender Cure. If the Borrowers, the Agent and the Letter of Credit Issuers agree in writing that a Lender is no longer a Defaulting Lender, the Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any cash collateral), that Lender will, to the extent applicable, purchase at par that portion of outstanding Revolving Loans of the other Lenders or take such other actions as the Agent may determine to be necessary to cause the Revolving Loans and funded and unfunded participations in Letters of Credit and Non-Ratable Loans to be held on a pro rata basis by the Lenders in accordance with their Pro Rata Shares (without giving effect to Section 12.20(a)(iv)), whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrowers while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender.

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ARTICLE 13

GUARANTEES

13.1Guaranty. Each U.S. Borrower hereby jointly and severally, unconditionally, continually and irrevocably guarantees to the Agent, for its benefit and the benefit of the Lenders and the Letter of Credit Issuers, 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 this 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 any other 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”). Notwithstanding the foregoing, the liability of each U.S. Borrower individually with respect to its Guaranteed Obligations shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law.

13.2     Contribution. The U.S. Borrowers hereby agree as among themselves that, if any U.S. Borrower shall make an Excess Payment (as defined below), such U.S. Borrower shall have a right of contribution from each other U.S. Borrower in an amount equal to such other U.S. Borrower’s Contribution Share (as defined below) of such Excess Payment. The payment obligations of any U.S. Borrower under this paragraph shall be subordinate and subject in right of payment to the Guaranteed Obligations until such time as the Guaranteed Obligations have been paid in full and all Commitments have been terminated, and none of the U.S. Borrowers shall exercise any right or remedy under this paragraph against any other U.S. Borrower until the Guaranteed Obligations have been paid in full and all Commitments have been terminated. For purposes of this paragraph, (a) “Excess Payment” shall mean the amount paid by any U.S. Borrower pursuant to this Article 13 in excess of its Pro Rata Guaranty Share of any Guaranteed Obligations; (b) “Pro Rata Guaranty Share” shall mean, for any U.S. Borrower in respect of any payment of Obligations by such U.S. Borrower, the ratio (expressed as a percentage) as of the date of such payment of Guaranteed Obligations of (i) the amount by which the aggregate present fair salable value of all of its assets and properties exceeds the amount of all debts and liabilities of such U.S. Borrower (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such U.S. Borrower hereunder) to (ii) the amount by which the aggregate present fair salable value of all assets and other properties of all of the U.S. Borrowers exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of the U.S. Borrowers hereunder) of the U.S. Borrowers; provided, however, that, for purpose of calculating the Pro Rata Guaranty Shares of the U.S. Borrowers in respect of any payment of Guaranteed Obligations, any U.S. Borrower that became a U.S. Borrower subsequent to the date of any such payment shall be deemed to have been a U.S. Borrower on the date of such payment and the financial information for such U.S. Borrower as of the date such U.S. Borrower became a U.S. Borrower shall be utilized for such U.S. Borrower in connection with such payment; and (c) “Contribution Share” shall mean, for any U.S. Borrower in respect of any Excess Payment made by any other U.S. Borrower, the ratio (expressed as a percentage) as of the date of suchExcess Payment of (i) the amount by which the aggregate present fair salable value of all of its assets

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and properties exceeds the amount of all debts and liabilities of such U.S. Borrower (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of such U.S. Borrower hereunder) to (ii) the amount by which the aggregate present fair salable value of all assets and other properties of the U.S. Borrowers other than the maker of such Excess Payment exceeds the amount of all of the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities, but excluding the obligations of the U.S. Borrowers hereunder) of the U.S. Borrowers other than the maker of such Excess Payment; provided, however, that, for purposes of calculating the Contribution Shares of the U.S. Borrowers in respect of any Excess Payment, any U.S. Borrower that became a U.S. Borrower subsequent to the date of any such Excess Payment shall be deemed to have been a U.S. Borrower on the date of such Excess Payment and the financial information for such U.S. Borrower as of the date such U.S. Borrower became a U.S. Borrower shall be utilized for such U.S. Borrower in connection with such Excess Payment.

13.3Waivers; Other Agreements.    (i) Subject to the terms hereof, the Agent is hereby authorized by the U.S. Borrowers (subject to any additional authorization required by the Lenders or the Required Lenders), without notice to or demand upon any U.S. Borrower, which notice or demand is expressly waived under this Article 13, and without discharging or otherwise affecting the obligations of any U.S. Borrower under this Article 13 (which shall remain absolute and unconditional notwithstanding any such action or omission to act), from time to time, to:

(A)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 this Agreement and the other Loan Documents) now or hereafter executed by any U.S. Borrower and delivered to the Agent, including, without limitation, any increase or decrease of the rate of interest thereon;

(B)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 this Agreement and the other Loan Documents) now or hereafter executed by any U.S. Borrower and delivered to the Agent;

(C)accept partial payments on the Guaranteed Obligations;

(D)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 any U.S. Borrower, and exchange, enforce, waive, substitute, liquidate, terminate, abandon, fail to perfect, subordinate, transfer, otherwise alter and release any such additional security or collateral;

(E)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;

(F)settle, release, compromise, collect or otherwise liquidate the Guaranteed Obligations or accept, substitute, release, exchange or otherwise alter, affect

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or impair any security or collateral for the Guaranteed Obligations or any other guaranty therefor, in any manner;

(G)add, release or substitute any one or more other guarantors, makers or endorsers of the Guaranteed Obligations and otherwise enforce its rights under the Loan Documents against any U.S. Borrower or any other guarantor, maker or endorser as the Agent may elect in its sole discretion;

(H)apply any and all payments or recoveries from any U.S. Borrower, from any other guarantor, maker or endorser of the Guaranteed Obligations to the Obligations in such order as provided in Section 3.5 hereof, whether such Guaranteed Obligations are secured or unsecured or guaranteed or not guaranteed by others;

(I)apply any and all payments or recoveries from any U.S. Borrower 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

(J)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 Agreement 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 any U.S. Borrower 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 any U.S. Borrower 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 such Borrower).

The foregoing provisions are intended to eliminate suretyship defenses and are not intended to affect the operation of Section 11.1.

(ii)Each U.S. Borrower hereby waives, with respect to this Article 13:

(A)any requirements of diligence or promptness on the part of the Agent;

(B)presentment, demand for payment or performance and protest and notice of protest with respect to the Guaranteed Obligations;

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(C)notices (I) of nonperformance, (II) of acceptance of this Agreement, (III) of default in respect of the Guaranteed Obligations, (IV) of the existence, creation or incurrence of new or additional indebtedness, arising either from additional loans extended to any Borrower or otherwise, (V) 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, (VI) of any and all proceedings to collect from any Borrower, any endorser or any other guarantor of all or any part of the Guaranteed Obligations, or from anyone else, and (VII) 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;

(D)any right to require the Agent to (I) proceed first against any other Borrower, or any other person whatsoever, (II) proceed against or exhaust any security given to or held by the Agent in connection with the Guaranteed Obligations, or (III) pursue any other remedy in the Agent’s power whatsoever;

(E)any defense arising by reason of (I) any disability or other defense of any U.S. Borrower, (II) the cessation from any cause whatsoever of the liability of any U.S. Borrower, (III) 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 any Borrower or any security given to or held by the Agent in connection with the Guaranteed Obligations;

(F)any and all other suretyship defenses under applicable law; and

(G)the benefit of any statute of limitations affecting the Guaranteed Obligations or such U.S. Borrower’s liability under this Article 13 or the enforcement of this Article 13.

In connection with the foregoing, each U.S. Borrower covenants that the provisions of this Article 13 shall not be discharged, except by complete performance of the obligations contained herein.

(iii)Each U.S. Borrower hereby assumes responsibility for keeping itself informed of the financial condition of each other 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 each Borrower hereby agrees that the Agent shall not have any duty to advise any Borrower of information known to the Agent regarding such condition or any such circumstances.

(iv)Each U.S. Borrower hereby agrees that any Debt of any other U.S. Borrower now or hereafter owing to such U.S. Borrower 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, no Letters of

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Credit are outstanding 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 Event of Default shall have occurred and be continuing to the extent such payments would not render such U.S. Borrower incapable of performing the Guaranteed Obligations. No U.S. Borrower will 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, each U.S. 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 the relevant U.S. Borrower 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 such U.S. Borrower’s liability under any of the provisions of this Agreement. Each U.S. Borrower agrees to file all claims against any other U.S. 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 such U.S. Borrower’s right thereunder. If for any reason the relevant U.S. Borrower 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 such U.S. Borrower’s attorney-in-fact, is hereby authorized to do so in such U.S. Borrower’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, each U.S. Borrower hereby assigns to the Agent all such U.S. Borrower’s rights to any payments or distributions to which such U.S. Borrower otherwise would be entitled. If the amount so paid is greater than such U.S. Borrower’s liability hereunder, the Agent will pay the excess amount to the party entitled thereto. In addition, until all the Guaranteed Obligations have been paid in full in cash, each U.S. Borrower hereby appoints the Agent as its attorney-in-fact to exercise all of such U.S. Borrower’s voting rights in connection with any bankruptcy proceeding or any plan for the reorganization of any other U.S. Borrower.

13.4Guarantee Absolute and Unconditional. Each U.S. Borrower hereby expressly agrees that this Article 13 is a continuing, unconditional guaranty of payment and not of collection and its obligations under this Article 13 are joint and several, 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, this 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 any other U.S. Borrower or any other guarantor or other action to enforce the same;

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(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)any borrowing or grant of a security interest by any U.S. Borrower, as debtor-in-possession, or extension of credit, under Section 364 of the Bankruptcy Code;

(v)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;

(vi)any use of cash collateral under Section 363 of the Bankruptcy Code;

(vii)any agreement or stipulation as to the provision of adequate protection in any bankruptcy proceeding;

(viii)the avoidance of any lien in favor of the Agent for any reason;

(ix)any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any U.S. Borrower 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;

(x)failure by the Agent to file or enforce a claim against any Borrower or its estate in any bankruptcy or insolvency case or proceeding;

(xi)any action taken by the Agent that is authorized by this Agreement;

(xii)any election by the Agent under Section 9-501(4) of the Uniform Commercial Code as enacted in any relevant jurisdiction as to any security for the Guaranteed Obligations or any guaranty of the Guaranteed Obligations; or

(xiii)any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor.

13.5Reinstatement. Each U.S. Borrower further agrees that, if any payment made by any 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 any Collateral are required to be returned by the Agent, any of the Lenders and any Letter of Credit Issuer to any U.S. Borrower, its estate, trustee, receiver or any other party, including, without limitation, any guarantor, under any bankruptcy law, state or federal law, common law or equitable cause, then, to the extent of such payment or repayment, each U.S. Borrower’s liability under this Article 13 (and any lien, security interest or other collateral securing such liability) shall be and remain in full force and

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effect, as fully as if such payment had never been made, or, if prior thereto this Agreement shall have been cancelled or surrendered (and if any lien, security interest or other collateral securing any U.S. Borrower’s liability under this Article 13 shall have been released or terminated by virtue of such cancellation or surrender), this Article 13 (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 any U.S. Borrower under this Article 13 in respect of the amount of such payment (or any lien, security interest or other collateral securing such obligation).

13.6Payment. (i) Each U.S. Borrower agrees that if any other U.S. Borrower shall default in payment or performance of any of the Guaranteed Obligations, whether principal, interest, premium, fee (including, but not limited to, loan fees and attorneys’ fees and expenses), or otherwise, when and as the same shall become due, and after expiration of any applicable grace period, whether according to the terms of this Agreement, by acceleration, or otherwise, or upon the occurrence and during the continuance of any Event of Default, then such U.S. Borrower will, upon demand thereof by the Agent, fully pay to the Agent, for the benefit of the Lenders and the Letter of Credit Issuers in an amount equal to all the Guaranteed Obligations then due and owing.

(ii)Each U.S. Borrower further agrees to pay all costs and expenses promptly upon written demand by the Agent, 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, any U.S. Borrower 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 any Guarantor’s liabilities under this Article 13.

ARTICLE 14MISCELLANEOUS

14.1No Waivers; Cumulative Remedies. No failure by the Agent or any Lender to exercise any right, remedy, or option under this Agreement or any present or future supplement thereto, or in any other agreement between or among any Borrower and the Agent and/or any Lender, or delay by the Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver by the Agent or any Lender will be effective unless it is in writing, and then only to the extent specifically stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent’s and each Lender’s rights thereafter to require strict performance by any Borrower of any provision of this Agreement. The Agent and the Lenders may proceed directly to collect the Obligations (other than Bank Product Obligations) when due and payable hereunder without any prior recourse to the Collateral. The Agent’s and each Lender’s rights under this Agreement will be cumulative and not exclusive of any other right or remedy which the Agent or any Lender may have.

14.2Severability. To the fullest extent permitted by applicable law, the illegality or unenforceability of any provision of this Agreement or any Loan Document or any instrument

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or agreement required hereunder shall not in any way affect or impair the legality or enforceability of the remaining provisions of this Agreement or any instrument or agreement required hereunder.

14.3Governing Law; Choice of Forum; Service of Process.

(a)THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

(b)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EXCEPT AS OTHERWISE EXPRESSLY PROVIDED FOR THEREIN) MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN NEW YORK COUNTY OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS, THE AGENT AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS, THE AGENT AND THE LENDERS IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY OBJECTION, INCLUDING ANY OBJECTION TO 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ITS RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

(c)EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH BORROWER AT ITS ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

14.4WAIVER OF JURY TRIAL. EACH BORROWER, THE LENDERS AND THE AGENT EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF

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OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

14.5Survival of Representations and Warranties. All of each Borrower’s representations and warranties contained in this Agreement shall survive the execution, delivery, and acceptance thereof by the parties, notwithstanding any investigation by the Agent or the Lenders or their respective agents.

14.6Other Security and Guaranties. The Agent, may, without notice or demand and without affecting any Borrower’s obligations hereunder, from time to time: (a) accept from any Person (other than Parent and its Subsidiaries) and hold collateral (other than the Collateral) for the payment of all or any part of the Obligations and exchange, enforce or release such collateral or any part thereof; and (b) accept and hold any endorsement or guaranty of payment of all or any part of the Obligations and release or substitute any such endorser or guarantor, or any Person who has given any Lien in any other collateral as security for the payment of all or any part of the Obligations, or any other Person in any way obligated to pay all or any part of the Obligations.

14.7Fees and Expenses. The U.S. Borrowers, jointly and severally, agree to promptly pay to the Agent, for its benefit, on demand, all reasonable and documented costs and expenses (other than any Taxes, which are governed by Section 4.1) that Agent pays or incurs in connection with the negotiation, preparation, syndication, consummation, administration, enforcement, and termination of this Agreement or any of the other Loan Documents, including: (a) its Attorney Costs; (b) reasonable and documented costs and expenses (including reasonable and documented attorneys’ and paralegals’ fees and disbursements) for any amendment, supplement, waiver, consent, or subsequent closing in connection with the Loan Documents and the transactions contemplated thereby; (c) costs and expenses of lien and title searches and title insurance; (d) taxes, fees and other charges for filing financing statements and continuations, and other actions to perfect, protect, and continue the Agent’s Liens; (e) sums paid or incurred to pay any amount or take any action required of any Borrower under the Loan Documents that such Borrower fails to pay or take; (f) subject to Section 7.4, costs of appraisals, field exams, inspections, audits, and verifications of the Collateral, including travel, lodging, and meals for inspections of the Collateral and any Borrower’s operations by the Agent plus the Agent’s then customary charge for field examinations and audits and the preparation of reports thereof; and (g) costs and expenses of forwarding loan proceeds, collecting checks and other items of payment, and establishing and maintaining Payment Accounts and lock boxes, and costs and expenses of preserving and protecting the Collateral. In addition, the U.S. Borrowers jointly and severally agree to pay costs and expenses incurred by the Agent (including its Attorneys’ Costs) to the Agent, for its benefit, promptly upon written demand by Agent, and to the other Lenders for their benefit, promptly upon written demand, and all reasonable and documented fees, expenses and disbursements incurred by such other Lenders for one law firm retained by such other Lenders, in each case, paid or incurred to obtain payment of the Obligations, enforce the Agent’s Liens, sell or otherwise realize upon the Collateral, and otherwise enforce against the Credit Parties the provisions of the Loan Documents, or to defend any claims made or threatened against the Agent or any Lender (other than by another Lender) arising out of the transactions contemplated hereby (including preparations for and consultations concerning any such matters). The foregoing shall not be construed to limit any other provisions of the Loan Documents regarding costs and expenses to be paid by any Borrower.

14.8Notices. Except as otherwise provided herein, all notices, demands and requests that any party is required or elects to give to any other shall be in writing, or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including, but not limited to, delivery by overnight mail and courier service, (b) four (4) days after it shall have been mailed by United States mail, first class, certified or registered, with postage prepaid, or (c) in the case of notice by such a telecommunications device, when properly transmitted, in each case addressed to the party to be notified as follows:

If to the Agent or to the Bank:

Bank of America, N.A.

100 Federal Street

MA5 100 09-09

Boston, MA 02110

Attention:    Kathleen Dimock

Facsimile No.: (617) 434-4131

Telephone No.: (617) 434-3830

If to the Borrowers

AnnTaylor, Inc.

7 Times Square

New York, New York 10036

Attention: Senior Vice President and General Counsel

Facsimile No.: (212) 536-4412

Telephone No.: (212) 536-4253

With copies to:

Cleary Gottlieb Steen & Hamilton LLP

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One Liberty Plaza

New York, NY 10006

Attention:  Kimberly B. Blacklow, Esq.

Facsimile No.: (212) 225-3999

Telephone No.: (212) 225-2000

or to such other address as each party may designate for itself by like notice. Failure or delay in delivering copies of any notice, demand, or request to the persons designated above to receive copies shall not adversely affect the effectiveness of such notice, demand, or request. Each of ANNCO, AT Retail, AT Distribution, ACS and the Canadian Borrower hereby appoint ATI as its agent for purposes of receiving and delivering all notices, demands and requests pursuant hereto and under the other Loan Documents.

14.9Waiver of Notices. Each Borrower waives presentment, and notice of demand or dishonor and protest as to any instrument, notice of intent to accelerate the Obligations and notice of acceleration of the Obligations, as well as any and all other notices to which it might otherwise be entitled, except, in each case, to the extent expressly provided for in the Loan Documents. No notice to or demand on any Borrower which the Agent or any Lender may elect to give shall entitle any Borrower to any or further notice or demand in the same, similar or other circumstances.

14.10Binding Effect. The provisions of this Agreement shall be binding upon and inure to the benefit of the respective representatives, successors, and permitted assigns of the parties hereto; provided, however, that no interest herein may be assigned by any Borrower without prior written consent of the Agent and each Lender or by any Lender other than in accordance with Section 11.2. Each Lender agrees to give prompt notice of any such assignment to the Agent and ATI on behalf of the Borrowers.

14.11Indemnity of the Agent and the Lenders by the Borrowers.

(a)Each U.S. Borrower agrees to defend, indemnify and hold the Agent-Related Persons, and each U.S. Lender and each of its respective officers, directors, employees, counsel, representatives, agents and attorneys-in-fact (each, a “U.S. Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Credit Extensions and the termination, resignation or replacement of the Agent or replacement of any U.S. Lender) be imposed on, incurred by or asserted against any such U.S. Indemnified Person in any way relating to or arising out of this Agreement or any other Loan Document, or the transactions contemplated hereby, or any action taken or omitted by any such U.S. Indemnified Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement, any other Loan Document, or the Credit Extensions (or the use of the proceeds thereof) or Letters of Credit, whether or not any U.S. Indemnified Person is a party thereto and whether or not brought by another U.S. Indemnified Person or by a U.S. Borrower or other Credit Party or any of their officers, equity

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holders or directors (all the foregoing, collectively, the “U.S. Indemnified Liabilities”); provided, that the U.S. Borrowers shall have no obligation hereunder to any U.S. Indemnified Person with respect to U.S. Indemnified Liabilities to the extent, as to any U.S. Indemnified Person, it shall be determined in a final, nonappealable judgment by a court of competent jurisdiction that such losses, claims, damages, liabilities or expenses resulted from the gross negligence or willful misconduct of such U.S. Indemnified Person; provided, further, that the indemnity provided in this Section 14.11 shall in no event entitle any U.S. Indemnified Person to payment in respect of claims, losses, liabilities or expenses of any kind that are expressly limited by or governed by other provisions of this Agreement in excess of amounts (if any) to which such U.S. Indemnified Person is entitled pursuant to such provisions. The agreements in this Section shall survive payment of all other Obligations.

(b)The Canadian Borrower agrees to defend, indemnify and hold the Agent-Related Persons, and each Canadian Lender and each of its respective officers, directors, employees, counsel, representatives, agents and attorneys-in-fact (each, a “Canadian Indemnified Person”), solely with respect to obligations of the Canadian Borrower, harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses and disbursements (including Attorney Costs) of any kind or nature whatsoever which may at any time (including at any time following repayment of the Credit Extensions and the termination, resignation or replacement of the Agent or replacement of any Canadian Lender) be imposed on, incurred by or asserted against any such Canadian Indemnified Person in any way relating to or arising out of this Agreement or any other Loan Document, or the transactions contemplated hereby, or any action taken or omitted by any such Canadian Indemnified Person under or in connection with any of the foregoing, including with respect to any investigation, litigation or proceeding (including any Insolvency Proceeding or appellate proceeding) related to or arising out of this Agreement, any other Loan Document, or the Credit Extensions (or the use of the proceeds thereof) or Letters of Credit, whether or not any Canadian Indemnified Person is a party thereto and whether or not brought by another Canadian Indemnified Person or any of their officers, equity holders or directors (all the foregoing, collectively, the “Canadian Indemnified Liabilities”); provided, that the Canadian Borrower shall have no obligation hereunder to any Canadian Indemnified Person with respect to Canadian Indemnified Liabilities to the extent, as to any Canadian Indemnified Person, it shall be determined in a final, nonappealable judgment by a court of competent jurisdiction that such losses, claims, damages, liabilities or expenses resulted from the gross negligence or willful misconduct of such Canadian Indemnified Person; provided, further, that the indemnity provided in this Section 14.11 shall in no event entitle any Canadian Indemnified Person to payment in respect of claims, losses, liabilities or expenses of any kind that are expressly limited by or governed by other provisions of this Agreement in excess of amounts (if any) to which such Canadian Indemnified Person is entitled pursuant to such provisions. The agreements in this Section shall survive payment of all other Obligations.

(c)Each U.S. Borrower agrees to indemnify, defend and hold harmless each U.S. Indemnified Person from any loss or liability directly or indirectly arising out of the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of a hazardous substance relating to any U.S. Borrower’s operations, business or property. This indemnity will apply whether the hazardous substance is on, under or about such U.S. Borrower’s property or operations or property leased to such U.S. Borrower.

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The indemnity includes but is not limited to Attorneys Costs. This indemnity will survive repayment of all other Obligations.

(d)The Canadian Borrower agrees to indemnify, defend and hold harmless, solely with respect to obligations of the Canadian Borrower, each Canadian Indemnified Person from any loss or liability directly or indirectly arising out of the use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or presence of a hazardous substance relating to the Canadian Borrower’s operations, business or property. This indemnity will apply whether the hazardous substance is on, under or about the Canadian Borrower’s property or operations or property leased to the Canadian Borrower. The indemnity includes but is not limited to Attorneys Costs. This indemnity will survive repayment of all other Obligations.

(e)For purposes of clauses (c) and (d) above “hazardous substances” means any substance, material or waste that is or becomes designated or regulated as “toxic,” “hazardous,” “pollutant,” or “contaminant” or a similar designation or regulation under any federal, state or local law (whether under common law, statute, regulation or otherwise) or judicial or administrative interpretation of such, including petroleum or natural gas.

14.12Limitation of Liability. NO CLAIM MAY BE MADE BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO OR THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, COUNSEL, REPRESENTATIVES, AGENTS OR ATTORNEYS-IN-FACT OF ANY SUCH PARTY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH PARTY HERETO HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.

14.13Final Agreement. This Agreement and the other Loan Documents are intended by the Borrowers, the Agent and the Lenders to be the final, complete, and exclusive expression of the agreement between them. This Agreement supersedes any and all prior oral or written agreements relating to the subject matter hereof except for the Fee Letter.

14.14Counterparts. This Agreement may be executed in any number of counterparts, and by the Agent, each Lender and each Borrower in separate counterparts, each of which shall be an original, but all of which shall together constitute one and the same agreement; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document.

14.15Captions. The captions contained in this Agreement are for convenience of reference only, are without substantive meaning and should not be construed to modify, enlarge, or restrict any provision.

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14.16Right of Setoff. In addition to any rights and remedies of the Lenders provided by law, if an Event of Default exists or the Revolving Loans have been accelerated, each Lender is authorized at any time and from time to time, without prior notice to the Borrowers, any such notice being waived by the Borrowers to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, such Lender or any Affiliate or branch of such Lender to or for the credit or the account of any Borrower against any and all Obligations owing to such Lender, now or hereafter existing, irrespective of whether or not the Agent or such Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured; provided, that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Agent for further application in accordance with the provisions of Section 12.20 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Agent, the Letter of Credit Issuers and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. Notwithstanding the foregoing, any amounts of the Canadian Borrower so offset shall be applied solely to the Canadian Obligations. Each Lender agrees promptly to notify the Borrowers (or ATI on behalf of the Borrowers) and the Agent after any such set-off and application made by such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE ANY RIGHT OF SET-OFF, BANKER’S LIEN, OR THE LIKE AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY BORROWER HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR WRITTEN CONSENT OF THE AGENT AND THE REQUIRED LENDERS.

14.17Confidentiality.

(a)Each Borrower hereby consents that the Agent and each Lender may issue and disseminate to the public general information describing the credit accommodation entered into pursuant to this Agreement, including the name and address of any Borrower and any other Subsidiary and a general description of any Borrower’s and its respective Subsidiaries’ business.

(b)Each Lender and the Agent severally agrees to take normal and reasonable precautions and exercise due care to maintain the confidentiality of all information provided to the Agent or any Lender by or on behalf of any Credit Party under this Agreement or any other Loan Document (including any Report provided by the Agent to any Lender), except to the extent that such information (i) was or becomes generally available to the public other than as a result of disclosure by the Agent or such Lender, or (ii) was or becomes available on a nonconfidential basis from a source other than any Borrower, provided that such source is not bound by a confidentiality agreement with any Borrower or an Affiliate thereof known to the Agent or such Lender; provided, however, that the Agent and any Lender may disclose such information (1) at the request or pursuant to any requirement of any Governmental Authority to which the Agent or such Lender is subject or in connection with an examination of the Agent or such Lender by any such Governmental Authority; (2) pursuant to subpoena or other court process; (3) when required to do so in accordance with the provisions of any applicable

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Requirements of Law; (4) to the extent reasonably required in connection with any litigation or proceeding (including, but not limited to, any bankruptcy proceeding) to which the Agent, any Lender or their respective Affiliates may be party; (5) to the extent reasonably required in connection with the exercise of any remedy hereunder or under any other Loan Document; (6) to the Agent’s or such Lender’s independent auditors, accountants, attorneys and other professional advisors, each of which will be informed of the confidential nature thereof; (7) to any prospective Participant or Assignee under any Assignment and Acceptance, actual or potential, provided that such prospective Participant or Assignee agrees to keep such information confidential to the same extent required of the Agent and the Lenders hereunder; (8) as expressly permitted under the terms of any other document or agreement regarding confidentiality to which any Borrower is party with the Agent or such Lender, and (9) to its Affiliates and to its and their respective employees, officers, directors, advisors or agents, each of which will be informed of the confidential nature thereof.

Notwithstanding anything herein to the contrary, the information subject to this Section 14.17(b) shall not include, and the Borrowers, Agent and each Lender and the respective Affiliates and branches of each of the foregoing (and the respective partners, directors, officers, employees, agents, advisors and other representatives of each of the foregoing and their Affiliates) may disclose to any and all Persons, without limitation of any kind, (a) any information with respect to the federal, provincial and state income tax treatment of the transactions contemplated hereby and any facts that may be relevant to understanding such tax treatment, which facts shall not include for this purpose the names of the parties or such other Persons, or any pricing terms or other nonpublic business or financial information that is unrelated to such tax treatment or facts and (b) all materials of any kind (including opinions or other tax analyses) that are provided to the Agent or such Lender relating to such tax treatment or facts.

14.18Conflicts with Other Loan Documents. Unless otherwise expressly provided in this Agreement (or in another Loan Document by specific reference to the applicable provision contained in this Agreement), if any provision contained in this Agreement conflicts with any provision of any other Loan Document, the provision contained in this Agreement shall govern and control.

14.19No Lender Reliance on Margin Stock. Each Lender acknowledges and represents that it, in good faith, has not relied upon Margin Stock of the Parent or any of its Subsidiaries as collateral in its decision to make any Credit Extensions to the Borrowers.

14.20Judgment Currency. If, for the purpose of obtaining judgment in any court or obtaining an order enforcing a judgment, it becomes necessary to convert any amount due under this Agreement in Dollars or in any other currency (hereinafter in this Section 14.20 called the “first currency”) into any other currency (hereinafter in this Section 14.20 called the “second currency”), then the conversion shall be made at the Exchange Rate for buying the first currency with the second currency prevailing at the Agent’s close of business on the Business Day next preceding the day on which the judgment is given or (as the case may be) the order is made. Any payment made by a Credit Party to the Agent or any Lender pursuant to this Agreement in the second currency shall constitute a discharge of the obligations of any applicable Credit Party to pay to the Agent or such Lender any amount originally due to the Agent or Lender in the first currency under this Agreement only to the extent of the amount of the first currency which the

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Agent or such Lender is able, on the date of the receipt by it of such payment in any second currency, to purchase, in accordance with the Agent’s or such Lender’s normal banking procedures, with the amount of such second currency so received. If the amount of the first currency falls short of the amount originally due to the Agent or such Lender in the first currency under this Agreement, the Credit Parties agree that they will indemnify the Agent and each Lender against and save the Agent and such Lender harmless from any shortfall so arising. This indemnity shall constitute an obligation of each such Credit Party separate and independent from the other obligations contained in this Agreement, shall give rise to a separate and independent cause of action and shall continue in full force and effect notwithstanding any judgment or order for a liquidated sum or sums in respect of amounts due to the Agent or any Lender under any Loan Documents or under any such judgment or order. Any such shortfall shall be deemed to constitute a loss suffered by the Agent or such Lender and the Credit Parties shall not be entitled to require any proof or evidence of any actual loss. If the amount of the first currency exceeds the amount originally due to the Agent or a Lender in the first currency under this Agreement, the Agent or such Lender shall promptly remit such excess to the Credit Parties. The covenants contained in this Section 14.20 shall survive payment in full of the Obligations under this Agreement

14.21Canadian Anti-Money Laundering Legislation. If the Agent has ascertained the identity of the Canadian Borrower or any authorized signatories of the Canadian Borrower for the purposes of the Proceeds of Crime Act and other applicable anti-money laundering, anti-terrorist financing, economic or trade sanctions and “know your client” policies, regulations, laws or rules (the Proceeds of Crime Act and such other applicable policies, regulations, laws or rules, collectively, including any guidelines or orders thereunder, “AML Legislation”), then the Agent shall be deemed to have done so as an agent for each Canadian Lender, and this Agreement shall constitute a “written agreement” in such regard between each Canadian Lender and the Agent within the meaning of the applicable AML Legislation; and shall provide to each Canadian Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness. Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each of the Canadian Lenders agrees that the Agent has no obligation to ascertain the identity of the Canadian Borrower or any authorized signatories of the Canadian Borrower on behalf of any Canadian Lender, or to confirm the completeness or accuracy of any information it obtains from the Canadian Borrower or any such authorized signatory in doing so.

14.22Canadian Obligations. Notwithstanding anything to the contrary in any Loan Document, the Canadian Borrower will have no obligation with respect to the U.S. Obligations and will not guarantee, support or pledge any of its assets to secure the U.S. Obligations.

14.23USA PATRIOT Act. Each Lender that is subject to the Act (as hereinafter defined) and the Agent (for itself and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrowers, which information includes the name and address of the Borrowers and other information that will allow such Lender or the Agent, as applicable, to identify the Borrowers in accordance with the Act. The Borrowers shall, promptly following a request by the

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Agent or any Lender, provide all documentation and other information that the Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the Act.

ARTICLE 15

PAYMENTS AND PREPAYMENTS

15.1Amendment and Restatement. Each Borrower, the Agent, the Letter of Credit Issuers and the Lenders hereby agree that upon the effectiveness of this Agreement, the terms and provisions of the Original Credit Agreement which in any manner govern or evidence the Obligations, the rights and interests of the Lenders and any terms, conditions or matters related to any thereof, shall be and hereby are amended and restated in their entirety by the terms and provisions of this Agreement and the terms and conditions of the Original Credit Agreement shall be superseded by this Agreement, except as expressly provided herein.

Notwithstanding the amendment and restatement of the Original Credit Agreement and certain of the related “Loan Documents” as defined in the Original Credit Agreement (the “Prior Loan Documents”) by this Agreement and the other Loan Documents as herein defined, all of the indebtedness, liabilities and obligations owing by any Borrower under the Original Credit Agreement shall continue as Obligations hereunder and shall be and remain secured by the Security Instruments for the benefit of the Agent and the Lenders. This Agreement is given as a substitution of, and not as a payment of, the indebtedness, liabilities and obligations of the Borrowers, under the Original Credit Agreement and is not intended to constitute a novation thereof or of any of the other Prior Loan Documents. As of the Effective Date, there are no Revolving Loans outstanding. Upon the effectiveness of this Agreement, all Revolving Loans owing by the Borrowers and Letters of Credit outstanding under the Original Credit Agreement shall continue as Revolving Loans and Letters of Credit hereunder.

15.2Assignment and Acceptance. Each Borrower, the Agent, the Letter of Credit Issuers and the Lenders hereby acknowledge the assignment by the lenders party to the Original Credit Agreement to the Lenders party hereto of all Revolving Loans and risk participations in Letters of Credit and Commitments under the Original Credit Agreement in the amounts and allocations as reflected on Schedule 1.1 substantially simultaneously with the effectiveness of this Agreement and such assignment shall be deemed to have been consummated in accordance with Section 12.01 of the Original Credit Agreement and the terms, conditions, representations and warranties set forth in the form of Assignment and Acceptance set forth as Exhibit 12.01 of the Original Credit Agreement shall be deemed to have been made and agreed to as between the lenders party to the Original Credit Agreement and Lender party hereto as if an Assignment and Acceptance had been fully executed and delivered by such parties.

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IN WITNESS WHEREOF, the parties have entered into this Agreement on the date first above written.

U.S. BORROWERS:

ANNTAYLOR, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

ANNCO, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

ANNTAYLOR DISTRIBUTION SERVICES, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

ANNTAYLOR RETAIL, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

ANN CARD SERVICES, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

Signature Page

Fourth Amended and Restated Credit Agreement

CANADIAN BORROWER:

ANN CANADA INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

Signature Page

Fourth Amended and Restated Credit Agreement

ADMINISTRATIVE AGENT AND

COLLATERAL AGENT:

BANK OF AMERICA, N.A., as the Agent, Collateral Agent and a Letter of Credit Issuer

By: /s/ Matthew Potter    

Name:    Matthew Potter

Title: Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

LENDERS:

BANK OF AMERICA, N.A., as a U.S. Lender

By: /s/ Matthew Potter    

Name:    Matthew Potter

Title:    Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

BANK OF AMERICA, N.A. (ACTING THROUGH ITS CANADA BRANCH),

as a Canadian Lender

By: /s/ Medina Sales de Andrade

Name:Medina Sales de Andrade

Title:Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

JPMORGAN CHASE BANK, N.A., as

Syndication Agent and as a U.S. Lender

By: /s/ Nisha Gupta                

Name:    Nisha Gupta

Title:    Authorized Officer

Signature Page

Fourth Amended and Restated Credit Agreement

JPMORGAN CHASE BANK, N.A., Toronto Branch, as a Canadian Lender

By: /s/ Steve Volgt                

Name:    Steve Volgt

Title:    Senior Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

RBS CITIZENS, N.A., as a U.S. Lender

By: /s/ Michael K. Makaitis

Name:Michael K. Makaitis

Title:Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

RBS CITIZENS, N.A., as a Canadian Lender

By: /s/ Michael K. Makaitis            

Name:    Michael K. Makaitis

Title:    Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent and as a U.S. Lender

By: /s/ Lauren Murphy

Name:Lauren Murphy

Title:Assistant Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

WELLS FARGO CAPITAL FINANCE CORPORATION CANADA, as a Canadian Lender

By: /s/ Domenic Cosentino            

Name:    Domenic Cosentino

Title:    Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

SCOTIABANC INC., as a U.S. Lender

By: /s/ J.F. Todd

Name:J.F. Todd

Title:Managing Director

Signature Page

Fourth Amended and Restated Credit Agreement

THE BANK OF NOVA SCOTIA, as a Canadian Lender

By: /s/ David Mahmood            

Name:    David Mahmood

Title:    Managing Director

Signature Page

Fourth Amended and Restated Credit Agreement

FIFTH THIRD BANK, as a U.S. Lender

By: /s/ Valerie Schanzer

Name:Valerie Schanzer

Title:Vice President

Signature Page

Fourth Amended and Restated Credit Agreement

FIFTH THIRD BANK, Operating Through its Canadian Branch, as a Canadian Lender

By: /s/ Mauro Spagnolo            

Name:    Mauro Spagnolo

Title:    Managing Director and Principal Officer

Signature Page

Fourth Amended and Restated Credit Agreement

ANNEX A
toCredit Agreement

1.    Definitions.

Capitalized terms used in the Loan Documents shall have the following respective meanings (unless otherwise defined therein), and all section references in the following definitions shall refer to sections of the Agreement:

“Accommodation Obligation” as applied to any Person, shall mean any contractual obligation, contingent or otherwise, of that Person with respect to any Debt or other obligation or liability of another, including any such Debt, 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 Debt, 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.

“Accounts” means all of any U.S. Borrower’s now owned or hereafter acquired or arising accounts, as defined in the UCC, including any rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance.

“Account Debtor” means each Person obligated in any way on or in connection with an Account.

“ACH Transactions” means any cash management or related services that include the automated clearing house transfer of funds by any Lender which is a bank for the account of any Credit Party pursuant to agreement or overdrafts.

“Acquisition” means the acquisition of (i) a controlling equity interest in another Person (including the purchase of an option, warrant or convertible or similar type security to acquire such a controlling interest at the time it becomes exercisable by the holder thereof), whether by purchase of such equity interest or upon exercise of an option or warrant for, or conversion of securities into, such equity interest, or (ii) assets of another Person which constitute all or substantially all of the assets of such Person or of a line or lines of business conducted by such Person.

“Activation Period” has the meaning specified in Section 7.25.

“Adjusted Availability” means at any time (a) the Borrowing Base, minus (b) Aggregate Outstandings.

“Adjusted Net Earnings from Operations” means, with respect to any fiscal period on a consolidated basis, the Parent’s and each Borrower’s net income after provision for income taxes for such fiscal period, as determined in accordance with GAAP and reported on the

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Financial Statements for such period, excluding any and all of the following included in such net income: (a) gain or loss arising from the sale of any capital assets; (b) gain arising from any write-up in the book value of any asset; (c) earnings of any Person other than a Subsidiary in which any Borrower has an ownership interest unless (and only to the extent) such earnings shall actually have been received by such Borrower in the form of cash distributions; (d) earnings of any Person in which any other Person (other than a Borrower or a Subsidiary) has an ownership interest, except to the extent of the amount of dividends or other distributions actually paid in cash to a Borrower or a Subsidiary by such Person during such period; (e) earnings of Unrestricted Subsidiaries; (f) earnings of any Person to which all or substantially all of the assets of any Borrower shall have been sold, transferred or disposed of, or into which any Borrower shall have been merged or amalgamated, or which has been a party with any Borrower to any consolidation or other form of reorganization, prior to the date of such transaction; (g) gain or loss arising from the acquisition of debt or equity securities of the Parent and the Borrowers or from cancellation or forgiveness of Debt; and (h) gain or loss arising from extraordinary items, as determined in accordance with GAAP or from any other non-recurring transaction.

“Affected Payee” has the meaning given to such term in Section 3.9.

“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 10% 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 any Borrower unless it owns, directly or indirectly, at least 20% of such Securities of such Borrower.

“Agent Advances” has the meaning specified in Section 1.2(i).

“Agent’s Liens” means the Liens on the Collateral granted to the Agent, for the benefit of the Lenders, Bank, and Agent pursuant to this Agreement and the other Loan Documents.

“Agent-Related Persons” means the Agent, together with its Affiliates, and the officers, directors, employees, counsel, representatives, agents and attorneys-in-fact of the Agent and such Affiliates.

“Aggregate Outstandings” means, at any date of determination: the sum of (a) the unpaid balance of the Dollar Equivalent of Revolving Loans, (b) the aggregate amount of the Dollar Equivalent of Pending Revolving Loans, and (c) all Letter of Credit Outstandings.

“Agreement” means the Credit Agreement to which this Annex A is attached, as from time to time amended, modified or restated.

“Applicable Margin” means, initially,

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(i) with respect to Base Rate Loans and Canadian Prime Rate Loans, 0.50%;

(ii) with respect to LIBOR Loans, Canadian BA Rate Loans and Standby Letter of Credit Fees, 1.50%; and

(iii) with respect to the Commercial Letter of Credit Fees, 0.625%.

Adjustments in Applicable Margins shall be determined by reference to the following grids:

If Average Daily Availability is:	Level of Applicable Margins:
Greater than or equal to $100,000,000	Level I
Less than $100,000,000	Level II

Low to High
	Applicable Margins
	Level I	Level II
Base Rate Loans and Canadian Prime Rate Loans	0.25%	0.50%
LIBOR Loans, Canadian BA Rate Loans and Standby Letter of Credit Fee	1.25%	1.50%
Commercial Letter of Credit Fee	0.50%	0.625%

Beginning with the fiscal quarter commencing February 3, 2013, all adjustments in the Applicable Margins shall be implemented quarterly on a prospective basis on the first day of each fiscal quarter of ATI (each an “Adjustment Date”) based on the Average Daily Availability for the immediately preceding fiscal quarter as determined by the Agent. If an Event of Default has occurred and is continuing at the time any reduction in the Applicable Margins is to be implemented, no reduction may occur until the first day of the first calendar month following the date on which such Event of Default is waived or cured.

“Applicable Value” means (a) with respect to Eligible Inventory and Eligible In-Transit Inventory at any time, the lower of (i) average cost of such Eligible Inventory at such time (calculated in accordance with GAAP) or (ii) market value of such Eligible Inventory at such time, and (b) with respect to Eligible L/C Inventory at any time, the aggregate undrawn face amount of Commercial Letters of Credit issued to finance the purchase of such Eligible L/C Inventory.

“Appraisal Date” means each of (a) the date of the appraisal conducted prior to the Effective Date, (b) any date upon which the Agent receives results of an appraisal conducted

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by an Eligible Appraiser at the Agent’s request in accordance with Section 7.4 and (c) any other date on which results are received by the Agent of an appraisal conducted by an Eligible Appraiser at any Borrower’s request or, if an Event of Default exists, the Agent’s request.

“Approved Deposit Account” means each Deposit Account (a) that is maintained within the United States with a 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 in excess of $500,000,000 and otherwise acceptable to the Agent, (b) as to which a DDA Notification or Control Agreement, as applicable, has been executed and delivered to the Agent and (c) as to which the deposits therein are not subject to any Lien, security interest or restriction upon withdrawal, other than the Agent’s Liens and rights of setoff, Liens or adjustment of the applicable depositary bank.

“Assignee” has the meaning specified in Section 11.2(a).

“Assignment and Acceptance” has the meaning specified in Section 11.2(a).

“AT Sourcing” means AnnTaylor Sourcing Far East Limited, a Hong Kong corporation.

“AT Sourcing Obligation” means the accrued obligations of ATI to AT Sourcing for sourcing services rendered in the ordinary course of business to ATI; provided such obligations shall not be evidenced by a promissory note or other negotiable instrument that has not been delivered to the Agent and duly endorsed in blank, and total Debt of AT Sourcing other than Debt for borrowed money owed to a wholly-owned Subsidiary of the Parent shall not exceed $500,000.

“ATI” means AnnTaylor, Inc., a Delaware corporation.

“Attorney Costs” means and includes all reasonable fees, expenses and disbursements of any law firm or other counsel engaged by any Person, the reasonably allocated costs and expenses of internal legal services of any Person.

“Availability” means at any time (a) the Line Cap, minus (b) Aggregate Outstandings.

“Average Daily Availability” means average daily Availability for the most recently ended fiscal quarter (or three month period for the Initial Adjustment Date only).

“Bank” means Bank of America, N.A., a national banking association, or any successor entity thereto.

“Bank of America–Canada Branch” means Bank of America, N.A. (acting through its Canada branch), a banking corporation carrying on business under the Bank Act (Canada).

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“Bank of Canada Rate” means, on any date of determination, the rate of interest charged by the Bank of Canada on one-day Canadian Dollar loans to financial institutions, for such date.

“Bank Products” means any U.S. Bank Products or Canadian Bank Products.

“Bank Product Amount” means any U.S. Bank Product Amount or Canadian Bank Product Amount.

“Bank Product Obligations” all debts, liabilities and obligations now or hereafter arising from or in connection with Bank Products, except to the extent the Agent shall have received written notice from the applicable Lender or Affiliate or branch of Bank that is providing such Bank Products that such debts, liabilities or obligations under such Bank Products shall be excluded as “Bank Product Obligations” under this Agreement.

“Bank Product Reserves” means all reserves which the Agent from time to time establishes in its reasonable discretion for the Bank Products then provided or outstanding.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. § 101 etseq.), as amended.

“Base Rate” means for any day a fluctuating rate per annum equal to the highest of (a) the Federal Funds Rate plus 1/2 of 1%; (b) the rate of interest in effect for such day as publicly announced from time to time by Bank of America as its “prime rate” and (c) LIBOR for a 30-day interest period as determined on such day plus 1%. The “prime rate” 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 such rate announced by Bank of America shall take effect at the opening of business on the day specified in the public announcement of such change.

“Base Rate Loans” means a Revolving Loan during any period in which it bears interest based on the Base Rate.

“Benefit Plan” shall mean a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multi-employer Plan) which the ATI or an ERISA Affiliate maintains, administers, contributes to or is required to contribute to, or under which ATI or any ERISA Affiliate may incur any liability.

“Borrowing” means a borrowing hereunder consisting of Revolving Loans made on the same day by the Lenders to a Borrower or by Bank in the case of a borrowing funded by Non-Ratable Loans or by the Agent in the case of a borrowing consisting of an Agent Advance, or the making of an L/C Borrowing in connection with any payment made pursuant to a Letter of Credit.

“Borrowing Base” at any time, means an amount equal to:

(a)     the sum of

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(i)     ninety percent (90%) of the Net Amount of Eligible Credit Card Accounts; plus

(ii)     ninety percent (90%) of the NOLV of Eligible Inventory, Eligible L/C Inventory and Eligible In-Transit Inventory; provided that such percentage may increase to ninety-two and a half percent (92.5%) of the NOLV at the U.S. Borrowers’ option, upon delivery of an updated Borrowing Base Certificate, for any ninety (90) day period from June 1 through November 30 each year; plus

(iii)    the lesser of (A) $50,000,000 or (B) one hundred percent (100%) of Qualified Cash; plus

(iv)    solely to the extent the Tradename Collateral has been added as Collateral under the Facility, the lesser of (A) $80,000,000 (as such amount is reduced by $2,500,000 per quarter after the Tradename Inclusion Date until such amount equals $50,000,000) or (B) fifty percent (50%) of the appraised NOLV of Eligible Tradenames; minus

(b)    Reserves from time to time established by the Agent in its Commercial Judgment.

Notwithstanding the foregoing, for purposes of this definition, no Accounts or Inventory being acquired in an Acquisition or otherwise created, purchased, completed or owned by a business unit acquired pursuant to an Acquisition will be included in the Borrowing Base unless (i) the Agent, in its reasonable commercial discretion exercised in good faith, confirms that such Accounts or Inventory conform to standards of eligibility established from time to time by the Agent in accordance with this Agreement, and (ii) to the extent deemed necessary by the Agent, an audit of such Accounts and an appraisal of such Inventory is conducted (which appraisal shall be conducted in accordance with the provisions hereof).

“Borrowing Base Certificate” means a certificate by a Responsible Officer of ATI, substantially in the form of Exhibit B (or another form acceptable to the Agent) setting forth the calculation of the Borrowing Base, including a calculation of each component thereof and each other item specified in Section 5.2(j), all in such detail as shall be reasonably satisfactory to the Agent. All calculations of the Borrowing Base in connection with the preparation of any Borrowing Base Certificate shall originally be made by ATI and certified to the Agent; provided, that the Agent shall have the right to review and adjust, in the exercise of its reasonable credit judgment, any such calculation (1) to reflect its reasonable estimate of declines in value of any of the Collateral described therein that are reflected in an appraisal or audit of such Collateral, and (2) to the extent that such calculation is not in accordance with this Agreement.

“Business Day” means (a) any day that is not a Saturday, Sunday, or a day on which banks in New York, New York or Charlotte, North Carolina are required or permitted to be closed, and (b) with respect to all notices, determinations, fundings and payments in connection with the LIBOR Rate or LIBOR Loans, any day that is a Business Day pursuant to

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clause (a) above and that is also a day on which trading in Dollars is carried on by and between banks in the London interbank market; provided that when used in connection with any Revolving Loan to the Canadian Borrower, the term “Business Day” shall also exclude any day on which banks are required or permitted to be closed in Toronto, Canada.

“Calculation Date” has the meaning specified in Section 3.9.

“CAM Letter” means that certain Letter Agreement among the Agent and the Lenders dated as of the date hereof relating to allocation of certain credit exposure among the Lenders.

“Canadian BA Rate” means with respect to each Interest Period for a Canadian BA Rate Loan, the rate of interest per annum equal to the average rateapplicable to Canadian Dollar bankers’ acceptances having an identical or comparable term as the proposed Canadian BA Rate Loan displayed and identified as such on the display referred to as the “CDOR Page ” (or any display substituted therefor) of Reuter Monitor Money Rates Service as at approximately 10:00 a.m. Toronto time on such day (or, if such day is not a Business Day, as of 10:00 a.m. Toronto time on the immediately preceding Business Day), provided that if such rate does not appear on the CDOR Page at such time on such date, the rate for such date will be the annual discount rate (rounded upward to the nearest whole multiple of 1/100 of 1%) as of 10:00 a.m. Toronto time on such day at which a Canadian chartered bank listed on Schedule 1 of the Bank Act (Canada) as selected by the Agent is then offering to purchase Canadian Dollar bankers’ acceptances accepted by it having such specified term (or a term as closely as possible comparable to such specified term).

“Canadian BA Rate Loan” means a Canadian Loan, or portion thereof, funded in Canadian Dollars and bearing interest calculated by reference to the Canadian BA Rate.

“Canadian Bank Products” means any one or more of the following types of services or facilities extended to the Canadian Borrower by any Canadian Lender, including the Bank and any of their respective Affiliates or branches in reliance on the Bank’s or a Canadian Lender’s agreement to indemnify such affiliate: (i) credit cards; (ii) ACH Transactions; (iii) cash management, including controlled disbursement services; and (iv) Hedge Agreements; provided, however, that for obligations in respect of any of the foregoing to be included as a “ Canadian Obligation” for purposes of a distribution under Section 3.5, the applicable Canadian Lender must have previously provided written notice to Agent of (i) the existence of such Canadian Bank Product, (ii) the current Dollar Equivalent amount of obligations arising thereunder (determined, in the case of Hedge Agreements and any other Canadian Bank Products that are Debt, in accordance with the definition of “Debt” herein) (“Canadian Bank Product Amount”), and (iii) the methodology to be used by such parties in determining the Canadian Bank Product Amount owing from time to time. The Canadian Bank Product Amount may be changed from time to time upon written notice to the Agent by the applicable Canadian Lender. No Canadian Bank Product Amount may be established or increased at any time that a Default or Event of Default exists or if a reserve in such amount would causeOutstandings to exceed Availability.

“Canadian Bank Product Amount” has the meaning provided in the definition of Canadian Bank Products.

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“Canadian Borrower” has the definition set forth in the preamble hereto.

“Canadian Commitment” means, at any time with respect to a Canadian Lender, the principal amount set forth beside such Canadian Lender’s name under the heading “Canadian Commitment” on Schedule 1.1 attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Canadian Lender hereunder in accordance with the provisions of Section 11.2, as such Canadian Commitment may be adjusted from time to time in accordance with the provisions of Section 11.2, and “Canadian Commitments” means, collectively, the aggregate amount of the commitments of all of the Lenders.

“Canadian Dollars and CDN$” means the lawful currency of Canada.

“Canadian Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Canadian Dollars, such amount, and (b) with respect to any amount denominated in any other currency, the amount of Canadian Dollars that the Agent determines (which determination shall be conclusive and binding absent manifest error) would be necessary to be sold on such date at the applicable Exchange Rate to obtain the stated amount of the other currency.

“Canadian Lenders” means the Lenders having Canadian Commitments from time to time or at any time, each of which is a Canadian Qualified Lender unless otherwise permitted in this Agreement.

“Canadian Letter of Credit” shall mean any Letter of Credit denominated in Canadian Dollars issued by any Letter of Credit Issuer for the account of the Canadian Borrower pursuant to Section 1.3.

“Canadian Loan” means each Revolving Loan denominated in Canadian Dollars made to the Canadian Borrower.

“Canadian MEPP” means a Canadian Pension Plan that is either (a) a multi- employer pension plan as defined in the PBA or (b) a plan that provides target benefits as defined in the PBA, in either case being a plan where the employer’s contribution obligations to such plan are set out in one or more collective agreements and are defined contribution in nature.

“Canadian Obligations” means, on any date, the portion of the Obligations outstanding that are owing by the Canadian Borrower.

“Canadian Pension Event” means solely with respect to Canadian Pension Plans (a) the whole or partial withdrawal of a Credit Party or any of its Subsidiaries from a Canadian Pension Plan during a plan year; or (b) the filing of a notice of proposal to terminate in whole or in part a Canadian Pension Plan or the treatment of a Canadian Pension Plan amendment as a termination or partial termination; or (c) the issuance of a notice of proposal by any Governmental Authority to terminate in whole or in part or have an administrator or like body appointed to administer a Canadian Pension Plan; or (d) any other event or condition which might constitute grounds for the termination of, winding up or partial termination or winding up or the appointment of a trustee to administer, any Canadian Pension Plan, to the extent any

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relevant Government Authority has so notified a Credit Party, unless such grounds are being duly contested by a Credit Party in good faith.

“Canadian Pension Plan” means a plan, program or arrangement which is required to be registered as a pension plan under any applicable pension benefits standards or tax statute or regulation in Canada maintained or contributed to by, or to which there is or may be an obligation to contribute by, any Credit Party in respect of its Canadian employees or former employees.

“Canadian Prime Rate” means, for any day, a per annum rate equal to the greater of (a) the per annum rate of interest in effect for such day as publicly announced from time to time by Bank of America – Canada Branch as its “prime rate” for loans in Canadian Dollars; or (b) the Canadian BA Rate for a one-month interest period as determined on such day (or if such day is not a Business Day, the immediately preceding Business Day), plus 0.5%.

“Canadian Prime Rate Loan” means a Canadian Loan, or portion thereof, funded in Canadian Dollars and bearing interest calculated by reference to the Canadian Prime Rate.

“Canadian Qualified Lender” means a financial institution that is listed on Schedule I, II or III of the Bank Act (Canada), has received an approval to have a financial establishment in Canada pursuant to Section 522.21 of the Bank Act (Canada) or is not a foreign bank for purposes of the Bank Act (Canada), and if such financial institution is not resident in Canada and is not deemed to be resident in Canada for purposes of the Income Tax Act (Canada), then such financial institution deals at arm’s length with the Canadian Borrower for purposes of the Income Tax Act (Canada).

“Canadian Subfacility Amount” has the meaning specified in Section 1.1.

“Capital Expenditures” means all expenditures of any Credit Party due (whether or not paid during any fiscal period) during any period in respect of the cost of any fixed asset which in accordance with GAAP would be reflected as a fixed asset on the balance sheet of such Credit Party.

“Capital Lease” means any lease of property by any Credit Party which, in accordance with GAAP, should be reflected as a capital lease on the balance sheet of such Credit Party.

“Cash Equivalents” shall mean (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government, the Government of Canada or issued by an agency thereof and backed by the full faith and credit of the United States of America or Government of Canada or having a rating of at least A-1 or P-1 from either S&P or Moody’s, in each case maturing within 360 days after the date of acquisition thereof; (b) marketable direct obligations issued by (i) any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof or (ii) a province of Canada or any political subdivision of any such province or any public instrumentality thereof, in either such case maturing within 180 days (or, if no Revolving Loans are outstanding at the time of acquisition thereof and after giving effect thereto, 360 days) after the date of acquisition thereof and, at the time of acquisition, having one of the two highest ratings obtainable from

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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 any Borrower or any Subsidiary of any Borrower or any of their Affiliates, maturing no more than 180 days (or, if no Credit Extensions are outstanding at the time of acquisition thereof and after giving effect thereto, 270 days) after the date of creation thereof and, at the time of acquisition thereof, 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 Required Lenders); (d) domestic and Eurodollar certificates of deposit or time deposits or bankers’ acceptances maturing within 180 days (or, if no Credit Extensions are outstanding at the time of acquisition thereof and after giving effect thereto, 360 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 or under the laws of Canada having combined capital and surplus of not less than $500,000,000; (e) repurchase agreements with parties reasonably acceptable to the Agent with a term of not more than 30 days for securities described in clauses (a) through (d) of this definition; and (f) shares of money market mutual or similar funds which invest substantially all their assets in assets satisfying the requirements of clauses (a) through (d) of this definition.

“Change in Control” shall be deemed to have occurred at such time as either of the following events shall occur:

(a)    There shall be consummated any consolidation, amalgamation or merger of the Parent or any Borrower pursuant to which the Common Stock would be converted into cash, or other property, in each case, other than a consolidation, amalgamation or merger of the Parent or any Borrower in which the holders of Common Stock immediately prior to the consolidation, amalgamation or merger have, directly or indirectly, at least a majority of the total voting power in the aggregate of all classes of common stock of the continuing or surviving corporation normally entitled to vote in elections of directors immediately after such consolidation, amalgamation or merger; or

(b)    There is a report filed by any person, including its Affiliates and Associates (as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act), on Schedule 13D or 14D-1 (or any successor schedule, form or report) pursuant to the Exchange Act, disclosing that such person (for the purposes of this definition only, the term “person” shall include a “person” within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision to either of the foregoing) has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of 50% or more of the total voting power in the aggregate of all classes of capital stock then outstanding of the Parent or any Borrower normally entitled to vote in elections of directors; provided, however, that a person shall not be deemed beneficial owner of, or to own beneficially, (A) any securities tendered pursuant to a tender or exchange offer made by or on behalf of such person or any of such person’s Affiliates or Associates until such tendered securities are accepted for purchase or exchange thereunder, or (B) any securities if such beneficial ownership (1) arises solely as a result

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of a revocable proxy delivered in response to a proxy or consent solicitation made pursuant to, and in accordance with, the applicable rules and regulations under the Exchange Act, and (2) is not also then reportable on Schedule 13D (or any successor schedule, form or report) under the Exchange Act; or

(c)    The Parent shall cease to be the owner of 100% of the capital stock of ATI.

Notwithstanding the foregoing, a Change in Control shall not be deemed to have occurred if at any time the Parent, any Subsidiary of the Parent, any employee stock ownership plan or any other employee benefit plan of either the Parent or any Subsidiary of the Parent, or any person holding shares of Common Stock for or pursuant to the terms of any such employee benefit plan, files or becomes obligated to file a report under or in response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report) under the Exchange Act disclosing beneficial ownership by it of 50% or more of the total voting power in the aggregate of all classes of Common Stock then outstanding of the Parent normally entitled to vote in elections of directors.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

“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, license, permit, ordinance or regulation, common law or otherwise.

“Clearing Bank” means Wells Fargo Bank, National Association (successor by merger to Wachovia Bank, National Association), or any other banking institution with whom the Payment Account has been established pursuant to the Collection Account Control Agreement.

“Closing Fee” has the meaning specified in Section 2.4.

“Code” means the Internal Revenue Code of 1986 as from time to time amended, or any successor statute.

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“Collateral” means the assets of each Credit Party (other than the Canadian Borrower) from time to time subject to Agent’s Liens securing payment or performance of the Obligations pursuant to the Security Instruments.

“Collection Account Control Agreement” means the Account Control Agreement dated as of the Effective Date among ATI, the Agent and Wells Fargo Bank, National Association, or any replacement account control agreement, in form and substance reasonably satisfactory to the Agent, concerning the collection of payments which represent the proceeds of Accounts or of any other Collateral, as from time to time amended, supplemented or replaced.

“Commercial Judgment” means the reasonable commercial discretion exercised in good faith based on an event, condition or circumstance either (i) arising after the Effective Date or (ii) existing on the date hereof to the extent the Agent has not been notified thereof in writing by any Credit Party prior to the Effective Date.

“Commercial Letter of Credit shall mean any Letter of Credit which is drawable upon presentation of documents, drafts at sight and time drafts evidencing the sale or shipment of goods purchased by the Credit Parties in the ordinary course of its business.

“Commitment” means, at any time with respect to a Lender, the principal amount set forth beside such Lender’s name under the heading “Commitment” on Schedule 1.1 attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 11.2, as such Commitment may be adjusted from time to time in accordance with the provisions of Section 11.2, and “Commitments” means, collectively, the aggregate amount of the commitments of all of the Lenders.

“Common Stock” shall mean the common stock of the Parent, the par value of which is set forth in the Parent’s certificate of incorporation, as amended, restated or otherwise modified from time to time.

“Contaminant” means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, asbestos in any form or condition, polychlorinated biphenyls (“PCBs”), or any constituent of any such substance or waste.

“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).

“Contribution Share” has the meaning specified in Section 13.2.

“Continuation/Conversion Date” means the date on which a Revolving Loan is converted into or continued as a LIBOR Loan.

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“Control Agreement” means each control agreement establishing control in favor of the Agent, in form and substance acceptable to the Agent in the exercise of its reasonable discretion, executed by each depositary institutions or financial institution or intermediary at which Deposit Accounts or Securities Accounts of the Credit Parties (other than the Canadian Borrower) are held, the terms of which shall provide that following receipt of written notice from the Agent that an Activation Period exists, and until receipt of written notice from the Agent that all Activation Periods have terminated, the depository institution or financial institution or intermediary holding such Deposit Account or Securities Account shall not permit any Person (including any Credit Party) to make withdrawals therefrom or otherwise direct disposition of funds or other property held therein and shall act only on instructions from the Agent.

“Controlled Account” means any Deposit Account or Securities Account which is subject to a Control Agreement.

“Credit Card Account” means an Account arising in the ordinary course of business in respect of a credit card receivable due to a U.S. Borrower from the Proprietary Credit Card Issuer or any major processor or issuer of MasterCard, Visa, American Express or Discover credit cards or any other nationally or internationally recognized credit card provider.

“Credit Card Notification” has the meaning specified in Section 7.25.

“Credit Extension” means all Borrowings of Revolving Loans and the issuance of Letters of Credit for the account of a Borrower hereunder.

“Credit Party” means the Borrowers and the Parent.

“DDA Notification” has the meaning specified in Section 7.25.

“Debt” means, without duplication, with respect to any Credit Party all indebtedness of such Credit Party for borrowed money and all payment obligations of such Credit Party for the deferred purchase price of property, in each case excluding Trade Payables, but including (a) the Obligations; (b) all payment obligations in each case of any Person of the type described in this definition secured by any Lien on such Credit Party’s property, even though such Credit Party shall not have assumed or become liable for the payment thereof; provided, however, that all such obligations which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of such Credit Party prepared in accordance with GAAP; (c) all payment obligations created or arising under any Capital Lease or conditional sale or other title retention agreement with respect to property used or acquired by such Credit Party, even if the rights and remedies of the lessor, seller or lender thereunder are limited to repossession of such property; provided, however, that all such obligations which are limited in recourse to such property shall be included in Debt only to the extent of the book value of such property as would be shown on a balance sheet of such Credit Party prepared in accordance with GAAP; (d) all payment obligations of such Credit Party under Guaranties of obligations of the type described in this definition; (e) the present value (discounted at the Base Rate) of lease payments due under synthetic leases; (f) all reimbursement obligations of such Credit Party under letters of credit or bankers acceptances issued for the account of such Credit Party; and (g) all payment obligations

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of such Credit Party in respect of Hedge Agreements and Foreign Currency Exchange Contracts; provided, however, that for purposes of determining Debt, the “principal amount” of the obligations of a Credit Party in respect of any Hedge Agreement or Foreign Currency Exchange Contract at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Credit Party would be required to pay if such contract were terminated at such time.

“Debtor Relief Laws” means the Bankruptcy Code or any other bankruptcy or insolvency act or law, state, provincial, federal or foreign (including, without limitation, the Bankruptcy and Insolvency Act (Canada)) and the Companies’ Creditors Arrangement Act (Canada)), now or hereafter existing.

“Default” means any event or circumstance which, with the giving of notice, the lapse of time, or both, would constitute an Event of Default.

“Defaulting Lender” means, subject to Section 12.20(b), any Lender that (a) has failed to (i) fund all or any portion of its Revolving Loans within two Business Days of the date such Revolving Loans were required to be funded hereunder unless such Lender notifies the Agent and the Borrowers in writing that such failure is the result of such Lender’s determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Agent, the Letter of Credit Issuers or any other Lender any other amount required to be paid by it hereunder (including, in respect of its participation in Letters of Credit or Non-Ratable Loans) within two Business Days of the date when due, (b) has notified the Borrowers, the Agent or the Letter of Credit Issuers in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender’s obligation to fund a Revolving Loan hereunder and states that such position is based on such Lender’s determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Agent or the Borrowers, to confirm in writing to the Agent and the Borrowers that it will comply with its prospective funding obligations hereunder (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Agent and the Borrowers), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity; provided that a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any capital stock in that Lender or any direct or indirect parent company thereof by a Governmental Authority so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Agent that a Lender is a Defaulting Lender under any one or more of clauses (a) through (d) above, and of the effective date of such status,

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shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to Section 12.20(b)) as of the date established therefor by the Agent in a written notice of such determination, which shall be delivered by the Agent to the Borrowers, the Letter of Credit Issuers and each other Lender promptly following such determination.

“Default Rate” means a fluctuating per annum interest rate at all times equal to the sum of the otherwise applicable Interest Rate plus (b) two percent (2%) per annum. Each Default Rate shall be adjusted simultaneously with any change in the applicable Interest Rate. In addition, application of the Default Rate shall result in an increase in the Letter of Credit Fees by two percent (2%) per annum for so long as the Default Rate is in effect.

“Deposit Account” means all “deposit accounts”, as defined in the UCC, now or hereafter owned by a Credit Party.

“Designated Account” has the meaning specified in Section 1.2(c).

“Documents” means all documents as such term is defined in the UCC, including bills of lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any Credit Party.

“DOL” means the United States Department of Labor or any successor department or agency.

“Dollar” and “$” means dollars in the lawful currency of the United States. Unless otherwise specified, all payments under the Agreements shall be made in Dollars.

“Dollar Equivalent” means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any other currency, the amount of Dollars that the Agent determines (which determination shall be conclusive and binding absent manifest error) would be necessary to be sold on such date at the applicable Exchange Rate to obtain the stated amount of the other currency.

“EBITDA” means, with respect to any fiscal period on a consolidated basis for the Parent and the Borrowers, Adjusted Net Earnings from Operations, plus, to the extent deducted in the determination of Adjusted Net Earnings from Operations for that fiscal period, Interest Expense, federal, state, provincial, local and foreign income taxes, depreciation and amortization.

“Effective Date” means the date of this Agreement.

“Eligible Appraiser” means any independent appraiser reasonably acceptable to the Agent and, so long as no Event of Default is continuing, the Borrowers.

“Eligible Assignee” means (a) a Lender; (b) an Affiliate of a Lender that is a commercial financial institution having total assets in excess of $1,000,000,000; and (c) any other commercial financial institution having total assets in excess of $1,000,000,000 approved by the Agent (such approval not to be unreasonably withheld or delayed) and, so long as no

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Event of Default has occurred and is continuing, (i) consented to by ATI and (ii) if a Canadian Lender, the Assignee is a Canadian Qualified Lender.

“Eligible Credit Card Accounts” means, as of any date of determination, Credit Card Accounts, other than Accounts as of such date:

(a)    that have been outstanding for more than five (5) Business Days from the date of sale;

(b)    with respect to which a U.S. Borrower does not have good, valid and marketable title thereto, free and clear of any Liens (other than Liens granted to the Agent, for its benefit and the ratable benefit of the Lenders, pursuant to the Security Instruments);

(c)    that are not subject to a first priority security interest in favor of the Agent, for the benefit of itself and the Lenders;

(d)    which arose on account of any private label credit card issued by any Person other than the Proprietary Credit Card Issuer;

(e)    which are disputed by the processor or issuer of the applicable credit card, are with recourse against a U.S. Borrower, or with respect to which a claim, counterclaim, offset or chargeback has been asserted against a U.S. Borrower (to the extent of such dispute, claim, counterclaim, offset or chargeback and to the extent not captured under the definition of Net Amount of Eligible Credit Card Accounts); or

(f)    with respect to which any of the representations, warranties, covenants, and agreements contained in the Security Agreement are incorrect, untrue or have been breached.

Each U.S. Borrower shall notify the Agent if it becomes aware that any Credit Card Accounts in an amount in excess of $500,000 which are then currently included in Eligible Credit Card Accounts has ceased to constitute Eligible Credit Card Accounts for any reason; provided, however, the U.S. Borrowers shall have no affirmative duty to monitor, audit or otherwise investigate the status of any Accounts other than (i) as required under the terms of the Loan Documents and (ii) as historically conducted in the ordinary course of business.

“Eligible Inventory” means, as of any date of determination, Inventory, which the Agent, in its reasonable discretion, determines to be Eligible Inventory. Without limiting the discretion of the Agent to establish other criteria of ineligibility, Eligible Inventory shall not, unless the Agent in its sole discretion elects, include any Inventory:

(a)that is not owned by a U.S. Borrower;

(b)that is not subject to the Agent’s Liens, which are perfected as to such Inventory, or that are subject to any other Lien whatsoever (other than the Liens described in clause (b) of the definition of Permitted Liens provided that

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such Permitted Liens (i) are junior in priority to the Agent’s Liens or subject to Reserves and (ii) do not impair directly or indirectly the ability of the Agent to realize on or obtain the full benefit of the Collateral);

(c)that does not consist of finished goods or raw materials;

(d)that consists of goods to be returned to vendors, work-in-process, samples, prototypes, supplies, or packing and shipping materials;

(e)that is unmerchantable, or does not meet all standards imposed by any Governmental Authority, having regulatory authority over such goods, their use or sale;

(f)as to which any of the representations, warranties, covenants or agreements contained in the Security Agreement are incorrect, untrue or have been breached;

(g)that is obsolete, slow moving beyond the ordinary course of first quality merchantable Inventory or stale;

(h)that is not of a type held for sale in the ordinary course of the Borrower’s business;

(i)that is located outside the United States of America or Puerto Rico (or that is in-transit from vendors or suppliers);

(j)that is located in a public warehouse or in possession of a bailee or in a facility (other than a retail store location) leased by such Borrower, if the warehouseman, or the bailee, or the lessor has not delivered to the Agent, if requested by the Agent, a subordination agreement or lien waiver in form and substance satisfactory to the Agent or if a Reserve for rents or storage charges has not been established for Inventory at that location;

(k)that contains or bears any Intellectual Property licensed to such Borrower by any Person, if the Agent is not reasonably satisfied that it may sell or otherwise dispose of such Inventory in accordance with the terms of the Security Agreement and Section 9.2 without infringing the rights of the licensor of such Intellectual Property or violating any contract with such licensor (and without payment of any royalties other than any royalties due with respect to the sale or disposition of such Inventory pursuant to the existing license agreement), and, as to which such Borrower has not delivered to the Agent a consent or sublicense agreement from such licensor in form and substance reasonably acceptable to the Agent if requested;

(l)that is not reflected in the details of a current inventory report; or

(m)that is Inventory placed on consignment.

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If the Agent determines in its Commercial Judgment that any Inventory at any time ceases to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of Eligible Inventory. Each U.S. Borrower shall notify the Agent if it becomes aware that any Inventory with an appraised or market value (whichever is higher) in excess of $2,500,000 which is then currently included in Eligible Inventory has ceased to constitute Eligible Inventory for any reason; provided, however, the U.S. Borrowers shall have no affirmative duty to monitor, audit or otherwise investigate the status of any Inventory other than (i) as required under the terms of the Loan Documents and (ii) as historically conducted in the ordinary course of business.

“Eligible In-Transit Inventory” means, as of the date of determination thereof, without duplication of other Eligible Inventory, Inventory owned by a U.S. Borrower that would be Eligible Inventory if it were not subject to a Document and in transit from a foreign location to a location of such U.S. Borrower within the United States, and that Agent, in its Commercial Judgment, deems to be Eligible In-Transit Inventory. Without limiting the foregoing, no Inventory shall be Eligible In-Transit Inventory unless it (a) is subject to a negotiable Document showing a U.S. Borrower or the Agent as consignee, which Document is in the possession of Agent or a U.S. Borrower or such other Person as Agent shall approve; (b) has been identified to the applicable sales contract and title has passed to the U.S. Borrower; (c) is not sold by a vendor that has a right to reclaim, divert shipment of, repossess, stop delivery, claim any reservation of title or otherwise assert Lien rights against the Inventory, or with respect to whom any U.S. Borrower is in default of any obligations; (d) is subject to purchase orders and other sale documentation satisfactory to Agent; (e) is shipped by a common carrier no more than forty (40) days prior to the date of determination thereof; (f) is covered by insurance policies (including, without limitation, marine cargo insurance) reasonably acceptable to the Agent; and (g) is being handled by a customs broker, freight-forwarder or other handler that has delivered a customs broker agreement or other lien waiver acceptable to the Agent. Upon the request of the Agent, the U.S. Borrowers shall promptly deliver to the Agent copies of all of the foregoing Documents.

“Eligible L/C Inventory” means, as of the date of determination thereof, Inventory (a) constituting work in progress not yet delivered to the U.S. Borrowers and for which no documents of title have been issued, (b) the purchase of which is supported by a Commercial Letter of Credit having an expiry within sixty (60) days of the date of issuance and providing that it may be drawn only after such Inventory is completed and after documents of title have been issued for such Inventory either (i) reflecting a U.S. Borrower or the Agent as consignee of such Inventory or (ii) as to which the Agent has control (such as by possession of such documents of title or by the delivery of a customs broker agency agreement or similar document satisfactory to the Agent), and (d) which otherwise would constitute Eligible Inventory.

“Eligible Tradenames” means those tradenames that have been (a) subjected to an acceptable NOLV appraisal satisfactory to the Agent and (b) added as Tradename Collateral at least ninety (90) days prior to inclusion in the Borrowing Base (the end of such ninety (90) day period being the “Tradename Inclusion Date”).

“Environmental Claims” means all claims, however asserted, by any Governmental Authority or other Person alleging potential liability or responsibility for violation of any Environmental Law, or for a Release or injury to the environment.

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“Environmental Compliance Reserve” means any reserve which the Agent establishes in its reasonable discretion after prior written notice to ATI from time to time for amounts that are reasonably likely to be expended by any Borrower or its respective Subsidiaries in order for the Borrowers, the other Credit Parties, and each of its operations and property (a) to comply with any notice from a Governmental Authority asserting material non-compliance with Environmental Laws, or (b) to correct any such material non-compliance identified in a report delivered to the Agent and the Lenders pursuant to Section 7.7.

“Environmental Laws” means all federal, state, provincial, municipal or local laws, statutes, common law duties, rules, regulations, ordinances and codes, together with all administrative orders, directed duties, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case relating to environmental, health, safety and land use matters.

“Environmental Lien” means a Lien in favor of any Governmental Authority for (a) any liability under Environmental Laws, 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.

“Equipment” means all of the U.S. Borrowers’ now owned and hereafter acquired machinery, equipment, furniture, furnishings, fixtures, and other tangible personal property (except Inventory), including embedded software, motor vehicles with respect to which a certificate of title has been issued, aircraft, dies, tools, jigs, molds and office equipment, as well as all of such types of property leased by any U.S. Borrower and all of each U.S. Borrowers’ rights and interests with respect thereto under such leases (including, without limitation, options to purchase); together with all present and future additions and accessions thereto, replacements therefor, component and auxiliary parts and supplies used or to be used in connection therewith, and all substitutes for any of the foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto; wherever any of the foregoing is located.

“ERISA” means the Employee Retirement Income Security Act of 1974, and regulations promulgated thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) under common control with any Borrower within the meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan, (b) a withdrawal by any Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as such a withdrawal under Section 4062(e) of ERISA, (c) a complete or partial withdrawal by any Borrower or any ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan is in reorganization, (d) the filing by the PBGC of a notice of intent to terminate, the treatment by the PBGC of a Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan or Multi-employer

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Plan, (e) the occurrence of an event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan or Multi-employer Plan, or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower or any ERISA Affiliate.

“Event of Default” has the meaning specified in Section 9.1.

“Excess Payment” has the meaning specified in Section 13.2.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and regulations promulgated thereunder.

“Exchange Rate” means on any date, (a) with respect to Canadian Dollars in relation to Dollars, the spot rate as quoted by Bank at its noon spot rate at which Dollars are offered on such date for Canadian Dollars, and (b) with respect to Dollars in relation to Canadian Dollars, the spot rate as quoted by Bank at its noon spot rate at which Canadian Dollars are offered on such date for such Dollars.

“Excluded Taxes” means, with respect to the Agent, any Lender, anyLetter of Credit Issuer or any other recipient of any payment (any of the foregoing, a “recipient”) to be made by or on account of any Obligation, (a) any income or franchise Taxes imposed on (or measured by) its gross or net income (i) by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is located or in which its applicable Lending Office is located or (ii) that are Other Connection Taxes, (b) any branch profits Taxes, (c) any Taxes imposed as a result of a Lender or Letter of Credit Issuer’s failure or inability (other than as a result of a Change in Law that occurs after such recipient becomes a Lender or Letter of Credit Issuer under this Agreement) to comply with Section4.1(e), (d) in the case of a recipient (other than a replacement Lender pursuant to a request by a Borrower under Section 4.8), any withholding Taxes that are imposed on amounts payable to such recipient at the time such recipient becomes a party to this Agreement (or designates a new Lending Office), or becomes a Letter of Credit Issuer or Participant under this Agreement, except to the extent that in the case of a Foreign Lender that designates a new Lending Office or is an Assignee, such Foreign Lender or its assignor, respectively, was entitled, before giving effect to such designation or assignment, to receive additional amounts from the applicable Borrower with respect to such Taxes pursuant to Section 4.1(a), and (e) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Letters of Credit” means the outstanding letters of credit issued under the Original Credit Agreement all of which are set forth on Schedule 1.3.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code.

“Facility” has the meaning specified in Section 1.1.

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“Federal Funds Rate” means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Bank on such day on such transactions as determined by the Agent.

“Federal Reserve Board” means the Board of Governors of the Federal Reserve System or any successor thereto.

“Fee Letter” has the meaning given to such term in Section 2.4.

“Financial Statements” means, according to the context in which it is used, the financial statements referred to in Sections 5.2 and 6.6 or any other financial statements required to be given to the Lenders pursuant to this Agreement.

“Fiscal Year” means the Borrowers’ fiscal year for financial accounting purposes. The current Fiscal Year of each Borrower will end on February 2, 2013.

“Fixed Charge Coverage Ratio” means, with respect to any Twelve-Month Period, the ratio of (a) EBITDA minus Capital Expenditures (excluding Capital Expenditures funded with Debt other than Revolving Loans) paid in cash during such period by the Parent and the Borrowers to (b) Fixed Charges.

“Fixed Charges” means, with respect to any Twelve-Month Period of the Parent and the Borrowers on a consolidated basis, without duplication, Interest Expense, all scheduled principal payments of Debt, and Federal, state, local and foreign income taxes, excluding deferred taxes, paid or accrued during such period.

“Fixed Charge Trigger Period” means the period beginning on the date that Liquidity shall be less than the greater of (a) $20,000,000 and (b) ten percent (10%) of the Line Cap and ending on the first date thereafter that Liquidity shall be in excess of the greater of (i) $20,000,000 and (ii) ten percent (10%) of the Line Cap for a period of forty-five (45) consecutive days.

“Foreign Currency Exchange Contracts” shall mean any foreign currency exchange agreement or other currency exchange rate arrangement providing currency exchange rate protection, entered into by any Borrower, the Parent or any of their respective Restricted Subsidiaries.

“Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

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“Foreign Letter of Credit Issuer” means any Letter of Credit Issuer that is organized under the laws of a jurisdiction other than the United States of America or any State thereof or the District of Columbia.

“Foreign Subsidiary” means (a) any Subsidiary that is not organized under a political subdivision of the United States of America or (b) which is organized under the laws of the United States of America, any state thereof or the District of Columbia, but for which no more than a de minimis amount of such Subsidiary’s assets consist of assets other than capital stock or in indebtedness of one or more Foreign Subsidiaries (within the meaning of clause (a) of this definition).

“Fronting Fee” has the meaning given to such term in Section 2.6.

“Fully Supported” means, with respect to any outstanding Letter of Credit, the U.S. Borrowers or the Canadian Borrower, as applicable, shall have deposited with the Agent, for the ratable benefit of the applicable Letter of Credit Issuer and the applicable Lenders, at the Agent’s election, either (a) a standby letter of credit (a “Supporting Letter of Credit”) in form and substance satisfactory to the Agent, issued by an issuer satisfactory to the Agent in an amount equal to the greatest amount for which such Letter of Credit may be drawn plus any outstanding L/C Borrowing made or other unreimbursed amount owing with respect to such Letter of Credit plus any fees and expenses associated with such Letter of Credit (the “Letter of Credit Exposure”), under which Supporting Letter of Credit the Agent shall be entitled to draw amounts necessary to reimburse such Letter of Credit Issuer and the Lenders for payments to be made by the applicable Letter of Credit Issuer and the Lenders under such Letter of Credit and any fees and expenses associated with such Letter of Credit or (b) cash in an amount sufficient to cover the Letter of Credit Exposure to be held as cash collateral for such Letter of Credit Exposure.

“Funding Date” means the date on which a Borrowing occurs.

“GAAP” means (a) with respect to the U.S. Borrowers, generally accepted accounting principles and practices set forth from time to time in the opinions and pronouncements of the Accounting Principles Board and the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board (or agencies with similar functions of comparable stature and authority within the U.S. accounting profession), which, solely in the case of computation of the Fixed Charge Coverage Ratio, are applicable to the circumstances as of the Effective Date or (b) with respect to the Canadian Borrower, Canadian generally accepted accounting principles and practices.

“Governmental Authority” means any nation or government, any state, province or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

“Guarantor” means the Parent and each U.S. Borrower pursuant to the terms of Article 13 hereof.

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“Guaranty” means, with respect to any Person, all obligations of such Person which in any manner directly or indirectly guarantee or assure, or in effect guarantee or assure, the payment or performance of any indebtedness, dividend or other obligations of any other Person (the “guaranteed obligations”), or assure or in effect assure the holder of the guaranteed obligations against loss in respect thereof, including any such obligations incurred through an agreement, contingent or otherwise: (a) to purchase the guaranteed obligations or any property constituting security therefor; (b) to advance or supply funds for the purchase or payment of the guaranteed obligations or to maintain a working capital or other balance sheet condition; or (c) to lease property or to purchase any debt or equity securities or other property or services.

“Hedge Agreement” means any and all transactions, agreements or documents now existing or hereafter entered into, which provides for an interest rate, credit, commodity or equity swap, cap, floor, collar, forward foreign exchange transaction, currency swap, cross currency rate swap, currency option, or any combination of, or option with respect to, these or similar transactions, for the purpose of hedging any Borrower’s exposure to fluctuations in interest or exchange rates, loan, credit exchange, security or currency valuations or commodity prices.

“Indemnified Taxes” means Taxes (including Other Taxes) imposed with respect to any payment made by or on account of any Obligation, other than Excluded Taxes.

“Initial Adjustment Date” has the meaning given to such term in the definition of Applicable Margin.

“Intellectual Property” has the meaning set forth in Section 6.22.

“Interest Expense” means, for any fiscal period, the aggregate amount of interest required to be paid or accrued by the Parent and the Borrowers during such period on all Debt of the Parent and the Borrowers during such period, whether such interest was or is required to be reflected as an item of expense or capitalized, including payments consisting of interest in respect of Capital Leases or synthetic leases), net of all interest income they receive during such period.

“Interest Payment Date” means, with respect to a LIBOR Loan or Canadian BA Rate Loan, (a) the Termination Date, (b) if the Interest Period with respect to such LIBOR Loan or Canadian BA Rate Loan exceeds three months, the respective dates that fall every three months after the beginning of such Interest Period, and (c) the last day of each Interest Period applicable to such LIBOR Loan or Canadian BA Rate Loan.

“Interest Period” means, as to any LIBOR Loan or Canadian BA Rate Loan, the period commencing on the Funding Date of such Loan or on the Continuation/Conversion Date on which the Loan is converted into or continued as a LIBOR Loan or Canadian BA Rate Loan, as applicable, and ending on the date one, two, three or six months thereafter as selected by the applicable Borrower in its Notice of Borrowing, in the form attached hereto as Exhibit D, or Notice of Continuation/Conversion, in the form attached hereto as Exhibit E, provided that:

(a)if any Interest Period would otherwise end on a day that is not a Business Day, that Interest Period shall be extended to the following Business Day unless the result of

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such extension would be to carry such Interest Period into another calendar month, in which event such Interest Period shall end on the preceding Business Day;

(b)any Interest Period pertaining to a LIBOR Loan or Canadian BA Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of the calendar month at the end of such Interest Period; and

(c)no Interest Period shall extend beyond the Stated Termination Date.

“Interest Rate” means each or any of the interest rates, including the Default Rate, set forth in Section 2.1.

“Inventory” means all of the Borrowers’ now owned and hereafter acquired inventory, goods and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods (including embedded software), other materials and supplies of any kind, nature or description which are used or consumed in the Borrowers’ business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise, and all documents of title or other Documents representing them.

“Investment” shall mean, as applied to any Person, (a) any direct or indirect purchase or other acquisition by that Person of all or substantially all of the assets of any other Person or a line of business of any other Person, or of Securities, or of a beneficial interest in Securities, of any other Person, and (b) any direct or indirect loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, advance payments to suppliers, advances to such Person, to employees and similar items, all made or incurred in the ordinary course of business), or capital contribution by such Person to any other Person, including all Accommodation Obligations provided by such Person to or for the benefit of such other Person and all Debt and accounts owed to such Person 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.

“IRS” means the Internal Revenue Service and any Governmental Authority succeeding to any of its principal functions under the Code.

“Issuing Bank Agreement” means, as to each Letter of Credit Issuer, any agreement entered into by such Letter of Credit Issuer and a Borrower relating to Letters of Credit.

“L/C Advance” means, with respect to each Lender, such Lender’s funding of its pro rata participation in any L/C Borrowing.

“L/C Borrowing” means the extension of credit made pursuant to Section 1.3(e) if conditions precedent under Section 8.2 would not be satisfied resulting from a payment under a Letter of Credit that has not been either reimbursed by the Borrowers in accordance with Section 1.3(e) or refinanced as a Borrowing.

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“Latest Projections” means: (a) on the Effective Date and thereafter until the Agent receives new projections pursuant to Section 5.2(e), the projections of the Borrowers’ consolidated financial condition, results of operations, and cash flows, for the period commencing on January 29, 2012 and ending on January 30, 2016, and delivered to the Agent prior to the Effective Date; and (b) thereafter, the projections most recently received by the Agent pursuant to Section 5.2(e).

“Lender” and “Lenders” have the meanings specified in the introductory paragraph hereof and shall include the Agent to the extent of any Agent Advance outstanding and the Bank to the extent of any Non-Ratable Loan outstanding.

“Lending Office” means the office through which a Lender or Letter of Credit Issuer is acting at any particular time for the purpose of this Agreement.

“Letter of Credit” shall mean any Commercial Letter of Credit or any Standby Letter of Credit issued by any Letter of Credit Issuer for the account of any Borrower pursuant to Section 1.3 and includes each Existing Letter of Credit and each Canadian Letter of Credit.

“Letter of Credit Fees” means the U.S. Commercial Letter of Credit Fee, the U.S. Standby Letter of Credit Fee, Canadian Commercial Letter of Credit Fee and the Canadian Standby Letter of Credit Fee, each as defined in Section 2.6.

“Letter of Credit Issuer” means the Bank, Wells Fargo Bank, National Association, JPMorgan Chase Bank, N.A., any of their Affiliates or branches or any other Lender selected by the Borrowers and approved by the Agent (such approval not to be unreasonably withheld) that agrees to become a Letter of Credit Issuer.

“Letter of Credit Outstandings” means, at any time, the Dollar Equivalent of the aggregate undrawn face amount of all outstanding Letters of Credit at such time, plus the Dollar Equivalent of the aggregate unpaid reimbursement obligations with respect to Letters of Credit at such time.

“Letter of Credit Subfacility” means, (a) with respect to the U.S. Borrowers, an amount equal to the Total Facility Amount and (b) with respect to the Canadian Borrower, an amount equal to the Canadian Subfacility Amount.

“Liabilities and Costs” means 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.

“LIBOR Loans” means a Revolving Loan during any period in which it bears interest based on the LIBOR Rate.

“LIBOR Rate” means for any Interest Period with respect to any LIBOR Loan, a rate per annum determined by the Agent pursuant to the following formula:

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Eurodollar Rate =                  Eurodollar Base Rate 1.00 – Eurodollar Reserve Percentage

Where,

“Eurodollar Base Rate” means, for such Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate or the successor thereto if the British Bankers Association is no longer making a LIBOR rate available (“LIBOR”), as published by Reuters (or other commercially available source providing quotations of LIBOR as designated by the Agent from time to time) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term equivalent to such Interest Period. If such rate is not available at such time for any reason, then the “Eurodollar Base Rate” for such Interest Period shall be the rate per annum determined by the Agent to be the rate at which deposits in Dollars for delivery on the first day of such Interest Period in same day funds in the approximate amount of the LIBOR Loan being made, continued or converted by Bank of America and with a term equivalent to such Interest Period would be offered by Bank of America’s London Branch to major banks in the London interbank eurodollar market at their request at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such Interest Period.

“Eurodollar Reserve Percentage” means, for any day during any Interest Period, the reserve percentage (expressed as a decimal, carried out to five decimal places) in effect on such day, whether or not applicable to any Lender, under regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental or other marginal reserve requirement) with respect to Eurocurrency funding (currently referred to as “Eurocurrency liabilities”). The LIBOR Rate for each outstanding LIBOR Loan shall be adjusted automatically as of the effective date of any change in the Eurodollar Reserve Percentage.

“Lien” means: (a) any security interest, charge, claim, hypothec or lien arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes; (b) to the extent not included under clause (a), any reservation, exception, encroachment, easement, servitude, right-of-way, covenant, condition, restriction, lease or other title exception or encumbrance affecting real property; and (c) any contingent or other agreement to provide any of the foregoing.

“Line Cap” means the lesser of (a) the Borrowing Base and (b) the Total Facility Amount.

“Liquidity” means, on any date of determination thereof, (a) the difference of (but not less than zero) (i) the sum of (A) all cash (other than Qualified Cash) of the Credit Parties (other than the Canadian Borrower) held in Approved Deposit Accounts on such date, plus (B) all Cash Equivalents (other than Qualified Cash) owned by the Credit Parties (other than the Canadian Borrower) and reflected on the most recent consolidated balance sheet of the Parent

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prepared prior such date, minus (ii) $37,500,000 plus (b) Availability or, if as of such date of determination of Liquidity there shall have been no Revolving Loans outstanding during the immediately preceding ninety (90) days (or if any Revolving Loans were outstanding during such period they shall not have been outstanding for a continuous period of ten or more Business Days), Adjusted Availability in either case on such date.

“Loan Account” means the loan account reflecting outstanding Revolving Loans, Letters of Credit, repayments, and similar information for the Borrowers as maintained by the Agent in accordance with the provisions hereof.

“Loan Documents” means this Agreement, the Security Instruments, the Parent Guaranty, the CAM Letter, and any other agreements, instruments, and documents heretofore, now or hereafter evidencing, securing or guaranteeing the payment obligations of the Credit Parties under this Agreement, the Security Agreement or the Parent Guaranty (excluding Bank Product Obligations) or the Liens on the Collateral.

“Margin Stock” means “margin stock” as such term is defined in Regulation T, U or X of the Federal Reserve Board.

“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of the Credit Parties taken as a whole or any material portion of the Collateral; (b) a material impairment of the ability of any Borrower or any other Credit Party to perform under any material Loan Document to which it is a party; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against any Credit Party of any material Loan Document to which it is a party.

“Moody’s” means Moody’s Investors Service, Inc.

“Multi-employer Plan” means a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is or was at any time during the current year or the immediately preceding six (6) years contributed to by any Borrower or any ERISA Affiliate.

“Net Amount of Eligible Credit Card Accounts” means, at any time of determination hereunder, the amount owing under Eligible Credit Card Accounts net of chargebacks and fees due to the credit card issuer or processor.

“NOLV” means the net orderly liquidation value of Inventory or tradenames, as applicable (expressed as a percentage with respect to Inventory), expected to be realized at an orderly, liquidation sale held within a reasonable period of time, net of all liquidation expenses, as determined from the most recent appraisal of a U.S. Borrower’s Inventory or tradenames, as applicable, performed by a nationally recognized professional liquidation and appraisal firm and on terms satisfactory to the Agent.

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting Lender at such time.

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“Non-Ratable Loan” and “Non-Ratable Loans” have the meanings specified in Section 1.2(h).

“Notice of Borrowing” has the meaning specified in Section 1.2(b).

“Notice of Continuation/Conversion” has the meaning specified in Section 2.2(b).

“Obligations” means all present and future loans, advances, liabilities, payment obligations and debts owing by any Credit Party to the Agent and/or any Lender, arising under or pursuant to this Agreement or any of the other Loan Documents, whether or not evidenced by any note, or other instrument or document, whether arising from an extension of credit, opening of a letter of credit, acceptance, loan, guaranty, indemnification or otherwise, whether direct or indirect, absolute or contingent, due or to become due, primary or secondary, as principal or guarantor, and including all principal, interest, charges, expenses, fees, attorneys’ fees, filing fees and any other sums chargeable to any Credit Party hereunder or under any of the other Loan Documents. “Obligations” includes, without limitation, (a) all debts, liabilities, and payment obligations of any Credit Party now or hereafter arising from or in connection with the Letters of Credit and L/C Borrowings and (b) all Bank Product Obligations.

“OFAC” has the meaning specified in Section 6.28.

“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.

“Original Credit Agreement” means that certain $250,000,000 Third Amended and Restated Credit Agreement dated April 23, 2008 by and between ATI, AT Retail, ANNCO, AT Distribution, Bank of America, N.A., as administrative agent, the lenders party thereto, the arranger party thereto, the syndication agents party thereto, the documentation agents party thereto and the co-agents party thereto, as amended.

“Other Connection Taxes” means, with respect to the Agent, any Lender, any Letter of Credit Issuer or any other recipient of any payment (any of the foregoing, a “recipient”), Taxes imposed as a result of a present or former connection between such recipient and the jurisdiction imposing such Tax (other than connections arising from such recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Borrowing or Loan Document).

“Other Taxes” means 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 or from the execution, delivery or registration of, or otherwise with respect to, this Agreement or any other Loan Documents, excluding, in each case, any such Taxes imposed as a result of an assignment, or designation of a new Lending Office under this Agreement or any other Loan Document, unless such assignment or designation is consented in writing by a Borrower or is requested by a Borrower under Section 4.8.

“Parent” shall mean ANN INC., a Delaware corporation.

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“Parent Guaranty” shall mean the Fourth Amended and Restated Guaranty dated as of the Effective Date substantially in the form of, and on the terms set forth in, Exhibit H, as the same may be amended, modified or otherwise supplemented from time to time.

“Parent Share Repurchase” means each purchase of Common Stock by the Parent funded in accordance with the terms of Section 7.13.

“Participant” means any Person who shall have been granted the right by any Lender to participate in the financing provided by such Lender under this Agreement, and who shall have entered into a participation agreement in form and substance satisfactory to such Lender.

“Participation Register” has the meaning specified in Section 11.2(e).

“Payment Account” means the bank account established pursuant to the Security Agreement, to which amounts held in the Approved Deposit Accounts of the Parent and the Borrowers are swept and deposited or credited, and which is maintained in the name of the Agent or any Borrower, as the Agent may determine, on terms acceptable to the Agent.

“PBA” means the Pension Benefits Act (Ontario) or similar legislation of any other Canadian federal or provincial jurisdiction, and the regulations promulgated thereunder applicable to a Canadian Pension Plan.

“PBGC” means the Pension Benefit Guaranty Corporation or any Governmental Authority succeeding to the functions thereof.

“Pending Revolving Loans” means, at any time, the aggregate principal amount of all Revolving Loans requested in any Notice of Borrowing received by the Agent which have not yet been advanced.

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Borrower (or an ERISA Affiliate) sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multi-employer Plan has made contributions at any time during the immediately preceding five (5) plan years, but excludes any Canadian Pension Plan.

“Permitted Existing Debt” shall mean the Debt existing on the date hereof and set forth in Schedule 6.9.

“Permitted Existing Liens” shall mean the Liens on any property, other than any Environmental Liens, reflected on Schedule 7.10(b).

“Permitted Liens” means:

(a)    Liens (other than Environmental Liens and any Lien imposed under ERISA or the PBA) for claims, taxes, assessments or charges of any Governmental Authority which are 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

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are being maintained in accordance with GAAP and as to which a stay of enforcement is in effect;

(b)    statutory Liens of landlords, bankers, carriers, warehousemen, mechanics, materialmen and other similar Liens (other than any Lien imposed under ERISA or any Environmental Lien) imposed by law, arising in the ordinary course of business securing obligations, and, in each case, for amounts which (A) are not yet due, (B) 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 (C)(1) 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 (2) are more than 30 days past due, and, in the case of clause (1) or (2), 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 and as to which a stay of enforcement is in effect;

(c)    Liens (other than any Lien imposed under ERISA or the PBA 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 in respect of Debt), 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, servitudes, covenants, consents, rights of landlords, reservations, encroachments, variations and other restrictions, charges or encumbrances (whether or not recorded) affecting the use of Real Estate, which do not materially detract from the value of such Real Estate or materially interfere with its use in the ordinary conduct of the business of any Borrower;

(e)    Liens arising from judgments and attachments in connection with court proceedings provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder and such judgments are being contested in good faith by appropriate proceedings, adequate reserves have been set aside and no material property is subject to a material risk of loss or forfeiture and the claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary deductibles) and a stay of execution pending appeal or proceeding for review is in effect.

(f)    Liens on goods in favor of customs and revenue authorities arising as a matter of law in the ordinary course of business to secure payment of customs duties in connection with the importation of such goods.

“Permitted Secured Debt” means

(a)     Debt issued by any Borrower (other than the Canadian Borrower) or any of its Restricted Subsidiaries so long as (i) such Debt may be secured by a Lien that is (A)

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secondary and expressly subordinated to the first priority security interest of the Agent in any Collateral and (B) first priority with respect to assets and property of the Borrowers and their Restricted Subsidiaries other than Collateral, the terms and condition of such secondary Lien being reasonably acceptable to the Agent; and (ii) the Agent shall be granted a Lien on all assets (other than Collateral) securing such Debt, which Lien shall be secondary and expressly subordinated to the first priority security interest of the holders of the such Debt;

(b)    other secured Debt so long as any Lien securing such Debt attaches only to assets other than Collateral; and

(c)    in case of each of clauses (a) and (b) above, such Debt has terms consistent with, but not limited to, the following: (i) the terms and conditions of such Indebtedness and all Liens described above shall be subject to an intercreditor agreement reasonably acceptable to the Agent; (ii) none of the maturity date, any scheduled payment of principal in excess of 1% per annumor any obligation to repurchase or prepay such Debt (whether absolute or at the option of the holder (other than as a result of the occurrence of a specified event as agreed to by the Agent that would constitute an Event of Default)) occurs for at least 180 days following the Stated Termination Date; (iii) the terms of such Debt contain covenants and other terms or conditions that are reasonably acceptable to the Agent; and (iv) on or prior to the date of incurrence thereof, ATI has delivered to the Agent a Compliance Certificate demonstrating compliance (calculated on a pro forma basis), giving effect to the incurrence of such Debt in an amount in excess of $2,000,000, with the financial covenant set forth in Section 7.22, and in the case of clauses (a), (b) and (c)(i)-(iii) above, acceptable to the Agent in the exercise of its reasonable discretion.

“Person” means any individual, sole proprietorship, partnership, limited liability company, unlimited liability company, joint venture, trust, unincorporated organization, association, corporation, Governmental Authority, or any other entity.

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower (or an ERISA Affiliate) sponsors or maintains or to which any Borrower (or an ERISA Affiliate) makes, is making, or is obligated to make contributions and includes any Pension Plan but excludes any Canadian Pension Plan.

“Proceeds of Crime Act” means the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) and the regulations promulgated thereunder, as amended.

“Proprietary Credit Card Issuer” means Alliance Data Systems Corporation or any successor or replacement issuer or manager of a credit card program acceptable to the Agent.

“Pro Rata Guaranty Share” has the meaning specified in Section 13.2.

“Pro Rata Share” means, with respect to:

(a)    any U.S. Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such U.S. Lender’s U.S. Commitment and the denominator of which is the sum of the amounts of all of the U.S. Lenders’ U.S. Commitments, or if no U.S. Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is

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the amount of U.S. Obligations (other than U.S. Bank Product Obligations) owed to such U.S. Lender and the denominator of which is the aggregate amount of the U.S. Obligations (other than U.S. Bank Product Obligations) owed to the U.S. Lenders, in each case giving effect to a U.S. Lender’s participation in Non-Ratable Loans and Agent Advances;

(b)    any Canadian Lender, a fraction (expressed as a percentage), the numerator of which is the amount of such Canadian Lender’s Canadian Commitment and the denominator of which is the sum of the amounts of all of the Canadian Lenders’ Canadian Commitments, or if no Canadian Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the amount of Canadian Obligations (other than Canadian Bank Product Obligations) owed to such Canadian Lender and the denominator of which is the aggregate amount of the Canadian Obligations (other than Canadian Bank Product Obligations) owed to the Canadian Lenders;

(c)    any Lender, a fraction (expressed as a percentage). the numerator of which is the amount of such Lender’s Commitment and the denominator of which is the sum of the amounts of all of the Lenders’ Commitments, or if no Commitments are outstanding, a fraction (expressed as a percentage), the numerator of which is the amount of Obligations (other than Bank Product Obligations) owed to such Lender and the denominator of which is the aggregate amount of the Obligations (other than Bank Product Obligations) owed to the Lenders, in each case giving effect to a Lender’s participation in Non-Ratable Loans and Agent Advances;

provided that such calculation shall exclude any Defaulting Lenders and any such Defaulting Lender’s Commitment in the event that such Defaulting Lender’s rights to participate shall have been suspended or terminated pursuant to Section 12.20 of this Agreement.

“Qualified Cash” means unrestricted cash and Cash Equivalents held in the United States in one or more designated Deposit Accounts at Bank (or another United States financial institution acceptable to the Agent), which shall be non-operating accounts subject to the sole dominion and control of the Agent on terms acceptable to the Agent.

“Rate Suspension Notice” has the meaning specified in Section 4.5.

“Real Estate” means all of any Credit Party’s now or hereafter owned or leased estates in real property, including, without limitation, all fees, leaseholds and future interests, together with all of such Credit Party’s now or hereafter owned or leased interests in the improvements thereon, the fixtures attached thereto and the easements appurtenant thereto.

“Release” means a release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Contaminant into the indoor or outdoor environment or into or out of any Real Estate or other property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or Real Estate or other property.

“Report” has the meaning given to such term in Section 12.18(a).

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“Reportable Event” means, any of the events set forth in Section 4043(b) of ERISA or the regulations thereunder, other than any such event for which the 30-day notice requirement under ERISA has been waived in regulations issued by the PBGC.

“Required Lenders” means at any time two (2) or more Lenders whose Pro Rata Shares aggregate more than 50% of the aggregate of all Lenders’ Pro Rata Shares.

“Requirement of Law” means, any international, foreign, federal, state, provincial, municipal and local statutes, treaties, rules, guidelines, regulations, ordinances, codes and administrative or judicial precedents or authorities, including the interpretation or administration thereof by any Governmental Authority charged with the enforcement, interpretation or administration thereof, and all applicable administrative orders, directed duties, requests, licenses, authorizations and permits of, and agreements with, any Governmental Authority, in each case whether or not having the force of law, in each case applicable to or binding upon the Person or any of its property or to which the Person or any of its property is subject. For purposes of Section 4.1, the term “Requirement of Law” shall include FATCA.

“Reserves” means reserves that limit the availability of credit hereunder, consisting of reserves against Availability, Eligible Credit Card Accounts or Eligible Inventory established by the Agent from time to time in its Commercial Judgment. Without limiting the generality of the foregoing, Reserves may include: (a) Bank Product Reserves, (b) a reserve for accrued, unpaid interest on the Obligations (other than Bank Product Obligations) arising under this Agreement or the other Loan Documents, (c) inventory shrinkage, (d) warehousemen’s, bailees’ and landlords’ charges and statutory liens, and (e) reserves for gift cards and merchandise credits. No reserve pursuant to this definition shall be duplicative of any other reserve or of any amount already deducted in the calculation of the Borrowing Base. The Agent shall give the Borrowers prompt notice of any change in the composition or calculation of any Reserves, provided that the failure to give such notice shall not affect the applicability of such change.

“Responsible Officer” means the chief executive officer, the chief operating officer, the president, the chief financial officer, the controller, the assistant secretary, the general counsel (other than with respect to financial reporting matters), any senior vice president or any assistant treasurer of the applicable Borrower, or any other officer having substantially the same authority and responsibility.

“Restricted Payment” shall mean (a) any dividend or other distribution, direct or indirect (including by means of any Accommodation Obligation), on account of any shares of any class of capital stock of the Parent or any Borrower or any of its respective 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 the Parent or any Borrower or any of its respective Subsidiaries now or hereafter outstanding, (c) any payment made to retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire any shares of any class of capital stock of the Parent or any Borrower or any of its respective Subsidiaries now or hereafter outstanding (other than

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purchases of warrants, options and other rights to acquire such shares in connection with the termination, retirement or other departure of employees of the Parent or its Subsidiaries), or (d) any consideration paid to any Person for the purpose of any of the foregoing.

“Restricted Payment Certification” has the meaning given to such term in Section 5.2(e).

“Restricted Subsidiary” means any Subsidiary of any Borrower that is not an Unrestricted Subsidiary.

“Revolving Loans” has the meaning specified in Section 1.2 and includes each Agent Advance, L/C Borrowing and Non-Ratable Loan.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc.

“SDN List” has the meaning specified in Section 6.28.

“SEC” means the Securities and Exchange Commission, or any other Governmental Authority succeeding to any of its principal functions.

“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 Account” means all “securities accounts”, as defined in the UCC, now or hereafter owned by a Credit Party.

“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.

“Security Agreement” means the Fourth Amended and Restated Pledge and Security Agreement dated as of the date hereof by the Borrowers and the Parent to the Agent in Form of Exhibit G hereto, and each other security agreement delivered pursuant to the terms of the Loan Documents, each as hereafter modified, amended or supplemented from time to time.

“Security Instruments” means, collectively, the Security Agreement, the Collection Account Control Agreement, each DDA Notification, each Credit Card Notification and all other agreements (including control agreements), instruments and other documents, whether now existing or hereafter in effect, pursuant to which any Credit Party (other than the Canadian Borrower) or other Person shall grant or convey to the Agent or the Lenders a Lien in, or any other Person shall acknowledge any such Lien in, property as security for all or any portion of the Obligations or any other obligation under any other Loan Document, as any of them may be amended, modified or supplemented from time to time.

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“Settlement” and “Settlement Date” have the meanings specified in Section 12.15(a)(ii).

“Solvent” means, when used with respect to any Person, that at the time of determination:

(a)    the assets of such Person, at a fair valuation, are in excess of the total amount of its debts (including contingent liabilities); and

(b)    the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and

(c)    it is then able and expects to be able to pay its debts (including contingent debts and other commitments) as they mature; and

(d)    it has capital sufficient to carry on its business as conducted and as proposed to be conducted.

For purposes of determining whether a Person is Solvent, the amount of any contingent liability shall be computed as the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Standby Letter of Credit” shall mean any Letter of Credit which is not a Commercial Letter of Credit.

“Stated Termination Date” means December 19, 2017.

“Subsidiary” of a Person means any corporation, association, partnership, limited liability company, unlimited liability company, joint venture or other business entity of which more than fifty percent (50%) of the voting stock or other equity interests (in the case of Persons other than corporations), is owned or controlled directly or indirectly by the Person, or one or more of the Subsidiaries of such Person, or a combination thereof. Unless the context otherwise clearly requires, references herein to a “Subsidiary” refer to a Subsidiary of a Borrower.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions, withholdings, assessments, fees or other charges imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

“Termination Date” means the earliest to occur of (i) the Stated Termination Date, (ii) the date the Facility is terminated either by the Borrowers pursuant to Section 3.2 or by the Required Lenders pursuant to Section 9.2, and (iii) the date this Agreement is otherwise terminated for any reason whatsoever pursuant to the terms of this Agreement.

“Termination Event” shall mean (i) a Reportable Event with respect to any Plan; (ii) the withdrawal of ATI or any ERISA Affiliate from a Benefit Plan during a plan year in which ATI or such ERISA Affiliate was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of

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employment of 20% of Benefit Plan participants who are employees of ATI and its ERISA Affiliates; (iii) the imposition of an obligation on ATI 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 termination of, or the institution under ERISA of proceedings to terminate, a Benefit Plan (including the giving of written notice thereof); (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 (including the giving of written notice thereof); (vi) the partial or complete withdrawal of ATI or any ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer Plan is in reorganization; (vii) any “accumulated funding deficiency” (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan; (viii) ATI or any ERISA Affiliate has incurred or is likely to incur a liability in connection with any nonexempt “prohibited transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan; (ix) the failure to make a required contribution to a Benefit Plan if such failure is sufficient to give rise to a lien under Section 302 (f) of ERISA; or (x) the imposition of any liability under Title IV of ERISA, other than PBGC premiums due but not delinquent under Section 4007 of ERISA, upon ATI or any ERISA Affiliate.

“Terrorist Lists” has the meaning specified in Section 6.28.

“Total Facility Amount” has the meaning specified in Section 1.1.

“Total Outstandings” means, at any time, the Dollar Equivalent of the total outstanding principal amount of all Revolving Loans plus all Letter of Credit Outstandings.

“Tradename Collateral” means, collectively, all trademarks and tradenames of the Borrower that are subject to perfected Agent’s Liens securing payment or performance of the Obligations pursuant to the Security Instruments.

“Tradename Inclusion Date” has the meaning given to such term in the definition of “Eligible Tradenames”.

“Trade Payables” means all trade payables of the Credit Parties and their Subsidiaries arising in the ordinary course of business, including any private label or corporate letter of credit issued by or any guaranty of any Credit Party to support the payment of such trade payables.

“Transfer” has the meaning specified in Section 11.2(e).

“Transferee” has the meaning specified in Section 11.2(e).

“Twelve-Month Period” a period of twelve full consecutive fiscal months of the Borrowers and their Subsidiaries, taken together as one accounting period.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests; provided, that to the extent that the UCC is used to define any term herein or in any other documents and such term is

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defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern.

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the current value of that Plan’s assets, determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

“Unrestricted Subsidiary” shall mean any Foreign Subsidiary (other than a Foreign Subsidiary which is a Borrower) and any other Subsidiary of any Borrower which has been designated as such by resolution duly adopted by the board of directors of such Borrower, which at the time of such designation does not own or hold any Securities of the Parent or any Borrower, provided (a) no Subsidiary of a Borrower shall be (or if already an Unrestricted Subsidiary shall immediately cease to be) an Unrestricted Subsidiary if, at any time, the Parent or any 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 Debt of, such Subsidiary which is not permitted under Article 7 and (b) the Parent or the Borrowers shall be deemed to have made an Investment in an Unrestricted Subsidiary at the time of designation of such Subsidiary as an “Unrestricted Subsidiary” in an amount equal to the sum of (i) any Debt owed by such Subsidiary to the Parent and any Borrower at such time, (ii) any outstanding Guarantees or Liens created by the Parent or any Borrower in favor of or for the benefit of such Subsidiary and (iii) the total assets of such Subsidiary at such time as determined on a consolidated basis in accordance with GAAP. As of the Effective Date, the following Subsidiaries are Unrestricted Subsidiaries: AnnTaylor Travel, Inc., AnnTaylor Sourcing Far East Ltd. and AnnTaylor of Puerto Rico, Inc.

“Unused Letter of Credit Subfacility” means an amount equal to the applicable Letter of Credit Subfacility minus the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit plus, without duplication, (b) the aggregate unpaid reimbursement obligations with respect to all Letters of Credit.

“Unused Line Fee” has the meaning specified in Section 2.5.

“U.S. Bank Products” means any one or more of the following types of services or facilities extended to a U.S. Borrower by any U.S. Lender, including the Bank and any of their Affiliates in reliance on the Bank’s or a U.S. Lender’s agreement to indemnify such affiliate: (i) credit cards; (ii) ACH Transactions; (iii) cash management, including controlled disbursement services; (iv) supply chain or similar financing; and (v) Hedge Agreements; provided, however, that for obligations in respect of any of the foregoing to be included as a “U.S. Obligation” for purposes of a distribution under Section 3.5, the applicable U.S. Lender must have previously provided written notice to Agent of (i) the existence of such U.S. Bank Product, (ii) the current dollar amount of obligations arising thereunder (determined, in the case of Hedge Agreements and any other U.S. Bank Products that are Debt, in accordance with the definition of “Debt” herein) (“U.S. Bank Product Amount”), and (iii) the methodology to be used by such parties in determining the U.S. Bank Product Amount owing from time to time. The U.S. Bank Product Amount may be changed from time to time upon written notice to the Agent by the applicable U.S. Lender. No U.S. Bank Product Amount (other than a change based on a mark-to-market

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change in value thereof) may be established or increased at any time that a Default or Event of Default exists or if a reserve in such amount would causeOutstandings to exceed Availability.

“U.S. Bank Product Amount” has the meaning provided in the definition of U.S. Bank Products.

“U.S. Borrowers” has the definition set forth in the preamble hereto.

“U.S. Commitment” means, at any time with respect to a Lender, the principal amount set forth beside such Lender’s name under the heading “U.S. Commitment” on Schedule 1.1 attached to the Agreement or on the signature page of the Assignment and Acceptance pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 11.2, as such U.S. Commitment may be adjusted from time to time in accordance with the provisions of Section 11.2, and “U.S. Commitments” means, collectively, the aggregate amount of the commitments of all of the Lenders.

“U.S. Lenders” means the Lenders having U.S. Commitments from time to time or at any time.

“U.S. Obligations” means, on any date, the portion of the Obligations outstanding that are owing by the U.S. Borrowers or any other Guarantor.

“Wholly Owned” means, with respect to any Person, a Subsidiary of such Person, all of the outstanding Capital Stock of which (other than director’s qualifying shares and other similar de minimis issuances required by law) are at the time owned directly or indirectly by such Person.

2.    Accounting Terms. Any accounting term used in the Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP, and all financial computations in the Agreement shall be computed, unless otherwise specifically provided therein, in accordance with GAAP as consistently applied and using the same method for inventory valuation as used in the preparation of the Financial Statements.

3.    Interpretive Provisions. (a) The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.

(b)    The words “hereof,” “herein,” “hereunder” and similar words refer to the Agreement as a whole and not to any particular provision of the Agreement; and Subsection, Section, Schedule and Exhibit references are to the Agreement unless otherwise specified.

(c)    (i)    The term “documents” includes any and all instruments, documents, agreements, certificates, indentures, notices and other writings, however evidenced.

(ii)    The term “including” is not limiting and means “including without limitation.”

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(iii)    In the computation of periods of time from a specified date to a later specified date, unless otherwise expressly provided herein, the word “from” means “from and including,” the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including.”

(iv)    The word “or” is not exclusive.

(d)    Unless otherwise expressly provided herein, (i) references to agreements (including the Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any relevant Loan Document, and (ii) references to any statute or regulation are to be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation.

(e)    The captions and headings of the Agreement and other Loan Documents are for convenience of reference only and shall not affect the interpretation of the Agreement.

(f)    The Agreement and other Loan Documents may use several different limitations, tests or measurements to regulate the same or similar matters. All such limitations, tests and measurements are cumulative and shall each be performed in accordance with their terms.

(g)    For purposes of Section 9.1, a breach of a financial covenant contained in Sections 7.22 shall be deemed to have occurred as of any date of determination thereof by the Agent or as of the last day of any specified measuring period, regardless of when the Financial Statements reflecting such breach are delivered to the Agent.

(h)    The Agreement and the other Loan Documents are the result of negotiations among and have been reviewed by counsel to the Agent, the Borrowers and the other parties, and are the products of all parties. Accordingly, they shall not be construed against the Lenders or the Agent merely because of the Agent’s or Lenders’ involvement in their preparation.

4.    Accounting for Acquisitions.

With respect to any Acquisition consummated on or after the Effective Date, the following shall apply:

(a)    For each of the twelve Twelve-Month Periods ending next following the date of any Acquisition, EBITDA shall include the results of operations of the Person or assets so acquired on a historical pro forma basis, and which amounts may include such adjustments as are permitted under Regulation S-X of the SEC and reasonably satisfactory to the Agent.

(b)    For each of the twelve Twelve-Month Periods ending next following the date of each Acquisition, Fixed Charges shall include the results of operations of the Person or assets so acquired, which amounts shall be determined on a historical pro forma basis; provided, however, Interest Expense shall be adjusted on a historical pro forma basis to (i) eliminate

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interest expense accrued during such period on any Debt repaid in connection with such Acquisition and (ii) include interest expense on any Debt (including Debt hereunder) incurred, acquired or assumed in connection with such Acquisition (“Incremental Debt”) calculated (x) as if all such Incremental Debt had been incurred as of the first day of such Twelve-Month Period and (y) at the following interest rates: (I) for all periods subsequent to the date of the Acquisition and for Incremental Debt assumed or acquired in the Acquisition and in effect prior to the date of Acquisition, at the actual rates of interest applicable thereto, and (II) for all periods prior to the actual incurrence of such Incremental Debt, equal to the average daily rate of interest actually applicable to such Incremental Debt hereunder or under other financing documents applicable thereto, as the case may be.

5.    Currency Equivalents Generally. Any amount specified in this Agreement (other than in Section 1,11,12 and 14) or any of the other Loan Documents to be in Dollars shall also include the equivalent of such amount in any currency other than Dollars to the extent necessary to give effect to the intent, where applicable, that this Agreement apply to the Canadian Borrower, such equivalent amount thereof in the applicable currency to be determined by Agent at such time on the basis of the Exchange Rate for the purchase of such currency with Dollars.

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EXHIBIT A

FORM OF COMPLIANCE CERTIFICATE

This Certificate is delivered to you pursuant to Section 5.2(c) of the Fourth Amended and Restated Credit Agreement dated as of December 19, 2012 (as amended, supplemented or modified from time to time, (the “Credit Agreement”), among AnnTaylor, Inc. (“ATI”), ANNCO, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc., ANN Card Services, Inc. (collectively, the “U.S. Borrowers”), ANN Canada Inc. (the “Canadian Borrower” and together with the U.S. Borrower, collectively, the “Borrowers”), Bank of America, N.A. (“Bank of America”), as Administrative Agent for the Lenders (in such capacity, (the “Agent”), JPMorgan Chase Bank, N.A., as Syndication Agent and Wells Fargo Bank, National Association, as Documentation 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 [Senior Vice President - Chief Financial Officer] [Vice President ‑ Controller] of ATI.

2.    I have reviewed and am familiar with the contents of this Certificate. I am providing this Certificate solely in my capacity as an officer of ATI. The matters set forth herein are true to the best of my knowledge after due 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. Such review did not disclose the existence of, and I have no knowledge of the existence, as of the date of this Certificate, of any condition or event which constitutes a Default or an Event of Default [, except as set forth below]. [Except as set forth below,] [A]ll of the representations and warranties of the Borrowers contained in the Credit Agreement and the other principal Loan Documents are correct and complete in all material respects as at the date of this certificate as if made as of the date hereof, except for those that speak as of a particular date. [Except as set forth below,] [T]he Borrowers are, as of _____________, ___, 20__ [most recent quarter-end] (the “Determination Date”) in compliance in all material respects with all of their respective covenants and agreements in the Credit Agreement and the other principal Loan Documents. No Fixed Charge Trigger Period has arisen or been in effect since the last Compliance Certificate delivered to the Agent [, except as set forth below].

4.Liquidity as of the Determination Date is as set forth below:

(a)     Cash (other than Qualified Cash and cash

held by the Canadian Borrower) held in

Approved Deposit Accounts                $___________

(b)    Cash Equivalents (other than Qualified Cash

and Cash Equivalents held by the Canadian

Borrower) reflected on most recently consolidated

balance sheet of Parent                $___________

(c)    4(a) plus 4(b)                        $___________

(d)    4(c) minus $37,500,000                $___________*

(e)    Availability**                        $___________

Liquidity                        $___________

*     But not less than zero

**    (or Adjusted Availability, if applicable)

5.    If the Determination Date is the end of a fiscal quarter of ATI, attached hereto as Attachment 1 are the computations showing compliance with the covenants specified therein as of the Determination Date.

6.    If any portion of a Fixed Charge Trigger Period shall have been in effect during the month ending on the Determination Date, attached hereto as Attachment 2 is the computation showing compliance with Section 7.22 as of the Determination Date.

IN WITNESS WHEREOF, I execute this Certificate this ___ day of ___________, 20__.

ANNTAYLOR, INC.

By:    _____________________________

Name:    _____________________________

Title:    _____________________________

Attachment 1

to Exhibit A

The information described herein is as of ___________, ____, and pertains to the period from _______________, ____ to ________________ __, ____.

I. Negative Covenants

A.    Indebtedness (Section 7.9)

SectionAmount

            7.9(l)                        $__________

B.     Sales (Section 7.10(a))

Section    Amount

        7.10(a)(ii)                    $__________

7.10(a)(vii)                    $__________

7.10(a)(ix)                     $__________

C.     Investments (Section 7.11)

Section    Amount

            7.11(e)                        $__________

            7.11(f)                        $__________

            7.11(g)                        $__________

            7.11(o)                        $__________

D.    Restricted Payments (Section 7.13)

Section    Amount

7.13(a)                     $__________

Attachment 2

to Exhibit A

The information described herein is as of ___________, ____, and pertains to the period from _______________, ____ to ________________ __, ____.

I.    Fixed Charge Coverage Ratio

A.    Fixed Charge Coverage Ratio (Section 7.22)

1.     Calculation of EBITDA:

a.     Adjusted Net Earnings From Operations

(i)    consolidated net income after

provision for income

taxes for such fiscal period        $______________

Less, to the extent included in net income

(ii)    gain or loss arising from the sale

of any capital assets        $______________

(iii)    gain arising from any write-up

in the book value of any asset        $______________

(iv)    earnings of any Person (other

than a Subsidiary) in which

any Borrower has an ownership interest

unless (and only to the extent) such

earnings or loss shall actually have

been received by such Borrower

in the form of cash distributions    $______________

(v)    earnings or loss of any Person to

which assets of any Borrower shall

have been sold, transferred or

disposed of, or into which any Borrower

shall have been merged, or which has

been a party with any Borrower

to any consolidation or other form

of reorganization, prior to

the date of such transaction        $______________

(vi)    gain or loss arising from the

acquisition of debt or equity

securities of the Parent and the

Borrowers or from

cancellation or forgiveness of Debt    $___________

(vii)    gain or loss arising from extraordinary

items, as determined in accordance

with GAAP, or from any other

non-recurring transaction, to the

extent included in net income        $___________

(viii)    Adjusted Net Earnings from

Operations     $___________

plus (to the extent

deducted in the calculation thereof)        $___________

b.    amortization                    $___________

c.    depreciation                    $___________

d.    Interest Expense                $___________

e.    income tax expense                $___________

EBITDA                    $

2.    Capital Expenditures (other than those

financed with Debt other than

Revolving Loans)                    $___________

3.    A.1 less A.2                        $

4.    Fixed Charges

a.    Interest Expense                $___________

b.    Scheduled principal payments

of Debt                    $___________

c.    Income taxes (non-deferred)            $___________

FIXED CHARGES                    $

5.     Ratio of line 3 to line 4                    _____:1

Minimum Required Ratio: 1.0 to 1.0

EXHIBIT B

FORM OF BORROWING BASE CERTIFICATE

[To be attached]

EXHIBIT C

[INTENTIONALLY OMITTED]

EXHIBIT D

NOTICE OF BORROWING

Date: ______________, 20__

To: Bank of America, N.A. as Agent for the Lenders who are parties to the Fourth Amended and Restated Credit Agreement dated as of December 19, 2012 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”) by and among AnnTaylor, Inc., ANNCO, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc., ANN Card Services, Inc., ANN Canada Inc., the Lenders party thereto and Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A., as Syndication Agent and Wells Fargo Bank, National Association, as Documentation Agent.

Ladies and Gentlemen:

The undersigned, ________________________ (the “Borrower”), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably of the Borrowing specified below:

1. The Business Day of the proposed Borrowing is _______________, 20__.

2. The aggregate amount of the proposed Borrowing is [$_______________] [CDN$______________].

3. The Borrowing is to be comprised of [$_______________ of Base Rate Loans][CDN$_____________ of Canadian Prime Rate Loans] and [$_______________ of LIBOR Loans][CDN$______________ or Canadian BA Rate Loans].

4. The duration of the Interest Period for the [LIBOR Loans][Canadian BA Rate Loans], if any, included in the Borrowing shall be _____ months.

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the proposed Borrowing, before and after giving effect thereto and to the application of the proceeds therefrom:

(a)The representations and warranties of the Credit Parties contained in the Credit Agreement and the other principal Loan Documents are correct in all material respects on and as of the date of the Credit Extension requested hereunder and are deemed made on and as of the date hereof, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agent and the Lenders have been notified in writing by any Borrower that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty; and

(b)No event has occurred and is continuing, or would result from the Credit Extension requested hereby, which constitutes a Default or an Event of Default; and

(c)No event has occurred and is continuing, or would result from such Credit Extension requested hereby, which has had or would have a Material Adverse Effect.

(d)The proposed Borrowing will not cause the aggregate principal amount of all outstanding Revolving Loans plus all Letter of Credit Outstandings, to exceed the Borrowing Base or the combined Commitments of the Lenders.

(e)The proposed Borrowing will not cause the aggregate principal Dollar Equivalent amount of all outstanding Canadian Loans plus all Letter of Credit Outstandings relating to Canadian Letters of Credit, to exceed the Canadian Subfacility Amount or the combined Canadian Commitments of the Canadian Lenders.

__________________________________

By:    

Title:    

EXHIBIT E

NOTICE OF CONTINUATION/CONVERSION

Date: _______________, 20__

To: Bank of America, N.A. as Agent for the Lenders to the Fourth Amended and Restated Credit Agreement dated as of December 19, 2012 (as extended, renewed, amended or restated from time to time, the “Credit Agreement”) among AnnTaylor, Inc., ANNCO, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc., ANN Card Services, Inc., ANN Canada Inc., the Lenders party thereto and Bank of America, N.A., as Agent, JPMorgan Chase Bank, N.A., as Syndication Agent and Wells Fargo Bank, National Association, as Documentation Agent.

Ladies and Gentlemen:

The undersigned, _______________________ (the “Borrower”), refers to the Credit Agreement, the terms defined therein being used herein as therein defined, and hereby gives you notice irrevocably of the [conversion] [continuation] of the Revolving Loans specified herein, that:

1. The Continuation/Conversion Date is _______________, 20__.

2. The aggregate amount of the Revolving Loans to be [converted] [continued] is [$_______________][CDN$_______________].

3. The Loans are to be [converted into] [continued as] [LIBOR Rate] [Base Rate] [Canadian Prime Rate] [Canadian BA Rate] Loans.

4. The duration of the Interest Period for the [LIBOR Loans] [Canadian BA Rate Loans] included in the [conversion] [continuation] shall be _____ months.

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the proposed Continuation/Conversion Date, before and after giving effect thereto and to the application of the proceeds therefrom:

(a)    The representations and warranties of the Credit Parties contained in the Credit Agreement and the other principal Loan Documents are correct in all material respects on and as of the date of the [continuation][conversion] requested hereunder and are deemed made on and as of the date hereof, other than any such representation or warranty which relates to a specified prior date and except to the extent the Agent and the Lenders have been notified in writing by any Borrower that any representation or warranty is not correct and the Required Lenders have explicitly waived in writing compliance with such representation or warranty.

(b)    No event has occurred and is continuing, or would result from the [continuation][conversion] requested hereby, which constitutes a Default or an Event of Default.

(c)    No event has occurred and is continuing, or would result from such [continuation][conversion] requested hereby, which has had or would have a Material Adverse Effect.

(d)    The proposed [continuation][conversion] will not cause the aggregate principal amount of all outstanding Revolving Loans plus all Letter of Credit Outstandings, to exceed the Borrowing Base or the combined Commitments of the Lenders.

(e)    The proposed [continuation][conversion] will not cause the aggregate principal Dollar Equivalent amount of all outstanding Canadian Loans plus all Letter of Credit Outstandings relating to Canadian Letters of Credit, to exceed the Canadian Subfacility Amount or the combined Canadian Commitments of the Canadian Lenders.

_______________________________

By:    

Title:    

EXHIBIT F

FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT

This ASSIGNMENT AND ACCEPTANCE AGREEMENT (this “Assignment and Acceptance”) dated as of ____________________, 20__ is made between ______________________________ (the “Assignor”) and __________________________ (the “Assignee”).

RECITALS

WHEREAS, the Assignor is party to that certain Fourth Amended and Restated Credit Agreement dated as of December 19, 2012 (as amended, amended and restated, modified, supplemented or renewed, the “Credit Agreement”) among AnnTaylor, Inc., ANNCO, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc., ANN Card Services, Inc., ANN Canada Inc., the Lenders party thereto and Bank of America, N. A., as agent for the Lenders (the “Agent”), JPMorgan Chase Bank, N.A., as Syndication Agent and Wells Fargo Bank, National Association, as Documentation Agent. Any terms defined in the Credit Agreement and not defined in this Assignment and Acceptance are used herein as defined in the Credit Agreement;

WHEREAS, as provided under the Credit Agreement, the Assignor has committed to making Revolving Loans (the “Committed Loans”) to the Borrowers in an aggregate amount not to exceed $__________ (the “Commitment”);

WHEREAS, the Assignor has made Committed Loans in the aggregate principal amount of $__________ to the Borrowers;

WHEREAS, [the Assignor has acquired a participation in its pro rata share of the Lenders’ liabilities under Letters of Credit in an aggregate principal amount of $____________ (the “L/C Obligations”)] [no Letters of Credit are outstanding under the Credit Agreement]; and

WHEREAS, the Assignor wishes to assign to the Assignee [part of the] [all] rights and obligations of the Assignor under the Credit Agreement in respect of its Commitment, together with a corresponding portion of each of its outstanding Committed Loans and L/C Obligations, in an amount equal to $__________ (the “Assigned Amount”) on the terms and subject to the conditions set forth herein and the Assignee wishes to accept assignment of such rights and to assume such obligations from the Assignor on such terms and subject to such conditions;

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

1.    Assignment and Acceptance.

(a)    Subject to the terms and conditions of this Assignment and Acceptance, (i) the Assignor hereby sells, transfers and assigns to the Assignee, and (ii) the Assignee hereby purchases, assumes and undertakes from the Assignor, without recourse and without

representation or warranty (except as provided in this Assignment and Acceptance) __% (the “Assignee’s Percentage Share”) of (A) the Commitment, the Committed Loans and the L/C Obligations of the Assignor and (B) all related rights, benefits, obligations, liabilities and indemnities of the Assignor under and in connection with the Credit Agreement and the Loan Documents (including, without limitation, the CAM Letter).

(b)    With effect on and after the Effective Date (as defined in Section 5 hereof), the Assignee shall be a party to the Credit Agreement and succeed to all of the rights and be obligated to perform all of the obligations of a Lender under the Credit Agreement, including the requirements concerning confidentiality and the payment of indemnification, with a Commitment in an amount equal to the Assigned Amount. The Assignee agrees that it will 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. It is the intent of the parties hereto that the Commitment of the Assignor shall, as of the Effective Date, be reduced by an amount equal to the Assigned Amount and the Assignor shall relinquish its rights and be released from its obligations under the Credit Agreement to the extent such obligations have been assumed by the Assignee; provided, however, the Assignor shall not relinquish its rights under Sections 4.4 and 14.11 of the Credit Agreement to the extent such rights relate to the time prior to the Effective Date.

(c)    After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignee’s Commitment will be $__________.

(d)    After giving effect to the assignment and assumption set forth herein, on the Effective Date the Assignor’s Commitment will be $__________.

2.    Payments.

(a)    As consideration for the sale, assignment and transfer contemplated in Section 1 hereof, the Assignee shall pay to the Assignor on the Effective Date in immediately available funds an amount equal to $__________, representing the Assignee’s Pro Rata Share of the principal amount of all Committed Loans.

(b)    The Assignee further agrees to pay to the Agent a processing fee in the amount specified in Section 11.2(a) of the Credit Agreement.

3.    Reallocation of Payments.

Any interest, fees and other payments accrued to the Effective Date with respect to the Commitment, and Committed Loans and L/C Obligations shall be for the account of the Assignor. Any interest, fees and other payments accrued on and after the Effective Date with respect to the Assigned Amount shall be for the account of the Assignee. Each of the Assignor and the Assignee agrees that it will hold in trust for the other party any interest, fees and other amounts which it may receive to which the other party is entitled pursuant to the preceding sentence and pay to the other party any such amounts which it may receive promptly upon receipt.

4.    Independent Credit Decision.

The Assignee (a) acknowledges that it has received a copy of the Credit Agreement and the Schedules and Exhibits thereto, together with copies of the most recent financial statements of the Borrowers, and such other documents (including, without limitation, the CAM Letter) and information as it has deemed appropriate to make its own credit and legal analysis and decision to enter into this Assignment and Acceptance; and (b) agrees that it will, independently and without reliance upon the Assignor, the Agent 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 and legal decisions in taking or not taking action under the Credit Agreement.

5.    Effective Date; Notices.

(a)    As between the Assignor and the Assignee, the effective date for this Assignment and Acceptance shall be __________, 20__ (the “Effective Date”); provided that the following conditions precedent have been satisfied on or before the Effective Date:

(i)    this Assignment and Acceptance shall be executed and delivered by the Assignor and the Assignee;

(ii)    the consent of each of the Agent and ATI required for an effective assignment of the Assigned Amount by the Assignor to the Assignee shall have been duly obtained and shall be in full force and effect as of the Effective Date;

(iii)    the Assignee shall pay to the Assignor all amounts due to the Assignor under this Assignment and Acceptance;

[(iv)    the Assignee shall have complied with Section 11.2 of the Credit Agreement (if applicable);]

(v)    the processing fee referred to in Section 2(b) hereof and in Section 11.2(a) of the Credit Agreement shall have been paid to the Agent; and

(b)    Promptly following the execution of this Assignment and Acceptance, the Assignor shall deliver to the Borrowers and the Agent for acknowledgment by the Agent, a Notice of Assignment in the form attached hereto as Schedule 1.

6.    [Agent. [INCLUDE ONLY IF ASSIGNOR IS AGENT]

(a)    The Assignee hereby appoints and authorizes the Assignor to take such action as agent on its behalf and to exercise such powers under the Credit Agreement as are delegated to the Agent by the Lenders pursuant to the terms of the Credit Agreement.

(b)    The Assignee shall assume no duties or obligations held by the Assignor in its capacity as Agent under the Credit Agreement.]

7.    Withholding Tax.

The Assignee (a) represents and warrants to the Lender, the Agent and the Borrowers that under applicable law and treaties no tax will be required to be withheld by any

Borrower and/or the Agent [and/or any Lender], as applicable with respect to any payments to be made to the Assignee hereunder, (b) agrees to furnish to the Agent and the Borrowers prior to the time that the Agent or Borrower is required to make any payment of principal, interest or fees hereunder and (so long as it remains eligible to do so) from time to time thereafter upon reasonable request by the Agent or a Borrower, (x) if the Assignee is organized under the laws of any jurisdiction other than the United States or any State thereof, duplicate executed originals of either U.S. Internal Revenue Service Form W-8ECI or U.S. Internal Revenue Service Form W-8BEN (wherein the Assignee claims entitlement to the benefits of a tax treaty that provides for a complete exemption from U.S. federal income withholding tax on all payments hereunder), or (y) if the Assignee is organized under the laws of the United States or any State thereof, duplicate executed originals of U.S. Internal Revenue Service Form W-9, and agrees to provide new forms upon the expiration of any previously delivered form or comparable statements in accordance with applicable U.S. law and regulations and amendments thereto, duly executed and completed by the Assignee, and (c) agrees to comply with all applicable U.S. laws and regulations with regard to such withholding tax exemption.

8.    Representations and Warranties.

(a)    The Assignor represents and warrants that (i) 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 Lien or other adverse claim; (ii) it is duly organized and existing and it has the full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to be executed or delivered by it in connection with this Assignment and Acceptance and to fulfill its obligations hereunder; (iii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance, and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; and (iv) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles.

(b)    The Assignor 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 the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document furnished pursuant thereto. The Assignor makes no representation or warranty in connection with, and assumes no responsibility with respect to, the solvency, financial condition or statements of any Borrower, or the performance or observance by any Borrower, of any of its respective obligations under the Credit Agreement or any other instrument or document furnished in connection therewith.

(c)    The Assignee represents and warrants that (i) it is duly organized and existing and it has full power and authority to take, and has taken, all action necessary to execute and deliver this Assignment and Acceptance and any other documents required or permitted to

be executed or delivered by it in connection with this Assignment and Acceptance, and to fulfill its obligations hereunder; (ii) no notices to, or consents, authorizations or approvals of, any Person are required (other than any already given or obtained) for its due execution, delivery and performance of this Assignment and Acceptance; and apart from any agreements or undertakings or filings required by the Credit Agreement, no further action by, or notice to, or filing with, any Person is required of it for such execution, delivery or performance; (iii) this Assignment and Acceptance has been duly executed and delivered by it and constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with the terms hereof, subject, as to enforcement, to bankruptcy, insolvency, moratorium, reorganization and other laws of general application relating to or affecting creditors’ rights and to general equitable principles; and (iv) it is an Eligible Assignee.

9.    Further Assurances.

The Assignor and the Assignee each hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment and Acceptance, including the delivery of any notices or other documents or instruments to the Borrowers or the Agent, which may be required in connection with the assignment and assumption contemplated hereby.

10.    Miscellaneous.

(a)    Any amendment or waiver of any provision of this Assignment and Acceptance shall be in writing and signed by the parties hereto. No failure or delay by either party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof and any waiver of any breach of the provisions of this Assignment and Acceptance shall be without prejudice to any rights with respect to any other or further breach thereof.

(b)    All payments made hereunder shall be made without any set-off or counterclaim.

(c)    The Assignor and the Assignee shall each pay its own costs and expenses incurred in connection with the negotiation, preparation, execution and performance of this Assignment and Acceptance.

(d)    This Assignment and Acceptance may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.

(e)    THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF _______________. The Assignor and the Assignee each irrevocably submits to the non-exclusive jurisdiction of any State or Federal court sitting in [_______________] over any suit, action or proceeding arising out of or relating to this Assignment and Acceptance and irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such [_______________] State or Federal court. Each party to this Assignment and Acceptance hereby

irrevocably waives, to the fullest extent it may effectively do so, the defense of an inconvenient forum to the maintenance of such action or proceeding.

(f)    THE ASSIGNOR AND THE ASSIGNEE EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS ASSIGNMENT AND ACCEPTANCE, THE CREDIT AGREEMENT, ANY RELATED DOCUMENTS AND AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF DEALING, OR STATEMENTS (WHETHER ORAL OR WRITTEN).

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Assignment and Acceptance to be executed and delivered by their duly authorized officers as of the date first above written.

[ASSIGNOR]

By:

Title:

Address:

[ASSIGNEE]

By:

Title:

Address:

SCHEDULE 1
to
ASSIGNMENT AND ACCEPTANCE

NOTICE OF ASSIGNMENT AND ACCEPTANCE

_______________, 20__

Bank of America, N.A., as Agent

________________________

________________________

________________________    

Attention: ___________________-Account Executive

AnnTaylor, Inc.

_____________________

_____________________

_____________________

Re: AnnTaylor, Inc.

Ladies and Gentlemen:

We refer to the Fourth Amended and Restated Credit Agreement dated as of December 19, 2012 (as amended, amended and restated, modified, supplemented or renewed from time to time the “Credit Agreement”) among AnnTaylor, Inc., ANNCO, Inc., AnnTaylor Distribution Services, Inc., AnnTaylor Retail, Inc., ANN Card Services, Inc., ANN Canada Inc., the Lenders party thereto and Bank of America, N. A., as agent for the Lenders (the “Agent”), JPMorgan Chase Bank, N.A., as Syndication Agent and Wells Fargo Bank, National Association, as Documentation Agent. Terms defined in the Credit Agreement are used herein as therein defined.

1.    We hereby give you notice of, and request your consent to, the assignment by __________________ (the “Assignor”) to _______________ (the “Assignee”) of _____% of the right, title and interest of the Assignor in and to the Credit Agreement (including the right, title and interest of the Assignor in and to the Commitments of the Assignor, all outstanding Revolving Loans made by the Assignor and the Assignor’s participation in the Letters of Credit pursuant to the Assignment and Acceptance Agreement attached hereto (the “Assignment and Acceptance”). We understand and agree that the Assignor’s Commitment, as of _______________, 20__, is $___________, the aggregate amount of its outstanding Revolving Loans is $_____________, and its participation in L/C Obligations (as defined in the Assignment and Acceptance) is $_____________.

2.    The Assignee agrees that, upon receiving the consent of the Agent to such assignment, the Assignee will be bound by the terms of the Credit Agreement as fully and to the same extent as if the Assignee were the Lender originally holding such interest in the Credit Agreement.

3.    The following administrative details apply to the Assignee:

(A)    Notice Address:

Assignee name:

Address:    

Attention:    

Telephone: (___)

Telecopier: (___)

Telex (Answerback):

(B)    Payment Instructions:

Account No.:

At:

Reference:    

Attention:    

4.    You are entitled to rely upon the representations, warranties and covenants of each of the Assignor and Assignee contained in the Assignment and Acceptance.

IN WITNESS WHEREOF, the Assignor and the Assignee have caused this Notice of Assignment and Acceptance to be executed by their respective duly authorized officials, officers or agents as of the date first above mentioned.

Very truly yours,

[NAME OF ASSIGNOR]

By:    

Title:    

[NAME OF ASSIGNEE]

By:    

Title:    

ACKNOWLEDGED AND ASSIGNMENT

CONSENTED TO:

Bank of America, N. A.

as Agent

By:    

Title:    

AnnTaylor, Inc.

By:    

Title:    

EXHIBIT G

FORM OF SECURITY AGREEMENT

EXHIBIT H

FORM OF PARENT GUARANTY

SCHEDULE 1.1

COMMITMENTS

Lender	U.S. Commitment		Canadian Commitment		Total Commitment		Pro Rata Share   (9 decimals)
Bank of America, N.A.		$75,000,000		$22,500,000		$75,000,000	30.000000000	%
JPMorgan Chase Bank, N.A.		$60,000,000		$18,000,000		$60,000,000	24.000000000	%
Wells Fargo Bank, National Association		$40,000,000		$12,000,000		$40,000,000	16.000000000	%
RBS Citizens, N.A.		$35,000,000		$10,500,000		$35,000,000	14.000000000	%
Fifth Third Bank		$35,000,000		$10,500,000		$35,000,000	14.000000000	%
Scotiabanc Inc.		$5,000,000		$1,500,000		$5,000,000	2.000000000	%
		$250,000,000		$75,000,000		$250,000,000	100.000000000	%

SCHEDULE 1.2

EXISTING LETTERS OF CREDIT

EX-10.2

Exhibit 10.2

FOURTH AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT

THIS FOURTH AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (as such agreement may be amended, supplemented, modified or amended and restated from time to time, this “Agreement”), dated as of December 19, 2012, is made by ANNTAYLOR, INC., a Delaware corporation (“ATI”), ANN INC., a Delaware corporation (the “Parent”), ANNCO, INC., a Delaware corporation (“ANNCO”), ANNTAYLOR DISTRIBUTION SERVICES, INC., a Delaware corporation (“ATDS”), ANNTAYLOR RETAIL, INC., a Florida corporation (“ATR”) and ANN CARD SERVICES, INC., a Florida corporation (“ACS” and, together with ATI, the Parent, ANNCO, ATDS and ATR, the “Grantors” and each, individually, a “Grantor”) in favor of BANK OF AMERICA, N.A., in its capacity as administrative agent for each of the Lenders now or hereafter party to the Credit Agreement (as defined below) (the “Agent”).

W I T N E S S E T H:

WHEREAS, ATI, ANNCO, ATDS, ATR (collectively, the “Original Borrowers”), the Agent, the lenders referred to therein, the syndication agents named therein, and the issuing banks named therein have entered into that certain $250,000,000 Third Amended and Restated Credit Agreement dated April 23, 2008 (as amended, the “Original Credit Agreement”); and

WHEREAS, at the request of the Original Borrowers, ACS and ANN CANADA INC., a Canadian corporation (the “Canadian Borrower” and, together with the Original Borrowers and ACS, the “Borrowers” and each, individually, a “Borrower”), the Lenders, the Agent and the syndication agents named therein have agreed to amend and restate the Original Credit Agreement in its entirety pursuant to that certain Fourth Amended and Restated Credit Agreement dated as of the date hereof (as so amended and restated and as such agreement may be further amended, supplemented, modified, or amended and restated from time to time, the “Credit Agreement”); and

WHEREAS, the Parent owns, directly or indirectly, all of the Equity Interests of each of the Borrowers and has and will materially benefit from the Revolving Loans made or to be made and the Letters of Credit issued or to be issued under the Credit Agreement, and in connection therewith and pursuant to the terms of the Credit Agreement, the Parent simultaneously herewith has entered into that certain Fourth Amended and Restated Parent Guaranty and is required to execute and deliver this Agreement; and

WHEREAS, each of ANNCO, ATDS, ATR and ACS is, directly or indirectly, a wholly owned Subsidiary of ATI and has and will materially benefit from the Revolving Loans made and to be made, and the Letters of Credit issued and to be issued, under the Credit Agreement; and

WHEREAS, the Parent, the Original Borrowers and the Agent have entered into that certain Third Amended and Restated Pledge and Security Agreement dated April 23, 2008

(as amended, the “Original Pledge and Security Agreement”), pursuant to which certain of the Grantors granted a security interest in certain personal property and assets as collateral security for the payment and performance of such Grantors’ obligations under the loan documents relating to and including the Original Credit Agreement; and

WHEREAS, as collateral security for payment and performance by each Grantor of its Obligations, each Grantor is willing to continue, amend and grant to the Lender, as the case may be, a security interest in certain of its personal property and assets pursuant to the terms of this Agreement.

NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders and each Letter of Credit Issuer to amend and restate the Original Credit Agreement and continue to, respectively, make Revolving Loans and issue Letters of Credit under the Credit Agreement, each Grantor hereby agrees with the Agent for its benefit, and for the benefit of the Lenders and each Letter of Credit Issuer, by acceptance hereof, as follows:

1.DEFINED TERMS. The following terms shall have the following respective meanings:

“Accounts” means all of each Grantor’s now owned or hereafter acquired or arising accounts, as defined in the UCC, including all Credit Card Accounts and any rights to payment for the sale or lease of goods or rendition of services, whether or not they have been earned by performance.

“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 10% 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 any Grantor unless it owns, directly or indirectly, at least 20% of such Securities of such Grantor.

“Chattel Paper” means all of each Grantor’s now owned or hereafter acquired chattel paper, as defined in the UCC, including electronic chattel paper.

“Deposit Accounts” means all “deposit accounts” as such term is defined in the UCC, now or hereafter held in the name of any Grantor.

“Documents” means all documents as such term is defined in the UCC, including bills of lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any Grantor.

“Equity Interests” means, with respect to any Person, all shares, interests, participations or other equivalent ownership interests (however, designated, whether voting or non-voting) of such Person’s capital, whether now outstanding or issued after the Effective Date.

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“Excluded Notes” means any promissory note with an original principal amount of less than $1,000,000 owing to any Grantor from a senior executive or key employee of such Grantor.

“General Intangibles” means all of each Grantor’s now owned or hereafter acquired general intangibles, choses in action and causes of action and all other intangible personal property of such Grantor of every kind and nature (other than Accounts), including, without limitation, all contract rights, payment intangibles, corporate or other business records, inventions, designs, blueprints, plans, specifications, trade secrets, goodwill, computer software, customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become due to such Grantor in connection with the termination of any employee benefit plan or any rights thereto and any other amounts payable to such Grantor from any employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, property, casualty or any similar type of insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on which such Grantor is beneficiary, rights to receive dividends, distributions, cash and other property in respect of or in exchange for pledged equity interests or Investment Property and any letter of credit, guarantee, claim, security interest or other security held by or granted to such Grantor, and including without limitation, all Credit Card Accounts constituting “general intangibles” as defined in the UCC.

“Instruments” means all instruments as such term is defined in the UCC, now owned or hereafter acquired by any Grantor, including, without limitation, all Pledged Notes constituting “instruments” as defined in the UCC.

“Inventory” means all of each Grantor’s now owned and hereafter acquired inventory, goods and merchandise, wherever located, to be furnished under any contract of service or held for sale or lease, all returned goods, raw materials, work-in-process, finished goods (including embedded software), other materials and supplies of any kind, nature or description which are used or consumed in such Grantor’s business or used in connection with the packing, shipping, advertising, selling or finishing of such goods, merchandise, and all documents of title or other Documents representing them.

“Investment Property” means all of each Grantor’s right title and interest in and to any and all: (a) securities whether certificated or uncertificated; (b) securities entitlements; (c) securities accounts; (d) commodity contracts; or (e) commodity accounts.

“Letter-of-Credit Rights” means “letter-of-credit rights” as such term is defined in the UCC, now owned or hereafter acquired by any Grantor, including rights to payment or performance under a letter of credit, whether or not such Grantor, as beneficiary, has demanded or is entitled to demand payment or performance.

“Pledged Collateral” is defined in Section 3(c) hereof.

“Pledged Notes” means all promissory notes of each Securities Issuer identified in Schedule III hereto opposite the name of any Grantor and all other promissory notes of any such Securities Issuer issued from time to time to such Grantor other than any Excluded Notes,

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as such promissory notes are amended, modified, supplemented, restated or otherwise modified from time to time and together with any promissory note of any Securities Issuer taken in extension or renewal thereof or substitution therefor.

“Securities Issuer” means any Person listed on Schedule III hereto that has issued or may issue a Pledged Note.

“Supporting Obligations” means all supporting obligations as such term is defined in the UCC.

“Trademark Inclusion Notice” is defined in Section 15 hereof.

“Trademarks” means all of each Grantor’s right, title and interest, whether now owned or hereafter acquired, in and to all United States and foreign trademarks, trade names, trade dress, service marks, trademark and service mark registrations, and applications for trademark or service mark registration and any renewals thereof (including without limitation each United States trademark, trade name, trade dress, registration and application identified on the schedules to the Trademark Inclusion Notice) and including all income, royalties, damages and payments now and hereafter due and/or payable with respect thereto (including without limitation damages for past or future infringements thereof), the right to sue or otherwise recover for all past, present and future infringements thereof, all rights corresponding thereto throughout the world (but only such rights as now exist or may come to exist under applicable local law) and all other rights of any kind whatsoever of each Grantor accruing thereunder or pertaining thereto, together in each case with the goodwill of the business connected with the use of, and symbolized by, each such trademark and service mark.

“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of New York or of any other state the laws of which are required as a result thereof to be applied in connection with the issue of perfection of security interests.

“Uniform Commercial Code jurisdiction” means any jurisdiction that has adopted “Revised Article 9” of the UCC on or after July 1, 2001.

All other capitalized terms used but not otherwise defined herein have the meanings given to them in the Credit Agreement or in Annex A thereto. All other undefined terms contained in this Agreement, unless the context indicates otherwise, have the meanings provided for by the UCC to the extent the same are used or defined therein.

2.GRANT OF LIEN.

(a)As security for all Obligations, each Grantor hereby pledges, assigns, charges, mortgages, delivers, transfers and grants to the Agent, for the benefit of the Agent and the Lenders, a continuing security interest in, lien on, assignment of and right of set‑off against, all of the following property and assets of such Grantor, whether now owned or existing or hereafter acquired or arising, regardless of where located:

(i)all Accounts;

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(ii)all Inventory;

(iii)all contract rights evidencing, or substituted for, or relating to Accounts, Inventory, Instruments or Investment Property described in clause (ix) below;

(iv)all Chattel Paper evidencing, or substituted for, or relating to Accounts, Inventory, Instruments or Investment Property described in clause (ix) below;

(v)all Documents evidencing, or substituted for, or relating to Accounts, Inventory, Instruments or Investment Property described in clause (ix) below;

(vi)all Instruments;

(vii)all Supporting Obligations and Letter-of-Credit Rights evidencing, or substituted for, or relating to Accounts, Inventory, Instruments or Investment Property described in clause (ix) below;

(viii)all General Intangibles (other than intellectual property) evidencing, or substituted for, or relating to Accounts, Inventory, Instruments or Investment Property described in clause (ix) below;

(ix)all Investment Property;

(x)all Trademarks to the extent a Trademark Inclusion Notice has been delivered to the Agent in accordance with Section 15 hereof;

(xi)all money, cash, cash equivalents, securities and other property of any kind of such Grantor held directly or indirectly by the Agent or any Lender;

(xii)all of such Grantor’s Deposit Accounts, including the Payment Account;

(xiii)all books, records and other property related to or referring to any of the foregoing, including books, records, account ledgers, data processing records, computer software and other property and General Intangibles at any time evidencing or relating to any of the foregoing;

(xiv)all accessions to, substitutions for and replacements, products and proceeds of any of the foregoing, including, but not limited to, proceeds of any insurance policies, claims against third parties, and condemnation or requisition payments with respect to all or any of the foregoing;

Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and no Grantor shall be deemed to have granted a security interest in (a) any lease, license, contract, property rights or agreement to which any Grantor is a party or any of its rights or interests thereunder, or any property or assets subject to any lease, license, contract or agreement if and for so long as the grant of such security interest shall constitute or result in (i) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (ii) in a breach or termination pursuant to the terms of, or a default under, any such lease license, contract

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property rights or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law (including the Bankruptcy Code) or principles of equity), provided however that such security interest shall attach immediately at such time as the condition causing such abandonment, invalidation or unenforceability shall be remedied and, to the extent severable, shall attach immediately to any portion of such lease, license, contract, property rights or agreement, or such property or assets subject to any lease, license, contract or agreement that does not result in any of the consequences specified in (i) or (ii), (b) any real property leasehold held by a Grantor, (c) any Excluded Notes, (d) motor vehicles covered by certificates of title, (e) any Equity Interests of a Subsidiary of any Grantor and (f) any shares of Parent’s capital stock owned by any Grantor or any Margin Stock owned by any Grantor, unless the Grantors in aggregate own at any time Margin Stock (other than shares of Parent’s capital stock) with an aggregate value over $1,000,000, in which case such Margin Stock (other than shares of Parent’s capital stock) shall be included as Collateral or disposed of for Cash Equivalents to be included as Collateral).

All of the foregoing and all other property of such Grantor in which the Agent or any Lender may at any time be granted a Lien as collateral for the Obligations, is herein collectively referred to as the “Collateral.”

(b)The Collateral of each Grantor secures (i) in the case of each Borrower, all Obligations of the Borrowers under the Loan Documents and (ii) in the case of the Parent, the Guaranteed Obligations under the Parent Guaranty. All of the Obligations shall be secured by all of the Collateral.

(c)This Section 2 continues, reaffirms and amends, as the case may be, those respective first priority pledge and security interests granted under the Original Pledge and Security Agreement.

3.PERFECTION AND PROTECTION OF SECURITY INTEREST.

(a)Each Grantor shall, at its expense, perform all steps requested by the Agent at any time to perfect, maintain, protect, and enforce the Agent’s Liens, including: (i)  executing and filing financing or continuation statements, and amendments thereof, in form and substance reasonably satisfactory to the Agent; (ii) delivering to the Agent warehouse receipts covering any portion of the Collateral located in warehouses and for which warehouse receipts are issued and certificates of title covering any portion of the collateral for which certificates of title have been issued; (iii) when an Event of Default has occurred and is continuing, transferring Inventory to warehouses or other locations designated by the Agent; (iv) placing notations on such Grantor’s books of account to disclose the Agent’s security interest; and (v) taking such other steps as are deemed necessary by the Agent to maintain and protect the Agent’s Liens. Each Grantor agrees that a carbon, photographic, photostatic, or other reproduction of this Agreement or of a financing statement is sufficient as a financing statement.

(b)If any Grantor at any time owns Collateral consisting of a negotiable Document with a value in excess of $1,000,000 or Chattel Paper with an aggregate value in _____

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excess of $1,000,000, such Grantor shall promptly notify Agent thereof and, upon request of the Agent, deliver such Collateral to the Agent.

(c)All notes and other instruments representing or evidencing the Pledged Notes and all other Instruments now owned or at any time hereafter acquired by any 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 10(c) 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 such 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 10 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 instruments representing or evidencing Pledged Collateral for instruments of smaller or larger denominations.

(d)If required by the terms of the Credit Agreement and not waived by Agent in writing (which waiver may be revoked), each Grantor shall obtain authenticated control agreements from each issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing or holding any financial assets or commodities to or for such Grantor.

(e)If any Grantor is or becomes the beneficiary of a letter of credit in an amount in excess of $1,000,000, such Grantor shall promptly notify Agent thereof and enter into a tri‑party agreement with Agent and the issuer and/or confirmation bank with respect to Letter-of-Credit Rights assigning such Letter-of-Credit Rights to Agent and directing all payments thereunder to the Payment Account, all in form and substance reasonably satisfactory to Agent.

(f)Each Grantor shall take all steps necessary to grant the Agent control of all electronic chattel paper in accordance with the Code and all “transferable records” as defined in the Uniform Electronic Transactions Act.

(g)Each Grantor hereby irrevocably authorizes the Agent at any time and from time to time to file in any filing office in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto that (a) indicate the Collateral (i) as all assets of such Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC of the State of New York or such jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain any other information required by part 5 of Article 9 of the UCC of the State of New York for the sufficiency or filing office acceptance of any financing statement or amendment, including whether such Grantor is an organization, the type of organization and any organization identification number issued to such Grantor. Each Grantor agrees to furnish any such information to the Agent promptly upon request. Each Grantor also ratifies its authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or amendments thereto if filed prior to the date hereof.

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(h)Each Grantor shall promptly deliver to Agent a copy of any complaint filed by it asserting any commercial tort claim (as defined in the UCC) in an amount in excess of $5,000,000 and unless otherwise consented by Agent, such Grantor shall enter into a supplement to this Agreement, granting to Agent a Lien in such commercial tort claim.

(i)From time to time, each Grantor shall, upon the Agent’s request, execute and deliver confirmatory written instruments pledging to the Agent, for the ratable benefit of the Agent and the Lenders, the Collateral, but such Grantor’s failure to do so shall not affect or limit any security interest or any other rights of the Agent or any Lender in and to the Collateral with respect to such Grantor. So long as the Credit Agreement is in effect and until all Obligations have been fully satisfied, the Agent’s Liens shall continue in full force and effect in all Collateral (whether or not deemed eligible for the purpose of calculating the Availability or as the basis for any advance, loan, extension of credit, or other financial accommodation).

(j)No Reincorporation. Without limiting the prohibitions on mergers involving any Grantor contained in the Credit Agreement or any other Loan Document, no Grantor shall reincorporate or reorganize itself under the laws of any jurisdiction other than the jurisdiction in which it is incorporated or organized as of the date hereof or change its type of entity as identified on Schedule II without the prior written consent of Agent.

(k)Terminations Amendments Not Authorized. Each Grantor acknowledges that it is not authorized to file any financing statement covering the Collateral or amendment or termination statement with respect to any financing statement covering the Collateral without the prior written consent of Agent and agrees that it will not do so without the prior written consent of Agent, subject to such Grantor’s rights under Section 9-509(d)(2).

(l)No Restriction on Payments to Agent. No Grantor shall enter into any Contract that restricts or prohibits the grant of a security interest in Accounts, Chattel Paper, Instruments or payment intangibles or the proceeds of the foregoing to Agent.

4.LOCATION OF COLLATERAL. (a) Each Grantor represents and warrants to the Agent and the Lenders that: Schedule I is a correct and complete list of the location of such Grantor’s chief executive office and the location of its books and records and (b) Schedule I correctly identifies any of such facilities and locations that are not owned by such Grantor. Each Grantor covenants and agrees that it will not (i) maintain any Collateral at any location other than those locations owned or leased by such Grantor or otherwise listed for such Grantor on Schedule I except for Collateral which is in transit from a supplier to a Grantor or to customers of a Grantor or between any such locations or (ii) change the location of its chief executive office or location of its books and records from the location identified in Schedule I, unless it gives the Agent at least thirty (30) days’ prior written notice thereof. Without limiting the foregoing, each Grantor represents that all of its Inventory (other than Inventory in transit from a supplier to a Grantor or to customers of a Grantor or between any such locations) is, and covenants that all of its Inventory will be, located either (a) on premises owned by such Grantor, (b) on premises leased by such Grantor, or (c) in a warehouse or with a bailee, provided that the Agent has received an executed bailee letter or collateral access agreement from the applicable Person in form and substance reasonably satisfactory to the Agent.

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5.JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each Grantor’s name as of the Effective Date as it appears in official filings in the state of its incorporation or other organization, the type of entity of such Grantor (including corporation, partnership, limited partnership or limited liability company), organizational identification number issued by such Grantor’s state of incorporation or organization or a statement that no such number has been issued and the jurisdiction in which such Grantor is incorporated or organized. Each Grantor has only one state of incorporation or organization.

6.TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor represents and warrants to the Agent and the Lenders and agrees with the Agent and the Lenders that: (a) such Grantor has rights in and the power to transfer all of the Collateral free and clear of all Liens whatsoever, except for Liens permitted by Section 7.10 of the Credit Agreement; (b) the Agent’s Liens in the Collateral will not be subject to any prior Lien except for those Liens identified in clause (a), (b), (c), (d) and (f) of the definition of Permitted Liens and permitted by clauses (b)(iii), (iv), (v), (vi), (vii) and (viii) of Section 7.10 of the Credit Agreement; and (c) such Grantor will use, store, and maintain the Collateral in accordance with customary business practices and will use such Collateral for lawful purposes only.

7.ACCOUNTS.

(a)Each Grantor hereby represents and warrants to the Agent and the Lenders, with respect to such Grantor’s Accounts that are to be included in the determination of Eligible Credit Card Accounts, that: (i) such Account arises from the sale of goods, is owned by such Grantor and represents a complete bona fide transaction which requires no further act on the part of such Grantor to make such Account payable by the Account Debtor; (ii) such Account and the underlying contract related thereto does not contravene in any material respect any laws, rules or regulations applicable thereto including, without limitation, rules and regulations relating to truth-in-lending, fair credit billing, fair credit reporting, equal credit opportunity, fair debt collection practices and privacy and no Grantor party to the underlying contract related thereto is in violation of any such laws, rules or regulations in any material respect; (iii) the goods, the sale of which gave rise to the Account, were not at the time of the sale subject to any Lien other than Liens permitted under Section 7.10(b) of the Credit Agreement; and (iv) no Grantor is in material breach of any express or implied material representations or warranty with respect to the goods, the sale of which gave rise to such Account nor in material breach of any material representation or warranty, covenant or other agreement contained in the Loan Documents with respect to such Account.

(b)No Grantor shall accept any note or other instrument (except a check or other instrument for the immediate payment of money) with respect to any Account without the Agent’s written consent. If the Agent consents to the acceptance of any such instrument, it shall be considered as evidence of the Account and not payment thereof and such Grantor will promptly deliver such instrument to the Agent, endorsed by such Grantor to the Agent in a manner satisfactory in form and substance to the Agent. Regardless of the form of presentment, demand, notice of protest with respect thereto, such Grantor shall remain liable thereon until such instrument is paid in full.

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(c)Each Grantor shall notify the Agent promptly of all disputes and claims in excess of $500,000 with any Account Debtor, and agrees to settle, contest, or adjust such dispute or claim at no expense to the Agent or any Lender. No discount, credit or allowance shall be granted to any such Account Debtor without the Agent’s prior written consent, except for discounts, credits and allowances made or given in the ordinary course of such Grantor’s business when no Event of Default exists hereunder. The Agent may at all times when an Event of Default exists hereunder, settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which the Agent or the Required Lenders, as applicable, shall consider advisable and, in all cases, the Agent will credit the Borrower’s Loan Account with the net amounts received by the Agent in payment of any Accounts in accordance with the provisions of the Credit Agreement.

8.INVENTORY; PERPETUAL INVENTORY.

(a)Each Grantor represents and warrants to the Agent and the Lenders and agrees with the Agent and the Lenders that all of the Inventory owned by such Grantor is and will be held for sale or lease, or to be furnished in connection with the rendition of services, in the ordinary course of such Grantor’s business, and is and will be fit for such purposes. Each Grantor will keep its Inventory in good and marketable condition, except for damaged or defective goods arising in the ordinary course of such Grantor’s business. No Grantor will, without the prior written consent of the Agent, acquire or accept any Inventory on consignment or approval. Each Grantor agrees that all Inventory produced by such Grantor in the United States of America will be produced in accordance with the Federal Fair Labor Standards Act of 1938, as amended, and all rules, regulations, and orders thereunder. Each Grantor will conduct a physical count of the Inventory at least once per Fiscal Year, and after and during the continuation of an Event of Default, at such other times as the Agent requests. Each Grantor will maintain a perpetual inventory reporting system at all times. No Grantor will, without the Agent’s written consent, sell any Inventory on a bill-and-hold, guaranteed sale, sale on approval, consignment, or other repurchase or return basis.

(b)If an Event of Default has occurred and is continuing or during any period that Liquidity is less than $37,500,000, in connection with all Inventory financed by Letters of Credit, each Grantor will, at the Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, Documents or Instruments in which the Agent holds a security interest to deliver them to the Agent and/or subject to the Agent’s order, and if they shall come into such Grantor’s possession, to deliver them, upon request, to the Agent in their original form and shall also, designate the Agent as the consignee on all bills of lading and other negotiable and non-negotiable documents.

9.[RESERVED].

10.PLEDGED COLLATERAL. (a) The Pledged Notes of any Grantor’s Subsidiaries (if any), and, to the best of each Grantor’s knowledge, all other Pledged Notes, have been duly authorized, issued and delivered, and is the legal, valid, binding and enforceable obligation of the issuers thereof.

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(b)The Pledged Notes 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.

(c)The pledge and delivery of the Pledged Collateral pursuant to this Agreement and all other filings and other actions taken by each Grantor to perfect such security interest prior to the date hereof, create a continuing, 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.

(d)So long as no Event of Default shall have occurred and be continuing:

(i)Each Grantor, and not the Agent, shall be entitled to receive and retain any and all principal and interest paid in respect of the Pledged Collateral provided, however, that any and all principal 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, shall forthwith be delivered to the Agent to hold as Pledged Collateral and shall, if received by any Grantor, be received in trust for the benefit of the Lenders and the Letter of Credit Issuers, be segregated from the other property or funds of such Grantor, and be forthwith delivered to the Agent, as Pledged Collateral in the same form as so received (with any necessary indorsement).

(ii)The Agent shall promptly execute and deliver (or cause to be executed and delivered) to each Grantor all such proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to paragraph (i) above and to receive the principal or interest payments which it is authorized to receive and retain pursuant to paragraph (ii) above.

(e)Upon the occurrence and during the continuance of an Event of Default and at the direction of the Required Lenders:

(i)All rights of any Grantor to receive the principal and interest payments which it would otherwise be authorized to receive and retain pursuant to Section 10(d)(ii) hereof shall cease, and all such rights shall thereupon become vested in the Agent, who shall thereupon have the sole right to receive and hold as Pledged Collateral such principal and interest payments which shall forthwith be delivered to the Agent to be applied to the Obligations in such order as provided in Section 7.25 (or, if applicable, Section 3.5) of the Credit Agreement .

(ii)All principal and interest payments which are received by any Grantor contrary to the provisions of paragraph (ii) of Section 10(d) hereof shall be ______

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received in trust for the benefit of the Lenders and the Letter of Credit Issuers and shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent as Pledged Collateral in the same form as so received (with any necessary indorsement).

(f)[Reserved].

(g)[Reserved].

(h)The Grantors hereby agree that the aggregate principal amount of all promissory notes described in clause (i) of the definition of Excluded Notes at any time outstanding shall not exceed $3,000,000.

11.DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and warrants to the Agent and the Lenders that (a) all Documents, Instruments, and Chattel Paper describing, evidencing, or constituting Collateral, and all signatures and endorsements thereon, are and will be complete, valid, and genuine, and (b) all goods evidenced by such Documents are and will be owned by such Grantor, free and clear of all Liens other than Liens permitted under Section 7.10(b) of the Credit Agreement.

12.RIGHT TO CURE. The Agent may, in its reasonable discretion, and shall, at the direction of the Required Lenders, pay any amount or do any act reasonably required of any Grantor hereunder or under any other Loan Document in order to preserve, protect, maintain or enforce the Obligations, the Collateral or the Agent’s Liens therein, and which such Grantor fails to pay or do, including payment of any judgment against such Grantor, any insurance premium, any warehouse charge, any finishing or processing charge, any landlord’s or bailee’s claim, and any other Lien upon or with respect to the Collateral. All payments that the Agent makes under this Section 12 and all out-of-pocket costs and expenses that the Agent pays or incurs in connection with any action taken by it hereunder shall be charged to the Borrower’s Loan Account as a Revolving Loan. Any payment made or other action taken by the Agent under this Section 12 shall be without prejudice to any right to assert an Event of Default hereunder and to proceed thereafter as herein provided.

13.POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the Agent’s designee as each Grantor’s attorney, with power: (a) to endorse such Grantor’s name on any checks, notes, acceptances, money orders, or other forms of payment or security that come into the Agent’s or any Lender’s possession; (b) to sign such Grantor’s name on any invoice, bill of lading, warehouse receipt or other negotiable or non-negotiable Document constituting Collateral, on drafts against customers, on assignments of Accounts, on notices of assignment, financing statements and other public records and to file any such financing statements by electronic means with or without a signature as authorized or required by applicable law or filing procedure; (c) so long as any Event of Default has occurred and is continuing to notify the post office authorities to change the address for delivery of such Grantor’s mail to an address designated by the Agent and to receive, open and dispose of all mail addressed to such Grantor; (d) to send requests for verification of Accounts to customers or Account Debtors; (e) upon the occurrence and during the continuance of an Event of Default, to complete in such Grantor’s name or the Agent’s name, any order, sale or transaction, obtain the ____________

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necessary Documents in connection therewith, and collect the proceeds thereof; (f) upon the occurrence and during the continuance of an Event of Default, to clear Inventory through customs in such Grantor’s name, the Agent’s name or the name of the Agent’s designee, and to sign and deliver to customs officials powers of attorney in such Grantor’s name for such purpose; (g) to the extent such Grantor’s authorization given in Section 3(g) hereof is not sufficient, to file such financing statements with respect to this Agreement, with or without such Grantor’s signature, or to file a photocopy of this Agreement in substitution for a financing statement, as the Agent may deem appropriate and to execute in such Grantor’s name such financing statements and amendments thereto and continuation statements which may require such Grantor’s signature; (h) to receive, indorse and collect all instruments made payable to such Grantor representing any interest payment or other distribution in respect of the Pledged Collateral or any part thereof and to give full discharge for the same; and (i) to do all things necessary to carry out the Credit Agreement and this Agreement. Each Grantor ratifies and approves all acts of such attorney. None of the Lenders or the Agent nor their attorneys will be liable for any acts or omissions or for any error of judgment or mistake of fact or law except for their gross negligence or willful misconduct. This power, being coupled with an interest, is irrevocable until the Credit Agreement has been terminated and the Obligations have been fully satisfied.

14.THE AGENT’S AND LENDERS’ RIGHTS, DUTIES AND LIABILITIES.

(a)Each Grantor assumes all responsibility and liability arising from or relating to the use, sale, license or other disposition of the Collateral. The Obligations shall not be affected by any failure of the Agent or any Lender to take any steps to perfect the Agent’s Liens or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release any Grantor from any of the Obligations. Following the occurrence and during the continuation of an Event of Default, the Agent may (but shall not be required to), and at the direction of the Required Lenders shall, without notice to or consent from any Grantor, sue upon or otherwise collect, extend the time for payment of, modify or amend the terms of, compromise or settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions, renewals, compositions, or releases, and take or omit to take any other action with respect to the Collateral, any security therefor, any agreement relating thereto, any insurance applicable thereto, or any Person liable directly or indirectly in connection with any of the foregoing, without discharging or otherwise affecting the liability of any Grantor for the Obligations or under the Credit Agreement or any other agreement now or hereafter existing between the Agent and/or any Lender and any Grantor.

(b)It is expressly agreed by each Grantor that, anything herein to the contrary notwithstanding, each Grantor shall remain liable under each of its contracts and each of its licenses to observe and perform all the conditions and obligations to be observed and performed by it thereunder. Neither Agent nor any Lender shall have any obligation or liability under any contract or license by reason of or arising out of this Agreement or the granting herein of a Lien thereon or the receipt by Agent or any Lender of any payment relating to any contract or license pursuant hereto. Neither Agent nor any Lender shall be required or obligated in any manner to perform or fulfill any of the obligations of any Grantor under or pursuant to any contract or license, or to make any payment, or to make any inquiry as to the nature or the sufficiency of any payment received by it or the sufficiency of any performance by any party under any contract

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or license, or to present or file any claims, or to take any action to collect or enforce any performance or the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times.

(c)Agent may at any time after an Event of Default has occurred and be continuing (or if any rights of set-off (other than set-offs against an Account arising under the contract giving rise to the same Account) or contra accounts may be asserted with respect to the following), without prior notice to any Grantor, notify Account Debtors, and other Persons obligated on the Collateral that Agent has a security interest therein, and that payments shall be made directly to Agent, for itself and the benefit of Lenders. Upon the request of Agent, each Grantor shall so notify Account Debtors and other Persons obligated on Collateral. Once any such notice has been given to any Account Debtor or other Person obligated on the Collateral, such Grantor shall not give any contrary instructions to such Account Debtor or other Person without Agent’s prior written consent.

(d)Agent may at any time in Agent’s own name or in the name of any Grantor communicate with Account Debtors, parties to Contracts and obligors in respect of Instruments to verify with such Persons, to Agent’s reasonable satisfaction, the existence, amount and terms of Accounts, payment intangibles, Instruments or Chattel Paper. If an Event of Default shall have occurred and be continuing, each Grantor, at its own expense, shall cause the independent certified public accountants then engaged by such Grantor to prepare and deliver to Agent and each Lender at any time and from time to time promptly upon Agent’s request the following reports with respect to such Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test verification of such Accounts as Agent may request. Each Grantor, at its own expense, shall deliver to Agent the results of each physical verification, if any, which such Grantor may in its discretion have made, or caused any other Person to have made on its behalf, of all or any portion of its Inventory.

15.TRADEMARK COLLATERAL.

(a)The Grantors may from time to time elect to include certain of their United States Trademarks as Collateral hereunder and in connection therewith shall deliver to the Agent a written notice in the form of Exhibit A hereto (the “Trademark Inclusion Notice”) identifying all Trademarks to be included as Collateral hereunder that are being pledged under Section 15(a) (the “Trademark Collateral”).

(b)Following delivery of the Trademark Inclusion Notice:

(i)Each Grantor agrees to take all action reasonably requested by the Agent (including, without limitation, the filing of a trademark security agreement with the United States Patent and Trademark Office) or otherwise necessary to create a valid and continuing Lien on and, upon the filing of appropriate financing statements, a perfected Lien in favor of the Agent on such Grantor’s Trademark Collateral.

(ii)Each Grantor shall thereafter notify Agent promptly if it knows that any application or registration relating to any Trademark Collateral may become abandoned or dedicated, or of any adverse determination or development (including the

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institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court) regarding such Grantor’s ownership of any such Trademark Collateral, its right to register the same, or to keep and maintain the same.

(iii)Each Grantor shall take all actions appropriate under the circumstances or reasonably requested by Agent to obtain the relevant registration and to maintain the registration of each of the Trademark Collateral, including the filing of applications for renewal, affidavits of use, affidavits of noncontestability and opposition and interference and cancellation proceedings, unless such Grantor shall determine in its reasonable business judgment that such Trademark Collateral is not material to the conduct of its business.

(iv)In the event that any of the Trademark Collateral is infringed upon, or misappropriated or diluted by a third party, such Grantor shall notify Agent promptly after such Grantor learns of such infringement. Each Grantor shall, unless it shall reasonably determine that such Trademark Collateral is not material to the conduct of its business or operations, promptly take appropriate action to protect such Trademark Collateral, including, where such Grantor believes in its reasonable business judgment that it would be prudent to do so, sue for infringement, misappropriation or dilution and to recover any and all damages for such infringement, misappropriation or dilution, and shall take such other actions as Agent shall reasonably request under the circumstances to protect such Trademark Collateral.

16.INDEMNIFICATION. In any suit, proceeding or action brought by Agent or any Lender relating to any Collateral for any sum owing with respect thereto or to enforce any rights or claims with respect thereto, the Grantors, jointly or severally, will save, indemnify and keep Agent and Lenders harmless from and against all expense (including reasonable attorneys’ fees and expenses), loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction of liability whatsoever of the Account Debtor or other Person obligated on the Collateral, arising out of a breach by any Grantor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to, or in favor of, such obligor or its successors from such Grantor, except in the case of Agent or any Lender, to the extent such expense, loss, or damage is attributable to the gross negligence or willful misconduct of Agent or such Lender as finally determined by a court of competent jurisdiction. All such obligations of the Grantors shall be and remain enforceable against and only against such Grantors and shall not be enforceable against Agent or any Lender.

17.LIMITATION ON LIENS ON COLLATERAL. No Grantor will create, permit or suffer to exist, and will defend the Collateral against, and take such other action as is necessary to remove, any Lien on the Collateral except Liens permitted by Section 7.10(b) of the Credit Agreement, and will defend the right, title and interest of Agent and Lenders in and to any of such Grantor’s rights under the Collateral against the claims and demands of all Persons whomsoever.

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18.NOTICE REGARDING COLLATERAL. Each Grantor will advise Agent promptly, in reasonable detail of any Lien (other than Liens permitted by Section 7.10(b) of the Credit Agreement) or claim made or asserted against any of the Collateral.

19.REMEDIES; RIGHTS UPON DEFAULT.

(a)In addition to all other rights and remedies granted to it under this Agreement, the Credit Agreement, the other Loan Documents and under any other instrument or agreement securing, evidencing or relating to any of the Obligations, if any Event of Default shall have occurred and be continuing, Agent may exercise all rights and remedies of a secured party under the UCC. Without limiting the generality of the foregoing, each Grantor expressly agrees that in any such event Agent, without demand of performance or other demand, advertisement or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon any Grantor or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may forthwith enter upon the premises of such Grantor where any Collateral is located through self-help, without judicial process, without first obtaining a final judgment or giving such Grantor or any other Person notice and opportunity for a hearing on Agent’s claim or action and may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part thereof, in one or more parcels at a public or private sale or sales, at any exchange at such prices as it may deem acceptable, for cash or on credit or for future delivery without assumption of any credit risk. Agent or any Lender shall have the right upon any such public sale or sales and, to the extent permitted by law, upon any such private sale or sales, to purchase for the benefit of Agent and Lenders, the whole or any part of said Collateral so sold, free of any right or equity of redemption, which equity of redemption such Grantor hereby releases. Such sales may be adjourned and continued from time to time with or without notice. Agent shall have the right to conduct such sales on any Grantor’s premises or elsewhere and shall have the right to use any Grantor’s premises without charge for such time or times as Agent deems necessary or advisable.

(b)Each Grantor further agrees, at Agent’s request, to assemble the Collateral and make it available to Agent at a place or places designated by Agent which are reasonably convenient to Agent and such Grantor, whether at such Grantor’s premises or elsewhere. Until Agent is able to effect a sale, lease, or other disposition of Collateral, Agent shall have the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate by Agent. Agent shall have no obligation to any Grantor to maintain or preserve the rights of such Grantor as against third parties with respect to Collateral while Collateral is in the possession of Agent. Agent may, if it so elects, seek the appointment of a receiver or keeper to take possession of Collateral and to enforce any of Agent’s remedies (for the benefit of Agent and Lenders), with respect to such appointment without prior notice or hearing as to such appointment. Agent shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization or sale to the Obligations as provided in the Credit Agreement, and only after so paying over such net proceeds, and after the payment by Agent of any other amount required by any provision of law, need Agent account for the surplus, if any, to such Grantor. To the maximum extent permitted

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by applicable law, each Grantor waives all claims, damages, and demands against Agent or any Lender arising out of the repossession, retention or sale of the Collateral except such as arise out of the gross negligence or willful misconduct of Agent or such Lender as finally determined by a court of competent jurisdiction. Each Grantor agrees that ten (10) days prior notice by Agent of the time and place of any public sale or of the time after which a private sale may take place is reasonable notification of such matters. Each Grantor shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all Obligations, including any attorneys’ fees or other expenses incurred by Agent or any Lender to collect such deficiency.

(c)Except as otherwise specifically provided herein, each Grantor hereby waives presentment, demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in connection with this Agreement or any Collateral.

(d)To the extent that applicable law imposes duties on the Agent to exercise remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it is commercially reasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (d) to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in the same business as such Grantor, for expressions of interest in acquiring all or any portion of such Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim disposition warranties, such as title, possession or quiet enjoyment, (k) to purchase insurance or credit enhancements to insure the Agent against risks of loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist the Agent in the collection or disposition of any of the Collateral. Each Grantor acknowledges that the purpose of this Section 19(d) is to provide non-exhaustive indications of what actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely on account of not being indicated in this Section 19(d). Without limitation upon the foregoing, nothing contained in this Section 19(d) shall be construed to grant any rights to any Grantor or to impose any duties on Agent that would not have been granted or imposed by this Agreement or by applicable law in the absence of this Section 19(d).

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20.GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose of enabling Agent to exercise rights and remedies under Section 19hereof  and the other Loan Documents (including taking possession of, holding, processing, completing or assembling, preparing for sale, marketing, selling or otherwise disposing of Collateral) at such time and for so long as Agent shall be lawfully entitled to exercise such rights and remedies after an Event of Default, each Grantor hereby grants to Agent, wherever permitted by law or by agreement, for the benefit of Agent and Lenders, a nonexclusive license (exercisable without payment of royalty or other compensation to such Grantor) to use, license or sublicense any intellectual property now owned or licensed  or hereafter acquired or licensed by such Grantor, and wherever the same may be located, and including in such license access to all media embodying such licensed property or in which any of the licensed property may be recorded or stored and to all computer software and programs used for the compilation or printout thereof.

21.LIMITATION ON AGENT’S AND LENDERS’ DUTY IN RESPECT OF COLLATERAL. Agent and each Lender shall use reasonable care with respect to the Collateral in its possession or under its control. Neither Agent nor any Lender shall have any other duty as to any Collateral in its possession or control or in the possession or control of any agent or nominee of Agent or such Lender, or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

22.MISCELLANEOUS.

(a)Reinstatement. This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or reorganization, should such Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of such Grantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

(b)Notices. Except as otherwise provided herein, whenever it is provided herein that any notice, demand, request, consent, approval, declaration or other communication shall or may be given to or served upon any of the parties by any other party, or whenever any of the parties desires to give and serve upon any other party any communication with respect to this Agreement, each such notice, demand, request, consent, approval, declaration or other communication shall be in writing and shall be given in the manner, and deemed received, as provided for in the Credit Agreement.

(c)Severability. Whenever possible, each provision of this Agreement shall be interpreted in 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, to the maximum extent permitted by applicable law, be ineffective to the extent of such prohibition

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or invalidity without invalidating the remainder of such provision or the remaining provisions of this Agreement. This Agreement is to be read, construed and applied together with the Credit Agreement and the other Loan Documents which, taken together, set forth the complete understanding and agreement of Agent, Lenders and Grantor with respect to the matters referred to herein and therein.

(d)No Waiver; Cumulative Remedies. Neither Agent nor any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder, and no waiver shall be valid unless in writing, signed by Agent and then only to the extent therein set forth. A waiver by Agent of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Agent would otherwise have had on any future occasion. No failure to exercise nor any delay in exercising on the part of Agent or any Lender, any right, power or privilege hereunder, shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege hereunder preclude any other or future exercise thereof or the exercise of any other right, power or privilege. The rights and remedies hereunder provided are cumulative and may be exercised singly or concurrently, and are not exclusive of any rights and remedies provided by law. None of the terms or provisions of this Agreement may be waived, altered, modified or amended except by an instrument in writing, duly executed by Agent and each Grantor.

(e)Limitation by Law. All rights, remedies and powers provided in this Agreement may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law, and all the provisions of this Agreement are intended to be subject to all applicable mandatory provisions of law that may be controlling and to be limited to the extent necessary so that they shall not render this Agreement invalid, unenforceable, in whole or in part, or not entitled to be recorded, registered or filed under the provisions of any applicable law.

(f)Termination of this Security Agreement.

(a) Subject to Section 22(a)hereof, this Agreement shall terminate upon all Letters of Credit being Fully Supported, the payment in full of all other Obligations (other than indemnification Obligations as to which no claim has been asserted) and the termination of all Commitments under the Credit Agreement.

(b)    Upon any sale or other transfer by a Grantor of any Collateral that is permitted under the Credit Agreement to any Person that is not a Grantor, or, upon the effectiveness of any written consent to the release of the security interest granted hereby in any Collateral pursuant to the Credit Agreement, the security interest in such Collateral shall automatically be released.

(c)    The Agent agrees that upon such termination or release of the security interests or release of any Collateral, the Agent shall, at the expense of the Grantors, execute and deliver to each Grantor such documents as such Grantor shall reasonably request to evidence the termination of the security interests or the release and reassignment of such Collateral, as the case may be.

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(g)Successors and Assigns. This Agreement and all obligations of each Grantor hereunder shall be binding upon the successors and assigns of each Grantor (including any debtor-in-possession on behalf of such Grantor) and shall, together with the rights and remedies of Agent, for the benefit of Agent and Lenders, hereunder, inure to the benefit of Agent and Lenders, all future holders of any instrument evidencing any of the Obligations and their respective successors and assigns. No sales of participations, other sales, assignments, transfers or other dispositions of any agreement governing or instrument evidencing the Obligations or any portion thereof or interest therein shall in any manner affect the Lien granted to Agent, for the benefit of Agent and Lenders, hereunder. No Grantor may assign, sell, hypothecate or otherwise transfer any interest in or obligation under this Agreement.

(h)Counterparts. This Agreement may be authenticated in any number of separate counterparts, each of which shall collectively and separately constitute one and the same agreement. This Agreement may be authenticated by manual signature, facsimile or, if approved in writing by Agent, electronic means, all of which shall be equally valid.

(i)Governing Law. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS AGREEMENT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE, AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. GRANTOR HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, CITY OF NEW YORK, SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN ANY GRANTOR, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, PROVIDED, THAT AGENT, LENDERS AND EACH GRANTOR ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK COUNTY, CITY OF NEW YORK, AND, PROVIDED, FURTHER, NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH GRANTOR EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND EACH GRANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUMNONCONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS, COMPLAINTS AND OTHER PROCESS MAY BE MADE

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BY REGISTERED OR CERTIFIED MAIL ADDRESSED TO SUCH GRANTOR AT THE ADDRESS SET FORTH IN SECTION 14.8 OF THE CREDIT AGREEMENT AND THAT SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER POSTAGE PREPAID.

(j)Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT DISPUTES ARISING HEREUNDER OR RELATING HERETO BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, AMONG AGENT, LENDERS, AND ANY GRANTOR ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS RELATED HERETO OR THERETO.

(k)Section Titles. The Section titles contained in this Agreement are and shall be without substantive meaning or content of any kind whatsoever and are not a part of the agreement between the parties hereto.

(l)No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

(m)Advice of Counsel. Each of the parties represents to each other party hereto that it has discussed this Agreement and, specifically, the provisions of Section 22(i)and Section 22(j), with its counsel.

(n)Benefit of Lenders. All Liens granted or contemplated hereby shall be for the benefit of Agent and Lenders, and all proceeds or payments realized from Collateral in accordance herewith shall be applied to the Obligations in accordance with the terms of the Credit Agreement.

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and delivered by its duly authorized officer as of the date first set forth above.

ANNTAYLOR, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title: Executive Vice President, Chief Financial Officer and Treasurer

ANN INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title: Executive Vice President, Chief Financial Officer and Treasurer

ANNCO, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title: Executive Vice President, Chief Financial Officer and Treasurer

ANNTAYLOR DISTRIBUTION SERVICES, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title: Executive Vice President, Chief Financial Officer and Treasurer

ANNTAYLOR RETAIL, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title: Executive Vice President, Chief Financial Officer and Treasurer

Signature Page

Fourth Amended and Restated Pledge and Security Agreement

ANN CARD SERVICES, INC.

By: /s/ Michael J. Nicholson    

Name:    Michael J. Nicholson

Title: Executive Vice President, Chief Financial Officer and Treasurer

Signature Page

Fourth Amended and Restated Pledge and Security Agreement

BANK OF AMERICA, N.A.,

as Agent

By: /s/ Matthew Potter    

Name: Matthew Potter

Title: Vice President

Signature Page

Fourth Amended and Restated Pledge and Security Agreement

SCHEDULE I

to

SECURITY AGREEMENT

LOCATION OF COLLATERAL

A.    Location of Chief Executive Office

B.    Location of Books and Records

C.    Location of Collateral

D.    Location of all other places of business

SCHEDULE II

to

SECURITY AGREEMENT

JURISDICTION OF ORGANIZATION

A. Each Grantor’s official name:

B. Type of entity (i.e. corporation, partnership, limited partnership, limited liability company)

C. Organizational identification number issued by each Grantor’s state of incorporation or organization or a statement that no such number has been issued.

D. State of Incorporation or Organization.

SCHEDULE III

Pledged Notes

Grantor Securities Issuer (Jurisdiction of Organization Date Original Principal Amount

EXHIBIT A

Form of Trademark Inclusion Notice

Date: __________, 20__

To: Bank of America, N.A., as Agent

Ladies and Gentlemen:

ANNTAYLOR, INC., a Delaware corporation (“ATI”), ANNCO, INC., a Delaware corporation (“ANNCO”), ANNTAYLOR DISTRIBUTION SERVICES, INC., a Delaware corporation (“AT Distribution”), ANNTAYLOR RETAIL, INC., a Florida corporation (“AT Retail”), ANN CARD SERVICES, INC., a Florida corporation (“ACS”), and ANN CANADA INC., a Canadian corporation (“Ann Canada”; ATI, ANNCO, AT Distribution, AT Retail, ACS and Ann Canada may be referred to individually herein as a “Borrower” or collectively as the “Borrowers”), the financial institutions parties thereto, BANK OF AMERICA, N.A., as Administrative Agent and Collateral Agent for the Lenders (in such capacities, the “Agent”), JPMORGAN CHASE BANK, N.A., as Syndication Agent and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Documentation Agent, are parties to that certain Fourth Amended and Restated Credit Agreement dated as of December 19, 2012 (as amended, modified, supplemented, extended or restated from time to time, the “Credit Agreement”).

In connection with the Credit Agreement, the Agent, Parent and the Borrowers (other than Ann Canada) (collectively, the “Grantors”) are parties to that certain Fourth Amended and Restated Pledge and Security Agreement, dated as of December 19,2012 (as amended, restated, extended, supplemented or otherwise modified in writing from time to time, the “Security Agreement”).

Capitalized terms used herein and not otherwise defined herein shall have the meaning given such terms in the Credit Agreement or Security Agreement, as applicable.

This Trademark Inclusion Notice is given in connection with Section 15 of the Security Agreement and the undersigned Grantors hereby:

1.    Pledge and grant to Agent for the benefit of the Secured Parties a lien on and security interest in and to all of its right, title and interest in, to and under all of the United States trademarks, service marks, trademark and service mark registrations, and applications for trademark or service mark registration and any renewals thereof listed on Schedule 1 attached hereto, including all income, royalties, damages and payments now and hereafter due and/or payable with respect thereto (including without limitation damages for past or future infringements thereof), the right to sue or otherwise recover for all past, present and future infringements thereof, and all other rights of any kind whatsoever of each Grantor accruing thereunder or pertaining thereto, and all proceeds thereof, together in each case with the goodwill of the business connected with the use of, and symbolized by, each such trademark and service mark (the “Pledged Trademarks”), which such security interest shall secure the Obligations.

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2.    Give notice that effective as of the date hereof, all Pledged Trademarks shall constitute “Collateral” under the Security Agreement.

ANNTAYLOR, INC.

By:

Name:    ______________________________

Title: _______________________________

ANN INC.

By:

Name:    ______________________________

Title: _______________________________

ANNCO, INC.

By:

Name:    ______________________________

Title: _______________________________

ANNTAYLOR DISTRIBUTION SERVICES, INC.

By:

Name:    ______________________________

Title: _______________________________

ANNTAYLOR RETAIL, INC.

By:

Name:    ______________________________

Title: _______________________________

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ANN CARD SERVICES, INC.

By:

Name:    ______________________________

Title: _______________________________

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SCHEDULE 1

to

TRADEMARK INCLUSION NOTICE

TRADEMARK REGISTRATIONS AND TRADEMARK APPLICATIONS

United States Trademark Registrations:

Grantor Trademark Registration Number Registration Date

United States Trademark Applications:

Grantor Trademark Application Number Application Date

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EX-10.3

Exhibit 10.3

FOURTH AMENDED AND RESTATED PARENT GUARANTY

THIS FOURTH AMENDED AND RESTATED PARENT GUARANTY (as such agreement may be amended, supplemented, modified or amended and restated from time to time, this “Guaranty”) dated as of December 19, 2012 is made by ANN INC., a Delaware corporation, with its principal place of business at 7 Times Square, New York, New York 10036 (the “Guarantor”), in favor of BANK OF AMERICA, N.A., in its capacity as Administrative Agent for each of the Lenders now or hereafter party to the Credit Agreement (as defined below) (the “Agent”). Capitalized terms used but not defined herein have the meanings ascribed thereto in the Credit Agreement (as defined below).

R E C I T A L S:

WHEREAS, ANNTAYLOR, INC., a Delaware corporation (“ATI”), ANNCO, INC., a Delaware corporation (“ANNCO”), ANNTAYLOR DISTRIBUTION SERVICES, INC., a Delaware corporation (“ATDS”), ANNTAYLOR RETAIL, INC., a Florida corporation (“ATR” and, together with ATI, ANNCO and ATDS, the “Original Borrowers”), the Agent, the lenders referred to therein, the syndication agents named therein and the issuing banks named therein have entered into that certain $250,000,000 Third Amended and Restated Credit Agreement dated April 23, 2008 (as amended, the “Original Credit Agreement”); and

WHEREAS, at the request of the Original Borrowers, ANN CARD SERVICES, INC., a Florida corporation (“ACS”), and ANN CANADA INC., a Canadian corporation (the “Canadian Borrower” and, together with the Original Borrowers and ACS, the “Borrowers” and each, individually, a “Borrower”), the Lenders, the Agent, and the syndication agents party thereto, have agreed to amend and restate the Original Credit Agreement in its entirety as of the date hereof (as so amended and restated and as such agreement may be further amended, supplemented, modified, or amended and restated from time to time, the “Credit Agreement”); and

WHEREAS, the Guarantor is the parent of the Borrowers and has and will materially benefit from the Revolving Loans made and to be made, and the Letters of Credit issued and to be issued, under the Credit Agreement; and

WHEREAS, the Guarantor and the Agent have entered into that certain Third Amended and Restated Parent Guaranty dated April 23, 2008 (as amended, the “Original Guaranty”) pursuant to which the Guarantor has guaranteed the full and prompt payment and performance of the Borrowers’ Obligations under the Original Credit Agreement.

NOW, THEREFORE, in consideration of the above premises and in order to induce the Lenders and each Letter of Credit Issuer to amend and restate the Original Credit Agreement and continue to, respectively, make Revolving Loans and issue Letters of Credit under the Credit Agreement, the Guarantor hereby agrees, and the Agent for its benefit, and for the benefit of the Lenders and the Letter of Credit Issuers, by acceptance hereof, hereby agrees as follows:

1.Guaranty.

(a)The Guarantor hereby unconditionally, continually and irrevocably guarantees to the Agent, for its benefit and the benefit of the Lenders and the Letter of Credit Issuers, 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 and all other Loan Documents, 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 Borrowers, 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”). For purposes of this Guaranty, any Affiliate of any Lender, which is a party to a Hedge Agreement or Foreign Currency Exchange Contract with any Borrower or any of its respective Restricted Subsidiaries, shall be deemed to be a “Lender”. This Section 1 continues, reaffirms and amends, as the case may be, the guarantees under the Original Guaranty.

(b)The Guarantor further agrees that, if any payment made by any 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 any of the Lenders or any of the Letter of Credit Issuers to any 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 promptly upon written demand by the Agent including, without limitation, all court costs and reasonable attorneys’ fees and expenses paid or incurred by the Agent in enforcing this Guaranty.

2.Payment.    The Guarantor agrees that if any Borrower shall default in the payment or performance of any of the Guaranteed Obligations, whether with respect to principal, interest, premium, fee (including, but not limited to, loan fees and attorneys’ fees and expenses), or otherwise, when and as the same shall become due, and after expiration of any applicable grace period, whether according to the terms of the Credit Agreement, by acceleration, or otherwise, or upon the occurrence and during the continuance of any Event of Default under the Credit Agreement, then the Guarantor will, upon demand thereof by the Agent, fully pay to the Agent, for the benefit of the Lenders and the Letter of Credit Issuers, an amount equal to all the Guaranteed Obligations then due and owing.

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3.Representations and Warranties.

The Guarantor hereby represents and warrants to the Agent that each representation and warranty made by Borrowers in Article 6 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 Revolving Loan, and on the date of issuance of each Letter of Credit.

4.Waivers; Other Agreements.

(a)Subject to the terms hereof and of the other Loan Documents, 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, restate 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 any 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 any 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 any 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;

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(vii)add, release or substitute any one or more other guarantors, makers or endorsers of the Guaranteed Obligations and otherwise enforce its rights under the Loan Agreements against any 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 Section 3.5 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 this Guaranty is a continuing, unconditional guaranty of payment and not of collection and 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;

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(iv)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;

(v)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;

(vi)any use of cash collateral under Section 363 of the Bankruptcy Code;

(vii)any agreement or stipulation as to the provision of adequate protection in any bankruptcy proceeding;

(viii)the avoidance of any lien in favor of the Agent for any reason;

(ix)any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation or dissolution proceeding commenced by or against any 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;

(x)failure by the Agent to file or enforce a claim against the Borrower or its estate in any bankruptcy or insolvency case or proceeding;

(xi)any action taken by the Agent that is authorized by this Guaranty; or

(xii)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 any 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 any 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 any 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;

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(v)any defense arising by reason of (a) any disability or other defense of any Borrower, (b) the cessation from any cause whatsoever of the liability of any 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 any 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 Borrowers, 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)The Guarantor hereby agrees that (i) until such time as the Guaranteed Obligations have been paid in full, the commitments of the Lenders to extend credit under the Credit Agreement have been terminated, no Letters of Credit exist that have not been Fully Supported, and the Credit Agreement has been terminated and is of no further force or effect (the “Satisfaction Date”) and (ii) during any period that the Guaranteed Obligations may arise or be reinstated after the Satisfaction Date whether pursuant Section 4(h) below or otherwise, the Guarantor agrees that it shall not exercise any claim or other rights which it may now or hereafter acquire against any Borrower that arises from the existence, payment, performance or enforcement of the Guarantor’s obligations or liabilities under this Guaranty, including any right of subrogation, reimbursement, exoneration or indemnification, any right to participate in any claim or remedy against any Borrower or any collateral which the Agent or any Lender now has or hereafter acquires an interest, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including the right to take or receive from any Borrower, directly or indirectly, in cash or other property or by setoff or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to the Guarantor in violation of the preceding sentence, such amount shall be deemed to have been paid for the benefit of the Agent and the Lenders, and shall forthwith be paid to the Agent to be credited and applied to the Guaranteed Obligations, whether matured or unmatured, as the Agent may determine.

(f)The Guarantor hereby agrees that any indebtedness of any 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 Satisfaction Date shall have occurred, except that payments of principal and interest on the ____

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Subordinated Debt shall be permitted so long as no Event of Default shall have occurred and be continuing to the extent such payments would not render such 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 applicable 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 applicable 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, until the Guaranteed Obligations have been paid in full, 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 such Borrower.

(g)The Guarantor shall comply with all covenants stated to be applicable to it under the Credit Agreement. The Guarantor shall also cause each Borrower to comply with all covenants applicable to such Borrower under the Credit Agreement.

(h)The Guarantor agrees that, if any payment made by any 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 any Collateral are required to be returned by the Agent, any of the Lenders and any Letter of Credit Issuer to any Borrower or the Guarantor, its estate, trustee, receiver or any other party, including, without limitation, any 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 under this Guaranty (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 any Guarantor’s liability under this Guaranty 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 under this Guaranty in ___

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respect of the amount of such payment (or any lien, security interest or other collateral securing such obligation).

5.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, the Agent may, at its sole election, proceed directly and at once against the Guarantor to collect and recover the full amount or any portion of the Guaranteed Obligations, without first proceeding against any Borrower or any other guarantor of the Guaranteed Obligations, or against any Collateral for the Guaranteed Obligations under the Loan 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 any 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 Letter of Credit Issuers.

(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 any 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 Security Instruments 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 ____

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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 Security Instruments. 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 Security Agreement or any of the other Loan Documents.

6.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 Lenders and the Letter of Credit Issuers; all references herein to the Borrowers and to the Guarantor shall be deemed to include their successors and assigns, heirs and legal representatives as applicable. Each Borrower’s successors and assigns shall include a receiver, trustee or debtor-in-possession of or for such 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 any 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 any 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 Borrowers or the Guarantor, or any 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 Borrowers 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 ______

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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, to the maximum extent permitted by applicable law, 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)ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS GUARANTY OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF PARTY HERETO IRREVOCABLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW ANY OBJECTION, INCLUDING ANY OBJECTION TO 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 ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST THE GUARANTOR OR ITS PROPERTY IN THE COURTS OR ANY OTHER JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.

(f)EACH PARTY HERETO HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO SUCH PARTY AT ITS ADDRESS SPECIFIED ON THE FIRST PAGE HEREOF OR SET FORTH IN SECTION 14.8 OF THE CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.

(g)WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. ________________

10

EACH PARTY HERETO AGREES THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.

(h)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.

(i)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.

(j)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.

(k)Captions are for convenience only and shall not affect the meaning of any term or provision of this Guaranty.

(l)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.

[Signature page follows.]

IN WITNESS WHEREOF, undersigned have made this Guaranty as of the date first above written.

ANN INC., as Guarantor

By: /s/ Michael J. Nicholson            

Name:    Michael J. Nicholson

Title:    Executive Vice President, Chief Financial Officer and Treasurer

Agreed and accepted to as of

the date first above written:

BANK OF AMERICA, N.A.,

as Agent

By: _____________________________

Name: Matthew Potter

Title:    Vice President

IN WITNESS WHEREOF, undersigned have made this Guaranty as of the date first above written.

ANN INC., as Guarantor

By:_____________________________

Name:    

Title:    

Agreed and accepted to as of

the date first above written:

BANK OF AMERICA, N.A.,

as Agent

By: /s/ Matthew Potter            

Name: Matthew Potter

Title:    Vice President

11

EX-10.14.1

Exhibit 10.14.1

AMENDMENT TO SPECIAL SEVERANCE PLAN

The AnnTaylor Stores Corporation Special Severance Plan (the “ASSP”) is hereby amended as set forth below:

(i)    The following sentence shall be added to the end of Section 2.1(b):

“Payments will begin on the first scheduled payroll date following the fifty-third (53^rd) day following the employee's separation date, provided that the employee has executed and not revoked a release of claims.”

(ii)    Section 2.4 of the ASSP is amended to read in its entirety as follows:

“2.4 No Employee shall be eligible to receive Severance Benefits under Section 2.1 or 2.2 above, unless, within forty-five (45) days following such Employee's Severance Date, he or she first executes a Release (substantially in the form of Exhibit A hereto) in favor of the Company and others set forth on said Exhibit A, relating to all claims or liabilities of any kind relating to his or her employment with the Company or a subsidiary thereof and the termination of the Employee's employment. When an employee executes a release in accordance with the requirements of the prior sentence, and does not revoke it within seven (7) days, the release will become effective on the eighth (8th) day following the employee's execution of such release.”

Except as set forth above, the ASSP is hereby ratified and affirmed in all respects.

http://at-share.anntaylor.com/sites/atfile/Form 10K/FY2012/Exhibit Index/Amendment to Special Severance Plan.doc

EX-10.27

Exhibit 10.27

COMPENSATION ARRANGEMENTS FOR NON-EMPLOYEE DIRECTORS

Director Cash Fees

Each Non-Employee Director is paid an annual retainer of $55,000, payable quarterly in advance (February 1^st, May 1^st, August 1^st and November 1^st).

In addition, each Audit Committee member will receive a yearly retainer of $15,000, and each Compensation Committee and Nominating and Corporate Governance Committee member will receive a yearly retainer of $10,000. All such retainers are payable quarterly in advance (February 1st, May 1^st, August 1^st and November 1^st).

The Chair of the Audit Committee receives an annual fee of $30,000, and the Chairs of the Nominating and Corporate Governance Committee and the Compensation Committee each receive an annual fee of $20,000.

Grant of Restricted Shares of Common Stock

Each Non-Employee Director receives an annual grant in connection with the Annual Meeting of Stockholders of restricted shares of ANN INC. (the “Company”) Common Stock (“Common Stock”) valued at $115,000 on the “grant date” (determined in accordance with the Policy on Grant of Equity Awards).

If a Non-Employee Director joins the Board of Directors after the Annual Meeting of Stockholders, the Director shall receive a pro-rated amount of the annual grant of restricted stock, based on the portion of the year the Director served and according to the following schedule:

• if a Non-Employee Director is appointed to the Board within 90 days after the Annual Meeting of Stockholders, the Director shall receive a grant of restricted stock valued at $115,000 on the “grant date” (determined in accordance with the Policy on Grant of Equity Awards);

• if a Non-Employee Director is appointed to the Board within between 91 days and 270 days after the Annual Meeting of Stockholders, the Director shall receive a grant of restricted stock valued at $57,500 on the “grant date” (determined in accordance with the Policy on Grant of Equity Awards); and

• if a Non-Employee Director is appointed to the Board 271 or more days after the Annual Meeting of Stockholders, the Director shall not receive any grant of restricted stock prior to the date of the Annual Meeting of Stockholders.

The number of shares granted to each such Director is determined by using the “fair market value” of the Common Stock on the grant date. The “fair market value” is the closing price of the Common Stock on the preceding business day. The restricted shares of Common Stock vest on the date of the next Annual Meeting of Stockholders. If a Director

Exhibit 10.27

ceases to be a Director for any reason prior to the date of the next Annual Meeting of Stockholders, the unvested restricted shares will be forfeited.

Non-Executive Chairman Fees

The Non-Executive Chairman of the Board receives an annual retainer of $125,000, comprised of $60,000 in cash and a grant of restricted shares of Common Stock valued at $65,000 on the “grant date”. The number of shares granted to the Non-Executive Chairman is determined by the same method as the annual grant to Non-Employee Directors. The restricted shares of Common Stock vest on the date of the next annual meeting of the Board of Directors. If the Non-Executive Chairman ceases to be the Non-Executive Chairman for any reason prior to the date of the next annual meeting of the Board of Directors, the unvested restricted shares will be forfeited.

Travel Expense Reimbursements and Other Benefits

Directors are entitled to reimbursement of their reasonable travel expenses for attending Board of Directors and Board Committee meetings.  Travel arrangements should be made by calling Ultramar Travel Management International, ANN INC.’s third party travel agency services provider, at 1-866-856-0441.  Directors should identify themselves as members of the Board of Directors when speaking to the Ultramar agent. The Corporate Secretary’s Office will arrange for reimbursement upon receiving receipts for any related out-of-pocket expenses.

Non-Employee Directors are also eligible to receive discounts on their purchases of the Company’s products under the same terms and conditions available to Company associates.

EX-10.31

Exhibit 10.31

CONFIDENTIALITY, NON-SOLICITATION OF ASSOCIATES AND NON-COMPETITION AGREEMENT

As an associate of Ann Taylor, Inc. (the “Company”), you will have access to or may develop trade secrets, intellectual property, and other confidential and proprietary information of the Company.     Therefore, in consideration of your employment and the payments described in Paragraph 2 below, benefits that you will not be eligible for if you do not sign this Agreement, and in recognition of the highly competitive nature of the Company’s business, you agree as follows:

1. Protection of Confidential Information.

(a) You acknowledge that your employment by the Company involves your obtaining knowledge of Confidential Information (as defined below) regarding the business and affairs of the Company.

(b) Accordingly, you agree that:

(i) except in compliance with legal process, you will keep secret all Confidential Information and other confidential matters of the Company which are not otherwise in the public domain and will not disclose them to anyone outside of the Company, wherever located (other than to a person to whom disclosure is reasonably necessary or appropriate in connection with the performance of your duties as an employee of the Company), either during or after your employment, except with the prior written consent of the Chief Executive Officer or the General Counsel of the Company. In the event that you are required to disclose any Confidential Information or other confidential matters of the Company to comply with legal process, you shall provide reasonable advance notice of such legal process to the General Counsel of the Company prior to disclosure of any Confidential Information or confidential matters and will not challenge the Company’s standing or ability to seek an order of protection or otherwise seek to prevent or limit disclosure pursuant to such legal process consistent with applicable law;

(ii) you will deliver promptly to the Company on termination of your employment or at any other time the Company may so request, all memoranda, notes, records, customer lists, reports and other documents (whether in paper or electronic form and all copies thereof) relating to the business of the Company and all other Company property which you obtained or developed while employed by, or otherwise serving or acting on behalf of, the Company and which you may then possess or have under your control, whether directly or indirectly; and

(iii) you will not use Confidential Information for your personal benefit or for the benefit of another person or entity.

(c) For purposes of this Agreement, “Confidential Information” refers to information of the Company (including its affiliated companies) or its suppliers, technology service providers, licensors, clients, and employees, including without limitation information relating to designs, products, processes, formulas, merchandising, real estate strategy, contract terms, client lists, sourcing information and strategies, technology, marketing plans, advertising, corporate assessments and strategic plans, financial and statistical information, accounting information, pricing and business affairs, associate compensation and relative skills and abilities, which have been or are disclosed or available to you and which are either designated at the time of disclosure as confidential or which you know or have reason to know are confidential, regardless of the form or media in which such information is disclosed.

Exhibit 10.31

2. Non-solicitation of Associates; Non-competition.

(a) During your employment and for a period of 12 months after your separation from the Company for any reason whatsoever, whether voluntary or involuntary (the “Non-Solicitation Period”), you shall not directly or indirectly, (1) solicit, induce, or attempt to influence any associate at the director level or above to leave his or her employment with the Company or (2) hire or attempt to hire any associate of the Company at the director level or above, directly or indirectly through a new employer or other person or entity, to join you in the pursuit of any business activity (whether or not such activity involves engaging or participating in a business that competes, or plans to compete, with the Company or any of its products). Should you violate this provision, in addition to the other remedies the Company may pursue hereunder, the Non-Solicitation Period will be extended by the number of months you were in violation of this Paragraph 2(a) and you shall have no further rights under Paragraphs 2(c), 2(d) and 2(e).

(b) During your employment and for a period of 12 months after your separation from the Company for any reason whatsoever, whether voluntary or involuntary (the “Non-Competition Period”), you shall not, directly or indirectly, without the prior written consent of the Company, work for, be employed, affiliated, engaged or associated with or contribute to the efforts (as an employee, owner, stockholder, partner, director, officer, consultant or otherwise) of a business that is, or plans to be, a Competitor (as defined herein) of the Company at the time of termination. As used herein, “Competitor” means a business or other entity engaged in the manufacture, design and/or sale of women’s apparel in the United States. Should you violate this provision, in addition to the other remedies the Company may pursue hereunder, the Non-Competition Period will be extended by the number of months you were in violation of this Paragraph 2(b) and you shall have no further rights under Paragraphs 2(c), 2(d) and 2(e). Notwithstanding the foregoing, passive ownership of less than 2% of any class of securities of a public company shall not violate this Section 2(b).

(c) If you are terminated by the Company without cause (as defined Paragraph 2(f) below, “Cause”) or if you resign from your employment, during the Non-Competition Period the Company shall pay you an amount equivalent to your base salary times 1.5 (“Separation Pay”), payable in substantially equal installments in accordance with the Company’s regular payroll cycle, and you will continue to receive all benefits under the Company’s medical, dental and vision benefit plans to the same extent as if you were an employee of the Company. If you resign from your employment, the Company may waive the provisions of Paragraph 2(b) or shorten the Non-Competition Period by providing you written notice of the waiver or the shortened Non-Competition Period within 10 business days of your resignation, in which case (i) you will only be bound by the restrictions in Paragraph 2(b) above during the shortened Non-Competition Period (but will continue to remain bound by the restrictions in Paragraphs 1 and 2(a) above), and (ii) the Company will have no obligation to pay you Separation Pay or continue your benefits if it waives the provisions of Paragraph 2(b) above or if the Company shortens the Non-Competition Period pursuant to this Paragraph 2(c), the Company will only pay you a pro rata portion of the Separation Pay as prorated in proportion to the shortened Non-Competition Period and continue your benefits only during the shortened Non-Competition Period. Subject to Paragraph 2(h), the Company will commence to pay the Separation Pay, if any, payable under this Paragraph 2(c), on the first scheduled payroll date following the fifty-third (53^rd) day following the employee's separation date, provided that the employee has executed and not revoked the separation agreement referenced in Paragraph 2(g).

(d) If you are terminated by the Company without Cause, in addition to the Separation Pay you will also be entitled to a prorated bonus under the Short Term Incentive Plan (“STIP”) (or if the STIP Plan is not then in effect, under the short-term cash bonus plan in effect at the time of termination of your employment) for the season in which you are terminated (or year in which you are terminated if the bonus plan target for you is then an annual target), such bonus to be based upon actual performance for such season or fiscal year, as the case may be. Provided that the employee has executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the STIP bonus, if any, payable under this Paragraph 2(d) when bonuses are paid to other Company executives under the STIP Plan, or the short-term cash bonus plan in effect at the time of termination, but in no event later than two and a half (2 ½) months following the end of the performance period to which the STIP bonus relates.

(e) If you are terminated by the Company without Cause, you will also receive payment of a prorated portion of your monies banked but not yet vested under the Restricted Cash Program. The pro-rated amount will be determined according to Schedule A, attached hereto. Because the Restricted Cash Program monies will be paid out before the three year deferral period is complete, they will not be adjusted upwards or downwards based upon the change in the Company’s corporate net income over the three-year deferral period and you

Exhibit 10.31

will not be entitled to receive any additional amounts based on such nor will you have the pro rata portion decreased. Subject to Paragraph 2(h), the Company will pay the Restricted Cash Program monies, if any, payable under this Paragraph 2(e), on the first scheduled payroll date following the fifty-third (53^rd) day following the employee's separation date, provided that the employee has executed and not revoked the separation agreement referenced in Paragraph 2(g).  

(f) For purposes of this Agreement, "Cause" shall be defined as: (1) conviction for the commission of any act or acts constituting a felony under the laws of the United States or any state thereof; (2) action toward the Company involving dishonesty; (3) refusal to abide by or follow reasonable written directions of the CEO, which does not cease within ten business days after such written notice regarding such refusal has been given to you by the CEO; (4) gross nonfeasance which does not cease within ten business days after written notice regarding such nonfeasance has been given to you by the CEO; or (5) failure to comply with the provisions of Paragraphs 1, 2(a) or 2(b) of this Agreement, or other willful conduct which is intended to have and does have a material adverse impact on the Company.

(g) In order to receive Separation Pay and the continued benefits described in Paragraph 2(c) and the payments described in Paragraph 2(d) and 2(e) above, you will be required to sign a separation agreement that is satisfactory to the Company and includes, but is not limited to, a general waiver and release of all claims and potential claims against the Company and a non-disparagement provision. You must sign the separation agreement within forty-five (45) days of receiving it. If you do not revoke the separation agreement within seven (7) days, the separation agreement will become effective on the eighth (8th) day following your execution of such agreement.

(h) To the extent required by Section 409A of the Code, and applicable guidance issued thereunder, payments under Paragraphs 2(c), 2(d) and 2(e) that would otherwise be payable during the six-month period immediately following your termination of employment by the Company shall instead be paid on the first business day after the expiration of such six-month period.

(i) Notwithstanding any other provision of this Agreement to the contrary, in the event you fail to comply with Paragraphs 1, 2(a) or 2(b) above, all of your rights hereunder to any future payments or benefits as described in Paragraphs 2(c), 2(d) and 2(e) above, and all rights with respect to any unexercised stock options you may have shall be forfeited; provided that, the foregoing shall not apply if such failure of compliance with Paragraphs 2(a) or 2(b) commences following an Acceleration Event (as defined in the Company’s 2003 Equity Incentive Plan).

3. If you commit a breach of any of the provisions of Paragraphs 1 and 2 of this Agreement, the Company shall have the right to have such provisions specifically enforced and to seek temporary, preliminary and/or permanent injunctive relief, without limitation to any available forms of equitable or other relief to which the Company may be entitled, by any court having jurisdiction without the necessity of posting a bond or other security. You hereby acknowledge and agree that any such breach or anticipatory or threatened breach will cause irreparable injury to the Company and that money damages will not provide an adequate remedy to the Company.

4. Intellectual Property. You acknowledge that all discoveries, innovations, designs and useful ideas that you may originate which relate to or would be useful to the Company’s business, including those developed on your own time, shall vest in the Company on the date they are originated and shall become the exclusive property of the Company. Without additional consideration, you further agree that you will sign all necessary applications with respect to such property which the Company may prepare at its own expense.

5. Severability & Governing Law. All provisions of this Agreement are severable. If any provision of this Agreement or the application of any provision of the Agreement is determined to be invalid or unenforceable to any extent or for any reason, all other provisions of this Agreement will remain in full force and effect and will continue to be enforceable to the fullest extent permitted by law, except that if the restraints in Paragraph 2(b) are held invalid or unenforceable in their entirety the Company shall have no obligation to make the payments or provide the benefits specified in Paragraphs 2(c), 2(d) and 2(e). In the event that any provision herein is deemed invalid or unenforceable, you agree that the Court shall modify the provision so as to make it enforceable to the fullest extent permitted by law. This Agreement shall be governed by the laws of the State of New York, applicable to contracts and to be performed therein, without regard to its conflicts of laws principles.

Exhibit 10.31

6. Waiver. The failure of the Company to enforce any terms, provisions or covenants of this Agreement shall not be construed as a waiver of the same or of the right of the Company to enforce the same. Waiver by the Company of any breach or default by you (or by any other associate) of any term or provision of this Agreement (or any similar agreement between the Company and you or any other associate) shall not operate as a waiver of any other breach or default.

7. Entire Agreement. Except as set forth in the next sentence, you hereby agree that this Agreement supersedes any other agreement you may have with the Company with respect to severance, non-solicitation of associates and non-competition. In the event a Change in Control (as defined in the Company’s Special Severance Plan) occurs prior to the termination of your employment, you will be eligible for benefits pursuant to the terms of such Special Severance Plan (as then in effect), except for those set forth in Section 2.6 thereof, and this Agreement shall become null and void, other than the provisions set forth in Paragraph 1.

8. At-Will Employment. Nothing in this Agreement constitutes a contract of continuing employment. Your employment is and will continue to be “at-will” which means it is for no fixed term or duration and either you or the Company may terminate the employment relationship at any time with or without cause and for any reason or no reason, with or without prior notice. Please sign below to indicate your agreement to the terms and conditions of this Agreement.

9. Nothing in this Agreement shall affect or impair any rights you may have to indemnification for attorneys’ fees, costs and/or expenses pursuant to applicable statutes, D&O insurance, Certificates of Incorporation and Bylaws of the Company, its affiliates or subsidiaries.

ANN TAYLOR, INC.:                        ASSOCIATE:

BY: /s/ Mark G. Morrison                    BY: /s/ Katherine Hargrove Ramundo    

Mark G. Morrison                        Katherine Hargrove Ramundo

Executive Vice President, Human Resources            Date: 12/19/12

Date: 1/14/13                            

Exhibit 10.31

SCHEDULE A

Involuntary Termination Restricted Cash Payout Scenarios

Within Fiscal Years				After Fiscal Year 4
Year 1	Year 2	Year 3	Year 4	Before 3/31
Forfeit bonus	Forfeit bonus	1/3 of banked paid	2/3 of banked paid	Full bonus paid as scheduled

EX-10.32.2

Exhibit 10.32.2

December 10, 2012

Mr. Gary Muto

Re: Amendment to Confidentiality, Non-Solicitation of Associates and Non-Competition Agreement

Dear Gary:

In consideration of your continued employment and other good and valuable consideration, this will confirm our agreement to amend the Confidentiality, Non-Solicitation of Associates and Non-Competition Agreement. Effective immediately, the Agreement is amended as follows:

(1) The following sentence is added to the end of Paragraph 2(c):

Subject to Paragraph 2(h), the Company will commence to pay the Separation Pay, if any, payable under this Paragraph 2(c), on the first scheduled payroll date following the fifty-third (53^rd) day following your separation date, provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g).

(2) The last sentence of Paragraph 2(d) is deleted and replaced with the following:

Provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the STIP bonus, if any, payable under this Paragraph 2(d) when bonuses are paid to other Company executives under the STIP Plan, or the annual cash bonus plan in effect at the time of termination, but in no event later than two and a half (2½) months following the end of the performance period to which the STIP bonus relates.

(3) The last sentence of Paragraph 2(e) is deleted and replaced with the following:

Provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the earned monies in the restricted cash feature of the STIP Plan, if any, in accordance with the payment schedule for active associates.

(4) The last sentence of Paragraph 2(g) is deleted and replaced with the following:

You must sign the separation agreement within forty-five (45) days of receiving it. If you do not revoke the separation agreement within seven (7) days, the separation agreement will become effective on the eighth (8th) day following your execution of such agreement.

Exhibit 10.32.2

Except as amended hereby, all other terms and conditions of the Agreement shall remain in full force and effect.

ANN INC.                    

/s/ Kay Krill

Kay Krill

President & Chief Executive Officer

Agreed:                    Date: December 18, 2012

/s/ Gary Muto

Gary Muto

EX-10.33.3

Exhibit 10.33.3

December 10, 2012

Mr. Brian Lynch

Re: Amendment to Confidentiality, Non-Solicitation of Associates and Non-Competition Agreement

Dear Brian:

In consideration of your continued employment and other good and valuable consideration, this will confirm our agreement to amend the Confidentiality, Non-Solicitation of Associates and Non-Competition Agreement. Effective immediately, the Agreement is amended as follows:

(1) The following sentence is added to the end of Paragraph 2(c):

Subject to Paragraph 2(h), the Company will commence to pay the Separation Pay, if any, payable under this Paragraph 2(c), on the first scheduled payroll date following the fifty-third (53^rd) day following your separation date, provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g).

(2) The last sentence of Paragraph 2(d) is deleted and replaced with the following:

Provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the STIP bonus, if any, payable under this Paragraph 2(d) when bonuses are paid to other Company executives under the STIP Plan, or the annual cash bonus plan in effect at the time of termination, but in no event later than two and a half (2½) months following the end of the performance period to which the STIP bonus relates.

(3) The last sentence of Paragraph 2(e) is deleted and replaced with the following:

Provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the earned monies in the restricted cash feature of the STIP Plan, if any, in accordance with the payment schedule for active associates.

(4) The following sentence is added to the end of Paragraph 2(g):

You must sign the separation agreement within forty-five (45) days of receiving it. If you do not revoke the separation agreement within seven (7) days, the separation agreement will become effective on the eighth (8th) day following your execution of such agreement.

Exhibit 10.33.3

Except as amended hereby, all other terms and conditions of the Agreement shall remain in full force and effect.

ANN INC.                    

/s/ Kay Krill

Kay Krill

President & Chief Executive Officer

Agreed:                    Date: December 19, 2012

/s/ Brian Lynch

Brian Lynch

EX-10.35.1

Exhibit 10.35.1

December 10, 2012

Mr. Michael J. Nicholson

Re: Amendment to Confidentiality, Non-Solicitation of Associates and Non-Competition Agreement

Dear Mike:

In consideration of your continued employment and other good and valuable consideration, this will confirm our agreement to amend the Confidentiality, Non-Solicitation of Associates and Non-Competition Agreement. Effective immediately, the Agreement is amended as follows:

(1) The following sentence is added to the end of Paragraph 2(c):

Subject to Paragraph 2(h), the Company will commence to pay the Separation Pay, if any, payable under this Paragraph 2(c), on the first scheduled payroll date following the fifty-third (53^rd) day following your separation date, provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g).

(2) The last sentence of Paragraph 2(d) is deleted and replaced with the following:

Provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the STIP bonus, if any, payable under this Paragraph 2(d) when bonuses are paid to other Company executives under the STIP Plan, or the annual cash bonus plan in effect at the time of termination, but in no event later than two and a half (2½) months following the end of the performance period to which the STIP bonus relates.

(3) The last sentence of Paragraph 2(e) is deleted and replaced with the following:

Provided that you have executed and not revoked the separation agreement referenced in Paragraph 2(g), the Company will pay the earned monies in the restricted cash feature of the STIP Plan, if any, in accordance with the payment schedule for active associates.

(4) The following sentence is added to the end of Paragraph 2(g):

You must sign the separation agreement within forty-five (45) days of receiving it. If you do not revoke the separation agreement within seven (7) days, the separation agreement will become effective on the eighth (8th) day following your execution of such agreement.

Exhibit 10.35.1

Except as amended hereby, all other terms and conditions of the Agreement shall remain in full force and effect.

ANN INC.                    

/s/ Kay Krill

Kay Krill

President & Chief Executive Officer

Agreed:                    Date: December 20, 2012

/s/ Michael J. Nicholson

Michael J. Nicholson

EX-23

Exhibit 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 33-54387, 33-52389, 33-55629, 333-32977, 333-37145, 333-79921, 333-38174, 333-53502, 333-90954, 333-97005, 333-105914, 333-138191,333-155958, 333-155959, 333-168997, and 333-168998 on Form S-8 of our report dated March 8, 2013 relating to the financial statements of ANN INC., and the effectiveness of ANN INC.’s internal control over financial reporting, appearing in this Annual Report on Form 10-K of ANN INC. for the year ended February 2, 2013.

/S/ DELOITTE & TOUCHE LLP

New York, New York

March 8, 2013

EX-31..1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Kay Krill, certify that:

1. I have reviewed this annual report on Form 10-K of ANN INC.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:     March 8, 2013        /s/ Kay Krill        

Kay Krill

President and Chief Executive Officer

EX-31..2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Nicholson, certify that:

1. I have reviewed this annual report on Form 10-K of ANN INC.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 8, 2013/s/ Michael J. Nicholson

Michael J. Nicholson

Executive Vice President,

Chief Operating Officer,

Chief Financial Officer and Treasurer

EX-32..1

Exhibit 32.1

CERTIFICATION PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of ANN INC. (the "Company") on Form 10-K for the period ended February 2, 2013 as filed with the Securities and Exchange Commission (the "Report"), we, Kay Krill, Chief Executive Officer of the Company, and Michael J. Nicholson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of each of our knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:    March 8, 2013                 /s/ Kay Krill            

Kay Krill

Chief Executive Officer

Date:    March 8, 2013                    /s/ Michael J. Nicholson    

Michael J. Nicholson

Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to ANN INC. and will be retained by ANN INC. and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.

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Earnings per share - Reconciliations of Basic and Diluted Share Calculations (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended												12 Months Ended
	Feb. 02, 2013	Oct. 27, 2012	Jul. 28, 2012	Apr. 28, 2012	Jan. 28, 2012		Oct. 29, 2011		Jul. 30, 2011		Apr. 30, 2011		Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Earnings Per Share Disclosure [Line Items]
Net income	$ 2,370	$ 40,748	$ 30,735	$ 28,732	$ 2,180	[1]	$ 32,280	[1]	$ 24,792	[1]	$ 27,314	[1]	$ 102,585	$ 86,566	$ 73,397
Weighted Average Number of Shares Outstanding, Diluted
Weighted average shares outstanding													47,494	51,200	57,203
Weighted average shares outstanding assuming dilution													48,094	52,029	58,110
Basic Earnings per Share
Basic earnings per share	$ 0.05	$ 0.85	$ 0.64	$ 0.59	$ 0.04		$ 0.62		$ 0.48		$ 0.52		$ 2.13	$ 1.66	$ 1.26
Diluted Earnings per Share
Diluted earnings per share	$ 0.05	$ 0.84	$ 0.63	$ 0.58	$ 0.04		$ 0.61		$ 0.47		$ 0.51		$ 2.10	$ 1.64	$ 1.24
Earnings Per Share, Basic
Earnings Per Share Disclosure [Line Items]
Net income													102,585	86,566	73,397
Less net income associated with participating securities													1,470	1,455	1,300
Net Income Available to Common Stockholders, Basic													101,115	85,111	72,097
Weighted Average Number of Shares Outstanding, Diluted
Weighted average shares outstanding													47,494	51,200	57,203
Basic Earnings per Share
Basic earnings per share													$ 2.13	$ 1.66	$ 1.26
Earnings Per Share, Diluted
Earnings Per Share Disclosure [Line Items]
Net income													102,585	86,566	73,397
Less net income associated with participating securities													1,452	1,432	1,280
Net Income Available to Common Stockholders, Diluted													$ 101,133	$ 85,134	$ 72,117
Weighted Average Number of Shares Outstanding, Diluted
Effect of dilutive securities													600	829	907
Weighted average shares outstanding assuming dilution													48,094	52,029	58,110
Diluted Earnings per Share
Diluted earnings per share													$ 2.10	$ 1.64	$ 1.24

[1] Includes approximately $5.5 million in pre-tax charges recorded during the fourth quarter of Fiscal 2011 for severance and related costs associated with the separation of the former Brand President, Ann Taylor division.

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Income Taxes - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Disclosure - Income Taxes - Additional Information [Abstract]
Deferred Tax Assets, Operating Loss Carryforwards, Foreign	$ 0.2
Deferred Tax Assets, Operating Loss Carryforwards, State and Local	3
Deferred Tax Assets, Tax Credit Carryforwards, Alternative Minimum Tax	0.2
Federal statutory rate	35.00%	35.00%	35.00%
Unremitted foreign earnings	3.6
Incremental tax on undistributed foreign earnings	0.5
Unrecognized tax benefits that would affect the effective tax rate if recognized	3.1
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Lower Bound	0.5
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Estimated Range of Change, Upper Bound	1.0
Recognized accrued interest and penalties related to unrecognized tax benefits	(1.8)	0.7
Accrued interest and penalties related to unrecognized tax benefits	1.9	4.8
Valuation Allowance, Amount	$ 0.2	$ 0

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Equity and Incentive Compensation Plans - Summary of Restricted Stock Activity (Parenthetical) (Detail)	12 Months Ended
	Feb. 02, 2013
Time-Based Restricted Stock Award
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Vested	337,005
Time-Based Restricted Stock Award | Share Vesting In March 2013, 2014, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares expected to vest	257,375
Time-Based Restricted Stock Award | Share Vesting In Sept 2013, 2014, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares expected to vest	5,000
Time-Based Restricted Stock Award | Share Vesting In March 2013 and 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares expected to vest	4,000
Time-Based Restricted Stock Award | Shares Vesting in May 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares expected to vest	41,187
Time-Based Restricted Stock Award | Share Vesting In December 2013, 2014, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares expected to vest	3,000
Time-Based Restricted Stock Award | Share Vesting In December 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares expected to vest	25,000
Performance Based Restricted Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Vested	27,871

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Retirement Plans - Additional Information (Detail) (USD $)	12 Months Ended
	Feb. 02, 2013 hours	Jan. 28, 2012	Jan. 29, 2011
Defined Benefit Plan Disclosure [Line Items]
Eligible Employees To 401(k) Plan, Minimum Consecutive Hours Worked	1,000
Defined Contribution Plan, Employers Matching Contribution, Annual Vesting Percentage	100.00%
Company's contribution to the 401(k) Plan	$ 7,500,000	$ 6,800,000	$ 100,000
Accumulated benefit obligation	34,300,000	38,600,000
Settlement loss recognized	$ (1,760,000)	$ 0	$ (338,000)
Discount Rate Yield Curve Period Of Spot Interest Rates	30 years
Deferred Compensation Plan and Deferred Contribution Plan, Employer Match Vesting Period From Date Of Executive Hire	2 years
Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Maximum contribution by employee, percentage of salary	50.00%
First 3 Percent of Each Participant's Contributions | Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Participant Contribution	3.00%
Percentage of company's matching contribution to the 401(k) Plan with respect to each participant's contribution	100.00%
Between 3 Percent and 6 Percent of Each Participant's Contributions | Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Percentage of company's matching contribution to the 401(k) Plan with respect to each participant's contribution	50.00%
Funded Status Greater Than One Hundred And Ten Percent [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan's assets allocation, securities	100.00%
After October 1, 2007
Defined Benefit Plan Disclosure [Line Items]
Maximum contribution by employee to the 401(k) Plan, percentage of annual earnings	100.00%
After October 1, 2007 | First 3 Percent of Each Participant's Contributions
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent	100.00%
Defined Contribution Plan, Participant Contribution	3.00%
After October 1, 2007 | Second 3 Percent of Each Participant's Contributions
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Employer Matching Contribution, Percent	50.00%
Defined Contribution Plan, Participant Contribution	3.00%
Prior to January 2011 | Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Maximum contribution by employee, percentage of cash-based performance compensation earned	100.00%
Beginning January 2011 | Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Maximum contribution by employee, percentage of cash-based performance compensation earned	95.00%
Minimum [Member] | Between 3 Percent and 6 Percent of Each Participant's Contributions | Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Participant Contribution	3.00%
Minimum [Member] | Funded Status Of 100% But No Greater Than 110% [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan, Threshold of Plan Funding for Target Allocation	100.00%
Minimum [Member] | Funded Status Greater Than One Hundred And Ten Percent [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan, Threshold of Plan Funding for Target Allocation	110.00%
Maximum | Between 3 Percent and 6 Percent of Each Participant's Contributions | Vice President Level And Above
Defined Benefit Plan Disclosure [Line Items]
Defined Contribution Plan, Participant Contribution	6.00%
Maximum | Funded Status Less Than One Hundred Percent [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan, Threshold of Plan Funding for Target Allocation	100.00%
Maximum | Funded Status Of 100% But No Greater Than 110% [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan, Threshold of Plan Funding for Target Allocation	110.00%
Equity Securities [Member] | Funded Status Less Than One Hundred Percent [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan's assets allocation, securities	45.00%
Equity Securities [Member] | Funded Status Of 100% But No Greater Than 110% [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan's assets allocation, securities	25.00%
Debt Securities [Member] | Funded Status Less Than One Hundred Percent [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan's assets allocation, securities	55.00%
Debt Securities [Member] | Funded Status Of 100% But No Greater Than 110% [Member]
Defined Benefit Plan Disclosure [Line Items]
Pension Plan's assets allocation, securities	75.00%

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Equity and Incentive Compensation Plans - Weighted-Average Assumptions (Detail)	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Disclosure - Weighted-Average Assumptions [Abstract]
Expected volatility	54.60%	57.20%	54.90%
Risk-free interest rate	0.90%	1.70%	2.20%
Expected life (years)	4 years 4 months 24 days	4 years 6 months	4 years 8 months 12 days
Dividend yield	0.00%	0.00%	0.00%

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Property and Equipment - Detailed Schedule (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013	Jan. 28, 2012
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 1,179,256	$ 1,133,721
Less accumulated depreciation and amortization	769,553	772,831
Net property and equipment	409,703	360,890
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,056	1,056
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	13,393	13,363
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	593,578	555,813
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	300,604	299,794
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	248,103	241,562
Asset under construction
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 22,522	$ 22,133

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Retirement Plans - Amounts Recognized in Consolidated Balance Sheets (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013	Jan. 28, 2012
Amounts recognized in Consolidated Balance Sheets
Net amount included in other liabilities	$ (7,833)	$ (6,428)

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Equity and Incentive Compensation Plans (Tables)

12 Months Ended

Feb. 02, 2013

Summary of Four Stock Incentive Plan

The Company has three active stock incentive plans (the “Plans”), which are summarized below:

		Shares Reserved		Shares  Reserved for Issuance at February 2, 2013	Shares Available for Future Grant
Defined Name	Plan Name	Restricted Stock/Units (1)	Total Authorized
2000 Plan	2000 Stock Option and Restricted Stock Award Plan	562,500	2,250,000	1,000	—
2002 Plan	2002 Stock Option and Restricted Stock and Unit Award Plan	787,500	4,500,000	369,025	—
2003 Plan	2003 Equity Incentive Plan	5,760,000	11,750,000	4,165,645	1,750,568

(1) Included in the number of total authorized shares. The Company may issue restricted stock or restricted unit grants up to the levels provided under each plan, however shares not used for this purpose are available for issuance as stock option grants.

Summary of stock option activity

The following table summarizes stock option activity for the fiscal year ended February 2, 2013:

	Shares		Weighted Average Exercise Price
Options outstanding at January 28, 2012	4,498,817		$	22.18
Granted (1)	530,750		28.10
Exercised	(1,925,199	)	18.06
Forfeited or expired	(319,266	)	26.98
Options outstanding at February 2, 2013	2,785,102		$	25.61
Vested and exercisable at February 2, 2013	1,876,984		$	25.19
Options expected to vest in the future as of February 2, 2013	794,441		$	26.48

(1) Options granted during Fiscal 2012 vest annually over a three-year period, and expire ten years after the grant date.

Fair Value of Options Granted Assumptions

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Expected volatility	54.6	%	57.2	%	54.9	%
Risk-free interest rate	0.9	%	1.7	%	2.2	%
Expected life (years)	4.4		4.5		4.7
Dividend yield	—		—		—

Restricted Stock

Summary of Restricted Stock Activity

The following table summarizes restricted stock activity for the fiscal year ended February 2, 2013:

	Time - Based					Performance - Based
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock awards at January 28, 2012	523,096			$	18.40	247,003			$	17.13
Granted	335,562		(1)	28.33		146,500		(2)	27.85
Vested	(337,005	)		13.78		(81,364	)		10.44
Forfeited	(60,257	)		26.34		(108,468	)		16.57
Restricted stock awards at February 2, 2013	461,396			27.96		203,671			27.81

(1) Of this amount, 257,375 shares vest equally in each of March 2013, 2014 and 2015; 5,000 shares vest equally in each of September 2013, 2014 and 2015; 4,000 shares vest equally in each of March 2013 and 2014; 41,187 shares vest in May 2013; 3,000 shares vest equally in each of December 2013, 2014 and 2015; and the remaining 25,000 shares vest in December 2015.

(2) These shares vest over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 150% of the shares granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such shares, grantees will not earn any shares with respect to that tranche.

Restricted Stock Units

Summary of Restricted Stock Activity

The following table summarizes restricted unit activity for the fiscal year ended February 2, 2013:

	Time - Based				Performance - Based
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Restricted unit awards at January 28, 2012	175,353		$	19.58	98,670		$	19.58
Vested	(86,165	)	19.58		(27,871	)	19.58
Forfeited	(14,172	)	19.58		(24,796	)	19.58
Restricted unit awards at February 2, 2013	75,016		19.58		46,003		19.58

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Income Taxes - Provision/(Benefit) for Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Federal:
Current	$ 30,404	$ 37,956	$ 45,440
Deferred	24,276	12,361	(1,465)
Total federal	54,680	50,317	43,975
State and local:
Current	5,174	11,809	1,300
Deferred	5,421	(4,702)	(515)
Total state and local	10,595	7,107	785
Foreign:
Current	702	773	780
Deferred	(909)	(316)	185
Total foreign	(207)	457	965
Provision for income taxes	$ 65,068	$ 57,881	$ 45,725

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Equity and Incentive Compensation Plans - Summary of Four Stock Incentive Plan (Detail)	Feb. 02, 2013
Stock Incentive Plan 2000
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total authorized shares reserved for issuance	2,250,000
Shares Reserved for Issuance at February 2, 2013	1,000
Shares available for future grant	0
Stock Incentive Plan 2002
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total authorized shares reserved for issuance	4,500,000
Shares Reserved for Issuance at February 2, 2013	369,025
Shares available for future grant	0
Stock Incentive Plan 2003
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total authorized shares reserved for issuance	11,750,000
Shares Reserved for Issuance at February 2, 2013	4,165,645
Shares available for future grant	1,750,568
Restricted Stock And Restricted Units [Member] | Stock Incentive Plan 2000
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total authorized shares reserved for issuance	562,500	[1]
Restricted Stock And Restricted Units [Member] | Stock Incentive Plan 2002
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total authorized shares reserved for issuance	787,500	[1]
Restricted Stock And Restricted Units [Member] | Stock Incentive Plan 2003
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total authorized shares reserved for issuance	5,760,000	[1]

[1] Included in the number of total authorized shares. The Company may issue restricted stock or restricted unit grants up to the levels provided under each plan, however shares not used for this purpose are available for issuance as stock option grants.

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Commitments and Contingencies - Future Minimum Lease Payments Under Non-cancelable Operating Leases (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013
Disclosure - Future Minimum Lease Payments Under Non-Cancelable Operating Leases [Abstract]
2013	$ 210,553
2014	202,295
2015	184,928
2016	158,181
2017	142,385
Thereafter	458,307
Total	1,356,649
Operating Leases, Future Minimum Payments Due, Future Minimum Sublease Rentals	14,715
Net rentals	$ 1,341,934

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Income Taxes - Tax Effects of Significant Items Comprising the Company's Deferred Tax Assets/ (Liabilities) (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013	Jan. 28, 2012
Current:
Inventory	$ 8,261	$ 8,331
Accrued expenses and other	15,559	15,011
Deferred rent and lease incentives	6,593	7,657
Total gross deferred tax assets - current	30,413	30,999
Less: valuation allowance	16	0
Total net deferred tax assets - current	30,397	30,999
Non-current:
Depreciation and amortization	91,062	66,271
Deferred rent and lease incentives	67,650	64,074
Benefits related	22,337	29,109
Other	6,058	7,579
Amounts included in accumulated other comprehensive loss	2,788	3,323
Total gross deferred tax assets - non-current	7,771	37,814
Less: valuation allowance	158	0
Total net deferred tax assets - non-current	$ 7,613	$ 37,814

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Retirement Plans - Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost (Detail)	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Disclosure - Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost [Abstract]
Discount rate	4.85%	5.75%	6.15%
Long-term rate of return on assets	5.10%	6.25%	6.25%

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Equity and Incentive Compensation Plans - Summary of Restricted Stock Activity (Detail) (USD $)	12 Months Ended
	Feb. 02, 2013
Time-Based Restricted Stock Award
Number of shares
Restricted unit awards at January 28, 2012	523,096
Granted	335,562	[1]
Vested	(337,005)
Forfeited	(60,257)
Restricted stock awards at February 2, 2013	461,396
Weighted - average grant date fair value
Restricted unit awards at January 28, 2012	$ 18.40
Granted	$ 28.33
Vested	$ 13.78
Forfeited	$ 26.34
Restricted stock awards at February 2, 2013	$ 27.96
Performance-Based Restricted Stock Awards
Number of shares
Restricted unit awards at January 28, 2012	247,003
Granted	146,500	[2]
Vested	(81,364)
Forfeited	(108,468)
Restricted stock awards at February 2, 2013	203,671
Weighted - average grant date fair value
Restricted unit awards at January 28, 2012	$ 17.13
Granted	$ 27.85
Vested	$ 10.44
Forfeited	$ 16.57
Restricted stock awards at February 2, 2013	$ 27.81

[1] Of this amount, 257,375 shares vest equally in each of March 2013, 2014 and 2015; 5,000 shares vest equally in each of September 2013, 2014 and 2015; 4,000 shares vest equally in each of March 2013 and 2014; 41,187 shares vest in May 2013; 3,000 shares vest equally in each of December 2013, 2014 and 2015; and the remaining 25,000 shares vest in December 2015.

[2] These shares vest over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 150% of the shares granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such shares, grantees will not earn any shares with respect to that tranche.

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Summary of Significant Accounting Policies

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

ANN INC. (the “Company”) is a leading national specialty retailer of women’s apparel, shoes and accessories sold primarily under the “Ann Taylor” and “LOFT” brands. Its principal markets consist of the United States and Canada. The Company sells its products through traditional retail stores and on the Internet at www.anntaylor.com and www.LOFT.com (together, the “Online Stores”) or by phone at 1-800-DIAL-ANN and 1-888-LOFT-444.

Basis of Presentation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, including its wholly-owned subsidiary, AnnTaylor, Inc. The Company has no material assets other than the common stock of AnnTaylor, Inc. and conducts no business other than the management of AnnTaylor, Inc. All intercompany accounts have been eliminated in consolidation.

Fiscal Year

The Company follows the standard fiscal year of the retail industry, which is a 52- or 53-week period ending on the Saturday closest to January 31. All fiscal years presented in these Consolidated Financial Statements include 52 weeks, except the fiscal year ended February 2, 2013, which includes 53 weeks.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. The significant estimates and assumptions used by management affect the fair value of stock based compensation, the reserve for sales returns, the valuation of inventories, the expense associated with short-and long-term performance-based compensation, the carrying value of long-lived assets and the valuation of deferred income taxes. Actual results could differ from these estimates.

Revenue Recognition

The Company records revenue as merchandise is sold to clients. Sales from the Company's Online Stores are recorded as merchandise is shipped to clients based on the date clients are expected to receive the merchandise. Amounts related to shipping and handling billed to clients in a sales transaction are classified as revenue and the costs related to shipping product to clients (billed and accrued) are classified as Cost of sales. A reserve for estimated returns is established when sales are recorded. The Company excludes sales taxes collected from clients from "Net sales" in its Consolidated Statements of Operations.

Gift cards and merchandise credits issued by the Company do not have expiration dates and the Company honors all gift cards and merchandise credits presented by clients, regardless of the length of time that passes from issuance to redemption.  The Company records a liability for unredeemed gift cards and merchandise credits at the time gift cards are sold or merchandise credits are issued.  The Company recognizes revenue and relieves the corresponding gift card and/or merchandise credit liability when the cards are redeemed by clients.

In cases where the Company has determined that it has a legal obligation to remit the value of unredeemed gift cards and merchandise credits to any state, the value of these cards is escheated to the appropriate state in accordance with that state's unclaimed property laws.  In certain jurisdictions, the Company is permitted to retain a portion of the escheated value of unredeemed gift cards and merchandise credits, which is immaterial and is recorded in "Net sales" in the Company's Consolidated Statements of Operations.

During Fiscal 2012, the Company recognized $6.6 million in revenue for the portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.  Fiscal 2012 is the first period during which the Company recognized gift card and merchandise credit “breakage,” and therefore includes breakage income related to gift cards sold and merchandise credits issued since inception of these programs.  Such gift card and merchandise credit “breakage” is estimated based upon an analysis of actual historical redemption patterns and is included in "Net sales" in the Company's Consolidated Statements of Operations.

1. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (continued)

The Company has a credit card program which offers eligible clients in the United States the choice of a private label or co-branded credit card. All cardholders are automatically enrolled in the Company’s exclusive rewards program, which is designed to recognize and promote client loyalty. The Company provides the sponsoring bank with marketing support of the program, and uses its sales force to process credit card applications for both the private label and co-branded credit cards. As part of the program, which began in October 2008 and has a six and one-half year term, the Company received an upfront signing bonus from the sponsoring bank. The Company also receives ongoing payments for new accounts activated, as well as a share of finance charges collected by the sponsoring bank. These revenue streams are accounted for as a single unit of accounting under Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition, and accordingly, are recognized as revenue ratably based on the total projected revenues over the term of the agreement.

Certain judgments and estimates underlie the Company’s projected revenues and related expenses under the credit card program, including projected future store counts, the number of applications processed, the Company’s projected sales growth and points breakage, among other things. During Fiscal 2012, Fiscal 2011 and Fiscal 2010, the Company recognized approximately $17.8 million, $16.5 million, and $14.8 million of revenue related to the credit card program, respectively. Partially offsetting the income from the credit card program are costs, net of points breakage, related to the client loyalty program. These costs are included in either “Cost of sales” or in “Net sales” as a sales discount, as appropriate. The cost of sales impact, net of points breakage, was approximately $5.7 million, $3.8 million and $0.3 million and the sales discount impact was approximately $6.8 million, $5.5 million and $3.0 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Cost of Sales and Selling, General and Administrative Expenses

The following table illustrates the primary costs classified in each major expense category:

	Cost of Sales		Selling, General and Administrative Expenses
Ÿ	Cost of merchandise sold;	Ÿ	Payroll, bonus and benefit costs for retail and corporate associates;
Ÿ	Costs associated with the Company’s sourcing operations;	Ÿ	Design and merchandising costs;
Ÿ	Freight costs associated with moving merchandise from suppliers to the Company’s distribution center;	Ÿ	Occupancy costs for retail and corporate facilities;
Ÿ	Costs associated with the movement of merchandise through customs;	Ÿ	Depreciation related to retail and corporate assets;
Ÿ	Costs associated with the fulfillment and shipment of client orders from the Company's Online Stores, including multi-channel sales;	Ÿ	Advertising and marketing costs;
Ÿ	Depreciation related to merchandise management systems;	Ÿ	Occupancy and other costs associated with operating the Company’s distribution center;
Ÿ	Sample development costs;	Ÿ	Freight expenses associated with moving merchandise from the Company's distribution center to its retail stores or from store to store; and
Ÿ	Direct costs of the credit card client loyalty program;	Ÿ	Legal, finance, information systems and other corporate overhead costs.
Ÿ	Merchandise shortage; and
Ÿ	Client shipping costs for store merchandise shipments.

Cash and Cash Equivalents

Cash and short-term highly liquid investments with original maturity dates of three months or less at time of purchase and no redemption restrictions are considered cash or cash equivalents. The Company has significant amounts of cash and cash equivalents invested in deposit accounts at FDIC-insured financial institutions that are currently in excess of federally insured limits.

1. Summary of Significant Accounting Policies (Continued)

Merchandise Inventories

Merchandise inventories are valued at the lower of average cost or market, at the individual item level. A reserve is established to account for situations where the current selling price or future estimated selling price is less than cost. Physical inventory counts are performed annually in January, and estimates are made for any shortage between the date of the physical inventory count and the balance sheet date.

Property and Equipment

Property and equipment are presented at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the following estimated useful lives:

Building	40 years
Leasehold improvements	10 years or term of lease, if shorter
Furniture, fixtures and equipment	2-10 years
Software	5 years

When assets are sold or retired, the related cost and accumulated depreciation are removed from their respective accounts and any resulting gain or loss is recorded to “Selling, general and administrative expenses,” unless the amounts were associated with the Company’s multi-year strategic restructuring program, in which case they are included in "Restructuring charges" in the Company's Consolidated Statements of Operations. Expenditures for maintenance and repairs which do not improve or extend the useful lives of the respective assets are expensed as incurred.

Store Pre-Opening Costs

Non-capital expenditures, such as rent, advertising and payroll costs incurred prior to the opening of a new store are charged to expense in the period they are incurred.

Internal-Use Software Development Costs

As required by ASC 350-40, Internal-Use Software, the Company capitalizes certain external and internal computer software and software development costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Capitalized costs include only external direct cost of materials and services consumed in developing or obtaining internal-use software, and payroll and payroll-related costs for employees who are directly associated with and devote time to the internal-use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized software costs are depreciated on a straight-line basis over five years.

Deferred Rent Obligations

Rent expense under non-cancelable operating leases with scheduled rent increases or free rent periods is accounted for on a straight-line basis over the initial lease term beginning on the date of initial possession, which is generally when the Company has access to the space and begins construction build-out. Any reasonably assured renewals are considered. The amount of the excess of straight-line rent expense over scheduled payments is recorded as a deferred liability. Construction allowances and other such lease incentives are recorded as deferred credits and are amortized on a straight-line basis as a reduction of rent expense beginning in the period they are deemed to be earned, which often is subsequent to the date of initial possession and generally coincides with the store opening date. The current portion of unamortized deferred lease costs and construction allowances is included in “Accrued tenancy” and the long-term portion is included in “Deferred lease costs” on the Company’s Consolidated Balance Sheets.

Lease Termination Costs

Contractual penalties associated with lease terminations are accounted for in accordance with the requirements of ASC 840-20, Leases – Operating Leases, which requires that the amount of the penalty be recognized on either an undiscounted or discounted basis, with consistent application. The Company recognizes such penalties on an undiscounted basis at the time notification to terminate the lease is provided to the lessor.

1. Summary of Significant Accounting Policies (Continued)

Long-Lived Assets

The Company accounts for long-lived tangible assets under ASC 360-10, Property, Plant, and Equipment. Long-lived assets are reviewed periodically for impairment or when events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. Assessment for possible impairment is based on the Company’s ability to recover the carrying value of the long-lived asset from the expected future pre-tax cash flows at a store level (undiscounted and without interest charges). The expected future pre-tax cash flows are estimated based on historical experience, knowledge and market data. Estimates of future cash flows require the Company to make assumptions and to apply judgment, including forecasting future sales and expenses and estimating the useful lives of assets. These estimates can be affected by factors such as, but not necessarily limited to, future store results, real estate demand, and economic conditions that can be difficult to predict. If the expected future cash flows related to the long-lived assets are less than the assets’ carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value. There were no material impairment charges in Fiscal 2012, Fiscal 2011 or Fiscal 2010.

Advertising

Costs associated with the production of advertising, such as print and other costs, as well as costs associated with communicating advertising that has been produced, such as magazine ads, are expensed when the advertising first appears in public. Costs of direct mail catalogs and postcards are fully expensed when the advertising is scheduled to first arrive in clients’ homes. Advertising costs were approximately $96.2 million, $88.4 million and $79.3 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Stock-based Awards

The Company accounts for stock-based awards in accordance with ASC 718-10, Compensation – Stock Compensation. ASC 718-10 requires the Company to estimate the grant-date fair value and recognize that estimated value as compensation expense over the requisite service period, which is generally the vesting period, adjusted for estimated forfeitures. The Company estimates the fair value of non-qualified stock options on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock awards is determined using the closing price of the Company's common stock on date of grant.

Long-Term Performance Compensation Expense

The Company recognizes the compensation cost associated with its Restricted Cash Program (“RCP”) over the mandatory service period, adjusted for estimated forfeitures.  The service period includes the fiscal year in which amounts earned under the program are banked, plus a mandatory three-year deferral period. The calculation of long-term performance compensation expense related to the RCP requires the input of subjective assumptions, including the expected forfeiture of earned and banked awards and forecasts of our future income growth. The Company estimates forfeitures based on historical RCP forfeiture patterns, as well as current and future trends of expected behavior, and estimates future income growth based on past performance, future business trends and new business initiatives.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. ASC 740-10 requires the use of the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. A valuation allowance has been established for deferred tax assets relating to certain tax credits in non-U.S. jurisdictions, since management anticipates that it is not more likely than not that these assets will be realized. In determining the need for a valuation allowance, management is required to make assumptions and to apply judgment, including forecasting future earnings, taxable income, and the mix of earnings in the jurisdictions in which the Company operates.

The tax effects of uncertain tax positions taken or expected to be taken in income tax returns are recognized only if they are “more likely-than-not” to be sustained on examination by the taxing authorities, based on the technical merits as of the reporting date. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes estimated accrued interest and penalties related to uncertain tax positions in income tax expense.

1. Summary of Significant Accounting Policies (Continued)

Income Taxes (continued)

The Company derecognizes an uncertain tax position in the period when it is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

The Company and its domestic subsidiaries file a consolidated Federal income tax return, while the Company’s foreign subsidiaries file in their respective local jurisdictions.

Segments

The Company has determined that it has four operating segments, as defined under ASC 280-10, Segment Reporting, including Ann Taylor, LOFT, Ann Taylor Factory and LOFT Outlet. The Company has aggregated its operating segments based on the aggregation criteria outlined in ASC 280-10, which states that two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the objective and basic principles of ASC 280-10, if the segments have similar economic characteristics, similar product, similar production processes, similar clients and similar methods of distribution.

The Company’s operating segments have similar economic characteristics and similar operating, financial and competitive risks. They are similar in nature of product, as they all offer women’s apparel, shoes and accessories. Merchandise inventory for the Company’s operating segments is sourced from the same countries and some of the same vendors, using similar production processes. Clients of the Company’s operating segments have similar characteristics. Merchandise for the Company’s operating segments is distributed to retail stores in a similar manner, primarily through the Company’s Louisville Distribution Center, and is subsequently distributed to clients in a similar manner, through its retail and outlet stores. The Company’s Ann Taylor and LOFT operating segments also sell merchandise through the Company’s Online Stores.

Fair Value of Financial Instruments

ASC 825-10, Financial Instruments, requires management to disclose the estimated fair value of certain assets and liabilities defined by ASC 825-10 as financial instruments. The Company did not have any non-financial assets or non-financial liabilities that are recognized at fair value on a recurring basis at February 2, 2013 or January 28, 2012. At February 2, 2013 and January 28, 2012, management believes that the carrying value of cash and cash equivalents, short-term investments, receivables and payables approximates fair value, due to the short maturity of these financial instruments.

Self-Insurance

The Company is self-insured for certain losses related to its employee point of service medical plan, its workers’ compensation plan, general liability and for short-term and long-term disability, up to certain thresholds. Costs for self-insurance claims filed, as well as claims incurred but not reported, are accrued based on estimates using information received from plan administrators, third-party actuaries, historical analysis and other relevant data. Management believes that it has adequately reserved for its self-insurance liability, which is capped through the use of stop loss contracts with insurance companies. Any significant variation from historical trends in claims incurred but not paid could cause actual expense to differ from the accrued liability.

Foreign Currency Translation

Balance Sheet accounts of the Company's Canadian operations, which commenced during the third quarter of Fiscal 2012, are translated at the exchange rate in effect at the end of each period. Statement of Operations accounts are translated using the weighted average of the prevailing exchange rates during each period. Gains or losses resulting from foreign currency transactions are included in the Company's Consolidated Statements of Operations under the caption “Other non-operating income/(expense),” whereas, translation adjustments are reflected in the Consolidated Statements of Comprehensive Income under the caption “Foreign currency translation adjustment.”

1. Summary of Significant Accounting Policies (Continued)

Immaterial Correction of Balance Sheet Equity Accounts and Consolidated Statements of Stockholders' Equity

Subsequent to the issuance of its Fiscal 2011 consolidated financial statements, the Company determined that, beginning in Fiscal 2009, it has been incorrectly recording the dollar impact of shares issued out of Treasury Stock in connection with the exercise of stock options, the issuance of restricted stock grants and the vesting, in shares, of restricted unit grants. In connection with these share issuances, the Company inappropriately reduced its Treasury Stock balance in an amount equal to the exercise price of shares issued in connection with stock options exercised or the incorrect cost basis of shares issued in connection with restricted stock grants and the vesting, in shares, of restricted unit grants. The Company should have reduced Treasury Stock by the cost basis of the shares issued, with any difference being charged or credited to Additional Paid-in Capital. As a result, the Company has restated previously presented balances to appropriately reflect the impact of these transactions in its Consolidated Statements of Stockholders' Equity and Consolidated Balance Sheets. The cumulative impact of these corrections has the effect of reducing both Treasury Stock and Additional Paid-in Capital by $17.6 million, $28.5 million and $35.0 million as of January 30, 2010, January 29, 2011 and January 28, 2012, respectively. These adjustments had no effect on any other accounts or financial statements.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income. ASU 2011-05 amended ASC 220-10, Comprehensive Income, and requires that all changes in comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements, and also requires the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, Presentation of Comprehensive Income, which indefinitely deferred the requirement of ASU 2011-05 related to presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements.  In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which sets forth additional disclosure requirements for items reclassified out of accumulated other comprehensive income and into net income that will be effective for annual reporting periods beginning after December 15, 2012. The Company adopted ASU 2011-05, as modified by ASU 2011-12, in the first quarter of Fiscal 2012, by presenting separate but consecutive statements. See the Consolidated Statements of Comprehensive Income. The Company will adopt the disclosures required by ASU 2013-02 in the first quarter of Fiscal 2013.

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Retirement Plans - Financial Assets and Liabilities Held by Pension Plan, Measured at Fair Value on a Recurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	$ 26,417	$ 32,181	$ 29,780
Mutual funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	534	5,691
Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		986
Mutual funds | Large growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		2,590
Mutual funds | Mid cap blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		953
Mutual funds | Real estate
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	534	669
Mutual funds | Mid cap growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		493
Common collective trusts
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	25,448	25,962
Common collective trusts | Large growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	2,971
Common collective trusts | Mid cap blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	983
Common collective trusts | Small blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	1,010	500
Common collective trusts | Large value
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	2,496	2,503
Common collective trusts | Foreign large blend/growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	1,543	495
Common collective trusts | Long-term bond
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	16,445	22,464
Money market funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	435	528
Quoted Prices in Active Markets for Identical Assets (Level 1)
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds | Large growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds | Mid cap blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Mutual funds | Real estate
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Common collective trusts
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Common collective trusts | Small blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Common collective trusts | Large value
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Common collective trusts | Foreign large blend/growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Common collective trusts | Long-term bond
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Significant Other Observable Inputs (Level 2)
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	26,417	32,181
Significant Other Observable Inputs (Level 2) | Mutual funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	534	5,691
Significant Other Observable Inputs (Level 2) | Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		986
Significant Other Observable Inputs (Level 2) | Mutual funds | Large growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		2,590
Significant Other Observable Inputs (Level 2) | Mutual funds | Mid cap blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		953
Significant Other Observable Inputs (Level 2) | Mutual funds | Real estate
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	534	669
Significant Other Observable Inputs (Level 2) | Mutual funds | Mid cap growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		493
Significant Other Observable Inputs (Level 2) | Common collective trusts
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	25,448	25,962
Significant Other Observable Inputs (Level 2) | Common collective trusts | Large growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	2,971
Significant Other Observable Inputs (Level 2) | Common collective trusts | Mid cap blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	983
Significant Other Observable Inputs (Level 2) | Common collective trusts | Small blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	1,010	500
Significant Other Observable Inputs (Level 2) | Common collective trusts | Large value
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	2,496	2,503
Significant Other Observable Inputs (Level 2) | Common collective trusts | Foreign large blend/growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	1,543	495
Significant Other Observable Inputs (Level 2) | Common collective trusts | Long-term bond
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	16,445	22,464
Significant Other Observable Inputs (Level 2) | Money market funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	435	528
Significant Unobservable Inputs (Level 3)
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Mutual funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Mutual funds | Foreign large blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Significant Unobservable Inputs (Level 3) | Mutual funds | Large growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Significant Unobservable Inputs (Level 3) | Mutual funds | Mid cap blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets		0
Significant Unobservable Inputs (Level 3) | Mutual funds | Real estate
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Common collective trusts
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Common collective trusts | Small blend
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Common collective trusts | Large value
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Common collective trusts | Foreign large blend/growth
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Common collective trusts | Long-term bond
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	0	0
Significant Unobservable Inputs (Level 3) | Money market funds
Defined Benefit Plan Disclosure [Line Items]
Pension plan assets	$ 0	$ 0

XML

Equity and Incentive Compensation Plans - Summary of Four Stock Incentive Plan (Parenthetical) (Detail)	12 Months Ended
	Feb. 02, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average remaining contractual term for options vested and exercisable	4 years 7 months 6 days
Weighted Average Remaining Contractual Term For Options Expected To Vest	8 years 6 months
Stock Incentive Plans | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Stock Incentive Plans | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Options granted expiration period	10 years

XML

Summary of Significant Accounting Policies - Additional Disclosure (Detail) (USD $)	3 Months Ended												12 Months Ended
	Feb. 02, 2013		Oct. 27, 2012		Jul. 28, 2012		Apr. 28, 2012		Jan. 28, 2012	Oct. 29, 2011	Jul. 30, 2011	Apr. 30, 2011	Feb. 02, 2013 segments	Jan. 28, 2012	Jan. 29, 2011
Significant Accounting Policies [Line Items]
Recognition of gift card and merchandise credit breakage			$ 6,200,000										$ 6,602,000	$ 0	$ 0
Net sales	607,678,000	[1]	612,548,000	[1]	594,872,000	[1]	560,411,000	[1]	566,661,000	564,003,000	558,201,000	523,628,000	2,375,509,000	2,212,493,000	1,980,195,000
Cost of sales													1,073,167,000	1,004,350,000	876,201,000
Impairment of Long-Lived Assets Held-for-use													0	0	0
Advertising expense													96,200,000	88,400,000	79,300,000
Number of Operating Segments													4
Quantifying Misstatement in Current Year Financial Statements, Amount													35,000,000	28,500,000	17,600,000
Retail Fiscal Period													P53W	P52W	P52W
Unrecognized Tax Benefits, Recognition of Tax Positions, Likelihood of Being Realized Upon Settlement													50.00%
Maximum
Significant Accounting Policies [Line Items]
Cash Equivalent Maturity Period													3 months
Credit Card [Member]
Significant Accounting Policies [Line Items]
Exclusive Rewards Program Period													6 years 6 months
Net sales													17,800,000	16,500,000	14,800,000
Cost of sales													5,700,000	3,800,000	300,000
Sales discount													$ 6,800,000	$ 5,500,000	$ 3,000,000

[1] Includes $6.2 million in pre-tax revenue recorded during the third quarter of Fiscal 2012 for a portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.

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Selected Quarterly Financial Data - Unaudited (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Selected Quarterly Financial Data - Unaudited

	Quarter
Fiscal 2012	First		Second		Third		Fourth
	(in thousands, except per share amounts)
Net sales (1)	$	560,411	$	594,872	$	612,548	$	607,678
Gross margin	$	317,371	$	332,401	$	354,399	$	298,171
Net income	$	28,732	$	30,735	$	40,748	$	2,370
Basic earnings per share (3)	$	0.59	$	0.64	$	0.85	$	0.05
Diluted earnings per share (3)	$	0.58	$	0.63	$	0.84	$	0.05
	Quarter
Fiscal 2011	First		Second		Third		Fourth
	(in thousands, except per share amounts)
Net sales	$	523,628	$	558,201	$	564,003	$	566,661
Gross margin	$	299,952	$	306,801	$	324,240	$	277,150
Net income (2)	$	27,314	$	24,792	$	32,280	$	2,180
Basic earnings per share (3)	$	0.52	$	0.48	$	0.62	$	0.04
Diluted earnings per share (3)	$	0.51	$	0.47	$	0.61	$	0.04

(1) Includes $6.2 million in pre-tax revenue recorded during the third quarter of Fiscal 2012 for a portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.

(2) Includes approximately $5.5 million in pre-tax charges recorded during the fourth quarter of Fiscal 2011 for severance and related costs associated with the separation of the former Brand President, Ann Taylor division.

(3) The sum of the quarterly per share data may not equal the annual amounts due to quarterly changes in the weighted average shares and share equivalents outstanding.

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Retirement Plans - Pension Plan Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012
Change in benefit obligation:
Projected benefit obligation at beginning of year	$ 38,609	$ 31,338
Interest cost	1,752	1,667
Actuarial Gain (Loss)	(2,825)	(7,123)
Benefits Paid	8,936	1,519
Projected benefit obligation at end of year	34,250	38,609
Change in plan assets:
Fair value of plan assets at beginning of year	32,181	29,780
Actual return on plan assets	3,172	3,920
Benefits Paid	8,936	1,519
Fair value of plan assets at end of year	26,417	32,181
Funded status at end of year	(7,833)	(6,428)
Net amount included in other liabilities	$ (7,833)	$ (6,428)

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Equity and Incentive Compensation Plans - Summary of Stock Option Activity (Detail) (USD $)	12 Months Ended
	Feb. 02, 2013
Shares
Options outstanding at January 28, 2012	4,498,817
Granted	530,750	[1]
Exercise of options (in shares)	1,925,199
Forfeitures and expirations	319,266
Vested and exercisable	1,876,984
Options outstanding at February 2, 2013	2,785,102
Options expected to vest	794,441
Weighted - Average Exercise Price
Options outstanding at January 28, 2012	$ 22.18
Granted	$ 28.10	[1]
Forfeitures and expirations, Weighted Average Exercise Price	$ 26.98
Exercises, Weighted Average Exercise Price	$ 18.06
Options outstanding at February 2, 2013	$ 25.61
Vested and exercisable at February 2, 2013	$ 25.19
Options expected to vest at February 2, 2013	$ 26.48

[1] Options granted during Fiscal 2012 vest annually over a three-year period, and expire ten years after the grant date.

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Summary of Significant Accounting Policies - Property and Equipment Estimated Useful Lives (Detail)	12 Months Ended
	Feb. 02, 2013
Building
Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Useful Life	40 years
Leasehold improvements
Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Software
Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Software Development
Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Useful Life	5 years
Maximum | Furniture, Fixtures and Equipment
Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Useful Life	10 years
Minimum [Member] | Furniture, Fixtures and Equipment
Significant Accounting Policies [Line Items]
Property, Plant and Equipment, Useful Life	2 years

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Investments - Additional Information (Detail) (Non-Qualified Deferred Compensation Plan Assets [Member], USD $) In Thousands, unless otherwise specified	Feb. 02, 2013
Non-Qualified Deferred Compensation Plan Assets [Member]
Schedule of Investments [Line Items]
Assets fair value	$ 8,100

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Operating activities:
Net income	$ 102,585	$ 86,566	$ 73,397
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes	30,272	7,343	(1,796)
Depreciation and amortization	97,829	94,187	95,523
Recognition of gift card and merchandise credit breakage	6,602	0	0
Loss on disposal and write-down of property and equipment	(3,040)	(2,287)	(1,459)
Stock-based compensation	16,998	20,710	21,210
Non-cash interest and other non-cash items	341	(287)	1,931
Non-cash restructuring charges	0	0	617
Tax benefit from exercise/vesting of stock awards	7,871	7,522	6,967
Changes in assets and liabilities:
Accounts receivable	(1,324)	2,060	(5,130)
Merchandise inventories	3,401	19,822	25,919
Prepaid expenses and other current assets	9,624	(7,063)	12,104
Refundable income taxes	(2,764)	(362)	1,702
Other non-current assets and liabilities, net	(10,563)	(28,032)	(11,140)
Accounts payable and accrued expenses	(7,573)	(24,649)	(7,680)
Net cash provided by operating activities	258,909	207,828	164,311
Investing activities:
Purchases of marketable securities	2,246	1,379	834
Sales of marketable securities and short-term investments	269	91	6,156
Purchases of property and equipment	147,286	118,918	61,213
Other, net	649	250	1,331
Net cash used for investing activities	(149,912)	(120,456)	(57,222)
Financing activities:
Proceeds from the issuance of common stock pursuant to Associate Discount Stock Purchase Plan	1,938	2,063	2,032
Proceeds from exercise of stock options	34,762	8,499	6,582
Excess tax benefits from stock-based compensation	9,229	7,627	7,159
Repurchases of common and restricted stock	140,752	180,298	105,708
Proceeds from fixed asset financing and capital leases	0	0	2,678
Repayments of fixed asset financing and capital lease obligations	1,460	1,511	1,056
Payments of deferred financing costs	1,341	0	0
Change in trade payable program obligation, net	5,449	(188)	3,377
Net cash used for financing activities	(92,175)	(163,808)	(84,936)
Effect of exchange rate changes on cash and cash equivalents	(19)	0	0
Net increase/(decrease) in cash	16,803	(76,436)	22,153
Cash and cash equivalents, beginning of year	150,208	226,644	204,491
Cash and cash equivalents, end of year	167,011	150,208	226,644
Supplemental disclosures of cash flow information:
Cash paid during the year for interest	1,207	1,350	1,333
Cash paid during the year for income taxes	40,454	37,491	58,194
Property and equipment acquired through capital leases	0	0	767
Accrual for purchases of property and equipment	$ 20,394	$ 17,998	$ 12,041

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Investments - Fair Value Table (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands, unless otherwise specified	Feb. 02, 2013		Jan. 28, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 8,123		$ 4,149
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	3,868		1,309
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	4,255		2,840
Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0		0
Non-Qualified Deferred Compensation Plan Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	8,123	[1]	4,149	[1]
Non-Qualified Deferred Compensation Plan Assets [Member] | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	3,868	[1]	1,309	[1]
Non-Qualified Deferred Compensation Plan Assets [Member] | Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	4,255	[1]	2,840	[1]
Non-Qualified Deferred Compensation Plan Assets [Member] | Significant Unobservable Inputs (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	$ 0	[1]	$ 0	[1]

[1] (1)The Company maintains a self-directed, non-qualified deferred compensation plan structured as a rabbi trust for certain executives at the vice-president level and above. Certain of the investment assets of the rabbi trust are valued based on quoted market prices, which are considered Level 1 inputs, with the remainder valued based on the net asset value determined by the value of the underlying assets, which are considered Level 2 inputs.

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Earnings per share - Additional Information (Detail)	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Nonparticipating Option Securities [Member]
Earnings Per Share Disclosure [Line Items]
Securities excluded from the computations of earnings per share	1,381,750	2,028,204	2,878,825
Nonparticipating Performance Based Restricted Units Securities [Member]
Earnings Per Share Disclosure [Line Items]
Securities excluded from the computations of earnings per share	11,918	14,125	7,063

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Income Taxes - Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Beginning Balance	$ 7,797	$ 6,959	$ 3,070
Additions based on tax positions related to the current year	383	708	478
Additions for tax positions of prior years	396	786	3,925
Reductions for tax positions of prior years	148	144	514
Settlements with Taxing Authorities	(4,579)
Lapses in statutes of limitation	51	512
Ending Balance	$ 3,798	$ 7,797	$ 6,959

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CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Income Statement [Abstract]
Net sales	$ 2,375,509	$ 2,212,493	$ 1,980,195
Cost of sales	1,073,167	1,004,350	876,201
Gross margin	1,302,342	1,208,143	1,103,994
Selling, general and administrative expenses	1,135,551	1,062,644	978,580
Restructuring charges	0	0	5,624
Operating income	166,791	145,499	119,790
Interest and Investment Income (Expense), Net	1,051	(1,052)	(668)
Other nonoperating income/(expense)	(189)	0	0
Income before income taxes	167,653	144,447	119,122
Income tax provision	65,068	57,881	45,725
Net income	$ 102,585	$ 86,566	$ 73,397
Basic earnings per share	$ 2.13	$ 1.66	$ 1.26
Weighted average shares outstanding	47,494	51,200	57,203
Diluted earnings per share	$ 2.10	$ 1.64	$ 1.24
Weighted average shares outstanding, assuming dilution	48,094	52,029	58,110

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Equity and Incentive Compensation Plans - Summary of Stock Option Activity (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options outstanding	$ 17.6
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	13.5
Aggregate Intrinsic Value Of Options Expected To Vest	3.6
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total intrinsic value of stock option exercised	$ 26.1	$ 13.3	$ 11.2
Vesting period	3 years
Options granted expiration period	10 years

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock
Beginning Balance at Jan. 30, 2010	$ 417,186	$ 561	$ 760,166	$ 414,294	$ (4,158)	$ (753,677)
Beginning Balance (in shares) at Jan. 30, 2010		82,476,000				23,702,000
Net income	73,397			73,397
Other comprehensive income/(loss), net of tax	1,780				1,780
Exercise of options (in shares)		79,000				670,000
Exercise of stock options, related tax benefit and tax effect of expirations	9,857		(6,409)			16,266
Stock-based compensation	21,210		21,210
Issuance of restricted stock, net of forfeitures and related tax benefits	3,577		(743)			4,320
Issuance of restricted stock, net of forfeitures (in shares)						167,000
Repurchase of common and restricted stock (in shares)						4,493,000
Repurchase of common and restricted stock	105,708					105,708
Issuance of common stock pursuant to Associate Discount Stock Purchase Plan and related tax benefit of disqualifying dispositions	2,146		(1,650)			3,796
Shares issued pursuant to the Stock Purchase Plan						152,000
Ending Balance at Jan. 29, 2011	423,445	561	772,574	487,691	(2,378)	(835,003)
Ending Balance (in shares) at Jan. 29, 2011		82,555,000				27,206,000
Net income	86,566			86,566
Other comprehensive income/(loss), net of tax	(2,940)				(2,940)
Exercise of options (in shares)		9,000				804,000
Exercise of stock options, related tax benefit and tax effect of expirations	8,175		(10,675)			18,850
Stock-based compensation	20,710		20,710
Issuance of restricted stock and vesting of restricted units, net of forfeitures and related tax benefits	6,090		(5,896)			11,986
Issuance of restricted stock and vesting of restricted units (in shares)						511,000
Repurchase of common and restricted stock (in shares)						7,490,000
Repurchase of common and restricted stock	180,298					180,298
Issuance of common stock pursuant to Associate Discount Stock Purchase Plan and related tax benefit of disqualifying dispositions	2,129		(55)			2,184
Shares issued pursuant to the Stock Purchase Plan						96,000
Ending Balance at Jan. 28, 2012	363,877	561	776,658	574,257	(5,318)	(982,281)
Ending Balance (in shares) at Jan. 28, 2012		82,564,000				33,285,000
Net income	102,585			102,585
Other comprehensive income/(loss), net of tax	821				821
Exercise of options (in shares)	1,925,199					1,925,000
Exercise of stock options, related tax benefit and tax effect of expirations	36,749		(17,441)			54,190
Stock-based compensation	16,998		16,998
Issuance of restricted stock and vesting of restricted units, net of forfeitures and related tax benefits	2,860		(7,465)			10,325
Issuance of restricted stock and vesting of restricted units (in shares)						428,000
Repurchase of common and restricted stock (in shares)						5,113,000
Repurchase of common and restricted stock	140,752					140,752
Issuance of common stock pursuant to Associate Discount Stock Purchase Plan and related tax benefit of disqualifying dispositions	1,972		(535)			2,507
Shares issued pursuant to the Stock Purchase Plan						87,000
Ending Balance at Feb. 02, 2013	$ 385,110	$ 561	$ 768,215	$ 676,842	$ (4,497)	$ (1,056,011)
Ending Balance (in shares) at Feb. 02, 2013		82,564,000				35,958,000

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Retirement Plans - Amounts Recognized in Accumulated Other Comprehensive Loss (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013	Jan. 28, 2012
Disclosure - Amounts Recognized in Accumulated Other Comprehensive Loss [Abstract]
Net actuarial loss	$ (7,307)	$ (8,641)
Total	$ 7,307	$ 8,641

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Debt and Other Financing Arrangements - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended			12 Months Ended
	Feb. 02, 2013 Revolving Credit Facility [Member]	Feb. 02, 2013 Revolving Credit Facility [Member]	Jan. 28, 2012 Revolving Credit Facility [Member]	Jan. 29, 2011 Revolving Credit Facility [Member]	Feb. 02, 2013 Revolving Credit Facility [Member] Minimum [Member]	Jan. 28, 2012 Revolving Credit Facility [Member] Minimum [Member]	Feb. 02, 2013 Revolving Credit Facility [Member] Maximum	Jan. 28, 2012 Revolving Credit Facility [Member] Maximum	Feb. 02, 2013 Debt Covenant	Feb. 02, 2013 Debt Covenant Maximum
Debt Instrument [Line Items]
Senior secured revolving credit facility	$ 250,000,000	$ 250,000,000
Potential increase in the total facility and the aggregate commitments thereunder	400,000,000	400,000,000
Line of credit facility, expiration day month and year	Dec. 19, 2017
Line of Credit Sub-Facility, Maximum Borrowing Capacity	75,000,000	75,000,000
Letters of credit outstanding	14,100,000	14,100,000	16,700,000	17,600,000
Remaining available balance for loans and letters of credit	150,800,000	150,800,000	146,400,000	120,200,000
Credit Facility Additional Interest, Federal Funds Rate		0.50%
Credit Facility Additional Interest, Base Rate					0.25%		0.50%
Credit Facility Additional Interest, LIBOR Rate					1.25%	1.25%	1.50%	1.75%
Percentage Of Monthly Commitment Fee On Unused Revolving Loan Commitment					0.20%	0.325%	0.25%	0.375%
Percentage of fees for outstanding commercial letters of credit					0.50%		0.625%
Percentage of fees for outstanding standby letters of credit					1.25%		1.50%
Maximum operating expense in any fiscal year										500,000
Maximum share repurchase by company from employees in any fiscal year									$ 100,000

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Selected Quarterly Financial Data - Unaudited (Parenthetical) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Jan. 28, 2012
Disclosure - Selected Quarterly Financial Data - Unaudited [Abstract]
Management Realignment Charges	$ 5.5

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Property and Equipment (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Property and Equipment

Property and equipment are presented at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the following estimated useful lives:

Building	40 years
Leasehold improvements	10 years or term of lease, if shorter
Furniture, fixtures and equipment	2-10 years
Software	5 years

Property and equipment consists of the following:

	February 2, 2013			January 28, 2012
	(in thousands)
Land	$	1,056		$	1,056
Buildings	13,393			13,363
Leasehold improvements	593,578			555,813
Furniture and fixtures	300,604			299,794
Computer equipment and software	248,103			241,562
Assets under construction	22,522			22,133
	1,179,256			1,133,721
Less accumulated depreciation and amortization	(769,553		)	(772,831		)
Net property and equipment	$	409,703		$	360,890

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Non-cancelable operating lease terms for certain office equipment	3 years
Non-cancelable operating lease terms for store leases	5 years
Common area maintenance (CAM) charges and real estate taxes	$ 78.8	$ 70.4	$ 68.6
Minimum [Member]
Number of lease term extensions allowed	1
Maximum
Number of lease term extensions allowed	2

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Earnings per share (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Reconciliations of Basic and Diluted Earnings Per Share Calculations

The following table presents a reconciliation of basic and diluted earnings per share for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, respectively.

	Fiscal Year Ended
	February 2, 2013					January 28, 2012					January 29, 2011
	(in thousands, except per share amounts)
Basic Earnings per Share	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Net income	$	102,585				$	86,566				$	73,397
Less net income associated with participating securities	1,470					1,455					1,300
Basic earnings per share	$	101,115	47,494	$	2.13	$	85,111	51,200	$	1.66	$	72,097	57,203	$	1.26
Diluted Earnings per Share
Net income	$	102,585				$	86,566				$	73,397
Less net income associated with participating securities	1,452					1,432					1,280
Effect of dilutive securities			600					829					907
Diluted earnings per share	$	101,133	48,094	$	2.10	$	85,134	52,029	$	1.64	$	72,117	58,110	$	1.24

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Consolidated Statements of Stockholders' Equity - Parenthetical (Parentheticals) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Employee Stock Option
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation	$ 1,986	$ 4,454	$ 3,274
Restricted Stock And Restricted Units [Member]
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation	2,859	3,001	3,577
Associate Discount Stock Purchase Plan
Adjustments to Additional Paid in Capital, Income Tax Benefit from Share-based Compensation	$ 35	$ 66	$ 117

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Net income	$ 102,585	$ 86,566	$ 73,397
Foreign currency translation adjustment	19	0	0
Pension settlement charge	1,760	0	338
Net actuarial (loss)/gain	(1,153)	(4,932)	2,317
Amortization of net actuarial loss	726	62	300
Other comprehensive income/(loss), before tax	1,352	(4,870)	2,955
Income tax expense/(benefit) on other comprehensive income items	531	(1,930)	1,175
Other comprehensive income/(loss), net of tax	821	(2,940)	1,780
Comprehensive income	$ 103,406	$ 83,626	$ 75,177

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Retirement Plans

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Retirement Plans

Retirement Plans

Savings Plan

Substantially all employees of the Company and its subsidiaries who are regular full-time employees or who work 1,000 hours during a 12-month period are eligible to participate in the Company’s 401(k) Plan. Beginning October 1, 2007, participants could contribute up to 100% of their annual earnings to the 401(k) Plan in any combination of pre-tax or after-tax contributions, and after January 1, 2012 to a Roth 401(k), as well, subject to certain limitations. The Company matches 100% with respect to the first 3% and 50% with respect to the second 3% of each participant’s contributions to the 401(k) Plan. Participants are 100% vested in the company matching contributions after two years of service. Effective January 1, 2010, the Company suspended its matching contributions under the 401(k) Plan, however the Company match was reinstated effective January 1, 2011. The Company’s contributions to the 401(k) Plan for Fiscal 2012, Fiscal 2011 and Fiscal 2010 were approximately $7.5 million, $6.8 million and $0.1 million, respectively.

9. Retirement Plans (Continued)

Pension Plan

The Company froze its non-contributory defined benefit pension plan (the “Pension Plan”) in October 2007. As a result, no additional associates became participants in the Pension Plan, and no additional benefits were earned under the Pension Plan on or after October 1, 2007.

The following table provides information for the Pension Plan as of February 2, 2013 and January 28, 2012:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012
	(in thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	38,609		$	31,338
Interest cost	1,752			1,667
Actuarial loss/(gain)	2,825			7,123
Benefits paid	(8,936		)	(1,519		)
Projected benefit obligation at end of year	34,250			38,609
Change in plan assets:
Fair value of plan assets at beginning of year	32,181			29,780
Actual return on plan assets	3,172			3,920
Benefits paid	(8,936		)	(1,519		)
Fair value of plan assets at end of year	26,417			32,181
Funded status at end of year	(7,833		)	(6,428		)
Net amount included in "Other liabilities"	$	(7,833	)	$	(6,428	)

The accumulated benefit obligation for the Company’s Pension Plan was approximately $34.3 million and $38.6 million at February 2, 2013 and January 28, 2012, respectively. As a result of the Pension Plan freeze, the accumulated benefit obligation equals the projected benefit obligation.

The following table summarizes the components of net periodic benefit cost and other amounts recognized in accumulated other comprehensive loss:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Net periodic benefit cost:
Interest cost	$	1,752		$	1,667		$	1,787
Expected return on plan assets	(1,500		)	(1,729		)	(1,673		)
Amortization of net loss	726			62			300
Settlement loss recognized	1,760			—			338
Net periodic benefit cost	2,738			—			752
Other changes in plan assets and benefit obligations recognized in other comprehensive loss:
Net loss/(gain) arising during the year	1,153			4,932			(2,317		)
Settlement charge	(1,760		)	—			(338		)
Amortization of net loss	(726		)	(62		)	(300		)
Total recognized in other comprehensive loss/(income)	(1,333		)	4,870			(2,955		)
Total recognized in net periodic benefit cost and other comprehensive loss/(income)	$	1,405		$	4,870		$	(2,203	)

9. Retirement Plans (Continued)

Pension Plan (continued)

As a result of the Pension Plan freeze, the Company has no remaining prior service cost that will be amortized from accumulated other comprehensive loss into net periodic benefit cost. When the total amount of lump sum payments made to Pension Plan participants exceeds the interest cost for the fiscal year, a non-cash settlement charge is recorded. Since the total amount of lump sum payments made to plan participants was greater than the interest component of pension expense during Fiscal 2012 and Fiscal 2010, non-cash settlement charges of $1.8 million and $0.3 million, respectively, were recorded and included in “Selling, general and administrative expenses” in our Consolidated Statements of Operations. There were no such settlement charges in Fiscal 2011.

Amounts recognized in accumulated other comprehensive loss consist of:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012
	(in thousands)
Net actuarial loss	$	7,307	$	8,641
Total	$	7,307	$	8,641

For the fiscal years ended February 2, 2013 and January 28, 2012 the following weighted average assumptions were used to determine benefit obligations at the end of the fiscal year:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012
Discount rate	4.35	%	4.85	%

For the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 the following weighted average assumptions were used to determine net periodic benefit cost:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Discount rate	4.85	%	5.75	%	6.15	%
Long-term rate of return on assets	5.10	%	6.25	%	6.25	%

To develop the expected long-term rate of return on Pension Plan assets, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the Pension Plan portfolio. The Company assumes that all employees will take lump-sum payouts based on historical payout trends. The discount rate was developed using a yield curve which consists of spot interest rates for each of the next 30 years and is developed based on pricing and yield information for high quality corporate bonds, whose cash flows mirror the anticipated timing of future benefit payments.

Since the Pension Plan was frozen in October 2007, its goal is to provide all plan benefits and expenses through growth and income from the Pension Plan assets, with such employer contributions as may be required in accordance with applicable rules and regulations. Accordingly, the Company sets recommended asset allocation percentages based upon the funded status of the Pension Plan. If the funded status is less than 100%, the recommended allocation of Pension Plan Assets is 45% equity securities and 55% debt securities. If the funded status is greater than 100% but less than 110%, the recommended allocation of Pension Plan assets is 25% equity securities and 75% debt securities. If the funded status is greater than 110%, the recommended allocation of Pension Plan assets is 100% debt securities. The Company's Investment Committee has the authority to override the target asset allocation or adjust the timing of asset allocation changes to the extent considered necessary.

9. Retirement Plans (Continued)

Pension Plan (continued)

Pension Plan assets consist primarily of equity and fixed income funds or cash and cash equivalents. The equity securities do not include any of the Company's common stock. The Pension Plan's principal investment objectives are: to minimize the volatility of the funding ratio and achieve a satisfactory rate of return based on that objective, incur a reasonable pension cost in the long-term and satisfy its benefit obligations. The Pension Plan's investment performance guidelines are set and measured against appropriate portfolio benchmarks. The Pension Plan's goals, objectives, asset allocation policies and funding forecasts are reviewed periodically within any given plan year, or when significant changes have occurred in Pension Plan benefits, participant demographics or funded status.

As discussed in Note 2, “Fair Value Measurements,” ASC 820-10 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The investments held by the Company’s Pension Plan, as well as their associated level within the fair value hierarchy, are shown below:

Mutual funds, money market funds and common collective trusts:

These investments are valued using the Net Asset Value provided by the administrators of the funds. The Net Asset Value is based on the value of the underlying assets owned by the fund or trust, minus its liabilities, and then divided by the number of shares outstanding. The unit price of this investment is not quoted in an active market. However, the unit price is based on underlying investments which are either traded in an active market or are valued based on observable inputs such as market interest rates and quoted prices for similar securities and, therefore, are classified in Level 2 of the fair value hierarchy.

The following tables segregate all financial assets and liabilities held by the Company’s Pension Plan as of February 2, 2013 and January 28, 2012 measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy, based on the inputs used to determine fair value at the measurement date:

9. Retirement Plans (Continued)

Pension Plan (continued)

	February 2, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Mutual funds:
Real estate	534		—		534		—
Total mutual funds	534		—		534		—
Common collective trusts:
Small blend	1,010		—		1,010		—
Mid cap blend	983		—		983		—
Large value	2,496		—		2,496		—
Large growth	2,971		—		2,971		—
Foreign large blend	1,543		—		1,543		—
Long-term bond	16,445		—		16,445		—
Total common collective trusts	25,448		—		25,448		—
Money market funds	435				435		—
Total assets	$	26,417	$	—	$	26,417	$	—
	January 28, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Mutual funds:
Foreign large blend	$	986	$	—	$	986	$	—
Large growth	2,590		—		2,590		—
Mid cap blend	953		—		953		—
Real estate	669		—		669		—
Mid cap growth	493		—		493		—
Total mutual funds	5,691		—		5,691		—
Small blend	500		—		500		—
Large value	2,503		—		2,503		—
Foreign large growth	495		—		495		—
Long-term bond	22,464		—		22,464		—
Total common collective trusts	25,962		—		25,962		—
Money market funds	528		—		528		—
Total assets	$	32,181	$	—	$	32,181	$	—

9. Retirement Plans (Continued)

Pension Plan (continued)

The benefits expected to be paid under the Pension Plan as of February 2, 2013 are as follows:

Fiscal Year	(in thousands)
2013	$	2,128
2014	1,977
2015	1,674
2016	2,055
2017	1,786
2018-2022	7,031

The Company made no contributions to the Pension Plan in Fiscal 2012, Fiscal 2011 or Fiscal 2010. Although the Company was not required to make a contribution to the Pension Plan during these periods, any deterioration in the financial markets or changes in discount rates may require the Company to make a contribution to its Pension Plan in Fiscal 2013.

Non-Qualified Deferred Compensation Plan

Under the Company’s Deferred Compensation Plan, certain executives at the vice-president level and above may defer up to 50% of their salary and, prior to January 2011, up to 100% of cash-based performance compensation earned during a calendar year. Beginning in January 2011, those executives may only defer up to 95% of cash-based performance compensation earned during a calendar year. Under the Deferred Compensation Plan, the Company matches the amount of the base and bonus compensation deferred by the executive during the Plan year above the Internal Revenue Code Section 401(a)(17) qualified plan compensation limit as indexed on an annual basis (“Eligible Compensation”). The Company matches 100% on the first 3% of a participant's deferred Eligible Compensation, and 50% of a participant’s deferred Eligible Compensation over 3% and up to 6%. Effective January 1, 2010, the Company suspended the match on amounts deferred under the Deferred Compensation Plan on or after that date, however, the match was reinstated effective January 1, 2011. Amounts deferred and credited to the executive’s deferred compensation account are at all times fully vested. The Company’s matching contribution vests upon the second anniversary of the executive’s date of hire, or earlier upon a change in control (as defined under the Deferred Compensation Plan). The value of the Company's matching contributions during Fiscal 2012, Fiscal 2011, and Fiscal 2010 was immaterial.

XML

Document and Entity Information Document (USD $)	12 Months Ended
	Feb. 02, 2013	Mar. 01, 2013	Jul. 28, 2012
Entity Information [Line Items]
Entity Registrant Name	ANN INC.
Trading Symbol	ANN
Entity Central Index Key	0000874214
Current Fiscal Year End Date	--02-02
Entity Filer Category	Large Accelerated Filer
Document Type	10-K
Document Period End Date	Feb. 02, 2013
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		46,604,419
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 1,252,248,299

XML

Selected Quarterly Financial Data - Unaudited

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Selected Quarterly Financial Data - Unaudited

Selected Quarterly Financial Data - Unaudited

	Quarter
Fiscal 2012	First		Second		Third		Fourth
	(in thousands, except per share amounts)
Net sales (1)	$	560,411	$	594,872	$	612,548	$	607,678
Gross margin	$	317,371	$	332,401	$	354,399	$	298,171
Net income	$	28,732	$	30,735	$	40,748	$	2,370
Basic earnings per share (3)	$	0.59	$	0.64	$	0.85	$	0.05
Diluted earnings per share (3)	$	0.58	$	0.63	$	0.84	$	0.05
	Quarter
Fiscal 2011	First		Second		Third		Fourth
	(in thousands, except per share amounts)
Net sales	$	523,628	$	558,201	$	564,003	$	566,661
Gross margin	$	299,952	$	306,801	$	324,240	$	277,150
Net income (2)	$	27,314	$	24,792	$	32,280	$	2,180
Basic earnings per share (3)	$	0.52	$	0.48	$	0.62	$	0.04
Diluted earnings per share (3)	$	0.51	$	0.47	$	0.61	$	0.04

(1) Includes $6.2 million in pre-tax revenue recorded during the third quarter of Fiscal 2012 for a portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.

(2) Includes approximately $5.5 million in pre-tax charges recorded during the fourth quarter of Fiscal 2011 for severance and related costs associated with the separation of the former Brand President, Ann Taylor division.

(3) The sum of the quarterly per share data may not equal the annual amounts due to quarterly changes in the weighted average shares and share equivalents outstanding.

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013	Jan. 28, 2012
Current assets
Cash and cash equivalents	$ 167,011	$ 150,208
Accounts receivable	17,856	19,591
Merchandise inventories	216,848	213,447
Refundable income taxes	9,201	11,965
Deferred income taxes	30,397	30,999
Prepaid expenses and other current assets	64,716	49,107
Total current assets	506,029	475,317
Property and equipment, net	409,703	360,890
Deferred income taxes	7,841	39,134
Other assets	18,632	12,340
Total assets	942,205	887,681
Current liabilities
Accounts payable	105,691	94,157
Accrued salaries and bonus	23,969	16,122
Current portion of long-term performance compensation	34,233	19,373
Accrued tenancy	38,647	41,435
Gift certificates and merchandise credits redeemable	47,268	50,750
Accrued expenses and other current liabilities	86,946	64,060
Total current liabilities	336,754	285,897
Deferred lease costs	162,620	159,435
Deferred income taxes	228	1,320
Long-term performance compensation, less current portion	26,368	42,122
Other liabilities	31,125	35,030
Commitments and contingencies
Stockholders' equity
Common stock, $.0068 par value; 200,000,000 shares authorized; 82,563,516 shares issued	561	561
Additional paid-in capital	768,215	776,658
Retained earnings	676,842	574,257
Accumulated other comprehensive loss	(4,497)	(5,318)
Treasury stock, 35,958,318 and 33,284,631 shares, respectively, at cost	1,056,011	982,281
Total stockholders' equity	385,110	363,877
Total liabilities and stockholders' equity	$ 942,205	$ 887,681

XML

Debt and Other Financing Arrangements

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Debt and Other Financing Arrangements

Revolving Credit Facility

On December 19, 2012, the Company’s wholly-owned subsidiary, AnnTaylor, Inc., and certain of its subsidiaries, entered into a Fourth Amended and Restated $250 million senior secured revolving credit facility with Bank of America, N.A. and a syndicate of lenders (the "Credit Facility"), which amended the existing senior secured revolving credit facility due to expire in April 2013. The Credit Facility extended the maturity date to December 19, 2017, established a $75 million sub-facility solely for loans and letters of credit to be provided to ANN Canada Inc., a wholly owned subsidiary of AnnTaylor, Inc., and increased our option to expand the total facility and the aggregate commitments thereunder up to $400 million, subject to the lenders' agreement to increase their commitment for the requested amount. In addition, as of the date of the amendment, the margin added to the LIBOR rate was reduced to between 1.25% - 1.50% from a previous range of 1.25% - 1.75% depending upon the Average Daily Availability as defined in the Credit Facility and the monthly commitment fee on the unused revolving loan commitment was reduced to between 0.20% - 0.25% per annum, where it was previously 0.325% - 0.375% per annum. The Credit Facility may be used for working capital, letters of credit and other corporate purposes, and contains an acceleration clause which, upon the occurrence of an Event of Default, including but not limited to, a Material Adverse Effect, as defined in the Credit Facility, may cause any outstanding borrowings to become immediately due and payable.

The maximum availability for loans and letters of credit under the Credit Facility is governed by a quarterly borrowing base, determined by the application of specified percentages to certain eligible assets, primarily accounts receivable and inventory. Commercial and standby letters of credit outstanding under the Credit Facility totaled approximately $14.1 million, $16.7 million and $17.6 million as of February 2, 2013, January 28, 2012 and January 29, 2011, respectively, leaving a remaining available balance for loans and letters of credit of $150.8 million, $146.4 million and $120.2 million as of February 2, 2013, January 28, 2012 and January 29, 2011, respectively. There were no borrowings outstanding under the Credit Facility at February 2, 2013, January 28, 2012, or as of March 8, 2013, the date of this Report.

Amounts outstanding under the Credit Facility bear interest at a rate equal to, at the option of AnnTaylor, Inc., 1) the Base Rate, defined as the higher of (i) the federal funds rate plus a margin of 0.50% and (ii) the Bank of America prime rate, or 2) the LIBOR Rate (as defined in the Credit Facility); plus in each case, an applicable margin, which is between 0.25% and 0.50% for Base Rate loans, and between 1.25% and 1.50% for LIBOR loans, depending on the Average Daily Availability as defined in the Credit Facility. In addition, AnnTaylor, Inc. is required to pay the lenders a monthly commitment fee on the unused revolving loan commitment at a rate ranging from 0.20% to 0.25% per annum. Fees for outstanding commercial and standby letters of credit range from 0.50% to 0.625% and from 1.25% to 1.50%, respectively. The Credit Facility contains financial and other covenants, including limitations on indebtedness and liens, and a fixed charge coverage ratio covenant that is triggered if certain liquidity thresholds are not met.

The Credit Facility permits the Company to pay cash dividends (and permits dividends by AnnTaylor, Inc. to fund such cash dividends) subject to certain Liquidity requirements (as defined in the Credit Facility) and other conditions as set forth in the Credit Facility. Subject, in some cases, to specific exceptions, certain subsidiaries of the Company are also permitted to pay dividends to the Company to fund certain taxes owed by the Company, fund ordinary operating expenses of the Company not in excess of $500,000 in any fiscal year, repurchase common stock held by employees not in excess of 100,000 in any fiscal year and for certain other stated purposes.

The lenders have been granted a security interest in the inventory and accounts receivable of AnnTaylor, Inc. and certain of its subsidiaries, as collateral for the obligations under the Credit Facility.

XML

Property and Equipment

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Property and Equipment

Property and Equipment

Property and equipment consists of the following:

	February 2, 2013			January 28, 2012
	(in thousands)
Land	$	1,056		$	1,056
Buildings	13,393			13,363
Leasehold improvements	593,578			555,813
Furniture and fixtures	300,604			299,794
Computer equipment and software	248,103			241,562
Assets under construction	22,522			22,133
	1,179,256			1,133,721
Less accumulated depreciation and amortization	(769,553		)	(772,831		)
Net property and equipment	$	409,703		$	360,890

Depreciation and amortization expense was approximately $97.8 million, $94.2 million and $95.5 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

XML

Commitments and Contingencies (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Future Minimum Lease Payments Under Non-cancelable Operating Leases

Future minimum lease payments under non-cancelable operating leases as of February 2, 2013 are as follows:

Fiscal Year	(in thousands)
2013	$	210,553
2014	202,295
2015	184,928
2016	158,181
2017	142,385
Thereafter	458,307
Total	1,356,649
Less sublease rentals	(14,715		)
Net rentals	$	1,341,934

Rent expense

Rent expense, excluding CAM charges and real estate taxes, for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was as follows:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
	(in thousands)
Minimum rent	$	212,947	$	200,825	$	194,331
Percentage rent	2,911		2,460		986
Total	$	215,858	$	203,285	$	195,317

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Basis of Presentation

The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, including its wholly-owned subsidiary, AnnTaylor, Inc. The Company has no material assets other than the common stock of AnnTaylor, Inc. and conducts no business other than the management of AnnTaylor, Inc. All intercompany accounts have been eliminated in consolidation.

Fiscal Year

The Company follows the standard fiscal year of the retail industry, which is a 52- or 53-week period ending on the Saturday closest to January 31. All fiscal years presented in these Consolidated Financial Statements include 52 weeks, except the fiscal year ended February 2, 2013, which includes 53 weeks.

Use of Estimates

Earnings Per Share, Policy Basic and Diluted

Basic earnings per share is calculated by dividing net income associated with common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method discussed in ASC 260-10, Earnings Per Share.

The determination and reporting of earnings per share requires the inclusion of time- and performance-based restricted stock as participating securities, since they have the right to share in dividends, if declared, equally with common shareholders. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net income, participating securities have the effect of diluting both basic and diluted earnings per share. During periods of net loss, no effect is given to participating securities, since they do not share in the losses of the Company.

Revenue Recognition

The Company records revenue as merchandise is sold to clients. Sales from the Company's Online Stores are recorded as merchandise is shipped to clients based on the date clients are expected to receive the merchandise. Amounts related to shipping and handling billed to clients in a sales transaction are classified as revenue and the costs related to shipping product to clients (billed and accrued) are classified as Cost of sales. A reserve for estimated returns is established when sales are recorded. The Company excludes sales taxes collected from clients from "Net sales" in its Consolidated Statements of Operations.

Gift cards and merchandise credits issued by the Company do not have expiration dates and the Company honors all gift cards and merchandise credits presented by clients, regardless of the length of time that passes from issuance to redemption.  The Company records a liability for unredeemed gift cards and merchandise credits at the time gift cards are sold or merchandise credits are issued.  The Company recognizes revenue and relieves the corresponding gift card and/or merchandise credit liability when the cards are redeemed by clients.

In cases where the Company has determined that it has a legal obligation to remit the value of unredeemed gift cards and merchandise credits to any state, the value of these cards is escheated to the appropriate state in accordance with that state's unclaimed property laws.  In certain jurisdictions, the Company is permitted to retain a portion of the escheated value of unredeemed gift cards and merchandise credits, which is immaterial and is recorded in "Net sales" in the Company's Consolidated Statements of Operations.

During Fiscal 2012, the Company recognized $6.6 million in revenue for the portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.  Fiscal 2012 is the first period during which the Company recognized gift card and merchandise credit “breakage,” and therefore includes breakage income related to gift cards sold and merchandise credits issued since inception of these programs.  Such gift card and merchandise credit “breakage” is estimated based upon an analysis of actual historical redemption patterns and is included in "Net sales" in the Company's Consolidated Statements of Operations.

1. Summary of Significant Accounting Policies (Continued)

Revenue Recognition (continued)

The Company has a credit card program which offers eligible clients in the United States the choice of a private label or co-branded credit card. All cardholders are automatically enrolled in the Company’s exclusive rewards program, which is designed to recognize and promote client loyalty. The Company provides the sponsoring bank with marketing support of the program, and uses its sales force to process credit card applications for both the private label and co-branded credit cards. As part of the program, which began in October 2008 and has a six and one-half year term, the Company received an upfront signing bonus from the sponsoring bank. The Company also receives ongoing payments for new accounts activated, as well as a share of finance charges collected by the sponsoring bank. These revenue streams are accounted for as a single unit of accounting under Accounting Standards Codification (“ASC”) 605-25, Revenue Recognition, and accordingly, are recognized as revenue ratably based on the total projected revenues over the term of the agreement.

Certain judgments and estimates underlie the Company’s projected revenues and related expenses under the credit card program, including projected future store counts, the number of applications processed, the Company’s projected sales growth and points breakage, among other things. During Fiscal 2012, Fiscal 2011 and Fiscal 2010, the Company recognized approximately $17.8 million, $16.5 million, and $14.8 million of revenue related to the credit card program, respectively. Partially offsetting the income from the credit card program are costs, net of points breakage, related to the client loyalty program. These costs are included in either “Cost of sales” or in “Net sales” as a sales discount, as appropriate. The cost of sales impact, net of points breakage, was approximately $5.7 million, $3.8 million and $0.3 million and the sales discount impact was approximately $6.8 million, $5.5 million and $3.0 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Gift Cards And Merchandise Credits

Gift cards and merchandise credits issued by the Company do not have expiration dates and the Company honors all gift cards and merchandise credits presented by clients, regardless of the length of time that passes from issuance to redemption.  The Company records a liability for unredeemed gift cards and merchandise credits at the time gift cards are sold or merchandise credits are issued.  The Company recognizes revenue and relieves the corresponding gift card and/or merchandise credit liability when the cards are redeemed by clients.

In cases where the Company has determined that it has a legal obligation to remit the value of unredeemed gift cards and merchandise credits to any state, the value of these cards is escheated to the appropriate state in accordance with that state's unclaimed property laws.  In certain jurisdictions, the Company is permitted to retain a portion of the escheated value of unredeemed gift cards and merchandise credits, which is immaterial and is recorded in "Net sales" in the Company's Consolidated Statements of Operations.

During Fiscal 2012, the Company recognized $6.6 million in revenue for the portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.  Fiscal 2012 is the first period during which the Company recognized gift card and merchandise credit “breakage,” and therefore includes breakage income related to gift cards sold and merchandise credits issued since inception of these programs.  Such gift card and merchandise credit “breakage” is estimated based upon an analysis of actual historical redemption patterns and is included in "Net sales" in the Company's Consolidated Statements of Operations.

Cost of Sales and Selling, General and Administrative Expenses

The following table illustrates the primary costs classified in each major expense category:

	Cost of Sales		Selling, General and Administrative Expenses
Ÿ	Cost of merchandise sold;	Ÿ	Payroll, bonus and benefit costs for retail and corporate associates;
Ÿ	Costs associated with the Company’s sourcing operations;	Ÿ	Design and merchandising costs;
Ÿ	Freight costs associated with moving merchandise from suppliers to the Company’s distribution center;	Ÿ	Occupancy costs for retail and corporate facilities;
Ÿ	Costs associated with the movement of merchandise through customs;	Ÿ	Depreciation related to retail and corporate assets;
Ÿ	Costs associated with the fulfillment and shipment of client orders from the Company's Online Stores, including multi-channel sales;	Ÿ	Advertising and marketing costs;
Ÿ	Depreciation related to merchandise management systems;	Ÿ	Occupancy and other costs associated with operating the Company’s distribution center;
Ÿ	Sample development costs;	Ÿ	Freight expenses associated with moving merchandise from the Company's distribution center to its retail stores or from store to store; and
Ÿ	Direct costs of the credit card client loyalty program;	Ÿ	Legal, finance, information systems and other corporate overhead costs.
Ÿ	Merchandise shortage; and
Ÿ	Client shipping costs for store merchandise shipments.

Cash and Cash Equivalents

Cash and short-term highly liquid investments with original maturity dates of three months or less at time of purchase and no redemption restrictions are considered cash or cash equivalents. The Company has significant amounts of cash and cash equivalents invested in deposit accounts at FDIC-insured financial institutions that are currently in excess of federally insured limits.

Merchandise Inventories

Merchandise inventories are valued at the lower of average cost or market, at the individual item level. A reserve is established to account for situations where the current selling price or future estimated selling price is less than cost. Physical inventory counts are performed annually in January, and estimates are made for any shortage between the date of the physical inventory count and the balance sheet date.

Property and Equipment

Property and equipment are presented at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the following estimated useful lives:

Building	40 years
Leasehold improvements	10 years or term of lease, if shorter
Furniture, fixtures and equipment	2-10 years
Software	5 years

When assets are sold or retired, the related cost and accumulated depreciation are removed from their respective accounts and any resulting gain or loss is recorded to “Selling, general and administrative expenses,” unless the amounts were associated with the Company’s multi-year strategic restructuring program, in which case they are included in "Restructuring charges" in the Company's Consolidated Statements of Operations. Expenditures for maintenance and repairs which do not improve or extend the useful lives of the respective assets are expensed as incurred.

Store Pre-Opening Costs

Non-capital expenditures, such as rent, advertising and payroll costs incurred prior to the opening of a new store are charged to expense in the period they are incurred.

Internal-Use Software Development Costs

As required by ASC 350-40, Internal-Use Software, the Company capitalizes certain external and internal computer software and software development costs incurred during the application development stage. The application development stage generally includes software design and configuration, coding, testing and installation activities. Capitalized costs include only external direct cost of materials and services consumed in developing or obtaining internal-use software, and payroll and payroll-related costs for employees who are directly associated with and devote time to the internal-use software project. Capitalization of such costs ceases no later than the point at which the project is substantially complete and ready for its intended use. Training and maintenance costs are expensed as incurred, while upgrades and enhancements are capitalized if it is probable that such expenditures will result in additional functionality. Capitalized software costs are depreciated on a straight-line basis over five years.

Deferred Rent Obligations

Rent expense under non-cancelable operating leases with scheduled rent increases or free rent periods is accounted for on a straight-line basis over the initial lease term beginning on the date of initial possession, which is generally when the Company has access to the space and begins construction build-out. Any reasonably assured renewals are considered. The amount of the excess of straight-line rent expense over scheduled payments is recorded as a deferred liability. Construction allowances and other such lease incentives are recorded as deferred credits and are amortized on a straight-line basis as a reduction of rent expense beginning in the period they are deemed to be earned, which often is subsequent to the date of initial possession and generally coincides with the store opening date. The current portion of unamortized deferred lease costs and construction allowances is included in “Accrued tenancy” and the long-term portion is included in “Deferred lease costs” on the Company’s Consolidated Balance Sheets.

Lease Termination Costs

Contractual penalties associated with lease terminations are accounted for in accordance with the requirements of ASC 840-20, Leases – Operating Leases, which requires that the amount of the penalty be recognized on either an undiscounted or discounted basis, with consistent application. The Company recognizes such penalties on an undiscounted basis at the time notification to terminate the lease is provided to the lessor.

Long-Lived Assets

The Company accounts for long-lived tangible assets under ASC 360-10, Property, Plant, and Equipment. Long-lived assets are reviewed periodically for impairment or when events or changes in circumstances indicate that full recoverability of net asset balances through future cash flows is in question. Assessment for possible impairment is based on the Company’s ability to recover the carrying value of the long-lived asset from the expected future pre-tax cash flows at a store level (undiscounted and without interest charges). The expected future pre-tax cash flows are estimated based on historical experience, knowledge and market data. Estimates of future cash flows require the Company to make assumptions and to apply judgment, including forecasting future sales and expenses and estimating the useful lives of assets. These estimates can be affected by factors such as, but not necessarily limited to, future store results, real estate demand, and economic conditions that can be difficult to predict. If the expected future cash flows related to the long-lived assets are less than the assets’ carrying value, an impairment charge is recognized for the difference between estimated fair value and carrying value. There were no material impairment charges in Fiscal 2012, Fiscal 2011 or Fiscal 2010.

Advertising

Costs associated with the production of advertising, such as print and other costs, as well as costs associated with communicating advertising that has been produced, such as magazine ads, are expensed when the advertising first appears in public. Costs of direct mail catalogs and postcards are fully expensed when the advertising is scheduled to first arrive in clients’ homes. Advertising costs were approximately $96.2 million, $88.4 million and $79.3 million in Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Stock-based Awards

The Company accounts for stock-based awards in accordance with ASC 718-10, Compensation – Stock Compensation. ASC 718-10 requires the Company to estimate the grant-date fair value and recognize that estimated value as compensation expense over the requisite service period, which is generally the vesting period, adjusted for estimated forfeitures. The Company estimates the fair value of non-qualified stock options on the date of grant using the Black-Scholes option pricing model. The fair value of restricted stock awards is determined using the closing price of the Company's common stock on date of grant.

Long-Term Performance Compensation Expense

The Company recognizes the compensation cost associated with its Restricted Cash Program (“RCP”) over the mandatory service period, adjusted for estimated forfeitures.  The service period includes the fiscal year in which amounts earned under the program are banked, plus a mandatory three-year deferral period. The calculation of long-term performance compensation expense related to the RCP requires the input of subjective assumptions, including the expected forfeiture of earned and banked awards and forecasts of our future income growth. The Company estimates forfeitures based on historical RCP forfeiture patterns, as well as current and future trends of expected behavior, and estimates future income growth based on past performance, future business trends and new business initiatives.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740-10, Income Taxes. ASC 740-10 requires the use of the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized based on the differences between the financial statement carrying value of existing assets and liabilities and their respective tax bases. A valuation allowance has been established for deferred tax assets relating to certain tax credits in non-U.S. jurisdictions, since management anticipates that it is not more likely than not that these assets will be realized. In determining the need for a valuation allowance, management is required to make assumptions and to apply judgment, including forecasting future earnings, taxable income, and the mix of earnings in the jurisdictions in which the Company operates.

The tax effects of uncertain tax positions taken or expected to be taken in income tax returns are recognized only if they are “more likely-than-not” to be sustained on examination by the taxing authorities, based on the technical merits as of the reporting date. The tax benefits recognized in the financial statements from such positions are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company recognizes estimated accrued interest and penalties related to uncertain tax positions in income tax expense.

1. Summary of Significant Accounting Policies (Continued)

Income Taxes (continued)

The Company derecognizes an uncertain tax position in the period when it is effectively settled. Previously recognized tax positions are derecognized in the first period in which it is no longer more likely than not that the tax position would be sustained upon examination.

The Company and its domestic subsidiaries file a consolidated Federal income tax return, while the Company’s foreign subsidiaries file in their respective local jurisdictions.

Segments

The Company has determined that it has four operating segments, as defined under ASC 280-10, Segment Reporting, including Ann Taylor, LOFT, Ann Taylor Factory and LOFT Outlet. The Company has aggregated its operating segments based on the aggregation criteria outlined in ASC 280-10, which states that two or more operating segments may be aggregated into a single operating segment if aggregation is consistent with the objective and basic principles of ASC 280-10, if the segments have similar economic characteristics, similar product, similar production processes, similar clients and similar methods of distribution.

The Company’s operating segments have similar economic characteristics and similar operating, financial and competitive risks. They are similar in nature of product, as they all offer women’s apparel, shoes and accessories. Merchandise inventory for the Company’s operating segments is sourced from the same countries and some of the same vendors, using similar production processes. Clients of the Company’s operating segments have similar characteristics. Merchandise for the Company’s operating segments is distributed to retail stores in a similar manner, primarily through the Company’s Louisville Distribution Center, and is subsequently distributed to clients in a similar manner, through its retail and outlet stores. The Company’s Ann Taylor and LOFT operating segments also sell merchandise through the Company’s Online Stores.

Fair Value of Financial Instruments

ASC 825-10, Financial Instruments, requires management to disclose the estimated fair value of certain assets and liabilities defined by ASC 825-10 as financial instruments. The Company did not have any non-financial assets or non-financial liabilities that are recognized at fair value on a recurring basis at February 2, 2013 or January 28, 2012. At February 2, 2013 and January 28, 2012, management believes that the carrying value of cash and cash equivalents, short-term investments, receivables and payables approximates fair value, due to the short maturity of these financial instruments.

Self Insurance

The Company is self-insured for certain losses related to its employee point of service medical plan, its workers’ compensation plan, general liability and for short-term and long-term disability, up to certain thresholds. Costs for self-insurance claims filed, as well as claims incurred but not reported, are accrued based on estimates using information received from plan administrators, third-party actuaries, historical analysis and other relevant data. Management believes that it has adequately reserved for its self-insurance liability, which is capped through the use of stop loss contracts with insurance companies. Any significant variation from historical trends in claims incurred but not paid could cause actual expense to differ from the accrued liability.

Foreign Currency Transactions and Translations Policy

Balance Sheet accounts of the Company's Canadian operations, which commenced during the third quarter of Fiscal 2012, are translated at the exchange rate in effect at the end of each period. Statement of Operations accounts are translated using the weighted average of the prevailing exchange rates during each period. Gains or losses resulting from foreign currency transactions are included in the Company's Consolidated Statements of Operations under the caption “Other non-operating income/(expense),” whereas, translation adjustments are reflected in the Consolidated Statements of Comprehensive Income under the caption “Foreign currency translation adjustment.”

Immaterial Correction of Balance Sheet Equity Accounts

Subsequent to the issuance of its Fiscal 2011 consolidated financial statements, the Company determined that, beginning in Fiscal 2009, it has been incorrectly recording the dollar impact of shares issued out of Treasury Stock in connection with the exercise of stock options, the issuance of restricted stock grants and the vesting, in shares, of restricted unit grants. In connection with these share issuances, the Company inappropriately reduced its Treasury Stock balance in an amount equal to the exercise price of shares issued in connection with stock options exercised or the incorrect cost basis of shares issued in connection with restricted stock grants and the vesting, in shares, of restricted unit grants. The Company should have reduced Treasury Stock by the cost basis of the shares issued, with any difference being charged or credited to Additional Paid-in Capital. As a result, the Company has restated previously presented balances to appropriately reflect the impact of these transactions in its Consolidated Statements of Stockholders' Equity and Consolidated Balance Sheets. The cumulative impact of these corrections has the effect of reducing both Treasury Stock and Additional Paid-in Capital by $17.6 million, $28.5 million and $35.0 million as of January 30, 2010, January 29, 2011 and January 28, 2012, respectively. These adjustments had no effect on any other accounts or financial statements.

New Accounting Pronouncements, Policy

In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-05, Presentation of Comprehensive Income. ASU 2011-05 amended ASC 220-10, Comprehensive Income, and requires that all changes in comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements, and also requires the presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements. In December 2011, the FASB issued ASU 2011-12, Presentation of Comprehensive Income, which indefinitely deferred the requirement of ASU 2011-05 related to presentation of reclassification adjustments from other comprehensive income to net income on the face of the financial statements.  In February 2013, the FASB issued ASU 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, which sets forth additional disclosure requirements for items reclassified out of accumulated other comprehensive income and into net income that will be effective for annual reporting periods beginning after December 15, 2012. The Company adopted ASU 2011-05, as modified by ASU 2011-12, in the first quarter of Fiscal 2012, by presenting separate but consecutive statements. See the Consolidated Statements of Comprehensive Income. The Company will adopt the disclosures required by ASU 2013-02 in the first quarter of Fiscal 2013.

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Equity and Incentive Compensation Plans

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Equity and Incentive Compensation Plans

Equity and Incentive Compensation Plans

Preferred Stock

At February 2, 2013, January 28, 2012 and January 29, 2011, there were two million shares of preferred stock, par value $0.01, authorized and unissued.

Repurchase Program

On August 19, 2010, the Company’s Board of Directors approved a $100 million expansion of the Company's existing securities repurchase program (the “Repurchase Program”), bringing the total authorized under the Repurchase Program to $400 million. On March 8, 2011, the Company’s Board of Directors approved an additional $200 million expansion of the Repurchase Program, bringing the total authorized under the Repurchase Program to $600 million. The Repurchase Program will expire when the Company has repurchased all securities authorized for repurchase thereunder, unless terminated earlier by the Company’s Board of Directors. Purchases of shares of common stock may be made from time to time, subject to market conditions and at prevailing market prices, through open market purchases or in privately negotiated transactions. Repurchased shares of common stock increase treasury shares available for general corporate purposes. During Fiscal 2012, the Company repurchased 4.9 million shares of its common stock through open market purchases under the Repurchase Program at a cost of $135 million. During Fiscal 2011, the Company repurchased 7.3 million shares of its common stock under the Repurchase Program, at a cost of $175 million. During Fiscal 2010, the Company repurchased 4.2 million shares of its common stock under the Repurchase Program at a cost of $100 million. As of February 2, 2013 and March 8, 2013, the date of this Report, $49.1 million remained available under the Repurchase Program.

7. Equity and Incentive Compensation Plans (Continued)

Associate Discount Stock Purchase Plan

In Fiscal 1999, the Company established an Associate Discount Stock Purchase Plan (the “Stock Purchase Plan”). Under the terms of the Stock Purchase Plan, as amended, eligible employees may purchase shares of the Company’s common stock quarterly, at a price equal to 85% of the lower of the closing price of the Company’s common stock at the beginning or end of each quarterly stock purchase period. Participating employees pay for their stock purchases under the Stock Purchase Plan by authorizing limited payroll deductions of up to a maximum of 15% of their compensation. On May 19, 2010 and May 15, 2008, the Company’s stockholders approved an increase in the number of shares available for purchase under the Stock Purchase Plan by 1,500,000 and 650,000 shares, respectively. During Fiscal 2012, 87,082 shares were issued pursuant to the Stock Purchase Plan, at an average discount of $3.93 per share. At February 2, 2013, there were 1,428,496 shares available for future issuance under the Stock Purchase Plan. The Company recorded approximately $0.6 million, $0.6 million and $0.7 million in compensation expense related to the Stock Purchase Plan during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

Stock Incentive Plans

The Company has three active stock incentive plans (the “Plans”), which are summarized below:

		Shares Reserved		Shares  Reserved for Issuance at February 2, 2013	Shares Available for Future Grant
Defined Name	Plan Name	Restricted Stock/Units (1)	Total Authorized
2000 Plan	2000 Stock Option and Restricted Stock Award Plan	562,500	2,250,000	1,000	—
2002 Plan	2002 Stock Option and Restricted Stock and Unit Award Plan	787,500	4,500,000	369,025	—
2003 Plan	2003 Equity Incentive Plan	5,760,000	11,750,000	4,165,645	1,750,568

(1) Included in the number of total authorized shares. The Company may issue restricted stock or restricted unit grants up to the levels provided under each plan, however shares not used for this purpose are available for issuance as stock option grants.

On May 19, 2010, the Company’s stockholders approved certain amendments to the Company's 2003 Plan, including increasing the total authorized shares reserved for issuance from 8.75 million to 11.75 million shares.

Stock option awards outstanding under the Company’s Plans are granted at exercise prices which are equal to the market value of the Company’s common stock on the grant date (determined in accordance with the applicable Plan), generally vest over three or four years and expire no later than ten years after the grant date. Each of the Plans also includes an acceleration clause by which all options not exercisable by their terms will, upon the occurrence of certain contingent events, become exercisable. Shares underlying stock award grants are generally issued out of treasury stock. All the Plans allow for restricted stock awards, and the 2002 Plan and 2003 Plan also allow for restricted unit awards. A restricted unit represents the right to receive a share of common stock and/or the cash value of a share of common stock on the date the restrictions on the restricted unit lapse. The restrictions on restricted stock or restricted unit grants generally lapse over a three- or four-year period from the date of the grant. Certain executives also receive performance-based restricted stock or restricted unit grants, which generally vest over three years if certain pre-established goals are met. In the event a grantee terminates employment with the Company, any unvested stock options and any restricted stock or restricted units still subject to restrictions are generally forfeited.

General

ASC 718-10 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from initial estimates. In Fiscal 2012, Fiscal 2011 and Fiscal 2010, stock-based compensation expense was recorded net of estimated forfeitures, such that expense was recorded only for those stock-based awards that are expected to vest.

7. Equity and Incentive Compensation Plans (Continued)

During the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, the Company recognized approximately $17.0 million, $20.7 million and $21.2 million, respectively, in total stock-based compensation expense. This stock-based compensation expense is included on the same income statement line as the cash compensation paid to the recipient of the stock-based award. The associated tax benefit recognized in the Consolidated Statements of Operations for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was approximately $7.9 million, $10.0 million and $6.7 million, respectively.

ASC 718-10 also requires that cash flows resulting from tax deductions in excess of the cumulative compensation cost recognized for stock-based compensation arrangements (“excess tax benefits”) be classified as financing cash flows. For the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, excess tax benefits realized from stock-based compensation arrangements were $9.2 million, $7.6 million, and $7.2 million, respectively. The Company received $34.8 million, $8.5 million and $6.6 million in cash from the exercise of stock options during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, respectively.

Stock Options

In accordance with ASC 718-10, Compensation – Stock Compensation, the Company recognizes stock option expense equal to the grant date fair value of a stock option on a straight-line basis over the requisite service period, which is generally the vesting period, net of estimated forfeitures. As of February 2, 2013, there was $6.6 million of unrecognized compensation cost related to unvested options, which is expected to be recognized over a remaining weighted average vesting period of 1.8 years. The total intrinsic value of options exercised was approximately $26.1 million, $13.3 million and $11.2 million during Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively.

The following table summarizes stock option activity for the fiscal year ended February 2, 2013:

	Shares		Weighted Average Exercise Price
Options outstanding at January 28, 2012	4,498,817		$	22.18
Granted (1)	530,750		28.10
Exercised	(1,925,199	)	18.06
Forfeited or expired	(319,266	)	26.98
Options outstanding at February 2, 2013	2,785,102		$	25.61
Vested and exercisable at February 2, 2013	1,876,984		$	25.19
Options expected to vest in the future as of February 2, 2013	794,441		$	26.48

(1) Options granted during Fiscal 2012 vest annually over a three-year period, and expire ten years after the grant date.

The weighted average fair value of options granted during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, estimated as of the grant date using the Black-Scholes option pricing model, was $12.47, $13.20 and $9.29 per share, respectively. The weighted average remaining contractual term for options outstanding at February 2, 2013 and January 28, 2012 was 5.9 and 6.0 years, respectively. The weighted average remaining contractual term for options vested and exercisable at February 2, 2013 was 4.6 years. The weighted average remaining contractual term for options expected to vest in the future at February 2, 2013 was 8.5 years. At February 2, 2013, the aggregate intrinsic value of options outstanding, options vested and exercisable and options expected to vest was $17.6 million, $13.5 million, and $3.6 million, respectively.

Option valuation models require the input of highly subjective assumptions, including expected stock price volatility. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. The fair value of options granted under the Company’s Plans was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

7. Equity and Incentive Compensation Plans (Continued)

Stock Options (continued)

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Expected volatility	54.6	%	57.2	%	54.9	%
Risk-free interest rate	0.9	%	1.7	%	2.2	%
Expected life (years)	4.4		4.5		4.7
Dividend yield	—		—		—

The risk-free rate is based on a zero-coupon U.S. Treasury rate in effect at the time of grant with maturity dates that coincide with the expected life of the options. The expected life of the options is based on a calculation of the Company’s historical exercise patterns to estimate future exercise patterns. The expected volatility for grants is based on a simple average of (i) historical volatility of stock price returns using daily closing prices and (ii) the volatility implied by exchange-traded call options to purchase the Company’s common stock, to the extent sufficient data for the latter is available. Historical volatility was calculated as of the grant date using stock price data over periods of time equal in duration to the expected life of the options granted. In assessing implied volatility data, the Company analyzed call option market activity during the three-month period preceding the grant date. The Company also considered the volume of market activity of the underlying shares and traded options, the similarity of the exercise prices of traded options to the exercise price of employee stock options during the period and traded options whose terms are close to the expected term of the employee stock options.

Restricted Stock

In accordance with ASC 718-10, the fair value of restricted stock awards is based on the market price of the Company’s stock on the date of grant (determined in accordance with the applicable Plan) and is amortized to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period, net of estimated forfeitures. As of February 2, 2013, there was $8.5 million of unrecognized compensation cost related to unvested restricted stock awards, which is expected to be recognized over a remaining weighted average vesting period of 1.9 years. The weighted average grant date fair value of restricted stock awards granted during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was $28.18, $27.65, and $19.82, respectively. The total fair value of restricted stock awards vested during the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was $11.7 million, $14.2 million and $15.2 million, respectively.

The following table summarizes restricted stock activity for the fiscal year ended February 2, 2013:

	Time - Based					Performance - Based
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Restricted stock awards at January 28, 2012	523,096			$	18.40	247,003			$	17.13
Granted	335,562		(1)	28.33		146,500		(2)	27.85
Vested	(337,005	)		13.78		(81,364	)		10.44
Forfeited	(60,257	)		26.34		(108,468	)		16.57
Restricted stock awards at February 2, 2013	461,396			27.96		203,671			27.81

(1) Of this amount, 257,375 shares vest equally in each of March 2013, 2014 and 2015; 5,000 shares vest equally in each of September 2013, 2014 and 2015; 4,000 shares vest equally in each of March 2013 and 2014; 41,187 shares vest in May 2013; 3,000 shares vest equally in each of December 2013, 2014 and 2015; and the remaining 25,000 shares vest in December 2015.

(2) These shares vest over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 150% of the shares granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such shares, grantees will not earn any shares with respect to that tranche.

7. Equity and Incentive Compensation Plans (Continued)

Restricted Units

In March 2010, the Company granted time- and performance-vesting restricted unit awards with a grant date fair value of $19.58. The time-vesting restricted unit awards vest annually over three years. The performance-vesting restricted unit awards vest annually over a three-year period based on achievement of performance targets set bi-annually for each tranche of the grant. Based on Company performance, grantees may earn 50% to 150% of the units granted with respect to each tranche. If the Company does not achieve the minimum threshold goal associated with such grants, grantees will not earn any units with respect to that tranche. Management’s estimates of the probability and level of achievement related to the performance-vesting restricted unit awards is considered in the compensation cost recorded during Fiscal 2012, Fiscal 2011 and Fiscal 2010.

Since there were insufficient shares available to settle these restricted unit awards in stock as of the date of grant, they were classified and accounted for as liability awards and were marked-to-market through May 19, 2010. Under mark-to-market accounting, the liability for these awards was remeasured periodically during the period through May 19, 2010 based upon the closing market price of the Company’s common stock. On May 19, 2010, the Company’s shareholders approved an additional 3,000,000 shares under the Company’s 2003 Plan. As such, the Company reserved shares sufficient to cover these restricted unit awards, reclassified the liability of approximately $0.5 million recognized through that date into equity and began accounting for these awards as equity awards as of May 19, 2010. The per share fair value of the restricted unit awards as of May 19, 2010 was $21.10.

In accordance with ASC 718-10, the fair value of restricted units is based on the market price of the Company’s stock on the date of grant (determined in accordance with the applicable Plan) and is amortized to compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period, net of estimated forfeitures. The total fair value of restricted unit awards vested during the fiscal year ended February 2, 2013 was $3.2 million. As of February 2, 2013, there was $0.3 million of unrecognized compensation cost related to unvested restricted units, which is expected to be recognized over a remaining weighted average vesting period of 0.1 years.

The following table summarizes restricted unit activity for the fiscal year ended February 2, 2013:

	Time - Based				Performance - Based
	Number of Shares		Weighted Average Grant Date Fair Value		Number of Shares		Weighted Average Grant Date Fair Value
Restricted unit awards at January 28, 2012	175,353		$	19.58	98,670		$	19.58
Vested	(86,165	)	19.58		(27,871	)	19.58
Forfeited	(14,172	)	19.58		(24,796	)	19.58
Restricted unit awards at February 2, 2013	75,016		19.58		46,003		19.58

Long-Term Performance Compensation

The Company maintains a long-term cash incentive program, the RCP, for vice-presidents and above. Corporate operating profit is the performance metric applied in determining amounts earned under the RCP, and any such earnings are banked and mandatorily deferred until the end of the third fiscal year following the earnings period. Amounts banked are adjusted upwards or downwards by the average percentage increase or decrease, as the case may be, of the Company's corporate net income performance over the mandatory three-year deferral period. Such corporate net income performance may be modified for certain unusual or infrequently occurring events to avoid distorting operating fundamentals and thereby benefiting or penalizing management for the financial impact of such unusual or infrequent events. The Company estimates corporate net income performance based on past results, future business trends and new business initiatives.

In order to receive payments under the RCP, participants must be employed by the Company at the end of the mandatory three-year deferral period, except in limited circumstances. Accordingly, amounts banked under the RCP are recorded as compensation expense on a pro-rata basis over the service period, net of estimated forfeitures. The service period includes the fiscal year in which amounts earned under the program are banked, plus the mandatory three-year deferral period. The Company estimates forfeitures based on historical RCP forfeiture patterns, as well as current and future trends of expected behavior. Any adjustments to compensation expense associated with changes in corporate net income performance or estimated forfeiture rates during the service period are accounted for as changes in estimate.

7. Equity and Incentive Compensation Plans (Continued)

Long-Term Performance Compensation (continued)

During the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, the Company recognized $18.5 million, $29.2 million and $22.8 million in compensation expense under the RCP, a portion of which applies to changes in estimates. As of February 2, 2013, there was $29.3 million of unrecognized compensation cost under the RCP, which is expected to be recognized over a remaining weighted average deferral period of 2.3 years.

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Retirement Plans - Weighted Average Assumptions Used to Determine Benefit Obligations (Detail)	Feb. 02, 2013	Jan. 28, 2012
Disclosure - Weighted Average Assumptions Used to Determine Benefit Obligations [Abstract]
Discount rate	4.35%	4.85%

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Commitments and Contingencies

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Operating Leases

The Company occupies its retail stores and administrative facilities under operating leases, most of which are non-cancelable. Most of the store leases grant the Company the right to extend the term for one or two additional five-year periods under substantially the same terms and conditions as the original leases. Most store leases also contain early termination options, which can be exercised by the Company under specific conditions. Most of the store leases require payment of a specified minimum rent, plus contingent rent based on a percentage of the store’s net sales in excess of a specified threshold. In addition, most of the leases require payment of real estate taxes, insurance and certain common area maintenance (“CAM”) costs in addition to the future minimum lease payments. The Company also leases certain office equipment for its corporate offices and store locations under non-cancelable operating leases, which generally have three-year terms.

5. Commitments and Contingencies (Continued)

Operating Leases (continued)

Future minimum lease payments under non-cancelable operating leases as of February 2, 2013 are as follows:

Fiscal Year	(in thousands)
2013	$	210,553
2014	202,295
2015	184,928
2016	158,181
2017	142,385
Thereafter	458,307
Total	1,356,649
Less sublease rentals	(14,715		)
Net rentals	$	1,341,934

The minimum lease payments presented above do not include CAM charges or real estate taxes, which are also contractual obligations under the Company’s store and office operating leases, but are generally not fixed and can fluctuate from year to year. Total CAM charges and real estate taxes for Fiscal 2012, Fiscal 2011 and Fiscal 2010 were $78.8 million, $70.4 million and $68.6 million, respectively.

Rent expense, excluding CAM charges and real estate taxes, for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 was as follows:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
	(in thousands)
Minimum rent	$	212,947	$	200,825	$	194,331
Percentage rent	2,911		2,460		986
Total	$	215,858	$	203,285	$	195,317

Legal Proceedings

The Company is subject to various legal proceedings and claims that arise in the ordinary course of its business. Although the amount of any liability that could arise with respect to these actions cannot be determined with certainty, in the Company’s opinion, any such liability will not have a material adverse effect on its consolidated financial position, consolidated results of operations or liquidity.

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Earnings per share

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Earnings per share

Earnings per Share

Basic earnings per share is calculated by dividing net income associated with common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share assumes the issuance of additional shares of common stock by the Company upon exercise of all outstanding stock options and contingently issuable securities if the effect is dilutive, in accordance with the treasury stock method discussed in ASC 260-10, Earnings Per Share.

The determination and reporting of earnings per share requires the inclusion of time- and performance-based restricted stock as participating securities, since they have the right to share in dividends, if declared, equally with common shareholders. During periods of net income, participating securities are allocated a proportional share of net income determined by dividing total weighted average participating securities by the sum of total weighted average common shares and participating securities (“the two-class method”). During periods of net income, participating securities have the effect of diluting both basic and diluted earnings per share. During periods of net loss, no effect is given to participating securities, since they do not share in the losses of the Company.

6. Earnings per Share (Continued)

The following table presents a reconciliation of basic and diluted earnings per share for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011, respectively.

	Fiscal Year Ended
	February 2, 2013					January 28, 2012					January 29, 2011
	(in thousands, except per share amounts)
Basic Earnings per Share	Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount		Net Income		Shares	Per Share Amount
Net income	$	102,585				$	86,566				$	73,397
Less net income associated with participating securities	1,470					1,455					1,300
Basic earnings per share	$	101,115	47,494	$	2.13	$	85,111	51,200	$	1.66	$	72,097	57,203	$	1.26
Diluted Earnings per Share
Net income	$	102,585				$	86,566				$	73,397
Less net income associated with participating securities	1,452					1,432					1,280
Effect of dilutive securities			600					829					907
Diluted earnings per share	$	101,133	48,094	$	2.10	$	85,134	52,029	$	1.64	$	72,117	58,110	$	1.24

Non-participating securities (stock options) representing 1,381,750, 2,028,204 and 2,878,825 shares of common stock were excluded from the above computation of weighted average shares for diluted earnings per share for Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively, due to their antidilutive effect, since their exercise prices exceeded the average market price of the common shares during the periods. In addition, non-participating securities (performance-based restricted units) representing 11,918, 14,125 and 7,063 shares of common stock were excluded from the above computations of weighted-average shares for diluted earnings per share for Fiscal 2012, Fiscal 2011 and Fiscal 2010, respectively, due to the fact that they are contingently issuable securities whose measurement period had not concluded as of the end of the fiscal year.

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Income Taxes

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Income Taxes

Income Taxes

The provision for income taxes for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 consists of the following:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Federal:
Current	$	30,404		$	37,956		$	45,440
Deferred	24,276			12,361			(1,465		)
Total federal	54,680			50,317			43,975
State and local:
Current	5,174			11,809			1,300
Deferred	5,421			(4,702		)	(515		)
Total state and local	10,595			7,107			785
Foreign:
Current	702			773			780
Deferred	(909		)	(316		)	185
Total foreign	(207		)	457			965
Total	$	65,068		$	57,881		$	45,725

The reconciliation between the provision for income taxes and the expected provision for income taxes at the U.S. federal statutory rate of 35% for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 is as follows:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(dollars in thousands)
U.S. operations	$	170,896		$	143,562		$	118,007
Foreign operations	(3,243		)	885			1,115
Income before income taxes	$	167,653		$	144,447		$	119,122
Federal statutory rate	35		%	35		%	35		%
Provision for income taxes at federal statutory rate	58,679			50,556			41,693
State and local income taxes, net of federal income tax benefit	6,886			4,620			3,031
Non-deductible expenses	2,341			1,700			1,677
Settlements of tax examinations	(4,113		)	267			—
Other	1,275			738			(676		)
Provision for income taxes	$	65,068		$	57,881		$	45,725

8. Income Taxes (Continued)

The income tax provision reflects the current and deferred tax consequences of events that have been recognized in the Company's Consolidated Financial Statements or tax returns. U.S. federal income taxes are provided on unremitted foreign earnings, except those that are considered indefinitely reinvested, which at February 2, 2013 amounted to approximately $3.6 million. However, if these earnings were not considered indefinitely reinvested, under current law the incremental tax on such undistributed earnings would be approximately $0.5 million. The Company considers the earnings of certain non-U.S. subsidiaries to be indefinitely reinvested outside the United States and our current plans do not demonstrate a need to repatriate them to fund our U.S. operations.

The tax effects of significant items comprising the Company’s deferred tax assets/(liabilities) as of February 2, 2013 and January 28, 2012 are as follows:

	As of
	February 2, 2013			January 28, 2012
	(in thousands)
Current:
Inventory	$	8,261		$	8,331
Accrued expenses and other	15,559			15,011
Deferred rent and lease incentives	6,593			7,657
Total gross deferred tax assets - current	30,413			30,999
Less: valuation allowance	(16		)	—
Total net deferred tax assets - current	$	30,397		$	30,999
Non-current:
Depreciation and amortization	$	(91,062	)	$	(66,271	)
Deferred rent and lease incentives	67,650			64,074
Benefits related	22,337			29,109
Other	6,058			7,579
Amounts included in accumulated other comprehensive loss	2,788			3,323
Total gross deferred tax assets - non-current	7,771			37,814
Less: valuation allowance	(158		)	—
Total net deferred tax assets - non-current	$	7,613		$	37,814

The valuation allowance for deferred tax assets as of February 2, 2013 was approximately $0.2 million. There was no valuation allowance as of January 28, 2012. The valuation allowance is primarily related to certain non-U.S. alternative minimum tax credits that, in the judgment of management, are not more likely than not to be realized prior to expiration. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. Management considers the scheduled reversal of deferred tax liabilities, projected taxable income, and tax planning strategies in making this assessment.

At February 2, 2013, the Company has net operating loss carry-forwards of $3.0 million for state income tax purposes and $0.2 million for income tax of certain non-U.S. jurisdictions. In addition, the Company has $0.2 million of alternative minimum tax credits in non-U.S. jurisdictions, which are available to reduce future income taxes, if any, over an indefinite period.

8. Income Taxes (Continued)

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	(in thousands)
Balance at January 30, 2010	$	3,070
Additions based on tax positions related to the current year	478
Additions for tax positions of prior years	3,925
Reductions for tax positions of prior years	(514		)
Balance at January 29, 2011	6,959
Additions based on tax positions related to the current year	708
Additions for tax positions of prior years	786
Reductions for tax positions of prior years	(144		)
Lapses in statutes of limitation	(512		)
Balance at January 28, 2012	7,797
Additions based on tax positions related to the current year	383
Additions for tax positions of prior years	396
Reductions for tax positions of prior years	(148		)
Settlements	(4,579		)
Lapses in statutes of limitation	(51		)
Balance at February 2, 2013	$	3,798

To the extent these unrecognized tax benefits are ultimately recognized, approximately $3.1 million will impact the Company’s effective tax rate in a future period. The Company anticipates that the amount of unrecognized tax benefits may be reduced within the next twelve months by approximately $0.5 million to $1.0 million as a result of the settlement of certain tax examinations, lapses in statutes of limitations, and voluntary tax filings for certain prior tax years.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in its provision for income taxes. During Fiscal 2012, the Company recognized $1.8 million in net interest income in its provision for income taxes, primarily due to the interest benefit associated with settlement of a U.S. federal tax examination. During Fiscal 2011, the Company recognized approximately $0.7 million in interest and penalties, net of related deferred tax assets, on unrecognized tax benefits. The Company had approximately $1.9 million and $4.8 million for the payment of interest and penalties accrued at February 2, 2013 and January 28, 2012, respectively.

The Company files income tax returns in the U.S. Federal jurisdiction, and various state and local jurisdictions and generally remains open to income tax examinations by relevant tax authorities for tax years beginning with Fiscal 2009. The Company also files income tax returns in foreign jurisdictions and generally remains open to income tax examinations for tax years beginning with Fiscal 2005. The Company is under examination by certain state and local jurisdictions. Although the outcome of these matters cannot currently be determined, the Company believes adequate provision has been made for any potential unfavorable financial statement impact.

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Selected Quarterly Financial Data - Unaudited (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended																12 Months Ended
	Feb. 02, 2013		Oct. 27, 2012		Jul. 28, 2012		Apr. 28, 2012		Jan. 28, 2012		Oct. 29, 2011		Jul. 30, 2011		Apr. 30, 2011		Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Disclosure - Selected Quarterly Financial Data - Unaudited [Abstract]
Recognition of gift card and merchandise credit breakage			$ 6,200														$ 6,602	$ 0	$ 0
Net sales	607,678	[1]	612,548	[1]	594,872	[1]	560,411	[1]	566,661		564,003		558,201		523,628		2,375,509	2,212,493	1,980,195
Gross margin	298,171		354,399		332,401		317,371		277,150		324,240		306,801		299,952		1,302,342	1,208,143	1,103,994
Net income	$ 2,370		$ 40,748		$ 30,735		$ 28,732		$ 2,180	[2]	$ 32,280	[2]	$ 24,792	[2]	$ 27,314	[2]	$ 102,585	$ 86,566	$ 73,397
Basic earnings per share	$ 0.05		$ 0.85		$ 0.64		$ 0.59		$ 0.04		$ 0.62		$ 0.48		$ 0.52		$ 2.13	$ 1.66	$ 1.26
Diluted earnings per share	$ 0.05		$ 0.84		$ 0.63		$ 0.58		$ 0.04		$ 0.61		$ 0.47		$ 0.51		$ 2.10	$ 1.64	$ 1.24

[1] Includes $6.2 million in pre-tax revenue recorded during the third quarter of Fiscal 2012 for a portion of the unredeemed value of gift cards and merchandise credits where the Company has determined that, under applicable state unclaimed property laws, there is no legal obligation to escheat these amounts to such states and the likelihood of redemption is considered remote.

[2] Includes approximately $5.5 million in pre-tax charges recorded during the fourth quarter of Fiscal 2011 for severance and related costs associated with the separation of the former Brand President, Ann Taylor division.

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Retirement Plans - Benefits Expected to be Paid under Pension Plan (Detail) (USD $) In Thousands, unless otherwise specified	Feb. 02, 2013
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract]
2013	$ 2,128
2014	1,977
2015	1,674
2016	2,055
2017	1,786
2018-2022	$ 7,031

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Property and Equipment - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Disclosure - Property and Equipment - Additional Information [Abstract]
Depreciation and amortization expense	$ 97,829	$ 94,187	$ 95,523

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Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
ReconciliationBetweenProvisionandStatutoryRate [Abstract]
U.S. Operations	$ 170,896	$ 143,562	$ 118,007
Foreign Operations	(3,243)	885	1,115
Income before income taxes	167,653	144,447	119,122
Federal statutory rate	35.00%	35.00%	35.00%
Provision for income taxes at federal statutory rate	58,679	50,556	41,693
State and local income taxes, net of federal income tax benefit	6,886	4,620	3,031
Non-deductible expenses	2,341	1,700	1,677
Settlements of tax examinations	(4,113)	267	0
Other	1,275	738	(676)
Provision for income taxes	$ 65,068	$ 57,881	$ 45,725

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Investments (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables segregate all financial assets and liabilities as of February 2, 2013 and January 28, 2012 that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine fair value at the measurement date:

	February 2, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Non-qualified deferred compensation plan assets (1)	$	8,123	$	3,868	$	4,255	$	—
Total assets	$	8,123	$	3,868	$	4,255	$	—
	January 28, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Non-qualified deferred compensation plan assets (1)	$	4,149	$	1,309	$	2,840	$	—
Total assets	$	4,149	$	1,309	$	2,840	$	—

(1) The Company maintains a self-directed, non-qualified deferred compensation plan structured as a rabbi trust for certain

executives at the vice-president level and above. Certain of the investment assets of the rabbi trust are valued based on quoted market prices, which are considered Level 1 inputs, with the remainder valued based on the net asset value determined by the value of the underlying assets, which are considered Level 2 inputs.

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Income Taxes (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Provision/(Benefit) for Income Taxes

The provision for income taxes for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 consists of the following:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Federal:
Current	$	30,404		$	37,956		$	45,440
Deferred	24,276			12,361			(1,465		)
Total federal	54,680			50,317			43,975
State and local:
Current	5,174			11,809			1,300
Deferred	5,421			(4,702		)	(515		)
Total state and local	10,595			7,107			785
Foreign:
Current	702			773			780
Deferred	(909		)	(316		)	185
Total foreign	(207		)	457			965
Total	$	65,068		$	57,881		$	45,725

Reconciliation Between Provision/(Benefit) for Income Taxes and Expected Provision/(benefit) for Income Taxes at U.S. Federal Statutory Rate

The reconciliation between the provision for income taxes and the expected provision for income taxes at the U.S. federal statutory rate of 35% for the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 is as follows:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(dollars in thousands)
U.S. operations	$	170,896		$	143,562		$	118,007
Foreign operations	(3,243		)	885			1,115
Income before income taxes	$	167,653		$	144,447		$	119,122
Federal statutory rate	35		%	35		%	35		%
Provision for income taxes at federal statutory rate	58,679			50,556			41,693
State and local income taxes, net of federal income tax benefit	6,886			4,620			3,031
Non-deductible expenses	2,341			1,700			1,677
Settlements of tax examinations	(4,113		)	267			—
Other	1,275			738			(676		)
Provision for income taxes	$	65,068		$	57,881		$	45,725

Tax Effects of Significant Items Comprising the Company's Deferred Tax Assets/ (Liabilities)

The tax effects of significant items comprising the Company’s deferred tax assets/(liabilities) as of February 2, 2013 and January 28, 2012 are as follows:

	As of
	February 2, 2013			January 28, 2012
	(in thousands)
Current:
Inventory	$	8,261		$	8,331
Accrued expenses and other	15,559			15,011
Deferred rent and lease incentives	6,593			7,657
Total gross deferred tax assets - current	30,413			30,999
Less: valuation allowance	(16		)	—
Total net deferred tax assets - current	$	30,397		$	30,999
Non-current:
Depreciation and amortization	$	(91,062	)	$	(66,271	)
Deferred rent and lease incentives	67,650			64,074
Benefits related	22,337			29,109
Other	6,058			7,579
Amounts included in accumulated other comprehensive loss	2,788			3,323
Total gross deferred tax assets - non-current	7,771			37,814
Less: valuation allowance	(158		)	—
Total net deferred tax assets - non-current	$	7,613		$	37,814

Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows:

	(in thousands)
Balance at January 30, 2010	$	3,070
Additions based on tax positions related to the current year	478
Additions for tax positions of prior years	3,925
Reductions for tax positions of prior years	(514		)
Balance at January 29, 2011	6,959
Additions based on tax positions related to the current year	708
Additions for tax positions of prior years	786
Reductions for tax positions of prior years	(144		)
Lapses in statutes of limitation	(512		)
Balance at January 28, 2012	7,797
Additions based on tax positions related to the current year	383
Additions for tax positions of prior years	396
Reductions for tax positions of prior years	(148		)
Settlements	(4,579		)
Lapses in statutes of limitation	(51		)
Balance at February 2, 2013	$	3,798

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Equity and Incentive Compensation Plans - Summary of Restricted unit Activity (Detail) (USD $)	12 Months Ended
	Feb. 02, 2013
Time Based Restricted Units
Number of shares
Restricted unit awards at January 28, 2012	175,353
Vested	(86,165)
Forfeited	(14,172)
Forfeited	$ 19.58
Restricted stock awards at February 2, 2013	75,016
Weighted - average grant date fair value
Restricted unit awards at January 28, 2012	$ 19.58
Vested	$ 19.58
Restricted stock awards at February 2, 2013	$ 19.58
Vesting period	3 years
Performance Based Restricted Units
Number of shares
Restricted unit awards at January 28, 2012	98,670
Vested	(27,871)
Forfeited	(24,796)
Forfeited	$ 19.58
Restricted stock awards at February 2, 2013	46,003
Weighted - average grant date fair value
Restricted unit awards at January 28, 2012	$ 19.58
Vested	$ 19.58
Restricted stock awards at February 2, 2013	$ 19.58
Vesting period	3 years

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Equity and Incentive Compensation Plans - Additional Information (Detail) (USD $)	12 Months Ended						12 Months Ended						12 Months Ended															1 Months Ended	12 Months Ended		12 Months Ended
	Feb. 02, 2013 plans years	Jan. 28, 2012	Jan. 29, 2011	Mar. 08, 2011	Aug. 19, 2010	May 19, 2010	Feb. 02, 2013 Stock Incentive Plans Minimum [Member]	Feb. 02, 2013 Stock Incentive Plans Maximum	Feb. 02, 2013 Stock Incentive Plan 2003	May 19, 2010 Stock Incentive Plan 2003	May 19, 2010 Before Amendment Stock Incentive Plan 2003	May 19, 2010 After Amendment Stock Incentive Plan 2003	Feb. 02, 2013 Associate Discount Stock Purchase Plan	Jan. 28, 2012 Associate Discount Stock Purchase Plan	Jan. 29, 2011 Associate Discount Stock Purchase Plan	Feb. 02, 2013 Employee Stock Option years	Jan. 28, 2012 Employee Stock Option	Jan. 29, 2011 Employee Stock Option	Feb. 02, 2013 Performance Based Restricted Units	Feb. 02, 2013 Time Based Restricted Units	Feb. 02, 2013 Time-Based Restricted Stock Award	Feb. 02, 2013 Performance Shares [Member] Minimum [Member]	Feb. 02, 2013 Performance Shares [Member] Maximum	Feb. 02, 2013 Performance-Based Restricted Stock Awards	Feb. 02, 2013 Restricted Stock years	Jan. 28, 2012 Restricted Stock	Jan. 29, 2011 Restricted Stock	Mar. 31, 2010 Restricted Stock Units	Feb. 02, 2013 Restricted Stock Units years	May 19, 2010 Restricted Stock Units	Feb. 02, 2013 Associate Discount Stock Purchase Plan	May 19, 2010 Associate Discount Stock Purchase Plan	May 15, 2008 Associate Discount Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Preferred stock, shares authorized	2,000,000	2,000,000	2,000,000
Preferred stock, par value	$ 0.01	$ 0.01	$ 0.01
Stock repurchase additional approved amount				$ 200,000,000	$ 100,000,000
Total authorized under the Securities Repurchase Program				600,000,000	400,000,000
Repurchase of common stock, shares	4,908,355	7,288,653	4,201,004
Repurchase of common stock, value	135,000,000	175,000,000	100,000,000
Total available for share repurchases under the Securities Repurchase Program	49,100,000
Eligible employee stock purchase price as a Percentage of closing price																															85.00%
Eligible employee stock purchase plan maximum payroll deduction																															15.00%
Additional shares approved under equity incentive plan										3,000,000																						1,500,000	650,000
Number of Active Stock Incentive Plans	3
Shares issued pursuant to the Stock Purchase Plan																															87,082
Shares price per share, average discount																															$ 3.93
Shares available for future purchase									1,750,568																						1,428,496
Compensation expense related to stock purchase plan													600,000	600,000	700,000
Total authorized shares reserved for issuance									11,750,000		8,750,000	11,750,000
Unrecognized compensation cost, unvested																6,600,000									8,500,000				300,000
Employee Service Share Based Compensation Unrecognized Compensation Costs Nonvested Awards Weighted Average Period Of Recognition																1.8
Unrecognized compensation cost, unvested, remaining weighted-average vesting period																									1.9				0.1
Total intrinsic value of stock option exercised																26,100,000	13,300,000	11,200,000
Weighted-average fair value of awards granted	$ 12.47	$ 13.20	$ 9.29
Weighted average remaining contractual term for options outstanding	5 years 10 months 24 days	6 years
Weighted average remaining contractual term for options vested and exercisable	4 years 7 months 6 days
Weighted Average Remaining Contractual Term For Options Expected To Vest	8 years 6 months
Aggregate intrinsic value of options outstanding	17,600,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value	13,500,000
Aggregate Intrinsic Value Of Options Expected To Vest	3,600,000
Granted																					$ 28.33			$ 27.85	$ 28.18	$ 27.65	$ 19.82	$ 19.58
Total fair value of restricted stock awards vested																									11,700,000	14,200,000	15,200,000		3,200,000
Fair value of restricted unit awards						$ 21.10
Percentage grantees may earn of the value granted with respect to each tranche of the grant																						50.00%	150.00%
Restricted Unit Awards Liability Reclassified In To Equity																														500,000
Excess tax benefits realized from stock-based compensation arrangements	9,229,000	7,627,000	7,159,000
Proceeds from Stock Options Exercised	34,762,000	8,499,000	6,582,000
Share-based compensation expense recognized	16,998,000	20,710,000	21,210,000
Tax benefit recognized	7,900,000	10,000,000	6,700,000
Long-Term performance compensation employment term	3 years
Long-term performance compensation expense	18,500,000	29,200,000	22,800,000
Long-term performance compensation expense total compensation not yet recognized	$ 29,300,000
Unrecognized compensation cost long-term performance compensation plan remaining weighted average service period	2.3
Vesting period							3 years	4 years								3 years			3 years	3 years	3 years			3 years
Options granted expiration period								10 years								10 years

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CONSOLIDATED BALANCE SHEETS CONSOLIDATED BALANCE SHEETS (Parentheticals) (USD $)	Feb. 02, 2013	Jan. 28, 2012
Common Stock, Par or Stated Value Per Share	$ 0.0068	$ 0.0068
Common Stock, Shares Authorized	200,000,000	200,000,000
Common Stock, Shares, Issued	82,563,516	82,563,516
Treasury Stock, Shares	35,958,318	33,284,631

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Investments

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Investments

At February 2, 2013, the Company had $8.1 million invested in a self-directed non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for certain executives at the vice-president level and above, which is structured as a rabbi trust. These investments are classified as trading securities and are recorded as a long-term asset, included in “Other assets,” on the Company’s Consolidated Balance Sheets. The investments are valued based on quoted market prices. Unrealized holding gains and losses are included in “Interest income/(expense)” on the Company’s Consolidated Statements of Operations. See Note 9, “Retirement Plans,” for further discussion of the Deferred Compensation Plan.

ASC 820-10, Fair Value Measurements and Disclosures, establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

• Level 1 — Quoted prices in active markets for identical assets or liabilities.

• Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

2. Fair Value Measurements (Continued)

The following tables segregate all financial assets and liabilities as of February 2, 2013 and January 28, 2012 that are measured at fair value on a recurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine fair value at the measurement date:

	February 2, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Non-qualified deferred compensation plan assets (1)	$	8,123	$	3,868	$	4,255	$	—
Total assets	$	8,123	$	3,868	$	4,255	$	—
	January 28, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in thousands)
Non-qualified deferred compensation plan assets (1)	$	4,149	$	1,309	$	2,840	$	—
Total assets	$	4,149	$	1,309	$	2,840	$	—

(1) The Company maintains a self-directed, non-qualified deferred compensation plan structured as a rabbi trust for certain

executives at the vice-president level and above. Certain of the investment assets of the rabbi trust are valued based on quoted market prices, which are considered Level 1 inputs, with the remainder valued based on the net asset value determined by the value of the underlying assets, which are considered Level 2 inputs.

At February 2, 2013, the Company believes that the carrying value of cash and cash equivalents, receivables and payables approximates fair value, due to the short maturity of these financial instruments.

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Retirement Plans - Summary of Components of Net Periodic Benefit Cost and Other Amounts Recognized in Accumulated Other Comprehensive (Income)/Loss (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Net periodic benefit cost:
Interest cost	$ 1,752	$ 1,667	$ 1,787
Expected Return on Plan Assets	1,500	1,729	1,673
Amortization of net loss	(726)	(62)	(300)
Settlement loss recognized	(1,760)	0	(338)
Net periodic benefit cost	2,738	0	752
Other changes in plan assets and benefit obligations recognized in other comprehensive loss:
Net actuarial (loss)/gain	(1,153)	(4,932)	2,317
Pension settlement charge	1,760	0	338
Amortization of net actuarial loss	726	62	300
Total recognized in other comprehensive loss/(income)	(1,333)	4,870	(2,955)
Amount Recognized in Net Periodic Benefit Cost and Other Comprehensive loss/(income), before Tax	$ 1,405	$ 4,870	$ (2,203)

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Retirement Plans (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Pension Plan Information

The following table provides information for the Pension Plan as of February 2, 2013 and January 28, 2012:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012
	(in thousands)
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	38,609		$	31,338
Interest cost	1,752			1,667
Actuarial loss/(gain)	2,825			7,123
Benefits paid	(8,936		)	(1,519		)
Projected benefit obligation at end of year	34,250			38,609
Change in plan assets:
Fair value of plan assets at beginning of year	32,181			29,780
Actual return on plan assets	3,172			3,920
Benefits paid	(8,936		)	(1,519		)
Fair value of plan assets at end of year	26,417			32,181
Funded status at end of year	(7,833		)	(6,428		)
Net amount included in "Other liabilities"	$	(7,833	)	$	(6,428	)

Summary of Components of Net Periodic Benefit Cost and Other Amounts Recognized in Accumulated Other Comprehensive (Income)/Loss

The following table summarizes the components of net periodic benefit cost and other amounts recognized in accumulated other comprehensive loss:

	Fiscal Year Ended
	February 2, 2013			January 28, 2012			January 29, 2011
	(in thousands)
Net periodic benefit cost:
Interest cost	$	1,752		$	1,667		$	1,787
Expected return on plan assets	(1,500		)	(1,729		)	(1,673		)
Amortization of net loss	726			62			300
Settlement loss recognized	1,760			—			338
Net periodic benefit cost	2,738			—			752
Other changes in plan assets and benefit obligations recognized in other comprehensive loss:
Net loss/(gain) arising during the year	1,153			4,932			(2,317		)
Settlement charge	(1,760		)	—			(338		)
Amortization of net loss	(726		)	(62		)	(300		)
Total recognized in other comprehensive loss/(income)	(1,333		)	4,870			(2,955		)
Total recognized in net periodic benefit cost and other comprehensive loss/(income)	$	1,405		$	4,870		$	(2,203	)

Amounts Recognized in Accumulated Other Comprehensive Loss

Amounts recognized in accumulated other comprehensive loss consist of:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012
	(in thousands)
Net actuarial loss	$	7,307	$	8,641
Total	$	7,307	$	8,641

Weighted Average Assumptions Used to Determine Benefit Obligations

For the fiscal years ended February 2, 2013 and January 28, 2012 the following weighted average assumptions were used to determine benefit obligations at the end of the fiscal year:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012
Discount rate	4.35	%	4.85	%

Weighted Average Assumptions Used to Determine Net Periodic Benefit Cost

For the fiscal years ended February 2, 2013, January 28, 2012 and January 29, 2011 the following weighted average assumptions were used to determine net periodic benefit cost:

	Fiscal Year Ended
	February 2, 2013		January 28, 2012		January 29, 2011
Discount rate	4.85	%	5.75	%	6.15	%
Long-term rate of return on assets	5.10	%	6.25	%	6.25	%

Financial Assets and Liabilities Held by Pension Plan, Measured at Fair Value on a Recurring Basis

The following tables segregate all financial assets and liabilities held by the Company’s Pension Plan as of February 2, 2013 and January 28, 2012 measured at fair value on a recurring basis (at least annually) into the most appropriate level within the fair value hierarchy, based on the inputs used to determine fair value at the measurement date:

9. Retirement Plans (Continued)

Pension Plan (continued)

	February 2, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Mutual funds:
Real estate	534		—		534		—
Total mutual funds	534		—		534		—
Common collective trusts:
Small blend	1,010		—		1,010		—
Mid cap blend	983		—		983		—
Large value	2,496		—		2,496		—
Large growth	2,971		—		2,971		—
Foreign large blend	1,543		—		1,543		—
Long-term bond	16,445		—		16,445		—
Total common collective trusts	25,448		—		25,448		—
Money market funds	435				435		—
Total assets	$	26,417	$	—	$	26,417	$	—
	January 28, 2012		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
			(in thousands)
Mutual funds:
Foreign large blend	$	986	$	—	$	986	$	—
Large growth	2,590		—		2,590		—
Mid cap blend	953		—		953		—
Real estate	669		—		669		—
Mid cap growth	493		—		493		—
Total mutual funds	5,691		—		5,691		—
Small blend	500		—		500		—
Large value	2,503		—		2,503		—
Foreign large growth	495		—		495		—
Long-term bond	22,464		—		22,464		—
Total common collective trusts	25,962		—		25,962		—
Money market funds	528		—		528		—
Total assets	$	32,181	$	—	$	32,181	$	—

Benefits Expected to be Paid under Pension Plan

he benefits expected to be paid under the Pension Plan as of February 2, 2013 are as follows:

Fiscal Year	(in thousands)
2013	$	2,128
2014	1,977
2015	1,674
2016	2,055
2017	1,786
2018-2022	7,031

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Commitments and Contingencies - Rent expense (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Feb. 02, 2013	Jan. 28, 2012	Jan. 29, 2011
Disclosure - Rent expense [Abstract]
Minimum rent	$ 212,947	$ 200,825	$ 194,331
Percentage rent	2,911	2,460	986
Total	$ 215,858	$ 203,285	$ 195,317

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Feb. 02, 2013

Notes to Financial Statements [Abstract]

Property and equipment Estimated Useful Lives

Property and equipment are presented at cost less accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the following estimated useful lives:

Building	40 years
Leasehold improvements	10 years or term of lease, if shorter
Furniture, fixtures and equipment	2-10 years
Software	5 years

Property and equipment consists of the following:

	February 2, 2013			January 28, 2012
	(in thousands)
Land	$	1,056		$	1,056
Buildings	13,393			13,363
Leasehold improvements	593,578			555,813
Furniture and fixtures	300,604			299,794
Computer equipment and software	248,103			241,562
Assets under construction	22,522			22,133
	1,179,256			1,133,721
Less accumulated depreciation and amortization	(769,553		)	(772,831		)
Net property and equipment	$	409,703		$	360,890