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ANNTAYLOR, INC.
________________________________________________
$150,000,000
CREDIT AGREEMENT
June 30, 1998
__________________________________________________
CITICORP USA,
FIRST UNION CAPITAL MARKETS,
as Syndication Agents
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
CITIBANK, N.A.,
FIRST UNION NATIONAL BANK,
as Issuing Banks
BANCAMERICA ROBERTSON STEPHENS,
as Arranger
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrative Agent
=================================================================
CREDIT AGREEMENT, dated as of June 30, 1998 (as
amended, supplemented or modified from time to time, this
"Agreement"), among ANNTAYLOR, INC., a Delaware corporation (the
---------
"Borrower"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
--------
ASSOCIATION ("Bank of America"), CITICORP USA ("Citicorp"), FIRST
--------------- --------
UNION NATIONAL BANK and each other Person signatory hereto as a
Lender or which from time to time becomes a Lender party hereto
in accordance with Section 12.01(a) (together with its respective
---------------
successors and assigns, individually, a "Lender" and,
------
collectively, the "Lenders"), BANCAMERICA ROBERTSON STEPHENS, as
-------
Arranger (in such capacity, the "Arranger"), BANK OF AMERICA, in
--------
its separate capacity as administrative agent for the Lenders
hereunder (in such capacity, the "Administrative Agent"),
----------------------
CITICORP and FIRST UNION CAPITAL MARKETS ("First Union"), in
------------
their respective capacities as syndication agents (collectively,
in such capacities, the "Syndication Agents"), and BANK OF
-------------------
AMERICA, CITIBANK, N.A. and FIRST UNION NATIONAL BANK, as Issuing
Banks.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower has requested that the Lenders
make available to the Borrower a $150,000,000 senior secured
revolving credit facility (the "Revolving Credit Facility") the
-------------------------
proceeds of which will be used by the Borrower for the issuance
of commercial and standby letters of credit and to provide
revolving loans for other general corporate purposes; and
WHEREAS, the Lenders are willing to make available the
Revolving Credit Facility pursuant to this Agreement upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and
mutual covenants contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
Definitions
-----------
1.01. Certain Defined Terms.
---------------------
The following terms used in this Agreement shall have
the following meanings (such meanings to be applicable, except to
the extent otherwise indicated in a definition of a particular
term, both to the singular and the plural forms of the terms
defined):
"Accommodation Obligation", as applied to any Person,
------------------------
shall mean any contractual obligation, contingent or otherwise,
of that Person with respect to any Indebtedness or other
obligation or liability of another, including any such
Indebtedness, obligation or liability directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in
the ordinary course of business), co-made or discounted or sold
with recourse by that Person, or in respect of which that Person
is otherwise directly or indirectly liable, including Contractual
Obligations (contingent or otherwise) arising through any
agreement to purchase, repurchase, or otherwise acquire such
Indebtedness, obligation or liability or any security therefor,
or to provide funds for the payment or discharge thereof (whether
in the form of loans, advances, stock purchases, capital
=================================================================
-2-
contributions or otherwise), or to maintain solvency, assets,
level of income, or other financial condition, or to make payment
other than for value received.
"Accounts" shall mean, as to any Person, any
--------
"account", as such term is defined in Section 9-106 of the UCC,
now or hereafter owned by such Person which is classified as a
receivable on a consolidated balance sheet of such Person in
accordance with GAAP.
"Account Debtor": any Person that is liable to make
--------------
payments with respect to a Credit Card Account.
"Administrative Agent" shall have the meaning ascribed
--------------------
to such term in the preamble and shall include any successor
Administrative Agent appointed pursuant to Section 11.09.
-------------
"Administrative Agent's Payment Office" shall mean the
-------------------------------------
address for payments set forth on the signature page hereto
relating to the Administrative Agent or such other address as the
Administrative Agent may from time to time specify in accordance
with Section 12.10.
--------------
"Advance Rate" shall mean with respect to Eligible
-------------
Accounts Receivable, 75%, with respect to Eligible Inventory,
65%, and with respect to Eligible Fixed Assets, 10%. The
Administrative Agent may, in its reasonable discretion, but
subject to Section 12.08(a)(vi), adjust the Advance Rate with
respect to Eligible Accounts Receivable based upon an increase or
decrease in the dilution of the Credit Card Accounts reflected in
the most recent collateral audit performed pursuant to Section
7.06.
"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 the Borrower unless it owns, directly or
indirectly, at least 20% of such Securities of the Borrower.
"Agent-Related Person" shall mean Bank of America and
--------------------
any successor Administrative Agent pursuant to Section 11.09,
--------------
together with their respective Affiliates, and the officers,
directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"Agreement" shall have the meaning ascribed to such
---------
term in the preamble hereto.
"AnnTaylor Finance Trust" shall mean AnnTaylor Finance
-----------------------
Trust, a Delaware statutory business trust.
"Applicable Approved Issuance Amount" shall mean, as to
-----------------------------------
each Issuing Bank (other than Bank of America), the amount
notified from time to time by the Administrative Agent to such
Issuing Banks. The Applicable Approved Issuance Amount for each
=================================================================
-3-
such Issuing Bank shall be equal unless otherwise agreed by the
Administrative Agent and each such Issuing Bank. The aggregate
Applicable Approved Issuance Amounts for such Issuing Banks shall
not at any time exceed the lesser of (i) the Commitments then in
effect less the aggregate principal amount of all outstanding
----
Loans and (ii) the Borrowing Base Amount then in effect less the
----
aggregate principal amount of all outstanding Loans.
"Applicable Lending Office" shall mean, with respect to
-------------------------
each Lender, such Lender's Domestic Lending Office, in the case
of a Base Rate Loan, and such Lender's Eurodollar Lending Office,
in the case of a Eurodollar Rate Loan.
"Arranger" shall have the meaning ascribed to such term
--------
in the preamble.
"Assignment and Acceptance" shall mean an Assignment
--------------------------
and Acceptance in the form of Exhibit 12.01 (with blanks appropri
-------------
ately filled in) delivered to the Administrative Agent and the
Borrower in connection with an assignment of a Lender's interest
under this Agreement pursuant to Section 12.01.
-------------
"ATSC" shall mean AnnTaylor Stores Corporation, a
----
Delaware corporation.
"ATSC Guarantee Agreements" shall mean the Common
---------------------------
Securities Guarantee Agreement and the Preferred Securities
Guarantee Agreement.
"ATSC Guaranty" shall mean the Guaranty dated as of the
-------------
Initial Funding Date substantially in the form of, and on the
terms set forth in, Exhibit 4.01(a)(iv), as the same may be
-------------------
amended, modified or otherwise supplemented from time to time.
"ATSC Pledge Agreement" shall mean the Security and
----------------------
Pledge Agreement dated as of the Initial Funding Date
substantially in the form of, and on the terms set forth in,
Exhibit 4.01(a)(v), as the same may be amended, supplemented or
------------------
otherwise modified from time to time.
"Available Cash" shall mean, with respect to any Fiscal
--------------
Year, (a) the sum of (i) Net Income for such Fiscal Year, plus
(ii) to the extent Net Income for such Fiscal Year is reduced
thereby, all charges for amortization of intangibles and
depreciation and other non-cash charges, plus (iii) any decrease
----
in Working Capital during such Fiscal Year minus (b) the sum of
(i) Capital Expenditures during such Fiscal year plus (ii) any
----
increase in Working Capital during such Fiscal Year.
"Available In-Transit Amount" shall mean, as of any
---------------------------
Calculation Date, an amount equal to (a) 65% of the sum of (i)
the aggregate undrawn face amount of Commercial Letters of Credit
issued to finance the purchase of Inventory (other than Inventory
included in the determination of Eligible Inventory), and (ii)
the aggregate Inventory Value of Inventory financed with
Commercial Letters of Credit which have been fully drawn and the
Reimbursement Obligations in respect of which have been fully
paid so long as, in the case of clause (i) and (ii), (A) such
Inventory shall be in transit to properties owned or leased by
the Borrower or the Subsidiary Guarantors in the United States
and (B) such Inventory is not included in the calculation of
Eligible Inventory and, upon arrival in the United States, will
be included in the determination of the Eligible Inventory minus
==================================================================
-4-
(b) the Stock-in-Transit Reserve with respect to all such
Inventory.
"Bank of America" shall mean Bank of America National
----------------
Trust and Savings Association, a national banking association.
"Bankruptcy Code" shall mean Title 11 of the United
----------------
States Code (11 U.S.C Section 101 et seq.), as amended from time to
time, or any successor statute.
"Base Rate" shall mean, for any day a fluctuating
----------
interest rate per annum equal to the higher of (a) the Reference
Rate in effect on such day and (b) the sum of the Federal Funds
Rate plus 0.50%.
"Base Rate Loans" shall mean all Loans outstanding
-----------------
which bear interest at a rate determined by reference to the Base
Rate as provided in Section 2.02.
------------
"Benefit Plan" shall mean a defined benefit plan as
-------------
defined in Section 3(35) of ERISA (other than a Multiemployer
Plan) which the Borrower or an ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or
under which the Borrower or any ERISA Affiliate may incur any
liability.
"Borrower" shall have the meaning ascribed to such term
--------
in the preamble hereto.
"Borrower Pledge Agreement" shall mean the Security and
-------------------------
Pledge Agreement dated as of the Initial Funding Date
substantially in the form of, and on the terms set forth in,
Exhibit 4.01(a)(iii), as the same may be amended, supplemented or
--------------------
otherwise modified from time to time.
"Borrowing" shall mean, except as otherwise provided in
---------
Section 2.07(c)(ii), a borrowing consisting of Loans of the same
-------------------
type, having the same Interest Period and made on the same day by
the Lenders.
"Borrowing Base Amount" shall mean, as of any
-----------------------
Calculation Date, the sum of (a) the product of (i) the Eligible
Accounts Receivable Amount at such Calculation Date times (ii)
the Advance Rate for Eligible Accounts Receivable, (b) the
product of (i) the Eligible Inventory Amount at such Calculation
Date times (ii) the Advance Rate for Eligible Inventory, (c) the
Available in-Transit Amount at such Calculation Date and (d) the
Eligible Fixed Asset Amount at such Calculation Date. The
Borrowing Base Amount as determined on any Calculation Date shall
remain in effect until the next succeeding Calculation Date.
"Borrowing Base Certificate" shall mean a certificate,
--------------------------
substantially in the form of Exhibit 6.01(o) delivered to the
--------------
Administrative Agent by the Borrower pursuant to Section 6.01(o).
---------------
"Business Day" shall mean (a) for all purposes other
-------------
than as covered by clause (b) below, any day excluding Saturday,
----------
Sunday and any day which is a legal holiday under the laws of the
State of New York or the State of California, or is a day on
==================================================================
-5-
which banking institutions located in either of those states are
required or authorized by law or other governmental action to
close and (b) with respect to all notices, determinations,
fundings and payments in connection with the Eurodollar Rate, any
day which is a Business Day described in clause (a) and which is
also a day for trading by and between banks in the London
interbank market.
"Calculation Date": at any time, the last day of any
----------------
period covered by the most recent Borrowing Base Certificate.
"Capital Expenditures" shall mean, for any period, on a
--------------------
consolidated basis for the Borrower and its Restricted
Subsidiaries, the aggregate of all expenditures (whether paid in
cash or accrued as liabilities during that period and including
that portion of Capital Leases (except any capitalized interest)
which is capitalized on the consolidated balance sheet of the
Borrower and its Restricted Subsidiaries) made by the Borrower or
any Restricted Subsidiary during such period that, in conformity
with GAAP, are required to be included in or reflected by
property, plant or equipment (including expenditures for
equipment purchased simultaneously with the trade-in of existing
equipment owned by the Borrower or any such Restricted Subsidiary
to the extent the gross amount of such purchase price exceeds the
book value of the equipment being traded in, but excluding
expenditures made in connection with the replacement or
restoration of assets, to the extent reimbursed or financed from
insurance proceeds or condemnation awards).
"Capital Lease", as applied to any Person, shall mean
-------------
any lease of any property (whether real, personal, or mixed) by
that Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that
Person.
"Cash Collateral Account" shall have the meaning
-------------------------
ascribed to such term in Section 2.04.
------------
"Cash Equivalents" shall mean (a) marketable direct
-----------------
obligations issued or unconditionally guaranteed by the United
States Government or issued by an agency thereof and backed by
the full faith and credit of the United States of America 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
any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within 180 days (or, if no 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 either S&P or Moody's (or, if at any time neither
S&P nor Moody's shall be rating such obligations, then from such
other nationally recognized rating services acceptable to the
Requisite Lenders) and not listed in Credit Watch published by
S&P; (c) commercial paper, other than commercial paper issued by
the Borrower or any Subsidiary of the Borrower or any of their
Affiliates, maturing no more than 180 days (or, if no Loans 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 Requisite Lenders); and (d) domestic and
Eurodollar certificates of deposit or time deposits or bankers'
acceptances maturing within 180 days (or, if no Loans are
outstanding at the time of acquisition thereof and after giving
effect thereto, 360 days) after the date of acquisition thereof
=================================================================
-6-
issued by any commercial bank organized under the laws of the
United States of America or any state thereof or the District of
Columbia having combined capital and surplus of not less than
$500,000,000.
"Change in Control" shall have the meaning ascribed to
-----------------
such term in the Subordinated Note Indenture (as in effect on the
date hereof and as from time to time in effect) or any
Subordinated Debt Indenture.
"Claim" shall mean any claim or demand, by any Person,
-----
of whatsoever kind or nature for any actual or alleged
Liabilities and Costs, whether based in contract, tort, implied
or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Cleandown" shall have the meaning ascribed to such
---------
term in Section 2.01(a)(v).
"Cleandown Period" shall have the meaning ascribed to
----------------
such term in Section 2.01(a)(v).
-----------------
"Code" shall mean the Internal Revenue Code of 1986, as
----
amended from time to time, and any successor statute.
"Collateral" shall mean all property and interests in
----------
property now owned or hereafter acquired in or upon which a
security interest, pledge, lien or mortgage is granted or of
which a collateral assignment is made under the Collateral
Documents.
"Collateral Documents" shall mean the ATSC Guaranty,
---------------------
the ATSC Pledge Agreement, the Borrower Pledge Agreement, the
Trademark Security Agreement and the Subsidiary Guaranty and
Collateral Agreement, and any other document creating in favor of
the Administrative Agent, for the benefit of the Lenders, a
security interest in any property as security for the
Obligations, as any of the foregoing may be amended, supplemented
or otherwise modified from time to time.
"Commercial Letter of Credit" shall mean any Letter of
---------------------------
Credit which is drawable upon presentation of documents, drafts
at sight and time drafts evidencing the sale or shipment of goods
purchased by the Borrower in the ordinary course of its business.
"Commission" shall mean the Securities and Exchange
----------
Commission.
"Commitment" shall mean, with respect to each Lender as
----------
the context may require, (a) the amount set out opposite such
Lender's name under the heading "Commitment" in Schedule 1.01(b)
---------- -----------------
or assigned to it in accordance with Section 12.01(a), as such
---------------
amount may be reduced or otherwise adjusted from time to time
pursuant to the terms of this Agreement or (b) the obligation of
such Lender to make Loans hereunder and participate in Letters of
Credit up to the amount specified in the immediately preceding
clause (a), and "Commitments" shall mean the aggregate amount of
--------- -----------
the Commitments of all Lenders.
================================================================
-7-
"Commitment Letter" shall mean the Commitment Letter
------------------
dated May 7, 1998 from Bank of America, the Arranger, Citicorp
and CoreStates Bank, N.A. to the Borrower.
"Common Securities Guarantee Agreement" shall mean the
-------------------------------------
Common Securities Guarantee Agreement, dated as of April 25,
1996, by ATSC for the benefit of the holders of the common
securities of AnnTaylor Finance Trust.
"Common Stock" shall mean the common stock of ATSC the
------------
par value of which is set forth in the ATSC Certificate of
Incorporation, as such certificate may be amended, restated or
otherwise modified from time to time.
"Compliance Certificate" shall mean a certificate
-----------------------
substantially in the form of Exhibit 6.01(d)(i) delivered to the
------------------
Administrative Agent by the Borrower pursuant to Section
-------
6.01(d)(i) and covering the Borrower's compliance with the
----------
covenants contained in Article IX and certain of the covenants
----------
contained in Article VIII.
------------
"Contaminant" shall mean any pollutant, hazardous
-----------
substance, hazardous chemical, toxic substance, hazardous waste
or special waste, as those terms are defined in federal, state or
local laws and regulations, radioactive material, petroleum,
including crude oil or any petroleum-derived substance, or
breakdown or decomposition product thereof, or any constituent of
any such substance or waste, including polychlorinated biphenyls
and asbestos.
"Contractual Obligation", as applied to any Person,
-----------------------
shall mean any provision of any Securities issued by that Person
or any indenture, mortgage, deed of trust, contract, undertaking,
document, instrument or other agreement or instrument to which
that Person is a party or by which it or any of its properties is
bound, or to which it or any of its properties is subject
(including any restrictive covenant affecting such Person or any
of its properties).
"Convertible Debentures" shall mean 8-1/2% Convertible
-----------------------
Subordinated Debentures Due 2016 issued pursuant to the
Indenture, dated as of April 15, 1996, between ATSC and the Bank
of New York, as Trustee.
"Cost/Market Reserve" shall mean, as of any Calculation
-------------------
Date, the lower of cost or market reserve for the most recent
fiscal month calculated in accordance with the accounting
practices of the Borrower and the Subsidiary Guarantors.
"Credit Card Accounts": all accounts receivable
----------------------
arising out of any sale in the ordinary course of business
pursuant to proprietary credit card transactions.
"Credit Facility" shall mean the loan and letter of
----------------
credit facility provided to the Borrower pursuant to this
Agreement.
"Current Assets" shall mean, as at any date of
---------------
determination, the consolidated assets of the Borrower and its
Restricted Subsidiaries which may properly be classified as
current assets in conformity with GAAP.
================================================================
-8-
"Current Liabilities" shall mean, as at any date of
--------------------
determination, the consolidated liabilities of the Borrower and
its Restricted Subsidiaries which may properly be classified as
current liabilities in conformity with GAAP.
"Customary Permitted Liens" shall mean
-------------------------
(a) Liens (other than Environmental Liens and any
Lien imposed under ERISA) for claims, taxes, assessments or
charges of any Governmental Authority not yet due or which are
being contested in good faith by appropriate proceedings and with
respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(b) statutory Liens of landlords, bankers, carriers,
warehousemen, mechanics, materialmen and other Liens (other than
any Lien imposed under ERISA or any Environmental Lien) imposed
by law, arising in the ordinary course of business and for
amounts which (i) are not yet due, (ii) are not more than 30 days
past due as long as no notice of default has been given or other
action taken to enforce such Liens, or (iii)(A) are not more than
30 days past due and a notice of default has been given or other
action taken to enforce such Liens, or (B) are more than 30 days
past due, and, in the case of clause (A) or (B), are being
---------- ---
contested in good faith by appropriate proceedings which are
sufficient to prevent imminent foreclosure of such Liens and with
respect to which adequate reserves or other appropriate
provisions are being maintained in accordance with GAAP;
(c) Liens (other than any Lien imposed under ERISA or
any Environmental Lien) incurred or deposits made in the ordinary
course of business (including surety bonds and appeal bonds) in
connection with workers' compensation, unemployment insurance and
other types of employment benefits or to secure the performance
of tenders, bids, leases, contracts (other than in respect of
Indebtedness), statutory obligations and other similar
obligations or arising as a result of progress payments under
government contracts;
(d) easements (including reciprocal easement
agreements and utility agreements), rights-of-way, covenants,
consents, rights of landlords, reservations, encroachments,
variations and other restrictions, charges or encumbrances
(whether or not recorded) affecting the use of real property,
which do not materially interfere with the ordinary conduct of
the business of the Borrower; and
(e) Liens on goods in favor of customs and revenue
authorities arising as a matter of law to secure payment of
customs duties in connection with the importation of such goods.
"DOL" shall mean the United States Department of Labor
---
and any successor department or agency.
"Dollars" and "$" shall mean the lawful money of the
------- -
United States of America.
"Domestic Lending Office" means, with respect to any
-----------------------
Lender, the office of such Lender specified as its "Domestic
--------
Lending Office" in Schedule 1.01(a) or in the Assignment and
--------------- ----------------
Acceptance by which it became a Lender or such other office of
such Lender as such Lender may from time to time specify to the
Borrower and the Administrative Agent.
=================================================================
-9-
"EBITDA" shall mean, for any period, the sum of the
------
amounts for such period, of (a) Net Income, plus (b) to the
----
extent Net Income is reduced thereby (i) all charges for
amortization of intangibles and depreciation, (ii) Interest
Expense, (iii) income tax expense and (iv) extraordinary losses,
minus (c) extraordinary gains (net of taxes).
-----
"EBITR" shall mean, for any period, the sum of the
-----
amounts for such period, of (a) Net Income, plus (b) to the
----
extent Net Income is reduced thereby (i) Interest Expense, (ii)
income tax expense and (iii) extraordinary losses, plus (c)
----
Rental Expense, minus (d) extraordinary gains (net of taxes).
"Eligible Accounts Receivable" shall mean, as of any
----------------------------
Calculation Date, all Credit Card Accounts of the Borrower and
the Subsidiary Guarantors that satisfy each of the following
criteria:
(a) such Credit Card Account has been adjusted to
reflect the return or rejection of, or any loss of or
damage to any of the Inventory giving rise to such
Credit Card Account, and is not subject to bona fide
set-offs, counterclaims, defenses, or disputes asserted
with respect to such Credit Card Account;
(b) to the best knowledge of the Borrower and the
Subsidiary Guarantors, the Account Debtor with respect
to such Credit Card Account is not insolvent or the
subject of any bankruptcy case or insolvency proceeding
of any kind, unless such Credit Card Account is due
from such Account Debtor as an administrative claim
under the Bankruptcy Code and the Administrative Agent,
in the exercise of its reasonable business judgment,
deems the Account Debtor to be creditworthy;
(c) the Account Debtor in respect of such Credit
Card Account has a mailing address within the United
States of America (excluding the Virgin Islands and any
other territory of the United States) or Puerto Rico;
(d) the Account Debtor in respect of such Credit
Card Account is not the United States of America or any
state, territory, subdivision, department, or agency
thereof;
(e) such Credit Card Account does not arise out
of transactions with a Subsidiary or Affiliate (other
than directors, officers and employees) of the Borrower
or any Subsidiary Guarantor;
(f) no amount payable in respect of such Credit
Card Account has remained unpaid for a period exceeding
sixty days after the due date stated on the customer
statement therefor;
(g) such Credit Card Account is owed by an
Account Debtor which does not then have balances on its
Credit Card Accounts which are more than 60 days past
due which exceed 50% of the total balance of all such
Credit Card Accounts owed by such Account Debtor;
=================================================================
-10-
(h) such Credit Card Account has not been and is
not required to be charged off or written off as
uncollectible in accordance with the customary business
practice of the Borrower and the Subsidiary Guarantors;
(i) such Credit Card Account does not arise out
of any claim in tort, is not evidenced by chattel
paper, a promissory note, a negotiable instrument, or
any other instrument of any kind or, if such Credit
Card Account is evidenced by chattel paper, a
promissory note, a negotiable instrument or any other
instrument, such chattel paper, promissory note,
negotiable instrument or other instrument has been
delivered to the Administrative Agent and is subject to
a first priority security interest in favor of the
Administrative Agent;
(j) the amount of the face value of such Credit
Card Account listed on any schedule of Credit Card
Accounts and shown on all customer statements delivered
to the Administrative Agent with respect to such Credit
Card Account is not subject to any asserted bona fide
retainages or holdbacks of any type, is actually and
absolutely owing, and is not contingent on any
condition, in each case, other than in respect of
repurchase or return agreements that (i) arise in the
ordinary course of the Borrower's business and (ii) are
consistent with the Borrower or such Subsidiary
Guarantor's historical business practice;
(k) such Credit Card Account does not arise out
of a cash on delivery sale;
(l) such Credit Card Account does not arise out
of the sale of samples;
(m) such Credit Card Account is owned solely by
the Borrower or a Subsidiary Guarantor and is evidenced
by a customer statement and has arisen from the sale of
goods which have been shipped or delivered to an
Account Debtor on an absolute sale basis, have not been
shipped or delivered on a consignment, approval, or
sale-or-return basis, and are not subject to any
repurchase or return agreement or arrangement, other
than those repurchase or return agreements or
arrangements that (i) arise in the ordinary course of
the Borrower's business and (ii) are consistent with
the Borrower or such Subsidiary Guarantor's historical
business practices; and
(n) such Credit Card Account is subject to a Lien
in favor of the Administrative Agent and is not subject
to Liens other than Permitted Account Liens.
The Administrative Agent may, in its reasonable discretion,
adjust or change the foregoing eligibility criteria or add
additional reserves with respect to Eligible Accounts Receivable
based upon the results of the most recent collateral audit
performed pursuant to Section 7.06.
"Eligible Accounts Receivable Amount" shall mean, as of
-----------------------------------
any Calculation Date, (a) Eligible Accounts Receivable of the
Borrower and the Subsidiary Guarantors at such Calculation Date
minus (b) the Sales Tax Reserve at such Calculation Date.
-----
=================================================================
-11-
"Eligible Assignee" means (a) a commercial bank
------------------
organized under the laws of the United States, or any state
thereof, and having a combined capital and surplus of at least
$100,000,000; (b) a commercial bank organized under the laws of
any other country which is a member of the Organization for
Economic Cooperation and Development (the "OECD"), or a political
----
subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is
acting through a branch or agency located in the United States of
America; (c) a Person that is primarily engaged in the business
of commercial banking and that is (i) a Subsidiary of a Lender,
(ii) a Subsidiary of a Person of which a Lender is a Subsidiary,
or (iii) a Person of which a Lender is a Subsidiary; and (d) any
Person that in the ordinary course of business extends credit or
purchases loans of a character substantially similar to the
Loans.
"Eligible Fixed Assets" shall mean, as of any
-----------------------
Calculation Date, the net book value of all furniture and
fixtures (excluding leasehold improvements) of the Borrower and
the Subsidiary Guarantors as set forth on the most recent balance
sheet of the Borrower and the Subsidiary Guarantors prepared in
accordance with GAAP, which are subject to a perfected security
interest in favor of the Administrative Agent and are subject to
no other Liens other than Permitted Fixed Asset Liens. The
Administrative Agent may, in its reasonable discretion, add
additional eligibility criteria or reserves with respect to
Eligible Fixed Assets based upon the results of the most recent
collateral audit performed pursuant to Section 7.06.
"Eligible Fixed Asset Amount" shall mean, as of any
---------------------------
Calculation Date, the Eligible Fixed Assets of the Borrower and
the Subsidiary Guarantors at such Calculation Date times the
Advance Rate for Eligible Fixed Assets.
"Eligible Inventory Amount" shall mean, as of any
--------------------------
Calculation Date, (a) the Inventory Value of all Eligible
Inventory of the Borrower and the Subsidiary Guarantors at such
Calculation Date minus (b) the sum of (i) the Gift Certificate
-----
Liability Amount as of such Calculation Date, (ii) the
Merchandise Credit Amount as of such Calculation Date, (iii) the
Cost/Market Reserve as of such Calculation Date, (iv) the Shrink
Reserve as of such Calculation Date, and (v) the Positive Price
Variance Reserve as of such Calculation Date.
"Eligible Inventory" shall mean, as of the Calculation
------------------
Date, all Inventory of the Borrower and the Subsidiary Guarantors
consisting of finished goods available for sale that satisfies
each of the following criteria as of such day:
(a) such Inventory (i) is owned solely by the
Borrower or any such Subsidiary Guarantor and (ii) is
not leased by or on consignment to the Borrower or any
Subsidiary Guarantor;
(b) such Inventory is located at property that
is owned or leased by the Borrower or any Subsidiary
Guarantor, including Inventory which is in transit from
one property that is owned or leased by the Borrower or
any Subsidiary Guarantor (or a flow through center or a
distribution center) to another property that is owned
or leased by the Borrower or any Subsidiary Guarantor
(or a flow through center or a distribution center);
==================================================================
-12-
(c) such Inventory is not subject to a layaway
purchase by any customer;
(g) such Inventory is not located at any return
center used by the Borrower or any Subsidiary
Guarantor;
(h) such Inventory is located in the United
States of America (excluding territories and
possessions thereof) and Puerto Rico; and
(i) such Inventory is subject to a perfected
security interest in favor of the Administrative Agent
and is not subject to Liens other than Permitted
Inventory Liens.
The Administrative Agent may, in its reasonable discretion,
adjust or change the foregoing eligibility criteria or add
additional reserves with respect to Eligible Inventory based upon
the results of the most recent collateral audit performed
pursuant to Section 7.06.
"Environmental Lien" shall mean a Lien in favor of any
------------------
Governmental Authority for (a) any liability of the Borrower or
any Subsidiary of the Borrower under federal or state
environmental laws or regulations, or (b) damages arising from,
or costs incurred by such Governmental Authority in response to,
a Release or threatened Release of a Contaminant into the
environment.
"ERISA" shall mean the Employee Retirement Income
-----
Security Act of 1974, as amended from time to time, and any
successor statute.
"ERISA Affiliate" shall mean any (a) corporation which
---------------
is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrower or any
of its Subsidiaries, (b) partnership or other trade or business
(whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Code) with the Borrower or any
of its Subsidiaries, and (c) member of the same affiliated
service group (within the meaning of Section 414(m) of the Code)
as the Borrower or any of its Subsidiaries, any corporation
described in clause (a) above or any partnership or trade or
business described in clause (b) above.
"Eurodollar Lending Office" means, with respect to any
-------------------------
Lender, the office of such Lender specified as its "Eurodollar
----------
Lending Office" in Schedule 1.01(a) or in the Assignment and
--------------- ----------------
Acceptance by which it became a Lender (or, if no such office is
specified, its Domestic Lending Office) or such other office of
such Lender as such Lender may from time to time specify by
written notice to the Borrower and the Administrative Agent.
"Eurodollar Rate" shall mean, with respect to any
----------------
Interest Period applicable to a Borrowing of Eurodollar Rate
Loans, an interest rate per annum determined by the
Administrative Agent by dividing (a) the rate (rounded upward to
the next 1/16th of 1%) of interest per annum given to the
Administrative Agent by the Reference Bank as the rate at which
dollar deposits for such Interest Period and in an amount
approximately equal to the amount of the Reference Bank's
Eurodollar Rate Loan during such Interest Period would be offered
by its applicable Eurodollar Lending Office to major banks in the
London eurodollar market at or about 11:00 a.m. (London time) two
=================================================================
-13-
Business Days prior to the commencement of such Interest Period
by (b) a percentage equal to 1 minus the Eurodollar Reserve
-----
Percentage.
"Eurodollar Rate Loans" shall mean those Loans
-----------------------
outstanding which bear interest at a rate determined by reference
to the Eurodollar Rate as provided in Section 2.02.
------------
"Eurodollar Reserve Percentage" shall mean with respect
-----------------------------
to any Interest Period for any Eurodollar Rate Loan, that percent
age (expressed as a decimal rounded upwards to the nearest
1/100%) which is in effect on the date the Eurodollar Rate for
such Interest Period is determined as prescribed by the Federal
Reserve Board, for determining the maximum reserve requirement
(including any emergency, supplemental or other marginal reserve
requirement) for a member bank of the Federal Reserve System with
deposits exceeding $5,000,000,000 in respect of "Eurocurrency
liabilities" having a term equal to such Interest Period (or in
respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar
Rate Loans is determined or any category of extensions of credit
or other assets which includes loans by a non-United States
office of any bank to United States residents).
"Event of Default" shall mean any of the occurrences
------------------
set forth in Section 10.01 after the expiration of any applicable
-------------
grace period expressly provided therein.
"Existing Credit Agreement" means the Amended and
---------------------------
Restated Credit Agreement dated as of September 29, 1995 among
AnnTaylor, Inc., Bank of America and Fleet Bank, National
Association, as Co-Agents, BancAmerica Robertson Stephens
(formerly known as BA Securities, Inc.), as Arranger, Bank of
America, as Agent, and the financial institutions parties
thereto, as amended.
"Existing Letter of Credit" shall mean each Letter of
-------------------------
Credit identified in Schedule 3.01.
-------------
"Extension Period" shall have the meaning ascribed to
----------------
such term in Section 2.01(f).
---------------
"FDIC" shall mean the Federal Deposit Insurance
----
Corporation or any successor thereto.
"Federal Funds Rate" shall mean, for any day, the rate
------------------
set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for
---------
such day opposite the caption "Federal Funds (Effective)". If on
------------------------
any relevant day such rate is not yet published in H.15(519), the
rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m.
Quotations for U.S. Government Securities, or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, the "Composite 3:30 p.m.
----------------------
Quotation") for such day under the caption "Federal Funds
--------- --------------
Effective Rate". If on any relevant day the appropriate rate for
--------------
such previous day is not yet published in either H.15(519) or the
Composite 3:30 p.m. Quotations, the rate for such day will be the
arithmetic mean as determined by the Administrative Agent of the
rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York time) on that day by each
of three leading brokers of Federal funds transactions in New
York City selected by the Administrative Agent.
==================================================================
-14-
"Federal Reserve Board" shall mean the Board of Gover
---------------------
nors of the Federal Reserve System or any Governmental Authority
succeeding to its functions.
"Fee Letter" shall mean the Fee Letter dated May 7,
-----------
1998 between the Borrower, Bank of America, the Arranger,
Citicorp and CoreStates Bank, N.A.
"Final Maturity Date" shall mean June 30, 2000, as such
-------------------
date may be extended pursuant to Section 2.01(f).
---------------
"Fiscal Year" shall mean the fiscal year of the
------------
Borrower, which shall be the twelve-month period ending on the
Saturday closest to January 31 in each year or such other period
as the Borrower may designate and the Requisite Lenders may
approve (such approval not to be unreasonably withheld) in
writing. A Fiscal Year ending in January or February, as the
case may be, of any calendar year shall have the numerical
designation of the prior calendar year.
"Fixed Charge Coverage Ratio" shall mean, for any
-----------------------------
period, the quotient obtained by dividing (a) EBITR by (b) the
sum of (i) Interest Expense plus (ii) Rental Expense.
----
"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 the Borrower, ATSC or any of their respective
Restricted Subsidiaries.
"Foreign Subsidiary" shall mean any Subsidiary of the
------------------
Borrower organized under the laws of any jurisdiction outside the
United States of America.
"Funded Debt" shall mean, as at any date of determina
------------
tion, all Indebtedness then outstanding (a) for the principal of
Loans under this Agreement and (b) for money borrowed or under
any debt Securities issued by ATSC (other than the Convertible
Debentures), the Borrower or any Restricted Subsidiary (whether
or not subordinated, and specifically including the Subordinated
Notes or any Subordinated Debt).
"Funding Date" shall mean the date of borrowing any
-------------
Loan.
"GAAP" shall mean generally accepted accounting princi
----
ples set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by
significant segments of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Gift Certificate Liability Amount" shall mean, as of
---------------------------------
any Calculation Date, the aggregate amount of gift certificates
then outstanding entitling the holder thereof to use all or a
portion thereof to pay all or a portion of the purchase price for
any Inventory as of such day which are not being held for
escheatment or which have not been escheated as of such day.
"Governmental Acts" shall have the meaning ascribed to
-----------------
ssuch term in Section 3.09(a).
----------------
==================================================================
-15-
"Governmental Authority" shall mean any nation, state,
----------------------
sovereign, or government, any federal, regional, state, local or
political subdivision and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Guarantors" shall mean ATSC and each Restricted
----------
Subsidiary (other than Foreign Subsidiaries and Nonmaterial
Domestic Subsidiaries) of the Borrower.
"HKSB Facility" shall mean the Amended and Restated
--------------
Credit Agreement, dated as of September 20, 1996, as amended,
between AnnTaylor Global Sourcing, Inc. and The Hongkong and
Shanghai Banking Corporation Limited.
"Indebtedness", as applied to any Person, shall mean
------------
(a) all indebtedness, obligations or other liabilities of such
Person for borrowed money or under any debt Securities, whether
or not subordinated, (b) all obligations with respect to
redeemable stock and redemption or repurchase obligations under
any equity securities or profit payment agreements, (c) all
reimbursement obligations and other liabilities of such Person
with respect to letters of credit issued for such Person's
account, (d) all obligations of such Person to pay the purchase
price of property or services, except trade payables incurred by
such Person in the ordinary course of business as presently
conducted, (e) all obligations in respect of Capital Leases of
such Person, (f) all Accommodation Obligations of such Person,
(g) all indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any asset of such Person,
whether or not such indebtedness, obligations or liabilities are
assumed by or are a personal liability of such Person, all as of
such time, and (h) all indebtedness, obligations or other
liabilities in respect of Interest Rate Contracts and Foreign
Currency Exchange Agreements. For purposes of determining
Indebtedness, the "principal amount" of the obligations of the
Borrower or any Subsidiary in respect of any Interest Rate
Contract or Foreign Currency Exchange Agreement at any time shall
be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be
required to pay if such Contract or Agreement were terminated at
such time.
"Initial Funding" shall mean the funding of Loans on
---------------
the Initial Funding Date.
"Initial Funding Date" shall mean the date (on or
---------------------
before July 29, 1998) on which all conditions precedent set forth
in Section 4.01 have been satisfied or waived.
------------
"Initial Loans" shall have the meaning ascribed to such
-------------
term in Section 4.01.
------------
"Interest Expense" shall mean, for any period for ATSC,
----------------
the Borrower and its Restricted Subsidiaries on a consolidated
basis, total consolidated interest expense, whether paid or
accrued (including any amortization of discount and the interest
component of Capital Leases), for such period, including to the
extent included in interest expense, all commissions, discounts
and other fees and charges owed with respect to the letters of
credit, the fees payable under this Agreement and net costs under
Interest Rate Contracts, all as determined in conformity with
GAAP, plus (without duplication) all capitalized interest, minus
---- -----
payments received under Interest Rate Contracts and interest
income.
=================================================================
-16-
"Interest Payment Date" shall mean with respect to any
---------------------
Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of an Interest
--------
Period of six months or longer, "Interest Payment Date" shall
----------------------
also include each date that is a three-month anniversary of the
first day of such Interest Period.
"Interest Period" shall have the meaning ascribed to
----------------
such term in Section 2.06.
------------
"Interest Rate Contracts" shall mean interest rate
-------------------------
exchange, collar, cap or similar agreements providing interest
rate protection, entered into by the Borrower, ATSC or any of
their respective Restricted Subsidiaries.
"Inventory" shall mean, as to any Person, any
---------
"inventory" as such term is defined in Section 9-109(4) of the
UCC, now or hereafter owned by such Person.
"Inventory Value" shall mean, with respect to any
----------------
Inventory of the Borrower or any Subsidiary Guarantor, the value
of such Inventory valued at cost on a basis consistent with the
Borrower's or such Subsidiary Guarantor's current and historical
accounting practice (without giving effect to markdowns,
intercompany profit, rebates and discounts and capitalized
inventory costs on the consolidated balance sheet of the Borrower
and the Subsidiary Guarantors in respect of Inventory (other than
capitalized costs recorded in accordance with GAAP)).
"Investment" shall mean, as applied to any Person, any
----------
direct or indirect purchase or other acquisition by that Person
of Securities, or of a beneficial interest in Securities, of any
other Person, and any direct or indirect loan, advance (other
than deposits with financial institutions available for
withdrawal on demand, prepaid expenses, advances to employees and
similar items made or incurred in the ordinary course of
business), or capital contribution by such Person to any other
Person, including all Indebtedness and accounts owed by that
other Person which are not current assets or did not arise from
sales of goods or services to that Person in the ordinary course
of business. The amount of any Investment shall be determined in
conformity with GAAP.
"Investor Group" shall mean Merrill Lynch Capital
---------------
Partners, Inc. and its Affiliates.
"IRS" shall mean the Internal Revenue Service of the
---
United States or any Governmental Authority succeeding to the
functions thereof.
"Issuing Banks" shall mean First Union National Bank,
-------------
Citibank, N.A. and Bank of America (as to any Existing Letters of
Credit issued by it).
"Issuing Bank Agreement" shall mean, as to each Issuing
----------------------
Bank (other than Bank of America), any agreement entered into by
such Issuing Bank and the Borrower relating to Letters of Credit.
"Lender" shall have the meaning ascribed to such term
------
in the preamble and shall include Bank of America, in its
individual capacity, each Issuing Bank and each Person which at
any time becomes a Lender pursuant to Section 12.01(a).
----------------
==================================================================
-17-
"Letter of Credit" shall mean any Commercial Letter of
----------------
Credit or any Standby Letter of Credit issued by any Issuing Bank
for the account of the Borrower pursuant to Article III and
includes each Existing Letter of Credit.
"Letter of Credit Fee" shall have the meaning ascribed
--------------------
to such term in Section 2.03(d).
---------------
"Letter of Credit Obligations" shall mean, at any
------------------------------
particular time, the sum of (a) Reimbursement Obligations and (b)
the aggregate maximum amount then available for drawing under the
Letters of Credit.
"Level I Status" exists at any date if the Pricing
----------------
Ratio on such date is greater than or equal to 3.25 to 1.00.
"Level II Status" exists at any date if the Pricing
-----------------
Ratio on such date is less than 3.25 to 1.00 but greater than or
equal to 2.50 to 1.00.
"Level III Status" exists at any date if the Pricing
-----------------
Ratio on such date is less than 2.50 to 1.00 but greater than or
equal to 1.75 to 1.00.
"Level IV Status" exists at any date if the Pricing
-----------------
Ratio on such date is less than 1.75 to 1.00.
"Liabilities and Costs" shall mean all liabilities,
----------------------
claims, obligations, responsibilities, losses, damages, punitive
damages, consequential damages, treble damages, charges, costs
and expenses (including attorney's, expert's and consulting fees
and costs of investigation and feasibility studies), fines,
penalties and monetary sanctions, interest, direct or indirect,
known or unknown, absolute or contingent, past, present or
future.
"Lien" shall mean any mortgage, deed of trust, pledge,
----
hypothecation, assignment, deposit arrangement, security
interest, encumbrance (including, but not limited to, easements,
rights of way and the like), lien (statutory or other),
Environmental Lien, security agreement or transfer intended as
security, including any conditional sale or other title retention
agreement, the interest of a lessor under a Capital Lease, any
financing lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement
(other than a financing statement filed pursuant to Section 9-408
of the Uniform Commercial Code not intended as security).
"Loan Account" shall have the meaning ascribed to such
------------
term in Section 2.01(d).
--------------
"Loan Documents" shall mean this Agreement, the
---------------
Collateral Documents and the Letters of Credit and all other
agreements delivered to the Administrative Agent, the Issuing
Banks or any Lender by or on behalf of the Borrower in
satisfaction of the requirements of this Agreement.
"Loan Party" shall mean ATSC, the Borrower and any
-----------
Restricted Subsidiary which is a party to any Loan Document.
=================================================================
-18-
"Loans" shall have the meaning ascribed to such term in
-----
Section 2.01(a).
--------------
"Margin Stock" shall have the meaning ascribed to such
------------
term in Regulation U.
"Material Adverse Effect" shall mean, with respect to
-----------------------
the Borrower, ATSC and its Restricted Subsidiaries, a material
adverse effect upon the business, assets or other properties,
liabilities or condition (financial or otherwise), results of
operations or prospects of the Borrower and its Restricted
Subsidiaries taken as a whole or ATSC and its Subsidiaries taken
as a whole, as the case may be, upon the ability of the Borrower
to repay the Loans, or upon the benefits provided to the
Administrative Agent or the Lenders under the Collateral
Documents.
"Maximum Loan Amount" shall mean, at any time, the
--------------------
lesser of (a) (i) the Commitments at such time (as reduced
pursuant to Section 2.01(e) and 2.04) less (ii) the sum of (A)
---------------- ---- ----
the then aggregate outstanding Letter of Credit Obligations and
(B) if applicable, the amount of any Cleandown, and (b)
$50,000,000.
"Merchandise Credit Amount" shall mean, as of any
--------------------------
Calculation Date, the aggregate amount of merchandise credits
then outstanding entitling the holder thereof to use all or a
portion thereof to pay all or a portion of the purchase price for
any Inventory as of such day which are not being held for
escheatment or which have not been escheated as of such day.
"Moody's" shall mean Moody's Investors Service, Inc.
-------
"Multiemployer Plan" shall mean a "multiemployer plan"
------------------
as defined in Section 4001(a)(3) of ERISA which is, or within the
immediately preceding six years was, contributed to by either the
Borrower or any ERISA Affiliate or under which the Borrower or
any ERISA Affiliate may incur any liability.
"Net Income" shall mean, for any period on a
-----------
consolidated basis for ATSC, the Borrower and its Restricted
Subsidiaries, the consolidated net income (or loss) of ATSC, the
Borrower and its Restricted Subsidiaries for such period taken as
a single accounting period, determined in conformity with GAAP.
"Net Worth" shall mean, as at any date of determi
----------
nation, the amount by which (a) the total consolidated assets of
ATSC, the Borrower and its Restricted Subsidiaries exceed (b) the
total consolidated liabilities of ATSC, the Borrower and its
Restricted Subsidiaries, as determined in conformity with GAAP
but excluding, for purposes of this definition, unrealized
foreign exchange translation gains and losses from Investments in
Foreign Subsidiaries.
"Nonmaterial Domestic Subsidiaries" shall mean any
----------------------------------
Restricted Subsidiary (other than a Foreign Subsidiary) which has
total assets of $250,000 or less, provided that the total assets
--------
of all Nonmaterial Domestic Subsidiaries shall not exceed
$1,000,000 in the aggregate and to the extent the aggregate total
assets of all such Restricted Subsidiaries exceeds $1,000,000,
one or more such Restricted Subsidiaries (in descending order
based upon their total assets) shall not be "Nonmaterial Domestic
Subsidiaries" until such excess is eliminated.
=================================================================
-19-
"Non-U.S. Lender" shall have the meaning ascribed to
----------------
such term in Section 2.08(e).
---------------
"Note" shall have the meaning ascribed to such term in
----
Section 2.01(d).
---------------
"Notice of Borrowing" shall mean, with respect to a
--------------------
proposed Borrowing pursuant to Section 2.01(b), a notice
----------------
substantially in the form of Exhibit 2.01.
------------
"Notice of Conversion/Continuation" shall mean, with
----------------------------------
respect to a proposed conversion or continuation of a Loan
pursuant to Section 2.02(c), a notice substantially in the form
--------------
of Exhibit 2.02.
------------
"Obligations" shall mean the principal of and all
-----------
interest on all Loans and Reimbursement Obligations, all fees,
expense reimbursements, taxes, compensation and indemnities
payable by the Borrower to the Administrative Agent, the Issuing
Banks, or any Lender pursuant to this Agreement and all other
present and future Indebtedness and other liabilities of the
Borrower owing to the Administrative Agent, the Issuing Banks,
any Lender (or, in the case of any Interest Rate Contract or
Foreign Currency Exchange Contract, any Affiliate of any Lender),
or any Person entitled to indemnification pursuant to Section
-------
12.04, or any of their respective successors, transferees or
-----
assigns, of every type and description, whether or not evidenced
by any note, guaranty or other instrument, arising under or in
connection with this Agreement, any other Loan Document, or any
Interest Rate Contract or Foreign Currency Exchange Contract,
whether or not for the payment of money, whether direct or
indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter
arising and however arising.
"Operating Lease" shall mean, as applied to any Person,
---------------
any lease of any Property by that Person as lessee which is not a
Capital Lease.
"Other Taxes" shall have the meaning ascribed to such
-----------
term in Section 2.08(b).
--------------
"PBGC" shall mean the Pension Benefit Guaranty Corpora
----
tion and any Person succeeding to the functions thereof.
"Permits" shall mean any permit, approval, consent,
-------
authorization, license, variance, or permission required from a
Governmental Authority under an applicable Requirement of Law.
"Permitted Account Liens" shall mean the collective
------------------------
reference to Liens permitted by clause (a) of the definition of
Customary Permitted Liens.
"Permitted Existing Indebtedness" shall mean the
---------------------------------
Indebtedness existing on the date hereof and set forth in
Schedule 8.01(k).
----------------
"Permitted Existing Liens" shall mean the Liens on any
------------------------
Property, other than any Environmental Liens, reflected on
Schedule 8.02(b).
----------------
=================================================================
-20-
"Permitted Fixed Asset Liens" shall mean the collective
---------------------------
reference to Liens permitted by clauses (a) and (b) of the
definition of Customary Permitted Liens.
"Permitted Inventory Liens" shall mean the collective
-------------------------
reference to Liens permitted by clauses (a), (b) and (e) of the
definition of Customary Permitted Liens.
"Person" shall mean any natural person, corporation,
------
limited partnership, general partnership, limited liability
company, joint stock company, joint venture, association,
company, trust, bank, trust company, land trust, business trust
or other organization, whether or not a legal entity, or any
other nongovernmental entity, or any Governmental Authority.
"Plan" shall mean an employee benefit plan defined in
----
Section 3(3) of ERISA which the Borrower or any ERISA Affiliate
maintains, administers, contributes to or is required to
contribute to, or under which the Borrower or any ERISA Affiliate
may incur any liability.
"Pledged Securities" shall mean the securities pledged
------------------
pursuant to the Collateral Documents.
"Positive Price Variance Reserve" shall mean, as of any
-------------------------------
Calculation Date, the reserve established by the Borrower and the
Subsidiary Guarantors for the most recently completed fiscal
quarter in accordance with the historical accounting practices of
the Borrower and the Subsidiary Guarantors in respect of the
excess, if any, of (a) the standard costs associated with the
importation of Inventory over (b) the actual costs associated
with the importation of Inventory.
"Potential Event of Default" shall mean an event which,
--------------------------
with the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
"Preferred Securities" shall mean the 8-1/2% Convertible
---------------------
Trust Originated Preferred Securities issued April 25, 1996 by
AnnTaylor Finance Trust pursuant to the Offering Memorandum dated
April 18, 1996.
"Preferred Securities Guarantee Agreement" shall mean
----------------------------------------
the Preferred Securities Guarantee Agreement, dated as of
April 25, 1996, by ATSC and the Bank of New York, as Trustee for
the benefit of the holders of the Preferred Securities.
"Pricing Ratio" shall mean, during any fiscal quarter,
-------------
the Fixed Charge Coverage Ratio for the period of four
consecutive fiscal quarters ended on the last day of the
immediately preceding fiscal quarter. Changes in the Pricing
Ratio indicated by a Pricing Ratio Certificate shall become
effective on the first day of the fiscal quarter following the
fiscal quarter in respect of which such Pricing Ratio Certificate
is delivered; provided, however, that (a) if any payment of
-------- -------
interest, commitment fee or Letter of Credit Fee is made during
the period between the first day of a fiscal quarter (including
the fiscal quarter ending August 2, 1998) and the date which is
five Business Days after the date of delivery of the Pricing
Ratio Certificate for the immediately preceding fiscal quarter,
such payment shall be tentatively calculated on the basis of the
Pricing Ratio in effect during such immediately preceding fiscal
quarter until the Pricing Ratio is adjusted upon delivery of such
Pricing Ratio Certificate (it being agreed that Level IV Status
=================================================================
-21-
shall be deemed to exist in respect of the fiscal quarter ending
August 2, 1998) and (b) in the event that no Pricing Ratio
Certificate has been delivered for a fiscal quarter prior to the
last day of the next succeeding fiscal quarter, Level IV Status
shall be presumed to exist until delivery of such Pricing Ratio
Certificate. Changes in the rates of calculation of interest,
commitment fee or Letter of Credit Fee resulting from the
operation of either of clauses (a) or (b) above for any fiscal
quarter shall be given effect through adjustments to the next
payments to be made of interest, commitment fee or Letter of
Credit Fee, as the case may be, so as to give effect to such
changes retroactively to the beginning of such fiscal quarter.
"Pricing Ratio Certificate" shall have the meaning
---------------------------
given to such term in Section 6.01(d)(ii).
-------------------
"Property" shall mean with respect to any Person, any
---------
real or personal property, plant, building, facility, structure,
equipment or unit, or other asset (tangible or intangible) owned,
leased or operated by such Person.
"Pro Rata Share" shall mean, at any particular time and
--------------
with respect to any Lender, a fraction (expressed as a
percentage), the numerator of which shall be the then amount of
such Lender's Commitment (or, if the Commitments have been
terminated, such Lender's Commitment as in effect immediately
prior to such termination, after giving effect to any assignments
pursuant to Section 12.01) and the denominator of which shall be
-------------
the then aggregate amount of all Commitments (or, if the
Commitments have been terminated, the aggregate amount of all
Commitments as in effect immediately prior to such termination,
after giving effect to any assignments pursuant to Section
-------
12.01).
-----
"Qualified Capital Stock" shall mean common stock of
-----------------------
ATSC or preferred stock of ATSC which is not subject to any
mandatory redemption or repurchase, upon the happening of a
contingency or otherwise, and is not subject to any required
sinking fund or similar payments, at any time prior to March 31,
2005.
"Receivables Transaction" shall mean the transaction
------------------------
contemplated by that certain Receivables Financing Agreement,
dated as of January 27, 1994 among AnnTaylor Funding, Inc., the
Borrower, Clipper Receivables Corporation, State Street Boston
Capital Corporation and PNC Bank, National Association and the
other documents relating thereto.
"Reference Bank" shall mean Bank of America.
--------------
"Reference Rate" shall mean the rate of interest
---------------
publicly announced from time to time by Bank of America in San
Francisco, California, as its reference rate. It is a rate set
by Bank of America based upon various factors including Bank of
America's costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing
some loans, which may be priced at, above, or below such
announced rate. Any change in the Reference Rate shall take
effect at the opening of business on the date specified in the
public announcement of such change.
"Refinancing Date" shall have the meaning ascribed to
----------------
such term in Section 2.01(f).
---------------
===================================================================
-22-
"Register" shall have the meaning ascribed to such term
--------
in Section 12.01(c).
----------------
"Regulation D", "Regulation T", "Regulation U" and
------------- ------------ -------------
"Regulation X" shall mean Regulation D, Regulation T, Regulation
------------
U and Regulation X, respectively, of the Federal Reserve Board as
in effect from time to time.
"Reimbursement Obligations" shall mean the reimburse
-------------------------
ment or repayment obligations of the Borrower to the Issuing
Banks with respect to Letters of Credit, for amounts paid out
thereunder.
"Release" shall mean any release, spill, emission,
-------
leaking, pumping, injection, deposit, disposal, discharge,
dispersal, leaching or migration from any Property into the
environment, including the movement of Contaminants through or in
the air, soil, surface water, groundwater or Property.
"Remedial Action" shall mean any action required to (i)
---------------
clean up, remove, treat or in any other way address Contaminants
in the indoor or outdoor environment; (ii) prevent a Release or
threat of Release or minimize the further Release of Contaminants
so they do not migrate or endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; or (iii)
perform preremedial studies and investigations and post-remedial
monitoring and care.
"Rental Expense" shall mean, for any period for ATSC,
--------------
the Borrower and its Restricted Subsidiaries, on a consolidated
basis, the aggregate base rental payments to lessors or their
assignees by such Persons for such period under agreements to
rent or lease any real property (excluding payments in respect of
Capital Leases) as recorded in accordance with GAAP.
"Reportable Event" shall mean the events described in
----------------
Section 4043 of ERISA with respect to which the 30-day notice
requirement is not waived.
"Requirements of Law" shall mean, as to any Person, the
-------------------
charter and by-laws or other organizational or governing
documents of such Person, and any law, rule or regulation,
Permit, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person
or any of its property is subject, including the Securities Act,
the Securities Exchange Act, Regulation T, Regulation U and
Regulation X, and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit or
occupational safety or health law, rule or regulation.
"Requisite Lenders" shall mean Lenders whose Pro Rata
-----------------
Shares, in the aggregate, are at least 51%, or after the
termination of the Commitments, at least 51% of the outstanding
Loans and Letter of Credit Obligations.
"Responsible Officer" shall mean, as to ATSC or the
-------------------
Borrower, its Senior Vice President-Chief Financial Officer, its
Treasurer or its Vice President-Controller.
==================================================================
-23-
"Restricted Payment" shall mean (a) any dividend or
-------------------
other distribution, direct or indirect, on account of any shares
of any class of capital stock of ATSC or the Borrower or any of
its Subsidiaries now or hereafter outstanding, including the
Common Stock, except a distribution of stock as part of a stock
split and except a dividend payable solely in shares of that
class of stock or in any junior class of stock to the holders of
that class, (b) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of capital stock of ATSC
or the Borrower or any of its Subsidiaries now or hereafter
outstanding, (c) any payment or prepayment of principal of,
premium, if any, or interest on, and any redemption, purchase,
retirement or defeasance of, or sinking fund or similar payment
with respect to, the Subordinated Notes, any Subordinated Debt,
the Convertible Debentures or any consideration paid to any
Person for the purpose of any of the foregoing, and (d) any
payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares
of any class of capital stock of ATSC or the Borrower or any of
the Borrower's Subsidiaries now or hereafter outstanding.
"Restricted Subsidiary" shall mean any Subsidiary of
----------------------
the Borrower which is not an Unrestricted Subsidiary. Whether or
not a Restricted Subsidiary is a "wholly-owned Restricted
Subsidiary" shall be determined without taking into account any
directors' qualifying shares or similar nominal requirements
under foreign laws.
"Sales Tax Reserve" shall mean, as of any Calculation
------------------
Date, an amount equal to 5% of Eligible Accounts Receivable at
such Calculation Date.
"S&P" shall mean Standard and Poor's Ratings Services.
---
"Securities" shall mean any stock, shares, voting trust
----------
certificates, bonds, debentures, notes or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as
"securities", or any certificates of interest, shares, or
participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not include
any evidence of the Obligations.
"Securities Act" shall mean the Securities Act of 1933,
--------------
as amended to the date hereof and from time to time hereafter,
and any successor statute.
"Securities Exchange Act" shall mean the Securities
------------------------
Exchange Act of 1934, as amended to the date hereof and from time
to time hereafter, and any successor statute.
"Shareholders' Equity" shall mean, as at any date of
--------------------
determination, the amount which would be set forth under
shareholders' equity on a consolidated balance sheet of ATSC and
its Subsidiaries in accordance with GAAP at such date of
determination.
"Shrink Reserve" shall mean, as of any Calculation
---------------
Date, the shrink reserve for the most recent fiscal month
calculated in accordance with the accounting practices of the
Borrower and the Subsidiary Guarantors.
==================================================================
-24-
"Standby Letter of Credit" shall mean any Letter of
-------------------------
Credit which is not a Commercial Letter of Credit.
"Stock-in-Transit Reserve" shall mean, as of any
-------------------------
Calculation Date with respect to any Inventory, an amount equal
to the product of (a) the Inventory Value of such Inventory times
(b) a fraction the numerator of which is 100 and the denominator
of which is 85 times (c) 0.15.
"Subordinated Debt" shall mean any unsecured
-------------------
Indebtedness of the Borrower or ATSC (other than the Subordinated
Notes), no part of the principal of which is required to be paid
(whether by way of mandatory sinking fund, mandatory redemption
or mandatory prepayment), prior to March 31, 2005 (it being
understood that any required offer to purchase such Indebtedness
as a result of change of control or asset sale shall not violate
the foregoing restriction); the payment of principal of and
interest of which and other obligations of the Borrower or ATSC
in respect thereof are subordinated to the prior payment in full
of the principal of and interest (including post-petition
interest) on the Loans and all other Obligations on terms and
conditions no less favorable to the Agents and the Lenders in any
material respect than those applicable to the Subordinated Notes;
and the amount of and all other terms and conditions of which are
reasonably satisfactory to the Requisite Lenders.
"Subordinated Debt Indenture" shall mean, as to any
---------------------------
Subordinated Debt, the indenture or other agreements pursuant to
which such Subordinated Debt is issued or incurred.
"Subordinated Note Indenture" shall mean the indenture
---------------------------
dated as of June 15, 1993 between the Borrower and Fleet Bank,
N.A., as trustee pursuant to which the Subordinated Notes were
issued.
"Subordinated Notes" shall mean the 8 3/4% Subordinated
------------------
Notes due 2000 issued pursuant to the Subordinated Note
Indenture.
"Subsidiary" shall mean, with respect to any Person,
----------
any corporation, partnership, trust or other entity of which a
majority of the stock (or equivalent ownership or controlling
interest) having voting power to elect a majority of the Board of
Directors (if a corporation) or to select the trustee or
equivalent controlling interest is directly or indirectly owned
or controlled by such Person or one or more of the other
Subsidiaries of such Person or any combination thereof; provided,
--------
however, that for purposes of this Agreement, AnnTaylor Finance
-------
Trust and the charitable foundation permitted to be established
pursuant to Section 8.02(a)(viii) shall not be deemed to be
--------------------
Subsidiaries of the Borrower or ATSC.
"Subsidiary Guaranty and Collateral Agreement" shall
---------------------------------------------
mean the Subsidiary Guaranty and Collateral Agreement dated as of
the Initial Funding Date substantially in the form of, and on the
terms set forth in, Exhibit 4.01(a)(vi), as the same may be
------------------
amended, supplemented or otherwise modified from time to time.
"Subsidiary Guarantor" shall mean any Guarantor (other
--------------------
than ATSC).
"Taxes" shall have the meaning ascribed to such term in
-----
Section 2.08.
------------
==================================================================
-25-
"Termination Date" shall mean the earlier to occur of
----------------
(a) the Final Maturity Date and (b) the date of termination of
the Commitments pursuant to Section 2.01(f) or 10.02(a).
--------------- --------
"Termination Event" shall mean (i) a Reportable Event
-----------------
with respect to any Plan; (ii) the withdrawal of the Borrower or
any ERISA Affiliate from a Benefit Plan during a plan year in
which the Borrower or such ERISA Affiliate was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA or the
cessation of operations which results in the termination of
employment of 20% of Benefit Plan participants who are employees
of the Borrower and its ERISA Affiliates; (iii) the imposition of
an obligation on the Borrower or any ERISA Affiliate under
Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination
described in Section 4041(c) of ERISA; (iv) the 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 the Borrower
or any ERISA Affiliate from a Multiemployer Plan or notification
that a Multiemployer 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) the Borrower 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 the Borrower or any ERISA Affiliate.
"Total Capitalization" means, as of any date of
---------------------
determination, the sum of (i) Funded Debt plus (ii) obligations
----
in respect of Capital Leases plus (iii) Shareholders' Equity.
----
"Total Debt" shall mean, as at any date of
------------
determination, the aggregate principal amount of all Funded Debt
of ATSC, the Borrower and its Restricted Subsidiaries at such
date, determined on a consolidated basis in accordance with GAAP.
"Trademark Security Agreement" shall mean a Trademark
----------------------------
Security Agreement substantially in the form of, and on the terms
set forth in, Exhibit 4.01(a)(iii), as the same may be amended,
--------------------
supplemented or otherwise modified from time to time.
"Transaction Costs" shall mean the fees, costs and
------------------
expenses payable by the Borrower or any of its Subsidiaries or
ATSC pursuant hereto or in connection herewith or in respect
hereof.
"UCC" shall mean the Uniform Commercial Code as from
---
time to time in effect in the State of New York.
"Unrestricted Subsidiary" shall mean a Subsidiary of
-----------------------
the Borrower which has been designated as such by resolution duly
adopted by the board of directors of the Borrower, which at the
time of such designation does not own or hold any Securities of
ATSC, the Borrower or any Restricted Subsidiary, provided (a) no
--------
=================================================================
-26-
Subsidiary of the Borrower shall be (or if already an
Unrestricted Subsidiary shall immediately cease to be) an
Unrestricted Subsidiary if, at any time, ATSC, the Borrower or
any other Restricted Subsidiary of the Borrower shall create,
incur, issue, assume, guarantee or in any other manner whatsoever
be or become liable with respect to any Claim against or any
Contractual Obligation or Indebtedness of, such Subsidiary which
is not permitted under Article VIII and (b) ATSC, the Borrower
and its Restricted Subsidiaries 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 Indebtedness owed by such
Subsidiary to ATSC, the Borrower and its Restricted Subsidiaries
at such time, (ii) any outstanding Guarantees or Liens created by
ATSC, the Borrower and its Restricted Subsidiaries 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.
"Working Capital" shall mean, as at any date of
----------------
determination, the difference between Current Assets at such date
and Current Liabilities at such date.
"Year 2000 Compliance" shall have the meaning ascribed
--------------------
to such term in Section 7.12(c).
--------------
"Year 2000 Problem" shall have the meaning ascribed to
-----------------
such term in Section 5.01(q).
---------------
1.02. Computation of Time Periods. In this Agreement,
---------------------------
in the computation of periods of time from a specified date to a
later specified date, the word "from" means "from and including"
and the words "to" and "until" each mean "to but excluding".
Periods of days referred to in this Agreement shall be counted in
calendar days unless Business Days are expressly prescribed.
1.03. Accounting Terms. For purposes of this
-----------------
Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with GAAP.
1.04. Other Definitional Provisions. References to
-----------------------------
"Articles", "Sections", "subsections", "Schedules", "Exhibits"
and "the preamble" shall be to Articles, Sections, subsections,
Schedules, Exhibits and the preamble, respectively, of this
Agreement unless otherwise specifically provided. The words
"include" and "including" when used herein are not intended to be
exclusive and mean "include, without limitation" and "including,
without limitation."
ARTICLE II
Amounts and Terms of Loans
--------------------------
2.01. The Revolving Credit Facility.
-----------------------------
(a) Availability. (i) Subject to the terms and
------------
conditions set forth in this Agreement, each Lender hereby
severally and not jointly agrees to make to the Borrower from
==================================================================
-27-
time to time during the period from the Initial Funding Date to
the Termination Date, revolving loans (each individually, a
"Loan" and, collectively, the "Loans"), in an amount which,
---- -----
together with such Lender's Pro Rata Share of the outstanding
Letters of Credit Obligations, shall not exceed, in the aggregate
at any time outstanding, the lesser of (A) such Lender's
Commitment and (B) such Lender's Pro Rata Share of the Borrowing
Base Amount then in effect; provided that the aggregate principal
amount of all Loans outstanding at any one time shall not exceed
the then Maximum Loan Amount.
(ii) All Loans under this Agreement shall be made
by the Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender
shall be responsible for any failure by any other Lender to
perform its obligation to make a Loan hereunder and that the
Commitment of any Lender shall not be increased or decreased
without the prior written consent of such Lender as a result of
the failure by any other Lender to perform its obligation to make
a Loan. The failure of any Lender to make available to the
Administrative Agent any Borrowing of the Commitments shall not
relieve any other Lender of its obligation hereunder to make
available to the Administrative Agent such other Lender's Pro
Rata Share of any Borrowing of the Commitments on the date such
funds are to be made available pursuant to the terms of this
Agreement.
(iii) Loans may be prepaid pursuant to Section
-------
2.04, and, subject to the provisions of this Agreement, any
----
amounts so prepaid may be reborrowed, up to the amount available
under this Section 2.01(a) at the time of such Borrowing, until
--------------
the Business Day immediately preceding the Final Maturity Date.
Each Lender's Commitment shall expire, and each Loan then
outstanding shall mature and be repaid by the Borrower, without
further action on the part of the Lenders, on the Final Maturity
Date.
(iv) Loans made on any Funding Date shall be in the
aggregate minimum amount of $1,000,000 and in integral multiples
of $1,000,000 in excess thereof.
(v) During the period of 30 consecutive days
commencing each year on January 1 and ending on January 30 of
each year, the Borrower shall effect a prepayment of the
outstanding Loans (such amount, a "Cleandown") so as to cause no
---------
Loans to be outstanding during such period (each such period, a
"Cleandown Period"). Within 15 days after the end of any
-----------------
Cleandown Period, the Borrower shall notify the Administrative
Agent that a Cleandown Period has occurred and the Administrative
Agent shall notify the Lenders.
(b) Notice of Borrowing. Whenever the Borrower
---------------------
desires to borrow under this Section 2.01, the Borrower shall
------------
deliver to the Administrative Agent a Notice of Borrowing (i) no
later than 11:00 a.m. (New York time) on the proposed Funding
Date, in the case of a Borrowing of Base Rate Loans, and (ii) not
later than 11:00 a.m. (New York time) at least three Business
Days in advance of the proposed Funding Date, in the case of a
Borrowing of Eurodollar Rate Loans. The Notice of Borrowing
shall specify (A) the Funding Date (which shall be a Business
Day), (B) the amount of the proposed Borrowing, (C) whether the
proposed Borrowing will be of Base Rate Loans or Eurodollar Rate
Loans, and (D) in the case of Eurodollar Rate Loans, the
requested Interest Period. In lieu of delivering the
above-described Notice of Borrowing and only with the consent of
the Administrative Agent in its sole discretion at such time, the
Borrower may give the Administrative Agent telephonic notice of
================================================================
-28-
any proposed Borrowing by the time required under this Section
-------
2.01(b); provided that, in the event the Administrative Agent so
-------
consents, such notice shall be confirmed immediately by delivery
to the Administrative Agent of a Notice of Borrowing by
facsimile. Any Notice of Borrowing (or telephonic notice in lieu
thereof) pursuant to this Section 2.01(b) shall be irrevocable.
---------------
(c) Making of Loans. Promptly after receipt of a
---------------
Notice of Borrowing under Section 2.01(b) (or telephonic notice
--------------
in lieu thereof if the Administrative Agent consents to such
telephonic notice, immediately confirmed by facsimile), the
Administrative Agent shall notify each Lender by facsimile or
other similar form of teletransmission, of the proposed
Borrowing. Each Lender shall make the amount of its Loan
available to the Administrative Agent at the Administrative
Agent's Payment Office in Dollars and in immediately available
funds, not later than (i) 1:00 p.m. (New York time) on the
Funding Date, in the case of a Borrowing of Base Rate Loans and
(ii) 11:00 a.m. (New York time) on the Funding Date, in the case
of a Borrowing of Eurodollar Rate Loans. After the
Administrative Agent's receipt of the proceeds of such Loans, the
Administrative Agent shall make the proceeds of such Loans
available to the Borrower on such Funding Date in Dollars and in
immediately available funds to an account of the Borrower,
designated in writing by the Borrower.
(d) Loan Accounts; Notes. The Loans made by each
--------------------
Lender shall be evidenced by one or more loan accounts maintained
by the Administrative Agent and such Lender in the ordinary
course of business (each a "Loan Account"). The Loan Accounts or
------------
records maintained by the Administrative Agent and each Lender
shall be conclusive absent manifest error of the amount of the
Loans made by the Lenders to the Borrower and the interest and
payments thereon. Any failure so to record or any error in doing
so shall not, however, limit or otherwise affect the obligation
of the Borrower hereunder to pay any amount owing with respect to
the Loans. In case of a discrepancy between the entries in the
Administrative Agent's books and any Lender's books, such
Lender's books shall constitute prima facie evidence of the
-----------
accuracy of the information so recorded. Notwithstanding the
foregoing, the Borrower agrees that, upon request to the
Administrative Agent by any Lender, in order to evidence such
Lender's Loans, the Borrower will execute and deliver to such
Lender a promissory note substantially in the form of Exhibit
-------
2.01(d) (each, as amended, supplemented, replaced or otherwise
-------
modified from time to time, a "Note"), with appropriate
----
insertions therein as to payee, date and principal amount. Each
Note shall (i) be dated the Initial Funding Date, (ii) be payable
as provided in Section 2.01(g) and (iii) provide for the payment
--------------
of interest in accordance with Section 2.02.
------------
(e) Termination or Reduction of Commitments. The
----------------------------------------
Borrower shall have the right, at any time and from time to time,
(a) to terminate the Commitments in whole, without premium or
penalty, if no Loans or Letter of Credit Obligations are then out
standing, or (b) permanently to reduce in part, without premium
or penalty, the Commitments by an amount of up to (i) the then
maximum amount of the Commitments, less (ii) the aggregate
principal amount of Loans and Letter of Credit Obligations then
outstanding, provided that the Borrower shall pay any funding
--------
losses, breakfunding fees and related expenses in connection with
any prepayment made in respect thereof. The Borrower shall give
not less than three Business Days' prior irrevocable notice
thereof (not later than 11:00 a.m. (New York time) on such day)
to the Administrative Agent designating the date (which shall be
a Business Day) of such termination or reduction and the amount
of any partial reduction. Promptly after receipt of a notice of
such termination or reduction, the Administrative Agent shall
notify each Lender of the proposed termination or reduction.
================================================================
-29-
Such termination or partial reduction of the Commitments shall be
effective on the date specified in the Borrower's notice and
shall reduce the Commitment of each Lender proportionately in
accordance with its Pro Rata Share. Any such partial reduction
of the Commitments shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $1,000,000 in excess of that
amount.
(f) Special Termination or Extension of Commitments.
-----------------------------------------------
(i) If the Subordinated Notes shall not have been
repaid in full with the net cash proceeds of Subordinated Debt or
the issuance of Qualified Capital Stock by ATSC on or prior to
February 16, 2000 (the "Refinancing Date") on terms and
-----------------
conditions reasonably satisfactory to the Requisite Lenders,
then, unless all the Lenders otherwise agree, the Commitments
shall automatically terminate on the Refinancing Date. The
Borrower shall provide the Lenders with a period of at least 15
days to review and approve the terms and conditions of any
issuance of Subordinated Debt or Qualified Capital Stock.
(ii) If the Subordinated Notes shall have been repaid
in full with the net cash proceeds of Subordinated Debt or the
issuance of Qualified Capital Stock by ATSC on or prior to the
Refinancing Date on terms and conditions reasonably satisfactory
to the Requisite Lenders, the Final Maturity Date shall be
extended for an additional one-year (the "Extension Period")
-----------------
period commencing on the then current Final Maturity Date,
provided that (a) no Default or Event of Default shall have then
--------
occurred and be continuing and (b) the Borrower shall demonstrate
compliance on a pro forma basis through the end of the Extension
Period with the financial covenants contained in Article IX and
----------
shall have delivered an officer's certificate to the
Administrative Agent and the Lenders setting forth in reasonable
detail the calculations required to make such determination.
(g) Repayment of Loans. The Borrower hereby promises
------------------
to pay on the Final Maturity Date the then outstanding principal
amount of Loans.
2.02. Interest on the Loans.
---------------------
(a) Rate of Interest. The Borrower promises to pay
----------------
interest on the unpaid principal amount of all Loans from the
date made until paid in full at a fluctuating rate determined
from time to time by reference to the Base Rate or the Eurodollar
Rate. The applicable basis for determining the rate of interest
shall be selected by the Borrower at the time a Notice of
Borrowing is given by the Borrower pursuant to Section 2.01(b) or
---------------
at the time a Notice of Conversion/Continuation is delivered by
the Borrower pursuant to Section 2.02(c); provided that the
---------------
Borrower may not select the Eurodollar Rate as the applicable
basis for determining the rate of interest on a Loan if at the
time of such selection an Event of Default has occurred and is
continuing. If on any day a Loan is outstanding with respect to
which notice has not been delivered to the Administrative Agent
in accordance with the terms of this Agreement specifying the
basis for determining the rate of interest, then for each such
day such Loan shall be a Base Rate Loan. The Loans shall bear
interest, subject to Section 2.02(d), as follows:
---------------
Loans shall bear interest from the Initial Funding Date
until August 2, 1998 at a rate per annum for each day which is,
(A) in the case of Base Rate Loans, equal to the Base Rate plus
==================================================================
-30-
1.00% and (B) in the case of Eurodollar Rate Loans, equal to the
Eurodollar Rate determined for the applicable Interest Period
plus 2.00%; thereafter, Loans shall bear interest as follows:
1) in the case of Base Rate Loans, then at a
rate per annum for each day equal to the sum of (x) the Base
Rate as in effect from time to time as interest accrues and
(y) the applicable margin set forth below opposite the
Pricing Ratio in effect on such day:
Pricing Ratio Applicable Margin
-------------- -----------------
Level I Status 0.25%
Level II Status 0.50%
Level III Status 0.75%
Level IV Status 1.00%
2) in the case of Eurodollar Rate Loans, then at
a rate per annum for each day equal to the sum of (x) the
Eurodollar Rate determined for the applicable Interest
Period and (y) the applicable margin set forth below
opposite the Pricing Ratio in effect on such day:
Pricing Ratio Applicable Margin
------------- -----------------
Level I Status 1.25%
Level II Status 1.50%
Level III Status 1.75%
Level IV Status 2.00%
(b) Interest Payments. Subject to Section 2.02(d),
----------------- ---------------
(i) interest accrued on each Base Rate Loan shall be payable in
arrears (A) on the fifteenth day of each January, April, July and
October, for the three-month period ending on such date,
commencing on the first such day following the making of such
Base Rate Loan, and (B) at the Termination Date and (ii) interest
accrued on each Eurodollar Rate Loan shall be payable in arrears
on the earlier of (A) each Interest Payment Date applicable to
such Eurodollar Rate Loan, (B) upon the prepayment thereof on the
amount prepaid and (C) at the Termination Date.
(c) Conversion or Continuation. (i) Subject to the
--------------------------
provisions of Sections 2.06 and 2.07, the Borrower shall have the
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option (A) to convert at any time all or any part of outstanding
Loans which comprise part of the same Borrowing and which, in the
aggregate, equal $1,000,000 or an integral multiple of $1,000,000
in excess of such amount from Base Rate Loans to Eurodollar Rate
Loans; or (B) to convert all or any part of outstanding Loans
which, in the aggregate, equal $1,000,000 or an integral multiple
of $1,000,000 in excess of that amount from Eurodollar Rate Loans
to Base Rate Loans on the expiration date of any Interest Period
applicable thereto, provided the remaining amount of Eurodollar
--------
Rate Loans with the same Interest Period shall not be less than
$1,000,000; or (C) upon the expiration of any Interest Period
applicable to a Borrowing of Eurodollar Rate Loans, to continue
all or any portion of such Loans equal to $1,000,000 or an
integral multiple of $1,000,000 in excess of such amount as
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Eurodollar Rate Loans, and the succeeding Interest Period of such
continued Loans shall commence on the expiration date of the
Interest Period applicable thereto; provided that no outstanding
--------
Loan may be continued as, or be converted into, a Eurodollar Rate
Loan when any Event of Default has occurred and is continuing.
(ii) In the event the Borrower shall elect to
convert or continue a Loan under this Section 2.02(c), the
----------------
Borrower shall deliver an irrevocable Notice of
Conversion/Continuation to the Administrative Agent no later than
11:00 a.m. (New York time) at least three Business Days in
advance of the proposed conversion date or date of continuation
in the case of Eurodollar Rate Loans and on the conversion or
continuation date in the case of Base Rate Loans. A Notice of
Conversion/Continuation shall specify (w) the proposed
conversion/continuation date (which shall be a Business Day), (x)
the amount of the Loan to be converted/continued, (y) the nature
of the proposed conversion/continuation, and (z) in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan, the
requested Interest Period. In lieu of delivering the
above-described Notice of Conversion/Continuation, the Borrower
may give the Administrative Agent telephonic notice of any
proposed conversion/continuation by the time required under this
Section 2.02(c); provided that such notice shall be confirmed
---------------- --------
immediately by delivery to the Administrative Agent by facsimile
of a Notice of Conversion/Continuation. No failure of the
Borrower to confirm any telephonic notice by facsimile shall
impair or in any way limit the Borrower's obligations with
respect to such Loans. Promptly after receipt of a Notice of
Conversion/Continuation under this Section 2.02(c) (or telephonic
---------------
notice in lieu thereof immediately confirmed by facsimile), the
Administrative Agent shall notify each Lender of the proposed
conversion/continuation.
(iii) Any Notice of Conversion/Continuation for
conversion to, or continuation of, a Loan (or telephonic notice
in lieu thereof) shall be irrevocable and the Borrower shall be
bound to convert or continue in accordance therewith.
(d) Default Interest. Notwithstanding the rates of
----------------
interest specified in Section 2.02(a) and the payment dates
---------------
specified in Section 2.02(b), effective immediately upon the
----------------
occurrence of any Event of Default of the type specified in
Section 10.01(a) or upon acceleration of maturity pursuant to
-----------------
Section 10.02(a) and for so long thereafter as any such Event of
----------------
Default or acceleration shall be continuing, the principal
balance of all Loans and Reimbursement Obligations then due and
payable (including all amounts due and payable pursuant to
Section 10.02(a)) and any interest payments on the Loans not paid
-----------------
when due, shall bear interest payable upon demand at a rate which
is 2 per cent per annum in excess of the rate of interest
otherwise payable under this Agreement.
(e) Computation of Interest. Interest on Base Rate
-----------------------
Loans and Reimbursement Obligations shall be computed on the
basis of the actual number of days elapsed in the period during
which interest accrues and a year of 365 or 366 days (except that
a year of 360 days shall be used if the Base Rate is derived from
the Federal Funds Rate), as applicable. Interest on Eurodollar
Rate Loans shall be computed on the basis of the actual number of
days elapsed in the period during which interest accrues and a
year of 360 days. In computing interest on any Loan, the date of
the making of the Loan or the first day of an Interest Period, as
the case may be, shall be included and the date of payment or the
expiration date of an Interest Period, as the case may be, shall
==================================================================
-32-
be excluded; provided that if a Loan is repaid on the same day on
--------
which it is made, one day's interest shall be paid on that Loan.
(f) Changes; Legal Restrictions. In the event that
---------------------------
after the date hereof (a) the adoption of or any change in any
law, treaty, rule, regulation, guideline or determination of a
Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority, or (b)
compliance by any Lender with any request or directive (whether
or not having the force of law and whether or not the failure to
comply therewith would be unlawful) from any central bank or
other Governmental Authority or quasi-governmental authority
exercising jurisdiction, power or control over banks or financial
institutions generally, does impose, modify, or hold applicable,
in the determination of a Lender, any reserve, special deposit,
compulsory loan, FDIC insurance, capital allocation or similar
requirement against assets held by, or deposits or other
liabilities (including those pertaining to Letters of Credit) in
or for the account of, advances or loans by, Commitments made, or
other credit extended by, or any other acquisition of funds by, a
Lender or any Applicable Lending Office of such Lender (except
(a) with respect to Base Rate Loans, so long as the Base Rate in
effect at the time is determined under clause (a) in the
-----------
definition of "Base Rate", (b) with respect to Base Rate Loans,
to the extent that the reserve and FDIC insurance requirements
are reflected in the definition of "Base Rate" and (c) with
respect to Eurodollar Rate Loans, to the extent that the reserve
requirements are reflected in the definition of "Eurodollar
Rate"), and the result of any of the foregoing is to increase the
cost to such Lender of making, renewing or maintaining the Loans
or its Commitment to the Borrower or issuing to the Borrower any
Letter of Credit or to reduce any amount receivable hereunder or
thereunder; then, in any such case, the Borrower shall upon
----
written notice from and demand by that Lender pay to such Lender,
within 15 Business Days of the date specified in such notice and
demand, such amount or amounts (based upon a reasonable
allocation thereof by such Lender to the financing transactions
contemplated by this Agreement and affected by this Section
-------
2.02(f)) as may be necessary to compensate that Lender for any
--------
such additional cost incurred or reduced amount received. Such
Lender shall deliver to the Borrower a written statement of the
costs or reductions claimed and the basis therefor, and the
allocation made by such Lender of such costs and reductions,
which statement shall, in the absence of manifest error, be
conclusive. If a Lender subsequently recovers from another
Person any amount previously paid by the Borrower pursuant to
this Section 2.02(f), such Lender shall, within 30 days after
-------------