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Receivables Financing Agreement

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Sectors: Retail
Governing Law: Connecticut, View Connecticut State Laws
Effective Date: October 31, 1995
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AMENDED AND RESTATED


RECEIVABLES FINANCING AGREEMENT


Dated as of October 31, 1995


Among


ANNTAYLOR FUNDING, INC.


as the Company


ANNTAYLOR, INC.


as Servicer


and


MARKET STREET CAPITAL CORP.


as Lender


and


PNC BANK, NATIONAL ASSOCIATION


as Administrator


- - -----------------------------------------------------------------
TABLE OF CONTENTS


ARTICLE I
LOANS


SECTION 1.01. Commitments to Lend; Limits on
Lender's Obligations 2


SECTION 1.02. Loan Procedures 2


SECTION 1.03. Borrowing Base 3


SECTION 1.04. Note 3


SECTION 1.05. Principal 4


ARTICLE II
INTEREST


SECTION 2.01. Interest 4


SECTION 2.02. Payment Dates 4


SECTION 2.03. Funding with Commercial Paper 5


ARTICLE III
SETTLEMENTS


SECTION 3.01. Settlement Procedures 5


SECTION 3.02. Deemed Collections; Reduction of
Outstanding Principal, Etc 8


SECTION 3.03. Payments and Computations, Etc. 10


SECTION 3.04. Treatment of Collections and Deemed
Collections 11


SECTION 3.05. Spread Account; Customer Letter of
Credit 11


ARTICLE IV
FEES AND YIELD PROTECTION


SECTION 4.01. Fees 13


SECTION 4.02. Yield Protection 13


SECTION 4.03. Funding Losses 15


ARTICLE V
CONDITIONS PRECEDENT


SECTION 5.01. Conditions Precedent to Effectiveness 16


SECTION 5.02. Conditions Precedent to All 18


ARTICLE VI
REPRESENTATIONS AND WARRANTIES


SECTION 6.01. Representations and Warranties of the Company 18


SECTION 6.02. Representations and Warranties of
AnnTaylor 23


ARTICLE VII
GENERAL COVENANTS OF THE COMPANY AND ANNTAYLOR


SECTION 7.01. Affirmative Covenants 27


SECTION 7.02 Separate Corporate Existence 28


SECTION 7.03. Reporting Requirements 31


SECTION 7.04. Negative Covenants of the Company 33


SECTION 7.05 Negative Covenants of AnnTaylor 35


ARTICLE VIII
ADMINISTRATION AND COLLECTION


SECTION 8.01. Designation of Servicer 37


SECTION 8.02. Duties of Servicer 38


SECTION 8.03. Rights of the Administrator 39


SECTION 8.04. Responsibilities of the Company 41


SECTION 8.05. Further Action Evidencing Security
Interest 41


SECTION 8.06. Application of Collections 42


ARTICLE IX
SECURITY INTEREST


SECTION 9.01. Grant of Security Interest 42


SECTION 9.02. Remedies 43


ARTICLE X
EVENTS OF DEFAULT


SECTION 10.01. Events of Default 43


SECTION 10.02. Remedies 45


ARTICLE XI
THE ADMINISTRATOR


SECTION 11.01. Authorization and Action 46


SECTION 11.02. Administrator's Reliance, Etc 46


SECTION 11.03. PNC Bank and Affiliates 47


ARTICLE XII
ASSIGNMENT OF LENDER'S INTEREST


SECTION 12.01. Restrictions on Assignments 47


SECTION 12.02. Rights of Assignee 48


SECTION 12.03. Evidence of Assignment 48


ARTICLE XIII
INDEMNIFICATION


SECTION 13.01. Indemnities 48


ARTICLE XIV
MISCELLANEOUS


SECTION 14.01. Amendments, Etc 52


SECTION 14.02. Notices, Etc. 53


SECTION 14.03. No Waiver; Remedies 53


SECTION 14.04. Binding Effect; Survival 53


SECTION 14.05. Costs, Expenses and Taxes 54


SECTION 14.06. No Proceedings 54


SECTION 14.07. Confidentiality of the Company
Information 55


SECTION 14.08. Confidentiality of Program Information 57


SECTION 14.09. Captions and Cross References 59


SECTION 14.10. Governing Law 59


SECTION 14.11. Waiver Of Jury Trial 59


SECTION 14.12. Consent To Jurisdiction; Waiver Of
Immunities 60


SECTION 14.13. Execution in Counterparts 60


SECTION 14.14. No Recourse Against Other Parties 60


APPENDICES


APPENDIX A Definitions


SCHEDULES


SCHEDULE 6.01(n) List of Offices of the Company where
Records Are Kept


SCHEDULE 6.01(o) List of Lock-Box Banks


SCHEDULE 6.01(p)-1 Forms of Contracts


SCHEDULE 6.01(p)-2 Description of Credit and Collection Policy


SCHEDULE 6.02(k) List of Offices of the Servicer where
Records Are Kept


SCHEDULE 6.02(l) List of Bank Accounts


SCHEDULE 6.01(r) Trade Names


EXHIBITS


EXHIBIT 1.02(a) Form of Borrowing Notice


EXHIBIT 1.04 Form of Note


EXHIBIT 3.01(a) Form of Information Package


EXHIBIT 3.05 Form of Spread Account Agreement


EXHIBIT 5.01(g) Form of Lock-Box Agreement


EXHIBIT 5.01(h)-(i) Form of Opinion of Skadden, Arps, Slate,
Meagher & Flom - Enforceability


EXHIBIT 5.01(h)-(ii) Form of Opinion of General Counsel for the
Company


EXHIBIT 5.01(h)-(iii) Form of Opinion of Skadden, Arps, Slate,
Meagher & Flom - True Sale


EXHIBIT 5.01(h)-(iv) Form of Opinion of Skadden, Arps, Slate,
Meagher & Flom - Substantive Consolidation


EXHIBIT 5.01(h)-(v) Form of Opinion of Connecticut Counsel


=============================================================================

AMENDED AND RESTATED
RECEIVABLES FINANCING AGREEMENT


THIS IS AN AMENDED AND RESTATED RECEIVABLES FINANCING


AGREEMENT, dated as of October 31, 1995, among ANNTAYLOR FUNDING,


INC., a Delaware corporation (the "Company"), ANNTAYLOR, INC., a
------------ Delaware corporation ("AnnTaylor"), as initial servicer, MARKET
--------- STREET CAPITAL CORP., a Delaware corporation ("Lender"), and PNC
------ BANK, NATIONAL ASSOCIATION, a national banking association ("PNC
--- Bank"), as administrator for Lender (in such capacity, the - - ---- "Administrator"). Unless otherwise indicated, capitalized terms - - -------------- used in this Agreement are defined in Appendix A.
----------


Background
----------
1. The Company is a limited purpose subsidiary of


AnnTaylor formed for the purpose of purchasing Receivables


generated by AnnTaylor in the ordinary course of its business.


2. The Company, AnnTaylor, Clipper Receivables Corporation


("Clipper"), State Street Boston Capital Corporation ("State ------ ----- Street"), as administrator, and PNC Bank, as relationship bank, - - ------ entered into the Receivables Financing Agreement, dated as of


January 27, 1994 (as amended prior to the date hereof, the


"Original Financing Agreement"). - - -----------------------------


3. Clipper has assigned to Lender all of its rights,


claims and obligations under the Original Financing Agreement and


the other Transaction Documents pursuant to the Assignment and


Assumption Agreement, dated as of October 31, 1995 (the


"Assignment Agreement"), among Clipper, Lender, State Street and - - -------------------- PNC Bank.


4. In connection with the assignment to Lender pursuant to


the Assignment Agreement, the parties hereto desire to amend and


restate the Original Financing Agreement in its entirety as set


forth herein.


5. The Company has, and expects to have, Pool Receivables


which the Company intends to finance pursuant to this Agreement.


The Company has requested Lender, and Lender has agreed, subject


to the terms and conditions contained in this Agreement, to make


loans to the Company from time to time during the term of this


Agreement, which loans will be secured by the Receivables Pool.


6. AnnTaylor has been requested by the Company, Lender and


the Administrator to act, and has agreed to act, as initial


Servicer.


7. PNC Bank has been requested, and is willing, to act as


the Administrator.


NOW, THEREFORE, in consideration of the premises and the


mutual agreements herein contained, the parties hereto agree as


follows:


======================================================================

ARTICLE I


LOANS


SECTION 1.01. Commitments to Lend; Limits on Lender's
------------------- Obligations. Upon the terms and subject to the conditions of


this Agreement, from time to time prior to the Termination Date,


the Company may request that Lender make loans to the Company


(each being a "Loan") and Lender shall make such Loans; provided
---- -------- that no Loan shall be made by Lender if, after giving effect


thereto, the then Outstanding Principal would exceed either (a)


$40,000,000 (the "Lending Limit"), or (b) the Borrowing Base then
------------- in effect; and provided further that each Loan made pursuant to
---------------- this Section 1.01 shall have an original principal amount of at
------------ least $5,000,000 and shall be in integral multiples of


$1,000,000, unless the Outstanding Principal is $20,000,000 or


more, in which case, each Loan shall have an original principal


amount of at least $100,000 and shall be in integral multiples of


$100,000.


SECTION 1.02. Loan Procedures.
---------------
(a) Notice of Loan. Each Loan to the Company by Lender
-------------- shall be made on notice from the Company to the Administrator


substantially in the form of Exhibit 1.02(a) (each, a "Borrowing
--------------- --------- Notice") received by the Administrator not later than noon (New - - ------ York City time) on the Business Day next preceding the date of


such proposed Loan. Each such notice of a proposed Loan shall


specify the desired amount and date of such Loan, which date


shall be a Settlement Date.


(b) Funding of Loan. On the date of each Loan, Lender
--------------- shall, upon satisfaction of the applicable conditions set forth


in Article V, make available to the Administrator at the
--------- Administrator's Office the principal amount of its Loan in same


day funds, and after receipt by the Administrator of such funds,


the Administrator will disburse such funds to an account of the


Company designated in writing by the Company in the applicable


Borrowing Notice.


SECTION 1.03. Borrowing Base.
--------------
(a) Computation of Borrowing Base. On any date, the
----------------------------- "Borrowing Base" means an amount equal to


NPB - LR


where:


LR = the Loss Reserve on such date; and


NPB = the Net Pool Balance on such date.


(b) Frequency of Computation. The Borrowing Base shall be
------------------------ computed and reported, as provided in Section 3.01, as of (i) the
------------ date of the initial Loan and (ii) the Cut-Off Date for each


Settlement Period. In addition, if the Administrator reasonably


believes that there shall exist any event or occurrence that has


a reasonable possibility of causing a Material Adverse Effect,


the Administrator may require the Servicer to provide a


computation of Collections received by the Company or the


Servicer since the last Cut-Off Date, the then aggregate Unpaid


Balance of all Pool Receivables and such other information


comprising a part of the Information Package that can be updated


from the last Cut-Off Date for purposes of computing the


Borrowing Base as of any other date, and the Servicer agrees to


do so within 5 Business Days of its receipt of the


Administrator's request.


SECTION 1.04. Note. The Loans shall be evidenced by a
---- replacement promissory note (as from time to time supplemented,


extended, amended, modified or further replaced from time to


time, and including the Original Note for as long as it was in


effect, the "Note"), substantially in the form set forth in
---- Exhibit 1.04, with appropriate insertions, dated the date hereof, - - ----------- payable to the order of Lender in the maximum principal amount of


$40,000,000 (or, if less, in the aggregate unpaid principal


amount of all of the Loans) on the Termination Date. The


Administrator shall record in its records, or at its option on


the schedule attached to the Note, the date and amount of each


Loan made hereunder, each repayment thereof and the other


information provided for thereon. The aggregate unpaid principal


amount so recorded shall be rebuttable presumptive evidence of


the principal amount owing and unpaid on the Note. The failure


so to record any such information or the error in so recording


any such information shall not, however, limit or otherwise


affect the actual obligations of the Company hereunder or under


the Note to repay the principal amount of all Loans, together


with all interest accruing thereon.


SECTION 1.05. Principal. The Company shall repay the
--------- principal of the Loans (i) on each Settlement Date in an amount


equal to the excess, if any, of the Outstanding Principal over


the Borrowing Base then in effect and (ii) in full on the


Termination Date. Outstanding Principal shall not be considered


reduced by any allocation, setting aside or distribution of any


portion of Collections unless such Collections shall have been


actually delivered to the Administrator pursuant hereto (or


deemed delivered pursuant to Section 3.03(a)(i)). Outstanding
----------------- Principal shall not be considered reduced by any distribution of


any portion of Collections if at any time such distribution is


rescinded or must otherwise be returned for any reason.


======================================================================
ARTICLE II


INTEREST


SECTION 2.01. Interest. The Company hereby promises to pay
-------- interest for each Interest Period on the unpaid principal amount


of each Loan (or the applicable portion thereof) for the period


commencing on the date of such Loan until such Loan is paid in


full, as follows:


(a) at all times while the making or maintenance

of such Loan (or the applicable portion thereof) by

Lender is funded by the issuance of Commercial Paper

Notes, the CP Rate for such Interest Period; and


(b) at all times while the making or maintenance

of such Loan (or the applicable portion thereof) by

Lender is not funded by the issuance of Commercial

Paper Notes, the Bank Rate applicable to such Interest

Period;


provided, however, that on any day when an Event of Default shall - - ------- ------ have occurred and be continuing, the Loans shall accrue interest


at a rate per annum equal to the higher of (i) the Alternate Base


Rate plus 2% per annum and (ii) the rate otherwise applicable to


such Loan during such Interest Period plus 2% per annum. The


interest rate on any Loan bearing interest at the Alternate Base


Rate shall change simultaneously with each change in the


Alternate Base Rate.


SECTION 2.02. Payment Dates. Interest accrued on each Loan
------------- shall be payable, without duplication; (a) on the Termination


Date; (b) on the date of any payment or repayment, in whole or in


part, of any principal outstanding on such Loan and (c) on each


Settlement Date. Interest accrued on Loans after the date such


Loan is due and payable (whether on the Termination Date, upon


acceleration or otherwise), together with interest on any and all


other amounts remaining unpaid, shall be payable upon demand. No


provision of this Agreement shall require the payment or permit


the collection of interest in excess of the maximum permitted by


applicable law. Interest for any Loan shall not be considered


paid by any distribution if at any time such distribution is


rescinded or must otherwise be returned for any reason.


SECTION 2.03. Funding with Commercial Paper. Lender will
----------------------------- initially fund the Loans with Liquidity Loans made to Lender


under the Liquidity Agreement and/or other advances made to


Lender under its other Program Support Agreements. At such time


as (i) the Fixed Charge Coverage Ratio is at least 1.00 to 1.00


for at least one full fiscal quarter, and there has been no


material adverse change in the consolidated financial condition,


business or operations of ATSC and its consolidated Subsidiaries


since the end of such fiscal quarter, (ii) Standard & Poor's and


Moody's Investors Service, Inc. have confirmed that the


Commercial Paper Notes will be rated A1/P-1 after giving effect


to the transaction contemplated by this Agreement, and (iii)


Lender, the Administrator and the Company have agreed upon a new


Program Fee, Lender will, to the extent that it is able to do so,


fund the Loans by the issuance of Commercial Paper Notes.


====================================================================

ARTICLE III


SETTLEMENTS


SECTION 3.01. Settlement Procedures.
---------------------

The parties hereto will take the following actions with


respect to each Settlement Period:


(a) Information Package. On or before the fifth day
-------------------
of the calendar month immediately following the calendar

month in which the Cut-Off Date for such Settlement Period

occurs, or, if such day is not a Business Day, the next

succeeding Business Day (each, a "Reporting Date"), Servicer

shall deliver to the Administrator a report, substantially

in the form of Exhibit 3.01 (each, an "Information
------------ -----------
Package"). In the event that the amount of Collections
-------
received during the Settlement Period to which an

Information Package relates is less than the amount equal to

(i) the Amount Payable for the related Settlement Date minus

(ii) the amount of funds available to be drawn from the

Spread Account on such Settlement Date, the Administrator

shall withdraw the amount of any such deficiency from the

Customer Letter of Credit on the Business Day next

succeeding the applicable Reporting Date. The Administrator

shall hold the funds so withdrawn from the Customer Letter

of Credit in a segregated account for application on the

related Settlement Date pursuant to this Section 3.01.
------------


(b) Collections. Servicer shall set aside for the
-----------
sole benefit of Lender and the Administrator all Collections

received to the extent necessary to pay the Estimated Amount

as it accrues (whether or not then due) that will be payable

during such Settlement Period or on the next occurring

Settlement Date; provided that, unless the Administrator
--------
shall request it to do so in writing after the occurrence

and during the continuance of an Event of Default, Servicer

shall not be required to hold such Collections in a separate

deposit account containing only such Collections. So long

as no Event of Default has occurred and is continuing,

Collections received during a Settlement Period in excess of

the amount to be set aside with respect to the Estimated

Amount for such Settlement Period shall be used by the

Company to pay the purchase price for Receivables generated

by AnnTaylor, as seller, pursuant to the Purchase Agreement;

if any Collections remain after such payment, they shall be

retained by the Company for use in its sole discretion

(subject to the terms of this Agreement). If an Event of

Default has occurred and is continuing, all Collections

shall be held by Servicer pursuant to the first sentence of

this paragraph (b). On each Settlement Date, Servicer shall
------------
remit to the Administrator an amount equal to the lesser of

(1) the amount of Collections received during the Settlement

Period related to such Settlement Date and (2) the sum of

(i) the amount of interest on the Loans accrued during the

most recently ended Interest Period (plus any interest

previously accrued and remaining unpaid), plus (ii) the
----
amount of principal then due and owing with respect to the

Loans (plus any principal previously due and remaining

unpaid), plus (iii) all fees and other amounts accrued and
----
payable by the Company under this Agreement (the amount set

forth in this clause (2), the "Amount Payable"). To the
--------- --------------
extent that the amount described in the foregoing clause (1)
----------
is less than the amount described in the foregoing

clause (2), the Administrator shall withdraw the amount of
---------
any such deficiency from the Spread Account. All

Collections received during the applicable Settlement Period

that exceed the amount described in the foregoing clause (2)
----------
shall be (A) deposited by the Servicer to the Spread Account

and/or (B) paid by the Servicer to the issuer of the

Customer Letter of Credit, in each case, to the extent

necessary to bring the sum of the funds in the Spread

Account plus the stated amount of the Customer Letter of

Credit up to the Enhancemen
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