STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of September 20, 1996 (the "Agreement"),
among AnnTaylor Stores Corporation, a Delaware corporation (the "Company"),
Cygne Designs, Inc., a Delaware corporation ("Cygne"), and Cygne Group (F.E.)
Limited, a Hong Kong corporation and wholly owned subsidiary of Cygne ("CGFE"
and, together with Cygne, "Holder").
WHEREAS, pursuant to that certain Stock and Asset Purchase Agreement, dated
as of June 7, 1996 as amended by Amendment dated August 27, 1996 (the "Purchase
Agreement"), the Company has acquired (the "Acquisition") from Holder (i) all of
the shares of common stock, par value $.01 per share, of CAT US, Inc., a
Delaware corporation, and all of the HK $1 ordinary shares of C.A.T. (Far East)
Limited, a Hong Kong corporation, owned by Holder and (ii) certain of the assets
of Cygne's AnnTaylor Woven Division;
WHEREAS, in consideration for the Acquisition, the Company has, among other
things, issued to Holder 2,348,145 shares of common stock, par value $.0068 per
share (the "Common Stock"), of the Company (the shares of Common Stock issued to
Holder in consideration for the Acquisition are hereinafter referred to as the
"Acquisition Shares"); and
WHEREAS, the Company and Holder have determined that it is in their best
interests that certain aspects of their relationship be regulated according to
the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
The term "ACQUISITION" shall have the meaning ascribed to it in the
second paragraph of the preamble.
The term "ACQUISITION SHARES" shall have the meaning ascribed to it in
the third paragraph of the preamble.
The term "AFFILIATE" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
The term "AGREEMENT" shall have the meaning ascribed to it in the
first paragraph of the preamble.
The term "COMMON STOCK" shall have the meaning ascribed to it in the
third paragraph of the preamble.
The term "COMPANY" shall have the meaning ascribed to it in the first
paragraph of the preamble.
The term "COMPANY OFFERING" shall mean the sale of equity securities
of the Company, or securities convertible into or exchangeable or
exercisable for equity securities of the Company, pursuant to a
registration statement filed by the Company under the Securities Act (other
than (i) a registration statement filed on Form S-4 or any successor form
or (ii) a registration statement filed on Form S-8 or any successor form)
respecting an underwritten offering, whether primary or secondary, that is
declared effective by the SEC.
The term "COMPANY SUBSIDIARY" shall mean any Person the majority of
the outstanding voting securities or interests of which are owned by the
Company, and shall include AnnTaylor Stores Corporation Finance Trust.
The term "EFFECTIVE DATE" shall have the meaning ascribed to it in
Section 2.02.
The term "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.
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The term "HOLDER" shall have the meaning ascribed to it in the first
paragraph of the preamble.
The term "LOSSES" shall have the meaning ascribed to it in Section
2.06(a).
The term "PERSON" shall mean an individual, trustee, corporation,
partnership, business trust, limited liability company, limited liability
partnership, joint stock company, trust, unincorporated association, union,
business association, firm or other entity.
The term "PURCHASE AGREEMENT" shall have the meaning ascribed to it in
the second paragraph of the preamble.
The term "REGISTRATION EXPENSES" shall have the meaning ascribed to it
in Section 2.05.
The term "RULE 144" shall mean Rule 144 promulgated under the
Securities Act (or any successor rule).
The term "RULE 415 OFFERING" shall have the meaning ascribed to it in
Section 2.01(a).
The term "SEC" shall mean the Securities and Exchange Commission.
The term "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the SEC promulgated thereunder.
The term "SHELF REGISTRATION STATEMENT" shall have the meaning
ascribed to it in Section 2.01(a).
The term "TRANSFER" shall mean any attempt to, directly or indirectly,
offer, sell, assign, transfer, grant a participation in, pledge or
otherwise dispose of any of the Acquisition Shares, or the consummation of
any such transactions, or the soliciting of any offers to purchase or
otherwise acquire, or take a pledge of any of the Acquisition Shares.
ARTICLE II
REQUIRED REGISTRATION
Section 2.01 Required Registration.
(a) Form S-3. As promptly as practicable, but in no event later than
fifteen (15) business days after the date on which the Acquisition closes, the
Company shall use reasonable best efforts to prepare and file with the SEC a
registration statement (the "Shelf Registration Statement") on Form S-3 or
another appropriate form permitting registration of the Acquisition Shares so as
to permit promptly the resale of the Acquisition Shares by Holder pursuant to an
offering on a delayed or continuous basis pursuant to Rule 415 (or any successor
rule) under the Securities Act (a "Rule 415 Offering") and shall use reasonable
best efforts to cause the Shelf Registration Statement to be declared effective
by the SEC as promptly as practicable.
(b) Effectiveness. The Company shall use reasonable best efforts to keep
the Shelf Registration Statement continuously effective under the Securities Act
until the date that is the earliest to occur of (i) the date that all
Acquisition Shares covered by the Shelf Registration Statement have been sold,
(ii) the third anniversary of the date hereof and (iii) when, in the written
opinion of counsel to the Company, all outstanding Acquisition Shares held by
persons which are not Affiliates of the Company may be resold without
registration under the Securities Act pursuant to Rule 144(k) under the Act or
any successor provision thereto.
(c) Amendments/Supplements. The Company shall amend and supplement the
Shelf Registration Statement and the prospectus contained therein if required by
the rules, regulations or instructions applicable to the registration form used
by the Company for such Shelf Registration Statement or if required by the
Securities Act; provided, however, that the Company may delay the filing of any
such amendment or supplement for up to 90 days if the Company in good faith has
a valid business reason for such delay.
(d) Offerings. At any time after the effective date of the Shelf
Registration Statement, Holder, subject to the restrictions and conditions
contained herein, and to compliance which all applicable state and federal
securities laws, shall have the right to dispose of all or any portion of the
Acquisition Shares from time to time in negotiated or market transactions (which
may include delivery to class action plaintiffs or a distribution to Holder's
stockholders).
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Section 2.02 Holdback Agreement.
From and after the first anniversary of the date on which the Shelf
Registration Statement is declared effective by the SEC (the "Effective Date"),
upon the request of the Company, Holder shall not effect any public sale or
distribution (including sales pursuant to Rule 144) of Acquisition Shares,
during the ten (10)-day period prior to the date on which the Company has
notified Holder that the Company intends to commence a Company Offering through
the filing of a registration statement with the Securities and Exchange
Commission, through the one hundred twenty (120)-day period immediately
following the closing date of such Company Offering; provided, however, that
Holder shall not be obligated to comply with this Section 2.02 on more than one
(1) occasion in any twelve (12)-month period.
Section 2.03 Blackout Provisions.
The Company shall be deemed not to have used its reasonable best efforts to
keep the Shelf Registration Statement effective during the requisite period if
the Company voluntarily takes any action that would result in Holder not being
able to offer and sell any Acquisition Shares during that period, unless (i)
such action is required by applicable law, (ii) upon the occurrence of any event
contemplated by Section 2.04(a)(8) below, such action is taken by the Company in
good faith and for valid business reasons or (iii) the continued effectiveness
of the Shelf Registration Statement would require the Company to disclose a
material financing, acquisition or other corporate development, and the proper
officers of the Company shall have determined in good faith that such disclosure
is not in the best interests of the Company and its stockholders, and, in the
case of clause (ii) above, the Company thereafter promptly comply with the
requirements of Section 2.04(a)(8) below; provided that the Company takes the
same action in respect of the Shelf Registration Statement filed pursuant to
that certain Registration Rights Agreement, dated as of April 25, 1996, between
the Company and the Initial Purchasers named therein.
Section 2.04 Registration Procedures.
(a) Procedures. In connection with the registration of the Acquisition
Shares pursuant to this Agreement, the Company shall use reasonable best efforts
to effect the registration and sale of the Acquisition Shares in accordance with
Holder's intended method of disposition thereof and, in connection therewith,
the Company shall as expeditiously as practicable:
(1) prepare and file with the SEC the Shelf Registration Statement and
use reasonable best efforts to cause the Shelf Registration Statement to
become and remain effective in accordance with Section 2.01(a) and (b)
above;
(2) prepare and file with the SEC amendments and supplements to the
Shelf Registration Statement and the prospectuses used in connection
therewith in accordance with Section 2.01(c) above;
(3) before filing with the SEC the Shelf Registration Statement or
prospectus or any amendments or supplements thereto, the Company shall
furnish to one counsel selected by Holder and one counsel for the
underwriter or sales or placement agent, if any, in connection therewith,
drafts of all such documents proposed to be filed and provide such counsel
with a reasonable opportunity for review thereof and comment thereon, such
review to be conducted and such comments to be delivered with reasonable
promptness;
(4) promptly (i) notify Holder of each of (x) the filing and
effectiveness of the Shelf Registration Statement and each prospectus and
any amendments or supplements thereto, (y) the receipt of any comments from
the SEC or any state securities law authorities or any other governmental
authorities with respect to any such Shelf Registration Statement or
prospectus or any amendments or supplements thereto, and (z) any oral or
written stop order with respect to such registration, any suspension of the
registration or qualification of the sale of the Acquisition Shares in any
jurisdiction or any initiation or threatening of any proceedings with
respect to any of the foregoing and (ii) use reasonable best efforts to
obtain the withdrawal of any order suspending the registration or
qualification (or the effectiveness thereof) or suspending or preventing
the use of any related prospectus in any jurisdiction with respect thereto;
(5) furnish to Holder, the underwriters or the sales or placement
agent, if any, and one counsel for each of the foregoing, a conformed copy
of the Shelf Registration Statement and each amendment and supplement
thereto (in each case, including all exhibits thereto) and such additional
number of copies of such Shelf
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Registration Statement, each amendment and supplement thereto (in such
case, without such exhibits), the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and prospectus
supplements and all exhibits thereto and such other documents as Holder,
underwriter, agent or such counsel may reasonably request in order to
facilitate the disposition of the Acquisition Shares by Holder;
(6) if requested by Holder or the managing underwriter or underwriters
of a Rule 415 Offering, subject to approval of counsel to the Company in
its reasonable judgment, promptly incorporate in a prospectus, supplement
or post-effective amendment to the Shelf Registration Statement such
information concerning underwriters and the plan of distribution of the
Acquisition Shares as such managing underwriter or underwriters or Holder
reasonably shall furnish to the Company in writing and request be included
therein, including, without limitation, information with respect to the
number of Acquisition Shares being sold by Holder to such underwriter or
underwriters, the purchase price being paid therefor by such underwriter or
underwriters and with respect to any other terms of the underwritten
offering of the Acquisition Shares to be sold in such offering; and make
all required filings of such prospectus, supplement or post-effective
amendment as soon as reasonably practicable after being notified of the
matters to be incorporated in such prospectus, supplement or post-effective
amendment;
(7) use reasonable best efforts to register or qualify the Acquisition
Shares under such securities or "blue sky" laws of such jurisdictions as
Holder reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable Holder to consummate the
disposition in such jurisdictions in which the Acquisition Shares are to be
sold and keep such registration or qualification in effect for so long as
the Shelf Registration Statement remains effective under the Securities Act
(provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required
to qualify but for this paragraph, (ii) subject itself to taxation in any
such jurisdiction where it would not otherwise be subject to taxation but
for this paragraph or (iii) consent to the general service of process in
any jurisdiction where it would not otherwise be subject to general service
of process but for this paragraph);
(8) notify Holder, at any time when a prospectus relating to the Shelf
Registration Statement is required to be delivered under the Securities
Act, upon the discovery that, or of the happening of any event as a result
of which, the Shelf Registration Statement, as then in effect, contains an
untrue statement of a material fact or omits to state any material fact
required to be stated therein or any fact necessary to make the statements
therein not misleading, and, subject to Section 2.03 above, promptly
prepare and furnish to the Holder a supplement or amendment to the
prospectus contained in the Shelf Registration Statement so that the Shelf
Registration Statement shall not, and such prospectus as thereafter
delivered to the purchasers of such Acquisition Shares shall not, contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or any fact necessary to make the statements
therein not misleading;
(9) cause all of the Acquisition Shares to be listed on each national
securities exchange and included in each established over-the-counter
market on which or through which the Common Stock is then listed or traded;
(10) make available for inspection by Holder, any underwriter
participating in any disposition pursuant to the Shelf Registration
Statement, and any attorney, accountant or other agent retained by Holder
or underwriter, all reasonably requested financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees, attorneys and independent
accountants to supply all information reasonably requested by Holder,
underwriters, attorneys, accountants or agents in connection with the Shelf
Registration Statement; information which the Company determines, in good
faith, to be confidential shall not be disclosed by such persons unless,
subject to Section 2.03 above, (i) the disclosure of such information is
required by applicable federal securities laws or is necessary to avoid or
correct a misstatement or omission in such Shelf Registration Statement or
(ii) the release of such information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction; Holder agrees, on its
own behalf and on behalf of all of its underwriters, accountants, attorneys
and agents, that the information obtained by any of them as a result of
such inspections shall be deemed confidential unless and until such is made
generally available to the public; Holder further agrees, on its own behalf
and on behalf of all of its underwriters, accountants, attorneys and
agents, that it will, upon learning that disclosure of such information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to
prevent disclosure of the information deemed confidential; nothing
contained herein shall require the Company to waive any attorney-client
privilege or disclose attorney work product;
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(11) use reasonable best efforts to comply with all applicable laws
related to the Shelf Registration Statement and offering and sale of
securities and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation, the
Securities Act and the Exchange Act, and the rules and regulations
promulgated by the Commission) and make generally available to its security
holders as soon as practicable (but in any event not later than fifteen
(15) months after the effectiveness of the Shelf Registration Statement) an
earnings statement of the Company and the Company Subsidiaries complying
with Section 11(a) of the Securities Act;
(12) use reasonable best efforts to furnish to Holder a signed
counterpart of (x) an opinion of counsel for the Company and (y) a
"comfort" letter signed by the independent public accountants who have
certified the Company's financial statements included or incorporated by
reference in such registration statement, covering such matters with
respect to such registration statement and, in the case of the accountants'
comfort letter, with respect to events subsequent to the date of such
financial statements as are customarily covered in opinions of issuer's
counsel and in accountants' comfort letters delivered to the underwriters
in underwritten public offerings of securities for the account of, or on
behalf of, a holder of common stock, such opinion and comfort letters to be
dated the date that such opinion and comfort letters are customarily dated
in such transactions; and
(13) take other actions as Holder or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of
the Acquisition Shares.
(b) Further Agreements. Without limiting any of the foregoing, in the event
that the sale of Acquisition Shares is to be made by or through an underwriter,
the Company shall enter into an underwriting agreement with a managing
underwriter or underwriters selected by Holder containing representations,
warranties, indemnities and agreements customarily included (but not
inconsistent with the agreements contained herein) by an issuer of common stock
in underwriting agreements with respect to offerings of common stock for the
account of, or on behalf of, holders of common stock; provided, however, that
the Holder shall not utilize the Shelf Registration Statement for more than one
underwritten offering during the term of this Agreement. In connection with the
sale of Acquisition Shares hereunder, Holder may, at its option, require that
any and all representations and warranties by, and the other agreements of, the
Company to or for the benefit of such underwriter or underwriters (or which
would be made to or for the benefit of such an underwriter or underwriter if
such sale of Acquisition Shares were pursuant to a customary underwritten
offering) be made to and for the benefit of Holder and that any or all of the
conditions precedent to the obligations of such underwriter or underwriters (or
which would be so for the benefit of such underwriter or underwriters under a
customary underwriting agreement) be conditions precedent to the obligations of
Holder in connection with the disposition of its securities pursuant to the
terms hereof. In connection with any offering of Acquisition Shares registered
pursuant to this Agreement, the Company shall, upon receipt of duly endorsed
certificates representing the Acquisition Shares, (x) furnish to the
underwriter, if any (or, if no underwriter, Holder), unlegended certificates
representing ownership of Acquisition Shares being sold, in such denominations
as requested, and (y) instruct any transfer agent and registrar of the
Acquisition Shares to release any stop transfer order with respect thereto.
Holder agrees that upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (8) of Section
2.04(a), Holder shall forthwith discontinue its disposition of Acquisition
Shares pursuant to the Shelf Registration Statement and prospectus relating
thereto until its receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (8) of Section 2.04(a) and, if so directed
by the Company, deliver to the Company all copies, other than permanent file
copies, then in Holder's possession of the prospectus current at the time of
receipt of such notice relating to the Acquisition Shares.
Section 2.05 Registration Expenses.
All expenses incidental to the Company's performance of, or compliance
with, its obligations under this Agreement including, without limitation, all
registration and filing fees, all fees and expenses of compliance with
securities and "blue sky" laws (including, without limitation, the fees and
expenses of counsel for underwriters or placement or sales agents in connection
with "blue sky" law compliance), all printing and copying expenses, all
messenger and delivery expenses, all reasonable out-of-pocket expenses of
underwriters and sales and placement agents in connection therewith (excluding
discounts and commissions and the fees and expenses of counsel therefor), all
fees and expenses of the Company's independent certified public accountants and
counsel (including, without limitation, with respect to "comfort" letters and
opinions) and other Persons retained by the Company in connection therewith
(collectively, the "Registration Expenses"), shall be borne by the Company. The
Company shall not be
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responsible for and shall not pay the fees and expenses of legal counsel,
accountants, agents or experts retained by Holder in connection with the sale of
the Acquisition Shares. The Company will pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties, the expense of any annual audit and the
expense of any liability insurance) and the expenses and fees for listing the
Acquisition Shares on the New York Stock Exchange.
Section 2.06 Indemnification.
(a) By the Company. The Company agrees to indemnify Holder, its officers,
directors, employees and agents and each Person who controls (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) Holder or
such other indemnified Person against all losses, claims, damages, liabilities
and expenses (collectively, the "Losses") caused by, resulting from or relating
to any untrue or alleged untrue statement of material fact contained in the
Shelf Registration Statement, any prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same are caused by or contained
in, or alleged to be omitted from, any information furnished in writing to the
Company by Holder or its underwriter or other agent expressly for use therein or
by Holder's failure to deliver, or its underwriter's or other agent's failure to
deliver, a copy of the Shelf Registration Statement or prospectus or any
amendments or supplements thereto after the Company has furnished Holder with
the requested number of copies of the same. In connection with an underwritten
offering and without limiting any of the Company's other obligations under this
Agreement, the Company shall indemnify such underwriters, their officers,
directors, employees and agents and each Person who controls (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act) such
underwriters or such other indemnified Person to the same extent as provided
above with respect to the indemnification of Holder.
(b) By Holder. In connection with the Shelf Registration Statement, Holder
shall furnish to the Company in writing information regarding Holder's ownership
of Acquisition Shares and its intended method of distribution thereof and shall
indemnify the Company, its directors, officers, employees and agents and each
Person who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) the Company or such other indemnified Person
against all Losses caused by, resulting from or relating to any untrue or
alleged untrue statement of material fact contained in the Shelf Registration
Statement, any prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission or
alleged untrue statement or omission (i) is caused by, results from or relates
to, or is alleged to be omitted from, such information so furnished in writing
by Holder or (ii) arises out of or results from Holder's failure to deliver, or
its underwriter's or other agent's failure to deliver, a copy of the Shelf
Registration Statement or prospectus or any amendments or supplements thereto
after the Company has furnished Holder with the requested number of copies of
the same; provided, however, that Holder shall not be liable for any claims
hereunder in excess of the amount of net proceeds received by Holder from the
sale of Acquisition Shares pursuant to the Shelf Registration Statement. In
connection with an underwritten offering and without limiting any of Holder's
other obligations under this Agreement, (i) Holder shall indemnify such
underwriters, their officers, directors, employees and agents and each Person
who controls (within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act) such underwriters or such other indemnified Person to
the same extent as provided above with respect to the indemnification of the
Company and (ii) Holder shall cause each underwriter of an underwritten offering
to indemnify the Company, its directors, officers, employees and agents and each
Person who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) the Company or such indemnified Person against
all Losses caused by, resulting from or relating to any untrue or alleged untrue
statement of material fact contained in the Shelf Registration Statement, any
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission or alleged untrue
statement or omission (x) is caused by, results from or relates to, or is
alleged to be omitted from, such information furnished in writing by such
underwriter or (y) arises out of or results from such underwriter's failure to
delivery a copy of the Shelf Registration Statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
underwriter with the requested number of copies of the same.
(c) Notice. Any Person entitled to indemnification hereunder shall give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification; provided, however, the failure to give
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such notice shall not release the indemnifying party from its obligation,
except to the extent that the indemnifying party has been prejudiced by such
failure to provide such notice.
(d) Defense of Actions. In any case in which any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not (so long as it shall
continue to have the right to defend, contest, litigate and settle the matter in
question in accordance with this paragraph) be liable to such indemnified party
hereunder for any legal or other expense subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, supervision and monitoring (unless such indemnified
party reasonably objects to such assumption on the grounds that there may be
defenses available to it which are different from or in addition to the defenses
available to such indemnifying party, in which event the indemnified party shall
be reimbursed by the indemnifying party for the reasonable expenses incurred in
connection with retaining one separate legal counsel). An indemnifying party
shall not be liable for any settlement of an action or claim effected without
its consent. The indemnifying party shall lose its right to defend, contest,
litigate and settle a matter if it shall fail to diligently contest such matter
(except to the extent settled in accordance with the next following sentence).
No matter shall be settled by an indemnifying party without the consent of the
indemnified party unless such settlement contains a full and unconditional
release of the indemnified party.
(e) Survival. The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified Person and will survive the transfer of the
Registrable Securities.
(f) Contribution. If recovery is not available under the foregoing
indemnification provisions for any reason or reasons other than as specified
therein, any Person who otherwise would be entitled to indemnification by the
terms thereof shall nevertheless be entitled to contribution with respect to any
Losses with respect to which such Person would be entitled to such
indemnification but for such reason or reasons. In determining the amount of
contribution to which the respective Persons are entitled, there shall be
considered the Persons' relative knowledge and access to information concerning
the matter with respect to which the claim was asserted, the opportunity to
correct and prevent any statement or omission, and other equitable
considerations appropriate under the circumstances. It is hereby agreed that it
would not necessarily be equitable if the amount of such contribution were
determined by pro rata or per capita allocation. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not found guilty of
such fraudulent misrepresentation.
Section 2.07 Transferability of Registration Rights.
The rights and obligations of Holder under this ARTICLE II may not be
transferred or assigned without the prior written consent of the Company;
provided, however, that such rights and obligations may be assigned by Holder in
connection with a pledge of the Acquisition Shares in a bona fide transaction to
secure indebtedness of Cygne for borrowed money to a lender that agrees in a
writing reasonably satisfactory to the Company to be subject to the terms of
this Agreement.
ARTICLE III
STANDSTILL PROVISIONS
Section 3.01 Certain Prohibited Actions.
During the term of this Agreement, without the prior written consent of the
Company, neither Cygne nor CGFE shall, and each shall cause each of its
Affiliates not to, singly or as part of a "group", directly or indirectly,
through one or more intermediaries or otherwise (i) make, or in any way
participate, directly or indirectly, in, any "solicitation" of "proxies" (as
such terms are defined or used in Regulation 14A under the Exchange Act) with
respect to the Common Stock or any securities of the Company Subsidiaries
(including by the execution of actions by written consent),
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become a "participant" in any "election contest" (as such terms are defined
or used in Rule 14a-11 under the Exchange Act) with respect to the Company or
seek to advise or influence any person or entity with respect to the voting of
any shares of Common Stock or any securities of the Company Subsidiaries; (ii)
initiate, propose, or participate in the solicitation of stockholders for the
approval of one or more stockholder proposals with respect to the Company, as
described in Rule 14a-8 under the Exchange Act, or induce or encourage any other
individual or entity to initiate any stockholder proposal relating to the
Company; (iii) form, join, influence or participate in a "group", or act in
concert with any other person or entity, for the purpose of acquiring, holding,
voting or disposing of any securities of the Company or the Company Subsidiaries
or taking any other actions prohibited under this Section 3.01; (iv) hold any
discussions with another Person regarding, make any proposal to or any public
announcement relating to a tender or exchange offer for any securities of the
Company or the Company Subsidiaries, or a merger, business combination, sale of
assets, liquidation, restructuring, recapitalization or other extraordinary
corporate transaction relating to the Company or any of the Company Subsidiaries
or its or their material assets or take any action which might require the
Company to make a public announcement regarding any of the foregoing; (v) cause
the merger of Cygne or CGFE with or into, the consolidation of the Cygne or CGFE
with, or the sale of the business or assets of Cygne or CGFE substantially as an
entirety to, any other Person unless (A) Cygne or CGFE, as the case may be, is
the surviving Person or the surviving Person agrees in writing to be bound by
this Agreement and (B) within 120 days after consummation of the transaction,
the surviving Person disposes of all shares of Common Stock owned by it (in
excess of those owned by Cygne or CGFE, as the case may be, prior to
consummation of the transaction); (vi) act, alone or in concert with others
(including by providing financing for another party), to seek or offer to
control the Company; (vii) deposit any Acquisition Shares in a voting trust or
subject any Acquisition Shares to any arrangement or agreement with respect to
the voting thereof (except pursuant to Section 3.03 below); (viii) execute any
written consents; (ix) enter into any discussions, negotiations, arrangements or
understandings with or provide any information to any third party with respect
to any of the foregoing; (x) disclose any intention, plan or arrangement
inconsistent with the foregoing prohibitions or advise or assist any other
Person in connection with any activity included in the foregoing prohibitions;
or (xi) seek, request, or propose any waiver, modification, amendment or
termination of any provision of this Section 3.01 (other than any request or
proposal made or solicited by the Company).
Section 3.02 Transferability of Acquisition Shares.
(a) Lock-up Period. Except pursuant to a pledge in a bona fide transaction
to secure indebtedness of Cygne for borrowed money to a lender that agrees in a
writing reasonably acceptable to the Company to be subject to the terms of this
Agreement, Holder may not Transfer any of the Acquisition Shares prior to the
Effective Date.
(b) Permitted Transfers. From and after the Effective Date, Holder may not
Transfer the Acquisition Shares except in the following circumstances:
(i) to the Company or with the Company's prior written consent;
(ii) pursuant to a pledge in a bona fide transaction to secure
indebtedness of Cygne for borrowed money to a lender that agrees in a
writing reasonably acceptable to the Company to be subject to the terms of
this Agreement;
(iii) to an Affiliate that agrees in a writing reasonably acceptable
to the Company to be bound by the terms of this Agreement;
(iv) pursuant to a tender offer made by a person with respect to which
the Company does not recommend rejection;
(v) pursuant to a settlement with the plaintiffs in the class action
XXXXXXXX XXXXXX X. XXXXXX, ET AL.;
(vi) pursuant to a pro rata dividend or other pro rata distribution to
all of Cygne's stockholders, upon liquidation of Cygne or otherwise; or
(vii) pursuant to Rule 144 or otherwise pursuant to the Shelf
Registration Statement;
provided, however, that, other than pursuant to clauses (iv)-(vi) above or
pursuant to an underwritten public offering, no Transfers of more than two
percent (2%) of the Company's then outstanding shares of Common Stock may be
made in any two (2)-week period; and provided, further, that any underwriter of
a public offering or any placement
8
agent, broker or other agent shall be instructed that (x) no Transfers of
any Acquisition Shares may knowingly be made to any person who beneficially owns
in excess of five percent (5%) of the then outstanding shares of Common Stock,
and (y) no Transfer of more than two percent (2%) of the Company's then
outstanding Common Stock may knowingly be made to a single purchaser (or group
of related purchasers).
Section 3.03 Voting.
During the term of this Agreement, the Holder (i) shall be present in
person or represented by proxy at all stockholder meetings of the Company so
that all Acquisition Shares then beneficially owned by Holder shall be counted
for the purpose of determining the presence of a quorum at such meetings, and
(ii) shall vote, or act by consent with respect to, all Acquisition Shares then
beneficially owned by Holder pro rata in the same proportion as the votes cast
by all other stockholders of the Company.
ARTICLE IV
MISCELLANEOUS
Section 4.01 Effectiveness of Agreement.
The provisions of this Agreement shall be effective as of the date hereof.
Section 4.02 Restrictive Legends.
Holder hereby acknowledges and agrees that, during the term of this
Agreement, each of the certificates representing Acquisition Shares shall be
subject to stop transfer instructions and shall include the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
WHETHER BY SALE, ASSIGNMENT, PLEDGE, ENCUMBRANCE, GIFT, BEQUEST,
APPOINTMENT OR OTHERWISE, AND ANNTAYLOR STORES CORPORATION (THE "COMPANY")
WILL NOT REGISTER THE TRANSFER OF SUCH SHARES, EXCEPT PURSUANT AND SUBJECT
TO THAT CERTAIN STOCKHOLDERS AGREEMENT DATED SEPTEMBER 20, 1996, AS MAY BE
AMENDED FROM TIME TO TIME, BETWEEN ATSC AND CYGNE DESIGNS, INC. A COPY OF
SUCH AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY."
Section 4.03 Recapitalization.
In the event that any capital stock or other securities are issued as a
dividend or distribution on, in respect of, in exchange for, or in substitution
of, any Acquisition Shares, such securities shall be deemed to be Acquisition
Shares for all purposes under this Agreement.
Section 4.04 Notices.
All notices, requests, demands, waivers and other communications required
or permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally, by mail (certified or
registered mail, return receipt requested), by reputable overnight courier or by
facsimile transmission (receipt of which is confirmed):
(a) If to the Company, to:
AnnTaylor Stores Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
9
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx Chuff, Esq,
Facsimile: (000) 000-0000
(b) If to Holder, to:
Cygne Designs, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with a copy to:
Fulbright and Xxxxxxxx, L.L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other person or address as any party shall specify by notice in
writing, given in accordance with this Section 4.04, to the other parties
hereto. All such notices, requests, demands, waivers and communications shall
be deemed to have been given on the date on which so hand-delivered, on the
third business day following the date on which so mailed, on the next business
day following the date on which delivered to such overnight courier and on the
date of such facsimile transmission and confirmation, except for a notice of
change of person or address, which shall be effective only upon receipt
thereof.
Section 4.05 Entire Agreement.
This Agreement contains the entire understanding of the parties hereto with
respect to the subject matter hereof. This Agreement supersedes all prior
agreements and understandings, oral and written, with respect to its subject
matter.
Section 4.06 Severability.
Should any provision of this Agreement, or any part thereof, for any reason
be declared invalid or unenforceable, such declaration shall not affect the
validity or enforceability of any other provision of this Agreement, or any
other part thereof, all of which other provisions, and parts, shall remain in
full force and effect, and the application of such invalid or unenforceable
provision, or such part thereof, to persons or circumstances other than those as
to which it is held invalid or unenforceable shall be valid and be enforced to
the fullest extent permitted by law.
Section 4.07 Binding Effect; Assignment.
This Agreement and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs,
executors, successors and permitted assigns, but, except as expressly
contemplated herein, neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned, directly or indirectly, by the Company
or Holder without the prior written consent of the other. Upon any such
assignment, this Agreement shall be amended to substitute the assignee as a
party hereto in a writing reasonably acceptable to the other party.
Section 4.08 Amendment, Modification and Waiver.
This Agreement may be amended, modified or supplemented at any time by
written agreement of the parties hereto. Any failure by Holder, on the one hand,
or the Company, on the other hand, to comply with any term or provision of this
Agreement may be waived by the Company or Holder, respectively, at any time by
an instrument in
10
writing signed by or on behalf of the Company and Holder, but such waiver
or failure to insist upon strict compliance with such term or provision shall
not operate as a waiver of, or estoppel with respect to, any subsequent or other
failure to comply.
Section 4.09 Third-Party Beneficiaries.
This Agreement is not intended, and shall not be deemed, to confer upon or
give any person except the parties hereto and their respective successors and
permitted assigns, any remedy, claim, liability, reimbursement, cause of action
or other right under or by reason of this Agreement.
Section 4.10 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
Section 4.11 Interpretation.
The article and section headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties and shall
not in any way affect the meaning or interpretation of this Agreement.
Section 4.12 Governing Law.
This Agreement shall be governed by the laws of the State of New York,
without regard to the principles of conflicts of law thereof.
Section 4.13 Termination; Restrictive Legend.
This Agreement shall terminate on the third anniversary of the date hereof;
provided, however, that the provisions of Section 2.06 hereof shall survive
termination of this Agreement. It is understood and agreed that any restrictive
legends set forth on any Acquisition Shares shall be removed by delivery of
substitute certificates without such legends and such Acquisition Shares shall
no longer be subject to the terms of this Agreement, upon the resale of such
Acquisition Shares in accordance with the terms of this Agreement (other than
pursuant to Section 3.02(b) (i), (ii) or (iii)) or, if not theretofore removed,
on the third anniversary of the date hereof.
IN WITNESS WHEREOF, the undersigned hereby agree to be bound by the terms
and provisions of this Stockholders Agreement as of the date first above
written.
ANNTAYLOR STORES CORPORATION
By: /s/ XXXXXX X. XXXXX
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Senior Vice President-Finance
CYGNE DESIGNS, INC.
By: /s/ XXXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
CYGNE GROUP (F.E.) LIMITED
By: /s/ XXXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman and Chief Executive Officer
11
