CONSULTING AGREEMENT
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THIS CONSULTING AGREEMENT is made and entered
into as of the 20th day of September, 1996, by and between
AnnTaylor Stores Corporation, a Delaware corporation
('ATSC'), AnnTaylor, Inc., a Delaware corporation
and wholly owned subsidiary of ATSC ('ATI' and, together
with ATSC, 'Ann Taylor'), Cygne Designs, Inc., a Delaware
corporation ('Cygne'), and Mr. Irving Benson ('Consultant').
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to that certain Stock and
Asset Purchase Agreement, dated as of June 7, 1996, as
amended as of August 27, 1996, among ATSC, ATSI, Cygne
and Cygne Group (F.E.) Limited, a Hong Kong corporation
and wholly owned subsidiary of Cygne ('CGFE'), ATI
acquired from Cygne (i) all of the shares of common stock,
par value $.01 per share, of CAT US, Inc., a Delaware
corporation ('CAT-US'), owned by Cygne; and (ii) certain
of the assets of Cygne's AnnTaylor Woven Division (the
'Division');
WHEREAS, pursuant to the Purchase Agreement,
ATI acquired from CGFE all of the shares of common stock,
par value $1 HK per share, of C.A.T. (Far East) Limited,
a Hong Kong corporation ('CAT-Far East' and, together
with CAT-US, 'CAT'), owned by CGFE;
WHEREAS, CAT serves as a fully dedicated
sourcing capability for ATI;
WHEREAS, prior to the date hereof, Cygne,
through the Division, served as a private label designer,
merchandiser and manufacturer of women's apparel for ATI;
WHEREAS, Consultant is the President and Vice
Chairman of Cygne with particular expertise regarding
design, merchandising and product development; and
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Consulting Agreement
Irving Benson
Page 2
WHEREAS, Ann Taylor, as partial consideration
for the transactions contemplated by the Purchase Agreement,
desires to obtain, and Cygne and Consultant desire
that Consultant provide, information, consultation,
advice and other services in aid of Ann Taylor's business,
all subject to the terms and conditions hereinafter
set forth.
NOW, THEREFORE, in consideration of the foregoing
and of the representations, warranties, covenants,
agreements and conditions contained herein, Ann Taylor,
Cygne and Consultant, intending to be legally bound,
agree as follows:
1. Engagement of Consultant.
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(a) Cygne hereby covenants and agrees to
make Consultant available to provide services to Ann
Taylor upon the terms and conditions set forth herein.
Consultant hereby agrees to act as a consultant to and on
behalf of Ann Taylor in accordance with the terms and
conditions set forth herein. Cygne, Consultant and Ann
Taylor agree that Consultant will provide services to Ann
Taylor not in excess of thirty percent (30%) of his
business time and that Consultant will continue his
duties as President and Vice Chairman of Cygne. Cygne
agrees to allow Consultant reasonable time to perform his
duties as a consultant to Ann Taylor on a timely basis,
provided, however, that the performance of such duties
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shall be at mutually agreeable times that do not unreasonably
interfere with Consultant's continuing obligations to Cygne.
(b) Cygne shall cause Consultant to, at
the request of the President of Ann Taylor, provide Ann
Taylor information, consultation and advice on design,
merchandising and product development.
(c) Cygne shall cause Consultant, and
Consultant hereby agrees, to diligently and faithfully
serve Ann Taylor and to devote his reasonable best efforts,
his highest talents and skills, and all necessary
time and attention in providing the information, consultation
and advice requested pursuant to paragraph (b) of
this Section 1; provided that Consultant shall not,
without the consent of Cygne and Consultant, be required
to travel outside New York. Cygne hereby consents to the
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Consulting Agreement
Irving Benson
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allocation of up to thirty percent (30%) of Consultant's
business time to perform services under this Agreement.
2. Term of Agreement. Unless terminated at
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an earlier date in accordance with Section 4 of this
Agreement, the term of this Agreement shall commence on
the date of this Agreement and shall end on the third
anniversary thereof (the 'Expiration Date').
3. Payment for Services.
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(a) Consultant's Fee. In consideration
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of Cygne causing Consultant to perform the services
provided for in this Agreement, Ann Taylor shall pay to
Cygne, at such time and in the manner as set forth in
Section 3(b) hereof, a fee of $225,000 per year (the
'Consultant's Fee'). Ann Taylor shall not provide Consultant
with any compensation or benefits, including, but
not limited to, medical or pension benefits, bonuses or
vacation, holiday or sick pay.
(b) Time of Payment. The Consultant's
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Fee shall be due and payable to Cygne by Ann Taylor in
quarterly installments commencing on the date hereof;
provided, however, that the first installment shall be
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prorated to reflect the remaining days of the current
fiscal quarter.
(c) Reimbursement of Expenses. Ann
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Taylor shall reimburse Cygne or Consultant, as the case
may be, for all reasonable out-of-pocket expenses in
curred by Cygne or Consultant in connection with the
performance of Consultant's services hereunder in
accordance with AnnTaylor's travel policies.
4. Termination.
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(a) Death. This Agreement shall terminate
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upon the Consultant's death.
(b) Termination by Default. Each of the
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following shall constitute, without limitation or restriction,
an event of default under this Agreement, in which
case, the non-defaulting party may give the other notice
that this Agreement shall terminate on the date selected
by the non-defaulting party and set forth in such notice
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Consulting Agreement
Irving Benson
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(the 'Termination Date'), unless cured as specified
below:
(i) If either Ann Taylor or
Cygne shall, whether by action or inaction,
breach in any material respect any obligation
under this Agreement, including a material
failure by Consultant to perform his duties and
responsibilities hereunder, and such breach is
not remedied within thirty (30) days after written
notice thereof from the non-defaulting party;
(ii) If, for any reason, Consultant
shall be convicted of a felony; or if Consultant
shall be convicted of any other crime as a result
of which his ability to perform the services described
in Section 1 hereof is materially impaired;
(iii) If there has been fraud,
bad faith or willful misconduct on the part of
Cygne or Consultant in connection with the performance
of Consultant's duties and responsibilities hereunder;
(iv) If Ann Taylor institutes proceedings
relief under the United States Bankruptcy Code or any similar
law, or consents to entry of an order for relief against it
in any bankruptcy or in solvency proceeding or similar proceeding,
or files a petition or answer or consent for reorganization
or other relief under any bankruptcy act or similar law, or consents
to the filing against it, of any petition for the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of it, or of any substantial part of its property,
or makes an assignment for the benefit of creditors, or admits in
writing its inability to pay its debts as they become due, or fails
to pay its debts as they become due or takes any action in
furtherance of the foregoing; or
(v) If Cygne or Consultant breaches
in any manner Section 5 hereof.
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Consulting Agreement
Irving Benson
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(c) Effect of Termination. Upon termination
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of this Agreement, Cygne's obligation to cause Consultant to
provide services to Ann Taylor hereunder, and Ann Taylor's
obligation to make payment to Cygne under Section 3 hereof,
shall terminate, except that AnnTaylor shall be obligated to
reimburse all expenses incurred through the termination date
in accordance with Section 3(b) hereof.
5. Confidentiality.
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(a) Proprietary Information. Each of
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Cygne and Consultant acknowledges and agrees that during
the course of the provision of Consultant's services to
Ann Taylor, Consultant may be exposed to sensitive data
and information concerning the business and affairs of
Ann Taylor, including, without limitation, fabric, product
and merchandise designs, and that all of such data
and information, financial plans, financial results, quantity
or assortment of merchandise orders or plans and inventory
levels (collectively, the 'Proprietary Information') are vital,
sensitive, confidential and proprietary to Ann Taylor.
(b) Consultant's Agreement. In consideration
----------------------
of the Purchase Price (as defined in the Purchase Agreement) to
be paid by Ann Taylor to Cygne in connection with the transactions
contemplated by the Purchase Agreement, Consultant agrees to the
covenants and restrictions set forth in this Section 5.
(c) Cygne's Agreement. In consideration
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of the Purchase Price to be paid by Ann Taylor to Cygne
in connection with the transactions contemplated by the
Purchase Agreement, Cygne agrees to the covenants and
restrictions set forth in this Section 5.
(d) Trade Secret Status. Each of Cygne
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and Consultant expressly acknowledges the trade secret
status of the Proprietary Information and acknowledges
that the Proprietary Information constitutes a
protectable business interest of Ann Taylor, and covenants
and agrees that during the term of the engagement
hereunder and at all times after the expiration or termination
of such engagement, neither Cygne nor Consultant
shall, directly or indirectly, whether, in the case of
Consultant, individually, as a director, stockholder,
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Irving Benson
Page 6
owner, partner, employee, principal or agent of or consultant
to any business, or in any other capacity, make
known, disclose, furnish, make available or utilize any
of the Proprietary Information, other than in the proper
performance of the duties contemplated herein during the
term of the engagement hereunder. Cygne's and Consultant's
obligations under this Section 5(d) with respect to particular
Proprietary Information shall terminate only at such time
(if any) as the Proprietary Information in question becomes
generally known to the public other than through a breach
of either Cygne's or Consultant's obligations hereunder.
(e) Return of Proprietary Information.
---------------------------------
Each of Cygne and Consultant acknowledges and agrees that
all records or documents containing Proprietary Information
prepared by Consultant or coming into his possession by virtue
of the engagement are and shall remain the property of
Ann Taylor and that, upon termination or expiration of this
engagement, Consultant shall return immediately to Ann Taylor
all such items in his possession, together with all copies and
extracts, and will destroy all summaries thereof and any such
information stored electronically on tapes, computer disks or in
any other manner.
(f) Consultant Non-Solicitation. Consultant
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agrees that during the term of this Agreement and
for a period of one (1) year thereafter he shall not,
directly or indirectly, induce or solicit (or authorize or
assist in the taking of any such actions by any third
party) any employee or consultant of Ann Taylor to leave
his or her business association with Ann Taylor.
(g) Cygne Non-Solicitation. Cygne agrees
----------------------
that during the term of this Agreement and for a period
of one (1) year thereafter it shall not, directly or
indirectly, induce or solicit (or authorize or assist in the
taking of any such actions by any third party) any
employee or consultant of Ann Taylor to leave his or her
business association with Ann Taylor.
(h) Ann Taylor Non-Solicitation. Ann
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Taylor agrees that during the term of this Agreement and
for a period of one (1) year thereafter it shall not, di-
rectly or indirectly, induce or solicit (or authorize or
assist in the taking of any such actions by any third
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Irving Benson
Page 7
party) any employee or consultant of Cygne to leave his
or her business association with Cygne.
(i) Acknowledgment. Consultant and Cygne
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acknowledge and agree that the covenants set forth in
this Section 5 and each subsection hereof are reasonable
and necessary for the protection of Ann Taylor's business
interests, that irreparable injury will result to
Ann Taylor if Consultant or Cygne breaches any of the
terms of said covenants, and that in the event of
Consultant's or Cygne's actual or threatened breach of
any such covenants, Ann Taylor will have no adequate
remedy at law. Cygne and Consultant accordingly agree
that in the event of any actual or threatened breach by
Consultant of any of said covenants, Ann Taylor shall be
entitled to immediate injunctive and other equitable
relief without bond and without the necessity of showing
actual monetary damages. Cygne accordingly agrees that
in the event of any actual or threatened breach by Cygne
of any of said covenants, Ann Taylor shall be entitled to
immediate injunctive and other equitable relief without
bond and without the necessity of showing actual monetary
damages. Notwithstanding the provisions of Section 9
hereof, such equitable relief may be sought in any court
of competent jurisdiction. Nothing contained herein
shall be construed as prohibiting Ann Taylor from pursuing
any other remedies available to it for such breach or
threatened breach, including the recovery of any damages
which it is able to prove.
(j) The provisions of this Section 5
shall survive the expiration or termination of this
Agreement, and any of the arrangements contained herein,
and shall be binding upon Consultant's, Cygne's and
Ann Taylor's corporate or personal successors and
assigns.
6. Representations and Warranties of Consultant.
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Consultant represents and warrants to Cygne and Ann Taylor
that he has full legal power and authority to enter into this
Agreement, perform all of his obligations hereunder and to
consummate the transactions contemplated hereby.
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Irving Benson
Page 8
7. Consultant's Independence and Discretion.
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(a) Nothing herein contained shall be construed
to constitute the parties hereto as partners or as
joint venturers, or as agent of the others, or, as
between Ann Taylor and Consultant, as employer and employee.
By virtue of the relationship described herein,
Consultant's relationship to Ann Taylor during the term
of this Agreement shall only be that of an independent
contractor and the Consultant shall perform all services
pursuant to this Agreement as an independent contractor.
The Consultant shall not provide any services under
Ann Taylor's business name and shall not present himself
as an agent or employee of Ann Taylor and shall have no
authority to enter into any binding obligation on behalf
of Ann Taylor.
(b) Subject to the terms of this Agreement,
the manner, means, details or methods by which the
Consultant performs his obligations under this Agreement
shall be determined by Cygne, subject to the reasonable
satisfaction of Ann Taylor.
(c) Each of Cygne and Consultant acknowledges
and agrees that Ann Taylor shall not provide to
Consultant any unemployment, disability, workers' compensation
or medical insurance or any other employee benefits. Payments
to Cygne under Section 3 hereof shall not be subject to withholding
taxes or other employment taxes.
8. Arbitration. Any controversy or claim
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arising out of or relating to this Agreement, or the
breach thereof, shall be settled by arbitration before
three (3) arbitrators selected in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association in the City of New York. Arbitration as
provided herein shall be the exclusive means for determination
of all matters as above provided, and any decision
and award of the arbitrators shall be final, binding and
conclusive upon the parties and such decision and award
may be entered as a final judgment in any court of competent
jurisdiction. Except as provided in Section 5(j)
hereof, none of the parties shall institute any action or
proceeding in any court of law or equity, state or federal,
other than as may be necessary for purposes of enforcement of
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Consulting Agreement
Irving Benson
Page 9
the arbitrators' decision and award hereunder.
9. Consultant's Employment. Cygne and Consultant
-----------------------
hereby acknowledge that Consultant's execution of
this Agreement is a condition to Consultant's continued
employment with Cygne.
10. Notices. All notices, requests, demands,
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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 ATSC or ATI, to:
AnnTaylor Stores Corporation
142 West 57th Street
New York, New York 10019
Attention: General Counsel
Facsimile: (212) 541-3299
with a copy to:
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square
Wilmington, Delaware 19801
Attention: Patricia Moran Chuff, Esq.
Facsimile: (302) 651-3001
(b) If to Cygne, to:
Cygne Designs, Inc.
1372 Broadway
New York, New York 10018
Attention: General Counsel
Facsimile: (212) 536-4174
with a copy to:
Fulbright and Jaworski, L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Roy L. Goldman, Esq.
Facsimile: (212) 752-5958
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Irving Benson
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(c) If to Consultant, to:
Cygne Designs, Inc.
1372 Broadway
New York, New York 10018
Attention: Irving Benson
Facsimile: (212) 536-4174
or to such other person or address as any party shall
specify by notice in writing, given in accordance with
this Section 10 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.
11. 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.
12. 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.
13. Binding Effect; Assignment. This Agreement
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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 as
signs, but, except as contemplated herein, neither this
Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, directly or indirectly, by
ATSC, ATI, Cygne or Consultant without the prior written
consent of the other parties hereto; provided, however,
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Irving Benson
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that ATSC or ATI may assign any or all of its rights,
interests or obligations hereunder to any one or more,
direct or indirect, wholly owned subsidiaries of ATSC or
ATI, provided, however, that no such assignment by ATSC or
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ATI shall limit or affect ATSC's or ATI's obligations
hereunder; provided, further, however, that this Agreement
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shall automatically be assigned to and assumed by Consultant
in the event that (i) Consultant's employment with
Cygne is terminated; or (ii) Cygne is liquidated or
dissolved, whether through Chapter 7 of the U.S. Bankruptcy
Laws or otherwise; provided, however, that Consultant
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hereby agrees, in the event of any such assignment by
Cygne and assumption by Consultant, to assume and perform
all of Cygne's obligations hereunder, to the extent applicable.
14. Amendment, Modification and Waiver. This
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Agreement may be amended, modified or supplemented at any
time by written agreement of the parties hereto. Any
failure by Cygne or Consultant, on the one hand, or ATSC
or ATI, on the other hand, to comply with any term or provision
of this Agreement may be waived by ATSC, ATI, Cygne
or Consultant, respectively, at any time by an instrument
in writing signed by or on behalf of ATSC, ATI, Cygne or
Consultant, 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.
15. Third-Party Beneficiaries. Except as
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otherwise expressly provided herein, 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.
16. Counterparts. This Agreement may be executed
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in counterparts, each of which shall be deemed an
original, but all of which together shall constitute one
and the same instrument.
17. Interpretation. The section headings contained
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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.
As used in this Agreement, the term 'person' shall mean and
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Irving Benson
Page 12
include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
18. Governing Law. This Agreement shall be governed
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by the laws of the State of New York, without regard
to the principles of conflicts of law thereof.
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IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date and year first
above written.
ANNTAYLOR STORES CORPORATION
By: /s/ Walter J. Parks
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Name: Walter J. Parks
Title: Senior Vice President -
Finance
ANNTAYLOR, INC.
By: /s/ Walter J. Parks
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Name: Walter J. Parks
Title: Senior Vice President -
Finance
CYGNE DESIGNS, INC.
By: /s/ Paul D. Baiocchi
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Name: Paul D. Baiocchi
Title: Vice President
CONSULTANT
/s/ Irving Benson
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Irving Benson
Consultant
Consulting Agreement - AnnTaylor Stores Corp., AnnTaylor Inc., Cygne Designs Inc. and Irving Benson
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