LETTER OF NEGATIVE PLEDGE The Hongkong and Shanghai Banking Corporation Limited 140 Broadway New York, NY 10005-1196 Re: Amended and Restated Credit Agreement dated as of September 20, 1996 with ANNTAYLOR GLOBAL SOURCING, INC. (formerly known as CAT US, Inc.) (the 'Company') up to ------- an aggregate amount of $40,000,000 --------------------- (the 'Credit Agreement') ------------------------ Dear Sir/Madam: In consideration of your agreeing to grant, continue and/or further extend credit facilities and other financial accommodation to the Company, the Company hereby irrevocably and unconditionally covenants and undertakes with you as follows: 1. The Company shall not: a. Create or attempt to create, assume or permit to subsist any mortgage, security interest, charge, pledge, lien, or other encumbrance upon, or permit any lien, security interest or other encumbrance (except for statutory or constitutional liens arising in the ordinary course of business with respect to any obligation or indebtedness which is not yet due and payable) to arise on or affect, the whole or any part of its respective undertaking, property, assets and rights, other than pledges created over goods and/or services acquired pursuant to documentary credits opened in the ordinary course of business for the purpose of financing the acquisition or provision of such goods and services; or b. Transfer, sell or otherwise dispose of or attempt or agree to transfer, sell or dispose of the whole or any part of its respective undertaking, property, assets and rights, except (i) by way of sale at full value in the usual and ordinary course of business as now conducted and for the purpose of carrying on the relevant business, (ii) obsolete or worn-out property, tools or equipment no longer used or useful in its business or (iii) the sale, in a single transaction, of the CAD-CAM computer equipment described in Exhibit F to the Stock and Asset Purchase Agreement (as defined in the Credit Agreement), the value of which equipment shall not exceed $10,000.00 in the aggregate; or c. Grant, issue or extend any guarantee or indemnity or enter into any other form of contractual undertaking or arrangement of similar effect in respect of any =========================================================================== indebtedness or obligations, actual or contingent, of any other Person whatsoever except in the usual and ordinary course of business as now conducted by the Company and for the purpose of the carrying on by the Company of its business. 2. The undertakings set out herein shall not be deemed breached by reason only of the existence of any mortgage, security interest, charge, pledge, lien or other encumbrance or guarantee or indemnity which has been created, assumed or which subsists or has arisen prior to the date hereof, provided, that any further or additional encumbrance over or affecting the relevant asset, or increase in the amount secured by or other variation of the relevant encumbrance or guarantee or indemnity of similar effect, shall constitute such a breach. 3. The Company further authorizes you, in your absolute discretion, at any time and from time to time to notify any creditors of the Company of the terms of the undertakings set out herein in the event that you receive notice of proposals which, if implemented, would or might be in breach of such undertakings. Yours faithfully, ANNTAYLOR GLOBAL SOURCING, INC. By /s/ _________________________ Name: Title: Date: As of September 20, 1996
Letter of Negative Pledge - Hongkong and Shanghai Banking Corp. Ltd. and AnnTaylor Global Sourcing Inc.
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