EXHIBIT 10.26.2
STOCKHOLDERS AGREEMENT
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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 (the
"Purchase Agreement"), as amended as of August 27, 1996,
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:
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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
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ascribed to it in the second paragraph of the preamble.
The term "Acquisition Shares" shall have the
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meaning ascribed to it in the third paragraph of the
preamble.
The term "Affiliate" shall have the meaning
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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
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ascribed to it in the first paragraph of the preamble.
The term "Company Offering" shall mean the sale
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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
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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
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meaning ascribed to it in Section 2.02.
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The term "Exchange Act" shall mean the Securities
------------
Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.
The term "Holder" shall have the meaning
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ascribed to it in the first paragraph of the preamble.
The term "Losses" shall have the meaning ascribed
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to it in Section 2.06(a).
The term "Person" shall mean an individual,
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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
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meaning ascribed to it in Section 2.05.
The term "Rule 144" shall mean Rule 144
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promulgated under the Securities Act (or any successor
rule).
The term "Rule 415 Offering" shall have the
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meaning ascribed to it in Section 2.01(a).
The term "SEC" shall mean the Securities and Ex
---
change 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
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have the meaning ascribed to it in Section 2.01(a).
The term "Transfer" shall mean any attempt to,
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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
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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
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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).
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,
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however, that Holder shall not be obligated to comply with this
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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.
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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
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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 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
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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
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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;
(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
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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 under
writer, 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
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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
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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 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
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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
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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 indemni-
fication hereunder shall give prompt written notice to
the indemnifying party of any claim with respect to which
it seeks indemnification; provided, however, the failure
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to give 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,
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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.
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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,
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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), 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
===============================================================
Page 16
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
====================================================================
Page 17
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 ▇▇▇▇▇▇▇▇
---------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, 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 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.
================================================================
Page 18
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.
===============================================================
Page 19
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
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Chuff, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to Holder, to:
Cygne Designs, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fulbright and ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
=====================================================================
Page 20
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 as
signed, 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.
===================================================================
Page 21
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 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
=============================================================
Page 22
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
_
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President - Finance
CYGNE DESIGNS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
CYGNE GROUP (F.E.) LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director