ex10_1.htm


  
    Exhibit
10.1

    


     June
10, 2008

     

    The
Talbots Inc.

    One
Talbots Drive

    Hingham,
MA 02043

    


    
      	
              Re:

            	
              $50,000,000
      Subordinated Term Loan Credit
Facility

            


    

    


    Gentlemen/Ladies:

    


    We are
pleased to inform The Talbots Inc. (the "Company") that we agree, subject to the
terms and conditions of this letter agreement, to provide through one or more
subsidiaries to the Company a $50 million subordinated  term loan
facility as more fully described in the attached summary of terms (the "Summary
of Terms").   We are providing this credit facility in support of
the turnaround plan previously approved by the Talbots Board of
Directors.

    


    In
addition, our obligation to provide such credit facility shall be subject to (i)
completion of satisfactory confirmatory due diligence, (ii) the execution of
definitive documentation which shall be mutually satisfactory to the Company and
us and consistent with the Summary of Terms and (iii) satisfaction of the other
conditions set forth in the Summary of Terms (or such definitive
documentation).

    


    This
letter agreement is made solely for the benefit of parties hereto and may not be
relied upon or enforced by any other person.  This letter agreement
may be amended or modified only by a writing signed by the parties
hereto.  This letter agreement may be executed in one or more
counterparts, all of which, taken together, shall constitute one and the same
agreement.  This letter agreement shall be governed by and construed
in accordance with the laws of the State of New York.

    


    If the
above is acceptable, please so confirm by signing and returning a copy of this
letter agreement to the undersigned no later than 5:00 p.m., New York City time,
on June 11, 2008, whereupon this letter agreement and each counterpart hereof
will constitute a binding agreement between the Company and us.  Our
agreements contain herein and in the Summary of Terms will expire at such time
in the event we have not received such confirmation.  Thereafter, our
accepted agreements hereunder will expire on July 15, 2008.

     

    
      
        	 	
                Very
      truly yours,

              	 
	 	 	 
	 	AEON
      CO., LTD.	 
	 	 	 
	 	
                By:

              	/s/
      Tsutomu Kajita	 
	 	 	
                Name:
      Tsutomu Kajita

              	 
	 	 	
                Title:
      Senior Vice President, International Operations

              	 


      

    

     

    Accepted
and agreed to this 10th

    day of
June, 2008:

     

    THE TALBOTS
INC.

     

    
      	
              By:

            	/s/
      Edward L. Larsen	 
	 	
              Name:

            	
              Edward
      L. Larsen

            
	 	
              Title:

            	
              Senior
      Vice President, Finance, Chief Financial Officer and
    Treasurer

            
	 	 	 
	Attachment:  	Summary
      of Terms and Conditions


    

    

      
        
           


        

        
          S-1

          
            

          

        

        
           


          
            June 10,
2008

          

        

      

    

    
       

      The
Talbots, Inc.

       

      $50,000,000
TERM LOAN CREDIT FACILITY

       

       

      These
terms are not exhaustive and provide a summary only of the principal terms and
conditions of the Term Loan Credit Facility described herein (the “Facility”).  The
final transaction documentation evidencing the Facility will incorporate such
conditions, undertakings, representations and warranties, events of default and
other provisions as may be considered necessary or appropriate by the
Lender  for a transaction of this nature and which are reasonably
agreed in final documentation between the Lender and the Borrower consistent
with the terms hereof.

       

      
        	
                Borrower:

              	
                The
      Talbots, Inc.

              
	 	 
	
                Lender:

              	
                One
      or more subsidiaries of Aeon Co., Ltd. organized under the laws of a U.S.
      State (the “Lender”).

              
	 	 
	
                Upfront
      Fee:

              	
                $0.75
      million.

              
	 	 
	
                Commitment
      Amount:

              	
                An
      aggregate principal amount of up to $50 million outstanding at any time
      (the "Commitment").

              
	 	 
	
                Commitment
      Fee:

              	
                0.50% per
      annum on the undrawn portion of the Commitment, payable quarterly in
      arrears after the Closing Date and upon the termination of the
      Commitment.

              
	 	 
	
                Purpose:

              	
                The
      purpose of the Facility is to provide working capital financing for the
      Borrower in connection with the Borrower’s execution of its turnaround
      plan (“Turnaround Plan”) as has been approved by the Borrower’s Board of
      Directors.

                 

                Proceeds
      of borrowings under the Facility (the “Loans”)
      will be used by the Borrower and its subsidiaries solely for general
      working capital purposes and other general corporate
    purposes.

              
	 	 
	
                Availability:

              	
                Upon
      satisfaction or waiver of all conditions precedent to borrowing (including
      absence of any defaults), Loans under the Facility will be available at
      any time after the Closing Date and prior to the Maturity Date (the "Commitment
      Period").  Amounts borrowed under the Facility that are
      repaid or prepaid may be not reborrowed.

                 

                It is intended that the Loans constitute "Subordinated Debt" under
      the Term Loan Agreement, dated as of July 24, 2006 (as the same may be
      amended, supplemented or otherwise modified from time to time, the "Existing
      Credit Agreement"), among the Borrower, the lenders from time to
      time party thereto and Mizuho Corporate Bank, Ltd. (the "Existing
      Lenders").

              


      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      
        	 	
                The
      principal amount of each Loan shall be an integral multiple of $10
      million and shall be in an amount not less than $10 million.

                 

                The
      Borrower shall notify the Lender by fax and email of its desire to make a
      borrowing under the Commitment no later that 5 business days prior to the
      proposed funding date.

              
	 	 
	
                Voluntary
      Prepayments:

              	
                Not
      permitted (unless permitted under the Borrower's then existing senior
      indebtedness).

              
	 	 
	
                Interest
      Rate:

              	
                LIBOR
      plus 500 basis points.  Interest on the Loans will be payable
      quarterly in arrears.

                 

                "LIBOR"
      means the three month rate for deposits in U.S. Dollars which appears on
      the Telerate Page 3750 as of 11:00 a.m., Tokyo time, on the day that is
      two business days prior to the proposed funding date.

                 

                All
      computations of fees and interest shall be made on the basis of a 360-day
      year and actual days elapsed.

              
	 	 
	
                Closing
      Date:

              	
                July
      15, 2008.

              
	 	 
	
                Maturity
      Date:

              	
                All
      outstanding Loans shall mature, and the Commitment shall expire, on
      January 28, 2012 (the "Maturity
      Date").

              
	 	 
	
                Security;
      Ranking:

              	
                The
      Loans will be unsecured general obligations of the Borrower subordinated
      only to financial institution indebtedness of the Borrower existing on the
      Closing Date (including the Existing Credit Agreement).

              
	 	 
	
                Default
      Rate:

              	
                Upon
      the occurrence and during the continuance of a de-fault, interest will
      accrue on any principal or other amount payable under a Loan at a rate of
      2.00% per annum in excess of the applicable interest rate and will be
      payable on demand.

              
	 	 
	
                Conditions
      Precedent to Borrowing:

              	
                Usual
      for facilities of this type and to be reasonably specified by the Lender,
      including, delivery of satisfactory payment of fees and expenses, accuracy
      of representations and warranties, no material adverse change and absence
      of a default or an event of default.

                 

                The
      Facility is also conditioned on execution and delivery of a subordination
      agreement between the Lender and the Existing Lenders, in form and
      substance reasonably satisfactory to the
Lender.

              


      

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	 	
                In
      addition, prior to the extension of any Loan, the Lender shall have
      received:

              
	 	 
	 	
                ·

              	
                within
      30 days after the end of each fiscal month of the Borrower during the
      Commitment Period, a financial report of the Borrower and its consolidated
      subsidiaries for such fiscal month, in form and substance satisfactory to
      the Lender;

              
	 	 	 
	 	
                 ·

              	
                prior
      to the Closing Date, copies of the Turnaround Plan of the Borrower and its
      subsidiaries, in form and substance satisfactory to the
      Lender;

              
	 	 	 
	 	
                 ·

              	
                evidence
      that the Borrower's indebtedness existing on the Closing Date is in full
      force and effect, without amendment or modification thereto in a manner
      adverse to the Lender in any material respect; and

              
	 	 	 
	 	
                 ·

              	
                sufficient
      information, such that the Lender can be reasonably certain that the
      Borrower will be in compliance with the financial covenants in the
      Existing Credit Facility over the 12 months following incurrence of a
      Loan.

              
	 	 
	
                Representations
      and Warranties:

              	
                The
      definitive documentation relating to the Loans (the “Loan
      Documents”) will contain representations and warranties relating to
      the Borrower and its subsidiaries that are substantially the same in all
      material respects as the representations and warranties contained in the
      Existing Credit Agreement.

              
	 	 
	
                Covenants:

              	
                The
      Loan Documents will contain covenants relating to the Borrower and its
      subsidiaries that are substantially the same in all material respects as
      the covenants contained in the Existing Credit
  Agreement.

              
	 	 
	
                Reports:

              	
                The
      Lender shall receive the following reports:

              
	 	 
	 	
                 ·

              	
                audited
      annual financial statements of the Borrower within 120 days after the end
      of each fiscal year of the Borrower;

              
	 	 	 
	 	
                 ·

              	
                unaudited
      quarterly financial statements of the Borrower within 60 days after the
      end of each fiscal quarter of the Borrower; and

              
	 	 	 
	 	
                 ·

              	
                Such
      other information and reports as reasonably requested by the Lender from
      time to time, including updates with regard to the  Turnaround
      Plan.

              
	 	 
	
                Events
      of Default:

              	
                The
      Loan Documents will contain events of default substantially the same in
      all material respects as the events of default contained in the Existing
      Credit Agreement (other than any change of control
    default).

              


      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	 	
                In
      case an event of default shall occur and be continuing, the Lender, by
      notice in writing to the Borrower, may declare the principal of, and all
      accrued interest on, all Loans to be due and payable
      immediately.  If a bankruptcy event of the Borrower occurs, the
      principal amount of and accrued interest on the Loans will be immediately
      due and payable without any notice, declaration or other act on the part
      of the Lender.

              
	 	 
	
                Cost
      and Yield Protection:

              	
                Usual
      for facilities and transactions of this type, including customary
      increased costs and tax gross-up provisions.

              
	 	 
	
                Expenses
      and Indemnification:

              	
                The
      Loan Documents will contain standard indemnification provisions of the
      Lender, its affiliates, officers, directors and employees that are usual
      and customary for transactions of this nature or required by the Lender
      for this transaction in particular.

                 

                In
      addition, all out-of-pocket expenses (including, legal fees) of the Lender
      in connection with the Facility and for the exercise and enforcement
      thereof will be paid by the Borrower upon demand from the
      Lender.

              
	 	 
	
                Borrower
      Account:

              	
                The
      Borrower shall open an account at a bank designated by the
      Lender.

              
	 	 
	
                Governing
      Law:

              	
                New
      York.

              


      

       

       

       

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