ex10_1.htm


  
    Exhibit
10.1

     

     February
5, 2009

    


    


    The
Talbots Inc.

    One
Talbots Drive

    Hingham,
MA 02043

    


    


    
      	
              Re:

            	
              Loan
      Facility Agreement

            


    

    


    Gentlemen/Ladies:

    


    We are
pleased to inform The Talbots Inc. (the "Company") that we agree, subject to the
terms and conditions set forth or referred to in this letter agreement, to
provide to the Company a loan facility as more fully described in the attached
summary of terms (the "Summary of Terms").  We are providing this loan
facility to be used by the Company and its subsidiaries to repay and retire all
outstanding indebtedness under the Term Loan Agreement, dated July 24, 2006,
among the Company, each of the lenders party thereto and Mizuho Corporate Bank
Ltd, as agent.

    


    In
addition, our obligation to provide such loan facility shall be subject to (i)
completion of satisfactory confirmatory due diligence, (ii) the negotiation,
execution and delivery 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 or referred to 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
and all or a portion of the commitment contained herein may be assigned to one
or more of our subsidiaries.  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 February 6, 2009, 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 March 31, 2009.

     

     

    
      
        
          
            
              
                
                  
                    
                      	 	Very
      truly yours,	 
	 	 	 
	 	AEON
      CO., LTD.	 
	 	 	 	 
	 	 	 	 
	
                               

                            	
                              By:

                            	  
      /s/ Masaaki Toyoshima	 
	 	 	
                              Name:
      Masaaki Toyoshima

                            	 
	 	 	
                              Title:
      Vice President

                            	 
	 	 	         
      Chief Financial Officer & CEO, GMS Business	 


                    

                  

                

              

            

          

        

      

    

     

    Accepted
and agreed to this 5th

    day of
February, 2009:

    


    
      
        
          
            
              
                
                  	THE
      TALBOTS INC.	 
	 	 	 
	 	 	 
	
                          By:

                        	  
      /s/ Trudy F. Sullivan	 
	 	Name: Chief
      Executive Officer and President	 
	 	Title:
      Chief Executive Officer and President	 
	 	 	 


                

              

            

          

        

         

        Attachment:   Summary
of Terms and Conditions

      

    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    The
Talbots, Inc.

     

    LOAN
FACILITY AGREEMENT

     

    


     

    These
terms are not exhaustive and provide a summary only of the principal terms and
conditions of the Loan Facility Agreement described herein (the “Facility
Agreement”).  The parties have agreed that the Facility
Agreement will be based on the Term Loan Agreement, dated as of July 16, 2008,
between The Talbots, Inc. and Aeon (U.S.A.), Inc. (the “Existing
Loan”) except (i) to the extent necessary to reflect the terms below and
(ii) such additional 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.  Each party acknowledges that certain information provided
in connection with the proposed transaction is confidential.  Each
party agrees that it will not disclose such information to any other party
except to its legal counsel or tax advisors or as required for the completion of
the transaction described herein.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                
                                                                                                  
                                                                                                    
                                                                                                      
                                                                                                        
                                                                                                          
                                                                                                            
                                                                                                              
                                                                                                                
                                                                                                                  
                                                                                                                    
                                                                                                                      
                                                                                                                        
                                                                                                                          
                                                                                                                            
                                                                                                                              
                                                                                                                                	
                                                                                                                                        Borrower:

                                                                                                                                      	
                                                                                                                                        The
      Talbots, Inc.

                                                                                                                                      
	 	 
	
                                                                                                                                        Lender:

                                                                                                                                      	
                                                                                                                                        Aeon
      Co., Ltd. or one or more subsidiaries of Aeon Co., Ltd. (the “Lender”).

                                                                                                                                      
	 	 
	
                                                                                                                                        Principal
      Amount

                                                                                                                                      	
                                                                                                                                        U.S.$200
      million.

                                                                                                                                      
	 	 
	
                                                                                                                                        Purpose:

                                                                                                                                      	
                                                                                                                                        Proceeds
      of the borrowing under the Facility Agreement (the “Loan”)
      will be used by the Borrower and its subsidiaries solely to repay all of
      the outstanding indebtedness under the Term Loan Agreement, dated July 24,
      2006 (as amended), among the Borrower, each of the lenders party thereto
      and Mizuho Corporate Bank Ltd, as agent (the “Acquisition
      Loan”).

                                                                                                                                      
	 	 
	
                                                                                                                                        Availability:

                                                                                                                                      	
                                                                                                                                        The
      full amount of the Loan must be drawn in a single drawing on the Closing
      Date.  Amounts borrowed under the Facility Agreement that are
      repaid or prepaid may not be reborrowed.

                                                                                                                                      
	 	 
	
                                                                                                                                        Repayment:

                                                                                                                                      	
                                                                                                                                        The
      entire principal amount of the Loan, less any prepaid amounts, shall be
      repaid in U.S. Dollars in full on the Maturity Date (as defined
      below).

                                                                                                                                      
	 	 
	
                                                                                                                                        Voluntary
      Prepayments:

                                                                                                                                      	
                                                                                                                                        The
      Loan may be prepaid, in whole or in part, at par plus accrued and unpaid
      interest and any break funding loss incurred upon not less than three
      business days’ in Japan prior written notice, at the option of the
      Borrower at any
time.

                                                                                                                                      


                                                                                                                              

                                                                                                                            

                                                                                                                          

                                                                                                                        

                                                                                                                      

                                                                                                                    

                                                                                                                  

                                                                                                                

                                                                                                              

                                                                                                            

                                                                                                          

                                                                                                        

                                                                                                      

                                                                                                    

                                                                                                  

                                                                                                

                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        	
                                                                Mandatory
      Prepayments:

                                                              	
                                                                The
      Loan shall be prepaid with (a) 50% of Excess Cash Flow (to be defined),
      (b) 75% of the net cash proceeds of all asset sales or other dispositions
      of property by the Borrower and its subsidiaries (including 75% of the net
      proceeds from the sale of stock of any subsidiary of the Borrower and
      insurance and condemnation proceeds, provided, however, that in case of
      the sale of J.Jill, it should be 100% of the net proceeds from the sale of
      J. Jill), (c) 100% of the net cash proceeds of issuances, offerings or
      placements of debt obligations of the Borrower and its subsidiaries
      (subject to exceptions to be agreed upon) and (d) 50% of the net cash
      proceeds of issuances of equity securities of the Borrower and its
      subsidiaries (subject to exceptions to be agreed upon).

                                                              
	 	 
	
                                                                Interest
      Rate:

                                                              	
                                                                LIBOR
      plus 6.00%.  Interest on the Loan will be payable on the last
      day of each six month interest period in arrears.

                                                                 

                                                                “LIBOR”
      means the six month London interbank offer rate expressed as a percentage
      rate per annum which appears on the Telerate Page 3750 as of 11:00 a.m.,
      London 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 365-day
      year and actual days elapsed.

                                                              
	 	 
	
                                                                Closing
      Date:

                                                              	
                                                                On
      the earlier to occur of (i) February 27, 2009 and (ii) three business days
      in Japan after satisfaction (or waiver) of all conditions precedent to
      borrowing.

                                                              
	 	 
	
                                                                Maturity
      Date:

                                                              	
                                                                The
      Loan will mature six-months after the Closing Date; provided, that, the Borrower
      shall have the option to extend the maturity for additional six-month
      periods, up to the third anniversary of the Closing Date (such date, as
      extended, the “Maturity
      Date”).

                                                              
	 	 
	
                                                                Security;
      Ranking:

                                                              	
                                                                The
      Loan will be a unsecured general obligation of the Borrower ranking pari passu with all
      other unsecured and unsubordinated indebtedness of the
      Borrower.

                                                                 

                                                                Neither
      the Borrower nor any of its subsidiaries may create, assume or suffer to
      exist any lien securing indebtedness incurred after the Closing Date
      without granting a pari
      passu lien to the Lender to secure the Loan made under the Facility
      Agreement.

                                                              
	 	 
	
                                                                Guarantees:

                                                              	
                                                                The
      obligations under the Facility Agreement will be fully and unconditionally
      guaranteed on a senior, joint and several basis (the “Guarantees”),
      by all of the existing and future direct and indirect subsidiaries of the
      Borrower (collectively, the “Guarantors”).

                                                                 

                                                                Each
      Guarantee will be the unsecured general obligation of the applicable
      Guarantor, ranking pari
      passu with all other unsecured and unsubordinated indebtedness of
      such
Guarantor.

                                                              


                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                
                                                  
                                                    
                                                      
                                                        
                                                          
                                                            
                                                              
                                                                
                                                                  
                                                                    
                                                                      
                                                                        
                                                                          
                                                                            
                                                                              
                                                                                
                                                                                  
                                                                                    
                                                                                      
                                                                                        
                                                                                          
                                                                                            
                                                                                              
                                                                                                	
                                                                                                        Default
      Rate:

                                                                                                      	
                                                                                                        Upon
      the occurrence and during the continuance of a de-fault, interest will
      accrue on any principal or other amount payable under the Loan at a rate
      of 15.00% per annum in excess of the applicable interest rate and will be
      payable on demand.

                                                                                                      
	 	 
	
                                                                                                        Conditions
      Precedent to 

                                                                                                        Borrowing:

                                                                                                      	
                                                                                                        Substantially
      the same as provided under the Existing Loan and usual for facilities of
      this type.

                                                                                                      
	 	 
	
                                                                                                        Representations
      and 

                                                                                                        Warranties:

                                                                                                      	
                                                                                                        The
      Facility Agreement and the other definitive documentation relating to the
      Loan (the “Loan
      Documents”) will contain representations and warranties relating to
      the Borrower and its subsidiaries that are usual and customary for
      transactions of this nature or required by the Lender for this transaction
      in particular.

                                                                                                      
	 	 
	
                                                                                                        Covenants:

                                                                                                      	
                                                                                                        The
      Loan Documents will contain restrictive covenants relating to the Borrower
      and its subsidiaries that are usual and customary for transactions of this
      nature, or required by the Lender for this transaction in particular,
      including:

                                                                                                         

                                                                                                        Financial
      Covenants: None.

                                                                                                         

                                                                                                        Affirmative
      Covenants: Payment of obligations, maintenance of existence,
      compliance with laws, maintenance of property, insurance, inspection of
      property, books and records, notices, use of proceeds, further
      assurances.

                                                                                                         

                                                                                                        Negative
      Covenants: Written consent of the Lender (in its sole discretion)
      shall be required prior to incurrences of indebtedness, liens, fundamental
      changes (including mergers, consolidations, etc.), dispositions of
      property (including sales of stock of subsidiaries), restricted payments,
      investments, transactions with affiliates and other related parties, sale
      leaseback transactions, swap agreements, changes in fiscal periods,
      negative pledge clauses, clauses restricting subsidiary distributions and
      lines of business.

                                                                                                      
	 	 	 
	
                                                                                                        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.

                                                                                                      


                                                                                              

                                                                                            

                                                                                          

                                                                                        

                                                                                      

                                                                                    

                                                                                  

                                                                                

                                                                              

                                                                            

                                                                          

                                                                        

                                                                      

                                                                    

                                                                  

                                                                

                                                              

                                                            

                                                          

                                                        

                                                      

                                                    

                                                  

                                                

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        
          
            	
                    Events
      of Default:

                  	
                    Customary
      for the type of transactions proposed and others to be reasonably
      specified by the Lender relating to the Borrower and its subsidiaries
      (subject, where appropriate, to thresholds and grace periods to be agreed
      upon), including nonpayment of principal, interest or other amounts,
      violation of covenants, incorrectness of representations and warranties in
      any material respect, cross default and cross acceleration, bankruptcy,
      material judgments or material adverse change.

                     

                    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, the Loan to be due and payable
      immediately.  If a bankruptcy event of the Borrower occurs, the
      principal amount of and accrued interest on the Loan 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.

                     

                    In
      addition, upon any voluntary or mandatory prepayment of the Loan, Borrower
      shall reimburse Lender for costs associated with early termination of any
      currency hedging arrangements relating to the Loan.

                  
	 	 
	
                    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 making of the Loan 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.

                  
	 	 
	
                    Language:

                  	
                    English.

                  
	 	 
	
                    Governing
      Law:

                  	
                    [TBD].