exv10w3






Exhibit 10.3




[EXECUTION VERSION]




General Electric Capital Corporation

10 Riverview Drive, 4th Floor

Danbury, CT 06810




December 7, 2009




CONFIDENTIAL




The Talbots, Inc.

One Talbots Drive

Hingham, MA 02043




Attn: Michael Scarpa, Chief Operating Officer and Chief Financial Officer





			
	Re:	 	Commitment Letter




Ladies and Gentlemen:



You have advised General Electric Capital Corporation (“GE Capital” or “Agent”) that The Talbots,
Inc. (“Talbots”) and certain of its subsidiaries (such subsidiaries of Talbots and Talbots are
collectively referred to as the “Borrowers” and individually as a “Borrower” , and together with
the Guarantors as defined below, the “Credit Parties”) are seeking up to $200 million of financing
(the “Financing”) pursuant to a senior secured revolving credit facility (“Revolver”) in connection
with (i) the merger of a newly-formed wholly-owned subsidiary of Talbots (hereinafter, “Merger
Sub”) with and into BPW Acquisition Corp. (“BPW”), with BPW as the surviving entity, (ii) the
refinancing of certain existing indebtedness of the Credit Parties and (iii) in support of working
capital, capital expenditures and other general corporate purposes of the Borrowers (collectively,
“the Transaction”).



We anticipate that each subsidiary of Talbots that is a Borrower will be a domestic operating
company that directly owns substantially all of the assets used in its business and does not have
any material subsidiaries; provided that, in no event, shall Talbots Classics National Bank
and Talbots Charitable Foundation, Inc. (collectively, the “Excluded Subsidiaries”) be Borrowers.



Based on our understanding of the Transaction as described above and the information which you have
provided to us to date, GE Capital is pleased to offer its commitment to provide the Financing
described herein, subject to the terms and conditions outlined in the attached Summary of Terms
(together with this cover letter, this “Commitment Letter”). GE Capital’s affiliate, GE Capital
Markets, Inc. (“GECM”), will seek to syndicate a portion of the loans and loan commitments under
the Financing to other financial institutions identified by GECM on the terms and conditions more
fully described herein.




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GECM shall act as the sole lead arranger and sole bookrunner with respect to the Financing. The
Borrowers agree that, except as expressly provided for in this Commitment Letter or the fee letter
dated as of the date hereof between Talbots and GE Capital (the “Fee Letter”), without the prior
written consent of GE Capital (i) no additional agents, co-agents, co-arrangers or co-bookrunners
shall be appointed, or other titles conferred to any person or entity, in respect of the Financing,
and (ii) no other lender under the Financing shall receive any compensation of any kind for its
participation in the Financing.



GECM intends to commence syndication efforts with respect to achieving a Successful Primary
Syndication (as defined below) promptly, and upon Borrowers’ acceptance of this Commitment Letter
and the Fee Letter, GECM will initiate discussions with potential lenders and investors. GECM
will, in consultation with Borrowers, manage and control all aspects of the syndication efforts
related to achieving a Successful Primary Syndication. For purposes hereof a “Successful Primary
Syndication” shall mean a syndication to other financial institutions of the loans and loan
commitments under the Financing in which GE Capital’s exposure and loan commitment under the
Financing has been finally reduced to or below its target hold level of $150 Million.



GE Capital and GECM each agree that such Successful Syndication may be achieved by the
participation of (a) financial institutions willing to participate in the Financing and designated
by GE Capital or GECM as lenders and (b) financial institutions willing to participate in the
Financing and designated by the Borrowers as lenders, at its sole expense and effort,
provided, that, (x) any such lender so designated by any Borrower shall (i) be a
commercial bank with total assets in excess of $1,000,000,000, (ii) extends asset-based lending
facilities in its ordinary course of business, and whose becoming a Lender would not be prohibited
by any applicable law, (iii) have a commitment of not less than $10,000,000, (iv) not be a Credit
Party or an affiliate of any Credit Party, and (v) be otherwise reasonably acceptable to GE Capital
and GECM (which acceptance shall not be unreasonably withheld or delayed).



Borrowers agree to actively assist, and cooperate with (and cause their subsidiaries and advisors
to actively assist and cooperate with), GE Capital and GECM in effecting and completing a
Successful Primary Syndication, including, participating in bank and other relevant meetings,
preparing and providing to GECM all information relating to the Financing, ensuring that GECM’s
syndication efforts benefit from your existing banking relationships, and assisting GECM in the
preparation of a confidential information memorandum, presentations and other offering materials to
be used in connection with syndication efforts related to achieving a Successful Primary
Syndication and confirming the completeness and accuracy of such materials.



Borrowers agree that until the earlier to occur of (x) the execution and delivery of the definitive
Financing documentation and (y) April 17, 2010, the Borrowers shall not (and shall not permit any
of their subsidiaries to), without the prior written consent of GECM, offer, issue, place,
syndicate or arrange any debt securities or debt facilities, other than the Term Loan Facility and
the L/C Facility (each as defined in the Summary of Terms)




2









 







(including any renewals, restatements, restructuring or refinancings of any existing debt
securities or debt facilities (other than, solely with respect to the extension of the maturities
thereof, the Existing Bank Debt) (any of the foregoing hereinafter referred to as an “Alternative
Financing Arrangement”), attempt or agree to do any of the foregoing, announce or authorize the
announcement of any of the foregoing, or engage in discussions concerning any of the foregoing, in
each case, for purposes of consummating a merger, consolidation, acquisition or other similar
transaction with BPW or any affiliate of BPW, on the one hand, and any such Borrower or any
subsidiary of such Borrower, on the other hand; provided, however, that (i) the
Borrowers and their subsidiaries may discuss with other potential lenders the terms of a potential
Alternative Financing Arrangement for not less than the full principal amount of the Financing so
long as any such potential lender, for itself and on behalf of its affiliates, agrees in writing
that it has not, and will not, commence, or engage in, any syndication or marketing efforts in
respect thereof prior to the Borrowers having terminated GE Capital’s commitment under this
Commitment Letter by written notice to GE Capital and (ii) prior to accepting any commitment in
respect of any such Alternative Financing Arrangement, the Borrowers shall terminate GE Capital’s
commitment under this Commitment Letter by written notice to GE Capital and, notwithstanding
anything to the contrary contained in this Commitment Letter or the Fee Letter, GE Capital shall be
permitted to retain for its own account the entire amount of the Initial Structuring Fee Deposit
(as defined in the Fee Letter) and shall not have any obligation to refund any amounts in respect
thereof.



It is expressly understood and agreed that GE Capital’s commitment in respect of the Financing is
subject to the Borrowers’ agreements and representations set forth herein and in the Fee Letter.



The Borrowers hereby acknowledge and agree that GECM may provide to industry trade organizations
information with respect to the Financing that is necessary and customary for inclusion in league
table measurements.



GE Capital’s commitment hereunder is subject to the execution and delivery of customary final legal
documentation reasonably acceptable to GE Capital and its counsel incorporating, without
limitation, the terms set forth in this Commitment Letter.



By signing this Commitment Letter, each party acknowledges that this Commitment Letter supersedes
any and all discussions and understandings, written or oral, between or among GE Capital and any
other person as to the subject matter hereof, including, without limitation, any prior commitment
letters and letters of interest. No amendments, waivers or modifications of this Commitment Letter
or any of its contents shall be effective unless expressly set forth in writing and executed by the
parties hereto.



This Commitment Letter is being provided to you on the condition that, except as required by law,
neither it nor the Fee Letter nor their contents will be disclosed publicly or privately except to
AEON (as hereinafter defined), BPW, and those individuals who are your or their directors,
officers, employees, accountants, advisors, attorneys or representatives who have a need to know of
them as a result of their being specifically


3









 






involved in the Transaction under consideration and then only on the condition that such matters
may not, except as required by law, be further disclosed (it being understood and agreed that,
after full execution hereof, this Commitment Letter (including the attached Summary of Terms), but
not the Fee Letter, may be filed with the Securities and Exchange Commission). No person, other
than the parties signatory hereto, is entitled to rely upon this Commitment Letter or any of its
contents. No person shall, except as required by law, use the name of, or refer to, GE Capital, or
any of its affiliates, in any correspondence, discussions, press release, advertisement or
disclosure made in connection with the Transaction without the prior written consent of GE Capital.



Regardless of whether the commitment herein is terminated or the Transaction or the Financing
closes, the Borrowers, jointly and severally, agree to pay upon demand to GE Capital all reasonable
out-of-pocket expenses (“Transaction Expenses”) which may be incurred by GE Capital or GECM in
connection with the Financing or the Transaction (including all reasonable legal, environmental,
and other consultant costs and fees incurred in the preparation of this Commitment Letter, the Fee
Letter and evaluation of and documenting of the Financing and the Transaction). Regardless of
whether the commitment herein is terminated or the Transaction or the Financing closes, the
Borrowers, jointly and severally, shall indemnify and hold harmless each of GE Capital, GECM, the
Lenders, their respective affiliates, and the directors, officers, employees, agents, attorneys and
representatives of any of them (each, an “Indemnified Person”), from and against all suits,
actions, proceedings, claims, damages, losses, liabilities and expenses (including, but not limited
to, attorneys’ fees and disbursements and other costs of investigation or defense, including those
incurred upon any appeal), which may be instituted or asserted against or incurred by any such
Indemnified Person in connection with, or arising out of, this Commitment Letter, the Fee Letter,
the Financing or the Transaction under consideration, the documentation related thereto, any other
financing related thereto, any actions or failures to act in connection therewith, and any and all
environmental liabilities and legal costs and expenses arising out of or incurred in connection
with any disputes between or among any parties to any of the foregoing, and any investigation,
litigation, or proceeding related to any such matters. Notwithstanding the preceding sentence,
indemnitors shall not be liable for any indemnification to an Indemnified Person to the extent that
any such suit, action, proceeding, claim, damage, loss, liability or expense results solely from
that Indemnified Person’s gross negligence or willful misconduct, as finally determined by a court
of competent jurisdiction. Under no circumstances shall any of you or your affiliates, on the one
hand, or GE Capital, GECM or any of their respective affiliates, on the other hand, be liable to
each other for any punitive, exemplary, consequential or indirect damages which may be alleged in
connection with this Commitment Letter, the Fee Letter, the Transaction, the Financing, the
documentation related thereto or any other financing, regardless of whether the commitment herein
is terminated or the Transaction or the Financing closes.



EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION ARISING UNDER THIS COMMITMENT LETTER, THE FEE LETTER, ANY TRANSACTION RELATING HERETO OR
THERETO, OR ANY OTHER


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INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THEREWITH,
WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. Each party hereto consents and agrees that the
state or federal courts located in the Borough of Manhattan, New York County, City of New York, New
York, shall have exclusive jurisdiction to hear and determine any claims or disputes between or
among any of the parties hereto pertaining to this Commitment Letter, the Fee Letter, the Financing
or the Transaction under consideration, any other financing related thereto, and any investigation,
litigation, or proceeding related to or arising out of any such matters, provided, that the
parties hereto acknowledge that any appeals from those courts may have to be heard by a court
(including an appellate court) located outside of such jurisdiction. Each party hereto expressly
submits and consents in advance to such jurisdiction in any action or suit commenced in any such
court, and hereby waives any objection which such party may have based upon lack of personal
jurisdiction, improper venue or inconvenient forum.



This Commitment Letter is governed by and shall be construed in accordance with the laws of the
State of New York applicable to contracts made and performed in that state.



GE Capital shall have access to all relevant facilities, personnel and accountants, and copies of
all documents which GE Capital may request, including business plans, financial statements (actual
and pro forma), books, records, and other documents of each Credit Party.



This Commitment Letter shall be of no force and effect unless and until (a) this Commitment Letter
and the Fee Letter are each executed and delivered to the undersigned GE Capital on or before 5:00
p.m. New York City time on December 8, 2009 at 10 Riverview Drive, 4th Floor, Danbury, CT 06810 and
(b) such delivery is accompanied by payment of the Initial Structuring Fee (as defined in the Fee
Letter) and any other fees or deposits due and payable to GE Capital as provided in the Fee Letter.
Once effective, GE Capital’s commitment to provide financing in accordance with the terms of this
Commitment Letter shall cease if the Transaction does not close, or the Financing is not funded for
any reason, on or before April 17, 2010 and, notwithstanding any further discussions, negotiations
or other actions taken after such date, neither GE Capital nor any of its affiliates shall have any
liability to any person in connection with its refusal to fund the Financing or any portion thereof
after such date.



We hereby notify you that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L.
107-56 (signed into law October 26, 2001) (the “PATRIOT Act”), each lender may be required
to obtain, verify and record information that identifies each Borrower, which information includes
the name, address, tax identification number and other information regarding such Borrower that
will allow such lender to identify such Borrower in accordance with the PATRIOT Act. This notice
is given in accordance with the requirements of the PATRIOT Act and is effective as to each lender.




[Remainder of Page Left Intentionally Blank]




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We look forward to continuing to work with you toward completing this transaction.



Our business is helping yours.




	 	 	 	 	 
	 	Sincerely,



GENERAL ELECTRIC CAPITAL CORPORATION

 	 
	 	By:  	/s/ Mark J. Forti
 	 
	 	Name: 	Mark J. Forti 	 
	 	Title: 	Duly Authorized Signatory 	 
	 



Talbots Commitment Letter




 









 








AGREED AND ACCEPTED THIS

8th DAY OF DECEMBER, 2009




ON BEHALF OF ITSELF AND

THE OTHER CREDIT PARTIES




THE TALBOTS, INC.




	 	 	 	 	 
	By:

	 	/s/ Michael Scarpa
	 	 
	 

	 	 	 	 
	Name: Michael Scarpa	 	 
	Title: Chief Operating Officer, Chief	 	 
	Financial Officer and Treasurer	 	 






Talbots Commitment Letterr




 









 








THE TALBOTS, INC.




SUMMARY OF TERMS




$250 MILLION REVOLVING CREDIT FACILITY

(The “Credit Facility”)




December 7, 2009




	 	 	 
	BORROWERS:

	 	The Talbots, Inc. and other subsidiaries to be
determined (other than the Excluded Subsidiaries).
	 
	 	 
	GUARANTORS:

	 	To be determined; provided that, in no event,
shall any Excluded Subsidiary be a Guarantor.
	 
	 	 
	AGENT:

	 	General Electric Capital Corporation (“GE Capital”
or “Agent”).
	 
	 	 
	LEAD ARRANGER AND 

BOOKRUNNER:

	 	GE Capital Markets, Inc.
	 
	 	 
	LENDERS:

	 	GE Capital and other lenders acceptable to Agent.
	 
	 	 
	MAXIMUM AMOUNT:

	 	Up to $200,000,000
	 
	 	 
	TERM:

	 	3.5 years.
	 
	 	 
	BORROWING
AVAILABILITY:

	 	Borrowing Availability on a combined basis will be
limited to the lesser of (A) the Maximum Amount
and (B) an amount equal to (i) 85% of the
Borrowers’ domestic eligible credit card
receivables; plus (ii) 85% of the Net Orderly
Liquidation Value (“NOLV”) of the Borrowers’
domestic eligible private label credit card
receivables; plus (iii) 85% of the NOLV of
domestic eligible finished goods inventory (other
than in-transit inventory), valued at the lower of
cost (FIFO) or market; plus (iv) the least of (x)
85% of the NOLV of eligible finished goods
inventory that is located outside of the United
States and is in-transit to a Credit Party’s
facility in the United States, valued at the lower
of cost (FIFO) or market, (y) 10% of the sum of
those items identified in clauses (i), (ii), (iii)
and (iv), and (z) $25,000,000; minus (v) reserves
(the result of clauses (B)(i) through (B)(v)
referred to as the “Borrowing Base”), minus (vi)
the Availability Block (referred to below).






 









 






	 	 	 
	 

	 	“Availability Block” means, at any time, 10% of
the lesser of (i) the Maximum Amount and (ii) the
Borrowing Base.
	 
	 	 
	 

	 	For purposes hereof “domestic” shall mean the
United States of America.
	 
	 	 
	 

	 	Agent will retain the right, in the exercise of
its reasonable (from the perspective of a secured
asset-based lender) business judgment, from time
to time to establish or modify advance rates,
standards of eligibility and reserves (with
appropriate lender approval in the case of
increases to the advance rates or changes to
eligibility criteria that would result in more
credit being available). For the avoidance of
doubt, no assets of the Excluded Subsidiaries or
any subsidiary that is not a Borrower or a
domestic subsidiary Guarantor shall be included in
the calculation of the Borrowing Base.
	 
	 	 
	USE OF PROCEEDS:

	 	Loans will be used for working capital, capital
expenditures and other corporate purposes and,
solely to the extent that (i) all Merger Capital
and all Term Loans (each, as hereinafter defined)
shall have been used to repay AEON Debt
(including, without limitation, any AEON Debt
incurred after the date hereof to refinance
Existing Bank Debt as such Existing Bank Debt
matures or otherwise becomes due; for purposes
hereof Existing Bank Debt shall be deemed to have
“matured” or “or otherwise become due” upon (x)
its scheduled maturity, (y) the occurrence of an
event of default thereunder or (z) repayment
thereof if such repayment resulted from the
failure of such bank lender to provide any consent
or waiver necessary to permit the amendments to
the AEON Debt contemplated herein (such AEON Debt
being hereinafter referred to as “AEON Refinancing
Debt”)), Existing Bank Debt (each, as hereinafter
defined) and transaction expenses of the Credit
Parties in the manner specified under the heading
“Closing Conditions” and (ii) the aggregate amount
of such Merger Capital and Term Loans is
insufficient to pay in full any of the Existing
Bank Debt, any such AEON Refinancing Debt, or any
such transaction expenses, then, subject to the
limitations set forth herein, loans under the
Credit Facility may be used to repay the Existing
Bank Debt, any such AEON Refinancing






 









 






	 	 	 
	 

	 	Debt and pay
transaction expenses under this Transaction and
the Merger Transaction (as hereinafter defined);
provided that, in no event shall proceeds from any
loans under the Credit Facility be commingled with
the proceeds of any Merger Capital or any Term
Loans.
	 
	 	 
	INTEREST RATES:

	 	For all loans, at Borrowers’ option, either (i)
absent a default, 1, 2 or 3-month interest periods
at the LIBOR Rate (as defined below) plus 4.50%
(the “LIBOR Margin”) or (ii) floating at the Index
Rate (as defined below) plus 3.50% (the “Base Rate
Margin”, and together with the LIBOR Margin, the
“Applicable Margins”).
	 
	 	 
	 

	 	“Index Rate” will be a floating rate of interest
defined as the highest of (a) the rate last quoted
by the Wall Street Journal (or another national
publication selected by Agent) as the U.S. “Prime
Rate,” (b) the Federal Funds Rate plus 300 basis
points, and (c) the sum of the three-month LIBOR
Rate plus 1.00%.
	 
	 	 
	 

	 	“LIBOR Rate” will be defined as the offered rate
per annum for deposits of Dollars for the
applicable interest period that appears on Reuters
Screen LIBOR01 Page as of 11:00 a.m. (London time)
two (2) business days prior to the first day in
each interest period; provided that at no time
will the LIBOR Rate be deemed to be below the
three-month LIBOR Rate determined 2 business days
prior to the start of the applicable interest
period.
	 
	 	 
	 

	 	To the extent (a) the Credit Facility does not
close on or prior to the 90th day after
the date of the Commitment Letter and (b) the
Secondary Market Index for the 100 most widely
held loans in the U.S. secondary market (“SMi U.S.
100”), as quoted by Reuter’s LPC, has decreased by
at least 5 from the date of the Commitment Letter
through the Closing Date, then each of the
Applicable Margins set forth above shall be
increased by the amount of basis points per annum
equal to the product of (i) 8 multiplied by (ii)
the actual decrease in the SMi U.S. 100 during the
period commencing on the date of the Commitment
Letter and ending on the Closing Date. As an
example, if the SMi U.S. 100 decrease is 10, then
each of the Applicable Margins shall be increased
by 80 basis points (i.e., 8 multiplied by 10).






 









 






	 	 	 
	FEES:
	 	 
	 
	 	 
	Unused Facility Fee:

	 	Commencing on the Closing Date, an unused facility
fee (calculated on the basis of a 360-day year and
actual days elapsed) of (a) until six months
following the Closing Date, 1.00% per annum, and
(b) thereafter, a percentage per annum determined
in accordance with the pricing grid set forth
below based on the average unused daily balance of
the Maximum Amount (expressed as a percentage
thereof):
	 
	 	 
	 

	 	Average unused daily balance of the Maximum






	 	 	 	 	 
	Amount	 	Unused Facility Fee
	> 75%
	 	 	1.00	%
	 
	 	 	 	 
	> 50% but ≤ 75%
	 	 	0.75	%
	 
	 	 	 	 
	≤ 50%
	 	 	0.50	%






	 	 	 
	 

	 	Such unused facility fee shall be payable to Agent
for the account of each Lender monthly in arrears.
	 
	Prepayment Premium:

	 	Payable in the event that the Maximum Amount is
reduced or terminated, in an amount equal to the
amount of the Maximum Amount so reduced or
terminated, multiplied by 1.00% upon a prepayment
during the first year following the Closing Date
and 0% upon a prepayment at any time following the
first anniversary following the Closing Date.
	 
	 	 
	DEFAULT RATES:

	 	From and after the occurrence of an event of
default, the interest rates and fees applicable to
all Obligations will be increased by 2.00% per
annum over the interest rate otherwise applicable
and such interest and fees will be payable on
demand.
	 
	 	 
	SECURITY:

	 	To secure all obligations of Borrowers to Agent
and Lenders, Agent, for itself and the ratable
benefit of Lenders, will receive a fully perfected
first priority security interest (subject only to
certain permitted liens and encumbrances
acceptable to Agent) in all of the existing and
after acquired assets of the Borrowers and
Guarantors (collectively, the






 









 






	 	 	 
	 

	 	“Collateral”);
provided that (i) in the case of any foreign
subsidiary, the Collateral shall be limited to
100% of the non-voting equity interests (if any)
and 66% of the voting equity interests of such
foreign subsidiary, and (ii) the security interest
of the Agent in all real estate and intellectual
property of the Credit Parties (collectively,
“Secondary Collateral”) shall be subject to the
liens securing the Borrowers’ obligations under
the Term Loan Facility and the L/C Facility.
Notwithstanding anything to the contrary contained
herein, in no event shall Collateral include
interests in vehicles.
	 
	 	 
	 

	 	Notwithstanding the foregoing, (a) the Agent and
the Lenders shall be granted an irrevocable,
non-exclusive, royalty free, worldwide license to
use, assign, license or sublicense all
intellectual property constituting Secondary
Collateral for purposes of enabling the Agent and
the Lenders to administer, and exercise any rights
and remedies with respect to, the Collateral and
(b) the Agent and the Lenders shall be granted
access rights, in scope and pursuant to access
agreements reasonably satisfactory to the Agent,
to all real property of the Credit Parties for
purposes of enabling the Agent and the Lenders to
administer, and exercise any rights and remedies
with respect to, the Collateral.
	 
	 	 
	FINANCIAL REPORTING:

	 	The Financing documentation will require the
Borrowers, on a monthly and quarterly basis, to
provide to Agent and Lenders internally prepared
financial statements. Annually, Borrowers will be
required to provide audited financial statements,
a board approved operating plan for the subsequent
year, and a communications letter from Borrowers’
auditors. All financial statements shall be
prepared on a consolidated and consolidating
basis.
	 
	 	 
	 

	 	The Borrowers will provide copies of all financial
statements and regular, periodic or special
reports which any Credit Party may make to, or
file with, the Securities and Exchange Commission.
	 
	 	 
	 

	 	Borrowers will provide a Borrowing Base
Certificate on a monthly basis or a weekly basis
if Borrowing Availability is less than 20% of the
lesser of (i) the Maximum Amount and (ii) the
Borrowing Base, in each case, after giving effect
to any reserves and the






 









 






	 	 	 
	 

	 	Availability Block.
	 
	 	 
	 

	 	Borrowers shall provide all other information
reasonably requested by the Agent.
	 
	 	 
	PRIVATE LABEL CREDIT
CARD MONITORING:

	 	The Borrowers will provide the following with
respect to private label credit cards:
	 
	 	 
	 

	 	(a) Concurrently with the delivery of each
Borrowing Base Certificate, (i) a credit
statistics report, (ii) report of outstanding
account balances, new accounts, write-off
analysis, and an aging of credit card receivables
arising therefrom, (iii) portfolio summary
(including a summary of new accounts, credit
approvals, gross sales, returns and fees and
interest arising therefrom), and (iv) a population
stability report, in each case, in form and
    substance reasonably satisfactory to the Agent,
accompanied by such supporting detail and
documentation as shall be reasonably requested by
Agent.
	 
	 	 
	 

	 	(b) No later than thirty (30) days after the end
of each fiscal quarter: (i) a reserve report
(including a summary of delinquent balances and a
calculation of reserves established on account of
private label credit card accounts, and (ii) a
master file extract of all private label credit
card accounts, which shall include, without
limitation, account statement data, account base
and charge-off data, in each case, in form and
substance reasonably satisfactory to the Agent.
	 
	 	 
	 

	 	(c) Within (3) business days after the
promulgation thereof, a summary setting forth any
changes to (i) credit policies or approval
procedures relating to any private label credit
card or (ii) reserve policies or reserve levels
established on account of any private label credit
card.
	 
	 	 
	 

	 	Borrowers shall provide all other information
reasonably requested by the Agent relating to
private label credit cards.
	 
	 	 
	 

	 	Under certain conditions (including during an
insolvency of the Credit Parties and other
circumstances to be mutually agreed) the Credit
Parties shall grant access to private label credit
card systems to the Agent or an agent designated
by the






 









 






	 	 	 
	 

	 	Agent, to monitor, implement and
restructure such systems to maintain and ensure
systems and processing continuity.
	 
	 	 
	AUDITS:

	 	Inventory appraisals, third party A/R Appraisals
and collateral audits to be conducted (i) if no
default has occurred, three (3) times per year,
(ii) if no default has occurred but Borrowing
Availability is less than 20% of the lesser of (a)
the Maximum Amount and (b) the Borrowing Base,
four (4) times per year and (iii) if a default has
occurred, at the Agent’s sole discretion.
	 
	 	 
	DOCUMENTATION:

	 	The Financing documentation will contain
representations and warranties; conditions
precedent; affirmative and negative covenants
(but, for the avoidance of doubt, no financial
covenants); prepayment conditions, indemnities;
events of default and remedies as are usual and
customary for transactions of this type (subject,
in each case where appropriate, to materiality,
exceptions, thresholds and grace periods to be
agreed upon). Relevant documents, such as
subordination and intercreditor agreements (if
applicable), equity or stockholder agreements,
incentive and employment agreements, tax
agreements, security documents, access agreements,
landlord waivers and other third party documents,
and other material agreements, to be acceptable to
Agent.
	 
	 	 
	TERM LOAN AND L/C
FACILITY:

	 	The Borrowers shall be permitted, among other
things, to enter into (a) a term loan facility
(the “Term Loan Facility”) on the Closing Date,
pursuant to which the Borrowers may incur up to
$50 million of senior secured term loans (“Term
Loans”) and (b) a letter of credit facility (the
“L/C Facility”), pursuant to which the Borrowers
shall be permitted to incur indebtedness under
letters of credit in an aggregate amount to be
mutually agreed to; provided that such Term Loan
Facility and L/C Facility, shall (x) mature no
earlier than a date that is 6 months after the end
of the Term hereof and (y) shall otherwise be on
terms (including subordination and intercreditor
terms) reasonably satisfactory to the Agent.
	 
	 	 
	 

	 	Such Term Loan Facility and L/C Facility may be
secured by a first priority lien upon any
Secondary Collateral, and if requested by the
Borrowers, a






 









 






	 	 	 
	 

	 	second lien upon the Collateral and,
in the case of the letter of credit facility, cash
and cash equivalent collateral (“L/C Facility Cash
Collateral”); provided, that such security
interests shall be granted on terms (including
subordination and intercreditor terms) reasonably
satisfactory to the Agent.
	 
	 	 
	CASH ACCUMULATION:

	 	So long as any loans or letters of credit are
outstanding (and not cash collateralized), the
Credit Parties shall not permit cash or cash
equivalents in an aggregate amount in excess of
$10,000,000 (other than L/C Facility Cash
Collateral and cash necessary for the Borrowers
and their subsidiaries to satisfy the current
liabilities incurred by them in the ordinary
course of their business and without acceleration
of the satisfaction of such current liabilities)
to accumulate and be maintained in the deposit
accounts and investment accounts of the Credit
Parties and their subsidiaries. The Borrowers
shall not utilize loans under the Credit Facility
in any manner that would violate the foregoing
provision and shall limit the use of any proceeds
of any loan to those permitted uses specified
under the heading “Use of Proceeds”.
	 
	 	 
	CLOSING DATE:

	 	The date that each of the conditions set forth
under the heading “Closing Conditions” below is
satisfied.
	 
	 	 
	CLOSING CONDITIONS:

	 	Usual and customary for a transaction of this
type, including, without limitation, the
following:
	 
	 	 
	 

	 	A newly-formed wholly-owned subsidiary of The
Talbots, Inc. (hereinafter, “Merger Sub”) shall
have consummated a merger with BPW Acquisition
Corp. (“BPW”) in accordance with law and the
Merger Documents referred to below, pursuant to
which:







	 	•	 	BPW shall be the surviving entity;
	 
	 	•	 	The Talbots, Inc. shall have received cash
consideration (the “Merger Capital”) in a minimum
amount sufficient, such that after giving effect
to (A) the Merger Transaction (as defined below),
(B) the payment of all AEON Debt (including,
without limitation, AEON Refinancing Debt) and
Existing Bank Debt, in the manner specified below,
(C) the payment of all costs and expenses incurred
in




 









 






	 	 	 	connection with the Transaction and the Merger
Transaction, (D) the borrowing of Term Loans under
the Term Loan Facility, and (E) the borrowing of
loans under the Credit Facility on the Closing
Date, the Borrowers shall have, on a pro forma
basis (x) minimum Borrowing Availability of not
less than $40 Million on the Closing Date
(determined with trade payables being paid
currently, expenses and liabilities being paid in
the ordinary course of business and without
acceleration of sales and without any
deterioration in working capital) and (y) the
aggregate principal amount of all outstanding
secured indebtedness (excluding limited secured
indebtedness to be agreed upon) of the Credit
Parties shall not exceed $222 Million on the
Closing Date;
	 
	 	•	 	The existing shareholders of BPW shall
have received a majority equity ownership interest
in The Talbots, Inc.; and
	 
	 	•	 	Solely in consideration of the repayment
of the AEON Debt and the Existing Bank Debt (which
AEON has guaranteed for the benefit of the Credit
Parties) and without the payment (in cash or
otherwise) of any other amounts by any Credit
Party, all of the outstanding equity interest of
The Talbots, Inc. owned directly or indirectly by
AEON Co., Ltd. shall be surrendered, retired,
defeased and/or redeemed (hereinafter, the “Merger
Transaction”); provided, however, that AEON Co.,
Ltd. may receive warrants for common shares of The
Talbots, Inc. on terms and conditions reasonably
acceptable to Agent and with an exercise price of
not less than the fair market value per share of
the common stock of The Talbots, Inc. on the
Closing Date.





	 	 	 
	 

	 	Each of the documents (the “Merger Documents”)
executed in connection with the Merger Transaction
shall be in form and substance reasonably
satisfactory to the Agent.
	 
	 	 
	 

	 	Prior to requesting any loan under the Credit






 









 






	 	 	 
	 

	 	Facility, the Borrowers shall have applied all
proceeds of the Merger Capital and the Term Loans
(if any) as follows: first, to the payment of all
existing indebtedness of the Credit Parties owing
under (x) the Loan Facility Agreement, dated as of
February 25, 2009 (as amended, supplemented or
otherwise modified from time to time, the “$200MM
Term Loan Agreement”), between Talbots and AEON,
(y) the Term Loan Agreement, dated as of July 15,
2008 (as amended on March 12, 2009, and as
otherwise amended, supplemented or otherwise
modified from time to time, the “$50MM Term Loan
Agreement”), between Talbots and an affiliate of
AEON and (z) the Secured Revolving Loan Agreement,
dated as of April 10, 2009 (as amended,
supplemented or otherwise modified from time to
time, the “$150MM Revolving Credit Agreement”)
between Talbots and AEON (together with any other
extension of credit to Talbots from AEON or any of
its affiliates (collectively, the “AEON Debt”),
second, to the payment of any AEON Refinancing
Debt, third, to the payment of all existing
indebtedness of the Credit Parties under each of
its existing bank credit facilities (the “Existing
Bank Debt”), and fourth, to the payment of all
costs and expenses incurred in connection with the
Transaction and the Merger Transaction; provided,
however, that in the event that the aggregate
proceeds of the Merger Capital and the Term Loans
shall not be sufficient to pay in full either the
Existing Bank Debt, any AEON Refinancing Debt
and/or any such transaction costs, the Borrowers
may, subject to the limitations set forth herein,
borrow loans under the Credit Facility to pay any
such excess Existing Bank Debt, any such AEON
Refinancing Debt and/or transaction costs,
provided that, in no event shall proceeds from any
loans under the Credit Facility be commingled with
the proceeds of any Merger Capital or the proceeds
of any Term Loans.
	 
	 	 
	 

	 	All amounts due or outstanding in respect of the
AEON Debt and the Existing Bank Debt shall have
been (or substantially simultaneously with the
closing under the Credit Facility shall be) paid
in full in cash in the manner provided for above
(or otherwise cancelled or forgiven for no
consideration), all commitments (if any) in
respect






 









 






	 	 	 
	 

	 	thereof terminated and all guarantees
therefor (including without limitation the
guaranties and support letters of AEON) and
security (if any) therefor discharged and
released. After giving effect to the Merger
Transaction, the Transactions, and any other
transactions contemplated hereby, the Borrowers
and their subsidiaries shall have outstanding no
indebtedness other than (a) the loans and other
extensions of credit under the Credit Facility,
(b) not more than $50 million of Term Loans under
the Term Loan Facility, provided that the
aggregate outstanding principal amount of Term
Loans and loans under the Credit Facility shall
not exceed $222 Million on the Closing Date, and
(c) other limited indebtedness to be agreed upon.
	 
	 	 
	 

	 	Agent shall have received a funds-flow memorandum
setting forth the sources and uses of the proceeds
of the Merger Capital, the Term Loans and any
loans under the Credit Facility, which funds-flow
memorandum and the wire transfer instructions set
forth therein shall be in form and substance
reasonably satisfactory to the Agent and shall
reflect the application of proceeds as set forth
above.
	 
	 	 
	 

	 	Agent shall have received a fully executed pay-off
letters (together with such other documents as the
Agent may reasonably request) reasonably
satisfactory to Agent confirming that the AEON
Debt (including, without limitation, AEON
Refinancing Debt) and the Existing Bank Debt will
be repaid in full.
	 
	 	 
	 

	 	Completion by Agent of all legal due diligence
(including, without limitation, legal due
diligence with respect to all factoring and other
sales arrangements with respect to credit card
receivables (including, private label credit card
receivables) of the Borrowers’ and their
subsidiaries) with results reasonably satisfactory
to Agent. Without limiting the foregoing, the
corporate structure, capital structure, ownership
and management of BPW, must be consistent with
that previously disclosed to Agent and otherwise
reasonably acceptable to Agent.
	 
	 	 
	 

	 	Agent shall have received (a) the results of
updated audits and collateral appraisals
(consistent with the






 









 






	 	 	 
	 

	 	most recent audits and
collateral appraisals provided to Agent by
Borrowers), in each case, as reasonably requested
by the Agent and with results reasonably
satisfactory to Agent and (b) all financial
statements, models, projections and forecasts, in
each case, as reasonably requested by the Agent.
	 
	 	 
	 

	 	Agent shall be reasonably satisfied tax structure
of the of the Merger Transaction, the Transactions
and any other transactions contemplated hereby
(including, without limitation, any adverse tax
consequences on the Credit Parties resulting from
the cancellation of any debt in connection with
the Merger Transaction, the Transactions and any
other transactions contemplated hereby).
	 
	 	 
	 

	 	The Agent shall have received a copy of the
fairness opinion delivered to the board of
directors of Talbots from a firm reasonably
acceptable to the board of directors of Talbots
regarding the Merger Transaction, in form and
substance reasonably satisfactory to the Agent.
	 
	 	 
	 

	 	Evidence reasonably satisfactory to the Agent that
all rent payments for real property that are due
on or prior to the Closing Date shall have been
paid on or prior to the respective due dates
therefor.
	 
	 	 
	 

	 	Agent will have full cash dominion by means of
lock boxes and blocked account agreements.
	 
	 	 
	 

	 	Such other assurances, certificates, documents,
consents or opinions as the Agent or the Lenders
reasonably may require.
	 
	 	 
	Yield Protection:

	 	Customary yield protection provisions, including,
without limitation, provisions as to capital
adequacy, illegality, changes in circumstances and
withholding taxes.
	 
	 	 
	GOVERNING LAW:

	 	New York.