SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 9, 1994
or
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File Number: 1-4715
The Warnaco Group, Inc.
(Exact name of registrant as specified in its charter)
Delaware 95-4032739
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Park Avenue
New York, New York 10016
(Address of principal executive offices)
(212) 661-1300
(Registrant's telephone number, including area code)
-----------------
Copies of all communications to:
The Warnaco Group, Inc.
90 Park Avenue
New York, New York 10016
Attention: Vice President and General Counsel
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the registrant's Class A Common Stock
as of May 14, 1994 is as follows: 21,998,821
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
THE WARNACO GROUP, INC.
Consolidated Condensed Balance Sheets
(in thousands of dollars)
April 9, January 8,
1994 1994
-------- --------
(unaudited)
Assets
Current assets:
Cash (restricted $386 and $886, respectively) $ 4,652 $ 4,651
Accounts receivable -- net 146,643(1) 126,507
Inventories:
Finished goods 148,168 120,203
Work in process 56,047 65,285
Raw materials 52,803 54,015
-------- --------
Total inventories 257,018(2) 239,503
Other current assets 30,390 22,148
-------- --------
Total current assets 438,703 392,809
-------- --------
Property, plant and equipment,
(net of accumulated depreciation
of $66,911 and $65,257, respectively) 76,842 73,636
Other assets:
Intangibles and other assets -- net 276,283 222,188
-------- --------
$791,828 $688,633
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ 5,142 $ 5,819
Borrowing under revolving credit facility 175,133 100,523
Current portion of long-term debt 47,059 49,171
Accounts payable and accrued liabilities 99,561 112,557
Federal and other income taxes 2,607 2,778
-------- --------
Total current liabilities 329,502 270,848
======== ========
Long-term debt 252,865 245,518
Other long-term liabilities 18,168 13,132
Stockholders' equity:
Preferred Stock; $.01 par value -- --
Common Stock; $.01 par value 210 202
Capital in excess of par value 338,099 315,270
Cumulative translation adjustment (154) 279
Accumulated deficit (138,264) (147,225)
Notes receivable for common stock issued (8,598) (9,391)
-------- --------
Total stockholders' equity 191,293 159,135
-------- --------
$791,828 $688,633
======== ========
(1) Includes $7.3 million acquired from Calvin Klein, Inc. on March 14, 1994.
(2) Includes $7.8 million acquired from Calvin Klein, Inc. on March 14, 1994.
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Consolidated Condensed Statements of Operations (unaudited)
(in thousands of dollars except share data)
Quarter ended
April 9, 1994 April 3, 1993
------------- -------------
Net revenues $ 147,731(1) $ 156,750
Cost of goods sold 97,355 101,953
----------- ----------
Gross profit 50,376 54,797
Selling, administrative and general expenses 30,260 32,790
----------- ----------
Income before interest and income taxes 20,116 22,007
Interest expense 7,405 9,905
Provision for income taxes 750 1,350
----------- ----------
Income from continuing operations 11,961 10,752
Cumulative effect of change in method of
accounting for postretirement benefits -- (10,500)
Loss on California earthquake (3,000) --
----------- ----------
Net income $ 8,961 $ 252
========== =========
Net income applicable to common stockholders $ 8,961 $ 252
========== =========
Income (loss) per common share:
Income from continuing operations $ 0.60 $ 0.54
Cumulative effect of change in method
of accounting for postretirement benefits -- (0.53)
Loss on California earthquake (0.15) --
---------- ---------
Net income (loss) per common share $ 0.45 0.01
---------- ---------
Weighted average number of
common shares outstanding 20,075,977 19,881,729
========== ==========
(1) Menswear sales on discontinued brands (Dior, Nicklaus and Puritan) were
lower by $15 million. Olga sales were lower by $14 million due to
earthquake interruption, partially offset by an anticipated recovery of
approximately $8 million. Excluding these two items, net revenues would
have been $168.7 million, up 8% over last year.
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Consolidated Condensed Statements of Cash Flow (unaudited)
Increase (Decrease) in Cash
(in thousands of dollars)
Quarter ended
----------------------------
April 9, 1994 April 3, 1993
------------- ------------
Cash flow from operations:
Net income (loss) $ 8,961 $ 252
Non cash items included in net income (loss):
Depreciation and amortization 4,698 5,303
Interest 274 976
Loss on California earthquake 3,000 --
Cumulative effect of change in method of
accounting for postretirement benefits -- 10,500
Income taxes paid (921) (784)
Other changes in operating accounts (53,623) (33,200)
Other (3,434) (6,503)
-------- --------
Cash used in operations (41,045) (23,456)
-------- --------
Cash flow from investing activities:
Net proceeds from sale of fixed assets 115 --
Purchase of property, plant & equipment (5,520) (4,261)
Payment for purchase of Calvin Klein
underwear businesses and trademarks (33,500) --
-------- --------
Cash used in investing activities (38,905) (4,261)
-------- --------
Cash flow from financing activities:
Borrowings (repayments) under revolving
credit facilities 71,723 21,524
Net proceeds from the sale of Class A
common stock and repayment
of notes receivable from employees 793 101
Repayments of debt -- (223)
Proceeds from other financings 7,445 2,587
Increase in deferred financing costs (10) --
-------- --------
Cash provided from financing activities 79,951 23,989
-------- --------
Increase (decrease) in cash 1 (3,728)
Cash at beginning of period 4,651 3,763
======== ========
Cash at end of period $ 4,652 $ 35
-------- --------
Other changes in operating accounts:
Accounts receivable $(12,312) $(16,178)
Inventories (12,572) (7,121)
Other current assets (8,242) (5,665)
Accounts payable and accrued liabilities (21,247) (5,586)
Income taxes payable 750 1,350
-------- --------
$(53,623) $(33,200)
======== ========
Supplemental disclosure of cash flow information:
In the month of March, Warnaco completed the
acquisition of Calvin Klein underwear
businesses and trademarks
Fair value of assets acquired $ 69,588
Cash paid (33,500)
Issuance of common stock (22,836)
--------
Liabilities assumed $ 13,252
========
This statement should be read in conjunction with the accompanying
Notes to Consolidated Condensed Financial Statements.
THE WARNACO GROUP, INC.
Notes to Consolidated Condensed Financial Statements
1. In the opinion of the Company, the accompanying consolidated
condensed financial statements contained all the adjustments (all of which
were of a normal recurring nature) necessary to present fairly the financial
position of the Company as of April 9, 1994 as well as its results of
operations and cash flows for the periods ended April 9, 1994 and April 3,
1993. Operating results for interim periods may not be indicative of results
for the full fiscal year.
2. Certain amounts for prior periods have been reclassified to be
comparable with the current period presentation.
3. In the first quarter of 1994, there is a $3.0 million non-operating
charge related to the January 1994 California earthquake.
4. On March 14, 1994, the Company acquired the Calvin Klein worldwide
businesses and trademarks for men's underwear, a worldwide license for
Calvin Klein men's accessories and the Calvin Klein worldwide businesses and
trademarks for women's intimate apparel upon the expiration of an existing
license on December 31, 1994.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Results of Operations
STATEMENT OF OPERATIONS (selected data)
(amounts in millions of dollars)
First Quarter 1994 First Quarter 1993
------------------ ------------------
Net revenues $147.7(1) $156.8
Cost of goods sold 97.3 102.0
------ ------
Gross profit 50.4 54.8
% to net revenues 34.1% 35.0%
Selling, administrative and general 30.3 32.8
------ ------
Income before interest and income taxes 20.1 22.0
% to net revenues 13.6% 14.0%
Interest expense 7.4 9.9
Provision for income taxes 0.7 1.3
------ ------
Income from continuing operations $ 12.0 $ 10.8
====== ======
- - - -------------
(1) Menswear sales on discontinued brands (Dior, Nicklaus and Puritan) were
lower by $15 million. Olga sales were lower by $14 million due to
earthquake interruption, partially offset by an anticipated recovery of
approximately $8 million. Excluding these two items, net revenues would
have been $168.7 million, up 8% over last year.
Due to the California earthquake in January and the discontinued menswear
brands of Dior, Nicklaus and Puritan, net revenues decreased 5.8% from $156.8
million in the first quarter of 1993 to $147.7 million in the first quarter of
1994. Excluding these two items, net revenues would have been $168.7 million,
up 8% over last year.
Intimate apparel division net revenues increased 3.2% in the first
quarter of 1994 to $99.1 million from $96.0 million in the first quarter of
1993. On January 17, 1994 the California earthquake caused a shutdown of
Olga's distribution center for six weeks. The Company successfully
relocated the distribution center to other facilities and began shipping
normally in March 1994. Excluding the impact of the earthquake, intimate
apparel net revenues would have been up nearly 10%. On March 14, 1994, the
Company acquired the Calvin Klein men's underwear worldwide businesses and
trademarks, a worldwide license for Calvin Klein men's accessories, and
the Calvin Klein worldwide businesses and trademarks for women's intimate
apparel upon the expiration of an existing license on December 31, 1994.
Included in the intimate apparel net revenues are approximately $3 million
of Calvin Klein men's underwear, which represents three weeks of shipments
in March.
Menswear division net revenues decreased 21.8% from $53.0 million in the
first quarter of 1993 to $41.4 million in the first quarter of 1994 due to the
discontinued brands of Dior, Nicklaus and Puritan. This was partially offset
by a 24.7% increase in the Chaps brand. Excluding the discontinued brands,
Menswear net revenues would have been up 9.0% over the previous year.
Gross profit decreased 8.1% from $54.8 million in the first quarter of
1993 to $50.4 million in the first quarter of 1994. The decrease in gross
profit is primarily a result of the decreased net revenues noted above. Gross
profit as a percentage of net revenues decreased from 35.0% in the first
quarter of 1993 to 34.1% in the first quarter of 1994, due to a higher mix of
Fruit of the Loom and Calvin Klein sales in the quarter which have lower gross
margins than the lost Olga sales resulting from the earthquake.
Selling, administrative and general expenses decreased from $32.8 million
(20.9% of net revenues) in the first quarter of 1993 to $30.3 million (20.5%
of net revenues) in the first quarter of 1994. The decrease in selling,
administrative and general expenses as a percentage of net revenues reflects
the reduction in Menswear division operating costs.
Interest expense decreased 25.2% from $9.9 million in the first quarter
of 1993 to $7.4 million in the first quarter of 1994. The decrease in
interest expense reflects the refinancing of the Company's debt in September
1993. The Company's debt is substantially all bank debt at a rate of LIBOR
plus 1.25%, and in January 1994, the Company negotiated a $100 million
two-year interest rate swap at a fixed LIBOR rate of 4.290%.
The provision for income taxes for both periods primarily reflects
accruals for taxes of foreign subsidiaries.
Income from continuing operations increased 11.1% from $10.8 million in
the first quarter of 1993 to $12.0 million in the first quarter of 1994
reflecting the increased operating income and decreased interest expense noted
above.
The first quarter of 1994 includes a loss on the California earthquake of
$3.0 million, related to the deductible portion of the Company's insurance
policy on the January 17th California earthquake which temporarily shut down
the Olga distribution center.
The first quarter of 1993 includes a one-time non-cash expense of $10.5
million for the cumulative effect of a change in the method of accounting for
employee postretirement benefits which was recorded in accordance with the
provisions of Statement on Financial Accounting Standards No. 106 ("FAS No.
106"). The adoption of FAS No. 106 is not expected to have a material impact
on the results of operations in any future period.
Net income for the first quarter of 1994, after the $3.0 million one-time
charge mentioned above, was $9.0 million compared to a net income of $300,000
for the first quarter of 1993 which reflects the FAS No. 106 one-time charge
noted above.
Capital Resources and Liquidity
The Company's liquidity requirements arise primarily from its debt
service requirements and the funding of the Company's working capital needs,
primarily inventory and accounts receivable. The Company's borrowing
requirements are seasonal, with peak working capital needs generally arising
at the end of the second quarter and during the third quarter of the fiscal
year. The Company typically generates nearly all of its operating cash flow
in the fourth quarter of the fiscal year reflecting third and fourth quarter
shipments and the sale of inventory built during the first half of the fiscal
year.
Cash used by operating activities in the first quarter of 1994 was $41.0
million compared to a use of $23.5 million in the comparable 1993 period,
primarily due to a decrease in accrued liabilities and accounts payable. The
use of cash is attributable to a seasonal increase in working capital,
primarily accounts receivable and inventories.
The Company believes that funds available under its existing credit
arrangements and cash flow to be generated from future operations will be
sufficient to meet working capital and capital expenditure needs of the
Company, including interest and principal payments on outstanding debt
obligations, for the foreseeable future.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1 Restated Certificate of Incorporation of the Company.
(Incorporated herein by reference to Exhibit 3.1 to the
Company's Registration Statement on Form S-1, File No.
33-45877).
3.2 By-Laws of the Company. (Incorporated herein by reference to
Exhibit 3.2 to the Company's Registration Statement on Form
S-1, File No. 33-45877).
4.1 Registration Rights Agreement dated as of March 14, 1994
between the Company and Calvin Klein, Inc. ("CKI").
10.1 Credit Agreement dated as of July 16, 1993 (the "U.S.
$55,000,000 Credit Agreement") among Warnaco Inc., The Bank
of Nova Scotia, as agent, and certain other lenders named
therein.
10.2 Amendment No. 1 to the U.S. $55,000,000 Credit Agreement
dated as of October 14, 1993.
10.3 Amendment No. 2 to the U.S. $55,000,000 Credit Agreement
dated as of November 5, 1993.
10.4 Amendment No. 3 to the U.S. $55,000,000 Credit Agreement
dated as of January 7, 1994.
10.5 Amendment No. 4 to the U.S. $55,000,000 Credit Agreement
dated as of April 25, 1994.
10.6 Acquisition Agreement dated as of March 14, 1994, by and among
CKI, the Company and Warnaco Inc.
10.7 U.S. $500,000,000 Credit Agreement dated as of October 14,
1993 among the Company, Warnaco Inc., The Bank of Nova
Scotia, as co-managing agent and paying agent, Citicorp
U.S.A., as co-managing agent and documentation and
collateral agent, and certain other lenders named therein.
(Incorporated herein by reference to Exhibit 10-1 to the
Company's Form 10-Q filed November 16, 1993).
10.8 Employment Agreement dated as of January 6, 1991, between the
Company and Linda J. Wachner. (Incorporated herein by
reference to Exhibit 10.7 to the Company's Registration
Statement on Form S-1, File No. 33-45877).
10.9 Incentive Compensation Plan. (Incorporated herein by reference
to Exhibit 10.8 to the Company's Registration Statement on Form
S-1, File No. 33-45877).
10.10 1991 Stock Option Plan. (Incorporated herein by reference to
Exhibit 10.9 to the Company's Registration Statement on Form
S-1, File No. 33-45877).
10.11 Amended and Restated 1988 Employee Stock Purchase Plan, as
amended. (Incorporated herein by reference to Exhibit 10.10 to
the Company's Registration Statement on Form S-1, File No.
33-45877).
10.12 Warnaco Employee Retirement Plan. (Incorporated herein by
reference to Exhibit 10.11 to the Company's Registration
Statement on Form S-1, File No. 33-45877).
10.13 Executive Management Agreement dated as of May 9, 1991 between
the Company, Warnaco and The Spectrum Group, Inc.
(Incorporated herein by reference to Exhibit 10.13 to the
Company's Registration Statement on Form S-1, File No.
33-45877).
10.14 1993 Stock Plan for Non-Employee Directors. (Incorporated
herein by reference to the Company's Proxy Statement for its
1994 Annual Meeting of Shareholders).
10.15 Amended and Restated 1993 Stock Plan. (Incorporated
herein by reference to the Company's Proxy Statement for its
1994 Annual Meeting of Shareholders).
10.16 Supplemental Incentive Compensation Plan. (Incorporated
herein by reference to the Company's Proxy Statement for its
1994 Annual Meeting of Shareholders).
11.1 Earnings per share.
(b) A Current Report on Form 8-K, dated January 18, 1994, was filed
with the Securities and Exchange Commission in connection wth
the announcement of the acquisition by the Company of certain
businesses and trademarks of Calvin Klein.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WARNACO GROUP, INC.
Date: May 24, 1994
By: /s/ DARIUSH ASHRAFI
--------------------------------
Dariush Ashrafi
Director, Senior Vice President
and Chief Financial Officer
Principal Financial Officer
Date: May 24, 1994
By: /s/ WILLIAM S. FINKELSTEIN
--------------------------------
William S. Finkelstein
Senior Vice President and
Corporate Controller
Principal Accounting Officer
Execution Copy
- - - -------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Between
THE WARNACO GROUP, INC.
and
CALVIN KLEIN, INC.
---------------------------------------------------
Class A Common Stock, par value $.01 per share
---------------------------------------------------
Dated as of March 14, 1994
- - - -------------------------------------------------------------------------
TABLE OF CONTENTS
Page
1. Definitions...................................... 1
2. Shelf Registration............................... 5
2.1 Shelf Registration........................ 5
2.2 Limited Sales Under Shelf Registration.... 6
3. Demand Registration.............................. 7
3.1 Demand.................................... 7
3.2 Registration Statement Form............... 9
3.3 Restrictions on Demand Registration....... 9
4. Piggy-Back Rights................................ 9
5. Registration Procedures.......................... 12
6. Registration Expenses............................ 20
7. Underwritten Offerings........................... 20
7.1 Underwritten Offerings Exclusive.......... 20
7.2 Selection of Underwriters................. 20
7.3 Underwriting Agreement.................... 21
7.4 Holdback Agreements....................... 22
8. Preparation; Reasonable Investigation............ 23
9. Restrictions on Sale............................. 25
10. Indemnification.................................. 27
10.1 Indemnification by Group.................. 27
10.2 Indemnification by the Sellers............ 29
10.3 Notices of Claims, etc................... 30
10.4 Contribution............................... 32
10.5 Other Indemnification...................... 33
10.6 Indemnification Payments................... 33
11. Rule 144......................................... 33
12. Miscellaneous.................................... 34
12.1 Amendments and Waivers..................... 34
12.2 Nominees for Beneficial Owners............. 34
12.3 Notices.................................... 35
12.4 Assignment................................. 36
12.5 No Inconsistent Agreements................. 37
12.6 Remedies................................... 37
12.7 Severability............................... 37
12.8 Entire Agreement........................... 38
12.9 Descriptive Headings....................... 38
12.10 Governing Law............................. 38
12.11 Counterparts.............................. 38
REGISTRATION RIGHTS AGREEMENT ("Agreement"), dated as of March
14, 1994, between CALVIN KLEIN, INC., a New York corporation ("CKI"), and
THE WARNACO GROUP, INC., a Delaware corporation ("Group").
WHEREAS, pursuant to an Acquisition Agreement, dated as of the
date hereof (the "Acquisition Agreement"), among CKI, Group and Warnaco
Inc. (the "Purchaser"), a Delaware corporation and a wholly owned
subsidiary of Group, Purchaser is acquiring the initial issuance of stock
of a newly formed subsidiary of CKI in return for an amount of
consideration which will include 849,746 shares of the Class A Common
Stock, par value $.01 per share, of Group (the "Class A Common Stock");
WHEREAS, Group has agreed to provide the registration rights
with respect to the Class A Common Stock to be received by CKI in
connection with the Acquisition Agreement as set forth herein.
NOW, THEREFORE, the parties hereby agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Class A Common Stock" has the meaning set forth in the recitals
of this Agreement.
"Closing" has the meaning set forth in the Acquisition Agreement.
"Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Exchange Act of 1934,
as amended, shall include a reference to the comparable section, if any, of
any such successor federal statute.
"Initiating Holders" means any holder or holders of Registrable
Shares holding at least 25% of Registrable Shares outstanding at the time
of any request which is made pursuant to Section 3 hereof.
"Majority Holders" has the meaning set forth in Section 2.1 of
this Agreement.
"NASDAQ" has the meaning set forth in Section 5(m) of this
Agreement.
"NYSE" means The New York Stock Exchange, Inc.
"Person" means any individual, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or
other entity of any kind.
"Piqqyback Sales" has the meaning set forth in Section 9 of this
Agreement.
"Pledgee" has the meaning set forth in Section 2.2 of this
Agreement.
"Registrable Shares" means the shares of Class A Common Stock
issued to CKI pursuant to the Acquisition Agreement and any Related
Registrable Shares. As to any particular Registrable Shares, once issued
such securities shall cease to be Registrable Shares when (a) a
registration statement with respect to the sale of such securities shall
have become effective under the Securities Act and such shares shall have
been disposed of in accordance with such registration statement, (b) they
shall have been distributed to the public pursuant to Rule 144 (or any
successor provision) under the Securities Act, (c) they shall have been
otherwise transferred, new certificates evidencing them not bearing a
legend restricting further transfer shall have been delivered by Group and
subsequent public distribution of them shall not, in the opinion of counsel
to the holders, require registration of them under the Securities Act or
(d) they shall have ceased to be outstanding.
"Registration Expenses" means all expenses incident to Group's
performance of or compliance with Sections 2 and 3, including, without
limitation, all registration (on Form S-3), filing, NYSE listing and NASD
fees, all fees and expenses of complying with securities or blue sky laws,
all word processing, duplicating and printing expenses, messenger and
delivery expenses incurred by Group, the fees and disbursements of counsel
for Group (but not of counsel for CKI) and of its independent public
accountants, including the expenses of "cold comfort" letters required by
or incident to such performance and compliance (but excluding the costs of
any special audits required solely as a result of Group's compliance with
Sections 2 and 3), and any fees and disbursements of underwriters
customarily paid by issuers of securities (excluding any underwriting
discounts or commissions and transfer taxes, if any, with respect to the
Registrable Shares) to which Group and the underwriter have separately
agreed.
"Related Registrable Shares" means any securities of Group issued
or issuable with respect to the Class A Common Stock identified in the
definition of Registrable Shares by way of a dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise.
"Representatives" has the meaning set forth in Section 8 of this
Agreement.
"Rule 144(e)" has the meaning set forth in Section 9(c) of this
Agreement.
"Securities Act" means the Securities Act of 1933, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to
a particular section of the Securities Act of 1933, as amended, shall
include a reference to the comparable section, if any, of any such
successor federal statute.
"Shelf Registration" has the meaning set forth in Section 2.1 of
this Agreement.
"Total Shares" means the total shares of Class A Common Stock
issued to CKI pursuant to the Acquisition Agreement; provided, that, if any
event occurs pursuant to which Related Registrable Shares are issued, the
number of shares included in "Total Shares" shall be equal to the sum of
(x) number of shares of Class A Common Stock issued to CKI pursuant to the
Acquisition Agreement and (y) the number of Related Registrable Shares
that would have been issued with respect to such amount of Class A Common
Stock issued to CKI at the Closing.
2. Shelf Registration.
2.1 Shelf Registration. Upon the written request of CKI,
Group shall, as soon as practicable, but in no event later than 10 days
after the date on which Group files with the Commission its Annual Report
on Form 10-K for the year ended December 31, 1993, prepare and cause to be
filed with the Commission a "shelf" registration statement with respect to
all of the Registrable Shares, on Form S-3 pursuant to Rule 415 under the
Securities Act (the "Shelf Registration"). Group shall use its best
efforts to have the Shelf Registration declared effective as soon as
reasonably practicable after such tiling and shall use its best efforts to
keep the Shelf Registration continuously effective from the date such Shelf
Registration is declared effective until the earlier of (i) such time as
all of the Registrable Shares shall cease to be Registrable Shares and (ii)
such time as all of the remaining Registrable Shares may be distributed in
a single broker's transaction in accordance with the volume limitations of
Rule 144(e) (or any successor provisions) under the Securities Act.
Group shall supplement or amend, if necessary, the Shelf
Registration, as required by the registration form utilized by Group or by
the instructions applicable to such registration form or by the Securities
Act or the rules and regulations promulgated thereunder or as reasonably
required by CKI or the holder or holders of (or any underwriter for) a
majority of the Registrable Shares (the "Majority Holders"), and Group
shall furnish to the holders of the Registrable Shares to which the Shelf
Registration relates copies of any such supplement or amendment prior to
its being used and/or filed with the Commission. In no event shall the
Shelf Registration include securities other than Registrable Shares, unless
CKI or the Majority Holders consents to such inclusion or Group has a
shelf registration statement in effect covering all Class A Common Stock
whose holders are entitled to registration by Group.
2.2 Limited Sales Under Shelf Registration. Pursuant to
Section 9, until September 14, 1994, CKI shall not be permitted to sell any
Registrable Shares using the Shelf Registration or otherwise.
Notwithstanding the foregoing, CKI may pledge from time to time part or all
of such Registrable Shares to one or more lenders (each a "Pledgee") as
security for a loan and each such Pledgee may sell (a "Permitted
Disposition") any or all of such Registrable Shares pledged to such Pledgee
pursuant to a margin call exercised in good faith in accordance with such
Pledgee's margin maintenance policies; provided, that, if CKI shall pledge
any or all of the Registrable Shares to any such Pledgee, CKI shall cause
such Pledgee to maintain a segregated account in which such Registrable
Shares shall be held to ensure that any market price changes in any other
securities or collateral owned by CKI that may be pledged to or held by
such Pledgee in connection with its loan or any other loan to CKI or its
shareholders shall not provide the basis for a margin call with respect to
the Registrable Shares, and CKI shall provide confirmation from the lender
to Group as to such Pledgee's agreement to hold the Registrable Shares in a
segregated account.
3. Demand Registration.
3.1 Demand. At any time after September 14, 1994, and
subject to Section 3.3 hereof, upon the written request of one or more of
the Initiating Holders that Group effect the registration under the
Securities Act of all or part of the Registrable Shares and specifying the
intended method or methods of disposition thereof, Group shall promptly,
but in any event within 10 days, give written notice of such requested
registration to all holders of Registrable Shares. Within 10 days after
receipt of such notice, each holder of Registrable Shares shall notify
Group in writing as to whether it wishes to have any or all of its
Registrable Shares included in such Registration. Thereupon, Group shall
use its best efforts to effect the registration under the Securities Act of
all Registrable Shares requested to be registered to the extent required to
permit the disposition in accordance with the requested method thereof and
in accordance with the procedures set forth in Section 5; provided, that,
if Group has had a Shelf Registration with respect to all of the
Registrable Shares declared effective by the Commission in accordance with
Section 2 above and such Shelf Registration remains effective on the date
of the demand made pursuant to this Section 3.1, Group shall, if requested
by CKI or such Initiating Holders, promptly file a post-effective amendment
to such Registration Statement (in lieu of the requirement to file a
registration statement set forth in this Section 3.1) to permit the
disposition of all or part of the Registrable Shares included in such Shelf
Registration in accordance with the requested method specified by CKI or
such Initiating Holders and in accordance with the procedures set forth in
Section 5 and Group shall use its best efforts to have such post-effective
amendment declared effective.
3.2 Registration Statement Form. A registration requested
pursuant to this Section 3 shall be effected by the filing of a
registration statement on any form which Group is eligible to use, such
form to be selected by Group after consultation with CKI and its counsel.
3.3 Restrictions on Demand Registration. Notwithstanding
the provisions of Section 3.1 hereof, Group shall not be required to take
action to effect the registration of Registrable Shares pursuant to Section
3.1 hereof, if:
(i) The aggregate market value of the Registrable Shares
for which registration is sought by the Initiating Holders is less than the
lesser of (a) $5 million and (b) the aggregate market value of all
Registrable Shares at such time as registration is requested;
(ii) Group has effected a registration pursuant to Section
3.1 hereof within the prior six months; or
(iii) Group has effected 3 registrations pursuant to
Section 3.1 hereof.
4. Piggy-Back Rights. If Group at any time proposes to file a
registration statement under the Act with respect to an offering by Group
for its own account or for the account of others of any class of security
(other than the Shelf Registration or a registration statement on Form S-4
or S-8, or any successor thereto, or in connection with an acquisition in a
manner which would not permit registration of Registrable Shares for sale
to the public) and if the sale of securities pursuant to such registration
statement is to be effected pursuant to an underwritten offering, then
Group shall in each case give written notice of such proposed filing to the
holders of Registrable Shares at least 15 days prior to the anticipated
filing date, and such notice shall offer each such holder the opportunity
to register all of its Registrable Shares. The failure of any holder to
advise Group in writing of its election to participate in such
registration or offering (which notice shall specify the number of
Registrable Shares sought to be sold by each holder) within 5 days after
such notice is given shall constitute an election not to register or
participate, without prejudice to the holder's right to participate in
subsequent registrations or offerings or to demand registration pursuant to
Section 3. Group shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit
the holders of Registrable Shares requested to be included in the
registration for such offering to include such shares in such offering on
the same terms and conditions as any similar securities included therein.
Notwithstanding the foregoing, if Group (as evidenced by the delivery of a
certificate signed by a responsible executive officer of Group to the
holders of Registrable Shares) and the managing underwriter or underwriters
of such offering (as evidenced by the delivery of an opinion to the holders
of Registrable Shares) determines that the inclusion of the Registrable
shares in such registration would be harmful to the prospects of a
successful offering of the securities being offered in such registration,
then the amount of securities to be offered for the account of the holders
of Registrable Shares shall be reduced to the extent necessary to reduce
the total amount of securities to be included in such offering to the
amount which would not be harmful to the prospects of a successful offering
as recommended in good faith by Group (as specified in the certificate from
its executive officer) or by such managing underwriter. If, at any time
after giving written notice of its intention to register any securities and
prior to the effective date of the registration statement, Group shall
determine for any reason either not to register or to delay registration of
such securities, Group may, at its election, give written notice of such
determination to each holder of Registrable Shares and thereupon, (i) in
the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Shares in connection with such
registration (but not from its obligation to pay the Registration Expenses
in connection therewith), without prejudice, however, to the rights of any
holder or holders of Registrable Shares entitled to do so to request that
such registration be effected as a registration under Section 3.1, and (ii)
in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Shares, for the same period as the delay
in registering such other securities.
5. Registration Procedures. If and whenever Group is required
to use its best efforts to effect the registration of any Registrable
Shares under the Securities Act as provided in Sections 2 and 3 or file a
post-effective amendment to an effective registration statement as provided
in Section 3, Group shall:
(a) promptly prepare and file with the Commission a
registration statement or post-effective amendment, as the case may
be, with respect to such Registrable Shares and use its best efforts
to have such registration statement or post-effective amendment, as
the case may be, declared effective;
(b) prepare and file with the Commission such amendments and
supplements to the registration statement (or post-effective
amendment) being filed or amended, as the case may be, and the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective and to comply with the rules,
regulations or instructions of the registration form utilized by
Group, the Securities Act and the rules and regulations thereunder
with respect to the disposition of all Registrable Shares covered by
such registration statement until such time as all of such Registrable
Shares have been disposed of in accordance with the intended method or
methods of disposition by the seller or sellers thereof set forth in
the registration statement, as amended, and furnish to each such
seller, prior to the filing of a copy thereof, a copy of any amendment
(including, without limitation, the post-effective amendment required
to be filed pursuant to Section 3.1) or supplement to such
registration statement or prospectus;
(c) furnish to each seller of Registrable Shares covered by
such registration statement (or post-effective amendment), such number
of conformed copies of any registration statement as is then in effect
with respect to such shares and of each amendment and supplement
thereto (in each case including all exhibits), such number of copies
of the prospectus contained in such registration statement (or post-
effective amendment) (including each preliminary prospectus and any
summary prospectus), such documents, if any, incorporated by reference
in such registration statement, amendment or supplement and any other
prospectus filed under Rule 424 under the Securities Act, in conformity
with the requirements of the Securities Act, and such other documents,
as such seller may reasonably request;
(d) use its best efforts (i) to register or qualify all
Registrable Shares and other securities covered by such registration
statement or post-effective amendment under such other securities or
blue sky laws of such States of the United States of America where an
exemption is not available and as the sellers of Registrable Shares
covered by such registration statement or post-effective amendment
shall reasonably request, (ii) to keep such registration or qualifica-
tion in effect for so long as such registration statement remains in
effect, and (iii) to take any other action which may be reasonably
necessary or advisable to enable such sellers to consummate the
disposition in such jurisdictions of the securities to be sold by such
sellers; provided, that, Group shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction in which it would not, but for the requirements of
this subparagraph (d), be obligated to be so qualified or to consent
to general service of process in any such jurisdiction;
(e) use its best efforts to cause all Registrable Shares
covered by such registration statement or post-effective amendment to
be registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in the
opinion of counsel to Group or counsel to the seller or sellers of
Registrable Shares to enable the seller or sellers thereof to dispose
of such Registrable Shares;
(f) use its best efforts to furnish at the effective date of
such registration statement or the effective date of a post-effective
amendment filed pursuant to Section 3.1, and the date of the closing
of the sale of the Registrable Shares (whether or not such sale is
underwritten), to each seller of Registrable Shares, and each such
seller's underwriters, if any, a signed counterpart of (i) an opinion
of counsel for Group, dated the effective date of such registration
statement or the effective date of a post-effective amendment filed
pursuant to Section 3.1 (or such date of sale, as applicable) and (ii)
a "comfort" letter signed by the independent public accountants who
have certified the financial statements included or incorporated by
reference in such registration statement or post-effective amendment
covering substantially the same matters with respect to such
registration statement or post-effective amendment (and the
prospectus included therein) and, in the case of the accountants'
comfort letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in
the case of the accountants' comfort letter, such other financial
matters, and, in the case of the legal opinion, such other legal
matters, as the sellers of the Registrable Shares covered by such
registration statement or post-effective amendment, or the under-
writers, may reasonably request;
(g) notify each holder of Registrable Shares covered by such
registration statement or post-effective amendment at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such
registration statement or post-effective amendment, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, in the light of the circumstances
under which they were made, and at the request of any such holder
promptly prepare and furnish to it a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary
so that, as amended or supplemented, such prospectus shall not include
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which
they were made;
(h) shall promptly notify such holders and their counsel of
any stop order issued or threatened by the Commission and take all
reasonable actions required to prevent the entry of such stop order or
use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement or post-
effective amendment, as the case may be, at the earliest possible
moment;
(i) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to holders of Registrable Shares, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first full
calendar month after the effective date of such registration statement
or post-effective amendment, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder;
(j) provide and cause to be maintained transfer agents and
registrars for all Registrable Shares covered by such registration
statement or post-effective amendment from and after a date not later
than the effective date of such registration statement or post-
effective amendment;
(k) keep CKI and its attorneys advised in writing as to the
initiation and progress of any registration statement or amendment
(including, the post-effective amendment filed pursuant to Section
3.1) or supplement thereto filed pursuant to this Agreement;
(l) provide officers' certificates and other customary closing
documents;
(m) use its best efforts to have approved for listing,
subject to official notice of issuance, the Class A Common Stock being
registered pursuant to such registration statement or post-effective
amendment on the NYSE or such other national securities exchange on
which shares of Class A Common Stock are then listed or on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") if the Class A Common Stock is then quoted on NASDAQ; and
(n) enter into and perform customary agreements (including
the underwriting agreement, if any, referred to in Section 7.3) and
take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Shares. Group
may (i) require each holder of Registrable Shares as to which any
registration is being effected to furnish Group such information
regarding such holder and the intended method of distribution of such
securities as Group may from time to time reasonably request in
writing and (ii) require each seller of Registrable Shares to agree to
comply with the Securities Act and the Exchange Act in connection with
the registration and distribution of the Registrable Shares.
Each holder of Registrable Shares agrees by acquisition of such
Registrable Shares that, upon receipt of any notice from Group of the
happening of any event of the kind described in subdivision (g) of this
Section 5, such holder will forthwith discontinue such holder's disposition
of Registrable Shares pursuant to Section 2 or 3 until such holder's
receipt of the copies of the supplemented or amended prospectus
contemplated by subdivision (g) of this Section 5 and, if so directed by
Group will deliver to Group (at Group's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Shares current at the time of receipt of such
notice.
6. Registration Expanses. Group shall pay all Registration
Expenses incurred by Group in connection with any registration effected
pursuant to Section 2 or 3 and CKI shall pay all costs, legal fees and
other expenses incurred by it in connection with the registration and sale
of its Registrable Shares.
7. Underwritten Offerings.
7.1 Underwritten Offerings Exclusive. Whenever a
registration requested by CKI or the Initiating Holders pursuant to Section
3, or a post-effective amendment filed pursuant to Section 3.1,
contemplates an underwritten offering, only Registrable Shares designated
by such holders in their sole discretion may be included in such
underwriting agreement relating to such offering, unless CKI or the holders
of a majority of the Registrable Shares shall have permitted (in writing)
other securities to be included in such registration or post-effective
amendment and such underwritten offering.
7.2 Selection of Underwriters. Whenever a registration or
post-effective amendment requested pursuant to Section 3 is for an
underwritten offering, the holders of a majority of Registrable Shares
included in such registration or post-effective amendment shall have the
right to select the managing underwriter(s) to administer the offering,
from a list of five nationally prominent investment banking firms named by
Group as reasonably acceptable to it and delivered to such holders.
7.3 Underwriting Agreement. If requested by the
underwriters for any underwritten offering by holders of Registrable
Shares, Group shall enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably
satisfactory in substance and form to Group and each such holder and the
underwriters and to contain such representations and warranties by Group
and such other terms as are generally prevailing in agreements of that
type, including, without limitation, indemnities by Group to such holders
and the underwriters substantially to the effect and to the extent provided
in Section 10. The holders of the Registrable Shares proposed to be sold
by such underwriters will reasonably cooperate with Group in the
negotiation of the underwriting agreement. Such holders of Registrable
Shares to be sold by such underwriters may be parties to such underwriting
agreement and may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
Group to and for the benefit of such underwriters shall also be made to and
for the benefit of such holders of Registrable Shares and that any or all
of the conditions precedent to the obligations of such underwriters under
such underwriting agreement be conditions precedent to the obligations of
such holders of Registrable Shares. Any such holder of Registrable Shares
shall not be required to make any representations or warranties to or
agreements with Group other than representations, warranties or agreements
regarding such holder, such holder's Registrable Shares and such holder's
intended method of distribution or any other representations required by
applicable law.
7.4 Holdback Agreements. (a) Each holder of Registrable
Shares whose shares are included in an underwritten registration statement,
agrees, if so required by the managing underwriter not to sell, make any
short sale of, loan, grant any option for the purchase of or effect any
public sale or distribution of Registrable Shares or otherwise dispose of
any equity securities of Group (other than as part of such underwritten
public offering) during the period beginning seven days prior to the
effective date of such registration statement and ending 90 days after the
effective date of such registration statement. In addition, each holder of
Registrable Shares agrees, that in connection with an underwritten
registration statement by Group of Class A Common Stock, if so requested by
the managing underwriter for such registration statement, not to sell, make
any short sale of, loan, grant any option for the purchase of or effect any
public sale or distribution of Registrable Shares or otherwise dispose of
any equity securities of Group during the period beginning seven days prior
to the effective date of such registration statement and ending 90 days
after the effective date of such registration statement; provided, however,
that Group (or the managing underwriter for such registration statement)
may only exercise the right set forth in this sentence once.
(b) Group agrees not to effect any public sale or
distribution of its Class A Common Stock (other than pursuant to a
registration Form S-4 or S-8, or any successor thereto, or in connection
with an acquisition) during the seven days prior to the effective date of
such registration statement or post-effective amendment and ending the
earlier of (a) 90 days after any underwritten registration pursuant to
Section 3 has become effective and (b) the date on which all securities to
which such registration statement or post-effective amendment relates are
sold.
8. Preparation; Reasonable Investigation. In connection with
the preparation and filing of any registration statement, amendment
(including, without limitation, the filing of a post-effective amendment as
required pursuant to Section 3.1) or supplement, as the case may be, filed
with respect to Registrable Shares, Group (i) shall give the holders of
Registrable Shares on whose behalf such Registrable Shares are to be so
registered and their underwriters, if any, and their respective counsel and
accountants (collectively, the "Representatives") an opportunity to
participate in the preparation of and to review such registration statement
or post-effective amendment, as the case may be, each prospectus included
therein or filed with the Commission, and each amendment (including a post-
effective amendment) thereof or supplement thereto for a reasonable period
prior to its filing with the commission and (ii) shall give the holders of
Registrable Securities and their Representatives such access to all
financial books and records, pertinent corporate documents and properties
of Group and such opportunities to discuss the business of Group with its
directors, officers, employees and the independent public accountants who
have certified its financial statements, which in the opinion of such
holders and their Representatives, is necessary to conduct a reasonable
investigation within the meaning of the Securities Act; provided, however,
that Group shall not be required to deliver specified documents or specific
information to the extent that Group reasonably determines that the
delivery of such documents or information would result in (i) the loss of
any attorney-client privilege, (ii) that the specific information sought to
be reviewed is proprietary to Group or (iii) that the disclosure of such
document or information would adversely affect its competitive position
with CKI; provided, further, that notwithstanding clauses (ii) and (iii)
above, Group shall deliver such information or document to the underwriter
for any underwritten offering if such underwriter agrees in writing not to
reveal its contents to CKI.
9. Restrictions on Sale. Notwithstanding any-thing to the
contrary set forth herein, CKI shall not be permitted to sell any
Registrable Shares prior to September 14, 1994, other than in connection
with an underwritten offering pursuant to Section 4 ("Piggyback Sales");
provided, that, CKI may at any time pledge its Registrable Shares
including, as contemplated in Section 2.2 of this Agreement, and in such
event any Pledgee may sell such Shares with the Shelf Registration at any
time in accordance with the provisions of Section 2.2.
From September 14, 1994 until September 14, 1995, CKI shall
be permitted to sell its Registrable Securities as follows:
(a) in Piggyback Sales without any volume limitation,
in accordance with the provisions of Section 4 hereof;
(b) in an underwritten public offering contemplated by
Sections 3 and 7 (an "Underwritten Offering"); provided, that, prior to
March 14, 1995, the number of shares sold by CKI in Underwritten Offerings
may not exceed one-third of the Total Shares, and thereafter CKI may sell
all of its Registrable Shares without regard to any volume limitations
whatsoever in any such Underwritten Offering; and
(c) in accordance with the manner of sale requirements
set forth in Rule 144(f) promulgated under the Securities Act and subject
to the following volume limitations: (i) for the period from September 14,
1994 to March 14, 1995, CKI may sell a number of Registrable Shares equal
to the lesser of (x) one-third of the Total Shares and (y) the number of
shares of Class A Common Stock permitted to be sold in such six-month
period in accordance with the volume limitations set forth in Rule 144(e)
promulgated under the Securities Act ("Rule 144(e)"), and (ii) for the
period March 14, 1995 to September 14, 1995, CKI may sell a number of
Registrable Shares equal to the lesser of (x) two-thirds of the Total
Shares less the number of shares of Class A Common Stock, if any, sold in
the preceding six-month period pursuant to clause (b)(i) above and (y) the
number of shares of Class A Common Stock permitted to be sold during the
preceding 12-month period in accordance with the volume limitations set
forth in Rule 144(e) less the number of shares of Class A Common Stock, if
any, sold in the preceding 6-month period pursuant to clause (b)(i) above.
From and after September 14, 1995 except as explicitly set forth
in Section 7.4, CKI shall have no restrictions whatsoever pursuant to this
Agreement on the sale, disposition or other assignment of any of the
Registrable Shares.
10. Indemnification.
10.1 Indemnification by Group. In the event of any
registration of Registrable Securities under the Securities Act pursuant
hereto, Group will, and hereby does, indemnify and hold harmless, each
seller of any Registrable Shares included in any registration and each
other Person who participates as an underwriter in the offering or sale of
such securities and each other Person, if any, who controls such seller or
any such underwriter within the meaning of the Securities Act, and their
respective directors, officers, partners, employees and affiliates against
any losses, claims, damages or liabilities, joint or several, to which such
seller or underwriter or any such director, officer, partner, employee,
affiliate or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration
statement, any preliminary prospectus, final prospectus or summary pros-
pectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein in light of
the circumstances under which they were made not misleading, and Group
will reimburse such seller or underwriter and each such director, officer,
partner, employee, affiliate and controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, action or proceeding;
provided, that Group shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or proceeding in
respect thereof) or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment, or supplement in reliance upon
and in conformity with written information furnished to Group in the form
of an instrument duly executed by or on behalf of such seller or
underwriter, as the case may be, specifically stating that it is for use in
the preparation thereof and, provided, further, that Group shall not be
liable to any Person who participates as an underwriter in the offering or
sale of Registrable Shares or to any other Person, if any, who controls
such underwriter within the meaning of the Securities Act, in any such case
to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such Person's
failure to send or give a copy of the final prospectus, as the same may be
then supplemented or amended, within the time required by the Securities
Act to the Person asserting the existence of an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Shares to such Person if such
statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director,
officer employee, affiliate, partner or controlling person and shall
survive the transfer of such securities by such seller.
10.2 Indemnification by the Sellers. As a condition to
including any Registrable Shares in any registration, Group shall have
received an undertaking reasonably satisfactory to it from the prospective
seller of such Registrable Shares, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 10.1) Group,
and each director of Group, each officer of Group and each other Person who
controls Group within the meaning of the Securities Act, with respect to
any statement or alleged statement in or omission or alleged omission from
the registration statement, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written
information furnished to Group in the form of an instrument duly executed
by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof. Such
indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of Group or any such director, officer
or controlling person and shall survive the transfer of such securities by
such seller.
10.3 Notices of Claims, etc. Promptly after receipt by an
indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subparagraphs of
this Section 10, such indemnified party will, if a claim in respect thereof
is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under the preceding
subparagraphs of this Section 10, except to the extent that the indemni-
fying party is actually materially prejudiced by such failure to give
notice as evidenced by a written opinion of counsel. In case any such
action is brought against an indemnified party, the indemnifying party
shall be entitled to participate in and to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying
party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation; provided, however,
that if the indemnified party reasonably believes it is advisable for it to
be represented by separate counsel because there exists or may exist a
conflict of interest between its interests and those of the indemnifying
party with respect to such claim, or there exist defenses available to such
indemnified party which may not be available to the indemnifying party, or
if the indemnifying party shall fail to assume responsibility for such
defense, the indemnified party may retain counsel satisfactory to it and
the indemnifying party shall pay all fees and expenses of such counsel. No
indemnifying party shall be liable for any settlement of any action or
proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed. No indemnifying party shall, without the
consent of the indemnified party, consent to entry of any judgment or enter
into any settlement which does not include as an uncondi-tional term
thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation or
which requires action other than the payment of by the indemnifying party.
10.4 Contribution. If the indemnification provided for in
this Section 10 shall for any reason be held by a court to be unavailable
to an indemnified party under Section 10.1 or 10.2 in respect of any loss,
claim, damage or liability, or any action or proceeding in respect thereof,
then, in lieu of the amount paid or payable under Section 10.1 or 10.2, the
indemnified party and the indemnifying party under Section 10.1 or 10.2
shall contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating the same), (i) in such proportion as is appropriate to
reflect the relative benefit to Group and the sellers of Registrable Shares
covered by the registration which resulted in such loss, claim, damage or
liability, or action in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action or proceeding in respect thereof, as well as any other relevant
equitable considerations or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as shall be
appropriate to reflect the relative fault of Group and such sellers from
the offering of the securities covered by such registration statement. No
Person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation. Such
prospective sellers' obligations to contribute as provided in this Section
10.4 are several in proportion to the relative value of their respective
Registrable Shares covered by such registration statement and not joint.
In addition, no Person shall be obligated to contribute hereunder any
amounts in payment for any settlement of any action or claim effected
without such Person's consent, which consent shall not be unreasonably
withheld or delayed.
10.5 Other Indemnification. Indemnification and
contribution similar to that specified in the preceding Sections of this
Section 10 (with appropriate modifications) shall be given by Group and
each seller of Registrable Shares with respect to any required registration
or other qualification of securities under any federal or state law or
regulation of any governmental authority other than the Securities Act.
10.6 Indemnification Payments. The indemnification and
contribution required by this Section 10 shall be made by periodic payments
of the amount thereof during the course of the investigation or defense, as
and when bills are received or expense, loss, damage or liability is
incurred.
11. Rule 144. Group covenants that it shall take all actions
reasonably necessary (including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the
Exchange Act) to enable holders of Registrable Shares to sell such securi-
ties without registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rules or
regulations hereafter adopted by the Commission. Upon the request of any
holder of Registrable Shares, Group will deliver to such holder a written
certificate signed by its Chief Financial Officer as to whether it has
complied with such requirements.
12. Miscellaneous.
12.1 Amendments and Waivers. This Agreement may be amended
with the written consent of Group and Group may take any action herein
prohibited, or omit to perform any act herein required to be performed by
it, only if Group shall have obtained the written consent to such
amendment, action or omission to act, of the holder or holders of at least
50% of the Registrable Shares affected by such amendment, action or
omission to act. Each holder of any Registrable Shares at the time or
thereafter outstanding shall be bound by any consent authorized by this
Section 12.1, whether or not such Registrable Shares shall have been marked
to indicate such consent.
12.2 Nominees for Beneficial Owners. In the event that any
Registrable Shares are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to
Group, be treated as the holder of such Registrable Shares for purposes of
any request or other action by any holder or holders of Registrable Shares
pursuant to this Agreement or any determination of any number or percentage
of shares of Registrable Shares held by any holder or holders of
Registrable Shares contemplated by this Agreement. If the beneficial owner
of any Registrable Shares so elects, Group may require assurances
reasonably satisfactory to it of such owner's beneficial ownership of such
Registrable Shares.
12.3 Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
by registered or certified first-class mail, return receipt requested,
telex, telegram, telecopier, reputable overnight courier service or
personal delivery to the following addresses (or at such other address for
a party as shall be specified by like notice):
(i) if to CKI, to
Calvin Klein, Inc.
205 West 39th Street
New York, New York 10018
Attention: Barry K. Schwartz
Telecopy: (212) 768-8930
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
Attention: Robert M. Hirsh, Esq.
Telecopy: (212) 757-3990
(ii) if to Group, to
The Warnaco Group, Inc.
90 Park Avenue
New York, New York 10016
Attention: General Counsel
Telecopy: (212) 687-0480
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom
919 Third Avenue
New York, New York 10022
Attention: Kenneth J. Bialkin
Telecopy: (212) 735-2001
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; one business
day after being sent by reputable overnight courier service; three business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; and when receipt is acknowledged, if telecopied.
12.4 Assignment. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and any
holder of Registrable Shares, and their respective successors and assigns.
12.5 No Inconsistent Agreements. Group will not hereafter
enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Shares
in this Agreement and Group has not previously entered into any agreement
with respect to any of its securities granting any registration rights to
any Person other than as set forth on Schedule 12.5.
12.6 Remedies. Each holder of Registrable Shares, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. Group agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of
the provisions of this Agreement and hereby agrees to waive the defense in
any action for specific performance that a remedy at law would be adequate.
12.7 Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein
shall not be in any way impaired thereby, it being intended that all of the
rights and privileges of the parties hereto shall be enforceable to the
fullest extent permitted by law.
12.8 Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. There
are no restrictions, promises, warranties or undertakings, other than those
set forth or referred to herein and therein. This Agreement supersedes all
prior agreements and understandings between the parties with respect to
such subject matter.
12.9 Descriptive Headings. The descriptive headings of the
several sections and paragraphs of this Agreement are inserted for
reference only and shall not limit or otherwise affect the meaning hereof.
12.10 Governing Law. This Agreement shall be construed and
enforced in accordance with, and the rights of the parties shall be
governed by, the laws of the State of New York applicable to agreements
made and to be performed entirely within such State.
12.11 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
THE WARNACO GROUP, INC.
By: /s/ LINDA J. WACHNER
----------------------------
Name: Linda J. Wachner
Title: Chairman of the Board,
President and Chief
Executive Officer
CALVIN KLEIN
By: /s/ RICHARD A. MARTIN
----------------------------
Name: Richard A. Martin
Title: President, Finance and
Administration
[EXECUTION COPY]
U.S. $55,000,000
CREDIT AGREEMENT,
dated as of July 16, 1993
among
WARNACO INC.,
as the Borrower,
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
THE BANK OF NOVA SCOTIA,
as the Agent for the Lenders.
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of July 16, 1993, among
WARNACO INC., a Delaware corporation (the "Borrower"), the
various financial institutions as are or may become parties
hereto (collectively, the "Lenders"), and THE BANK OF NOVA SCOTIA
("Scotiabank"), as agent (the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower and Scotiabank are parties to a letter
agreement, dated as of February 1, 1993 (the "Existing Letter of
Credit Facility"), pursuant to which Scotiabank provides a
documentary letter of credit facility in favor of the Borrower
and has issued those letters of credit (the "Existing Letters of
Credit") listed on Schedule A hereto;
WHEREAS, the Borrower has requested that the Lenders replace
the Existing Letter of Credit Facility with this Agreement by
providing a documentary letter of credit facility in an aggregate
principal amount not exceeding the Letter of Credit Commitment
Amount;
WHEREAS, the Borrower desires to obtain Commitments from the
Lenders pursuant to which
(a) Loans will be made by the RL Lenders to the
Borrower from time to time prior to the Loan Commitment
Termination Date; and
(b) documentary Letters of Credit will be issued by
the Issuer for the account of the Borrower and under the
several obligations hereunder of the Lenders from time to
time prior to the Letter of Credit Commitment Termination
Date;
WHEREAS, the Lenders are willing, on the terms and subject
to the conditions hereinafter set forth (including Article VI),
to extend such Commitments and issue and participate in such
Letters of Credit, and the RL Lenders are willing to make such
Loans to the Borrower; and
WHEREAS, the proceeds of Loans will be used to reimburse the
Issuer for payments made by the Issuer under the Letters of
Credit, and proceeds of Letters of Credit will be used in
connection with the Borrower's worldwide sourcing of merchandise;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether
or not underscored) when used in this Agreement, including its
preamble and recitals, shall, except where the context otherwise
requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms thereof):
"Agent" is defined in the preamble and includes each other
Person as shall have subsequently been appointed as the successor
Agent pursuant to Section 10.4.
"Agreement" means, on any date, this Credit Agreement as
originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or
otherwise modified and in effect on such date.
"Alternate Base Rate" means, on any date and with respect to
all Base Rate Loans, a fluctuating rate of interest per annum
equal to the higher of
(a) the rate of interest most recently announced by
Scotiabank at its Domestic Office as its base rate for
Dollar loans; and
(b) the Federal Funds Rate most recently determined by
the Agent plus 1/2 of 1%.
The Alternate Base Rate is not necessarily intended to be the
lowest rate of interest determined by Scotiabank in connection
with extensions of credit. Changes in the rate of interest on
that portion of any Loans maintained as Base Rate Loans will take
effect simultaneously with each change in the Alternate Base
Rate. The Agent will give notice promptly to the Borrower of
changes in the Alternate Base Rate.
"Assignee Lender" is defined in Section 11.11.1.
"Authorized Officer" means, relative to the Borrower, those
of its officers whose signatures and incumbency shall have been
certified to the Agent and the Lenders pursuant to Section 6.1.1.
"Base Rate Loan" means a Loan bearing interest at a
fluctuating rate determined by reference to the Alternate Base
Rate.
"Borrower" is defined in the preamble.
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"Borrowing" means the making of Loans by the RL Lenders of
the same type and, in the case of LIBO Rate Loans, having the
same Interest Period in accordance with Section 2.1.
"Borrowing Request" means a loan request and certificate
duly executed by an Authorized Officer of the Borrower,
substantially in the form of Exhibit C hereto.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to
be closed in New York; and
(b) relative to the making, continuing, prepaying or
repaying of any LIBO Rate Loans, any day on which dealings
in Dollars are carried on in the London interbank market.
"Commitment" means, as the context may require, a RL Lender's Loan
Commitment or the Issuer's or a Lender's Letter of Credit Commitment.
"Commitment Amount" means, as the context may require,
either the Loan Commitment Amount or the Letter of Credit
Commitment Amount.
"Commitment Termination Date" means, as the context may
require, either the Loan Commitment Termination Date or the
Letter of Credit Commitment Termination Date.
"Commitment Termination Event" means
(a) the occurrence of any event or condition described
in clauses (f) or (g) of Section 10.1 of the U.S. Credit
Agreement; or
(b) the occurrence and continuance of any other Event
of Default and either
(i) the declaration of the Loans to be due and
payable pursuant to Section 9.3, or
(ii) in the absence of such declaration, the
giving of notice by the Agent, acting at the direction
of the Required Lenders, to the Borrower that the
Commitments have been terminated.
"Continuation/Conversion Notice" means a notice of
continuation or conversion and certificate duly executed by an
Authorized Officer of the Borrower, substantially in the form of
Exhibit D hereto.
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"Credit Extension" means and includes
(a) the advancing of any Loans by the RL Lenders in
connection with a Borrowing; and
(b) any issuance or extension by the Issuer of a
Letter of Credit.
"Default" means any Event of Default or any condition,
occurrence or event which, after notice or lapse of time or both,
would constitute an Event of Default.
"Disbursement" means any payment made under a Letter of
Credit by the Issuer to the beneficiary of such Letter of Credit.
"Disbursement Date" is defined in Section 4.5.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means, relative to any Lender, the office
of such Lender designated as such below its signature hereto or
designated in the Lender Assignment Agreement or such other
office of a Lender (or any successor or assign of such Lender)
within the United States as may be designated from time to time
by notice from such Lender, as the case may be, to each other
Person party hereto.
"Draft" means and includes any draft, bill, cable or written
demand for payment or receipt drawn or issued under a Letter of
Credit.
"Effective Date" means the date this Agreement becomes
effective pursuant to Section 11.8.
"Event of Default" is defined in Section 9.1.
"Excess" is defined in Section 11.17.
"Existing Letter of Credit Facility" is defined in the first
recital.
"Existing Letters of Credit" is defined in the first
recital.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to
(a) the weighted average of the rates on overnight
federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business
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Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which
is a Business Day, the average of the quotations for such
day on such transactions received by the Agent from three
federal funds brokers of recognized standing selected by it.
If for any reason the Agent shall have determined (which
determination shall be conclusive, absent manifest error) that it
is unable to ascertain the Federal Funds Rate for any reason,
including without limitation, the inability or failure of the
Agent to obtain sufficient bids or publications in accordance
with the terms hereof, the rate announced by the Agent at its New
York Agency as its "Base Rate New York" shall be the Alternate
Base Rate until the circumstances giving rise to such inability
no longer exists.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means the fiscal year of the Borrower ending
on or about December 31 of each year.
"F.R.S. Board" means the Board of Governors of the Federal
Reserve System or any successor thereto.
"GAAP" has the meaning set forth in the U.S. Credit
Agreement.
"Goods" is defined in Section 8.1.3.
"herein", "hereof", "hereto", "hereunder" and similar terms
contained in this Agreement or any other Loan Document refer to
this Agreement or such other Loan Document, as the case may be,
as a whole and not to any particular Section, paragraph or
provision of this Agreement or such other Loan Document.
"including" means including without limiting the generality
of any description preceding such term.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money
and all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments;
(b) all obligations, contingent or otherwise, relative
to the face amount of all letters of credit, whether or not
drawn, and banker's acceptances issued for the account of
such Person;
-5-
(c) all obligations of such Person as lessee under
leases which have been or should be, in accordance with
GAAP, recorded as capitalized lease liabilities;
(d) all obligations of such Person to pay the deferred
purchase price of property or services (other than trade
debt incurred in the ordinary course of business), and
indebtedness (excluding prepaid interest thereon) secured by
a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or
other title retention agreements), whether or not such
indebtedness shall have been assumed by such Person or is
limited in recourse; and
(e) all contingent liabilities of such Person in
respect of any of the foregoing.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Initial Percentage" means, relative to any Lender, the
percentage set forth opposite its signature hereto or set forth
in a Lender Assignment Agreement, as such percentage may be
adjusted from time to time pursuant to the terms hereof or a
Lender Assignment Agreement executed by such Lender and its
Assignee Lender and delivered pursuant to Section 11.11.
"Intercreditor Agreement" means the Intercreditor Agreement
dated the date hereof executed and delivered by the Agent and the
Agent under the U.S. Credit Agreement pursuant to Section 6.1.6.
"Issuance Request" means either (a) a request delivered by
the Borrower to the Issuer in accordance with the provisions of
the Tradexpress Agreement or (b) a request and certificate duly
executed by an Authorized Officer of the Borrower, in
substantially the form of Exhibit B attached hereto (with such
changes thereto as may be agreed upon from time to time by the
Agent and the Borrower).
"Issuer" means any affiliate, unit or agency of Scotiabank.
"Interest Period" means, relative to any LIBO Rate Loans,
the period beginning on (and including) the date on which such
LIBO Rate Loan is made or continued as, or converted into, a LIBO
Rate Loan pursuant to Section 2.3 or 2.4 and ending on (but
excluding) the day which numerically corresponds to such date one
or two months thereafter (or, if such month has no numerically
corresponding day, on the last Business Day of such month), in
each case as such Loan may be made or as the Borrower may select
in its relevant notice pursuant to Section 2.3 or 2.4; provided,
however, that
-6-
(a) Interest Periods commencing on the same date for
Loans comprising part of the same Borrowing shall be of the
same duration;
(b) if such Interest Period would otherwise end on a
day which is not a Business Day, such Interest Period shall
end on the next following Business Day (unless such next
following Business Day is the first Business Day of a
calendar month, in which case such Interest Period shall end
on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period may end later than the date set
forth in clause (a) of the definition of "Loan Commitment
Termination Date", as such date may be extended from time to
time pursuant to the terms of this Agreement.
"Lender Assignment Agreement" means a Lender Assignment
Agreement substantially in the form of Exhibit E hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 4.1, and shall also
mean and include each Existing Letter of Credit.
"Letter of Credit Availability" means, at any time, the
lesser of
(a) $55,000,000, minus the sum of (i) the aggregate
outstanding principal amount of all Loans and (ii) the
aggregate amount of all Letter of Credit Outstandings, and
(b) $50,000,000.
"Letter of Credit Commitment" means, relative to the Issuer,
the Issuer's obligation to issue Letters of Credit pursuant to
Section 2.1.2 and, with respect to each of the other Lenders, the
obligations of each such Lender to participate in such Letter of
Credit pursuant to the terms of this Agreement.
"Letter of Credit Commitment Amount" means, on any date a
maximum amount of $50,000,000, as such amount may be reduced from
time to time pursuant to Section 2.2.
"Letter of Credit Commitment Termination Date" means the
earliest to occur of
(a) June 30, 1994 (as such date may be extended
pursuant to the terms of this Agreement);
-7-
(b) the date on which the Letter of Credit Commitment
Amount is terminated in full or reduced to zero pursuant to
Section 2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b) or (c),
the Letter of Credit Commitment shall terminate automatically and
without any further action.
"Letter of Credit Outstandings" means, at any time, an
amount equal to the sum of
(a) the aggregate Stated Amount at such time of all
Letters of Credit then outstanding and undrawn (as such
aggregate Stated Amount shall be adjusted, from time to
time, as a result of drawings, the issuance of Letters of
Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and
outstanding Reimbursement Obligations.
"LIBO Rate" is defined in Section 3.2.1.
"LIBO Rate Loan" means a Loan bearing interest, at all times
during an Interest Period applicable to such Loan, at a fixed
rate of interest determined by reference to the LIBO Rate
(Reserve Adjusted).
"LIBO Rate (Reserve Adjusted)" is defined in Section 3.2.1.
"LIBOR Office" means, relative to any RL Lender, the office
of such RL Lender designated as such below its signature hereto
or designated in the Lender Assignment Agreement or such other
office of any RL Lender as designated from time to time by notice
from such RL Lender to the Borrower and the Agent, whether or not
outside the United States, which shall be making or maintaining
LIBO Rate Loans hereunder.
"LIBOR Reserve Percentage" is defined in Section 3.2.1.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in property
to secure payment of a debt or performance of an obligation or
other priority or preferential arrangement of any kind or nature
whatsoever.
"Loan" is defined in Section 2.1.1.
-8-
"Loan Commitment" means, relative to any RL Lender, such RL
Lender's obligation to make Loans pursuant to Section 2.1.1.
"Loan Commitment Amount" means $20,000,000, as such amount
may be reduced by Section 2.2; provided, that notwithstanding
anything to the contrary contained in this Agreement, unless and
until (i) the RL Lenders receive a sole second priority Lien on
all or substantially all of the assets of Warner's (United
Kingdom) Limited and Warner's of Canada Ltd. located in the
United Kingdom and Canada, respectively and (ii) the Liens
securing the ASCO Debt (as defined in the U.S. Credit Agreement)
owing to ASCO International Sourcing Limited (or its affiliates
or assigns) are released, the Loan Commitment Amount shall not in
any event exceed $10,000,000, as such amount may be reduced
pursuant to Section 2.2. Notwithstanding anything to the
contrary contained in this Agreement (including Section 2.1.3) in
no event shall Scotiabank be required to make any Loans if and to
the extent that, after giving effect to such Loans (and any
adjustments to Scotiabank's Percentage (and its resulting pro
rata portion of Letter of Credit Outstandings) required pursuant
to the terms of this Agreement), the aggregate outstanding
principal amount of Loans made by Scotiabank together with
Scotiabank's Percentage of Letter of Credit Outstandings would
exceed $40,000,000.
"Loan Commitment Termination Date" means the earliest of
(a) June 30, 1994, as such date may be extended
pursuant to the terms of this Agreement;
(b) the date on which the Loan Commitment Amount is
terminated in full or reduced to zero pursuant to Section
2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b) or (c),
the Loan Commitment shall terminate automatically and without any
further action.
"Loan Document" means this Agreement, each Note, the
Tradexpress Agreement, the Security Agreement and each other
agreement, document or instrument delivered in connection with
this Agreement, whether or not specifically mentioned herein.
"Maximum Rate" is defined in Section 11.17.
"Monthly Payment Date" means the last Business Day of each
calendar month.
-9-
"Note" means any promissory note of the Borrower payable to
the order of a RL Lender, in the form of Exhibit A hereto (as
such promissory note may be amended, endorsed or otherwise
modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such RL Lender resulting from
outstanding Loans made by such RL Lender, and also means all
other promissory notes accepted from time to time in substitution
therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise)
of the Borrower arising under or in connection with this
Agreement, the Notes and each other Loan Document.
"Order" is defined in Section 4.6.
"Organic Document" means, relative to the Borrower, its
certificate of incorporation, its by-laws and all shareholder
agreements, voting trusts and similar arrangements applicable to
any of its authorized shares of capital stock.
"Participant" is defined in Section 11.11.
"Percentage" means, on any date, relative to any Lender, its
Initial Percentage; provided, however, at any time (and during
any period) that the sum of (x) Scotiabank's Initial Percentage
(under the heading "Letter of Credit" on the signature pages
hereof) of the Letter of Credit Outstandings (after giving effect
to any Letters of Credit to be issued by Scotiabank on such date)
and (y) the aggregate outstanding principal amount of all Loans
exceeds $40,000,000, the Percentage (under the heading "Letter of
Credit" on the signature pages hereof) of each Lender other than
Scotiabank shall equal the percentage obtained by dividing
(a) the product of such Lender's Initial Percentage
(under the heading "Letter of Credit" on the signature pages
hereof) and $50,000,000;
by
(b) the excess of (i) $55,000,000 over (ii) the
aggregate outstanding principal amount of all Loans,
and the Percentage of Scotiabank shall equal the excess of 100%
over the sum of the Percentages of the Lenders other than
Scotiabank.
"Person" means any natural person, corporation, partnership,
firm, association, trust, government, governmental agency or any
other entity, whether acting in an individual, fiduciary or other
capacity.
"Received Amount" is defined in Section 4.6.
-10-
"Reimbursement Obligation" is defined in Section 4.6.
"Required Lenders" means, at any time,
(a) with respect to any provision of this Agreement
other than the declaration of the acceleration of the
maturity of all or any portion of the outstanding principal
amount of the Loans and other Obligations in respect of
Loans to be due and payable pursuant to Section 9.3,
Scotiabank and at least one other Lender; and
(b) with respect to the declaration of the
acceleration of the maturity of all or any portion of the
outstanding principal amount of the Loans to be due and
payable pursuant to Section 9.3, and other Obligations in
respect of Loans, RL Lenders holding Loans representing at
least 51% of the aggregate principal amount of the Loans
then outstanding.
"RL Lender" means each Lender that is committed to make
Loans to the Borrower pursuant to Section 2.1 to the extent set
forth opposite such Lender's name under the column heading
"Loans" on the signature pages hereto, as such percentage may be
modified from time to time by way of an assignment or transfer by
such RL Lender pursuant to Section 11.11.1 and reflected in a
Lender Assignment Agreement. On the Effective Date Scotiabank
was the only RL Lender and was the only Lender obligated to make
Loans to the Borrower under this Agreement.
"Scotiabank" is defined in the preamble.
"Security Agreement" means the Security Agreement executed
and delivered pursuant to Section 6.1.3, substantially in the
form of Exhibit F hereto, as amended, supplemented, restated or
otherwise modified from time to time.
"Stated Amount" of each Letter of Credit means the maximum
amount of such Letter of Credit that may then be drawn under such
Letter of Credit.
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means, in the case of any Loan, the
date that is 60 days after the Loan Commitment Termination Date.
"Stated Rate" is defined in Section 11.17.
"Subject Property" is defined in Section 8.1.5.
"Subsidiary" means, with respect to any Person, any
corporation of which more than 50% of the outstanding capital
stock having ordinary voting power to elect a majority of the
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board of directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such
corporation shall or might have voting power upon the occurrence
of any contingency) is at the time directly or indirectly owned
by such Person, by such Person and one or more other Subsidiaries
of such Person, or by one or more other Subsidiaries of such
Person.
"Taxes" is defined in Section 5.6.
"Tradexpress Agreement" means the Tradexpress Transmission
Agreement duly executed and delivered by the Borrower and the
Issuer pursuant to Section 6.1.8 in substantially the form of
Exhibit I hereto.
"type" means, relative to any Loan, the portion thereof, if
any, being maintained as a Base Rate Loan or a LIBO Rate Loan.
"UCP" is defined in Section 11.16.
"United States" or "U.S." means the United States of
America, its fifty States and the District of Columbia.
"U.S. Credit Agreement" means the Credit Agreement, dated as
of March 26, 1992, as amended and restated as of October 1, 1992,
among the Borrower, The Warnaco Group, Inc., General Electric
Capital Corporation, individually and in its capacity as Agent,
Union Bank of Switzerland, individually and in its capacity as
Co-Agent, The Bank of Nova Scotia, individually and in its
capacity as Paying Agent and Term Loan B Co-Agent, Citibank,
N.A., individually and in its capacity as Term Loan B Co-Agent,
and certain other lenders and financial institutions parties
thereto, as such agreement was in effect on the Effective Date,
and as further amended, restated or waived from time to time with
the consent of the Required Lenders hereunder solely for purposes
of this Agreement, and regardless of whether such U.S. Credit
Agreement is terminated, unless in connection with such
termination a replacement credit facility satisfactory to the
Required Lenders hereunder is entered into in which case, the
affirmative and negative covenants in such facility shall become
the subject of this Agreement.
"Usury Restraint" is defined in Section 11.17.
SECTION 1.2. Use of Defined Terms. Unless otherwise
defined or the context otherwise requires, terms for which
meanings are provided in this Agreement shall have such meanings
when used in each Note, Borrowing Request, Continuation/
Conversion Notice, Loan Document, notice and other communication
delivered from time to time in connection with this Agreement or
any other Loan Document.
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SECTION 1.3. Cross-References. Unless otherwise specified,
references in this Agreement and in each other Loan Document to
any Article or Section are references to such Article or Section
of this Agreement or such other Loan Document, as the case may
be, and, unless otherwise specified, references in any Article,
Section or definition to any clause are references to such clause
of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations.
Unless otherwise specified, all accounting terms used herein
shall be interpreted, all accounting determinations and
computations hereunder shall be made, and all financial
statements required to be delivered hereunder or thereunder shall
be prepared in accordance with, GAAP.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the
conditions of this Agreement (including Article VI), each Lender
severally agrees as follows:
SECTION 2.1.1. Loan Commitment. From time to time on any
Business Day occurring prior to the Loan Commitment Termination
Date, each RL Lender severally agrees, subject to the terms of
this Agreement (including Article VI) that it will make loans
(relative to such RL Lender, its "Loans") to the Borrower equal
to its Percentage of the aggregate amount of the Borrowing of
Loans requested by the Borrower to be made on such day or
otherwise required to be made pursuant to the terms of Section
2.3. No RL Lender's obligation to make any Loan shall be
affected by any other RL Lender's failure to make any Loan. On
the terms and subject to the conditions hereof, the Borrower may
from time to time borrow, prepay and reborrow Loans.
Notwithstanding anything contained herein to the contrary, so
long as any RL Lender whose Percentage to make Loans is less than
51% shall be in default in its obligation to fund its pro rata
share of any Loans (as notified to such Lender by the Agent, the
Agent agreeing to use good faith efforts to give such
notification promptly following the occurrence of such default)
or shall have rejected its obligations under the Loan Commitment,
then such RL Lender whose Percentage to make Loans is less than
51% shall not be entitled to receive any payments of principal of
or interest on its pro rata share of the Loans or its share of
any commitment or other fees payable hereunder unless and until
(x) the Loans of all the other RL Lenders and all interest
thereon have been paid in full, (y) such failure to fulfill its
obligation to fund is cured or (z) the Obligations under this
Agreement shall have been declared or shall have become
immediately due and payable, and for purposes of voting or
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consenting to matters with respect to the Loan Documents, such RL
Lender shall be deemed not to be a "RL Lender" hereunder and such
RL Lender's Percentage shall each be deemed to be zero (0). No
Loan Commitment of any RL Lender shall be increased or otherwise
affected by any such failure or rejections by any other RL
Lender. Any payments of principal of or interest on Obligations
which would, but for this Section, be paid to any RL Lender,
shall be paid to the RL Lenders who shall not be in default under
their respective Loan Commitments and who shall not have rejected
any Loan Commitment, for application to the Obligations or cash
collateral in respect of Letters of Credit in such manner and
order (pro rata among such RL Lenders) as shall be determined by
the Agent. The parties hereto acknowledge and agree that a RL
Lender's failure to make a Loan based on the Borrower's failure
to satisfy one or more of the conditions precedent to the making
of Loans set forth in Article VI shall not be construed as such
RL Lender being in default of its obligations to fund its pro
rata share of Loans or a rejection of such RL Lender's
obligations under the Loan Commitment.
SECTION 2.1.2. Commitment to Issue Letters of Credit. From
time to time on any Business Day, the Issuer will issue, and each
Lender will participate in, the Letters of Credit, in accordance
with Article IV.
SECTION 2.1.3. Lenders Not Permitted or Required To Make
Loans or Issue Letters of Credit Under Certain Circumstances.
(a) No RL Lender shall be permitted or required to
make any Loan if, after giving effect thereto (and the
payment of any Reimbursement Obligations with the proceeds
of such Loans), the aggregate outstanding principal amount
of all Loans
(i) together with all Letter of Credit
Outstandings, would exceed $55,000,000, or
(ii) would exceed the then effective Loan
Commitment Amount.
(b) The Issuer shall not be permitted or required to
issue any Letter of Credit if, after giving effect thereto
(i) all Letter of Credit Outstandings together
with the aggregate outstanding principal amount of all
Loans would exceed the Letter of Credit Availability
amount, or
(ii) any Lender's Percentage (after giving effect
to any changes to such Percentage pursuant to the terms
of this Agreement) of all Letter of Credit Outstandings
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would exceed such Lender's then effective Percentage of
the Letter of Credit Commitment Amount.
SECTION 2.2. Reduction of Commitment Amounts. The Borrower
may, from time to time on any Business Day, voluntarily reduce
the amount of either Commitment Amount; provided, however, that
all such reductions shall require at least three Business Days'
prior notice to the Agent and be permanent.
SECTION 2.3. Borrowing Procedure. (a) Upon any
Disbursement being made in respect of a Letter of Credit, the
Borrower shall (unless it shall have given notice to the Agent to
the contrary prior to 3:00 p.m., New York time, three Business
Days prior to the date of such Disbursement) be deemed to have
delivered to the Agent a Borrowing Request pursuant to which the
Borrower shall have been deemed to irrevocably request that the
RL Lenders make a LIBO Rate Loan with a two month Interest Period
in a principal amount equal to the amount of the Disbursement
being made. The Borrower hereby acknowledges and agrees that
each Borrower Request deemed to be delivered hereunder and the
acceptance by the Borrower of the proceeds of the Borrowing shall
constitute a representation and warranty by the Borrower that on
the date of such Borrowing (both immediately before and after
giving effect to such Borrowing and the application of the
proceeds thereof) the statements made in Section 6.2.1 and the
representations and warranties set forth in Section 3.1 of the
Security Agreement are in each case true and correct. Proceeds
of such Loans shall be used to fund the Reimbursement Obligations
in respect of Letters of Credit under which a Disbursement was
made on the date of the Loan. In addition, to the extent that
the amount available under the Loan Commitment is not sufficient
to fund the entire amount of the Disbursement made on the date
the Loans are being made, then the Borrower shall have been
deemed to request that Scotiabank, in its capacity as Swingline
Lender under the U.S. Credit Agreement, make a Swingline Loan (as
such term is defined in the U.S. Credit Agreement) in an amount
necessary to fund the remainder of such Disbursement (after
giving effect to the Loans being made hereunder).
Notwithstanding anything to the contrary contained herein,
Scotiabank shall only be required to make such Swingline Loans if
the Borrower has satisfied all of the conditions to making a
Swingline Loan under the U.S. Credit Agreement as in effect on
the date of the making of such Swingline Loans and the Borrower
hereby acknowledges and agrees that all the terms and conditions
(including as to repayment, accrual of interest and otherwise)
contained in the U.S. Credit Agreement shall be applicable to all
Swingline Loans made pursuant to this Section.
(b) In addition to the provisions of the making of Loans
set forth in clause (a), above, by delivering a Borrowing Request
to the Agent on or before 2:00 p.m., New York time, on a Business
Day, the Borrower may from time to time irrevocably request, on
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not less than three nor more than five Business Days' notice (in
the case of LIBO Rate Loans) and on the date of such Borrowing
(in the case of Base Rate Loans), that a Borrowing be made as
other than a LIBO Rate Loan having a two month Interest Period or
in an amount other than the full amount of Disbursement with
respect to which such Loan is to be made.
On the terms and subject to the conditions of this Agreement,
each Borrowing shall be comprised of the type of Loans, and shall
be made on the Business Day, specified in such Borrowing Request.
SECTION 2.4. Continuation and Conversion Elections. By
delivering a Continuation/Conversion Notice to the Agent on or
before 10:00 a.m., New York time, on a Business Day, the Borrower
may from time to time irrevocably elect, on not less than three
nor more than five Business Days' notice that all, or any portion
of any Loans be, in the case of Base Rate Loans, converted into
LIBO Rate Loans or, in the case of a LIBO Rate Loan, converted
into a Base Rate Loan or continued as a LIBO Rate Loan (in the
absence of delivery of a Continuation/Conversion Notice with
respect to any LIBO Rate Loan at least three Business Days before
the last day of the then current Interest Period with respect
thereto, such LIBO Rate Loan shall, on such last day,
automatically convert to a Base Rate Loan unless such Loan is
otherwise required to be paid pursuant to the terms of this
Agreement (including the first sentence of Section 3.1));
provided, however, that no portion of the outstanding principal
amount of any Loans may be continued as, or be converted into,
LIBO Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. Funding. Each RL Lender may, if it so elects,
fulfill its obligation to make, continue or convert LIBO Rate
Loans hereunder by causing one of its foreign branches or
affiliates (or an international banking facility all of the
capital stock or other ownership interests of which are wholly-
owned by such RL Lender) to make or maintain such LIBO Rate Loan;
provided, however, that such LIBO Rate Loan shall nonetheless be
deemed to have been made and to be held by such RL Lender, and
the obligation of the Borrower to repay such LIBO Rate Loan shall
nevertheless be to such RL Lender for the account of such foreign
branch, affiliate or international banking facility; provided,
further that the Borrower shall not be required to pay any amount
under this Section or Section 5.6 that is greater than the amount
which it would have been required to pay had such RL Lender not
caused such branch, affiliate or facility to make or maintain
such LIBO Rate Loan. In addition, the Borrower hereby consents
and agrees that, for purposes of any determination to be made for
purposes of Section 5.1, 5.2, 5.3 or 5.4, it shall be
conclusively assumed that such RL Lender elected to fund all LIBO
Rate Loans by purchasing Dollar deposits in its LIBOR Office's
interbank eurodollar market.
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SECTION 2.6. Notes. Each RL Lender's Loans under the Loan
Commitment shall be evidenced by a Note payable to the order of
such RL Lender in a maximum principal amount equal to such RL
Lender's Percentage of Loans multiplied by $20,000,000. The
Borrower hereby irrevocably authorizes each RL Lender to make (or
cause to be made) appropriate notations on the grid attached to
such RL Lender's Note (or on any continuation of such grid),
which notations, if made, shall evidence, inter alia, the date
of, the outstanding principal of, and the interest rate and
Interest Period applicable to the Loans evidenced thereby. Such
notations shall be conclusive and binding on the Borrower absent
manifest error; provided, however, that the failure of any RL
Lender to make any such notations shall not limit or otherwise
affect any Obligations of the Borrower.
SECTION 2.7. Extension of Commitment Termination Date. The
Letter of Credit Commitment Termination Date may be extended by
the Lenders in their sole and absolute discretion upon written
request of the Borrower received at least 60 days but not more
than 90 days prior to the then effective Letter of Credit
Commitment Termination Date (as such date may have been
extended). The Lenders shall give written notice to the Borrower
of their decision and, if approved, of the new Letter of Credit
Commitment Termination Date; provided, that if and when the
Lenders extend the Letter of Credit Commitment Termination Date,
the Loan Commitment Termination Date shall be also extended by
each RL Lender for the same number of days as the number of days
by which the Letter of Credit Commitment Termination Date is
extended; provided, further, that notwithstanding any other
provision in this Agreement to the contrary, in no event shall
the modified Letter of Credit Commitment Termination Date exceed
364 days from the then expiring Letter of Credit Commitment
Termination Date. The Lenders shall give written notice to the
Borrower of their decision within 30 days of request. In the
absence of notice by any one of the Lenders, neither the then
effective Letter of Credit Commitment Termination Date nor the
Loan Commitment Termination Date shall be extended and each shall
terminate and expire as otherwise provided in this Agreement.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrower
shall repay in full the entire unpaid principal amount of each
Loan upon the earlier of (i) a date which is, at the election of
the Borrower, no later than sixty (60) days following the date of
the making of such Loan, and (ii) the Stated Maturity Date
therefor (provided, that Loans made pursuant to clause (a) of
Section 2.3 shall be payable on the termination of the two month
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Interest Period with respect to such Loan). Prior thereto, the
Borrower
(a) may, from time to time on any Business Day, make a
voluntary prepayment, in whole or in part, of the
outstanding principal amount of any Loans; provided,
however, that
(i) no such prepayment of any LIBO Rate Loan may
be made on any day other than the last day of the
Interest Period for such Loan; and
(ii) all such voluntary prepayments shall require
at least one Business Day's prior written notice to the
Agent;
(b) shall, on each date when any reduction in the
Letter of Credit Commitment Amount shall become effective,
make a mandatory prepayment (which shall be applied (or held
as cash collateral for application, as the case may be) by
the Agent first to the payment of Reimbursement Obligations
of the then Letter of Credit Outstandings, and then to the
payment of the aggregate unpaid principal amount of Loans
then outstanding) equal to the excess, if any, of the
aggregate, outstanding principal amount of all Letter of
Credit Outstandings over the Letter of Credit Commitment
Amount as so reduced;
(c) shall, on each date when any reduction in the Loan
Commitment Amount shall become effective, make a mandatory
prepayment of the aggregate outstanding principal amount of
all Loans then outstanding in an amount equal to the excess,
if any, of the aggregate outstanding principal amount of all
Loans over the Loan Commitment Amount, as so reduced; and
(d) shall, immediately upon any acceleration of the
Stated Maturity Date of any Obligations pursuant to Section
9.2 or Section 9.3, repay all Obligations, unless, pursuant
to Section 9.3, only a portion of all Obligations is so
accelerated.
Each prepayment of any Loans made pursuant to this Section shall
be without premium or penalty, except as may be required by
Section 5.4. No voluntary prepayment of principal of any Loans
shall cause a reduction in the Loan Commitment Amount.
SECTION 3.2. Interest Provisions. Interest on the
outstanding principal amount of Loans shall accrue and be payable
in accordance with this Section 3.2.
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SECTION 3.2.1. Rates. Loans comprising a Borrowing shall
accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a
Base Rate Loan, equal to the sum of the Alternate Base Rate
from time to time in effect plus a margin of 2 1/4%; or
(b) on that portion maintained as a LIBO Rate Loan
(whether made pursuant to clause (a) or clause (b) of
Section 2.3), during each Interest Period applicable
thereto, equal to the sum of the LIBO Rate (Reserve
Adjusted) for such Interest Period plus a margin of 3 1/4%.
The "LIBO Rate (Reserve Adjusted)" means, relative to any
Loan to be made, continued or maintained as, or converted into, a
LIBO Rate Loan for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) determined
pursuant to the following formula:
LIBO Rate = LIBO Rate
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO
Rate Loans will be determined by the Agent on the basis of the
LIBOR Reserve Percentage in effect on, and the applicable rates
furnished to and received by the Agent from Scotiabank, two
Business Days before the first day of such Interest Period.
"LIBO Rate" means, relative to any Interest Period for LIBO
Rate Loans, the rate of interest equal to the average of the
rates per annum at which Dollar deposits in immediately available
funds are offered to Scotiabank's LIBOR Office in the London
interbank market as at or about 11:00 a.m. London time two
Business Days prior to the beginning of such Interest Period for
delivery on the first day of such Interest Period, and in an
amount approximately equal to the amount of Scotiabank's LIBO
Rate Loan and for a period approximately equal to such Interest
Period.
"LIBOR Reserve Percentage" means, relative to any Interest
Period for LIBO Rate Loans, the reserve percentage, if any
(expressed as a decimal) equal to the maximum aggregate reserve
requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any
transitional adjustments or other scheduled changes in reserve
requirements) specified under regulations issued from time to
time by the F.R.S. Board and then applicable to assets or
liabilities consisting of and including "Eurocurrency
Liabilities", as currently defined in Regulation D of the F.R.S.
Board, having a term approximately equal or comparable to such
Interest Period.
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All LIBO Rate Loans shall bear interest from and including
the first day of the applicable Interest Period to (but not
including) the last day of such Interest Period at the interest
rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. Post-Maturity Rates. After the date any
principal amount of any Loan is due and payable (whether on the
Stated Maturity Date, upon acceleration or otherwise), or after
any other monetary Obligation of the Borrower shall have become
due and payable, the Borrower shall pay, but only to the extent
permitted by law, interest (after as well as before judgment) on
such amounts at a rate per annum equal to the greater of (i) the
Alternate Base Rate plus a margin of 3%, and (ii) the then
applicable interest rate plus a margin of 1%.
SECTION 3.2.3. Payment Dates. Interest accrued on each
Loan shall be payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any optional or required payment
or prepayment, in whole or in part, of principal
outstanding on such Loan (including, with respect to LIBO
Rate Loans, on the last day of each applicable Interest
Period for such LIBO Rate Loan);
(c) with respect to any Base Rate Loans converted
into LIBO Rate Loans on a day when interest would not
otherwise have been payable pursuant to the terms hereof,
on the date of such conversion; and
(d) on that portion of any Loans the Stated Maturity
Date of which is accelerated pursuant to Section 9.2 or
Section 9.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising
under this Agreement or any other Loan Document after the date
such amount is due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise) shall be payable upon
demand.
SECTION 3.3. Fees. The Borrower agrees to pay the fees
set forth in this Section 3.3. All such fees shall be non-
refundable.
SECTION 3.3.1. Letter of Credit Face Amount Fee. The
Borrower agrees to pay to the Agent, for the account of the
Lenders, a fee for each Letter of Credit for the period from and
including the date of the issuance of such Letter of Credit to
(but not including) the earlier of (a) the date upon which such
Letter of Credit expires and (b) the date upon which the Stated
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Amount of such Letter of Credit is irrevocably reduced to zero
(by the making of a Disbursement by the Issuer or otherwise), of
1% per annum of the Stated Amount of such Letter of Credit,
calculated daily in arrears. Such fee shall be payable by the
Borrower in arrears on each Monthly Payment Date, and on the
Letter of Credit Commitment Termination Date for any period then
ending for which such fee shall not theretofore have been paid,
commencing on the first such date after the issuance of such
Letter of Credit.
SECTION 3.3.2. Letter of Credit Issuing Fee. The Borrower
agrees to pay to the Issuer an issuing fee in accordance with the
fees currently paid by the Borrower on the Effective Date for
each Letter of Credit for the period from and including the date
of issuance of such Letter of Credit to (but not including) the
date upon which such Letter of Credit expires.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance Requests. By delivering to the
Agent and the Issuer an Issuance Request (such request being, in
the Borrower's sole discretion, either delivered (by telex,
teletransmission or otherwise) in accordance with the terms of
the Tradexpress Agreement or in the form attached hereto as
Exhibit B) on or before 3:00 p.m., New York time on the Business
Day on which a Letter of Credit is to be issued, the Borrower may
request, from time to time prior to the Letter of Credit
Commitment Termination Date that the Issuer issue an irrevocable
sight documentary letter of credit in such form as may be
requested by the Borrower and approved by the Issuer (each a
"Letter of Credit"), to facilitate the Borrower's worldwide
sourcing of merchandise. Upon receipt of an Issuance Request,
the Agent shall promptly notify the Lenders thereof. Each Letter
of Credit shall by its terms:
(a) be issued in a Stated Amount which does not
exceed (or would not exceed) the then Letter of Credit
Availability;
(b) be stated to expire on a date (its "Stated Expiry
Date") no later than the earlier of 180 days from its date
of issuance and the Letter of Credit Commitment Termination
Date; and
(c) on or prior to its Stated Expiry Date
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(i) terminate immediately upon notice to the
Issuer thereof from the beneficiary thereunder that
all obligations covered thereby have been terminated,
paid, or otherwise satisfied in full, and
(ii) reduce in part immediately and to the
extent the beneficiary thereunder has notified the
Issuer thereof that the obligations covered thereby
have been paid or otherwise satisfied in part.
So long as no Default has occurred and is continuing, by delivery
to the Issuer and the Agent of an Issuance Request (such request
being, in the Borrower's sole discretion, either delivered (by
telex, teletransmission or otherwise) in accordance with the
terms of the Tradexpress Agreement or in the form attached hereto
as Exhibit B) on or before 3:00 p.m., New York time, on the
Stated Expiry Date of any Letter of Credit, the Borrower may
request the Issuer to extend the Stated Expiry Date of such
Letter of Credit for an additional period not to exceed the
earlier of 180 days from its date of extension and the Letter of
Credit Commitment Termination Date. Notwithstanding any other
provision in this Agreement to the contrary, the Issuer may in
its discretion refuse to issue any Letter of Credit if such
issuance would, in the Issuer's reasonable determination,
contravene any sanctions, laws or regulations of any State of the
United States or any Federal body or authority of the United
States (including but not limited to the regulations of the
Federal Reserve Bank) or the laws, regulations or sanctions of
any other applicable jurisdiction or authority or if, in the
Issuer's reasonable determination, any of the above-mentioned
laws, regulations or sanctions would affect the Issuer's ability
to perform its obligations with respect to any such Letter of
Credit if issued.
SECTION 4.2. Issuances and Extensions. On the terms and
subject to the conditions of this Agreement (including Article
VI), the Issuer shall issue Letters of Credit, and extend the
Stated Expiry Dates of outstanding Letters of Credit, in
accordance with the Issuance Requests made therefor. The Issuer
will make available the original of each Letter of Credit which
it issues in accordance with the Issuance Request therefor to the
beneficiary thereof (and will promptly provide each of the
Lenders with a copy of such Letter of Credit) and will notify the
beneficiary under any Letter of Credit of any extension of the
Stated Expiry Date thereof.
SECTION 4.3. Destruction of Goods, etc. Neither the
Issuer nor its agents or correspondents shall be responsible for
the negligence or fraudulence of any beneficiary of a Letter of
Credit for the existence, nature, condition, description, value,
quality or quantity of the Goods, for the packing, shipment,
export, import, handling, storage or delivery thereof, or for the
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safety or preservation thereof at any time, and neither the
Issuer nor its agents or correspondents shall be liable for any
loss resulting from the total or partial destruction of or damage
to or deterioration or fall in value of the Goods, or from the
delay in arrival or failure to arrive of either the Goods or of
any of the documents relating thereto, or from the inadequacy or
invalidity of any document or insurance, or from the default or
insolvency of any insurer, carrier or other person issuing any
document with respect to the Goods, or from failure to give or
delay in giving notice of arrival of the Goods or any other
notice, or from any error in or misinterpretation of or default
or delay in the sending, transmission, arrival or delivery of any
message, whether in writing or not, by post, telegraph, cable,
wireless or otherwise, and the obligations hereunder of the
Borrower to the Issuer shall not be in any way lessened or
affected if any Draft or document accepted, paid or acted upon by
the Issuer or its agents or correspondents does not bear a
reference or sufficient reference to a Letter of Credit or if no
note thereof is made on a Letter of Credit.
SECTION 4.4. Other Lenders' Participation. Each Letter of
Credit issued pursuant to Section 4.2 shall, effective upon its
issuance and without further action, be issued on behalf of all
Lenders (including the Issuer thereof) according to their
respective Percentages. Each Lender shall, to the extent of its
Percentage, be deemed irrevocably to have participated in the
issuance of such Letter of Credit and shall be responsible to
reimburse promptly the Issuer thereof for Reimbursement
Obligations which have not been reimbursed by the Borrower in
accordance with Section 4.5, or which have been reimbursed by the
Borrower but must be returned, restored or disgorged by the
Issuer for any reason, and each Lender shall, to the extent of
its Percentage, be entitled to receive from the Agent a ratable
portion of the letter of credit fees received by the Agent
pursuant to Section 3.3.1, with respect to each Letter of Credit.
In the event that the Borrower shall fail to reimburse the
Issuer, or if for any reason Loans shall not be made to fund any
Reimbursement Obligation, all as provided in Section 4.5 and in
an amount equal to the amount of any drawing honored by the
Issuer under a Letter of Credit issued by it, or in the event the
Issuer must for any reason return or disgorge such reimbursement,
the Issuer shall promptly notify each Lender of the unreimbursed
amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the
Issuer, whether or not any Default shall have occurred and be
continuing, an amount equal to its respective participation in
same day or immediately available funds at the office of the
Issuer specified in such notice not later than 11:00 a.m., New
York City time, on the Business Day after the date notified by
the Issuer. In the event that any Lender fails to make available
to the Issuer the amount of such Lender's participation in such
Letter of Credit as provided herein, the Issuer shall be entitled
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to recover such amount on demand from such Lender together with
interest at the daily average Federal Funds Rate for three
Business Days (together with such other compensatory amounts as
may be required to be paid by such Lender to the Agent pursuant
to the Rules for Interbank Compensation of the council on
International Banking or the Clearinghouse Compensation
Committee, as the case may be, as in effect from time to time)
and thereafter at the Alternate Base Rate plus 1%. Nothing in
this Section shall be deemed to prejudice the right of any Lender
to recover from the Issuer any amounts made available by such
Lender to the Issuer pursuant to this Section in the event that
it is determined by a court of competent jurisdiction that the
payment with respect to a Letter of Credit by the Issuer in
respect of which payment was made by such Lender constituted
gross negligence or wilful misconduct on the part of the Issuer.
The Issuer shall distribute to each other Lender which has paid
all amounts payable by it under this Section with respect to any
Letter of Credit issued by the Issuer such other Lender's
Percentage of all payments received by the Issuer from the
Borrower in reimbursement of drawings honored by the Issuer under
such Letter of Credit when such payments are received.
SECTION 4.5. Disbursements. The Issuer will notify the
Borrower and the Agent promptly of the presentment for payment of
any Letter of Credit, together with notice of the date (a
"Disbursement Date") such payment shall be made. Subject to the
terms and provisions of such Letter of Credit, and the delivery
to the Issuer of all documents and instruments required as a
condition to making a Disbursement under such Letter of Credit,
the Issuer shall make such payment to the beneficiary (or its
designee) of such Letter of Credit (with proceeds of Loans (and,
if applicable, Swingline Loans) pursuant to Section 2.3 or
otherwise). If and to the extent that Loans (and, if applicable,
Swingline Loans) are not made to fund a Reimbursement Obligation
pursuant to Section 2.3, then the Borrower will reimburse the
Issuer within one Business Day following the Disbursement Date
for all amounts which the Issuer has disbursed under the Letter
of Credit. After a Disbursement under a Letter of Credit, the
Issuer shall only release and convey title to the Borrower in the
Goods delivered by virtue of such Letter of Credit if and when
the Borrower has (either through the making of Loans, Swingline
Loans or otherwise) repaid the Issuer in full all Reimbursement
Obligations in respect of such Letter of Credit.
SECTION 4.6. Reimbursement; Outstanding Letters, etc.
(a) The Borrower's obligation (a "Reimbursement Obligation")
under Section 4.5 to reimburse the Issuer with respect to each
Disbursement (including fees and interest thereon payable
pursuant to Section 3.2.2 and Section 3.3.1), and each Lender's
obligation to make participation payments in each drawing which
has not been reimbursed by the Borrower, shall be absolute
unconditional and irrevocable and shall not be reduced by any
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event or occurrence including, without limitation, any lack of
validity or enforceability of a Letter of Credit or any Draft
paid or acted upon by the Issuer or any of its correspondents
being fraudulent, forged, invalid or insufficient in any respect,
or be subject to any defense or be affected by any right of set-
off, counter-claim or recoupment, or any other claims which the
Borrower or any Lender may have against any beneficiary of any
Letter of Credit, the Issuer or the transferee of any Letter of
Credit or any other Person for any reason whatsoever. The
obligations of the Borrower and the Lenders hereunder shall
remain in full force and effect and shall apply to any alteration
to or extension of the expiration date of any Letter of Credit or
any Letter of Credit issued to replace, extend or alter any
Letter of Credit during the term of this Agreement.
(b) The Borrower shall pay to the Issuer an amount equal
to then Stated Amount and all unpaid fees in respect of (i) any
Letter of Credit outstanding under this Agreement upon any
termination of this Agreement and (ii) any Letter of Credit which
is affected by, or becomes the subject matter of, any order,
judgment, injunction or other such determination (an "Order") or
any petition or other application for any Order by the Borrower
or any other party, restricting payment by the Issuer under and
in accordance with such Letter of Credit or extending the
Issuer's or any Lender's liability under such Letter of Credit
beyond the expiration date stated therein, or if not stated
therein, which would otherwise apply to such Letter of Credit.
Payment in respect of each such Letter of Credit described in (i)
and (ii) in this clause shall be due forthwith upon demand and in
Dollars.
(c) The Issuer hereby agrees that it will, with respect to
each Letter of Credit subjected to any such demand for payment
under the preceding clause (b), upon the later of:
(i) the date on which any final and non-appealable
order, judgment or other such determination has been
rendered or issued either terminating any applicable Order
or permanently enjoining the Issuer from paying under such
Letter; and
(ii) the earlier of (x) the date on which either the
original counterpart of such Letter of Credit is returned
to the Issuer for cancellation or the Issuer is released by
the beneficiary thereof from any further obligations in
respect of such Letter of Credit, and (y) the expiry of
such Letter of Credit;
pay to the Borrower an amount in Dollars equal to any excess of
the amount received by the Issuer pursuant to clause (b) above in
respect of such Letter of Credit (the "Received Amount") over the
equivalent in Dollars of the total of amounts applied to
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reimburse the Issuer for amounts paid by it under such Letter of
Credit, if any (the Issuer having the right to so appropriate
such funds), together with an additional amount in Dollars
computed by applying to the amount of such excess from time to
time a per annum rate equal to 3% less than the Alternate Base
Rate. Such additional amount shall be calculated daily on the
basis of a 360 day year for the actual number of days elapsed
from and including the date of payment to the Issuer of the
Received Amount to (but not including) the date of return to the
Borrower of the excess.
SECTION 4.7. Deemed Disbursements. Upon the occurrence
and during the continuation of any event or condition specified
in clauses (f) or (g) of Section 10.1 of the U.S. Credit
Agreement or upon the occurrence and during the continuance of
any other Event of Default,
(a) an amount equal to that portion of Letter of
Credit Outstandings attributable to outstanding and undrawn
Letters of Credit shall, without demand upon or notice to
the Borrower, be deemed to have been paid or disbursed by
the Issuer under such Letters of Credit (notwithstanding
that such amount may not in fact have been so paid or
disbursed), and
(b) upon notification by the Issuer to the Agent and
the Borrower of its obligations under this Section, the
Borrower shall be immediately obligated to reimburse the
Issuer the amount deemed to have been so paid or disbursed
by the Issuer.
Any amounts so received by the Issuer from the Borrower pursuant
to this Section shall be held as collateral security for the
repayment of the Borrower's Obligations in connection with the
Letters of Credit issued by the Issuer. At any time when such
Letters of Credit shall terminate and all Obligations of the
Issuer are either terminated or paid or reimbursed to the Issuer
in full, the Obligations of the Borrower under this Section shall
be reduced accordingly (subject, however, to reinstatement in the
event any payment in respect of such Letters of Credit is
recovered in any manner from the Issuer), and the Issuer will
return to the Borrower the excess, if any, of
(c) the aggregate amount deposited by the Borrower
with the Issuer and not theretofore applied by the Issuer
to any Reimbursement Obligation
over
(d) the aggregate amount of all Reimbursement
Obligations to the Issuer pursuant to this Section, as so
adjusted.
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At such time when all Events of Default shall have been cured or
waived, the Issuer shall return to the Borrower all amounts then
on deposit with the Issuer pursuant to this Section together with
an additional amount in dollars computed by applying to the
amount so returned to the Borrower from time to time a per annum
rate equal to 3% less than the Alternate Base Rate. Such
additional amount shall be calculated daily on the basis of a 360
day year for the actual number of days elapsed from and including
the date of payment to the Issuer by the Borrower to (but not
including) the date of return to the Borrower of such amounts.
SECTION 4.8. Nature of Reimbursement Obligations. The
Borrower shall assume all risks of the acts, omissions, or misuse
of any Letter of Credit by the beneficiary thereof. Any action,
inaction or omission taken or suffered by the Issuer or any of
the Issuer's correspondents under or in connection with a Letter
of Credit or any Draft made thereunder or any document relating
thereto, if in good faith and in conformity with foreign or
domestic laws, regulations or customs applicable thereto shall be
binding upon the Borrower and shall not place the Issuer or any
of its correspondents under any resulting liability to the
Borrower. Without limiting the generality of the foregoing, the
Issuer and its correspondents may receive, accept or pay as
complying with the terms of a Letter of Credit, any Draft
thereunder, otherwise in order which may be signed by, or issued
to, the administrator or any executor of, or the trustee in
bankruptcy of, or the receiver for any property of, or other
Person or entity acting as the representative or in the place of,
such beneficiary or its successors and assigns. The Borrower
covenants that it will not take any steps, issue any instructions
to the Issuer or any of its correspondents or institute any
proceedings intended to derogate from the right or ability of the
Issuer or its correspondents to honor and pay any Draft or
Drafts.
SECTION 4.9. Existing Letters of Credit. Upon the payment
to Scotiabank of all fees and other amounts due and owing to
Scotiabank under the terms of the Existing Letter of Credit
Facility, such Existing Letters of Credit, and the amount and
payment date of fees on Letters of Credit (including Existing
Letters of Credit deemed to be Letters of Credit hereunder),
shall be governed by this Agreement. Simultaneously with the
effectiveness of this Agreement pursuant to Section 11.8, the
Existing Letter of Credit Facility shall be terminated and of no
further force and effect, except to the extent of any provisions
of the Existing Letter of Credit Facility which by their express
terms survive termination of the Existing Letter of Credit
Facility.
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ARTICLE V
CERTAIN LIBO RATE AND OTHER PROVISIONS
SECTION 5.1. LIBO Rate Lending Unlawful. If any RL Lender
shall determine (which determination shall, upon notice thereof
to the Borrower, be conclusive and binding on the Borrower) that
the introduction of or any change in or in the interpretation of
any law makes it unlawful, or any central bank or other
governmental authority asserts that it is unlawful, for such RL
Lender to make, continue or maintain any Loan as, or to convert
any Loan into, a LIBO Rate Loan, the obligations the RL Lenders
to make, continue, maintain or convert into any such Loans shall,
upon such determination, forthwith be suspended until such RL
Lender shall notify the Borrower that the circumstances causing
such suspension no longer exist, and all LIBO Rate Loans shall
automatically convert into Base Rate Loans at the end of the then
current Interest Periods with respect thereto or sooner, if
required by such law or assertion.
SECTION 5.2. Deposits Unavailable. If any RL Lender shall
have determined that
(a) Dollar deposits in the relevant amount and for
the relevant Interest Period are not available to it in its
relevant market; or
(b) by reason of circumstances affecting such RL
Lender's relevant market, adequate means do not exist for
ascertaining the interest rate applicable hereunder to LIBO
Rate Loans,
then, upon notice from such RL Lender to the Borrower and the
Agent, the obligations of the RL Lenders under Section 2.3 and
Section 2.4 to make or continue any Loans as, or to convert any
Loans into, LIBO Rate Loans shall forthwith be suspended until
such RL Lender shall notify the Borrower and the Agent that the
circumstances causing such suspension no longer exist.
SECTION 5.3. Increased LIBO Rate Loan Costs, etc. The
Borrower agrees to reimburse each RL Lender for any increase in
the cost to such RL Lender of, or any reduction in the amount of
any sum receivable by such RL Lender in respect of, making or
continuing (or of its obligation to make or continue) any Loans
as, or of converting (or of its obligation to convert) any Loans
into, LIBO Rate Loans. Each RL Lender shall promptly notify the
Borrower and the Agent in writing of the occurrence of any such
event, such notice to state, in reasonable detail, the reasons
therefor and the additional amount required fully to compensate
such RL lender for such increased cost or reduced amount. Such
additional amounts shall be payable by the Borrower directly to
such RL Lender within five Business Days of its receipt of such
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notice, and such notice shall, in the absence of manifest error,
be conclusive and binding on the Borrower.
SECTION 5.4. Funding Losses. In the event any RL Lender
shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by such RL Lender to make, continue or
maintain any portion of the principal amount of any Loan as, or
to convert any portion of the principal amount of any Loan into,
a LIBO Rate Loan, but excluding the loss of any anticipated or
expected profits in respect of such LIBO Rate Loan) as a result
of
(a) any conversion or repayment or prepayment of the
principal amount of any LIBO Rate Loans on a date other
than the scheduled last day of the Interest Period
applicable thereto, whether pursuant to Section 3.1 or
otherwise;
(b) any Loans not being made as LIBO Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted
into, LIBO Rate Loans in accordance with the Continuation/
Conversion Notice therefor,
then, upon the written notice of such RL Lender to the Borrower
and the Agent, the Borrower shall, within five Business Days of
its receipt thereof, pay directly to such RL Lender such amount
as will (in the reasonable determination of such RL Lender)
reimburse such RL Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail)
shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
SECTION 5.5. Increased Capital Costs, etc. If the
implementation of or, after the date hereof, the introduction or
any change in the interpretation of, or any change in its
application to the Borrower, the Issuer and/or the Lenders of,
any law or any regulation or guideline issued by any central bank
or other governmental authority (whether or not having the force
of law), including any eurocurrency or other reserve or special
deposit requirement or any tax (other than tax which is on a
Lender's general net or gross income or in respect of a Lender's
franchise taxes) or any capital requirement, has, due to a
Lender's or the Issuer's compliance, the effect, directly or
indirectly, of (i) increasing the cost to such Lender or Issuer
of performing its obligations hereunder or under any Letter of
Credit or Loan; (ii) reducing any amount received or receivable
by such Lender or Issuer or its effective return hereunder or in
respect of any Letter of Credit or Loan or on its capital; or
(iii) causing such Lender or Issuer to make any payment or to
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forgo any return based on any amount received or receivable by
such Lender or Issuer hereunder or in respect of any Letter of
Credit or Loan, then upon demand from time to time the Borrower
shall pay such amount as shall compensate such Lender or Issuer
for any such cost, reduction, payment or foregone return upon
receipt of the certificate referred to in the last sentence of
this paragraph. The Borrower shall further indemnify the Issuer
for all costs, losses and expenses incurred by the Issuer in
connection with any Letter of Credit and agrees that the Issuer
shall have no liability to the Borrower for any reason in respect
of any Letter of Credit other than on account of the Issuer's
gross negligence or wilful misconduct. Any certificate of the
Issuer or any Lender in respect of the foregoing will be
conclusive and binding upon the Borrower, except for manifest
error, and shall set forth a determination of the amounts owing
to the Issuer or such Lender in good faith using any reasonable
averaging and attribution methods. Anything in this Agreement or
any Loan Document to the contrary notwithstanding, no Lender or
Issuer shall be indemnified for, exculpated from, or relieved
from liability, under this Agreement or any Loan Document, for
any act or omission constituting gross negligence or wilful
misconduct.
SECTION 5.6. Taxes. (a) Each payment made by the Borrower
under this Agreement shall be made free and clear of, and without
deduction for, any present or future withholding or other taxes
imposed on such payments by or on behalf of any government or any
political subdivision or agency thereof or therein, except for
any income, franchise and other taxes imposed on the Lender
(which for purposes of this Section 5.6 shall include any branch,
affiliate or international banking facility created by a RL
Lender to make or maintain a LIBO Rate Loan pursuant to Section
2.5) by the jurisdiction under the laws of which such Lender is
organized or any political subdivision or agency thereof or by
the jurisdiction of such Lender's branch or lending office or
principal place of business (all such non-excluded taxes being
hereinafter referred to as "Taxes"). Whenever any Taxes are
payable by the Borrower with respect to any payments hereunder,
the Borrower shall promptly furnish to the Agent for the account
of the applicable Lender official receipts (to the extent that
the relevant governmental authority delivers such receipts)
evidencing payment of any such Taxes so withheld or deducted.
(b) Each Lender that is not a "United States person" (as
such term is defined in Section 7701(a)(3) of the Internal
Revenue Code of 1986) shall submit to the Borrower on or before
the Effective Date (or, in the case of a Person that becomes a
Lender after the Effective Date by assignment or pursuant to
Section 2.5 promptly upon such assignment or funding) two duly
completed and signed copies of either (1) Form 1001 of the United
States Internal Revenue Service entitling such Lender to a
complete exemption from withholding on all amounts to be received
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by such Lender pursuant to this Agreement or (2) Form 4224 of the
United States Internal Revenue Service relating to all amounts to
be received by such Lender pursuant to this Agreement. Each such
Lender shall, from time to time after submitting either such
form, submit to the Borrower and the Agent such additional duly
completed and signed copies of one or the other such forms (or
such successor forms or other documents as shall be adopted from
time to time by the relevant United States taxing authorities) as
may be (1) reasonably requested in writing by the Borrower or the
Agent and (2) appropriate under then current United States law or
regulations to avoid United States withholding taxes on payments
in respect of any amounts to be received by such Lender pursuant
to this Agreement. Upon the reasonable request of the Borrower
or the Agent, each Lender that has not provided the forms or
other documents, as provided above, on the basis of being a
"United States person" shall submit to the Borrower and the Agent
a certificate to the effect that it is such a "United States
person".
(ii) If any Lender which is not a "United States person"
determines that it is unable to submit to the Borrower and the
Agent any form or certificate that such Lender is requested to
submit pursuant to the preceding paragraph, or that it is
required to withdraw or cancel any such form or certificate, or
that any such form or certificate previously submitted has
otherwise become ineffective or inaccurate, such Lender shall
promptly notify the Borrower and the Agent of such fact.
(iii) The Borrower shall not be required to pay any
additional amount in respect of Taxes to any Lender if and only
to the extent that (A) such Lender is subject to such Taxes on
the Effective Date (or in the case of a Person that became a
Lender after the Effective Date by assignment or pursuant to
Section 2.5 on the date of such assignment or funding) or would
be subject to such Taxes on such date if a payment under this
Agreement has been received by it on such date; (B) such Lender
becomes subject to such Taxes subsequent to the date referred to
in clause (A) above (or in the case of a Lender which is not a
"United States person", the first date on which it delivers the
appropriate form or certificate to the Borrower as referred to in
clause (b) of this Section) as a result of a change in the
circumstances of such Lender (other than a change in applicable
law), including without limitation a change in the residence,
place of incorporation or principal place of business of the
Lender, a change in the branch or lending office of the Lender
participating in the transactions set forth herein or as a result
of the sale by the Lender of participating interests in such
Lender's creditor position(s) hereunder; or (C) such Taxes would
not have been incurred but for the failure of such Lender to file
with the appropriate tax authorities and/or provide to the
Borrower any form or certificate that it was required so to do
pursuant to clause (b) of this Section, unless the Lender is not
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entitled to provide such form or certificate as a result of a
change in applicable law after the Effective Date (or in the case
of a Person that became a Lender after the Effective Date by
assignment or pursuant to Section 2.5 the date of such assignment
or funding).
(iv) Within thirty (30) days after the written reasonable
request of the Borrower, each Lender shall execute and deliver to
the Borrower such certificates, forms or other documents which
can be furnished consistent with the facts and which are
reasonably necessary to assist the Borrower in applying for
refunds of Taxes paid by the Borrower hereunder or making payment
of Taxes hereunder; provided, however, that no Lender shall be
required to furnish to the Borrower any financial information
with respect to itself or other information which it considers
confidential.
(v) The Borrower shall have the right to require any
Lender which is not a "United States person" to which the
Borrower is required to make additional payments pursuant to
Section 5.6 hereof on account of Taxes (or would, upon payment to
such Lender of an amount hereunder, be so required) to assign
such Lender's total Loans and Commitments to one or more banks or
financial institutions identified by the Borrower and acceptable
to the Agent at a purchase price equal to the then outstanding
amount of all principal, interest, fees and other amounts then
owed to such Lender.
SECTION 5.7. Payments, Computations, etc. Unless
otherwise expressly provided herein (including as set forth in
Section 2.3 and Section 4.5), all payments by the Borrower
pursuant to this Agreement, the Notes or any other Loan Document
shall be made by the Borrower to the Agent for the account of the
Lenders entitled to receive such payment. All such payments
required to be made to the Agent shall be made, without setoff,
deduction or counterclaim, not later than 11:00 a.m., New York
time, on the date due, in same day or immediately available
funds, to such account as the Agent shall specify from time to
time by notice to the Borrower. To the extent the Agent receives
such funds prior to 12:00 noon, New York time, the Agent shall
promptly remit in same day funds to each Lender its share, if
any, of such payments received by the Agent for the account of
such Lender. All interest and fees shall be computed on the
basis of the actual number of days (including the first day but
excluding the last day) occurring during the period for which
such interest or fee is payable over a year comprised of 360
days. Whenever any payment to be made shall otherwise be due on
a day which is not a Business Day, such payment shall (except as
otherwise required by clause (b) of the definition of the term
"Interest Period") be made on the next succeeding Business Day
and such extension of time shall be included in computing
interest and fees, if any, in connection with such payment.
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SECTION 5.8. Sharing of Payments. If any Lender shall
obtain any payment or other recovery (whether voluntary,
involuntary, by application of setoff or otherwise) on account of
any Letter of Credit in excess of its Percentage of payments then
or therewith obtained by all Lenders, such Lender shall purchase
from the other Lenders such participations in Letters of Credit
as shall be necessary to cause such purchasing Lender to share
the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such
purchasing Lender, the purchase shall be rescinded and each
Lender which has sold a participation to the purchasing Lender
shall repay to the purchasing Lender the purchase price to the
ratable extent of such recovery together with an amount equal to
such selling Lender's ratable share (according to the proportion
of
(a) the amount of such selling Lender's required
repayment to the purchasing Lender
to
(b) the total amount so recovered from the purchasing
Lender)
of any interest or other amount paid or payable by the purchasing
Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another
Lender pursuant to this Section may, to the fullest extent
permitted by law, exercise all its rights of payment (including
pursuant to Section 5.9) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower
in the amount of such participation. If under any applicable
bankruptcy, insolvency or other similar law, any Lender receives
a secured claim in lieu of a setoff to which this Section
applies, such Lender shall, to the extent practicable, exercise
its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this
Section to share in the benefits of any recovery on such secured
claim.
SECTION 5.9. Setoff. Each Lender shall, upon the
occurrence of any event or condition described in clauses (f) and
(g) of Section 10.1 of the U.S. Credit Agreement or, with the
consent of the Required Lenders, upon the occurrence of any other
Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due)
any and all balances, credits, deposits, accounts or moneys of
the Borrower then or thereafter maintained with or otherwise held
by such Lender; provided, however, that any such appropriation
and application shall be subject to the provisions of Section
5.8. Each Lender agrees promptly to notify the Borrower and the
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Agent after any such setoff and application made by such Lender;
provided, however, that the failure to give such notice shall not
affect the validity of such setoff and application. The rights
of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff under applicable
law or otherwise) which such Lender may have.
SECTION 5.10. Use of Proceeds. The Borrower shall apply
the proceeds of each Credit Extension in accordance with the
fifth recital.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Initial Credit Extension. The obligations of
the Lenders to make the initial Credit Extension shall be subject
to the prior or concurrent satisfaction of each of the conditions
precedent set forth in this Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Agent shall have
received from the Borrower four originally executed copies of a
certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary as to
(a) resolutions of its Board of Directors then in
full force and effect authorizing the execution, delivery
and performance of this Agreement, the Note and each other
Loan Document to be executed by it; and
(b) the incumbency and signatures of those of its
officers authorized to act with respect to this Agreement,
the Notes and each other Loan Document executed by it,
upon which certificate each Lender may conclusively rely until it
shall have received a further certificate of the Secretary of the
Borrower canceling or amending such prior certificate.
SECTION 6.1.2. Delivery of Note. Scotiabank shall have
received its Note duly executed and delivered by the Borrower.
SECTION 6.1.3. Security Agreement. The Agent shall have
received four originally executed copies of executed counterparts
of the Security Agreement, dated as of the date hereof, duly
executed by the Borrower, together with
(a) executed copies of Uniform Commercial Code
financing statements (Form UCC-1) or such other evidence of
filing as may be acceptable to the Agent, naming the
Borrower as the debtor and the Agent as the secured party,
or other similar instruments or documents, filed under the
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Uniform Commercial Code of all jurisdictions as may be
necessary or, in the opinion of the Agent, desirable to
perfect the security interest of the Agent pursuant to the
Security Agreement; and
(b) executed copies of proper Uniform Commercial Code
Form UCC-3 termination statements, if any, necessary to
release all Liens and other rights of any Person (other
than under or in respect of the U.S. Credit Agreement) in
any collateral described in the Security Agreement
previously granted by any Person, together with such other
Uniform Commercial Code Form UCC-3 termination statements
as the Agent may reasonably request from such Persons.
SECTION 6.1.4. Certificates as to No Default, etc. No
default shall have occurred and be continuing in the performance
of any affirmative or negative covenants contained in the U.S.
Credit Agreement, none of the events described in clauses (a),
(b), (d), (f), (g), (h), (i), (j), (k), or (l) of Section 10.1 of
the U.S. Credit Agreement shall have occurred, and no Event of
Default shall have occurred or would occur under the U.S. Credit
Agreement or would result from the issuance of any Letter of
Credit or the making of any Loan, and the Agent shall have
received four originally executed certificates dated the
Effective Date from an Authorized Officer of the Borrower
certifying as to the above.
SECTION 6.1.5. ASCO Debt, etc. The Agent to the U.S.
Credit Agreement shall have consented to the partial replacement
of ASCO for purposes of the definition of "ASCO" in the U.S.
Credit Agreement and the Agent shall be satisfied that
Indebtedness under this Agreement will constitute permitted "ASCO
Debt" under the U.S. Credit Agreement or is otherwise permitted
under the U.S. Credit Agreement, all to be evidenced and
satisfied by the execution and delivery by the parties thereto of
a letter in substantially the form of Exhibit J hereto.
SECTION 6.1.6. Intercreditor Agreement. The Agent under
the U.S. Credit Agreement shall have entered into the ASCO
Intercreditor Agreement (as defined in the U.S. Credit Agreement)
with the Agent hereunder (with sufficient originally executed
copies for each Lender).
SECTION 6.1.7. No Material Adverse Change. Since
December 31, 1992, there shall have been no material adverse
change in the financial condition, operations, assets, business,
properties or prospects of the Borrower and its Subsidiaries,
taken as a whole, and the Agent shall have received four
originally executed certificates from an Authorized Officer of
the Borrower certifying as such.
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SECTION 6.1.8. Tradexpress Agreement. The Agent shall
have received a completed Tradexpress Transmission Agreement,
duly executed and delivered by the Borrower and the Issuer in
substantially the form of Exhibit I hereto.
SECTION 6.1.9. Opinions of Counsel. The Agent shall have
received opinions, dated the date of the initial Borrowing and
addressed to the Agent and all Lenders, from
(a) Skadden, Arps, Slate, Meagher & Flom, counsel to
the Borrower, substantially in the form of Exhibit G
hereto; and
(b) Mayer, Brown & Platt, counsel to the Agent,
substantially in the form of Exhibit H hereto.
SECTION 6.1.10. Closing Fees, Expenses, etc. The Agent
shall have received for its own account, or for the account of
each Lender, as the case may be, all fees, costs and expenses
(i) previously agreed to between the Agent and the Borrower,
(ii) as otherwise due and payable pursuant to Section 3.3 and, if
then invoiced, Section 11.3, and (iii) all fees and other amounts
payable to Scotiabank that have accrued through (and including)
the Effective Date or that are otherwise payable to Scotiabank
under the terms of the Existing Letter of Credit Facility.
SECTION 6.1.11. Delivery of Form 1001 or 4224. The Agent
shall have received two executed copies of either Internal
Revenue Service Form 1001 or Form 4224, as applicable, from each
Lender.
SECTION 6.2. All Credit Extensions. The obligation of
each Lender to make any Credit Extension (including the initial
Credit Extension) shall be subject to the satisfaction of each of
the conditions precedent set forth in this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default,
etc. Both before and after giving effect to any Credit Extension
the following statements shall be true and correct
(a) no event or circumstances has occurred and is
continuing, or would result from the making of such Credit
Extension, which constitutes a Default, or which when
considered by itself or together with other past or then
existing events or circumstances, constitutes or would
constitute a material adverse change in the business
prospects or financial condition of the Borrower and its
Subsidiaries taken as a whole;
(b) no event of default or any condition, occurrence
or event which, after notice or lapse of time or both,
would constitute an event of default shall have occurred
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and be continuing in the performance of any affirmative and
negative covenants contained in Sections 8 and 9 of the
U.S. Credit Agreement and regardless of whether such U.S.
Credit Agreement is terminated, unless in connection with
such termination a replacement credit facility to which the
Required Lenders hereunder have approved is entered into in
which case, the affirmative and negative covenants in such
facility shall become the subject of this clause (b); and
(c) none of the events described in clauses (a), (b),
(d), (f), (g), (h), (i), (j), (k) or (l) of Section 10.1 of
the U.S. Credit Agreement (without giving effect to any
termination of the U.S. Credit Agreement, unless in
connection with such termination a replacement credit
facility to which the Required Lenders hereunder have
approved, in which case the analogous provisions of such
replacement credit facility shall become the subject of
this clause (c)), shall have occurred and be continuing.
SECTION 6.2.2. Credit Request. To the extent that Loans
are made in accordance with clause (b) of Section 2.3 or the
Borrower requests that the Issuer issue a Letter of Credit other
than by means of notification in accordance with the terms of the
Tradexpress Agreement, the Agent shall have received a Borrowing
Request or Issuance Request (in the form of Exhibit B hereto), as
the case may be, for such Credit Extension. Each of the delivery
of a Borrowing Request or an Issuance Request and the acceptance
by the Borrower of the proceeds of the Borrowing or the issuance
of the Letter of Credit, as applicable, shall constitute a
representation and warranty by the Borrower that on the date of
such Credit Extension (both immediately before and after giving
effect to such Credit Extension and the application of the
proceeds thereof) or the issuance of the Letter of Credit, as
applicable, the statements made in Section 6.2.1 and the
representations and warranties contained in Section 3.1 of the
Security Agreement are in each case true and correct.
SECTION 6.2.3. Satisfactory Legal Form. All documents
executed or submitted pursuant hereto by or on behalf of the
Borrower or any of its Subsidiaries shall be satisfactory in form
and substance to the Agent; the Agent shall have received all
information, approvals, opinions, documents or instruments as the
Agent may reasonably request.
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into
this Agreement and to make Loans and issue Letters of Credit
hereunder, the Borrower represents and warrants unto the Agent
and each Lender as set forth in this Article VII.
SECTION 7.1. Organization, etc. The Borrower is a
corporation validly organized and existing and in good standing
under the laws of the State of its incorporation, is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business
requires such qualification, except where the failure to so
qualify would not have a Material Adverse Effect (as defined in
the U.S. Credit Agreement (provided, that clause (iii) of such
definition shall be deemed to refer to the first priority Lien in
favor of the Issuer on the Goods and the second priority Lien (if
any) on Inventory created by the Security Agreement)), and has
full power and authority and holds all requisite governmental
licenses, permits and other approvals to enter into and perform
its Obligations under this Agreement, the Notes and each other
Loan Document to which it is a party and to own and hold under
lease its property and to conduct its business substantially as
currently conducted by it.
SECTION 7.2. Due Authorization, Non-Contravention, etc.
The execution, delivery and performance by the Borrower of this
Agreement, the Notes and each other Loan Document executed or to
be executed by it, are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, and
do not
(a) contravene the Borrower's Organic Documents;
(b) contravene any contractual restriction, law or
governmental regulation or court decree or order binding on
or affecting the Borrower; or
(c) result in, or require the creation or imposition
of, any Lien on any of the Borrower's properties, except
pursuant to the terms of the Security Agreement.
SECTION 7.3. Government Approval, Regulation, etc. No
authorization or approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body or
other Person is required for the due execution, delivery or
performance by the Borrower of this Agreement, the Notes or any
other Loan Document to which it is a party. Neither the Borrower
nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a
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"holding company", or a "subsidiary company" of a "holding
company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 7.4. Validity, etc. This Agreement constitutes,
and the Note and each other Loan Document executed by the
Borrower will, on the due execution and delivery thereof,
constitute, the legal, valid and binding obligations of the
Borrower enforceable in accordance with their respective terms,
except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium and other similar laws
affecting the enforcement of creditors rights generally and by
general equity principles.
SECTION 7.5. No Material Adverse Change. Since
December 31, 1992, there has been no material adverse change in
the business, prospects or financial condition of the Borrower
and its Subsidiaries, taken a whole.
SECTION 7.6. Litigation, Labor Controversies, etc. There
is no pending or, to the knowledge of the Borrower, threatened
litigation, action, proceeding, or labor controversy affecting
the Borrower and its Subsidiaries, taken as a whole, or any of
their respective properties, businesses, assets or revenues,
which could reasonably be expected to materially adversely affect
the financial condition, business or prospects of the Borrower
and its Subsidiaries, taken as a whole, or which purports to
affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document.
SECTION 7.7. Regulations G, U and X. The Borrower is not
engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no proceeds of any Loans
will be used for a purpose which violates, or would be
inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X
or any regulations substituted therefor, as from time to time in
effect, are used in this Section with such meanings.
SECTION 7.8. Accuracy of Information. All factual
information heretofore or contemporaneously furnished by or on
behalf of the Borrower in writing to the Agent or any Lender for
purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all other such factual
information hereafter furnished by or on behalf of the Borrower
to the Agent or any Lender will be, true and accurate in every
material respect on the date as of which such information is
dated or certified and as of the date of execution and delivery
of this Agreement by the Agent and such Lender, and such
information is not, or shall not be, as the case may be,
incomplete by omitting to state any material fact necessary to
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make such information not misleading. The parties acknowledge
and agree that nothing contained in this Section shall constitute
a representation or warranty by the Borrower as to the future
financial performance or the results of operations of the
Borrower; provided, however, that any projections delivered
pursuant to this Agreement have been (and will be) prepared on
the basis of the assumptions accompanying them, and such
projections and assumptions, as of the date of preparation
thereof and as of the date hereof, are reasonable and represent
the Borrower's good faith estimate of its future financial
performance.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. The Borrower agrees
with the Agent and each Lender that, until all Commitments have
terminated and all Obligations have been paid and performed in
full, the Borrower will perform the obligations set forth in this
Section 8.1.
SECTION 8.1.1. Financial Information, Reports, Notices,
etc. Unless the information set forth below is otherwise
delivered to a Lender under the terms of the U.S. Credit
Agreement, the Borrower will furnish, or will cause to be
furnished, to each Lender and the Agent copies of the following
financial statements, reports, notices and information:
(a) unaudited, quarterly, consolidated and/or
consolidating financial statements of the Borrower within
45 days of the end of each of the first 3 Fiscal Quarters
of each of its Fiscal Years, certified by the chief
financial Authorized Officer of the Borrower;
(b) audited, annual, consolidated and/or
consolidating financial statements of the Borrower within
90 days of each Fiscal year;
(c) on each date that a financial statement of the
Borrower is deliverable to the Lenders, the certificate of
the Borrower, signed by an Authorized Officer of the
Borrower certifying that no Default or Event of Default
under this Agreement has occurred and is continuing or, if
a Default or Event of Default has occurred and is
continuing, a statement setting forth details of such
Default or Event of Default and the actions that the
Borrower has taken or proposes to take with respect
thereto;
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(d) on each date that a financial statement of the
Borrower is deliverable to the Lenders such financial
calculations as are provided pursuant to the U.S. Credit
Agreement;
(e) as soon as possible and in any event within two
Business Days after the occurrence of each Default, a
statement of an Authorized Officer of the Borrower setting
forth details of such Default and the action which the
Borrower has taken and proposes to take with respect
thereto;
(f) as soon as possible and in any event within two
Business Days after (x) the occurrence of any adverse
development with respect to any litigation, action,
proceeding, or labor controversy described in Section 7.6
or (y) the commencement of any labor controversy,
litigation, action, proceeding of the type described in
Section 7.6, notice thereof and copies of all documentation
relating thereto;
(g) promptly after the sending or filing thereof,
copies of all Forms 10Q and 10K reports and registration
statements which the Borrower files with the Securities and
Exchange Commission or any national securities exchange;
and
(h) such other information respecting the condition
or operations, financial or otherwise, of the Borrower or
any of its Subsidiaries as any Lender through the Agent may
from time to time reasonably request.
SECTION 8.1.2. Corporate Existence. The Borrower will at
all times maintain and preserve its corporate existence.
SECTION 8.1.3. Security. The Borrower covenants and
agrees to give to the Agent, for the benefit of the Lender
Parties (as defined in the Security Agreement), solely to secure
the Borrower's obligation to reimburse the Issuer for
Disbursements under a Letter of Credit (and to pay fees in
respect of such Letter of Credit), from time to time security by
way of the Goods (as such term is defined in the Security
Agreement) and with respect to any Goods, all documents of title
(including bills of lading, air way bills, ocean bills, warehouse
receipts and other documents, instruments and other evidence of
title) issued in respect of such Goods, all contracts, contract
rights and policies or certificates of insurance specifically
relating to such Goods.
SECTION 8.1.4. Insurance of Goods. The Borrower covenants
and agrees to keep the Goods insured in amounts, against risks,
and with companies satisfactory to the Agent (with loss payable
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to the Agent and the Agent under the U.S. Credit Agreement) and
covenants to deliver the policies or certificates of insurance to
the Agent, and in the event that the Borrower fails to keep the
Goods insured or the insurance is for any reason unsatisfactory
to the Agent, the Agent may, at the expense of the Borrower,
obtain insurance satisfactory to the Agent.
SECTION 8.1.5. Possession, etc. Until payment by the
Borrower to the Agent of all Obligations with respect to a
particular Letter of Credit secured by Goods, the Agent, on
behalf of the Lenders, shall, subject to the terms of the
Intercreditor Agreement, have the absolute right and title to and
the unqualified right to the possession and disposal of the Goods
covered by such Letter of Credit, whether or not released to the
Borrower on trust or bailee receipt or otherwise, and all
documents of title (including bills of lading, air way bills,
ocean bills, warehouse receipts and other documents, instruments
or other evidence of title) issued in respect of the Goods
relating to such Letter of Credit, all contracts, contract rights
and policies or certificates of insurance specifically relating
to such Goods under such Letter of Credit (all of the foregoing
shall be referred to herein as the "Subject Property" under such
Letter of Credit) and shall, subject to the terms of the
Intercreditor Agreement, be entitled to exercise all rights as an
unpaid seller of such Goods. As more fully set forth in the
Security Agreement, Goods as to a particular Letter of Credit
shall be assigned and pledged to the Agent for the benefit of the
Lender Parties (as defined in the Security Agreement) as security
for the fulfillment and payment of the Obligations in respect of
such Letter of Credit and Inventory (as defined in the Security
Agreement) shall be assigned and pledged to the Agent for the
benefit of the RL Lenders as security for the fulfillment and
payment of the Obligations in respect of the Loans made to
reimburse the Issuer in respect of any Letter of Credit, and the
Agent (for the benefit of the Lenders), whenever it thinks fit,
may without notice to the Borrower, without prejudice to any of
its claims or rights against the Borrower and at the cost and
expense of the Borrower, place the Goods in charge of any broker,
warehouseman or other agent, either for storage or for sale, and
the Agent (for the benefit of the Lenders) shall not incur any
liability whatever for the default of any such broker,
warehouseman or other agent.
SECTION 8.1.6. Partial Shipments. The Borrower covenants
and agrees that if a Letter of Credit does not specify the unit
price of the Goods and does not state that partial shipments are
not permitted, the Issuer shall be entitled to be paid the full
amount of any Draft honored in respect of a partial shipment
notwithstanding that it is for an amount that is disproportionate
to the relative partial shipment.
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SECTION 8.1.7. Licenses. The Borrower covenants and
agrees to obtain promptly all necessary permissions and licenses
in respect of the shipping, export and import of the Goods and
covenants to comply with all foreign and domestic governmental
requirements with regard thereto, the whole to the exoneration of
the Issuer and the Lenders, and covenants to deliver to the Agent
such certificates in respect thereof as it may require from time
to time.
SECTION 8.1.8. Sale Upon Default. As more fully set forth
in the Security Agreement, the Borrower agrees that the Agent, on
behalf of the Lenders, whenever in its discretion it deems it
necessary for its protection, so long as the Borrower is in
default of its repayment Obligations under a Letter of Credit or
with respect to a Loan (after giving effect to any grace period),
may, without regard to the maturity of any of the other
Obligations, and with notice to the Borrower of not less than 24
hours (but subject to the terms of the Intercreditor Agreement),
sell by public or private sale or realize in such other manner as
the Agent thinks fit all or any of the Goods in respect of such
Letter of Credit or Inventory (as defined in the Security
Agreement) in respect of any Loan, before or after arrival and
whether or not released to the Borrower on trust or bailee
receipt or otherwise, upon such terms and conditions and for such
price in money or other consideration as the Agent thinks fit;
and the Borrower covenants that, subject to the terms of the
Intercreditor Agreement, any moneys received by the Agent as
proceeds of any such sale, after deduction of all fees and
expenses in connection therewith which with interest shall be
borne by the Borrower, shall be applied against the Obligations
in respect of such Letter of Credit (in the case of Goods) or
Loans (in the case of Inventory) as the Agent thinks fit and the
Borrower shall remain liable for and covenants to pay to the
Agent (for the benefit of the Lenders) or the RL Lenders on
demand the balance of the Obligations in respect of such Letter
of Credit or Loans, as the case may be.
SECTION 8.1.9. Additional Security. The Borrower
covenants and agrees that it will cause Warner's of Canada Ltd.
and Warner's (United Kingdom) Limited each to use their best
efforts to provide the RL Lenders with a sole second priority
lien on all or substantially all of the assets that such Person
owns in Canada and the United Kingdom, respectively, as
additional security for the Loans and cause ASCO International
Sourcing Limited (or its applicable affiliates or assigns) to
release its liens on such assets as soon as possible following
the Effective Date.
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ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the
following events or occurrences described in this Section 9.1
shall constitute an "Event of Default".
SECTION 9.1.1. Non-Payment of Obligations. The Borrower
shall default in the payment or prepayment when due of (i) any
principal of or interest on any Loan, (ii) any Reimbursement
Obligation, or (iii) any fee or of any other Obligation, and in
each case such default in payment or prepayment shall continue
unremedied for more than one Business Day from the date such
payment or prepayment was due.
SECTION 9.1.2. Breach of Warranty. Any representation or
warranty of the Borrower made or deemed to be made hereunder or
in any other Loan Document executed by it (including any
certificates delivered pursuant to Article VI) is or shall be
incorrect when made or deemed made in any material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and
Obligations. The Borrower shall default in the due performance
and observance of any of its obligations under Section 8.1.2 or
under any other covenant which is impossible to remedy.
SECTION 9.1.4. Non-Performance of Other Covenants and
Obligations. The Borrower shall default in the due performance
and observance of any other agreement contained herein or in any
other Loan Document executed by it, and such default shall
continue unremedied for a period of ten Business Days after
notice thereof shall have been given to the Borrower by the Agent
or any Lender.
SECTION 9.1.5. Default Under U.S. Credit Agreement. Any
Event of Default (as defined in the U.S. Credit Agreement) or any
replacement credit facility shall have occurred, and any or all
of the Indebtedness of the Borrower thereunder shall have become
due and payable in accordance with Section 10.1 thereof (or
similar section of any replacement credit facility).
SECTION 9.1.6. Bankruptcy, Insolvency, etc. Any event or
condition described in clauses (f) or (g) of Section 10.1 of the
U.S. Credit Agreement (or similar provision of any replacement
credit facility) shall have occurred and be continuing.
SECTION 9.1.7. Impairment of Security, etc. Any Loan
Document, or any Lien granted thereunder, shall (except in
accordance with its terms), in whole or in part, terminate, cease
to be effective or cease to be the legally valid, binding and
enforceable obligation of the Borrower; the Borrower or any other
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party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any
Lien securing any Obligation shall, in whole or in part, (i) with
respect to the Goods, cease to be a perfected first priority
Lien, and (ii) with respect to Inventory (as such term is defined
in the Security Agreement), cease to be a perfected, second
priority Lien, in each case subject only to those exceptions
expressly permitted by such Loan Document or pursuant to the
Intercreditor Agreement.
SECTION 9.2. Action Upon Bankruptcy. If any Event of
Default described in Section 9.1.6 shall occur, the Commitments
(if not theretofore terminated) shall automatically terminate and
the outstanding principal amount of all outstanding Loans and all
other Obligations shall automatically be and become immediately
due and payable, without notice or demand.
SECTION 9.3. Action Upon Other Event of Default. If any
Event of Default (other than any Event of Default described in
Section 9.1.6) shall occur for any reason, whether voluntary or
involuntary, and be continuing, the Agent, upon the direction of
the Required Lenders, shall by notice to the Borrower declare all
or any portion of the outstanding principal amount of the Loans
and other Obligations in respect of the Loans or otherwise to be
due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of
such Loans and other Obligations which shall be so declared due
and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the
case may be, the Commitments shall terminate.
ARTICLE X
THE AGENT
SECTION 10.1. Actions. Each Lender hereby appoints
Scotiabank as its Agent under and for purposes of this Agreement,
the Notes and each other Loan Document. Each Lender authorizes
the Agent to act on behalf of such Lender under this Agreement,
the Notes and each other Loan Document and, in the absence of
other written instructions from the Required Lenders received
from time to time by the Agent (with respect to which the Agent
agrees that it will comply, except as otherwise provided in this
Section or as otherwise advised by counsel), to exercise such
powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof,
together with such powers as may be reasonably incidental
thereto. Each Lender hereby indemnifies (which indemnity shall
survive any termination of this Agreement) the Agent, pro rata
according to such Lender's Percentage, from and against any and
all liabilities, obligations, losses, damages, claims, costs or
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expenses of any kind or nature whatsoever which may at any time
be imposed on, incurred by, or asserted against, the Agent in any
way relating to or arising out of this Agreement, the Notes and
any other Loan Document, including reasonable attorneys' fees,
and as to which the Agent is not reimbursed by the Borrower;
provided, however, that no Lender shall be liable for the payment
of any portion of such liabilities, obligations, losses, damages,
claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted
solely from the Agent's gross negligence or wilful misconduct.
The Agent shall not be required to take any action hereunder,
under the Notes or under any other Loan Document, or to prosecute
or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or
become, in the Agent's determination, inadequate, the Agent may
call for additional indemnification from the Lenders and cease to
do the acts indemnified against hereunder until such additional
indemnity is given.
SECTION 10.2. Copies, etc. The Agent shall give prompt
notice to each Lender of each notice or request required or
permitted to be given to the Agent by the Borrower pursuant to
the terms of this Agreement (unless concurrently delivered to the
Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and
copies of all other communications received by the Agent from the
Borrower for distribution to the Lenders by the Agent in
accordance with the terms of this Agreement.
SECTION 10.3. Exculpation. Neither the Agent nor any of
its directors, officers, employees or agents shall be liable to
any Lender for any action taken or omitted to be taken by it
under this Agreement or any other Loan Document, or in connection
herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties
herein or therein, nor for the effectiveness, enforceability,
validity or due execution of this Agreement or any other Loan
Document, nor for the creation, perfection or priority of any
Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or
sufficiency of any collateral security, nor to make any inquiry
respecting the performance by the Borrower of its obligations
hereunder or under any other Loan Document. Any such inquiry
which may be made by the Agent shall not obligate it to make any
further inquiry or to take any action. The Agent shall be
entitled to rely upon advice of counsel concerning legal matters
and upon any notice, consent, certificate, statement or writing
which the Agent believes to be genuine and to have been presented
by a proper Person.
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SECTION 10.4. Successor. The Agent may resign as such at
any time upon at least 30 days' prior notice to the Borrower and
all Lenders. If the Agent at any time shall resign, the Required
Lenders may appoint another Lender as a successor Agent which
shall thereupon become the Agent hereunder. If no successor
Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within 30 days after the
retiring Agent's giving notice of resignation, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State
thereof) or a U.S. branch or agency of a commercial banking
institution, and having a combined capital and surplus of at
least $100,000,000. Upon the acceptance of any appointment as
Agent hereunder by a successor Agent, such successor Agent shall
be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably
request, and shall thereupon succeed to and become vested with
all rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's
resignation hereunder as the Agent, the provisions of
(a) this Article X shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was
the Agent under this Agreement; and
(b) Section 11.3 and Section 11.4 shall continue to
inure to its benefit.
SECTION 10.5. Loans or Letters of Credit Issued by
Scotiabank. Scotiabank shall have the same rights and powers
with respect to (x) the Loans made by it or any of its
affiliates, (y) the Notes held by it or any of its affiliates,
and (z) its participating interests in the Letters of Credit as
any other Lender and may exercise the same as if it were not the
Agent. Scotiabank and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or affiliate of the Borrower as if
Scotiabank were not the Agent hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges
that it has, independently of the Agent and each other Lender,
and based on such Lender's review of the financial information of
the Borrower, this Agreement, the other Loan Documents (the terms
and provisions of which being satisfactory to such Lender) and
such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to
extend its Commitment. Each Lender also acknowledges that it
will, independently of the Agent and each other Lender, and based
on such other documents, information and investigations as it
shall deem appropriate at any time, continue to make its own
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credit decisions as to exercising or not exercising from time to
time any rights and privileges available to it under this
Agreement or any other Loan Document.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of
this Agreement and of each other Loan Document may from time to
time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the
Borrower and the Required Lenders; provided, however, that no
such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any
particular action be taken by all the Lenders or by the
Required Lenders shall be effective unless consented to by
each Lender;
(b) modify this Section 11.1, change the definition
of "Required Lenders", increase any Commitment Amount or
(except as otherwise contemplated by this Agreement) the
Percentage of any Lender, reduce any fees described in
Article III, release any collateral security, except as
otherwise specifically provided in any Loan Document or
extend any Commitment Termination Date shall be made
without the consent of each Lender and each holder of a
Note;
(c) extend the due date for, or reduce the amount of,
any scheduled repayment or prepayment of principal of or
interest on any Loan (or reduce the principal amount of or
rate of interest on any Loan) shall be made without the
consent of the holder of that Note evidencing such Loan;
(d) affect adversely the interests, rights or
obligations of the Issuer in its capacity as the Issuer
shall be made without the consent of the Issuer; or
(e) affect adversely the interests, rights or
obligations of the Agent in its capacity as the Agent shall
be made without consent of the Agent.
No failure or delay on the part of the Agent, any Lender or the
holder of any Note in exercising any power or right under this
Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such
power or right preclude any other or further exercise thereof or
the exercise of any other power or right. No notice to or demand
on the Borrower in any case shall entitle it to any notice or
-48-
demand in similar or other circumstances. No waiver or approval
by the Agent, any Lender or the holder of any Note under this
Agreement or any other Loan Document shall, except as may be
otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall
require any similar or dissimilar waiver or approval thereafter
to be granted hereunder.
SECTION 11.2. Notices. All notices and other
communications provided to any party hereto under this Agreement
or any other Loan Document shall be in writing or by Telex or by
facsimile and addressed, delivered or transmitted to such party
at its address, Telex or facsimile number set forth below its
signature hereto or set forth in the Lender Assignment Agreement
or at such other address, Telex or facsimile number as may be
designated by such party in a notice to the other parties. Any
notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall
be deemed given when received; any notice, if transmitted by
Telex or facsimile, shall be deemed given when transmitted
(answerback confirmed in the case of Telexes).
SECTION 11.3. Payment of Costs and Expenses. The Borrower
agrees to pay on demand all reasonable expenses of the Agent
(including the reasonable fees and out-of-pocket expenses of
counsel to the Agent and of local counsel, if any, who may be
retained by counsel to the Agent) in connection with
(a) the negotiation, preparation, execution and
delivery of this Agreement and of each other Loan Document,
including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modifications to
this Agreement or any other Loan Document as may from time
to time hereafter be required, whether or not the
transactions contemplated hereby are consummated,
(b) the filing, recording, refiling or rerecording of
the Security Agreement and/or any Uniform Commercial Code
financing statements relating thereto and all amendments,
supplements and modifications to any thereof and any and
all other documents or instruments of further assurance
required to be filed or recorded or refiled or rerecorded
by the terms hereof or of the Security Agreement, and
(c) the preparation and review of the form of any
document or instrument relevant to this Agreement or any
other Loan Document.
The Borrower covenants to pay on demand all reasonable costs and
expenses of the Agent, the Issuer and the Lenders incurred in the
enforcement of the Agent's, the Issuer's or any Lender's rights
under this Agreement and any Loan Document and, further,
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covenants that it will indemnify the Agent, the Issuer and the
Lenders on demand against all loss or damage to such Persons
arising out of the issuance of or other action taken by such
Persons in connection with any Letter of Credit or Loan
including, without limitation, the costs relating to any legal
process instituted by any party restraining or seeking to
restrain the Issuer from accepting or paying any Letter of Credit
or Draft. The Borrower also agrees that neither the Agent, the
Issuer or any Lender shall have any liability to it for any
reason in respect of the issuance of any Letter of Credit or Loan
other than on account of such Agent's, Issuer's or Lender's gross
negligence or wilful misconduct. All payments to be made to the
Agent, the Issuer and the Lenders hereunder shall, subject to
Section 5.6, be made for value on the date due and free of any
withholding tax or levy, other than taxes imposed on the net
income of the Agent, the Issuer or a Lender, and the Borrower
covenants that such taxes or levies, other than as excepted,
shall be paid by the Borrower. The provisions of this paragraph
will survive payment in full hereunder.
SECTION 11.4. Indemnification. In consideration of the
execution and delivery of this Agreement by each Lender and the
extension of the Commitments, the Borrower hereby indemnifies,
exonerates and holds the Agent, the Issuer and each Lender and
each of their respective officers, directors, employees and
agents (collectively, the "Indemnified Parties") free and
harmless from and against any and all actions, causes of action,
suits, losses, costs, liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether any
such Indemnified Party is a party to the action for which
indemnification hereunder is sought), including reasonable
attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to
(a) any transaction financed or to be financed in
whole or in part, directly or indirectly, with the proceeds
of any Loan or the use of any Letter of Credit; or
(b) the entering into and performance of this
Agreement and any other Loan Document by any of the
Indemnified Parties (including any action brought by or on
behalf of the Borrower as the result of any determination
by the Required Lenders pursuant to Article VI not to make
any Credit Extension);
except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the
relevant Indemnified Party's gross negligence or wilful
misconduct.
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SECTION 11.5. Survival. The obligations of the Borrower
under Sections 5.3, 5.4, 5.5, 5.6, 11.3 and 11.4, and the
obligations of the Lenders under Section 10.1, shall in each case
survive any termination of this Agreement, the payment in full of
all Obligations and the termination of all Commitments. The
representations and warranties made by the Borrower in this
Agreement and in each other Loan Document shall survive the
execution and delivery of this Agreement and each such other Loan
Document.
SECTION 11.6. Severability. Any provision of this
Agreement or any other Loan Document which is prohibited or
unenforceable in any jurisdiction shall, as to such provision and
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or
affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 11.7. Headings. The various headings of this
Agreement and of each other Loan Document are inserted for
convenience only and shall not affect the meaning or
interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness,
etc. This Agreement may be executed by the parties hereto in
several counterparts, each of which shall be executed by the
Borrower and the Agent and be deemed to be an original and all of
which shall constitute together but one and the same agreement.
This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice
thereof satisfactory to the Agent) shall have been received by
the Agent and notice thereof shall have been given by the Agent
to the Borrower and each Lender.
SECTION 11.9. Governing Law; Entire Agreement. THIS
AGREEMENT, THE NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE
DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL
LAWS OF THE STATE OF NEW YORK. This Agreement, the Notes and the
other Loan Documents constitute the entire understanding among
the parties hereto with respect to the subject matter hereof and
supersede any prior agreements, written or oral, with respect
thereto.
SECTION 11.10. Successors and Assigns. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns;
provided, however, that:
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(a) the Borrower may not assign or transfer its
rights or obligations hereunder without the prior written
consent of the Agent and all Lenders; and
(b) the rights of sale, assignment and transfer of
the Lenders are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes;
Participations in Loans and Notes. Each Lender may assign, or
sell participations in, its Loans and Commitments to one or more
other Persons in accordance with this Section 11.11.
SECTION 11.11.1. Assignments. Any Lender,
(a) with the written consents of the Borrower and the
Agent (which consents shall not be unreasonably delayed or
withheld) may at any time assign and delegate to one or
more commercial banks or other financial institutions; and
(b) with the consent of the Issuer, and notice to the
Borrower and the Agent, but without the consent of the
Borrower or the Agent, may assign and delegate to any of
its affiliates or to any other Lender or any Lender under
the U.S. Credit Agreement
(each Person described in either of the foregoing clauses as
being the Person to whom such assignment and delegation is to be
made, being hereinafter referred to as an "Assignee Lender"), all
or a fraction of such Lender's total Loans and Commitments;
provided, that after giving effect to such assignment or
transfer, such Lender and its Assignee Lender shall each hold not
less than $5,000,000 of Loans and/or Commitments; provided,
further, that the Borrower shall not be required to pay an amount
under Section 5.6 that is greater than the amount which it would
have been required to pay had no assignment been made and
further, provided, however, that, the Borrower and the Agent
shall be entitled to continue to deal solely and directly with
such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until
(c) written notice of such assignment and delegation,
together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall
have been given to the Borrower and the Agent by such
Lender and such Assignee Lender,
(d) such Assignee Lender shall have executed and
delivered to the Borrower and the Agent a Lender Assignment
Agreement, accepted by the Agent, and
(e) the processing fees described below shall have
been paid.
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From and after the date that the Agent accepts such Lender
Assignment Agreement, (x) the Assignee Lender thereunder shall be
deemed automatically to have become a party hereto and to the
extent that rights and obligations hereunder have been assigned
and delegated to such Assignee Lender in connection with such
Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan
Documents, and (y) the assignor Lender, to the extent that rights
and obligations hereunder have been assigned and delegated by it
in connection with such Lender Assignment Agreement, shall be
released from its obligations hereunder and under the other Loan
Documents. Within five Business Days after its receipt of notice
that the Agent has received an executed Lender Assignment
Agreement with respect to the assignment of Loans, the Borrower
shall execute and deliver to the Agent (for delivery to the
relevant Assignee Lender) new Notes evidencing such Assignee
Lender's assigned Loans and Commitments and, if the assignor
Lender has Loans and Commitments hereunder, replacement Notes in
the principal amount of the Loans and Commitments retained by the
assignor Lender hereunder (such Notes to be in exchange for, but
not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the
predecessor Notes. The assignor Lender shall mark the
predecessor Notes "exchanged" and deliver them to the Borrower.
Accrued interest on that part of the predecessor Notes evidenced
by the new Notes, and accrued fees, shall be paid as provided in
the Lender Assignment Agreement. Accrued interest on that part
of the predecessor Notes evidenced by the replacement Notes shall
be paid to the assignor Lender. Accrued interest and accrued
fees shall be paid at the same time or times provided in the
predecessor Notes and in this Agreement. Such assignor Lender or
such Assignee Lender must also pay a processing fee to the Agent
upon delivery of any Lender Assignment Agreement in the amount of
$2,500. Any attempted assignment and delegation not made in
accordance with this Section 11.11.1 shall be null and void.
Nothing in this Section shall prevent or prohibit any Lender from
pledging its rights (but not its obligations to make Loans and to
issue or participate in Letters of Credit) under this Agreement
and/or its Loans and/or Notes hereunder to a Federal Reserve Bank
in support of borrowing made by such Lender from such Federal
Reserve Bank.
SECTION 11.11.2. Participations. Any Lender may at any
time sell to one or more commercial banks or other Persons (each
of such commercial banks and other Persons being herein called a
"Participant") participating interests (or a sub-participating
interest, in the case of a Lender's participating interest in a
Letter of Credit) in any of the Loans, Commitments, or other
interests of such Lender hereunder; provided, however, that
(a) no participation or sub-participation
contemplated in this Section 11.11 shall relieve such
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Lender from its Commitments or its other obligations
hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for
the performance of its Commitments and such other
obligations,
(c) the Borrower and the Agent shall continue to deal
solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement
and each of the other Loan Documents,
(d) no Participant, unless such Participant is an
affiliate of such Lender, or is itself a Lender, shall be
entitled to require such Lender to take or refrain from
taking any action hereunder or under any other Loan
Document, except that such Lender may agree with any
Participant that such Lender will not, without such
Participant's consent, take any actions of the type
described in clause (b) or (c) of Section 11.1, and
(e) the Borrower shall not be required to pay any
amount under Section 5.6 that is greater than the amount
which it would have been required to pay had no
participating interest been sold.
SECTION 11.12. Acknowledgement. Notwithstanding anything
herein to the contrary, the Lenders hereby acknowledge and agree
that the obligations of the Borrower with respect to Letters of
Credit and Loans are not and shall not be guaranteed by The
Warnaco Group, Inc. or any of its Subsidiaries nor are any such
Obligations secured or to be secured by any assets of the
Borrower, The Warnaco Group, Inc. or any of its Subsidiaries,
other than (i) the security interest in Goods securing the
Borrower's Obligations in respect of the Letters of Credit
pursuant to which such Goods were financed, (ii) the security
interest in Inventory (as defined in the Security Agreement) to
the extent set forth in the Intercreditor Agreement in respect of
Loans made in respect to the Reimbursement Obligations related to
such Letters of Credit, and (iii) the security interest in all or
substantially all of the assets of Warner's (United Kingdom)
Limited and Warner's of Canada Ltd. as security only for the
Loans (and Obligations in respect of the Loans). The Lenders,
the Issuer and the Borrower acknowledge that the Lenders under
the U.S. Credit Agreement are relying on this paragraph and this
paragraph may not be amended or terminated (except as a result of
a termination of this Agreement) without the prior written
consent of the Agent and Paying Agent (as such terms are defined
in the U.S. Credit Agreement).
SECTION 11.13. Other Transactions. Nothing contained
herein shall preclude the Agent or any other Lender from engaging
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in any transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of
its affiliates in which the Borrower or such affiliate is not
restricted hereby from engaging with any other Person.
SECTION 11.14. Forum Selection and Consent to
Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR
THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE
COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER,
THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER
PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE PARTIES HERETO HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. THE BORROWER
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER
MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN
ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
SECTION 11.15. Waiver of Jury Trial. THE PARTIES HERETO
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF THE AGENT, THE LENDERS, THE ISSUER OR THE BORROWER.
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH
OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A
PARTY) AND THE BORROWER ACKNOWLEDGES THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE AGENT, THE ISSUER AND THE LENDERS
ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT.
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SECTION 11.16. UCP; etc. (a) The Uniform Customs and
Practice for Documentary Credits as most recently published by
the International Chamber of Commerce (the "UCP") shall in all
respects apply to each Letter of Credit issued hereunder and
shall be deemed for such purpose to be a part hereof as if fully
incorporated herein. In the event of any conflict between the
UCP and the governing law of the Agreement, the UCP shall prevail
to the extent necessary to remove the conflict.
(b) In the event of any issuance of a further Letter of
Credit for which the Borrower may apply from time to time
hereafter, or, of any extension of the maturity or time for
presentation of any Draft, or, of any renewal, extension or
increase in the amount of a Letter of Credit or any other
modifications of its terms, in each case with the consent or at
the request of the Borrower, the terms of the Agreement shall
continue in force and apply to the further Letter of Credit so
issued, or, to a Letter of Credit so renewed, extended, increased
or otherwise modified, or, to any, Draft, document or property
covered thereby and to any action taken by the Issuer or its
agents or correspondents in accordance with such issuance,
renewal, extension, increase or other modification.
SECTION 11.17. Usury Restraint. The provisions of this
Agreement shall be subject to any applicable law, regulation,
order, rule or direction (a "Usury Restraint") which prohibits or
restricts the charging, receipt or retention of interest or other
amounts at the rates and amounts set forth herein (the "Stated
Rate") in excess (the "Excess") of the maximum rates or amount
(the "Maximum Rate") stipulated in the Usury Restraint. The
provisions of this Agreement shall not require the payment or
permit the collection of interest in excess of the Maximum Rate
from time to time. If the Lenders comply (whether or not
required to do so at law) with such Usury Restraint then, to the
extent permitted by law, a subsequent reduction in the Stated
Rate below the Maximum Rate shall be deemed not to reduce the
Stated Rate below the Maximum Rate until the total amount of
interest and other amounts earned and retained, measured by a
dollar amount, equals the amount of interest and other amounts
which would have been earned and retained hereunder, inclusive of
the Excess, measured by a dollar amount, if the Stated Rate had
not been held at the Maximum Rate or any amount had not been
refunded to the Borrower.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized as of the day and year first above written.
WARNACO INC.
By________________________________
Title:
Address: 90 Park Avenue
New York, New York 10016
Facsimile No.: 212-687-0480
Attention: Chief Financial Officer
THE BANK OF NOVA SCOTIA,
as Agent
By________________________________
Title:
Address: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: Kevin Clark
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INITIAL
PERCENTAGE LENDERS
LETTERS
LOANS OF CREDIT
100% 70.00000% THE BANK OF NOVA SCOTIA
By_________________________________
Title:
Domestic
Office: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: Kevin Clark
LIBOR
Office: One Liberty Plaza
New York, New York 10006
Facsimile No.: 212-225-5090
Attention: Kevin Clark
-58-
LETTERS
LOANS OF CREDIT
0% 20.00000% MITSUI NEVITT CAPITAL CORPORATION
By_________________________________
Title:
Domestic
Office: 330 Madison Avenue
New York, New York 10017
Facsimile No.: 212-949-7205
Attention: Jerry Parisi
Vice President
0% 10.00000% SOCIETE GENERALE, NEW YORK BRANCH
By_________________________________
Title:
Domestic
Office: 50 Rockefeller Plaza
New York, New York 10020
Facsimile No.: 212-581-8752
Attention: Jan Wertlieb
Vice President
____ __________
100% 100%
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SCHEDULE A
EXISTING LETTERS OF CREDIT
AMOUNT DATE BENEFICIARY L/C NO.
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
1.1. Defined Terms. . . . . . . . . . . . . . . . . . . 2
1.2. Use of Defined Terms . . . . . . . . . . . . . . . 12
1.3. Cross-References . . . . . . . . . . . . . . . . . 13
1.4. Accounting and Financial Determinations. . . . . . 13
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
2.1. Commitments. . . . . . . . . . . . . . . . . . . . 13
2.1.1. Loan Commitment. . . . . . . . . . . . . . . . . . 13
2.1.2. Commitment to Issue Letters of Credit. . . . . . . 14
2.1.3. Lenders Not Permitted or Required To Make Loans or
Issue Letters of Credit Under Certain
Circumstances . . . . . . . . . . . . . . . . . . 14
2.2. Reduction of Commitment Amounts. . . . . . . . . . 15
2.3. Borrowing Procedure. . . . . . . . . . . . . . . . 15
2.4. Continuation and Conversion Elections. . . . . . . 16
2.5. Funding. . . . . . . . . . . . . . . . . . . . . . 16
2.6. Notes. . . . . . . . . . . . . . . . . . . . . . . 17
2.7. Extension of Commitment Termination Date . . . . . 17
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
3.1. Repayments and Prepayments . . . . . . . . . . . . 17
3.2. Interest Provisions. . . . . . . . . . . . . . . . 18
3.2.1. Rates. . . . . . . . . . . . . . . . . . . . . . . 19
3.2.2. Post-Maturity Rates. . . . . . . . . . . . . . . . 20
3.2.3. Payment Dates. . . . . . . . . . . . . . . . . . . 20
3.3. Fees . . . . . . . . . . . . . . . . . . . . . . . 20
3.3.1. Letter of Credit Face Amount Fee . . . . . . . . . 20
3.3.2. Letter of Credit Issuing Fee . . . . . . . . . . . 21
ARTICLE IV
LETTERS OF CREDIT
4.1. Issuance Requests. . . . . . . . . . . . . . . . . 21
4.2. Issuances and Extensions . . . . . . . . . . . . . 22
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PAGE
4.3. Destruction of Goods, etc. . . . . . . . . . . . . 22
4.4. Other Lenders' Participation . . . . . . . . . . . 23
4.5. Disbursements. . . . . . . . . . . . . . . . . . . 24
4.6. Reimbursement; Outstanding Letters, etc. . . . . . 24
4.7. Deemed Disbursements . . . . . . . . . . . . . . . 26
4.8. Nature of Reimbursement Obligations. . . . . . . . 27
4.9. Existing Letters of Credit . . . . . . . . . . . . 27
ARTICLE V
CERTAIN LIBO RATE AND OTHER PROVISIONS
5.1. LIBO Rate Lending Unlawful . . . . . . . . . . . . 28
5.2. Deposits Unavailable . . . . . . . . . . . . . . . 28
5.3. Increased LIBO Rate Loan Costs, etc. . . . . . . . 28
5.4. Funding Losses . . . . . . . . . . . . . . . . . . 29
5.5. Increased Capital Costs, etc . . . . . . . . . . . 29
5.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . 30
5.7. Payments, Computations, etc. . . . . . . . . . . . 32
5.8. Sharing of Payments. . . . . . . . . . . . . . . . 33
5.9. Setoff . . . . . . . . . . . . . . . . . . . . . . 33
5.10. Use of Proceeds. . . . . . . . . . . . . . . . . . 34
ARTICLE VI
CONDITIONS PRECEDENT
6.1. Initial Credit Extension . . . . . . . . . . . . . 34
6.1.1. Resolutions, etc . . . . . . . . . . . . . . . . . 34
6.1.2. Delivery of Note . . . . . . . . . . . . . . . . . 34
6.1.3. Security Agreement . . . . . . . . . . . . . . . . 34
6.1.4. Certificates as to No Default, etc . . . . . . . . 35
6.1.5. ASCO Debt, etc . . . . . . . . . . . . . . . . . . 35
6.1.6. Intercreditor Agreement. . . . . . . . . . . . . . 35
6.1.7. No Material Adverse Change . . . . . . . . . . . . 35
6.1.8. Tradexpress Agreement. . . . . . . . . . . . . . . 36
6.1.9. Opinions of Counsel. . . . . . . . . . . . . . . . 36
6.1.10. Closing Fees, Expenses, etc. . . . . . . . . . . . 36
6.1.11. Delivery of Form 1001 or 4224. . . . . . . . . . . 36
6.2. All Credit Extensions. . . . . . . . . . . . . . . 36
6.2.1. Compliance with Warranties, No Default, etc. . . . 36
6.2.2. Credit Request . . . . . . . . . . . . . . . . . . 37
6.2.3. Satisfactory Legal Form. . . . . . . . . . . . . . 37
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1. Organization, etc. . . . . . . . . . . . . . . . . 38
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PAGE
7.2. Due Authorization, Non-Contravention, etc. . . . . 38
7.3. Government Approval, Regulation, etc . . . . . . . 38
7.4. Validity, etc. . . . . . . . . . . . . . . . . . . 39
7.5. No Material Adverse Change . . . . . . . . . . . . 39
7.6. Litigation, Labor Controversies, etc . . . . . . . 39
7.7. Regulations G, U and X . . . . . . . . . . . . . . 39
7.8. Accuracy of Information. . . . . . . . . . . . . . 39
ARTICLE VIII
COVENANTS
8.1. Affirmative Covenants. . . . . . . . . . . . . . . 40
8.1.1. Financial Information, Reports, Notices, etc . . . 40
8.1.2. Corporate Existence. . . . . . . . . . . . . . . . 41
8.1.3. Security . . . . . . . . . . . . . . . . . . . . . 41
8.1.4. Insurance of Goods . . . . . . . . . . . . . . . . 41
8.1.5. Possession, etc. . . . . . . . . . . . . . . . . . 42
8.1.6. Partial Shipments. . . . . . . . . . . . . . . . . 42
8.1.7. Licenses . . . . . . . . . . . . . . . . . . . . . 43
8.1.8. Sale Upon Default. . . . . . . . . . . . . . . . . 43
8.1.9. Additional Security. . . . . . . . . . . . . . . . 43
ARTICLE IX
EVENTS OF DEFAULT
9.1. Listing of Events of Default . . . . . . . . . . . 44
9.1.1. Non-Payment of Obligations . . . . . . . . . . . . 44
9.1.2. Breach of Warranty . . . . . . . . . . . . . . . . 44
9.1.3. Non-Performance of Certain Covenants and
Obligations . . . . . . . . . . . . . . . . . . . 44
9.1.4. Non-Performance of Other Covenants and Obligations 44
9.1.5. Default Under U.S. Credit Agreement. . . . . . . . 44
9.1.6. Bankruptcy, Insolvency, etc. . . . . . . . . . . . 44
9.1.7. Impairment of Security, etc. . . . . . . . . . . . 44
9.2. Action Upon Bankruptcy . . . . . . . . . . . . . . 45
9.3. Action Upon Other Event of Default . . . . . . . . 45
ARTICLE X
THE AGENT
10.1. Actions. . . . . . . . . . . . . . . . . . . . . . 45
10.2. Copies, etc . . . . . . . . . . . . . . . . . . . 46
10.3. Exculpation . . . . . . . . . . . . . . . . . . . 46
10.4. Successor . . . . . . . . . . . . . . . . . . . . 47
10.5. Loans or Letters of Credit Issued by Scotiabank. . 47
10.6. Credit Decisions . . . . . . . . . . . . . . . . . 47
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PAGE
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.1. Waivers, Amendments, etc . . . . . . . . . . . . . 48
11.2. Notices . . . . . . . . . . . . . . . . . . . . . 49
11.3. Payment of Costs and Expenses. . . . . . . . . . . 49
11.4. Indemnification . . . . . . . . . . . . . . . . . 50
11.5. Survival . . . . . . . . . . . . . . . . . . . . . 51
11.6. Severability . . . . . . . . . . . . . . . . . . . 51
11.7. Headings . . . . . . . . . . . . . . . . . . . . . 51
11.8. Execution in Counterparts, Effectiveness, etc . . 51
11.9. Governing Law; Entire Agreement. . . . . . . . . . 51
11.10. Successors and Assigns . . . . . . . . . . . . . . 51
11.11. Sale and Transfer of Loans and Notes; Participations
in Loans and Notes . . . . . . . . . . . . . . . 52
11.11.1. Assignments . . . . . . . . . . . . . . . . . . . 52
11.11.2. Participations . . . . . . . . . . . . . . . . . . 53
11.12. Acknowledgement. . . . . . . . . . . . . . . . . . 54
11.13. Other Transactions . . . . . . . . . . . . . . . . 54
11.14. Forum Selection and Consent to Jurisdiction. . . . 55
11.15. Waiver of Jury Trial . . . . . . . . . . . . . . . 55
11.16. UCP; etc . . . . . . . . . . . . . . . . . . . . . 56
11.17. Usury Restraint. . . . . . . . . . . . . . . . . . 56
-iv-
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Revolving Note
EXHIBIT B - Form of Issuance Request
EXHIBIT C - Form of Borrowing Request
EXHIBIT D - Form of Continuation/Conversion Notice
EXHIBIT E - Form of Lender Assignment Agreement
EXHIBIT F - Form of Security Agreement
EXHIBIT G - Form of Opinion of Counsel to the Borrower
EXHIBIT H - Form of Opinion of Counsel to the Agent
EXHIBIT I - Form of Tradexpress Transmission Agreement
EXHIBIT J - Form of Side Letter
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[CONFORMED COPY]
(EXHIBIT F)
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement"), dated
as of July 16, 1993, made by WARNACO INC., a Delaware corporation
(the "Grantor"), in favor of THE BANK OF NOVA SCOTIA, as agent
(together with any successor(s) thereto in such capacity, the
"Agent") for each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of the
date hereof (together with all amendments and other
modifications, if any, from time to time thereafter made thereto,
the "Credit Agreement"), among the Grantor, the various
commercial lending institutions (individually a "Lender" and
collectively the "Lenders") as are, or may from time to time
become, parties thereto and the Agent, the Lenders have extended
Commitments to make Credit Extensions to the Grantor;
WHEREAS, as a condition precedent to the making of the
initial Credit Extensions under the Credit Agreement, the Grantor
is required to execute and deliver this Security Agreement; and
WHEREAS, the Grantor has duly authorized the execution,
delivery and performance of this Security Agreement;
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in
order to induce the Lenders to make Credit Extensions (including
the initial Credit Extensions) to the Grantor pursuant to the
Credit Agreement, the Grantor agrees, for the benefit of each
Lender Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether
or not underscored) when used in this Security Agreement,
including its preamble and recitals, shall have the following
meanings (such definitions to be equally applicable to the
singular and plural forms thereof):
"Agent" is defined in the preamble.
"Collateral" is defined in Section 2.1.
"Credit Agreement" is defined in the first recital.
"Goods" is defined in clause (a) of Section 2.1.
"Grantor" is defined in the preamble.
"Inventory" is defined in clause (b) of Section 2.1
"Lender" is defined in the first recital.
"Lender Party" means, as the context may require, any
Lender, the Issuer or the Agent and each of its respective
successors, transferees and assigns.
"Lenders" is defined in the first recital.
"Security Agreement" is defined in the preamble.
"U.C.C." means the Uniform Commercial Code, as in effect in
the State of New York.
SECTION 1.2. Credit Agreement Definitions. Unless
otherwise defined herein or the context otherwise requires, terms
used in this Security Agreement, including its preamble and
recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined
herein or the context otherwise requires, terms for which
meanings are provided in the U.C.C. are used in this Security
Agreement, including its preamble and recitals, with such
meanings.
ARTICLE II
SECURITY INTEREST
SECTION 2.1. Grant of Security. The Grantor hereby assigns
and pledges to the Agent for its benefit and the benefit of each
of the Lender Parties, and hereby grants to the Agent for its
benefit and the benefit of each of the Lender Parties, a security
interest in all of the following, whether now owned or hereafter
existing or acquired (the "Collateral"):
(a) all goods (including, without limitation, all
inventory (the "Inventory")), wares, merchandise and other
commodities purchased by or shipped to or to the order of
(i) Scotiabank on behalf of the Grantor or (ii) the Grantor
under or by virtue of or in connection with the issuance of
a Letter of Credit (collectively being, in respect of each
such Letter of Credit, the "Goods"); and
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(b) with respect to any Goods, all documents of title
(including bills of lading, air way bills, ocean bills,
warehouse receipts and other documents, instruments or other
evidence of title) issued in respect of such Goods, all
contracts, contract rights and policies or certificates of
insurance specifically relating to such Goods.
Proceeds of clauses (a) and (b) shall not in any event constitute
Collateral.
SECTION 2.2. Security for Obligations. The Collateral in
respect of any Letter of Credit shall secure all Letter of Credit
Obligations in respect of such Letter of Credit and no other
Letter of Credit Obligations. "Letter of Credit Obligations"
shall mean in respect of any Letter of Credit, all Obligations,
including without limitation Reimbursement Obligations, of the
Grantor incurred in connection with the issuance of such Letter
of Credit, together with the Loans (and Obligations in respect
thereof), if any, made to refund such Reimbursement Obligations.
To the extent that a Reimbursement Obligation is funded or repaid
with the proceeds of a Loan made by the RL Lenders, the specific
Collateral that theretofore secured the payment of such
Reimbursement Obligation shall thereafter solely secure the Loan
made by the RL Lenders, notwithstanding any provisions to the
contrary contained in the Credit Agreement (including the
provisions of Section 5.8 of the Credit Agreement). After a
disbursement under a Letter of Credit, the Issuer shall only
release and convey title to the Borrower in the Goods delivered
by virtue of such Letter of Credit if and when the Borrower has
(either through the making of Loans, Swingline Loans or
otherwise) repaid the Issuer in full all Reimbursement
Obligations in respect of such Letter of Credit.
SECTION 2.3. Continuing Security Interest; Transfer of
Notes. This Security Agreement shall create a continuing
security interest in the Collateral and shall
(a) remain in full force and effect until payment in
full of all Obligations and the termination of all
Commitments,
(b) be binding upon the Grantor, its successors,
transferees and assigns, and
(c) inure, together with the rights and remedies of
the Agent hereunder, to the benefit of the Agent and each
other Lender Party.
Without limiting the generality of the foregoing clause (c), any
Lender may assign or otherwise transfer (in whole or in part) any
Note or Loan held by it to any other Person or entity, and such
other Person or entity shall thereupon become vested with all the
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rights and benefits in respect thereof granted to such Lender
under any Loan Document (including this Security Agreement) or
otherwise, subject, however, to any contrary provisions in such
assignment or transfer, and to the provisions of Section 11.11
and Article X of the Credit Agreement. Upon the later to occur
of the payment in full of all Obligations with respect to (i)
payments due to the Issuer under a specific Letter of Credit or
(ii) any Loan that has been made to refund or repay a
Reimbursement Obligation attributable to such Letter of Credit,
the security interest granted hereunder in the Collateral that
was purchased or shipped by virtue of such Letter of Credit or
Loan, as the case may be, and all related Collateral shall
terminate and all rights to such Collateral shall revert to the
Grantor. Upon such termination, the Agent will, at the Grantor's
sole expense, execute and deliver to the Grantor such documents
as the Grantor shall reasonably request to evidence the release
of the security interest in the Collateral that was so purchased
or shipped. In addition, the Agent hereby acknowledges and
agrees that upon the repayment of all Obligations and the
termination of all Commitments, all security interests granted
hereunder or under any Uniform Commercial Code financing (or
other) statements shall cease to be effective and shall thereupon
be released, without any further action on the part of the Agent,
and the Agent shall execute and deliver to the Borrower all UCC-3
or similar termination statements necessary to reflect such
termination.
SECTION 2.4. Grantor Remains Liable. Anything herein to
the contrary notwithstanding
(a) the Grantor shall remain liable under the
contracts and agreements included in the Collateral to the
extent set forth therein, and shall perform all of its
duties and obligations under such contracts and agreements
to the same extent as if this Security Agreement had not
been executed,
(b) the exercise by the Agent of any of its rights
hereunder shall not release the Grantor from any of its
duties or obligations under any such contracts or agreements
included in the Collateral, and
(c) neither the Agent nor any other Lender Party shall
have any obligation or liability under any such contracts or
agreements included in the Collateral by reason of this
Security Agreement, nor shall the Agent or any other Lender
Party be obligated to perform any of the obligations or
duties of the Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. Representations and Warranties. The Grantor
represents and warrants unto each Lender Party as set forth in
this Article.
SECTION 3.1.1. Location of Collateral, etc. All of the
Inventory with a fair market value individually or in the
aggregate in excess of $1,000,000 is located at the places
specified in Item A of Schedule I hereto. Other than in
connection with the transit of such Inventory, none of the
Inventory has, within the four months preceding the date of this
Security Agreement, been located at any place other than the
places specified in Item A of Schedule I hereto. The Grantor has
no trade names on the Effective Date other than those set forth
in Item B of Schedule I hereto. The Grantor has not changed its
legal name to a name different from the one set forth on the
signature page hereto, nor has the Grantor been the subject of
any merger or other corporate reorganization within the last
year. If the Collateral includes any Inventory located in the
State of California, the Grantor is not a "retail merchant"
within the meaning of Section 9102 of the Uniform Commercial Code
- - - - Secured Transactions of the State of California.
SECTION 3.1.2. Ownership, No Liens, etc. The Grantor owns
the Collateral free and clear of any Lien, security interest,
charge or encumbrance except for the security interests created
by this Security Agreement and under the U.S. Credit Agreement or
related document. No effective financing statement or other
instrument similar in effect covering all or any part of the
Collateral is on file in any recording office, except such as may
have been filed in favor of the Agent relating to this Security
Agreement or in respect of the U.S. Credit Agreement.
SECTION 3.1.3. Validity, etc. This Security Agreement
creates a valid security interest in the Collateral, securing the
payment of the Obligations.
SECTION 3.1.4. Authorization, Approval, etc. No
authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is
required either
(a) for the grant by the Grantor of the security
interest granted hereby or for the execution, delivery and
performance of this Security Agreement by the Grantor, or
(b) for the perfection of or the exercise by the Agent
of its rights and remedies hereunder, other than the filing
of UCC-1 financing statements.
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ARTICLE IV
COVENANTS
SECTION 4.1. Certain Covenants. The Grantor covenants and
agrees that, so long as any portion of the Obligations shall
remain unpaid or any Lender shall have any outstanding
Commitment, the Grantor will perform the obligations set forth in
this Section.
SECTION 4.1.1. As to Inventory. The Grantor hereby agrees
that it shall keep all the Inventory (other than Inventory sold
in the ordinary course of business) at the places therefor
specified in Section 3.1.1 or, upon 30 days' prior written notice
to the Agent, at such other places in a jurisdiction where all
representations and warranties set forth in Article III
(including Section 3.1.3) shall be true and correct, and all
action required pursuant to the first sentence of Section 4.1.2
shall have been taken with respect to such Inventory.
SECTION 4.1.2. Further Assurances, etc. The Grantor agrees
that, from time to time at its own expense, the Grantor will
promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or
desirable, or that the Agent may request, in order to perfect,
preserve and protect any security interest granted or purported
to be granted hereby or to enable the Agent to exercise and
enforce its rights and remedies hereunder with respect to any
Collateral, including delivery to the Agent of all Goods as is
necessary to provide the Agent with a possessory security
interest in such Goods. With respect to the foregoing and the
grant of the security interest hereunder, the Grantor hereby
authorizes the Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all
or any part of the Collateral without the signature of the
Grantor where permitted by law, provided, that the Agent agrees
to deliver copies of such documents promptly after filing them
with the applicable filing offices. A carbon, photographic or
other reproduction of this Security Agreement or any financing
statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.
ARTICLE V
THE AGENT
SECTION 5.1. Agent Appointed Attorney-in-Fact. The Grantor
hereby irrevocably appoints the Agent the Grantor's attorney-in-
fact, with full authority in the place and stead of the Grantor
and in the name of the Grantor or otherwise, from time to time in
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the Agent's discretion, to take any action and to execute any
instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Security Agreement. The Grantor
hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and
coupled with an interest.
SECTION 5.2. Agent May Perform. If the Grantor fails to
perform any agreement contained herein, the Agent may itself
perform, or cause performance of, such agreement, and the
expenses of the Agent incurred in connection therewith shall be
payable by the Grantor.
SECTION 5.3. Agent Has No Duty. In addition to, and not in
limitation of, Section 2.4, the powers conferred on the Agent
hereunder are solely to protect its interest (on behalf of the
Lender Parties) in the Collateral and shall not impose any duty
on it to exercise any such powers.
SECTION 5.4. Reasonable Care. The Agent is required to
exercise reasonable care in the custody and preservation of any
of the Collateral in its possession; provided, however, the Agent
shall be deemed to have exercised reasonable care in the custody
and preservation of any of the Collateral, if it takes such
action for that purpose as the Grantor reasonably requests in
writing at times other than upon the occurrence and during the
continuance of any Event of Default, but failure of the Agent to
comply with any such request at any time shall not in itself be
deemed a failure to exercise reasonable care.
ARTICLE VI
REMEDIES
SECTION 6.1. Certain Remedies. If any Event of Default
shall have occurred and be continuing the Agent may exercise in
respect of the Collateral, in addition to other rights and
remedies provided for herein, under the terms of the Credit
Agreement or otherwise available to it, all the rights and
remedies of a secured party on default under the U.C.C.
SECTION 6.2. Indemnity and Expenses. The Grantor agrees to
indemnify the Agent from and against any and all claims, losses
and liabilities arising out of or resulting from this Security
Agreement (including, without limitation, enforcement of this
Security Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or wilful misconduct.
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ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1. Loan Document. This Security Agreement is a
Loan Document executed pursuant to the Credit Agreement and shall
(unless otherwise expressly indicated herein) be construed,
administered and applied in accordance with the terms and
provisions thereof.
SECTION 7.2. Amendments; etc. No amendment to or waiver of
any provision of this Security Agreement nor consent to any
departure by the Grantor herefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given. Furthermore, this Security Agreement may not be amended
without the written consent of the Agent under the U.S. Credit
Agreement.
SECTION 7.3. Addresses for Notices. All notices and other
communications provided to any party hereto under this Security
Agreement shall be in writing or by Telex or by facsimile and
addressed, delivered or transmitted to such party at its address,
Telex or facsimile number set forth below its signature in the
Credit Agreement or at such other address, Telex or facsimile
number as may be designated by such party in a notice to the
other parties. Any notice, if mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid
courier service, shall be deemed given when received; any notice,
if transmitted by Telex or facsimile, shall be deemed given when
transmitted (answerback confirmed in the case of Telexes).
SECTION 7.4. Section Captions. Section captions used in
this Security Agreement are for convenience of reference only,
and shall not affect the construction of this Security Agreement.
SECTION 7.5. Severability. Wherever possible each
provision of this Security Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if
any provision of this Security Agreement shall be prohibited by
or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Security Agreement.
-8-
SECTION 7.6. Governing Law, Entire Agreement, etc. THIS
SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCEPT TO THE EXTENT THAT THE PERFECTION AND THE EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE
OF NEW YORK. THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS
CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR
AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
SECTION 7.7. Intercreditor Agreement. This Security
Agreement and the Liens, security interests, rights and remedies
provided hereunder are subject to the terms of the Intercreditor
Agreement.
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IN WITNESS WHEREOF, the Grantor has caused this Security
Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.
WARNACO INC.
By: /s/ Dariush Ashrafi
Title: Senior Vice President
& Chief Financial Officer
THE BANK OF NOVA SCOTIA,
New York Agency, as Agent
By: /s/ Terry K. Fryett
Title: Vice President
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SCHEDULE I
to Security Agreement
Item A. Location of Inventory.
1. 10 Water Street
Waterville, ME 04901
2. Intersection of Rts. 22 & 220
Duncansville, PA 16635
3. 47-44 31st Street
Long Island City, NY 11101
Item B. Trade Names as of Effective Date.
Blanche
C.D. et Cie
C.F. Hathaway
Chaps & Co.
Chaps by Ralph Lauren
Christian Dior
Exclusive Apparel
Fruit of the Loom Bras
Golden Bear
Hathaway
Jack Nicklaus/Golden Bear
Jack Nicklaus
Olga
Olga's Christina
Puritan
Puritan Sportswear
Scassi
Valentino
Warner's
White Stag
White Stag Sportswear
Ungaro Lingerie
[CONFORMED COPY]
FIRST AMENDMENT TO
CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of
October 14, 1993 (this "Amendatory Agreement"), among WARNACO
INC. (the "Borrower"), the various financial institutions
signatories hereto (the "Lenders") and THE BANK OF NOVA SCOTIA,
as agent (the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties
to a Credit Agreement, dated as of July 16, 1993 (as amended or
otherwise modified to the date hereof, the "Existing Credit
Agreement");
WHEREAS, the Borrower has requested that the Lenders amend
the Existing Credit Agreement in certain respects; and
WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit
Agreement in certain respects as provided below (the Existing
Credit Agreement, as so amended by this Amendatory Agreement,
being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms
(whether or not underscored) when used in this Amendatory
Agreement shall have the following meanings (such meanings to be
equally applicable to the singular and plural form thereof):
"Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Amendment No. 1" is defined in Subpart 3.1.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the third recital.
"Existing Credit Agreement" is defined in the first recital.
"First Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings
are provided in the Existing Credit Agreement are, unless
otherwise defined herein or the context otherwise requires, used
in this Amendatory Agreement with such meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the First
Amendment Effective Date, the Existing Credit Agreement is hereby
amended in accordance with Subpart 2.1 through Subpart 2.8;
except as so amended, the Existing Credit Agreement shall
continue in full force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement
is hereby amended by inserting the following definitions in such
Section in the appropriate alphabetical sequence:
"Amendment No. 1" means the First Amendment, dated as of
October 14, 1993, to this Agreement among the Borrower,
the Lenders and the Agent.
"Applicable Margin" means a percentage per annum
determined by reference to the Implied Debt Rating as set
forth below:
Implied Debt Rating Base Rate Loans LIBO Rate Loans
BB or Below 0.500% 1.500%
BB+ 0.250% 1.250%
BBB- 0.000% 0.875%
BBB or Above 0.000% 0.750%
The Applicable margin shall be determined by reference
to the Implied Debt Rating in effect from time to time;
provided, however, that no change in the Applicable
Margin shall be effective until three Business Days
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after the date on which the Agent receives evidence
reasonably satisfactory to it from Group or the
Borrower that a new Implied Debt Rating is in effect.
In the event that at any time no Implied Debt Rating
shall be in effect, the Applicable Margin shall be
0.500% for each Base Rate Loan and 1.500% for each LIBO
Rate Loan.
"Collateral Agent" is defined in the U.S. Credit
Agreement.
"First Amendment Effective Date" is defined in
Subpart 3.1 of Amendment No. 2.
"Group" means The Warnaco Group, Inc., a Delaware
corporation.
"Implied Debt Rating" means the rating assigned by S&P
to Group's "implied senior debt" from time to time, as
notified to Group by S&P in its letter dated July 30, 1993
or any subsequent letter issued by S&P or, if such rating is
unavailable, the equivalent rating assigned by Moody's to
Group's "implied senior debt", as notified in writing to
Group by Moody's. For purposes of this Agreement, the
following is the equivalent rating by Moody's for each
rating by S&P:
S&P Moody's
BB Ba2
BB+ Ba1
BBB- Baa3
BBB Baa2
The Lenders acknowledge and agree that the Implied Debt
Rating as of the First Amendment Effective Date is BB+, and
that from and after the First Amendment Effective Date
interest and all other fees and amounts calculated by
reference to the Implied Debt Rating shall be calculated
after giving effect to such Implied Debt Rating.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Corporation.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement
is hereby further amended as follows:
(a) the definition of "Commitment Termination Event"
is hereby amended in its entirety to read as follows:
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"'Commitment Termination Event'" means
(a) the occurrence of any event or condition
described in clause (f) of Section 6.01 of the U.S.
Credit Agreement;
(b) the occurrence and continuance of any other
Event of Default and either
(i) the declaration of the Loans to be due
and payable pursuant to Section 9.3, or
(ii) in the absence of such declaration, the
giving of notice by the Agent, acting at the
direction of the Required Lenders, to the Borrower
that the Commitments have been terminated; or
(c) the termination of, or any refinancing,
refunding, replacement, renewal or restatement of, the
U.S. Credit Agreement.";
(b) the definition of "Intercreditor Agreement" is
hereby amended in its entirety to read as follows:
"`Intercreditor Agreement' means the Intercreditor
Agreement, dated as of October 14, 1993, between the
Agent and Citicorp USA, Inc., in substantially the form
of Annex 1 to Amendment No. 2.";
(c) the definition of "Loan Commitment Amount" is
hereby amended in its entirety to read as follows:
"`Loan Commitment Amount' means $20,000,000, as
such amount may be reduced by Section 2.2.
Notwithstanding anything to the contrary contained in
this Agreement (including Section 2.1.3) in no event
shall Scotiabank be required to make any Loans if and
to the extent that, after giving effect to such Loans
(and any adjustments to Scotiabank's Percentage (and
its resulting pro rata portion of Letter of Credit
Outstandings) required pursuant to the terms of this
Agreement), the aggregate outstanding principal amount
of Loans made by Scotiabank together with Scotiabank's
Percentage of Letter of Credit Outstandings would
exceed $40,000,000.";
(d) the definition of "Loan Document" is hereby
amended in its entirety to read as follows:
"`Loan Document' means this Agreement, each Note,
the Tradexpress Agreement, the Security Agreement and
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each other agreement, document or instrument delivered
in connection with this Agreement (including each
guaranty, mortgage and each other collateral security
agreement and pledge agreement delivered on (or,
pursuant to clauses (p) and (q) of Section 5.01 of the
U.S. Credit Agreement, after) the Second Amendment
Effective Date which grants in favor of, inter alia,
the Collateral Agent for the benefit of (or grants
directly to) the RL Lenders a security interest in the
Borrower's, any of its Subsidiaries' or Group's
assets), whether or not specifically mentioned
herein.";
(e) the definition of "Stated Maturity Date" is hereby
amended in its entirety to read as follows:
"'Stated Maturity Date'" means, in the case of any
Loan, the date that is 60 days after the Loan
Commitment Termination Date; provided, however, that in
the case of a Commitment Termination Event of the type
described in clause (c) of the definition of
"Commitment Termination Event", the Stated Maturity
Date shall be the date on which such event occurs.";
and
(f) the definition of "U.S. Credit Agreement" is
hereby amended in its entirety to read as follows:
"`U.S. Credit Agreement' means the Credit
Agreement, dated as of October 14, 1993, among the
Borrower, The Warnaco Group, Inc., the Banks named
therein, The Bank of Nova Scotia and Citicorp USA,
Inc., as Managing Agents, Citicorp USA, Inc., as
Documentation Agent and Collateral Agent, and The Bank
of Nova Scotia, as Paying Agent, Swing Line Bank and an
Issuing Bank, as such agreement was in effect on the
Second Amendment Effective Date, and as further
amended, restated or waived from time to time with the
consent of the Required Lenders hereunder solely for
purposes of this Agreement, and regardless of whether
such U.S. Credit Agreement is terminated, unless in
connection with such termination a replacement credit
facility satisfactory to the Required Lenders hereunder
is entered into in which case, the affirmative and
negative covenants in such facility shall become the
subject of this Agreement."
SUBPART 2.2. Amendments to Article III. Article III of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.2.1 through 2.2.2.
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SUBPART 2.2.1. Clauses (a) and (b) of Section 3.2.1 of the
Existing Credit Agreement are hereby amended in their entirety to
read as follows:
"(a) on that portion maintained from time to
time as a Base Rate Loan, equal to the sum of the
Alternate Base Rate from time to time in effect
plus the Applicable Margin in effect from time to
time; or
(b) on that portion maintained as a LIBO Rate
Loan (whether made pursuant to clause (a) or clause (b)
of Section 2.3), during each Interest Period applicable
thereto, equal to the sum of the LIBO Rate (Reserve
Adjusted) for such Interest Period plus the Applicable
Margin in effect from time to time."
SUBPART 2.2.2. Section 3.3.1 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 3.3.1 Letter of Credit Face Amount Fee. The
Borrower agrees to pay to the Agent, for the account of the
Lenders, a fee for each Letter of Credit for the period from
and including the date of the issuance of such Letter of
Credit to (but not including) the earlier of (a) the date
upon which such Letter of Credit expires and (b) the date
upon which the Stated Amount of such Letter of Credit is
irrevocably reduced to zero (by the making of a Disbursement
by the Issuer or otherwise), at the rates per annum
determined by reference to the Implied Debt Rating in effect
from time to time as set forth below; (provided, however,
that no change in the rate for Letters of Credit shall be
effective until three Business Days after the date on which
the Agent receives evidence reasonably satisfactory to it
from Group or the Borrower that a new Implied Debt Rating is
in effect):
Rate for
Implied Debt Rating Letters of Credit
BB or below 1.000%
BB+ 0.750%
BBB- 0.500%
BBB or above 0.500%
In the event that at any time no Implied Debt Rating shall
be in effect, the applicable rate per annum for purposes of
determining the letter of credit fees provided for hereunder
shall be 1.000% for documentary Letters of Credit. Such fee
shall be payable by the Borrower in arrears on each Monthly
Payment Date, and on the Letter of Credit Commitment
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Termination Date for any period then ending for which such
fee shall not theretofore have been paid, commencing on the
first such date after the issuance of such Letter of
Credit."
SUBPART 2.3. Amendment to Article IV. Article IV of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.3.1.
SUBPART 2.3.1. The first sentence of Section 4.7 of the
Existing Credit Agreement is hereby amended in its entirety to
read as follows:
"Upon (i) the occurrence of any Commitment Termination
Event of the type described in clause (c) of the definition
of "Commitment Termination Event", (ii) the occurrence and
during the continuation of any event or condition specified
in clause (f) of Section 6.01 of the U.S. Credit Agreement,
or (iii) the occurrence and during the continuance of any
other Event of Default,
(a) an amount equal to that portion of Letter of
Credit Outstandings attributable to outstanding and undrawn
Letters of Credit shall, without demand upon or notice to
the Borrower, be deemed to have been paid or disbursed by
the Issuer under such Letters of Credit (notwithstanding
that such amount may not in fact have been so paid or
disbursed), and
(b) upon notification by the Issuer to the Agent and
the Borrower of its obligations under this Section, the
Borrower shall be immediately obligated to reimburse the
Issuer the amount deemed to have been so paid or disbursed
by the Issuer.
SUBPART 2.4. Amendment to Article V. Article V of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.4.1.
SUBPART 2.4.1. Section 5.9 of the Existing Credit Agreement
is hereby amended by deleting the references to "clauses (f) and
(g) of Section 10.1 of the U.S. Credit Agreement" appearing in
the second and third lines of such Section, and inserting "clause
(f) of Section 6.01 of the U.S. Credit Agreement" in place
thereof.
SUBPART 2.5. Amendment to Article VI. Article VI of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.5.1.
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SUBPART 2.5.1. Clauses (b) and (c) of Section 6.2.1 of the
Existing Credit Agreement are hereby amended in their entirety to
read as follows:
"(b) no event of default or any condition,
occurrence or event which, after notice or lapse of
time or both, would constitute an event of default
shall have occurred and be continuing in the
performance of any affirmative and negative covenants
contained in Article V of the U.S. Credit Agreement and
regardless of whether such U.S. Credit Agreement is
terminated, unless in connection with such termination
a replacement credit facility which the Required
Lenders hereunder have approved is entered into in
which case, the affirmative and negative covenants in
such facility shall become the subject of this clause
(b); and
(c) none of the events described in clauses (a),
(e), (f), (g), (h), (k), (l), (m) or (n) of Section
6.01 of the U.S. Credit Agreement (without giving
effect to any termination of the U.S. Credit Agreement,
unless in connection with such termination a
replacement credit facility to which the Required
Lenders hereunder have approved, in which case the
analogous provisions of such replacement credit
facility shall become the subject of this clause (c)),
shall have occurred and be continuing."
SUBPART 2.6. Amendments to Article VIII. Article VIII of
the Existing Credit Agreement is hereby amended in accordance
with Subparts 2.6.1 through 2.6.4.
SUBPART 2.6.1. Section 8.1.3 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 8.1.3. Security. The Borrower covenants and
agrees
(a) to give to the Agent, for the benefit of the
Lender Parties (as defined in the Security Agreement),
solely to secure the Borrower's obligation to reimburse
the Issuer for Disbursements under a Letter of Credit
(and to pay fees in respect of such Letter of Credit),
from time to time a security interest in all documents
of title (including bills of lading, air way bills,
ocean bills, warehouse receipts and other documents,
instruments and other evidence of title) issued in
respect of Goods (as such term is defined in the
Security Agreement) relating to such Letter of Credit
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and all contracts, contract rights and policies or
certificates of insurance specifically relating to such
Goods relating to such Letter of Credit; and
(b) to grant to Agent, or to the Collateral Agent
(as defined in the U.S. Credit Agreement) for the
benefit of, inter alia, the RL Lenders, to secure all
of the Borrower's Obligations in respect of RL Loans
hereunder, a Lien on and security interest in all
assets in which a Lien was (or in the future may be)
granted in favor of the parties to the U.S. Credit
Agreement, with the Lien and security interest in favor
of the Agent and the RL Lenders described in this
clause to be pari passu with the Lien and security
interest granted in favor of the parties to the U.S.
Credit Agreement, all on terms reasonably satisfactory
to the Agent, together with guaranties from each Person
that delivers a guaranty pursuant to the terms of the
U.S. Credit Agreement."
SUBPART 2.6.2. Section 8.1.5 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 8.1.5. Possession, etc. Until payment by the
Borrower to the Agent of all Obligations with respect to a
particular Letter of Credit, the Agent, on behalf of the
Lenders, shall have the absolute right and title to and the
unqualified right to the possession and disposal of the
Goods covered by such Letter of Credit, to the extent not
theretofore released to the Borrower on trust or bailee
receipt or otherwise, and all documents of title (including
bills of lading, air way bills, ocean bills, warehouse
receipts and other documents, instruments or other evidence
of title) issued in respect of the Goods relating to such
Letter of Credit, all contracts, contract rights and
policies or certificates of insurance specifically relating
to such Goods under such Letter of Credit (all of the
foregoing shall be referred to herein as the "Subject
Property" under such Letter of Credit) and shall be entitled
to exercise all rights as an unpaid seller of such Subject
Property."
SUBPART 2.6.3. Section 8.1.8 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 8.1.8 Sale Upon Default. As more fully set
forth in the Security Agreement, the Borrower agrees that
the Agent, on behalf of the Lenders, whenever in its
discretion it deems it necessary for its protection, so long
as the Borrower is in default of its repayment Obligations
under a Letter of Credit (after giving effect to any grace
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period), may, without regard to the maturity of any of the
other Obligations, and with notice to the Borrower of not
less than 24 hours, sell by public or private sale or
realize in such other manner as the Agent thinks fit all or
any of the Goods in respect of such Letter of Credit, before
or after arrival and to the extent not theretofore released
to the Borrower on trust or bailee receipt or otherwise,
upon such terms and conditions and for such price in money
or other consideration as the Agent thinks fit; and the
Borrower covenants that any moneys received by the Agent as
proceeds of any such sale, after deduction of all fees and
expenses in connection therewith which with interest shall
be borne by the Borrower, shall be applied against the
Obligations in respect of such Letter of Credit and the
Borrower shall remain liable for and covenants to pay to the
Agent (for the benefit of the Lenders) on demand the balance
of the Obligations in respect of such Letter of Credit."
SUBPART 2.6.4. Section 8.1.9 of the Existing Credit
Agreement is hereby deleted in its entirety.
SUBPART 2.7. Amendments to Article IX. Article IX of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.7.1 through 2.7.3.
SUBPART 2.7.1. Section 9.1.5 of the Existing Credit
Agreement is hereby amended by deleting the reference to "Section
10.1" appearing in the fifth line of such Section, and inserting
"Sections 6.01 or 6.02" in place thereof.
SUBPART 2.7.2. Section 9.1.6 of the Existing Credit
Agreement is hereby amended by deleting the reference to "clauses
(f) or (g) of Section 10.1" appearing in the second line of such
Section, and inserting "clause (f) of Section 6.01" in place
thereof.
SUBPART 2.7.3. Section 9.1.7 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 9.1.7. Impairment of Security, etc. Any Loan
Document, or any Lien granted thereunder, shall (except in
accordance with clause (b)(ii) of Section 2.05 of the U.S.
Credit Agreement), in whole or in part, terminate, cease to
be effective or cease to be the legally valid, binding and
enforceable obligation of the obligor that is a party
thereto; the Borrower or any other party shall, directly or
indirectly, contest in any manner such effectiveness,
validity, binding nature or enforceability (except as
aforesaid); or any Lien securing any Obligation shall, in
whole or in part, cease to be a perfected first priority
Lien (except as aforesaid), subject only to those exceptions
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expressly permitted by a Loan Document or pursuant to the
Intercreditor Agreement."
SUBPART 2.8. Global Amendment to Existing Credit Agreement
and Loan Documents. The Existing Credit Agreement and each Loan
Document is hereby amended by
(a) deleting each reference to the "Agent under the
U.S. Credit Agreement" (and similar references to such
agent), and substituting the "Collateral Agent" in place
thereof; and
(b) deleting each reference to "clauses (f) or (g) of
Section 10.1 of the U.S. Credit Agreement", and substituting
"clause (f) of Section 6.01 of the U.S. Credit Agreement" in
place thereof.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This
Amendatory Agreement (and the amendments and modifications
contained herein) shall become effective, and shall thereafter be
referred to as "Amendment No. 2", on the date (the "Second
Amendment Effective Date") when all of the conditions set forth
in this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendatory Agreement, duly
executed and delivered on behalf of the Borrower, the Agent and
each Lender.
SUBPART 3.1.2. Intercreditor Agreement. The Agent shall
have received a copy of the Intercreditor Agreement,
substantially in the form of Annex I hereto, duly executed and
delivered by the parties thereto.
SUBPART 3.1.3. Consummation of Refinancing. The Agent
shall have received evidence satisfactory to it that the
conditions to the effectiveness of the U.S. Credit Agreement have
been satisfied (or waived, pursuant to the terms thereof), and
that such U.S. Credit Agreement has refinanced all obligations
theretofore outstanding under the credit agreement, dated as of
March 26, 1992, as amended and restated as of October 1, 1992
(and as further amended or otherwise modified, the "Original U.S.
Credit Agreement"), among General Electric Capital Corporation,
as agent, certain financial institutions parties thereto, the
Borrower and Group.
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SUBPART 3.1.4. The Agent shall have received copies of each
agreement required to be delivered pursuant to clauses (e)(ii),
(e)(iii), (e)(iv), (e)(vi), (e)(viii), (e)(ix) and (e)(x) of
Section 3.01 of the U.S. Credit Agreement, duly executed and
delivered by each of the parties thereto, in form and substance
satisfactory to the Agent (including as to naming the RL Lenders
as secured parties, where applicable).
SUBPART 3.1.5. Opinions. The Agent shall have received
executed copies of each of the opinions required to be delivered
pursuant to clauses (e)(xviii) and (e)(xix) of Section 3.01 of
the U.S. Credit Agreement, naming the RL Lender as addressee.
SUBPART 3.1.6. Legal Details, etc. All documents executed
or submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its
counsel shall have received all information and such counterpart
originals or such certified or other copies or such materials, as
the Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this
Amendatory Agreement shall be satisfactory to the Agent and its
counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this
Amendatory Agreement to any Part or Subpart are, unless otherwise
specified or otherwise required by the context, to such Part or
Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit
Agreement. This Amendatory Agreement is a Loan Document executed
pursuant to the Existing Credit Agreement and shall be construed,
administered and applied in accordance with all of the terms and
provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may
be executed by the parties hereto in several counterparts, each
of which when executed and delivered shall be deemed to be an
original and all of which shall constitute together but one and
the same agreement.
SUBPART 4.5. Governing Law. THIS AMENDATORY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
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SUBPART 4.6. Consent to New U.S. Credit Agreement. By its
signature below each Lender hereby consents to the Borrower
terminating the Original U.S. Credit Agreement, and approves of
the terms of the U.S. Credit Agreement being entered into by the
Borrower, Group and others on the date hereof.
SUBPART 4.7. Waiver of Certain Provisions, etc. The
Lenders hereby waive any Default or Event of Default under the
Existing Credit Agreement (including Section 9.1.7 thereof) and
each Loan Document caused by the release and termination by
General Electric Capital Corporation as agent under the U.S.
Credit Agreement (as in effect immediately prior to the Second
Amendment Effective Date) on the Second Amendment Effective Date
of all liens (including any Liens) and security interests in the
collateral securing the Obligations.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendatory Agreement to be executed by their respective officers
as of the day and year first above written.
WARNACO INC.
By /s/ William S. Finklestein
Title: Senior Vice President
THE BANK OF NOVA SCOTIA,
as Agent and as Lender
By /s/ Terry K. Fryett
Title: Vice President
MITSUI NEVITT CAPITAL CORPORATION
By /s/ Jerry Parisi
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By /s/ Jan Wertlieb
Title: Vice President
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[CONFORMED COPY]
SECOND AMENDMENT TO
CREDIT AGREEMENT
This SECOND AMENDMENT TO CREDIT AGREEMENT, dated as of
November 5, 1993 (this "Amendatory Agreement"), among WARNACO
INC. (the "Borrower"), the various financial institutions
signatories hereto (the "Lenders") and THE BANK OF NOVA SCOTIA,
as agent (the "Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties
to a Credit Agreement, dated as of July 16, 1993 (as amended or
otherwise modified to the date hereof, the "Existing Credit
Agreement");
WHEREAS, the Borrower has requested that the Lenders amend
the Existing Credit Agreement in certain respects; and
WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit
Agreement in certain respects as provided below (the Existing
Credit Agreement, as so amended by this Amendatory Agreement,
being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms
(whether or not underscored) when used in this Amendatory
Agreement shall have the following meanings (such meanings to be
equally applicable to the singular and plural form thereof):
"Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Amendment No. 2" is defined in Subpart 3.1.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the third recital.
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
"Second Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings
are provided in the Existing Credit Agreement are, unless
otherwise defined herein or the context otherwise requires, used
in this Amendatory Agreement with such meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Second
Amendment Effective Date, the Existing Credit Agreement is hereby
amended in accordance with Subparts 2.1 through 2.4; except as so
amended, the Existing Credit Agreement shall continue in full
force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement
is hereby amended by inserting the following definitions in such
Section in the appropriate alphabetical sequence:
"Amendment No. 2" means the Second Amendment, dated as
of November 5, 1993, to this Agreement among the Borrower,
the Lenders and the Agent.
"Second Amendment Effective Date" is defined in Subpart
3.1 of Amendment No. 2.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement
is hereby further amended as follows:
(a) the definition of "Interest Period" is hereby
amended by deleting "or two months thereafter" appearing in
the sixth line of such definition, and inserting the words
", two or three months thereafter" in place thereof; and
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(b) the definition of "Stated Maturity Date" is hereby
amended by deleting the number "60" appearing in the second
line of such definition and inserting the number "90" in
place thereof.
SUBPART 2.2 Amendment to Article II. Article II of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.2.1
SUBPART 2.2.1 Section 2.3 of the Existing Credit Agreement
is hereby amended by
(a) deleting the words "two month Interest Period" in
the ninth line of clause (a) of such Section, and inserting
the words "three month Interest Period" in place thereof;
and
(b) deleting the words "two month Interest Period" in
the eighth and ninth lines of clause (b) of such Section,
and inserting the words "three month Interest Period" in
place thereof.
SUBPART 2.3 Amendment to Article III. Article III of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.3.1.
SUBPART 2.3.1 The first sentence of Section 3.1 of the
Existing Credit Agreement is hereby amended in its entirety to
read as follows:
"The Borrower shall repay in full the entire unpaid
principal amount of each Loan upon the earlier of (i) a date
which is, (A) in the case of any Loans outstanding prior to
the Second Amendment Effective Date, on the date such Loan
was due and payable pursuant to the terms of the Credit
Agreement as in effect immediately prior to the Second
Amendment Effective Date, and (B) in the case of Loans made
on or subsequent to the Second Amendment Effective Date, at
the election of the Borrower, no later than 90 days
following the date of the making of such Loan (or, if
different, on the last day of the Interest Period for such
Loan), and (ii) the Stated Maturity Date therefor."
SUBPART 2.4 Consent to Making Loans. Notwithstanding any
provisions to the contrary contained in the Existing Credit
Agreement (including (i) the fifth recital, (ii) the language
contained in the parenthetical of clause (a) of Section 2.1.3,
and (iii) the third sentence of clause (a) of Section 2.3, in
each case of the Existing Credit Agreement) by its signature
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below each of the undersigned hereby acknowledges and consents to
the making of Loans by the RL Lenders in a principal amount not
to exceed $6,500,000 to repay Indebtedness owing by the Borrower
to ASCO International Sourcing Limited or its Subsidiaries or
affiliates (as opposed to the application of such Loans to the
refunding of a Disbursement).
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Second Amendment Effective Date. This
Amendatory Agreement (and the amendments and modifications
contained herein) shall become effective, and shall thereafter be
referred to as "Amendment No. 2", on the date (the "Second
Amendment Effective Date") when all of the conditions set forth
in this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendatory Agreement, duly
executed and delivered on behalf of the Borrower and the Required
Lenders.
SUBPART 3.1.2. Acknowledgement. The Agent shall have
received a copy of the Acknowledgement, substantially in the form
of Annex I hereto, duly executed and delivered by the Collateral
Agent.
SUBPART 3.1.3 Legal Details, etc. All documents executed
or submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its
counsel shall have received all information and such counterpart
originals or such certified or other copies or such materials, as
the Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this
Amendatory Agreement shall be satisfactory to the Agent and its
counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this
Amendatory Agreement to any Part or Subpart are, unless otherwise
specified or otherwise required by the context, to such Part or
Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit
Agreement. This Amendatory Agreement is a Loan Document executed
pursuant to the Existing Credit Agreement and shall be construed,
administered and applied in accordance with all of the terms and
provisions of the Existing Credit Agreement.
-4-
SUBPART 4.3. Successors and Assigns. This Amendatory
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may
be executed by the parties hereto in several counterparts, each
of which when executed and delivered shall be deemed to be an
original and all of which shall constitute together but one and
the same agreement.
SUBPART 4.5. Governing Law. THIS AMENDATORY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
-5-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendatory Agreement to be executed by their respective officers
as of the day and year first above written.
WARNACO INC.
By /s/ Dariush Ashrafi
Title: Senior Vice President &
Chief Financial Officer
THE BANK OF NOVA SCOTIA,
as Agent and as Lender
By /s/ Terry K. Fryett
Title: Vice President
MITSUI NEVITT CAPITAL CORPORATION
By /s/ Jerry Parisi
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By /s/ Jan Wertlieb
Title: Vice President
-6-
ANNEX I (to
Second Amendment)
ACKNOWLEDGMENT
Reference is made to the Intercreditor Agreement, dated as
of October 14, 1993 (the "Intercreditor Agreement"), among
CITICORP USA, INC. in its capacity as, inter alia, Collateral
Agent under the Loan Documents (such capitalized term, and other
terms used in this Acknowledgment, unless otherwise defined
herein, to have the meanings set forth in, or by reference in,
the Intercreditor Agreement) and THE BANK OF NOVA SCOTIA, acting
through its New York Agency ("Scotiabank"), in its capacity as,
inter alia, agent for the SCA Banks.
By its signature below, the Collateral Agent hereby
acknowledges and confirms that the loan made by Scotiabank (in
its capacity as an SCA Bank under the Scotiabank Credit
Agreement) in a principal amount not to exceed $6,500,000 and
applied to the repayment of the Borrower's obligations to a Trade
Lender (as opposed to the making of such loan to refinance a
Disbursement (as defined in the Scotiabank Credit Agreement)), is
an "RL Obligation" for all purposes under the Intercreditor
Agreement, and the obligation to repay such RL Obligation is
secured by an RL Lien which ranks pari passu with the Credit
Agreement Liens.
CITICORP USA, INC., as
Collateral Agent
By /s/_____________________
Title:
-7-
[CONFORMED COPY]
THIRD AMENDMENT TO
CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of
January 7, 1994 (this "Amendatory Agreement"), among WARNACO INC.
(the "Borrower"), the various financial institutions signatories
hereto (the "Lenders") and THE BANK OF NOVA SCOTIA, as agent (the
"Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties
to a Credit Agreement, dated as of July 16, 1993 (as amended or
otherwise modified to the date hereof, the "Existing Credit
Agreement");
WHEREAS, the Borrower has requested that the Lenders amend
the Existing Credit Agreement in certain respects; and
WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit
Agreement in certain respects as provided below (the Existing
Credit Agreement, as so amended by this Amendatory Agreement,
being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms
(whether or not underscored) when used in this Amendatory
Agreement shall have the following meanings (such meanings to be
equally applicable to the singular and plural form thereof):
"Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Amendment No. 3" is defined in Subpart 3.1.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the third recital.
"Existing Credit Agreement" is defined in the first recital.
"Lenders" is defined in the preamble.
"Third Amendment Effective Date" is defined in Subpart 3.1.
SUBPART 1.2. Other Definitions. Terms for which meanings
are provided in the Existing Credit Agreement are, unless
otherwise defined herein or the context otherwise requires, used
in this Amendatory Agreement with such meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Third
Amendment Effective Date, the Existing Credit Agreement is hereby
amended in accordance with Subparts 2.1 through 2.2; except as so
amended, the Existing Credit Agreement shall continue in full
force and effect.
SUBPART 2.1. Amendments to Article I. Article I of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.1.1 through 2.1.2.
SUBPART 2.1.1. Section 1.1 of the Existing Credit Agreement
is hereby amended by inserting the following definitions in such
Section in the appropriate alphabetical sequence:
"Amendment No. 3" means the Third Amendment, dated as
of January 7, 1994, to this Agreement among the Borrower,
the Lenders and the Agent.
"Third Amendment Effective Date" is defined in Subpart
3.1 of Amendment No. 3.
SUBPART 2.1.2. Section 1.1 of the Existing Credit Agreement
is hereby further amended as follows:
(a) the definition of "Loan Commitment Amount" is
hereby amended by deleting the number "$20,000,000"
appearing in the first line of such definition, and
inserting the number "$30,000,000" in place thereof.
SUBPART 2.2 Amendment to Article II. Article II of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.2.1
SUBPART 2.2.1 Section 2.6 of the Existing Credit Agreement
is hereby amended by deleting the number "$20,000,000" in the
fourth line of such Section, and inserting the number
"$30,000,000" in place thereof.
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Third Amendment Effective Date. This
Amendatory Agreement (and the amendments and modifications
contained herein) shall become effective, and shall thereafter be
referred to as "Amendment No. 3", on the date (the "Third
Amendment Effective Date") when all of the conditions set forth
in this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendatory Agreement, duly
executed and delivered on behalf of the Borrower and the Required
Lenders.
SUBPART 3.1.2. Replacement Note. The Bank of Nova Scotia,
in its capacity as the RL Lender, shall have received a
replacement Note in the form of Exhibit A hereto, duly executed
and delivered by the Borrower.
SUBPART 3.1.3 Legal Details, etc. All documents executed
or submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its
counsel shall have received all information and such counterpart
originals or such certified or other copies or such materials, as
the Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this
Amendatory Agreement shall be satisfactory to the Agent and its
counsel.
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this
Amendatory Agreement to any Part or Subpart are, unless otherwise
specified or otherwise required by the context, to such Part or
Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit
Agreement. This Amendatory Agreement is a Loan Document executed
pursuant to the Existing Credit Agreement and shall be construed,
-3-
administered and applied in accordance with all of the terms and
provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may
be executed by the parties hereto in several counterparts, each
of which when executed and delivered shall be deemed to be an
original and all of which shall constitute together but one and
the same agreement.
SUBPART 4.5. Governing Law. THIS AMENDATORY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
-4-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendatory Agreement to be executed by their respective officers
as of the day and year first above written.
WARNACO INC.
By/s/ Dariush Ashrafi
Title: Senior Vice President
Chief Financial Officer
THE BANK OF NOVA SCOTIA,
as Agent and as Lender
By/s/ Terry K. Fryett
Title: Vice President
MITSUI NEVITT CAPITAL CORPORATION
By/s/ Jerry Parisi
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By/s/ Jan Wertlieb
Title: Vice President
-5-
NOTE
$30,000,000 January 7, 1994
FOR VALUE RECEIVED, the undersigned, WARNACO INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of THE
BANK OF NOVA SCOTIA (the "Lender") on the Stated Maturity Date
(as defined in the Credit Agreement referred to below) the
principal sum of THIRTY MILLION DOLLARS ($30,000,000) or, if
less, the aggregate unpaid principal amount of all Loans shown on
the schedule attached hereto (and any continuation thereof) made
by the Lender pursuant to that certain Credit Agreement, dated as
of July 16, 1993 (together with all amendments and other
modifications, if any, from time to time thereafter made thereto,
the "Credit Agreement"), among the Borrower, The Bank of Nova
Scotia, as Agent, and the various financial institutions
(including the Lender) as are, or may from time to time become,
parties thereto.
The Borrower also promises to pay interest on the unpaid
principal amount hereof from time to time outstanding from the
date hereof until maturity (whether by acceleration or otherwise)
and, after maturity, until paid, at the rates per annum, on the
dates and in the manner specified in the Credit Agreement.
Payments of both principal and interest are to be made in
lawful money of the United States of America in same day or
immediately available funds to the account designated by the
Lender pursuant to the Credit Agreement.
This Note represents a renewal of, and is issued in
substitution and exchange for (and not in satisfaction of), that
certain Note of the Borrower, dated July 16, 1993, payable to the
order of the Lender. The Indebtedness originally evidenced by
such Note is a continuing Indebtedness, and nothing herein
contained shall be construed to release or terminate any Lien or
security interest given to secure such Note.
This Note is the Note referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which
reference is made for a description of the security for this Note
and for a statement of the terms and conditions on which the
Borrower is permitted and required to make prepayments and
repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be
immediately due and payable in accordance with the terms and
provisions of the Credit Agreement. Unless otherwise defined,
terms used herein have the meanings provided in the Credit
Agreement.
All parties hereto, whether as makers, endorsers, or
otherwise, severally waive presentment for payment, demand,
protest and notice of dishonor.
THIS NOTE HAS BEEN DELIVERED IN NEW YORK, NEW YORK AND SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
WARNACO INC.
By
Title:
-2-
LOANS AND PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
|==================================================================================================================
| | | | Amount of | | | |
| | Amount of | | Principal | Unpaid Principal| | |
| | Loan Made | | Repaid | Balance | | |
| |-------------- | Interest | --------------| ----------------| | |
| | | Period | | | | |
| | | (If Applicable)| | | | |
| |--------------- | ---------------| --------------| --------------- | | |
| |Base | LIBO | | Base | LIBO| Base | | | Notation |
|Date |Rate | Rate | | Rate | Rate| Rate | Rate | Total | Made By |
|===============|======|=========|=================|=========|=======|==========|========|===========|=============|
|<C> |<S> |<S> |<S> |<S> |<S> |<S> |<S> |<S> |<S> |
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
|---------------|------|---------|-----------------|---------|-------|----------|--------|-----------|-------------|
| | | | | | | | | | |
====================================================================================================================
</TABLE>
-4-
[CONFORMED COPY]
FOURTH AMENDMENT TO
CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT, dated as of
April 25, 1994 (this "Amendatory Agreement"), among WARNACO INC.
(the "Borrower"), the various financial institutions signatories
hereto (the "Lenders") and THE BANK OF NOVA SCOTIA, as agent (the
"Agent") for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agent are parties
to a Credit Agreement, dated as of July 16, 1993 (as amended or
otherwise modified to the date hereof, the "Existing Credit
Agreement");
WHEREAS, the Borrower has requested that the Lenders amend
the Existing Credit Agreement in certain respects; and
WHEREAS, the Lenders have agreed, subject to the terms and
conditions hereinafter set forth, to amend the Existing Credit
Agreement in certain respects as provided below (the Existing
Credit Agreement, as so amended by this Amendatory Agreement,
being referred to as the "Credit Agreement");
NOW, THEREFORE, in consideration of the agreements herein
contained, the parties hereto agree as follows:
PART I
DEFINITIONS
SUBPART 1.1. Certain Definitions. The following terms
(whether or not underscored) when used in this Amendatory
Agreement shall have the following meanings (such meanings to be
equally applicable to the singular and plural form thereof):
"Agent" is defined in the preamble.
"Amendatory Agreement" is defined in the preamble.
"Amendment No. 4" is defined in Subpart 3.1.
"Borrower" is defined in the preamble.
"Credit Agreement" is defined in the third recital.
"Existing Credit Agreement" is defined in the first recital.
"Fourth Amendment Effective Date" is defined in Subpart 3.1.
"Lenders" is defined in the preamble.
SUBPART 1.2. Other Definitions. Terms for which meanings
are provided in the Existing Credit Agreement are, unless
otherwise defined herein or the context otherwise requires, used
in this Amendatory Agreement with such meanings.
PART II
AMENDMENTS TO THE
EXISTING CREDIT AGREEMENT
Effective on (and subject to the occurrence of) the Fourth
Amendment Effective Date, the Existing Credit Agreement is hereby
amended in accordance with Subparts 2.1 through 2.5; except as so
amended, the Existing Credit Agreement shall continue in full
force and effect.
SUBPART 2.1. Amendments to Recitals. The third and fifth
recitals of the Existing Credit Agreement are hereby amended in
their entirety to read as follows:
"WHEREAS, the Borrower desires to obtain Commitments
from the Lenders pursuant to which
(a) Loans will be made by the RL Lenders to the
Borrower from time to time prior to the Loan Commitment
Termination Date; and
(b) documentary Letters of Credit will be issued
by the Issuer for the account of the Borrower to
support obligations of the Borrower and its wholly-
owned Subsidiaries and under the several obligations
hereunder of the Lenders to the extent of such Lender's
Initial Percentage to participate in Letters of Credit
from time to time prior to the Letter of Credit
Commitment Termination Date;"
"WHEREAS, the proceeds of Loans will be used to
reimburse the Issuer for payments made by the Issuer under
the Letters of Credit and proceeds of Letters of Credit will
be used in connection with the Borrower's and its wholly-
owned Subsidiaries' worldwide sourcing of merchandise;"
SUBPART 2.2. Amendments to Article I. Article I of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.2.1 through 2.2.2.
-2-
SUBPART 2.2.1. Section 1.1 of the Existing Credit Agreement
is hereby amended by inserting the following definitions in such
Section in the appropriate alphabetical sequence:
"Amendment No. 4" means the Fourth Amendment, dated as
of April 25, 1994, to this Agreement among the Borrower, the
Lenders and the Agent.
"Fourth Amendment Effective Date" is defined in Subpart
3.1 of Amendment No. 4.
SUBPART 2.2.2. Section 1.1 of the Existing Credit Agreement
is hereby further amended as follows:
(a) the definition of "Loan Commitment Amount" is
hereby amended in its entirety to read as follows:
"`Loan Commitment Amount' means $30,000,000, as
such amount may be reduced by Section 2.2.
Notwithstanding anything to the contrary contained in
this Agreement (including Section 2.1.3), in no event
shall Scotiabank be required to make any Loans if and
to the extent that, after giving effect to such Loans
(and any adjustments to Scotiabank's Percentage (and
its resulting pro rata portion of Letter of Credit
Outstandings) required pursuant to the terms of this
Agreement), the aggregate outstanding principal amount
of Loans made by Scotiabank together with Scotiabank's
Percentage of Letter of Credit Outstandings would
exceed $35,000,000 (as such amount may be modified as a
result of any purchase, sale or assignment from time to
time by Scotiabank of its Loans and/or Commitments)";
and
(b) the definition of "Percentage" is hereby amended
be deleting the figure "$40,000,000" appearing in clause (y)
of such definition, and inserting the following in place
thereof:
"$35,000,000 (as such amount may be modified as a
result of any purchase, sale or assignment from time to
time by Scotiabank of its Loans and/or Commitments),"
SUBPART 2.3. Amendments to Article II. Article II of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.3.1.
SUBPART 2.3.1. The first sentence of clause (a) of Section
2.3 of the Existing Credit Agreement is hereby amended in its
entirety to read as follows:
-3-
"Upon any Disbursement being made in respect of a
Letter of Credit (whether such Letter of Credit was issued
to support the obligations of the Borrower or any Subsidiary
of the Borrower), the Borrower shall (unless it shall have
given notice to the Agent to the contrary prior to 3:00
p.m., New York time, at least three Business Days prior to
the date of such Disbursement) be deemed to have delivered
to the Agent a Borrowing Request pursuant to which the
Borrower shall have been deemed to irrevocably request that
the RL Lenders make a LIBO Rate Loan with a three month
Interest Period in a principal amount equal to the amount of
the Disbursement being made."
SUBPART 2.4. Amendment to Article IV. Article IV of the
Existing Credit Agreement is hereby amended in accordance with
Subparts 2.4.1 through 2.4.2.
SUBPART 2.4.1. The first sentence of Section 4.1 of the
Existing Credit Agreement is hereby amended in its entirety to
read as follows:
"By delivering to the Agent and the Issuer an Issuance
Request (such request being, in the Borrower's sole
discretion, either delivered (by telex, teletransmission or
otherwise) in accordance with the terms of the Tradexpress
Agreement or in the form attached hereto as Exhibit B) on or
before 3:00 p.m., New York time on the Business Day on which
a Letter of Credit is to be issued, the Borrower or any
wholly-owned Subsidiary of the Borrower may request, from
time to time prior to the Letter of Credit Commitment
Termination Date, that the Issuer issue an irrevocable sight
documentary letter of credit in such form as may be
requested by the Borrower or such Subsidiary and approved by
the Issuer (each a "Letter of Credit"), to facilitate the
Borrower's and the Borrower's Subsidiaries' worldwide
sourcing of merchandise."
SUBPART 2.4.2. Section 4.8 of the Existing Credit Agreement
is hereby amended by adding the following new sentence to the end
of such Section:
"Without in any way limiting the provisions
of Section 4.6, and notwithstanding anything
to the contrary contained in this Agreement
or in any other Loan Document, the Borrower
irrevocably acknowledges and agrees that it
is unconditionally liable for all
Reimbursement Obligations with respect to
each Disbursement (including fees and
interest thereon) under each Letter of
Credit, regardless of whether such Letter of
-4-
Credit was issued in respect of the sourcing
or other corporate requirements or needs of
the Borrower or any Subsidiary of the
Borrower, or otherwise."
SUBPART 2.5. Amendment to Article XI. Article XI of the
Existing Credit Agreement is hereby amended in accordance with
Subpart 2.5.1.
SUBPART 2.5.1. Section 11.12 of the Existing Credit
Agreement is hereby amended in its entirety to read as follows:
"SECTION 11.12. [RESERVED]"
PART III
CONDITIONS TO EFFECTIVENESS
SUBPART 3.1. Fourth Amendment Effective Date. This
Amendatory Agreement (and the amendments and modifications
contained herein) shall become effective, and shall thereafter be
referred to as "Amendment No. 4", on the date (the "Fourth
Amendment Effective Date") when all of the conditions set forth
in this Subpart 3.1 have been satisfied.
SUBPART 3.1.1. Execution of Counterparts. The Agent shall
have received counterparts of this Amendatory Agreement, duly
executed and delivered on behalf of the Borrower and the Lenders.
SUBPART 3.1.2. Delivery of Assignment Agreement. The Bank
of Nova Scotia and Mitsui Nevitt Capital Corporation shall have
executed and delivered an Assignment Agreement in the form
attached hereto as Exhibit A.
SUBPART 3.1.3. Acknowledgment Letter. The Agent shall have
received a copy of the Acknowledgment Letter in the form attached
hereto as Exhibit B, duly executed and delivered by Citicorp USA,
Inc.
SUBPART 3.1.4. Legal Details, etc. All documents executed
or submitted pursuant hereto shall be satisfactory in form and
substance to the Agent and its counsel. The Agent and its
counsel shall have received all information and such counterpart
originals or such certified or other copies or such materials, as
the Agent or its counsel may reasonably request, and all legal
matters incident to the transactions contemplated by this
Amendatory Agreement shall be satisfactory to the Agent and its
counsel.
-5-
PART IV
MISCELLANEOUS
SUBPART 4.1. Cross-References. References in this
Amendatory Agreement to any Part or Subpart are, unless otherwise
specified or otherwise required by the context, to such Part or
Subpart of this Amendatory Agreement.
SUBPART 4.2. Loan Document Pursuant to Existing Credit
Agreement. This Amendatory Agreement is a Loan Document executed
pursuant to the Existing Credit Agreement and shall be construed,
administered and applied in accordance with all of the terms and
provisions of the Existing Credit Agreement.
SUBPART 4.3. Successors and Assigns. This Amendatory
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.
SUBPART 4.4. Counterparts. This Amendatory Agreement may
be executed by the parties hereto in several counterparts, each
of which when executed and delivered shall be deemed to be an
original and all of which shall constitute together but one and
the same agreement.
SUBPART 4.5. Governing Law. THIS AMENDATORY AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendatory Agreement to be executed by their respective officers
as of the day and year first above written.
WARNACO INC.
By /s/ Dariush Ashrafi
Title: Senior Vice President
and Chief Financial Officer
THE BANK OF NOVA SCOTIA,
as Agent, as Issuer and as Lender
By /s/ Terry K. Fryett
Title: Vice President
MITSUI NEVITT CAPITAL CORPORATION
By /s/ Jerry Parisi
Title: Vice President
SOCIETE GENERALE, NEW YORK BRANCH
By /s/ Jan Wertlieb
Title: Vice President
-7-
EXHIBIT A
[EXECUTION COPY]
LENDER ASSIGNMENT AGREEMENT
To: Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attn: Chief Financial Officer
To: The Bank of Nova Scotia,
New York Agency
One Liberty Plaza
New York, New York 10006
Attn: Kevin Clark
April 25, 1994
WARNACO INC.
Gentlemen and Ladies:
We refer to clause (d) of Section 11.11.1 of the Credit
Agreement, dated as of July 16, 1993 (together with all
amendments and other modifications, if any, from time to time
thereafter made thereto, the "Credit Agreement"), among Warnaco
Inc., a Delaware corporation (the "Borrower"), the various
financial institutions (the "Lenders") as are, or shall from time
to time become, parties thereto, and The Bank of Nova Scotia, as
agent (the "Agent") for the Lenders. Unless otherwise defined
herein or the context otherwise requires, terms used herein have
the meaning provided in the Credit Agreement.
This Agreement is delivered to you pursuant to clause (d) of
Section 11.11.1 of the Credit Agreement and also constitutes
notice to each of you, pursuant to clause (c) of Section 11.11.1
of the Credit Agreement, of the assignment and delegation to
Mitsui Nevitt Capital Corporation (the "Assignee") of $5,000,000
of the Letter of Credit Commitment of The Bank of Nova Scotia
(the "Assignor") under the Credit Agreement on the date hereof.
After giving effect to the foregoing assignment and delegation,
the Assignor's and the Assignee's Percentage for purposes of the
Credit Agreement are set forth opposite such Person's name on the
signature pages hereof.
Interest and fees with respect to the Letter of Credit
Commitment assigned hereby that have accrued prior to the date
hereof shall be payable to the Assignor; interest and fees with
respect to the Letter of Credit Commitment assigned hereby that
accrue after the date hereof shall be payable to the Assignee.
The Assignee hereby acknowledges and confirms that it has
received a copy of the Credit Agreement (and amendments thereto)
and the related exhibits, together with copies of the documents
which were required to be delivered under the Credit Agreement as
a condition to the making of the Credit Extensions thereunder.
The Assignee further confirms and agrees that increasing its
Letter of Credit Commitment under the Credit Agreement has and
will be made without recourse to, or representation or warranty
by, the Agent.
Except as otherwise provided in the Credit Agreement,
effective as of the date of acceptance hereof by the Issuer
(a) the Assignee
(i) shall, to the extent of its increased Letter
of Credit Commitment, have all the rights and
obligations of a "Lender" under the Credit Agreement
and the other Loan Documents to the extent specified in
the second paragraph hereof; and
(ii) to the extent of its increased Letter of
Credit Commitment, agrees to be bound by the terms and
conditions set forth in the Credit Agreement and the
other Loan Documents; and
(b) the Assignor shall be released from its
obligations under the Credit Agreement and the other Loan
Documents to the extent specified in the second paragraph
hereof.
The Agent hereby waives the processing fee referred to in
Section 11.11.1 of the Credit Agreement upon its delivery hereof.
The Assignee hereby advises each of you that the
administrative details as to the Assignee with respect to the
assigned Letter of Credit Commitment remains the same as set
forth in the Credit Agreement.
-2-
This Agreement may be executed by the Issuer, the Assignor
and Assignee in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, each of the undersigned has executed and
delivered this Agreement as of the date first written above.
Adjusted Percentage THE BANK OF NOVA SCOTIA
(Letter of Credit): 60%
By: /s/ Terry K. Fryett
Title: Vice President
Adjusted Percentage MITSUI NEVITT CAPITAL
(Letter of Credit): 30% CORPORATION
By: /s/ Jerry Parisi
Title: Vice President
Accepted and Acknowledged:
THE BANK OF NOVA SCOTIA,
New York Agency, as Issuer
and as Agent
By: /s/ Terry K. Fryett
Title: Vice President
-3-
EXHIBIT B
ACKNOWLEDGMENT
Reference is made to the Credit Agreement, dated as of
July 16, 1993 (as amended or otherwise modified, the "Credit
Agreement"), among Warnaco Inc., certain commercial lending
institutions from time to time parties thereto and The Bank of
Nova Scotia, as agent for such lending institutions. By its
signature below, Citicorp USA, Inc. in its capacity as Managing
Agent, Documentation Agent and Collateral Agent under the U.S.
Credit Agreement (as defined in the Credit Agreement) hereby
acknowledges and agrees that Section 11.12 of the Credit
Agreement may be deleted in its entirety.
CITICORP USA, INC., as
Managing Agent,
Documentation Agent and
Collateral Agent
By ______________________
Title:
ACQUISITION AGREEMENT
by and among
CALVIN KLEIN, INC.
THE WARNACO GROUP, INC.
AND
WARNACO INC.
Dated March 14, 1994
TABLE OF CONTENTS
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
SALE OF SHARES AND TRADEMARKS
Section 2.1. Shares of Newco; Entry into
Worldwide Transfer Agreement . . . . . . . . . . . . . 17
Section 2.2. Consideration . . . . . . . . . . . . . . . . . . . . . 17
Section 2.3. Consideration at Closing . . . . . . . . . . . . . . . . 18
Section 2.4. Women's Intimate Apparel Beneficial
Interest and Trademarks . . . . . . . . . . . . . . . . 19
Section 2.5. Consideration at Second Closing . . . . . . . . . . . . 20
ARTICLE III
CLOSINGS AND DELIVERIES
Section 3.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.2. Deliveries by CKI at the Closing. . . . . . . . . . . . . 21
Section 3.3. Deliveries by Group and Warnaco at
the Closing . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.4. Second Closing . . . . . . . . . . . . . . . . . . . . . 24
Section 3.5. Deliveries by CKI at the Second Closing . . . . . . . . . 25
Section 3.6. Deliveries by Warnaco at the Second
Closing . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE IV
RELATED MATTERS
Section 4.1. Interim Balance Sheet . . . . . . . . . . . . . . . . . 27
Section 4.2. Post-Closing Adjustment . . . . . . . . . . . . . . . . 28
Section 4.3. Number of Shares . . . . . . . . . . . . . . . . . . . . 31
Section 4.4. Cash or Stock Substitution . . . . . . . . . . . . . . . 32
Section 4.5. Related Agreements . . . . . . . . . . . . . . . . . . . 32
Section 4.6. Loans and Promissory Notes . . . . . . . . . . . . . . . 33
Section 4.7. Stock Options . . . . . . . . . . . . . . . . . . . . . 33
Section 4.8. Actions to be Taken by CKI . . . . . . . . . . . . . . . 34
Section 4.9. Assumption of Employee Compensation . . . . . . . . . . . 35
Section 4.10. Change of Newco Name . . . . . . . . . . . . . . . . . . 36
Section 4.11. Post-Closing Matters . . . . . . . . . . . . . . . . . . 36
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CKI
Section 5A.1. Corporate Organization . . . . . . . . . . . . . . . . 37
Section 5A.2. Authority; Authorization and Validity
of Agreement . . . . . . . . . . . . . . . . . . . . 37
Section 5A.3. No Conflict or Violation . . . . . . . . . . . . . . . 38
Section 5A.4. Consents and Approvals . . . . . . . . . . . . . . . . 39
Section 5A.5. Financial Statements . . . . . . . . . . . . . . . . . 39
Section 5A.6. Operation in Ordinary Course . . . . . . . . . . . . . 41
Section 5A.7. No Material Adverse Change . . . . . . . . . . . . . . . 41
Section 5A.8. Tax Matters . . . . . . . . . . . . . . . . . . . . . . 42
Section 5A.9. Absence of Undisclosed Liabilities . . . . . . . . . . 42
Section 5A.10. Intellectual Property . . . . . . . . . . . . . . . . 43
Section 5A.11. Compliance with Law . . . . . . . . . . . . . . . . . 46
Section 5A.12. Litigation . . . . . . . . . . . . . . . . . . . . . . 47
Section 5A.13. Contracts . . . . . . . . . . . . . . . . . . . . . . 48
Section 5A.14. Employee Benefits; ERISA . . . . . . . . . . . . . . . 48
Section 5A.15. Employees. . . . . . . . . . . . . . . . . . . . . . 49
Section 5A.16. Labor Difficulties . . . . . . . . . . . . . . . . . . 50
Section 5A.17. Investment Purpose; Legend . . . . . . . . . . . . . . 51
Section 5A.18. Environmental Matters . . . . . . . . . . . . . . . . 51
Section 5A.19. Fixed Assets. . . . . . . . . . . . . . . . . . . . 52
Section 5A.20. Inventory . . . . . . . . . . . . . . . . . . . . . . 52
Section 5A.21. Accounts Receivable . . . . . . . . . . . . . . . . . 53
Section 5A.22. Assets Necessary to Operate the Business . . . . . . . 53
Section 5A.23. Customers and Suppliers . . . . . . . . . . . . . . . 54
Section 5A.24. Orders, Commitments and Returns . . . . . . . . . . . 54
Section 5A.25. Letters of Credit . . . . . . . . . . . . . . . . . . 55
Section 5A.26. Licenses and Permits . . . . . . . . . . . . . . . . . 55
Section 5A.27. Disclosure . . . . . . . . . . . . . . . . . . . . . . 55
Section 5B.1. Corporate Organization . . . . . . . . . . . . . . . . 56
Section 5B.2. Capitalization . . . . . . . . . . . . . . . . . . . . 57
Section 5B.3. Authority; Authorization and Validity
of Agreement . . . . . . . . . . . . . . . . . . . . . 57
Section 5B.4. No Conflict or Violation . . . . . . . . . . . . . . . 57
Section 5B.5. No Prior Activities . . . . . . . . . . . . . . . . . . 57
Section 5C.1. Authorization . . . . . . . . . . . . . . . . . . . . . 58
Section 5C.2. No Violation . . . . . . . . . . . . . . . . . . . . . 58
Section 5C.3. Litigation . . . . . . . . . . . . . . . . . . . . . . 59
Section 5C.4. Consents . . . . . . . . . . . . . . . . . . . . . . . 59
Section 5C.5. Title . . . . . . . . . . . . . . . . . . . . . . . . . 60
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF GROUP
Section 6A.1. Corporate Organization . . . . . . . . . . . . . . . . 60
Section 6A.2. Authority; Authorization and Validity of Agreements . . 61
Section 6A.3. No Conflict or Violation . . . . . . . . . . . . . . . 62
Section 6A.4. Consent and Approvals . . . . . . . . . . . . . . . . . 62
Section 6A.5. Reports and Financial Statements . . . . . . . . . . . . 63
Section 6A.6. Capital Stock and Related Matters . . . . . . . . . . . 65
Section 6A.7. Authorization and Validity of the Shares of
Warnaco Common Stock . . . . . . . . . . . . . . . . . 66
Section 6A.8. Absence of Specified Changes . . . . . . . . . . . . . 67
Section 6A.9. Disclosure . . . . . . . . . . . . . . . . . . . . . . 67
Section 6B.1. Corporate Organization . . . . . . . . . . . . . . . . 68
Section 6B.2. Authorization and Validity of Agreement . . . . . . . . 68
Section 6B.3. No Conflict or Violation . . . . . . . . . . . . . . . 69
Section 6B.4. Consents and Approvals . . . . . . . . . . . . . . . . 70
Section 6B.5. Capitalization . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE VII
OTHER AGREEMENTS AND COVENANTS OF THE PARTIES
A. AGREEMENTS AND COVENANTS OF CKI
Section 7A.1. Warnaco Mail and Other Documents . . . . . . . . . . . 70
Section 7A.2. Further Assurances . . . . . . . . . . . . . . . . . . 71
Section 7A.3. Insurance . . . . . . . . . . . . . . . . . . . . . . . 71
Section 7A.4. Women's Intimate Apparel . . . . . . . . . . . . . . . . 72
Section 7A.6. Promotional Figures. . . . . . . . . . . . . . . . . . . 74
B. AGREEMENTS AND COVENANTS OF GROUP AND WARNACO.
Section 7B.1. Stock Options . . . . . . . . . . . . . . . . . . . . . 74
Section 7B.2. Assumed Liabilities. . . . . . . . . . . . . . . . . . . 75
Section 7B.3. CKI Loan . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7B.4. Letters of Credit. . . . . . . . . . . . . . . . . . . . 76
Section 7B.5. Returns . . . . . . . . . . . . . . . . . . . . . . . . 76
Section 7B.6. CKI Mail and Ohter Documents . . . . . . . . . . . . . . 77
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF GROUP
AND WARNACO WITH RESPECT TO THE SECOND CLOSING
Section 8.1. Representations and Warranties . . . . . . . . . . . . . 77
Section 8.2. CKI's Obligations . . . . . . . . . . . . . . . . . . . 78
Section 8.3. CKI Certificate . . . . . . . . . . . . . . . . . . . . 78
Section 8.4. Certified Resolutions . . . . . . . . . . . . . . . . . 78
Section 8.5. No Injunction . . . . . . . . . . . . . . . . . . . . . 78
Section 8.6. Opinions of Counsel to CKI . . . . . . . . . . . . . . . 79
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF
CKI WITH RESPECT TO THE SECOND CLOSING
Section 9.1. Representations and Warranties. . . . . . . . . . . . . . 79
Section 9.2. Group and Warnaco Obligations . . . . . . . . . . . . . 80
Section 9.3. Certificate of Warnaco . . . . . . . . . . . . . . . . . 80
Section 9.4. Certified Resolutions . . . . . . . . . . . . . . . . . 80
Section 9.5. No Injunction . . . . . . . . . . . . . . . . . . . . . 80
Section 9.6. Opinion of Counsel to Warnaco . . . . . . . . . . . . . 81
ARTICLE X
SURVIVAL, INDEMNIFICATION AND SET-OFF
Section 10.1. Survival of Representations. . . . . . . . . . . . . . . 81
Section 10.2. Statements as Representations. . . . . . . . . . . . . . 81
Section 10.3. Indemnification by CKI . . . . . . . . . . . . . . . . . 81
Section 10.4 Indemnification by Group and Warnaco . . . . . . . . . . 84
Section 10.5. Conditions of Indemnification. . . . . . . . . . . . . . 85
Section 10.6. Set-off . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.7. Limitation on Indemnification . . . . . . . . . . . . . 89
ARTICLE XI
MISCELLANEOUS
Section 11.1. Headings . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.3. Assignment . . . . . . . . . . . . . . . . . . . . . . 92
Section 11.4. Complete Agreement . . . . . . . . . . . . . . . . . . 93
Section 11.5. Severability . . . . . . . . . . . . . . . . . . . . . 93
Section 11.6. Amendments; Waivers . . . . . . . . . . . . . . . . . . 93
Section 11.7. Public Announcements . . . . . . . . . . . . . . . . . 94
Section 11.8. Parties in Interest . . . . . . . . . . . . . . . . . . 94
Section 11.9. Counterparts . . . . . . . . . . . . . . . . . . . . . 94
Section 11.10. Governing Law . . . . . . . . . . . . . . . . . . . . 95
Section 11.11. Jurisdiction . . . . . . . . . . . . . . . . . . . . . 95
Section 11.12. Guarantee . . . . . . . . . . . . . . . . . . . . . . . 95
Section 11.13. Brokers, Finders . . . . . . . . . . . . . . . . . . . 95
Section 11.14. Fees and Expenses . . . . . . . . . . . . . . . . . . 96
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated March 14, 1994 (the
"Agreement"), by and among CALVIN KLEIN, INC., a New York
corporation ("CKI"), THE WARNACO GROUP, INC., a Delaware
corporation ("Group"), and WARNACO INC., a Delaware corporation
and a direct, wholly owned subsidiary of Group ("Warnaco").
WHEREAS, CKI or one of its Affiliates (as hereinafter
defined) is the owner of the Calvin Klein Trademarks (as
hereinafter defined) in the United States and in foreign
countries and other jurisdictions;
WHEREAS, CKI and its Affiliates are engaged in, among
other things, the business of selling and marketing, and granting
licenses for the sale and marketing of, Men's Underwear (as
hereinafter defined) utilizing the Calvin Klein Trademarks;
WHEREAS, CKI, Group and Warnaco desire to transfer
ownership, to the extent it can be accomplished without
jeopardizing the validity or enforceability of the Calvin Klein
Trademarks and to the extent legally possible, of the Calvin
Klein Trademarks relating to Men's Underwear (as hereinafter
defined) and Women's Intimate Apparel (as hereinafter defined) on
a worldwide basis to the Trust (as hereinafter defined), and
where such transfer of ownership is not legally possible, to
enter into alternative arrangements to provide for the
irrevocable, perpetual use and enjoyment of such Trademarks by
Warnaco, and, in furtherance of such objective (and to provide
for the possible ownership by Warnaco directly), will enter into
the Worldwide Transfer Agreement (as hereinafter defined) which
provides for appropriate action to be taken to achieve such
objective;
WHEREAS, CKI, Group and Warnaco wish to provide for the
terms and conditions pursuant to which (a) Warnaco will acquire
from CKI, through the issuance to Warnaco of all of the initial
capital stock of Calvin Klein Men's Underwear, Inc., a Delaware
corporation which has been newly formed by CKI ("Newco"), the
ownership of (i) certain Assets (as hereinafter defined) relating
to the Men's Underwear business of CKI, which will have been
transferred to Newco by CKI, (ii) the beneficial interest in a
Trust to which CKI will have transferred the Calvin Klein
Trademarks, which beneficial interest will have been issued to
CKI by the Trust and transferred by CKI to Newco and will
represent the ownership of the Calvin Klein Trademarks for Men's
Underwear in the United States and certain foreign countries and
jurisdictions, and (iii) a related license in perpetuity, which
will have been issued to CKI by the Trust and transferred by CKI
to Newco, to use the Calvin Klein Trademarks for Men's Underwear
in the United States and certain foreign countries and
jurisdictions, and (b) Warnaco will acquire from CKI, upon the
expiration of the existing Women's Intimate Apparel License (as
hereinafter defined), the beneficial interest in the Trust, which
will represent the ownership of the Calvin Klein Trademarks for
Women's Intimate Apparel in the United States and certain foreign
countries and jurisdictions, and a related license in perpetuity,
which will have been issued to CKI by the Trust, to use the
Calvin Klein Trademarks for Women's Intimate Apparel in the
United States and certain foreign countries and jurisdictions;
WHEREAS, Warnaco wishes to obtain from CKI, and CKI
wishes to grant to Warnaco, a license to use the Calvin Klein
Trademarks for Men's Accessories (as hereinafter defined); and
WHEREAS, Group, Warnaco and CKI wish to provide for
certain other agreements which are related to the foregoing
transactions.
NOW, THEREFORE, in consideration of the foregoing and
the respective agreements of the parties contained herein,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.1. Definitions. As used in this Agreement,
each of the following terms shall have the following meaning:
"ACCOUNTS PAYABLE" shall mean the accounts payable
arising out of the Business (other than accounts payable to
Employees or to CKI or any of its Affiliates).
"ACCOUNTS RECEIVABLE" shall mean the trade accounts
receivable net of reserves arising out of the Business (other
than accounts receivable from Employees or from CKI or any of its
Affiliates but including Accounts Receivable from CKI's and its
Affiliates' retail and outlet stores in an amount not in excess
of $171,000).
"ACCRUED COMPENSATION" shall have the meaning set forth
in Section 4.9 hereof.
"ADMINISTRATION AGREEMENT" shall mean the
Administration Agreement being entered into between CKI and
Warnaco in the form annexed hereto as Exhibit A.
"AFFILIATE" shall mean, with respect to a specified
person, a person that directly or indirectly, through one or more
intermediaries, controls, or is controlled by or is under common
control with, the person specified.
"ALLOCATION AGREEMENT" shall mean the purchase price
allocation agreement being entered into by CKI and Warnaco in the
form annexed hereto as Exhibit B.
"ASSETS" shall mean Inventory, Accounts Receivable and
Fixed Assets.
"ASSUMED LIABILITIES" shall mean the Accounts Payable
and Contracts being assumed by Warnaco pursuant to Section 7B.2
hereof, the returns of the Business being assumed pursuant to
Section 7B.5 and all liabilities arising after the Closing Date
(including, without limitation, any severance, termination or
continuing medical coverage obligations owed to Employees as a
result of the termination of their employment by Warnaco or any
of its Affiliates).
"AUDITED BALANCE SHEET" shall have the meaning set
forth in Section 4.2 hereof.
"AUDITED NET WORKING CAPITAL" shall have the meaning
set forth in Section 4.2 hereof.
"AVERAGE COMMON SHARE PRICE" shall have the meaning set
forth in Section 4.3 hereof.
"BOOKS AND RECORDS" shall mean all of the books and
records of CKI and its Affiliates (or true and complete copies
thereof), including all computerized books and records maintained
by CKI and its Affiliates, which relate to the Business and are
necessary for Warnaco to operate the Business after the Closing,
including, without limitation, books of account, general,
financial, tax and personnel records, sales, advertising,
marketing and promotional records and literature and other sales-
related material, sourcing, production and manufacturing
documents and records, invoices, shipping records, customer
lists, supplier lists, patterns, specifications, bills of
material and prototypes, correspondence and other documents and
any rights thereto.
"BUSINESS" shall mean the business activities of CKI
and its Affiliates relating to the manufacture, distribution and
sale of Men's Underwear.
"CALVIN KLEIN TRADEMARKS" shall mean the applications
and the registrations for the trademarks "CALVIN KLEIN",
"CK/CALVIN KLEIN", "CK" and all variations and combinations
thereof, including those not yet developed, and as identified for
each country in Section 5A.10 of the Disclosure Schedule.
"CASH CONSIDERATION" shall mean the amount of Twenty-
Nine Million Five Hundred Thousand Dollars ($29,500,000);
provided, however, that in the event Group exercises its right,
pursuant to Section 4.4 hereof, to utilize cash in lieu of shares
of Warnaco Common Stock, the amount of cash being paid by Warnaco
to CKI shall be $29,500,000 plus the amount of increased cash
equal to the value of the Warnaco Common Stock, as determined
pursuant to Section 4.3 hereof, for which cash is being
substituted by Warnaco in order that the Cash Consideration and
Share Consideration, as determined pursuant to Section 4.3
hereof, equals Fifty-Three Million Five Hundred Thousand Dollars
($53,500,000).
"CKI'S KNOWLEDGE" shall mean the actual knowledge of
Mr. Calvin Klein, Mr. Barry K. Schwartz, Mr. Richard A. Martin,
Mr. Robert B. DiPaola and Ms. Deirdre Miles-Graeter and after
having made due inquiry of Mr. John Kourakos or Mr. Robert
Mazzoli and other responsible management employees of CKI and its
Affiliates and shall be deemed to include all written notices,
service of process or other written communications (addressed, in
the case of other written correspondence, to any of the parties
named in this paragraph or such other responsible management
employees) received by CKI or its Affiliates as of the close of
business on March 10, 1994.
"CKI PLANS" shall have the meaning set forth in Section
5A.14 hereof.
"CLOSING" shall mean the transactions contemplated by
Article III hereof other than the transactions referred to in
Sections 3.5 and 3.6 hereof.
"CLOSING DATE" shall mean the date referred to in
Section 3.1 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"CONFIDENTIALITY AGREEMENT" shall mean the
Confidentiality Agreement, dated December 27, 1993, by and
between Warnaco and CKI, annexed hereto as Exhibit C.
"CONSIDERATION AT CLOSING" shall mean the Cash
Consideration and Share Consideration.
"CONTRACTS" shall mean those manufacturing agreements,
supply agreements, distribution agreements, license agreements,
Intellectual Property Agreements, service agreements, purchase
orders and commitments, advertising and promotional agreements
and commitments and other agreements identified in Section 5A.13
of the Disclosure Schedule.
"DISCLOSURE SCHEDULE" shall mean the document delivered
by CKI to Warnaco simultaneously with the execution of this
Agreement containing the information required to be included
therein pursuant to this Agreement.
"EMPLOYEES" shall mean those persons employed by CKI
who are engaged in the Business and who are listed in Section
5A.15A of the Disclosure Schedule.
"ENVIRONMENTAL LAWS" shall have the meaning set forth
in Section 5A.18 hereof.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"ERISA AFFILIATE" shall have the meaning set forth in
Section 5A.14 hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
"FIXED ASSETS" shall mean those items of office
equipment, supplies, machinery, furniture, fixtures and CKI's
interest in improvements, and other assets owned by CKI and its
Affiliates which are used principally in the Business and which
are listed in Section 5A.19 of the Disclosure Schedule.
"GAAP" shall mean generally accepted accounting
principles in the United States.
"GOVERNMENTAL BODY" shall mean any agency, division or
subdivision of the government of the United States or of any
state, city, municipality, county or town thereof, or of any
foreign jurisdiction.
"GROUP'S KNOWLEDGE" shall mean the knowledge of Mrs.
Linda J. Wachner, Mr. Dariush Ashrafi, Mr. William S. Finkelstein
and Mr. Stanley P. Silverstein and other responsible management
employees of Group and its Affiliates and shall include all
written notices, service of process or other communications
received by Group or its Affiliates as of the date of this
Agreement.
"HECKLER LICENSE" shall have the meaning set forth in
Section 3.4 hereof.
"HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"INTELLECTUAL PROPERTY" shall have the meaning set
forth in Section 5A.10 hereof.
"INTELLECTUAL PROPERTY AGREEMENTS" shall have the
meaning set forth in Section 5A.10 hereof.
"INTERIM BALANCE SHEET" shall have the meaning set
forth in Section 4.1 hereof.
"INTERIM NET WORKING CAPITAL" shall have the meaning
set forth in Section 4.1 hereof.
"INVENTORY" shall mean all Product owned by CKI or its
Affiliates (including Newco), other than Product which is owned
by CKI's or its Affiliates' retail or outlet stores.
"LETTERS OF CREDIT" shall mean the trade letters of
credit outstanding with respect to Product and materials ordered
by the Business as set forth in Section 5A.25 of the Disclosure
Schedule.
"LICENSES AND PERMITS" shall mean the governmental
permits, authorizations and licenses of CKI and its Affiliates
issued by any Governmental Body and applicable to the Business.
"LIEN" shall mean any mortgage, pledge, security
interest, encumbrance, lien (statutory or other) or conditional
sale agreement.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to
the Business, CKI, or Group, a material adverse effect on the
business, properties, condition (financial or otherwise) or
operations of the Business, CKI or Group, as the case may be,
taken as a whole.
"MEN'S ACCESSORIES" shall have the meaning set forth
for "Products" in the Men's Accessories License.
"MEN'S ACCESSORIES LICENSE" shall mean the Men's
Accessories License being granted to Warnaco by CKI in the form
annexed hereto as Exhibit D.
"MEN'S UNDERWEAR" shall have the meaning set forth in
the Administration Agreement.
"MEN'S UNDERWEAR BENEFICIAL INTEREST" shall mean the
beneficial interest in the Trust relating to the Men's Underwear
Trademarks.
"MEN'S UNDERWEAR LICENSE" shall mean the license in
perpetuity in the form annexed hereto as Exhibit E.
"MEN'S UNDERWEAR TRADEMARKS" shall have the meaning set
forth for Men's Trademarks in the Men's Underwear License.
"NET ASSETS STATEMENT" shall mean the statement of net
assets referred to in Section 5A.5 hereof.
"NEWCO SHARES" shall mean 1,000 shares of common stock,
par value $.01 per share, of Newco.
"NON-COMPETITION AGREEMENT" shall mean the agreement
being entered into by each of CKI, Mr. Calvin Klein and Mr. Barry
K. Schwartz with Warnaco in the form annexed hereto as Exhibit F.
"NYSE" shall mean The New York Stock Exchange, Inc.
"OWNER CERTIFICATE" shall mean a certificate issued by
the Trust representing a beneficial interest in the Trust.
"POST-CLOSING ADJUSTMENT" shall have the meaning set
forth in Section 4.2 hereof.
"PRODUCT" shall mean any item of Men's Underwear
bearing any of the Calvin Klein Trademarks.
"PROMISSORY NOTE" shall mean the promissory note in the
form annexed hereto as Exhibit G.
"QUALITY ASSURANCE AGREEMENT" shall mean the agreement
being entered into by CKI, the Trust and Warnaco in the form
annexed hereto as Exhibit H.
"REGISTRATION RIGHTS AGREEMENT" shall mean the
Registration Rights Agreement being entered into by Group and CKI
in the form annexed hereto as Exhibit I.
"RELATED AGREEMENTS" shall mean the agreements being
entered into pursuant to Section 4.5 hereof and, in addition, in
the case of Group, the Stock Option Agreements being entered into
by Group pursuant to Section 4.7 hereof.
"SEC" shall mean the Securities and Exchange
Commission.
"SEC REPORTS" shall have the meaning set forth in
Section 6A.5 hereof.
"SECOND CLOSING" shall mean the transactions
contemplated by Sections 3.5 and 3.6 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
"SERVICES AGREEMENT" shall mean the Shared Space,
Services and Warehousing Agreement being entered into by CKI and
Newco in the form annexed hereto as Exhibit J.
"SERVICING AGREEMENT" shall mean the agreement being
entered into by CKI, the Trust and Warnaco in the form annexed
hereto as Exhibit K.
"SHARE CONSIDERATION" shall mean the number of shares
of Warnaco Common Stock, determined pursuant to Section 4.3
hereof; provided, however, that in the event Warnaco exercises
its right, pursuant to Section 4.4 hereof, to pay additional cash
in lieu of shares of Warnaco Common Stock, the number of shares
of Warnaco Common Stock shall be reduced as determined by
reducing "y" in the formula set forth in Section 4.3 hereof, and
the amount of Cash Consideration shall be increased dollar-for-dollar
by the amount by which "y" is so reduced.
"STOCK OPTION AGREEMENT" shall mean the Stock Option
Agreement of Group customarily used in connection with the grant
of stock options under the 1991 Stock Option Plan of Group,
modified to the extent disclosed to CKI, in the form annexed
hereto as Exhibit L.
"TAXES" shall mean all taxes, charges, fees, levies,
imposts, duties or other assessments of any nature whatsoever
imposed by or payable to any federal, state, local, or foreign
taxing authority, including, without limitation, any gross
income, net income, franchise, profits, gross receipts,
estimated, ad valorem, value added, sales, use, service, customs,
real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation,
unemployment compensation, utility, severance, production,
excise, stamp, occupation, premium, windfall profits, occupancy,
transfer and gains taxes, together with all interest, penalties
and additions imposed with respect to such amounts.
"TAX RETURNS" shall mean all returns, reports and
information statements (including, without limitation, elections,
declarations, disclosures, schedules, estimates and information
returns) required to be provided to or filed with any taxing
authority of any Governmental Body relating to Taxes.
"TRUST" shall mean the trust established under the
Trust Agreement pursuant to the Delaware Business Trust Act.
"TRUST AGREEMENT" shall mean the Trust Agreement, being
entered into between CKI and Wilmington Trust Company, as
Trustee, and to which Newco is executing a counterpart and
becoming a party thereto, which is annexed hereto as Exhibit M.
"WARNACO COMMON STOCK" shall mean shares of Class A
Common Stock, par value $0.01 share, of Group.
"WOMEN'S INTIMATE APPAREL" shall have the meaning set
forth in the Administration Agreement.
"WOMEN'S INTIMATE APPAREL BENEFICIAL INTEREST" shall
mean the beneficial interest in the Trust relating to the Women's
Intimate Apparel Trademarks.
"WOMEN'S INTIMATE APPAREL LICENSE" shall mean the
license in perpetuity set forth as Exhibit N hereto.
"WOMEN'S INTIMATE APPAREL TRADEMARKS" shall have the
meaning set forth for Women's Trademarks in the Women's Intimate
Apparel License.
"WORLDWIDE TRANSFER AGREEMENT" shall mean the Worldwide
Transfer Agreement being entered into among CKI, the Trust and
Warnaco annexed hereto as Exhibit O.
ARTICLE II
SALE OF SHARES AND TRADEMARKS
Section 2.1. Shares of Newco; Entry into
Worldwide Transfer Agreement. Subject to the terms and upon the
conditions of this Agreement and in reliance upon the
representations, warranties and agreements of Group contained
herein, at the Closing being held simultaneously with the
execution of this Agreement, CKI is causing to be issued, sold
and delivered to Warnaco, and Warnaco is purchasing and
acquiring, good, valid and marketable title to the Newco Shares,
free and clear of any Lien. The sale of the Newco Shares is
being made by delivery to Warnaco of a stock certificate or stock
certificates for Newco Shares, registered in the name of Warnaco,
in form reasonably satisfactory to counsel for Group. In
addition, at the Closing, (i) CKI is entering into the Worldwide
Transfer Agreement with Warnaco, (ii) CKI, Mr. Calvin Klein and
Mr. Barry Schwartz are each entering into a Non-Competition
Agreement with Warnaco and (iii) CKI is entering into the Men's
Accessories License with Warnaco.
Section 2.2. Consideration. Subject to the terms and
conditions of this Agreement, in reliance on the representations,
warranties and agreements of CKI contained herein, and as the
full purchase price and consideration for (i) the Assets, the
Owner Certificate representing the Men's Underwear Trademarks and
the Owner Certificate representing the Women's Intimate Apparel
Trademarks being conveyed by CKI to Warnaco as provided for
herein through the issuance of the Newco Shares and the entry
into the Worldwide Transfer Agreement, (ii) the entry into the
Non-Competition Agreement by each of CKI, Mr. Calvin Klein and
Mr. Barry K. Schwartz and (iii) the grant of the Men's
Accessories License to Warnaco by CKI, Group and Warnaco are
paying to CKI at the times and as provided herein total
consideration in the amount of Fifty-Eight Million Five Hundred
Thousand Dollars ($58,500,000), subject to the potential Post-
Closing Adjustment provided in Section 4.2 hereof and the
potential adjustment provided for in Section 4.10 hereof.
Section 2.3. Consideration at Closing. Subject to the
terms and conditions of this Agreement, in reliance on the
representations, warranties and agreements of CKI contained
herein and upon the aforesaid issuance, sale and delivery of the
Newco Shares and the entry into the Worldwide Transfer Agreement
by CKI, the entry into the Non-Competition Agreements by CKI, Mr.
Calvin Klein and Mr. Barry K. Schwartz and the grant of the Men's
Accessories License by CKI, Group is delivering or causing to be
delivered to CKI, at the Closing, but subject to the Post-Closing
Adjustment, if any, provided for in Section 4.2 hereof and the
potential adjustment provided for in Section 4.10 hereof, the
Consideration at Closing. The Share Consideration, constituting
part of the Consideration at Closing, is being paid to CKI at the
Closing by delivery of a stock certificate or stock certificates
for the number of shares of Warnaco Common Stock representing the
Share Consideration, registered in the name of CKI, in form
reasonably satisfactory to counsel for CKI, and the Cash
Consideration, constituting part of the Consideration at Closing,
and the amount of the loans being made to Mr. Calvin Klein and
Mr. Barry K. Schwartz pursuant to Section 4.6 hereof, is being
paid to CKI, Mr. Calvin Klein and Mr. Barry K. Schwartz by
delivery of certified or official bank checks in the amounts
designated by CKI to Warnaco in writing on Appendix A hereto.
Section 2.4. Women's Intimate Apparel Beneficial
Interest and Trademarks. Subject to the terms and upon the
conditions of this Agreement and in reliance upon the
representations, warranties and agreements of CKI contained
herein, at the Second Closing CKI shall sell, assign, convey,
transfer and deliver to Warnaco, and Warnaco shall purchase,
acquire and accept from CKI, good, valid and marketable title to
the Women's Intimate Apparel Beneficial Interest and the Women's
Intimate Apparel License, free and clear of any Lien, and, as
provided in the Worldwide Transfer Agreement, all other Foreign
Trademarks for Women's Intimate Apparel not included in the
Women's Intimate Apparel Beneficial Interest. The sale of the
Women's Intimate Apparel Beneficial Interest shall be made by CKI
by delivery to Warnaco or its designee of an Owner Certificate
representing the Women's Intimate Apparel Beneficial Interest,
registered in the name of Warnaco or its designee, or duly
endorsed to Warnaco or its designee, with stamps for any
applicable transfer tax affixed, all in form reasonably
satisfactory to counsel for Group, and the grant of the Women's
Intimate Apparel License shall be made by delivery of an
assignment by CKI to Warnaco of the Women's Intimate Apparel
License.
Section 2.5. Consideration at Second Closing. Subject
to the terms and upon the conditions of this Agreement, in
reliance on the representations, warranties and agreements of CKI
contained herein, and upon the sale, assignment, conveyance,
transfer and delivery of the Owner Certificate referred to in
Section 2.4 hereof, Warnaco shall deliver or cause to be
delivered to CKI at the Second Closing, by certified or official
bank check, the amount of Five Million Dollars ($5,000,000).
ARTICLE III
CLOSINGS AND DELIVERIES
Section 3.1. Closing. The closing of the transactions
contemplated by this Agreement, other than the transactions
contemplated in Sections 2.4 and 2.5 hereof, is taking place at
10:00 a.m. (New York City time) at the offices of Skadden, Arps,
Slate, Meagher & Flom, 919 Third Avenue, New York, New York on
the date of execution of this Agreement.
Section 3.2. Deliveries by CKI at the Closing. At the
Closing, CKI is entering into the Related Agreements to which it
is a party and delivering or causing to be delivered to Warnaco
(except, in the case of the Books and Records referred to in
Section 3.2(e), which shall be delivered by CKI to Newco's
facilities at 205 West 39th Street, New York, New York), unless
previously delivered, the following:
3.2(a) the Newco Shares referred to in Section
2.1 hereof;
3.2(b) the Owner Certificate representing the
Men's Underwear Beneficial Interest registered in the name of
Newco;
3.2(c) certified copies of resolutions duly
adopted by CKI's Board of Directors and the Board of Directors of
any Affiliate whose approval is required, authorizing and
approving the execution, delivery and performance of this
Agreement and each other agreement or instrument required to be
executed and delivered by them pursuant to this Agreement;
3.2(d) the opinions of Paul, Weiss, Rifkind,
Wharton and Garrison and Rubin, Rubin & DiPaola, counsel to CKI,
each dated the Closing Date, to the effect set forth in Annex I
hereto;
3.2(e) all Books and Records;
3.2(f) certificates, in form and substance
satisfactory to counsel to Group, from the Secretaries of State
of the States of New York and Delaware, evidencing the existence
of CKI and Newco and their good standing as corporations
organized under the laws of the States of New York and Delaware,
respectively;
3.2(g) the resignations of each officer and
director of Newco;
3.2(h) the Interim Balance Sheet;
3.2(i) the minute book and stock book of Newco;
3.2(j) the opinion of Richards, Layton & Fingers,
counsel to the Trustee, dated the Closing Date, to the effect set
forth in Annex V hereto; and
3.2(k) all other documents, instruments and
other items reasonably requested by Warnaco to be delivered by
CKI at the Closing in connection with the transactions
contemplated herein.
Section 3.3. Deliveries by Group and Warnaco at the
Closing. At the Closing, each of Group and Warnaco is entering
into the Related Agreements to which it is a party and delivering
or causing to be delivered to CKI (and, in the case of the checks
referred to in Section 3.3(b), also to Mr. Calvin Klein and Mr.
Barry K. Schwartz), unless previously delivered, the following:
3.3(a) Share Consideration, if any;
3.3(b) the checks referred to in Section 2.3
hereof in the amount of the Cash Consideration, sub-ject in the
case of the amount being paid to CKI to the adjustment provided
for in Section 4.10 hereof;
3.3(c) certified copies of resolutions duly
adopted by the Board of Directors of Group and Warnaco
authorizing and approving the execution, delivery and performance
of this Agreement and each other agreement required to be
executed and delivered by them pursuant to this Agreement;
3.3(d) the opinions of Skadden, Arps, Slate,
Meagher & Flom, counsel to Group and Warnaco, and Stanley P.
Silverstein, General Counsel of Group and Warnaco, each dated as
of the Closing Date, to the effect set forth in Annex II hereto;
3.3(e) certificates, in form and substance
satisfactory to counsel to CKI, from the Secretary of State of
the State of Delaware, evidencing the existence of Group and
Warnaco and their good standing as corporations organized under
the laws of the State of Delaware; and
3.3(f) all other documents, instruments and other
items reasonably requested by CKI to be delivered by Warnaco at
the Closing in connection with the transactions contemplated
herein.
Section 3.4. Second Closing. Subject to the
satisfaction or waiver of all of the conditions contained in
Article VIII and in Article IX by Group or Warnaco and CKI,
respectively, the closing of the transactions contemplated by
Sections 2.4 and 2.5 of this Agreement shall take place at 10:00
a.m. (New York City time) at the offices of Skadden, Arps, Slate,
Meagher & Flom, 919 Third Avenue, New York, New York on the
earlier of (i) the third business day after the termination of
the License Agreement, dated August 24, 1984, as amended on
January 25, 1989, January 31, 1990 and September 12, 1990,
between Heckler Manufacturing and Investment Group, Inc. (as
successor to Kayser-Roth Corporation) and CKI (as successor to
Calvin Klein Company) (the "Heckler License") or (ii) January 2,
1995.
Section 3.5. Deliveries by CKI at the Second Closing.
At the Second Closing, CKI will deliver or cause to be delivered
to Warnaco, unless previously delivered, the following:
3.5(a) an Owner Certificate representing the
Women's Intimate Apparel Beneficial Interest registered in the
name of Warnaco or duly endorsed to Warnaco, all in form
satisfactory to counsel for Warnaco;
3.5(b) the assignment to Warnaco of the Women's
Intimate Apparel License;
3.5(c) the certified resolutions referred to in
Section 8.4;
3.5(d) the officer's certificate referred to in
Section 8.3;
3.5(e) the opinions referred to in Section 8.6;
and
3.5(f) all other documents, instruments and other
items reasonably requested by Warnaco to be delivered by CKI at
or prior to the Second Closing in connection with the
transactions contemplated by the Second Closing.
Section 3.6. Deliveries by Warnaco at the Second
Closing. At the Second Closing, Warnaco will deliver or cause to
be delivered to CKI, unless previously delivered, the following:
3.6(a) the check referred to in Section 2.5
hereof in the amount of Five Million Dollars ($5,000,000);
3.6(b) the certified resolutions referred to in
Section 9.4;
3.6(c) the officer's certificate referred to in
Section 9.3;
3.6(d) the opinions referred to in Section 9.6
hereof; and
3.6(e) all other documents, instruments and other
items reasonably requested by CKI to be delivered by Warnaco at
or prior to the Second Closing in connection with the
transactions contemplated by the Second Closing.
ARTICLE IV
RELATED MATTERS
Section 4.1. Interim Balance Sheet. At the Closing,
CKI is delivering to Warnaco a preliminary estimated balance
sheet of Newco as of the Closing Date determined in good faith in
accordance with the accounting principles used in preparing the
Net Assets Statement (the "Interim Balance Sheet"). Interim Net
Working Capital shall be derived from the Interim Balance Sheet
by adding together interim Accounts Receivable and interim
Inventory, which were transferred to Newco by CKI, and
subtracting interim Accounts Payable, which were assigned by CKI
to, and are being assumed by, Newco; provided, however, that CKI
agrees that (i) the amount of Accounts Payable being transferred
by an Affiliate of CKI to, and being assumed by, Newco shall not
exceed $3,000,000 and the Accounts Payable greater than
$3,000,000 remain a liability and obligation of CKI and (ii) the
amount of Accounts Receivable from CKI and its Affiliates' retail
and outlet stores being transferred to Newco are not in excess of
$171,000.
Section 4.2. Post-Closing Adjustment. As promptly as
practicable following the Closing, but in no event later than the
45th day after the Closing, CKI shall deliver to Warnaco a
balance sheet of Newco as of the Closing Date, which shall be
prepared by CKI and audited by independent certified public
accountants, in accordance with GAAP consistent with the
practices used to prepare the Net Assets Statement (the "Audited
Balance Sheet"). A physical inventory shall be taken by CKI and
observed by CKI's independent certified public accountants. The
Consideration at Closing being paid by Group and Warnaco to CKI
for the Newco Shares shall be subject to adjustment following the
Closing (the "Post-Closing Adjustment") based upon the Audited
Net Working Capital (which shall be derived by adding together
audited Accounts Receivable and audited Inventory and subtracting
audited Accounts Payable being assigned by CKI or its Affiliates
to, and being assumed by, Newco, which Accounts Payable shall in
no event be in an amount greater than $3,000,000) as shown on the
Audited Balance Sheet as follows: (i) if the Audited Net Working
Capital is less than $16 million, the Cash Consideration that was
paid will be reduced on a dollar-for-dollar basis for the amount
by which Audited Net Working Capital is less than $16 million,
(ii) if this Audited Net Working Capital is more than $16 million
but less than $17.5 million, the Cash Consideration to be paid
will be increased on a dollar-for-dollar basis for the amount by
which Audited Net Working Capital is greater than $16 million but
less than $17.5 million, (iii) if the Audited Net Working Capital
is $17.5 million or more but less than $18.5 million, no
additional Cash Consideration will be paid and (iv) if the
Audited Net Working Capital is more than $18 million by more than
$500,000, the Cash Consideration to be paid, will be increased on
a dollar-for-dollar basis for the amount by which Audited Net
Working Capital is greater than $18.5 million. Payment of the
amount in excess of $18.5 million will be made by Warnaco in cash
or by assigning Inventory, Accounts Receivable, or a combination
thereof, as jointly determined by Warnaco and CKI.
Representatives of Warnaco and Warnaco's independent public
accountants, shall be entitled to be present at, observe and
participate in the taking of the physical inventory and to review
the work papers, schedules, memoranda and other documents used in
the preparation of the Audited Balance Sheet for a period of 20
days following its delivery to Warnaco. Following the Closing,
Warnaco shall cause its employees to cooperate with and otherwise
assist CKI, its employees and its independent auditors in the
preparation and audit of the Audited Balance Sheet including
information regarding subsequent liquidation of Accounts
Receivable, inventory in-transit matters and other matters
required in the normal course of preparing and auditing the
Audited Balance Sheet. Not later than such 20th day, Warnaco
shall notify CKI whether or not it agrees that the Audited
Balance Sheet fairly presents the Audited Net Working Capital of
Newco as at the Closing Date. If Warnaco is in agreement with
the Audited Net Working Capital stated on the Audited Balance
Sheet, Warnaco or CKI, as the case may be, shall pay, transfer or
assign to the other, within fifteen (15) business days after the
day that notice of such agreement is given to CKI by Warnaco, the
amount owed pursuant to this Section 4.2. In the event that
Warnaco does not agree that the Audited Balance Sheet fairly
presents the Audited Net Working Capital of CKI as of the Closing
Date, Warnaco shall so notify CKI and CKI and Warnaco shall,
during the 30 days after delivery of such notice, negotiate in
good faith to resolve such disagreement. If at the end of such
30-day period no resolution is reached, such disagreement shall
be resolved by Arthur Andersen & Co., independent public
accountants mutually agreed upon by Warnaco and CKI, whose
determination shall be conclusive and binding on all the parties
hereto. Within fifteen (15) business days following the
resolution of Warnaco's and CKI's disagreement or the delivery of
the determination made by such accountants to CKI and Warnaco,
Warnaco or CKI, as the case may be, shall pay, transfer or assign
to the other, the amount of cash, Accounts Receivable or
Inventory owed pursuant to this Section 4.2. The fees and
disbursements of such third firm of independent public
accountants shall be borne equally by CKI and Warnaco. Any
Inventory assigned to CKI by Warnaco shall be sold solely in
CKI's outlet stores.
Section 4.3. Number of Shares. The number of shares
of Warnaco Common Stock being delivered as Share Consideration
was determined by calculating "x" (rounded to the nearest whole
number) in the formula: x = y z where "y" equals $24,000,000
(unless adjusted in accordance with Section 4.4 hereof) and "z"
equals the average of the closing prices of the Warnaco Common
Stock on the New York Stock Exchange Composite Tape for the
twenty (20) trading days preceding the Closing Date (the "Average
Common Share Price") as jointly calculated by the parties hereto.
Section 4.4. Cash or Stock Substitution. At the
Closing, Warnaco shall have the option, in the event that the
Average Common Share Price is less than $25 per share, to
substitute cash for all or part of the Warnaco Common Stock to be
paid as Share Consideration by reducing "y" in the formula set
forth in Section 4.3 hereof and increasing the amount of Cash
Consideration, on a dollar-for-dollar basis, for the amount that
"y" has been so reduced.
Section 4.5. Related Agreements. At the Closing, the
parties hereto and persons and entities indicated below are
entering into the following agreements:
4.5(a) Each of CKI, Mr. Calvin Klein and Mr.
Barry K. Schwartz are entering into a Non-Competition Agreement
with Warnaco;
4.5(b) CKI and Group are entering into the
Registration Rights Agreement;
4.5(c) CKI and Newco are entering into the
Services Agreement;
4.5(d) CKI and the Trustee are entering into the
Trust Agreement and Newco is executing a counterpart thereof;
4.5(e) CKI and Warnaco are entering into the
Men's Accessories License;
4.5(f) CKI and Warnaco are entering into the
Administration Agreement;
4.5(g) CKI and Warnaco are entering into the
Worldwide Transfer Agreement;
4.5(h) CKI and Warnaco are entering into the
Allocation Agreement;
4.5(i) CKI, the Trust and Warnaco are entering
into the Servicing Agreement; and
4.5(j) CKI, the Trust and Warnaco are entering
into the Quality Assurance Agreement.
Section 4.6. Loans and Promissory Notes. At the
Closing, Warnaco is lending to each of Mr. Calvin Klein and Mr.
Barry K. Schwartz the amount of Two Million Dollars ($2,000,000)
on the terms and conditions set forth in the Promissory Note, and
a Promissory Note, evidencing the aforesaid loans, is being
entered into separately by each of them and delivered to Warnaco.
Section 4.7. Stock Options. At the Closing, Mr.
Calvin Klein and Mr. Barry K. Schwartz each are being granted
options by Group, pursuant to the 1991 Stock Option Plan of
Group, to purchase 37,500 shares of Warnaco Common Stock and each
is entering into a Stock Option Agreement with Group which shall
govern the terms and conditions (including, as a condition,
compliance by CKI, Mr. Calvin Klein and Mr. Barry K. Schwartz
with the terms and conditions of their Non-Competition Agreement
being entered into by them) pursuant to which the options may be
exercised.
Section 4.8 Actions to be Taken by CKI. In order to
effectuate the transactions contemplated by this Agreement and
the Worldwide Transfer Agreement, CKI acknowledges that as of the
Closing, it has (i) incorporated and organized Newco under the
laws of the State of Delaware with the authorized capital stock
provided in Section 5B.2 hereof, (ii) entered into the Trust
Agreement and established the Trust, assigned the Calvin Klein
Trademarks to the Trust and caused the Trust to issue the Men's
Underwear Beneficial Interest and the Men's Underwear License to
CKI and the Women's Intimate Apparel Beneficial Interest and
Women's Intimate Apparel License to CKI, (iii) assigned the
Assets and the Assumed Liabilities to Newco, (iv) caused the
directors of Newco to authorize the issuance and sale of the
Newco Shares to Warnaco on the terms and conditions provided for
herein in return for CKI having caused the transfer of the
Assets, the Men's Underwear Beneficial Interest and the Men's
Underwear License to Newco, and (v) filed (or will file
immediately following the Closing) separate applications in the
name of the Trust in the United States Patent and Trademark
Office for the Calvin Klein Trademarks (except "CK/Calvin Klein")
covering the items of Men's Underwear and Women's Intimate
Apparel specified in Schedule A to the Administration Agreement.
Section 4.9 Assumption of Employee Compensation. At
the Closing, CKI may provide Warnaco in Section 5A.15B of the
Disclosure Schedule with a list of any accrued salaries, firm
bonuses, sales commissions, vacation pay and other compensation,
including all applicable taxes (social security, withholding,
etc.) resulting therefrom ("Accrued Compensation") which have
been earned by Employees as of the Closing but is not yet payable
to such Employees and Warnaco, at its option, may assume such
Accrued Compensation obligations of CKI and, if Warnaco agrees to
assume the Accrued Compensation obligations, CKI agrees that
Warnaco may reduce, on a dollar-for-dollar basis, the Cash
Consideration being paid to CKI by the total aggregate amount of
such Accrued Compensation obligations assumed by Warnaco.
Section 4.10 Change of Newco Name. CKI agrees that
Warnaco may utilize the name "Calvin Klein Men's Underwear, Inc."
for Newco while Newco is the owner of the Owner Certificate
representing the Men's Underwear Trademarks and the Men's
Underwear License and that Warnaco may change the name of Newco
to "Calvin Klein Underwear, Inc." following the Second Closing.
Section 4.11 Post-Closing Matters. CKI agrees that on
the day following the Closing Date it shall deliver to Warnaco a
listing of Accounts Receivable (aged by account) as of the
Closing Date and a listing of all recorded Accounts Payable as of
the Closing Date, each of which is subject to normal post-closing
adjustments consistent with past practice. CKI also agrees that
it shall pay to Warnaco no later than 30 days after the Closing
Date all Accounts Receivable from outstanding on the Closing Date
CKI and its retail and outlet stores.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF CKI
A. CKI HEREBY REPRESENTS AND WARRANTS TO GROUP AND
WARNACO, WITH RESPECT TO CKI, AS FOLLOWS:
Section 5A.1. Corporate Organization. CKI is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York, and has all requisite
corporate power and authority to own its properties and assets
and to conduct its businesses as now conducted. True, accurate
and complete copies of the Articles of Incorporation and By-laws
of CKI as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered or made available to
Warnaco.
Section 5A.2. Authority; Authorization and Validity of
Agreement. CKI has all requisite corporate power and authority
to enter into this Agreement and the Related Agreements to which
it is a party and carry out its obligations hereunder and
thereunder. The execution and delivery of this Agreement and
Related Agreements to which it is a party and the performance of
CKI's obligations hereunder and thereunder have been duly
authorized by all necessary corporate action by the Board of
Directors and shareholders of CKI, and no other corporate
proceedings on the part of CKI are necessary to authorize such
execution, delivery and performance. This Agreement has been
duly executed by CKI and each of the Related Agreements has been
duly executed by CKI and this Agreement constitutes, and each of
the Related Agreements to which it is a party constitute, its
valid and binding obligation, enforceable against it in
accordance with its terms.
Section 5A.3. No Conflict or Violation. Except as set
forth in Section 5A.3 of the Disclosure Schedule, the execution,
delivery and performance by CKI of this Agreement and the Related
Agreements to which it is a party do not and will not (i) violate
or conflict with any provision of the Articles of Incorporation
or By-laws of CKI, (ii) violate any provision of law, or any
order, judgment or decree of any court or other Governmental
Body, or (iii) except to the extent a waiver or consent has been
obtained, violate or result in a breach of or constitute (with
due notice or lapse of time or both) a default, or result in the
creation of any Lien upon the Newco Shares, the Assets, the Men's
Underwear Beneficial Interest, the Men's Underwear License, the
Women's Intimate Apparel Beneficial Interest, the Women's
Intimate Apparel License or the Foreign Trademarks, under any
contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument or obligation to
which CKI or any of its Affiliates is a party or by which it is
bound, which violation, breach, default or Lien would reasonably
be expected to have a Material Adverse Effect on the Business.
Section 5A.4. Consents and Approvals. Except as set
forth in Section 5A.4 of the Disclosure Schedule, the execution,
delivery and performance of this Agreement and the Related
Agreements to which it is or will be a party do not require, on
the part of CKI, the consent or approval of, or filing with, any
Governmental Body or any third party, except such consents,
approvals and filings which have been obtained or the failure of
which to obtain or make would not have a Material Adverse Effect
on the Business.
Section 5A.5. Financial Statements. (a) CKI has
heretofore delivered or made available to Group the statement of
net assets of the Business being transferred to Newco at January
1, 1994 (the "Net Assets Statement"). Each of the items set
forth in the Net Assets Statements (i) has been taken from the
books and records of CKI and accurately state or reflect in all
material respects the financial matters thereby, and (ii) has
been determined in conformity with GAAP consistently applied.
(b) CKI has heretofore delivered or made
available to Group the preliminary statement of operations of the
Business for the year ended January 1, 1994 and the statement of
operations of the Business for the year ended January 2, 1993
(the "Operations Statements"). The Operations Statements,
including the accompanying notes thereto, (i) have been taken
from the books and records of CKI and accurately state or reflect
in all material respects the financial matters reflected thereby
and (ii) except as otherwise stated therein, all material
components have been determined in accordance with GAAP
consistently applied. Except as set forth in Section 5A.5 of the
Disclosure Schedule, all direct or directly allocable expenses
attributable to the Business have been reflected in the
Operations Statement, except to the extent any such expenses
would not reasonably be expected to have a Material Adverse
Effect on the Business. In the course of performing their audit
of CKI's consolidated financial statements for its 1993 fiscal
year which is currently in process, CKI has not been informed by
its independent public accountants that any material adjustment
should be made to any item set forth on the Operations Statement.
(c) CKI has heretofore delivered, or made available to
Warnaco, the sales and gross profits for the Business for the
month ended January 29, 1994. The sales and gross profits
amounts (i) have been taken from the books and records of CKI and
accurately state the amounts thereof and (ii) have been
determined in accordance with past practice for CKI internal-use
monthly operating statements of the Business.
(d) CKI has heretofore delivered, or made
available to Warnaco, the unaudited consolidated interim balance
sheet of CKI and its subsidiaries at October 2, 1993 (including
the related notes) which presents fairly, in all material
respects, the financial condition of CKI as of the date thereof
in accordance with GAAP for such unaudited financial statements,
subject to normal year-end adjustments.
Section 5A.6. Operation in Ordinary Course. Except as
set forth in Section 5A.6 of the Disclosure Schedule and as
contemplated by this Agreement, since January 1, 1994, CKI has
operated the Business, and has not entered into any transaction
with respect to the Business, other than in the ordinary course
consistent with past practice.
Section 5A.7 No Material Adverse Change. During the
period from January 1, 1994 to the date hereof, there has not
been, with respect to the Business, any adverse change in its
business, condition or results of operations or change in
accounting principles or practices, except for changes which
would not reasonably be expected to have a Material Adverse
Effect on the Business. Since October 2, 1993 to the date
hereof, there has not been any adverse change in the business,
condition or results of operations of CKI, except for changes
which would not reasonably be expected to have a Material Adverse
Effect on CKI.
Section 5A.8. Tax Matters. (a) CKI and each of its
Affiliates, within the time and in the manner prescribed by law,
have filed all material state and local Tax Returns required to
be filed in respect of any Taxes relating to the Business, and
have timely paid all Taxes that are due and payable or
established, on the appropriate books and records, reserves that
are adequate therefor, except in those cases where the failure to
do so would not reasonably be expected to have a Material Adverse
Effect on the Business; and
(b) there are no Liens for Taxes upon the Assets,
except for statutory liens for Taxes not yet due.
Section 5A.9. Absence of Undisclosed Liabilities.
Except as set forth in Section 5A.9 of the Disclosure Schedule,
neither CKI nor any of its Affiliates has any material,
contingent liability relating to the Business, which would have
required disclosure in accordance with GAAP in the Net Assets
Statement. Since January 1, 1994 neither CKI nor any of its
Affiliates has incurred, with respect to the Business, any
liability not in the ordinary course which is material to the
Business.
Section 5A.10. Intellectual Property.
(a) Section 5A.10 of the Disclosure Schedule is a
complete and accurate list of all current (i) trademark and
service mark registrations and applications for registration,
(ii) copyright applications and registrations, and (iii) patents
and patent applications owned by CKI relating to the manufacture,
distribution, licensing, advertising, promotion and sale of (x)
Men's Underwear and (y) Women's Intimate Apparel (the
"Intellectual Property"). Section 5A.10 of the Disclosure
Schedule also sets forth, for each registered Calvin Klein
Trademark and trademark application with respect thereto, the
country of such registration or application, the registration or
application number, the registration or filing date, and the
class of goods covered by such registration or application.
Except as set forth in Section 5A.10 of the Disclosure Schedule,
CKI owns the material Intellectual Property in the United States
free and clear of any Liens and free and clear of any licenses
and sublicenses to any third parties. Except as set forth in
Section 5A.10 of the Disclosure Schedule, all Foreign Trademarks
owned by CKI relating to the manufacture, distribution,
licensing, advertising, promotion and sale of (i) Men's Underwear
and (ii) Women's Intimate Apparel are free and clear of all Liens
which singularly or in the aggregate would materially interfere
with the enjoyment of the Foreign Trademarks and free and clear
of any licenses or sublicenses to any third parties. All
trademark and service mark registrations and applications, and
all patents, patent applications, copyright registrations and
applications included in the Intellectual Property are recorded
in the name of CKI or its predecessors.
(b) All of the material Intellectual Property is
valid, subsisting in full force and effect, and enforceable and
no registration or application therefor has lapsed, expired, or
been abandoned or cancelled or is the subject of any pending or
threatened opposition or cancellation proceeding before any
trademark office or other registration authority in any
jurisdiction. Except as set forth in Section 5A.10 of the
Disclosure Schedule, CKI is not aware of any claims or any basis
for such claims pending before any Governmental Body or
threatened by any third party anywhere in the world challenging
(i) the registrability, validity or enforceability of the
material Intellectual Property, (ii) CKI's or its Affiliates'
ownership rights therein or (iii) CKI's use of the material
Intellectual Property on the grounds that such use violates the
legitimate rights of a third party. Except as set forth in
Schedule 5A.10 of the Disclosure Schedule, all United States
trademarks in International Class 25 (or the corresponding local
class) for which there is a registration or application for
registration have been in continuous use by CKI or its Affiliates
or a licensee of CKI or the licensee's Affiliates from the date
of first use alleged in any registration or application for
registration, and such use continues to the date hereof and
inures to the benefit of CKI. Except as set forth in Section
5A.10 of the Disclosure Schedule, to the best of CKI's Knowledge,
neither CKI's use of the Intellectual Property nor CKI's conduct
of the Business, infringes upon the legitimate proprietary rights
of any third party and there are no material infringement actions
being taken or contemplated to be taken against third parties for
infringement of the material Intellectual Property.
Except as set forth in Section 5A.10 of the Disclosure
Schedule, neither CKI nor any of its Affiliates has entered into
any consents, consent decrees, indemnifications, forbearances to
sue, or settlement agreements with any third party relating to
the material Intellectual Property adversely affecting to any
degree or restricting to any degree any rights of CKI (and
Warnaco hereunder) with respect to the Intellectual Property.
(c) Section 5A.10 of the Disclosure Schedule sets
forth all license or distribution agreements relating to the
material Intellectual Property other than licenses to CKI
authorized retail stores (the "Intellectual Property
Agreements").
(d) Except as set forth in Section 5A.10 of the
Disclosure Schedule, CKI has not, either orally or in writing,
agreed to enter into, amend, extend, renew, modify or terminate
any Intellectual Property Agreement or joint venture agreement
relating to Men's Underwear, Women's Intimate Apparel or Men's
Accessories.
Section 5A.11. Compliance with Law. CKI and each of
its Affiliates has complied with all laws, regulations, orders or
other legal requirements, and is not in default with respect to
any order, writ, judgment, award, injunction or decree of any
national, state or local court or Governmental Body or regulatory
authority or arbitrator, domestic or foreign, applicable to the
Business or any of the assets, properties or operations with
respect thereto, with which failure to comply or default would
have a Material Adverse Effect on the Business. Neither CKI nor
any of its Affiliates has made any unlawful contributions, gifts
or expenditures to government officials or others in violation of
Section 30A of the Exchange Act. CKI has complied with and is in
compliance with all laws relating to the import or export of
Product and has paid in full all duties, custom charges, tariffs,
surcharges or other fees relating to the import or export of
Product, except where the failure to comply or pay would not
reasonably be expected to have a Material Adverse Effect on the
Business.
Section 5A.12. Litigation. Section 5A.12 of the
Disclosure Schedule sets forth all claims, actions, suits,
proceedings, or investigations pending or, to CKI's Knowledge,
threatened, before any arbitration or other tribunal, or any
federal or state court or Governmental Body brought against CKI
or any of its Affiliates relating to the Business, Men's
Underwear or Women's Intimate Apparel. Except as disclosed in
Section 5A.12 of the Disclosure Schedule, based on the current
status of the matters, none of the matters listed in Section
5A.12 of the Disclosure Schedule would reasonably be expected to
have a Material Adverse Effect on the Business.
Section 5A.13. Contracts. Section 5A.13 of the
Disclosure Schedule lists all Contracts to which CKI or any of
its Affiliates is a party relating to the Business, Men's
Underwear or Women's Intimate Apparel, other than any single
Contract for less than $100,000 or all Contracts which in the
aggregate call for the payment of less than $500,000. Except as
set forth in Section 5A.13 of the Disclosure Schedule, each of
the Contracts is a valid and binding obligation of the parties
thereto and enforceable against them according to its terms and
is in full force and effect and CKI or its Affiliate, if a party
thereto, and, to CKI's knowledge, the other parties to such
Contracts, are in compliance with all material terms thereof.
Except as set forth in Section 5A.13 of the Disclosure Schedule
and except for those rights as would not reasonably be expected
to have a Material Adverse Effect on the Business, CKI's or its
Affiliates' rights under the Contracts are fully assignable
without consent of any party thereto or any third party.
Section 5A.14. Employee Benefits; ERISA. (a) Section
5A.14 of the Disclosure Schedule contains a true and complete
list of each bonus, deferred compensation, incentive
compensation, stock purchase, stock option, severance or
termination pay, hospitalization or other medical benefits,
savings, profit-sharing, pension or retirement plan or program,
and each other employee benefit plan, welfare plan or other
program or perquisite, currently sponsored, maintained or
contributed to or required to be contributed to by CKI or any
trade or business, whether or not incorporated, that would be
deemed affiliated with CKI for purposes of Section 414(b), (c),
(m), (n) or (o) of the Code (an "ERISA Affiliate") for the
benefit of any employee or former employee of the Business,
whether formal or informal and whether legally binding or not
(the "CKI Plans").
(b) Except for the severance policies or
agreements of CKI previously delivered to Group, there are no
employment or severance agreements, contracts or other
arrangements between CKI or any of its Affiliates and any
Employee providing for continued employment or the payment of
separation pay or separation benefits to any Employee.
Section 5A.15. Employees. Schedule 5A.15A of the
Disclosure Schedule lists the names, current salaries and
benefits of each of the Employees. At the Closing, if CKI wishes
to have Warnaco assume its obligations for Accrued Compensation
as provided in Section 4.10 hereof, Section 5A.15B of the
Disclosure Schedule shall list, by Employee and matter, the
amount of Accrued Compensation to which Employees of CKI are
entitled as of the Closing Date.
Section 5A.16. Labor Difficulties. Except to the
extent set forth in Section 5A.16 of the Disclosure Schedule,
with respect solely to operations of the Business, (a) CKI and
each of its Affiliates are in compliance in all material respects
with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and
hours, and are not engaged in any unfair labor practice; (b) no
collective bargaining agreement is binding on CKI or any of its
Affiliates; (c) there is no unfair labor practice complaint
against CKI or any of its Affiliates pending before the National
Labor Relations Board; (d) there is no labor strike, dispute,
slowdown or stoppage actually pending or, to CKI's knowledge,
threatened against or affecting CKI or any of its Affiliates; (e)
no representation question exists respecting the Employees of CKI
or any of its Affiliates; and (f) neither CKI nor any of its
Affiliates has experienced any material work stoppage.
Section 5A.17. Investment Purpose; Legend. CKI will
acquire the shares of Warnaco Common Stock to be issued by Group
pursuant to the terms hereof for its own account for the purpose
of investment and not with a view to or for sale in connection
with any distribution thereof, provided that the disposition of
CKI's property shall at all times be and remain within CKI's
control. CKI agrees that all certificates representing the
shares of Warnaco Common Stock shall bear a legend to the effect
that such securities have not been registered under the
Securities Act or the securities laws of any state and neither
such securities nor any interest therein may be sold or otherwise
transferred in the absence of such registration or an exemption
thereunder.
Section 5A.18. Environmental Matters. CKI has
obtained and maintained in effect with respect to the operations
of the Business all material licenses, permits and other
authorizations required under all applicable laws, regulations
and other requirements of governmental or regulatory authorities
relating to pollution or to the protection of the environment
("Environmental Laws") and is in compliance in all material
respects with all Environmental Laws and with all such licenses,
permits and authorizations.
Section 5A.19. Fixed Assets. Section 5A.19 of the
Disclosure Schedule lists each of the items constituting Fixed
Assets owned by CKI or its Affiliates. The Fixed Assets are
suitable for their intended use in all material respects. CKI
has, and Newco will have upon the transfer to it by CKI, good,
valid and marketable title to such Fixed Assets, free and clear
of any Lien, except for Liens which would not be reasonably
expected to have a Material Adverse Effect on the Business.
Section 5A.20. Inventory. To CKI's Knowledge, the
Inventory shown on the Interim Balance Sheet and Audited Balance
Sheet, whether finished goods, work in process or raw materials,
are all items of a quality usable or saleable in the ordinary and
usual course of the Business consistent with past practice,
except for inventory items that are obsolete or not usable or
saleable in the ordinary course of the Business and that have
been written down to an amount not in excess of the market value
or for which sufficient accounting reserves or allowances have
been provided in accordance with GAAP (or, with respect to the
Interim Balance Sheet, as reasonably estimated consistent with
the principles used in preparing the Net Assets Statement).
Section 5A.21. Accounts Receivable. Section 5A.21 of
the Disclosure Schedule lists, by individual account, the
Accounts Receivable as of the close of business on March 9, 1994.
The Accounts Receivable on the Interim Balance Sheet and Audited
Balance Sheet represent sales actually made in the ordinary
course of business (including amounts due from Affiliates and
retail and outlet stores of CKI which were not in excess of
$171,000). To CKI's Knowledge, such accounts are collectible net
of the amount of reserve set forth in the notes thereto, which
amount, based on GAAP, is adequate to cover doubtful accounts,
returns, discounts and allowances.
Section 5A.22. Assets Necessary to Operate the
Business. Except as set forth in Section 5A.22 of the Disclosure
Schedule and except for the personnel and services being supplied
by the Services Agreement, the Administration Agreement and
treasury, accounting and other administrative services, the
Assets, the Employees, the Men's Underwear License and the
Contracts constitute all rights, properties, leases, licenses and
other assets and agreements necessary to permit Warnaco to
conduct the Business in the same manner as such Business has been
conducted prior to the date hereof.
Section 5A.23. Customers and Suppliers. Section 5A.23
of the Disclosure Schedule sets forth a list of (a) the 20
largest customers of the Business in terms of sales during the
1993 fiscal year ended January 1, 1994 and the total sales to
each such customer for such period and (b) the 10 largest
suppliers of the Business in terms of purchases during the 1993
fiscal year ended January 1, 1994 and the total purchase by the
Business from each such supplier during such period. Except as
set forth in Section 5A.23 of the Disclosure Schedule, none of
the 20 largest customers of the Business nor the 10 largest
suppliers of the Business has threatened, to the knowledge of
CKI, to cancel or significantly diminish its purchases of Men's
Underwear or supply of goods used in the manufacture and
production of Men's Underwear or to take (or omit to take) an
action that would significantly, adversely change the
relationship of such customer or supplier with the Business
either prior to or following the Closing.
Section 5A.24. Orders, Commitments and Returns. As of
January 29, 1994, the aggregate of all accepted and unfilled
orders of the Business did not exceed $8.2 million and the
aggregate of all contracts or commitments for the purchase of
Men's Underwear manufactured for the Business did not exceed $8.0
million, all of which orders, contracts and commitments were made
in the ordinary course of business and consistent with past
practice. Except as set forth in Section 5A.24 of the Disclosure
Schedule, there are no claims or, to CKI's Knowledge, bases for
claims to return Men's Underwear in an amount greater than
historical levels by reason of alleged undershipments, defective
merchandise or otherwise, or of merchandise in the hands of
customers under an understanding that such merchandise would be
returnable.
Section 5A.25. Letters of Credit. Section 5A.25 of
the Disclosure Schedule lists all outstanding Letters of Credit
as of the date hereof.
Section 5A.26. Licenses and Permits. Except as set
forth in Section 5A.26 of the Disclosure Schedule, no License or
Permit is necessary for CKI to operate the Business.
Section 5A.27. Disclosure. Except as set forth in
Section 5A.27 of the Disclosure Schedule, to the best of CKI's
Knowledge, the information listed on Schedule 5A.27 hereto, taken
as a whole, is or was not inaccurate in any material respect at
the time it was made in light of the circumstances under which it
was made. CKI has not knowingly failed to disclose to Warnaco
any facts or circumstances which would reasonably be expected to
have a Material Adverse Effect on the Business.
B. CKI HEREBY REPRESENTS AND WARRANTS TO GROUP AND
WARNACO, WITH RESPECT TO NEWCO, AS FOLLOWS:
Section 5B.1. Corporate Organization. Newco is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite
corporate power and authority to consummate the transactions to
be consummated by it as contemplated hereby. True, accurate and
complete copies of the Certificate of Incorporation and By-laws
of Newco, including all amendments thereto, have been delivered
to Warnaco by CKI as of the Closing.
Section 5B.2. Capitalization. (a) The authorized
capital stock of Newco consists of 1,000 shares of common stock,
par value $0.01 per share. Prior to the Closing, there were no
shares of capital stock of Newco issued and outstanding, and the
Newco Shares being issued and sold to Warnaco at the Closing are
validly issued, fully paid and nonassessable and not subject to,
or issued in violation of, any preemptive rights.
(b) Other than pursuant to this Agreement, there
are no options, warrants, calls, rights, subscriptions,
convertible securities or other rights or agreements,
arrangements or commitments of any kind with respect to any
security of Newco.
Section 5B.3. Authority; Authorization and Validity of
Agreement. Newco has all requisite corporate power and authority
to consummate the transactions contemplated hereby to be
consummated by it and carry out its obligations hereunder. The
performance of Newco's obligations in connection with the
consummation of the transactions contemplated hereby has been
duly authorized by all necessary corporate action by the Board of
Directors of Newco, and no other corporate proceedings on the
part of Newco are necessary in connection therewith.
Section 5B.4. No Conflict or Violation. The
transactions being consummated by Newco as contemplated herein
will not violate or conflict with any provision of the
Certificate of Incorporation or By-laws of Newco.
Section 5B.5. No Prior Activities. Except for
obligations or liabilities incurred in connection with its
incorporation or organization and the transactions contemplated
hereby, Newco has not incurred any obligations or liabilities nor
engage in any business or activities of any type or kind
whatsoever or enter into any agreements or arrangements with any
person or entity.
C. CKI REPRESENTS AND WARRANTS TO GROUP AND WARNACO,
WITH RESPECT TO THE TRUST, AS FOLLOWS:
Section 5C.1. Authorization. The Trust Agreement has
been duly authorized by CKI and constitutes a valid and binding
agreement of CKI. The Owner Certificates representing the Men's
Underwear Beneficial Interest and the Women's Intimate Apparel
Beneficial Interest and the Men's Underwear License and Women's
Intimate Apparel License have been duly authorized, duly and
validly executed in accordance with the Trust Agreement and
delivered to CKI and assigned to Newco and to CKI, respectively,
and are validly issued and outstanding and entitled to the
benefits of the Trust Agreement.
Section 5C.2. No Violation. (a) The Trust is not in
violation of its organizational documents or in default in the
performance or observance of any obligation, agreement, covenant
or condition contained in any agreement or instrument to which it
is a party or by which it is bound, which violation or default
could affect interests held by (i) the Trust in the Calvin Klein
Trademarks, (ii) Newco in the Men's Underwear Beneficial Interest
and Men's Underwear License or (iii) CKI in the Women's Intimate
Apparel Beneficial Interest and Women's Intimate Apparel License.
(b) The authorization, execution, delivery and
performance of the Trust Agreement and the consummation of the
transactions contemplated thereby will not result in a breach or
violation of any of the terms and provisions of the Trust
Agreement, or constitute a default under, any statute, order,
rule or regulation of any Governmental Body having jurisdiction
over the Trust or any agreement, indenture or instrument to which
the Trust is a party or by which the Trust is bound.
Section 5C.3. Litigation. There is no action, suit or
proceeding before or by any court or Governmental Body pending
or, to the knowledge of CKI, threatened, against the Trust.
Section 5C.4. Consents. Except for filings in the
U.S. Patent and Trademark Office and filings in the appropriate
trademark offices in other foreign jurisdictions no consent,
approval, authorization or order of, or filing with, any court or
Governmental Body or any third party is required to be obtained
or made by the Trust in connection with the consummation of the
transactions contemplated by this Agreement, including the
issuance of the Owner Certificate representing the Men's
Underwear Beneficial Interest and the Men's Underwear License and
the Owner Certificate representing the Women's Intimate Apparel
Beneficial Interest and the Women's Intimate Apparel License.
Section 5C.5. Title. (a) Newco has good, valid and
marketable title to the Owner Certificate representing the Men's
Underwear Beneficial Interest, free and clear of any Lien, and
all rights as licensee in and to the Men's Underwear License.
(b) CKI has good, valid and marketable title to
the Owner Certificate representing the Women's Intimate Apparel
Beneficial Interest and the Women's Intimate Apparel License,
free and clear of any Lien.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF GROUP
A. GROUP HEREBY REPRESENTS AND WARRANTS TO CKI, WITH
RESPECT TO GROUP, AS FOLLOWS:
Section 6A.1. Corporate Organization. Group is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite
corporate power and authority to own its properties and assets
and to conduct its businesses as now conducted. True, accurate
and complete copies of the Restated Certificate of Incorporation
and By-laws of Group as in effect on the date hereof, including
all amendments thereto, have heretofore been delivered to CKI.
Section 6A.2. Authority; Authorization and Validity of
Agreements. Group has all requisite corporate power and
authority to enter into this Agreement and the Related Agreements
to which it is a party, to issue and deliver the shares of
Warnaco Common Stock constituting Share Consideration and to
carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Related
Agreements to which it is a party and the issuance and delivery
of the shares of Warnaco Common Stock constituting Share
Consideration and the performance of Group's obligations
hereunder and thereunder have been duly authorized by all
necessary corporate action by the Board of Directors of Group,
and no other corporate proceedings on the part of Group are
necessary to authorize such execution, issuance, delivery and
performance. This Agreement has been, and the Related Agreements
to which Group is a party have been, duly executed by Group and
this Agreement constitutes, and the Related Agreements constitute
its valid and binding obligation, enforceable against it in
accordance with their terms.
Section 6A.3. No Conflict or Violation. The
execution, delivery and performance by Group of this Agreement,
and the Related Agreements to which it is a party, and the
issuance and delivery of the shares of Warnaco Common Stock do
not and will not (i) violate or conflict with any provision of
the Restated Certificate of Incorporation or By-laws of Group,
(ii) violate any provision of law, or any order, judgment or
decree of any court or other Governmental Body, or (iii) violate
or result in a breach of or constitute (with due notice or lapse
of time or both), except to the extent a waiver or consent has
been obtained, a default, or result in the creation of any Lien
on any property of Group or any of its Affiliates, under any
contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which Group
or any of its Affiliates is a party or by which it is bound,
which violation, breach, default or Lien would reasonably be
expected to have a Material Adverse Effect on the Business.
Section 6A.4. Consent and Approvals. The execution,
delivery and performance of this Agreement by Group and the
Related Agreements to which it is a party, and the issuance and
delivery of the shares of Warnaco Common Stock do not require the
consent or approval of, or filing with, any Governmental Body or
any third party except (i) as required pursuant to the rules and
regulations of the NYSE for the listing of the shares of Warnaco
Common Stock being issued as Share Consideration and (ii) such
consents, approvals and filings which have been obtained or which
the failure to obtain or make would not, individually or in the
aggregate, have a Material Adverse Effect on Group or on Group's
ability to consummate the transactions contemplated hereby.
Section 6A.5. Reports and Financial Statements. Group
has filed all reports, proxy statements and documents required to
be filed with the SEC pursuant to the Exchange Act since January
1, 1992, including, without limitation, an Annual Report on Form
10-K for the year ended December 31, 1992 (collectively, the "SEC
Reports"), and has previously furnished or made available to CKI
true and complete copies of all such SEC Reports. As of their
respective dates (as amended through the date hereof), all such
SEC Reports (including all exhibits and schedules thereto and
documents incorporated by reference therein) complied in all
material respects with the laws, regulations and forms governing
such filings, and none of such SEC Reports (including all
schedules thereto and documents incorporated by reference
therein), contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Each
of the balance sheets (including the related notes) included in
the SEC Reports fairly presents the consolidated financial
position of Group as of the respective dates thereof, and the
other related statements (including the related notes) included
therein fairly present the consolidated results of operations and
cash flow of Group for the respective periods or as of the
respective dates set forth therein, all in conformity with GAAP
consistently applied during the periods involved, except as
otherwise noted therein and subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments and
any other adjustment described therein.
As of the date hereof, there are no claims, actions,
proceedings or investigations pending or, to Group's Knowledge,
threatened against Group or any of its subsidiaries, or any
properties or rights of Group or any of its subsidiaries, before
any court, administrative, governmental or regulatory authority
or body which is required to be described in any SEC Report that
is not so described and which would have or will have a Material
Adverse Effect on Group. There are no contracts or other
agreements required to be described in or filed as an exhibit to
any SEC Report that is not described in or filed as required by
the Exchange Act. Group is not in violation or breach of or
default under any such contract or agreement; nor to Group's
Knowledge, is any other party to any such contract or agreement
in violation or breach of default under any such contract or
agreement except for, in the case of each of the foregoing, any
breach or default which does not and will not have a Material
Adverse Effect on Group.
Section 6A.6. Capital Stock and Related Matters. The
authorized capital stock of Group consists of (i) 65,000,000
shares of Warnaco Common Stock, of which 19,822,616 shares are
issued and outstanding as of March 10, 1994 and (ii) 10,000,000
shares of Preferred Stock of which no shares were issued and
outstanding as of the date hereof. All of the outstanding shares
of capital stock of Group have been duly authorized and validly
issued and are fully paid and nonassessable. As of the date
hereof, none of the shares of capital stock of Group are, by
virtue of any agreement to which Group
is a party, subject to any option, warrant, right or call,
preemptive right or commitment of any kind or character except
that, with respect to the Warnaco Common Stock, 285,675 shares
are reserved for issuance pursuant to Group's 1988 Employee Stock
Purchase Plan, and 156,500 shares and 180,000 shares are reserved
for issuance pursuant to outstanding options pursuant to Group's
1991 Stock Option Plan and 1993 Stock Plan, respectively.
Section 6A.7. Authorization and Validity of the Shares
of Warnaco Common Stock. The shares of Warnaco Common Stock
which may be issued at the Closing and the shares of Warnaco
Common Stock issuable upon exercise of the Stock Option
Agreements contemplated by Sections 4.7 and 7B.1 (the "Option
Shares") have been duly authorized by all necessary corporate
action on the part of Group. When issued pursuant to the terms
of the Agreement, the shares of Warnaco Common Stock and the
Option Shares will be validly issued and outstanding, fully paid
and nonassessable and the issuance of such shares of Warnaco
Common Stock (including the Option Shares) will not be subject to
preemptive rights of any other stockholder of the Group or any
Lien. The Option Shares to be issued pursuant to Sections 4.7
and 7B.1 hereof will have been registered at the time of issuance
under the Securities Act and when such shares are received by the
holder of such stock options, the Option Shares will be freely
transferable without further registration. Application to list
the Option Shares to be issued pursuant to Sections 4.7 and 7B.1
hereof on the NYSE will have been made by Group at the time of
issuance of the Option Shares.
Section 6A.8. Absence of Specified Changes. Except
for the transactions provided for by this Agreement and as set
forth in Schedule 6A.8 hereto, during the period from September
30, 1993 to the date hereof, there has not been, with respect to
Group, any (i) material adverse change in its business, condition
or results of operations; (ii) change in accounting principles,
methods or practices; (iii) amendment to its Certificate of
Incorporation or By-laws; or (iv) agreement or understanding to
take any of the actions described in clause (ii) or (iii) of this
Section 6A.8.
Section 6A.9. Disclosure. Warnaco has not knowingly
failed to disclose to CKI any facts or circumstances which would
have a Material Adverse Effect on Group.
B. GROUP HEREBY REPRESENTS AND WARRANTS TO CKI, WITH
RESPECT TO WARNACO, AS FOLLOWS:
Section 6B.1. Corporate Organization. Warnaco is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite
corporate power and authority to own its properties and assets
and to conduct its businesses as now conducted. True, accurate
and complete copies of the Restated Certificate of Incorporation
and By-laws of Warnaco as in effect on the date hereof, including
all amendments thereto, have heretofore been delivered or made
available to CKI.
Section 6B.2. Authorization and Validity of Agreement.
Warnaco has all requisite corporate power and authority to enter
into this Agreement and the Related Agreements to which it is a
party, to make the loans pursuant to Section 4.6 hereof and to
carry out its obligations hereunder and thereunder. The
execution and delivery of this Agreement and Related Agreements
to which it is a party, the making of the loans pursuant to
Section 4.6 hereof, and the performance of Warnaco's obligations
hereunder and thereunder have been duly authorized by all
necessary corporate action by the Board of Directors or Warnaco
and by Group, as the sole shareholder of Warnaco, and no other
corporate proceedings on the part of Warnaco are necessary to
authorize such execution, delivery and performance. This
Agreement has been duly executed by Warnaco and each of the
Related Agreements to which it is a party have been duly executed
by Warnaco and this Agreement and each of the Related Agreements
constitute a valid and binding obligation of Warnaco, enforceable
against it in accordance with its terms.
Section 6B.3. No Conflict or Violation. The
execution, delivery and performance by Warnaco of this Agreement
and the Related Agreements to which it is a party and the making
of the loans pursuant to Section 4.6 hereof do not (i) violate or
conflict with any provision of the Restated Certificate of
Incorporation or By-laws of Warnaco, (ii) violate any provision
of law, or any order, judgment or decree of any court or other
Governmental Body, or (iii) violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default,
or result in the creation of any Lien on any of the assets of
Warnaco or any of its Affiliates, under any contract, lease, loan
agreement, mortgage, security agreement, trust indenture or other
agreement or instrument or obligation to which Warnaco or any of
its Affiliates is a party or by which it is bound, which
violation, breach, default or Lien would reasonably be expected
to have a Material Adverse Effect on Warnaco.
Section 6B.4. Consents and Approvals. The execution,
delivery and performance of this Agreement and the Related
Agreements to which it is a party and the making of the loans
pursuant to Section 4.6 hereof do not require on the part of
Warnaco the consent or approval of, or filing with, any
Governmental Body or any third party except such consents,
approvals and filings, the failure of which to obtain or make
would not reasonably be expected to have a Material Adverse
Effect on Warnaco.
Section 6B.5. Capitalization. The authorized capital
stock of Warnaco consists of 100,000 shares of Common Stock, par
value $1.00 per share, of which 100,000 shares are issued and
outstanding. All of the issued and outstanding shares of the
Common Stock are owned by Group.
ARTICLE VII
OTHER AGREEMENTS AND COVENANTS OF THE PARTIES
A. AGREEMENTS AND COVENANTS OF CKI.
Section 7A.1. Warnaco Mail and Other Documents.
Following the Closing, CKI agrees to deliver to Warnaco all mail
and other documents received by CKI which relates to the Business
and which, from its review, should be delivered to Warnaco.
Section 7A.2. Further Assurances. After the Closing
and the Second Closing, CKI shall, from time to time at the
request of Warnaco and without further cost or expense to Warnaco
(except for any and all costs and recordation and filing taxes
relating to the transfer or assignment of the Calvin Klein
Trademarks or the recordation of perpetual licenses for such
marks as they relate to Men's Underwear and Women's Intimate
Apparel and maintaining and defending the Men's Underwear
Trademarks and the Women's Intimate Apparel Trademarks, which
shall be borne solely by Warnaco), execute and deliver such other
instruments of conveyance and transfer and take such other
actions as Warnaco may reasonably request, in order to more
effectively consummate the transactions contemplated hereby.
Section 7A.3. Insurance. CKI has heretofore delivered
or made available to Warnaco a listing of the policies of
insurance, in force as of the date hereof, naming CKI or its
Affiliates as insured, which cover losses which may be suffered
by the Business. CKI agrees to keep, or cause to be kept, in
full force and effect, insurance, which is customary to be kept
by a provider of warehousing and shipping services, to cover the
warehousing and shipping services being provided to Warnaco by
CKI pursuant to the Services Agreement until such services are no
longer being provided to Warnaco by CKI.
Section 7A.4. Women's Intimate Apparel. From the date
of entry into this Agreement until the Second Closing, CKI shall
not sell, transfer, assign or in any way encumber, including
through the grant of any Lien or any license or distribution
agreement relating to Women's Intimate Apparel, the Women's
Intimate Apparel Beneficial Interest or the Women's Intimate
Apparel License or take or fail to take any action which would
prevent it from consummating the sale of the Women's Intimate
Apparel Beneficial Interest and the transfer and assignment of
the Women's Intimate Apparel License to Warnaco as provided
herein. CKI agrees that from the date of execution of this
Agreement until the Second Closing, unless otherwise expressly
consented to in writing by Warnaco, CKI will conduct its
operations with respect to any rights or obligations under the
Heckler License to sustain the quality of the Calvin Klein
Trademarks as applied to Women's Intimate Apparel.
Section 7A.5. Assignment of Contracts. At the
Closing, CKI is assigning to Warnaco the Contracts listed on
Schedule 7B.2 hereto (but with respect to the licenses and
distribution agreements listed thereon, only the interests
thereof relating to Men's Underwear) and, effective as of the
Second Closing, the interest relating to Women's Intimate
Apparel, provided, however, amounts payable by such licensees
under any such Contract on account of sales made prior to the
Closing Date shall be payable solely to CKI. Warnaco and CKI
agree that the Administration Agreement will govern the means of
sharing royalties, fees and payments received from licensees
under the Contracts which are license agreements and the
allocation of purchase requirements by distributors under the
Contracts which are distribution agreements. In addition, upon
the expiration or the earlier termination of the Heckler License,
and upon the Second Closing, Warnaco shall assume all of CKI's
remaining rights under the Heckler License, including but not
limited to the option to purchase the licensee's remaining
inventory under the terms of such license. If it shall be
necessary for CKI to exercise such right to purchase all or part
of this inventory in order to comply with any time requirements
under the Heckler License (or as may otherwise be requested or
directed by Warnaco) CKI shall, if directed by Warnaco, exercise
such option to purchase the licensee's remaining inventory for
Warnaco's account and subject to payment by Warnaco of the cost
of purchasing such inventory. CKI will promptly take all
commercially reasonable steps necessary to obtain executed
licenses and distribution agreements covering only Men's
Underwear and Women's Intimate Apparel on the same business terms
and conditions as, and substantially identical to, such
agreements in effect on the date hereof, which new agreements as
to Men's Underwear shall be assigned to Warnaco following their
execution and such agreements relating to Women's Intimate
Apparel shall be assigned to Warnaco at the Second Closing.
Section 7A.6. Promotional Figures. CKI covenants and
agrees that any promotional figure or figures for Men's Underwear
will be subject to Warnaco's prior approval (which will not be
unreasonably withheld) and the terms of such person's retention
will be on terms that are acceptable to Warnaco and will be
standard for a CKI modeling services agreement.
B. AGREEMENTS AND COVENANTS OF GROUP AND WARNACO.
Section 7B.1. Stock Options. Upon the first
anniversary of the Closing, provided that none of CKI, Mr. Calvin
Klein nor Mr. Barry K. Schwartz has violated the Non-Competition
Agreement being entered into by them pursuant to this Agreement
and subject to the approval, if required, of the shareholders of
Group of additional shares of Warnaco Common Stock for the grant
of stock options, Mr. Calvin Klein and Mr. Barry K. Schwartz each
shall be granted options, pursuant to the 1993 Stock Plan and/or
any successor plan of Group, to purchase 37,500 shares of Warnaco
Common Stock. Exercisability of the options will be subject to
the compliance by CKI, Mr. Calvin Klein and Mr. Barry K. Schwartz
with the above-referenced Non-Competition Agreement and the terms
and conditions of the Stock Option Agreement governing such
options.
Section 7B.2. Assumed Liabilities. From and after
Closing, Warnaco agrees to cause Newco to undertake, pay and
perform the Accounts Payable (but in no event in an amount
greater than $3,000,000) being assigned by CKI to Newco
(including all duties, customs and brokerage charges incurred on
Inventory in transit at the Closing) and the Contracts relating
to Men's Underwear listed on Schedule 7B.2 hereto and all other
Contracts arising in the ordinary course of business and, at the
Second Closing, those Intellectual Property Agreements relating
to Women's Intimate Apparel listed on Schedule 7B.2.
Section 7B.3. CKI Loan. Warnaco agrees that, if
requested, it will assist CKI until the first anniversary of the
date of this Agreement in obtaining a loan on commercially
reasonable terms which is secured solely by the Warnaco Common
Stock to be received by CKI pursuant to this Agreement and is
otherwise a non-recourse loan. CKI agrees that the Warnaco
Common Stock securing such loan shall be kept in a segregated
account so that any changes in the value of other securities or
collateral held by the lender for any other loan to CKI shall not
provide a basis for a margin call and CKI shall provide Warnaco
with confirmation from the lender to such effect.
Section 7B.4. Letters of Credit. Warnaco agrees with
CKI that as of the Closing it will replace all Letters of Credit
issued on behalf of CKI and its Affiliates which are listed in
Section 5A.26 of the Disclosure Schedule with letters of credit
issued by Warnaco's lenders or issue a back-to-back letter of
credit to CKI's issuer.
Section 7B.5. Returns. From and after the Closing,
Warnaco agrees that it will accept and issue a credit to
customers of the Business for all returns, in the normal course
to the extent consistent with prior experience as heretofore
disclosed by CKI to Warnaco, of Product which was sold by CKI or
its Affiliates prior to the Closing.
Section 7B.6. CKI Mail and Other Documents. Warnaco
agrees to deliver to CKI all mail and other documents received by
Warnaco and which from its review should be delivered to CKI.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF GROUP
AND WARNACO WITH RESPECT TO THE SECOND CLOSING
The obligations of Group and Warnaco to consummate the
purchase of the Women's Intimate Apparel Beneficial Interest and
the Women's Intimate Apparel License are subject to the
fulfillment, prior to or at the Second Closing, of each of the
following conditions:
Section 8.1. Representations and Warranties. Each of
the representations and warranties made by CKI in Sections 5A.1,
5A.2, 5A.3, 5A.4, 5A.10, 5A.23 and 5C.1 through 5C.5 of this
Agreement with respect to CKI and as modified to be
representations as to the Women's Intimate Apparel Beneficial
Interest and the Women's Intimate Apparel License or the subject
matter thereof as of the Second Closing shall be true in all
material respects when made and as of the Second Closing Date as
though such representations and warranties were made at and as of
the Second Closing Date.
Section 8.2. CKI's Obligations. CKI shall have
performed and complied in all material respects with all
covenants, agreements, obligations and conditions relating to the
Women's Intimate Beneficial Interest and the Women's Intimate
Apparel License required by this Agreement to be so performed or
complied with it on or prior to the Second Closing Date.
Section 8.3. CKI Certificate. CKI shall have
delivered to Warnaco a certificate, dated the Second Closing
Date, executed by the President or a Vice President of CKI,
certifying as to the fulfillment of the conditions specified in
Sections 8.1 and 8.2 hereof.
Section 8.4. Certified Resolutions. CKI shall have
furnished Warnaco with certified copies of resolutions duly
adopted by its Board of Directors authorizing and approving the
performance of this Agreement and each other agreement or
instrument required to be executed and delivered pursuant to this
Agreement in connection with transactions contemplated by the
Second Closing.
Section 8.5. No Injunction. At the Second Closing
Date, there shall be no injunction, restraining order or decree
of any nature of any court or governmental agency or body of
competent jurisdiction that is in effect that restrains or
prohibits the consummation of the transactions contemplated by
the Second Closing.
Section 8.6. Opinions of Counsel to CKI. Warnaco
shall have received such opinions of counsel to CKI as reasonably
requested by Warnaco.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF
CKI WITH RESPECT TO THE SECOND CLOSING
The obligations of CKI under this Agreement to
consummate the sale of the Women's Intimate Apparel Beneficial
Interest and the Women's Intimate Apparel License are subject to
the fulfillment, prior to or at the Second Closing, of each of
the following conditions:
Section 9.1. Representations and Warranties. The
representations and warranties made by Group in Sections 6B.1
through 6B.4 of this Agreement with respect to Group and Warnaco
shall be true in all material respects when made and as of the
Second Closing Date as though such representations and warranties
were made at and as of the Second Closing Date.
Section 9.2. Group and Warnaco Obligations. Group and
Warnaco shall have performed and complied in all material
respects with all agreements, obligations and conditions relating
to the Women's Intimate Apparel Beneficial Interest and Women's
Intimate Apparel License required by this Agreement to be so
performed or complied with by them on or prior to the Second
Closing Date.
Section 9.3. Certificate of Warnaco. Warnaco shall
have delivered to CKI a certificate of its President or of a Vice
President of Warnaco, dated the Second Closing Date, certifying
as to the fulfillment of the conditions specified in Sections 9.1
and 9.2 hereof.
Section 9.4. Certified Resolutions. Warnaco shall
have furnished CKI with a certified copy of resolutions duly
adopted by its Board of Directors authorizing and approving the
execution, delivery and performance of this Agreement and each
other agreement required to be executed and delivered pursuant to
this Agreement in connection with the transactions contemplated
by the Second Closing.
Section 9.5. No Injunction. At the Second Closing
Date, there shall be no injunction, restraining order or decree
of any nature of any court or governmental agency or body of
competent jurisdiction that is in effect that restrains or
prohibits the consummation of the transactions contemplated by
the Second Closing.
Section 9.6. Opinion of Counsel to Warnaco. Warnaco
shall have delivered to CKI such opinions of counsel to Warnaco
as reasonably requested by CKI.
ARTICLE X
SURVIVAL, INDEMNIFICATION AND SET-OFF
Section 10.1. Survival of Representations. All
representations, warranties, covenants and agreements made by any
party in this Agreement or pursuant hereto shall survive the
Closing hereunder and any investigation at any time made by or on
behalf of any party hereto.
Section 10.2. Statements as Representations. All
statements contained in any certificate and in any schedule
delivered pursuant hereto (including the Disclosure Schedule)
shall be deemed representations and warranties for all purposes
of this Agreement.
Section 10.3. Indemnification by CKI. (a) Subject to
the terms and conditions of this Article X, CKI hereby agrees to
indemnify, fully defend, save and hold harmless Group, Warnaco
and any Affiliate thereof or any of their directors or officers
(the "Warnaco Indemnified Group") from and against all demands,
claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including, without
limitation, interest, penalties, amounts paid in settlement and
reasonable attorneys' fees and expenses (collectively,
"Damages"), asserted against, resulting to, imposed upon or
incurred by the Warnaco Indemnified Group or any member thereof,
directly or indirectly, by reason of or resulting from:
(1) except for Assumed Liabilities, any and all
liabilities or obligations of, or claims against, CKI (whether
absolute, accrued, contingent or otherwise) relating to the
Business existing as of the Closing Date or arising out of facts
or circumstances existing at or prior thereto, whether or not
such claims were known at the time of the Closing, including, but
not limited to, any product liability claims relating to Product
manufactured for CKI, its licensees or distributors prior to the
Closing (irrespective of when such claim is brought) whether
arising in tort, strict liability or otherwise;
(2) any inaccuracy in, or a breach of, any
representation, warranty, covenant or agreement of CKI
contained in or made pursuant to this Agreement or any facts or
circumstances constituting such a breach;
(3) any and all liabilities, direct or indirect,
absolute or contingent, for Taxes or related claims asserted
against the Warnaco Indemnified Group or any member thereof (i)
with respect to any sales or other transfer taxes which may be
payable in connection with any sale, conveyance, assignment,
transfer and delivery made pursuant to this Agreement (except for
any and all costs and recordation and transfer taxes relating to
the transfer or assignment of the Calvin Klein Trademarks or the
recordation of perpetual licenses for such marks as they relate
to Men's Underwear and Women's Intimate Apparel and maintaining
and defending the Men's Underwear Trademarks and the Women's
Intimate Apparel Trademarks, which shall be borne solely by
Warnaco); (ii) with respect to any Taxes relating to the
operations or properties of the Business or CKI prior to the
Closing Date; or (iii) with respect to any and all Taxes imposed
upon any gains arising from the transactions contemplated by
Article II of this Agreement;
(4) the failure by CKI to comply with any "bulk sales"
law under the Uniform Commercial Code applicable to the
transactions contemplated by this Agreement, including the
transfer of the Assets to Newco;
(5) any liability arising out of CKI's or any ERISA
Affiliates' obligations pursuant to any Multi-Employer Plan or
any liability that may be imposed upon any member of the Warnaco
Indemnified Group arising out of the operation and administration
of any of the CKI Plans, including, without limitation, any such
liability arising under Title IV of ERISA; and
(6) any action, suit or proceeding brought against any
member of the Warnaco Indemnified Group arising out of or in
connection with the termination or non-renewal of the Heckler
License.
(b) Each matter for which CKI has agreed to
provide indemnification pursuant to Section 10.3(a) hereof is
hereinafter referred to individually as a "Claim" and
collectively as the "Claims".
Section 10.4. Indemnification by Group and Warnaco.
(a) Subject to the terms and conditions of this Article X, Group
and Warnaco hereby agree to indemnify, fully defend, save and
hold harmless CKI and any Affiliate thereof or any of their
directors or officers (the "CKI Indemnified Group") from and
against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities, costs and expenses,
including, without limitation, interest, penalties, amounts paid
in settlement and reasonable attorneys' fees and expenses
(collectively, "Damages"), asserted against, resulting to,
imposed upon or incurred by the CKI Indemnified Group or any
member thereof, directly or indirectly, by reason of or resulting
from:
(1) any inaccuracy in, or a breach of, any
representation, warranty, covenant or agreement of Warnaco or
Group contained in or made pursuant to this Agreement or any
facts or circumstances constituting such a breach;
(2) any Assumed Liability; and
(3) any liabilities of the Business, or related to the
Business, arising out of facts or circumstances which occur on or
after the Closing Date.
(b) Each matter for which Group and Warnaco has
agreed to provide indemnification pursuant to Section 10.4(a)
hereof is hereinafter referred to individually as a "Claim" and
collectively as the "Claims."
Section 10.5. Conditions of Indemnification. The
obligations and liabilities of any party to indemnify any other
party under Sections 10.3 and 10.4 hereof with respect to Claims
shall be subject to the following terms and conditions:
(a) The party to be indemnified (the "Indemnified
Party") will give the other party or parties (the "Indemnifying
Party") prompt notice of any such Claim. Such notice shall be a
condition precedent to any liability of the Indemnifying Party
under the provisions for indemnification contained in this
Agreement (provided that the delay to notify the Indemnifying
Party promptly shall not relieve such Indemnifying Party of its
obligations under this Article X except to the extent that the
failure to so notify adversely prejudices the Indemnifying
Party's ability to defend such Claim).
(b) The Indemnifying Party may elect to undertake
the defense of any Claim with respect to which indemnification is
sought by the Indemnified Party by representatives chosen by it
reasonably satisfactory to the Indemnified Party. If the
Indemnifying Party elects to compromise or defend such asserted
liability, it shall within 30 days from delivery of the notice
pursuant to Section 10.5(a) (or sooner, if the nature of the
asserted liability so requires) notify the Indemnified Party of
its intent to do so and the Indemnified Party shall cooperate in
the compromise of, or defense against, any such asserted
liability. In such case, the Indemnified Party may participate
in such defense at its own expense. If the Indemnifying Party,
within such 30-day period after notice of any such Claim, fails
to so defend, the Indemnified Party will have the right to assume
the defense, compromise or settlement of such Claim on behalf of
and for the account and risk of the Indemnifying Party, subject
to the right of the Indemnifying Party to assume the defense of
such Claim at any time prior to settlement, compromise or final
determination thereof. If, in the opinion of counsel to an
Indemnified Party, the interests of the Indemnified Party and the
Indemnifying Party with respect to any Claim are conflicting, the
Indemnified Party shall be entitled to undertake the defense of
such Claim at the expense of the Indemnifying Party. If the
Indemnifying Party chooses to defend any Claim, the Indemnified
Party shall make available to the Indemnifying Party any books,
records or other documents within its control that are necessary
or appropriate for such defense.
(c) The notice referred to in Section 10.5(a)
hereof shall set forth the details of the Claim (including the
amount, estimated, if necessary, of the asserted Damages) and the
specific provisions of this Agreement relating thereto and shall
have been given by the Indemnified Party no later than the second
anniversary of the Closing Date, except that with respect to any
Claim for indemnity provided by Section 10.3(a)(3) or 10.3(a)(5)
hereof, the date prior to which notice must be given shall be the
applicable statute of limitations.
(d) Anything in this Section 10.5 to the contrary
notwithstanding, (i) if there is a reasonable probability that a
Claim may materially and adversely affect the Indemnified Party
other than solely as a result of money damages or other money
payments, the Indemnified Party shall have the right, at its own
cost and expense, to defend, compromise or settle such Claim, and
(ii) the Indemnifying Party shall not, without the written
consent of the Indemnified Party (which consent shall not be
unreasonably withheld), settle or compromise any Claim or consent
to the entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all
liability in respect of such Claim.
Section 10.6. Set-off. Notwithstanding any provision
of this Agreement or of any other agreement, instrument or
undertaking, and in addition to the right of the Indemnified
Party to indemnification hereunder and to all remedies provided
by law, the Indemnified Party shall have the right to set off the
amount of any Claim against any sums of money or other property
at any time or from time to time payable or deliverable by the
Indemnified Party to the Indemnifying Party pursuant to any
agreement, instrument or undertaking, when the Claim becomes
payable by the Indemnifying Party to the Indemnified Party,
provided the Claim is not disputed by the Indemnifying Party or,
if disputed, a final non-appealable judgment has been rendered by
a court of competent jurisdiction that the Claim is to be paid by
the Indemnifying Party. Except as provided by the foregoing
sentence, no Indemnified Party under this Agreement shall have
any right to set off the amount of any Claim against any sums of
money or other property payable or deliverable by the Indemnified
Party to the Indemnifying Party pursuant to this Agreement or any
other agreement, instrument or undertaking to which they are a
party to with another party to this Agreement.
Section 10.7. Limitation on Indemnification.
(a) Notwithstanding anything to the contrary set forth in this
Agreement, no indemnification payment for any Damages shall be
made by CKI or Group, as the case may be, pursuant to Section
10.3(a)(2) or 10.4(a)(1) hereof, respectively, except to the
extent that the amounts which would otherwise be payable pursuant
to either such Section relating to such Damages aggregate at
least $300,000 (the "Minimum Amount"), and such Minimum Amount
shall be deducted from the aggregate amount payable under Section
10.3(a)(2) or 10.4(a)(1), as the case may be, with respect to
Damages payable pursuant to such sections of this Agreement;
provided, however, that the foregoing shall not apply to the non-
collectability of any Account Receivable owing from CKI or any of
its Affiliates.
(b) This Article X shall be the sole basis of any
remedy each party may have against the other party for a breach
or violation of a representation, warranty, covenant or agreement
under this Agreement or any agreement contemplated hereby and
each party hereby waives any claim (other than under this Article
X) it may have against the other party with respect to a breach
of any such representation, warranty, covenant or agreement
unless such breach or violation is a result of fraud or
intentional or wilful misrepresentation by a party hereto.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Headings. The descriptive headings of
the several Articles and Sections of this Agreement are inserted
for convenience only and are not meant in any way to affect the
meaning or interpretation of this Agreement.
Section 11.2. Notices. Any notices or other
communications required or permitted hereunder shall be given in
writing and shall be delivered by hand or air courier or sent by
certified or registered mail, postage prepaid, addressed as
follows:
If to Group or Warnaco, to:
Warnaco Inc.
90 Park Avenue
New York, New York 10016
Attention: Linda J. Wachner
Chairman, President and Chief
Executive Officer
Copy to: General Counsel
Copy to:
Skadden, Arps, Slate,
Meagher & Flom
919 Third Avenue
New York, New York 10022
Attention: Kenneth J. Bialkin, Esq.
or:
If to CKI, to:
Calvin Klein, Inc.
205 West 39th Street
New York, New York 10018
Attention: Richard A. Martin
Copy to:
Paul Weiss Rifkind
Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019
Attention: Arthur L. Liman, Esq.
or to such other address as shall be furnished in writing by such
party, and any such notice or communication shall be effective
and be deemed to have been given as of the date delivered, if by
hand or air courier, and five days following the date of mailing
if mailed.
Section 11.3. Assignment. This Agreement, and all of
the provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of
the other parties.
Section 11.4. Complete Agreement. This Agreement,
including the Disclosure Schedule, the schedules and any other
documents specifically referred to herein, the Confidentiality
Agreement and the Related Agreements contain the entire
understanding of the parties with respect to the transactions
contemplated hereby and supersede all prior arrangements or
understandings with respect thereto. There are no agreements,
promises, warranties, covenants or undertakings other than those
expressly set forth herein and therein.
Section 11.5. Severability. In the event that any
part of this Agreement is declared by any court or other judicial
or administrative body to be null, void or unenforceable, said
provision shall survive to the extent it is not so declared, and
all of the other provisions of this Agreement shall remain in
full force and effect.
Section 11.6. Amendments; Waivers. This Agreement may
be amended or modified, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived,
only by a written instrument executed by the parties hereto or
their respective successors or assigns, or in the case of a
waiver, by the party waiving compliance. Any waiver by any party
of any condition, or of the breach of any provision, term,
covenant, representation or warranty contained in this Agreement,
in any one or more instances, shall not be deemed to be nor
construed as a further or continuing waiver of any such
condition, or of the breach of any other provision, term,
covenant, representation or warranty of this Agreement.
Section 11.7. Public Announcements. The parties agree
that after the execution of this Agreement, neither party shall
make any press release or public announcement concerning this
transaction without first consulting with the nondisclosing party
and giving the nondisclosing party prior notice and an
opportunity to comment on the proposed disclosure.
Section 11.8. Parties in Interest. Nothing in this
Agreement is intended to confer any rights or remedies under or
by reason of this Agreement on any persons other than CKI, Group
and Warnaco and their respective successors and permitted
assigns. Nothing in this Agreement is intended to relieve or
discharge the obligations or liability of any third persons to
CKI, Group or Warnaco.
Section 11.9. Counterparts. This Agreement may be
executed in two or more counterparts all of which shall be
considered one and the same agreement and each of which shall be
deemed an original.
Section 11.10. Governing Law. This Agreement shall be
governed by the laws of the State of New York (regardless of the
laws that might be applicable under principles of conflicts of
law) as to all matters, including but not limited to matters of
validity, construction, effect and performance.
Section 11.11. Jurisdiction. The parties hereto
irrevocably elect as the sole judicial forum for the adjudication
of any matters arising under or in connection with this
Agreement, and consent to the jurisdiction of, the courts of the
County of New York, State of New York or of the United States of
America for the Southern District of New York.
Section 11.12. Guarantee. Group hereby
unconditionally and irrevocably guarantees the due and punctual
payment and performance in full of any and all obligations of
Warnaco hereunder.
Section 11.13. Brokers, Finders. CKI on the one hand
and Group and Warnaco, on the other hand, will each hold the
other harmless from, and pay and discharge, any claims for
liabilities for brokerage commissions or finder's fees incurred
by reason of any action on their or its behalf.
Section 11.14. Fees and Expenses. CKI shall pay its
costs and expenses, and Group and Warnaco shall pay their costs
and expenses, in connection with the transactions contemplated
herein.
IN WITNESS WHEREOF, each of the parties hereto has duly
executed this Agreement, as of the day and year first above
written.
CALVIN KLEIN, INC.
By____________________________
Name:
Title:
THE WARNACO GROUP, INC.
By____________________________
Name:
Title:
WARNACO INC.
By____________________________
Name:
Title:
CKI DISCLOSURE SCHEDULE
Section Matter
Section 5A.3 -- No Conflict or Violation
Section 5A.4 -- Consents and Approvals
Section 5A.5 -- Financial Statements
Section 5A.6 -- Operation in Ordinary
Course
Section 5A.9 -- Absence of Undisclosed
Liabilities
Section 5A.10 -- Intellectual Property
Section 5A.12 -- Litigation
Section 5A.13 -- Contracts
Section 5A.14 -- Employee Benefits;
ERISA
Section 5A.15A -- Employees
Section 5A.15B -- Accrued Compensation
Section 5A.16 -- Labor Difficulties
Section 5A.19 -- Fixed Assets
Section 5A.21 -- Accounts Receivable
Section 5A.22 -- Assets Necessary to
Operate the Business
Section 5A.23 -- Customers and Suppliers
Section 5A.24 -- Orders, Commitments and
Returns
Section 5A.25 -- Letters of Credit
Section 5A.26 -- Licenses and Permits
Section 5A.27 -- Disclosure
APPENDIX
Appendix A - Cash Consideration Delivery
Information
WARNACO SCHEDULES
Schedule Matter
Schedule 5A.27 - Disclosure Items
Schedule 6A.8 - Absence of Specified Changes
Schedule 7B.2 - Assumed Liabilities
OPINIONS
Annex I - Opinions of Counsel to CKI at
Closing
Annex II - Opinions of Counsel to Group
and Warnaco at Closing
Annex III - Opinion of Counsel to the
Trustee at Closing
INDEX TO EXHIBITS
Exhibit A -- Administration Agreement
Exhibit B -- Allocation Agreement
Exhibit C -- Confidentiality Agreement
Exhibit D -- Men's Accessories License
Exhibit E -- Men's Underwear License
Exhibit F -- Non-Competition Agreement
Exhibit G -- Promissory Note
Exhibit H -- Quality Assurance Agreement
Exhibit I -- Registration Rights Agreement
Exhibit J -- Shared Space, Services and
Warehousing Agreement
Exhibit K -- Servicing Agreement
Exhibit L -- Stock Option Agreement
Exhibit M -- Trust Agreement
Exhibit N -- Women's Intimate Apparel License
Exhibit O -- Worldwide Transfer Agreement
THE WARNACO GROUP, INC.
Calculation of Income (Loss) per Common Share
(in thousands except share data)
For the quarter ended
------------------------------------
April 9, 1994 April 3, 1993
-------------- -------------
Income from continuing operations
applicable to Common Shareholders $ 11,961 $ 10,752
Cumulative effect of change in the
method of accounting for
postretirement benefits (10,500)
Loss on earthquake (3,000) --
------------ ------------
Net income $ 8,961 $ 252
============ ============
Weighted average number of shares
actually outstanding during
the year 18,270,947 18,037,500
Add common equivalent shares as
part of IPO(a) 1,805,030 1,844,229
------------ ------------
Weighted average number of shares
used in calculation of primary
income (loss) per share 20,075,977 19,881,729
============ ============
Income (Loss) per common share:
Income from continuing operations
applicable to common shareholders $ 0.60 $ 0.54
Cumulative effect of change in the
method of accounting for
postretirement benefits -- (0.53)
Loss on earthquake (0.15) --
------------ ------------
Net income per common share $ 0.45 $ 0.01
============ ============
(a) Represents additional shares granted to employees at prices below the
offering price for the October 1991 Initial Public Offering ("IPO").
