<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1995
REGISTRATION NO. 33-61701
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE WARNACO GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 95-4032739
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)
</TABLE>
------------------------
90 PARK AVENUE
NEW YORK, NY 10016
(212) 661-1300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
STANLEY P. SILVERSTEIN, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
THE WARNACO GROUP, INC.
90 PARK AVENUE
NEW YORK, NY 10016
(212) 661-1300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
------------------------
COPIES OF ALL COMMUNICATIONS TO:
<TABLE>
<S> <C>
KENNETH J. BIALKIN, ESQ. VALERIE FORD JACOB, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
919 THIRD AVENUE ONE NEW YORK PLAZA
NEW YORK, NY 10022 NEW YORK, NY 10004
(212) 735-3000 (212) 859-8000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement is declared effective.
------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [x]
------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
PROPOSED
MAXIMUM
OFFERING PROPOSED
PRICE MAXIMUM AMOUNT OF
TITLE OF SHARES AMOUNT TO PER AGGREGATE REGISTRATION
TO BE REGISTERED BE REGISTERED(1) SHARE(2) OFFERING PRICE(2) FEE(3)
<S> <C> <C> <C> <C>
Class A Common Stock,
par value $.01 per
share..................... 11,040,000 $23.750 $ 262,200,000 $ 84,470
</TABLE>
(1) Includes 1,440,000 shares issuable pursuant to options granted by the
Company and the Selling Stockholder to the Underwriters solely for the
purpose of covering over-allotments.
(2) Estimated solely for the purpose of computing the amount for the
registration fee in accordance with Rule 457(c) of the Securities Act of
1933 based on the average of the high and low prices for shares of the
Registrant's Class A Common Stock on August 7, 1995 and September 15, 1995,
on the New York Stock Exchange.
(3) $69,400 of the registration fee was previously paid on August 9, 1995 when
this Registration Statement was initially filed.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
________________________________________________________________________________
<PAGE>
EXPLANATORY NOTE
This Registration Statement contains a Prospectus relating to a public
offering in the United States and Canada (the 'U.S. Offering') of an aggregate
of 7,680,000 shares of Class A Common Stock, par value $.01 per share ('Common
Stock'), of The Warnaco Group, Inc., together with separate prospectus pages
relating to a concurrent offering outside the United States and Canada (the
'International Offering') of an aggregate of 1,920,000 shares of Common Stock.
The complete Prospectus for the U.S. Offering follows immediately after this
Explanatory Note. After such Prospectus are the alternate pages for the
International Offering: a front cover page, an 'Underwriting,' a 'Legal
Matters,' an 'Experts,' an 'Available Information' and a 'Documents Incorporated
By Reference' section and a back cover page. All other pages of the Prospectus
for the U.S. Offering are to be used for both the U.S. Offering and the
International Offering.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 19, 1995
9,600,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
Of the 9,600,000 shares of Class A Common Stock offered, 8,800,000 are
being offered by The Warnaco Group, Inc. and 800,000 shares are being offered by
the Selling Stockholder of the Company. See 'Selling Stockholder' and
'Underwriting.' The Company will not receive any of the proceeds from the sale
of shares of Class A Common Stock by the Selling Stockholder.
Of the 9,600,000 shares of Class A Common Stock offered, 7,680,000 shares
are being offered initially in the United States and Canada by the U.S.
Underwriters and 1,920,000 shares are being offered initially outside the United
States and Canada by the International Managers. The initial offering price and
the aggregate underwriting discount per share are identical for both Offerings.
See 'Underwriting.'
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol 'WAC.' On September 18, 1995, the last sale price of the Class A Common
Stock as reported on the New York Stock Exchange was $23.25 per share. See
'Price Range of Common Stock.'
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE 'RISK FACTORS' APPEARING ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
<S> <C> <C> <C> <C>
Per Share............................... $ $ $ $
Total(3)................................ $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deducting expenses estimated at $ payable by the Company and
$ payable by the Selling Stockholder.
(3) The Company has granted the U.S. Underwriters and the International Managers
options to purchase up to 1,032,000 and 288,000 additional shares of Class A
Common Stock, respectively, and the Selling Stockholder has granted the U.S.
Underwriters an option to purchase up to 120,000 additional shares of Class
A Common Stock, in each case, exercisable within 30 days after the date
hereof and solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discount,
Proceeds to Company and Proceeds to Selling Stockholder will be $ ,
$ , $ and $ , respectively. See 'Underwriting.'
------------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Class A Common Stock will be made in New York,
New York on or about , 1995.
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO.
INCORPORATED
OPPENHEIMER & CO., INC.
------------------------
The date of this Prospectus is , 1995.
<PAGE>
[PHOTOS]
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
THE COMPANY
The Warnaco Group, Inc. (the 'Company') is a leading designer, manufacturer
and marketer of a broad line of women's intimate apparel, such as bras, panties,
daywear and sleepwear and men's underwear, dress shirts, sportswear, accessories
and small leather goods. The Company's internationally recognized intimate
apparel brands include Warner's'r', Olga'r', Calvin Klein'r', Valentino
Intimo'r', Scaasi'r', Blanche'r', Van Raalte'r', White Stag'r' and Fruit of the
Loom'r'. Building on the strength of its brand names and reputation for fit and
quality, the Company has developed a significant level of repeat business and a
high degree of consumer loyalty. The Company is the leading marketer of intimate
apparel to department and specialty stores in the United States, accounting for
approximately 30% market share in bra sales over the last three years, nearly
twice its nearest competitor. In the mass merchandise segment, the Company has
built its Fruit of the Loom brand to an approximately 7% market share in bra
sales in the last two years. In March 1994, the Company acquired the worldwide
trademarks, rights and business of Calvin Klein men's underwear and, effective
January 1, 1995, the worldwide trademarks and rights for Calvin Klein women's
intimate apparel. The purchase price was approximately $60,924,000 and consisted
of cash payments of $33,103,000 in fiscal 1994, $5,000,000 in fiscal 1995 and
the issuance of 1,699,492 shares of the Company's Common Stock valued at fair
market value ($22,821,000) for such shares. In addition, the Company entered
into an exclusive license agreement to produce men's accessories and small
leather goods under the Calvin Klein brand. The growth potential of the Calvin
Klein brand is reflected in the Company's financial results for the second
quarter of fiscal 1995, in which net revenues for Calvin Klein men's underwear
and women's intimate apparel more than doubled compared to the second quarter of
fiscal 1994. In addition to Calvin Klein, the Company's menswear brand names
include Chaps by Ralph Lauren'r', Hathaway'r' and Catalina'r'. The Company
operates 53 retail outlet stores. The Intimate Apparel, Menswear and Retail
Outlet Stores divisions accounted for 75%, 20% and 5%, respectively, of net
revenues for the first six months of fiscal 1995.
The Company seeks to continue its growth strategy by capitalizing on its
highly recognized brand names worldwide while broadening its channels of
distribution and improving manufacturing efficiencies and cost controls. The key
elements of this growth strategy are:
Implement Brand Strategies to Broaden Channels of Distribution. The
Company has expanded its distribution beyond its traditional base of
department and specialty stores in the United States by (i) entering into
an exclusive license agreement with Fruit of the Loom, Inc. to distribute
moderately-priced bras, daywear and other related items through mass
merchandisers, (ii) signing an agreement with Avon Products, Inc. to
distribute Warner's and Fruit of the Loom bras on an exclusive basis and
Scaasi sleepwear throughout the United States, (iii) licensing the White
Stag and Catalina brand names to Wal-Mart on a non-exclusive basis and (iv)
developing a new line of intimate apparel under the recently acquired Van
Raalte trademark for sale in Sears stores beginning in August 1995. The
success of these strategies is reflected in the growth in Fruit of the Loom
net revenues, which increased over 95% to $64.3 million in fiscal 1994 from
fiscal 1993, and the successful launch of the Company's products through
Avon, which generated net revenues of over $50 million in fiscal 1994.
Within the department and specialty stores, the Company expects to increase
the presence of Calvin Klein by enhancing floor space and fixturing and
increasing the number of locations in which Calvin Klein women's intimate
apparel is offered from approximately 600 stores currently to approximately
900 stores by the end of fiscal 1995, and may eventually include up to
1,500 locations.
Expand Worldwide Brand Presence. The Company has increased the
presence of its products in international markets by (i) converting the
Calvin Klein businesses in Canada, Japan, Hong Kong, Taiwan and other
countries from licensing arrangements to direct sales in order to achieve
greater consistency in execution and to increase revenue growth and
profitability, (ii) marketing the Warner's brand directly in Spain,
Portugal, Italy and other countries, (iii) beginning to market the
Company's products through an exclusive joint venture with News Corporation
Limited's Satellite Television Asian Region Network ('STAR') in Asia and
the Middle East in late 1995 and (iv) extending the Valentino Intimo
intimate apparel license to a worldwide agreement.
3
<PAGE>
Improve Manufacturing Efficiencies and Cost Controls. The Company
believes that its U.S. manufacturing expertise, in addition to its expanded
Mexican and Central American manufacturing facilities, have allowed the
Company to become one of the low cost producers of intimate apparel,
worldwide. The Company expects to achieve increased efficiencies from its
manufacturing facilities and benefit from economies of scale as its
business continues to grow. Manufacturing efficiencies achieved from these
facilities have contributed significantly to an improvement in the
Company's gross margin from 31.8% for the first six months of fiscal 1994
to 33.3% for the first six months of fiscal 1995.
As a result of the ongoing implementation of these strategies, the Company
has increased net revenues to $788.8 million in fiscal 1994 from $548.1 million
in fiscal 1990. The increase in net revenues is primarily the result of the 16%
compounded annual growth rate of the Intimate Apparel Division. In the first six
months of fiscal 1995, net revenues increased 20% to $405.6 million compared to
the comparable fiscal 1994 period, driven by the Intimate Apparel Division's 27%
increase in net revenues. Income before non-recurring items, interest and income
taxes has increased to $99.2 million in fiscal 1994 from $59.9 million in fiscal
1990. Income before non-recurring items, interest and income taxes increased
over 30% to $49.9 million in the first six months of fiscal 1995 from $38.3
million in the comparable fiscal 1994 period.
The principal executive offices of the Company are located at 90 Park
Avenue, New York, New York 10016, telephone (212) 661-1300.
THE OFFERINGS
The offering of 7,680,000 shares of Class A Common Stock, par value $.01
per share (the 'Common Stock'), being offered in the United States and Canada
(the 'U.S. Offering') and the offering of 1,920,000 shares of Common Stock being
offered outside the United States and Canada (the 'International Offering') are
collectively referred to herein as the 'Offerings.' Unless otherwise indicated,
all information included in this Prospectus assumes the Underwriters'
over-allotment options are not exercised.
<TABLE>
<S> <C>
Common Stock Offered By:
The Company............................. 8,800,000 shares
The Selling Stockholder................. 800,000 shares
Common Stock Outstanding after the Offerings
(a)........................................ 51,199,912 shares
Use of Proceeds.............................. The net proceeds to the Company will be used to reduce bank debt.
Additional funds available under the Revolving Facility (as
defined below) may be used for strategic acquisitions as well as
working capital and other corporate purposes. See 'Use of
Proceeds.'
New York Stock Exchange Symbol............... 'WAC'
</TABLE>
------------
(a) Based upon shares outstanding as of September 18, 1995 and excludes
5,182,500 shares of Common Stock issuable upon exercise of outstanding
employee stock options, of which 3,595,500 are presently exercisable at an
average price of $16.36 per share.
4
<PAGE>
RISK FACTORS
Prospective investors should consider carefully the following factors, in
addition to the other information contained in this Prospectus, before
purchasing the shares of Common Stock offered hereby.
RETAIL INDUSTRY
The apparel industry is highly competitive and the Company's competitors
include manufacturers of all sizes, some of which have greater resources than
the Company. In addition, the apparel industry historically has been subject to
cyclical variation, and a downturn in the general economy or uncertainties
regarding future economic prospects that affect consumer spending habits could
have a material effect on the Company's results of operations. Over the past
several years, the Company has broadened its channels of distribution to
decrease its dependence on any one retail channel and no single customer
accounted for more than 8.5% of the Company's net revenues in fiscal 1994. See
'Business.'
DEPENDENCE ON KEY PERSONNEL
The Company believes that it has benefited substantially from the
leadership of Linda J. Wachner, the Company's Chairman, President and Chief
Executive Officer and that the loss of her services could have a significant
impact on the Company's business and its future operations. In May 1991, the
Company entered into an employment agreement with Mrs. Wachner which is
presently in effect until May 2001.
SHARES ELIGIBLE FOR FUTURE SALE
A substantial number of shares of Common Stock could be sold in the public
market following the completion of the Offerings. No predictions can be made as
to the effect, if any, that market sales of such shares or the availability of
such shares for future sale will have on the market price of shares of Common
Stock prevailing from time to time. There will be 51,199,912 shares of Common
Stock outstanding after the Offerings. Of such amount, 45,820,814 of such shares
will be tradeable without restriction and 5,379,098 of such shares may only be
sold pursuant to a registration statement under the Securities Act, an
applicable exemption from the registration requirements of such Act, including
Rule 144 and Rule 144A thereunder, or the Company's Amended and Restated 1993
Stock Plan. However, certain officers and directors of the Company, including
the Selling Stockholder, who will hold an aggregate of 4,435,600 shares after
giving effect to the Offerings, have agreed with the Underwriters not to sell or
otherwise dispose of such shares for 90 days after the date of this Prospectus
without the prior consent of Merrill Lynch, Pierce, Fenner & Smith Incorporated
('Merrill Lynch') on behalf of the Underwriters. See 'Underwriting.'
INTERNATIONAL OPERATIONS
The Company has subsidiaries in Canada and Mexico in North America and in
Western Europe which engage in sales and marketing activities. The Company
maintains manufacturing facilities in Mexico, Honduras, Costa Rica, the
Dominican Republic, Canada, Ireland and the United Kingdom and warehousing
facilities in Canada, Mexico, the United Kingdom and contracts warehousing in
Spain. Mexico has historically been subject to high rates of inflation and
currency restrictions which may, from time to time impact the Mexican operation.
However, the recent devaluation of the Mexican peso has had a favorable impact
on the Company. In addition, with the exception of the fluctuation of local
currencies against the United States dollar, the Company does not believe that
the operations in Canada and Western Europe are subject to risks which are
significantly different from domestic operations. Also, the Company's
manufacturing policy is to have many potential sources of manufacturing so that
a disruption of production at any one facility will not cause a significant
problem.
A portion of the Company's products are manufactured by contractors located
outside the United States. These products are imported and are subject to
Federal customs laws, which impose tariffs as well as import quota restrictions
established by the Department of Commerce. While importation of goods from
certain countries may be subject to embargo by U.S. Customs authorities if
shipments exceed quota limits, the Company closely monitors import quotas
through its Washington, D.C. office and can, in most cases, shift production to
contractors located in countries with available quotas or to domestic
manufacturing facilities. The existence of import quotas has, therefore, not had
a material effect on the Company's business.
5
<PAGE>
SELECTED FINANCIAL INFORMATION
The following selected financial information for the five years ended
January 7, 1995 is derived from the audited consolidated financial statements of
the Company. References herein to fiscal years are to the Company's 52- or
53-week fiscal year (a 'fiscal year'). All fiscal years for which financial
information is included in this Prospectus had 52 weeks, except fiscal 1990 and
1993, each of which had 53 weeks. This summary data is qualified in its entirety
by the detailed information and consolidated financial statements, including
notes thereto, and management's discussion and analysis included or incorporated
by reference herein. See 'Documents Incorporated by Reference' and Annex I
hereto. The selected financial data for, and as of the end of, interim periods
are derived from the Company's unaudited interim consolidated financial
statements. Such unaudited interim consolidated financial statements include all
adjustments (consisting only of normal recurring adjustments) that the Company
considers necessary for a fair presentation of the financial position and the
results of operations as of the dates and for the periods indicated. Information
for any interim period is not necessarily indicative of results that may be
anticipated for a full year.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
-------------------------------------------------------------- -----------------------
JANUARY 5, JANUARY 4, JANUARY 2, JANUARY 8, JANUARY 7, JULY 9, JULY 8,
1991 1992(a) 1993 1994(a) 1995(a) 1994(a) 1995(e)
-------------------------------------------------------------- -----------------------
(IN MILLIONS, EXCEPT RATIOS AND SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenues......................... $ 548.1 $ 562.5 $ 625.1 $ 703.8 $ 788.8 $ 338.0 $ 405.6
Gross profit......................... 190.8 195.4 219.3 236.4 255.8 107.4 135.0
Income before non-recurring items,
interest and income taxes.......... 59.9 70.8 89.8 92.2 99.2 38.3 49.9
Interest expense..................... 68.0 72.3 48.8 38.9 32.5 15.7 17.8
Income (loss) from continuing
operations......................... (7.9) (19.5) 47.6 53.3 63.3 18.0(d) 19.9
Preferred stock dividends paid....... 5.5 5.5 2.7 -- -- -- --
Income (loss) from continuing
operations applicable to Common
Stock.............................. (13.4) (25.0) 44.9 53.3 63.3 18.0(d) 19.9
Net income (loss) applicable to
Common Stock(b).................... (22.2) (33.9) (20.2) 24.1 63.3 18.0(d) 19.9
Common Stock dividends paid.......... -- -- -- -- -- -- 2.9
Per share amounts:(c)
Income (loss) from continuing
operations....................... (0.84) (1.31) 1.18 1.34 1.53 0.44(d) 0.48
Net income (loss)(f)............... (1.40) (1.78) (0.53) 0.61 1.53 0.44(d) 0.48
Weighted average number of shares of
Common Stock outstanding........... 15,871,796 19,059,062 38,109,450 39,770,482 41,285,355 40,714,744 41,699,347
DIVISIONAL SUMMARY:
Net revenues:
Intimate Apparel................... $ 309.1 $ 339.7 $ 384.8 $ 423.2 $ 565.3 $ 240.5 $ 305.4
Menswear........................... 196.3 180.8 200.0 243.2 183.8 80.8 82.6
Retail Outlet Stores............... 42.7 42.0 40.3 37.4 39.7 16.7 17.6
---------- ---------- ---------- ---------- ---------- ---------- ----------
$548.1 $562.5 $625.1 $703.8 $788.8 $338.0 $405.6
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Percentage of net revenues:
Intimate Apparel................... 56.4% 60.4% 61.6% 60.1% 71.7% 71.1% 75.2%
Menswear........................... 35.8 32.1 32.0 34.6 23.3 23.9 20.4
Retail Outlet Stores............... 7.8 7.5 6.4 5.3 5.0 5.0 4.4
---------- ---------- ---------- ---------- ---------- ---------- ----------
100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA (AT PERIOD END):
Working capital...................... $ 69.4 $ 109.3 $ 141.5 $ 122.0 $ 104.5 $ 106.8 $ 105.0
Total assets......................... 517.3 540.5 629.6 688.6 780.6 789.0 849.0
Long-term debt (excluding current
maturities)........................ 408.2 344.8 277.6 245.5 206.8 243.9 197.3
Redeemable preferred stock........... 41.5 41.5 -- -- -- -- --
Stockholders' equity (deficit)....... (91.4) (1.7) 135.8 159.1 240.5 199.9 257.3
</TABLE>
(Footnotes on following page)
6
<PAGE>
(Footnotes from preceding page)
(a) On September 4, 1991, the Company's Board of Directors determined that the
Company should restructure its knitwear operations. The restructuring
resulted in a non-recurring charge of approximately $13 million (or $0.68
per share) in fiscal 1991. Such charge was associated with the closing of
the Company's knitwear manufacturing facilities and the liquidation of
related inventory. In October 1993, the Company decided to discontinue a
portion of its men's manufactured dress shirt and neckwear business
segment. This resulted in a non-recurring charge of $19.9 million. Also,
the Company incurred a $2.6 million non-recurring charge associated with a
previously discontinued business. The total non-recurring charge recorded
in fiscal 1993 was $22.5 million (or $0.56 per share). In fiscal 1994, the
Company incurred a $3 million (or $0.07 per share) charge related to the
California earthquake.
(b) Fiscal 1993 includes a $10.5 million charge (or $0.26 per share) for the
cumulative effect of the Company changing its method of accounting for
postretirement benefits other than pensions.
(c) All share and per share amounts have been adjusted to reflect the
two-for-one stock split effective October 3, 1994 and includes all Common
Stock and Common Stock equivalents.
(d) Income reflects the benefits of utilizing the Company's net operating loss
carryforward to offset the Company's federal income tax provision. Income
before non-recurring items, after giving effect to a full tax provision at
the Company's rate of 38%, was $14.0 million (or $0.34 per share).
(e) Effective with the fiscal year beginning January 8, 1995, the Company has
adopted Statement of Position 93-7, dealing with certain types of
advertising and promotion costs. The position statement mandates that such
costs, which many companies had previously deferred for amortization
against related future revenues, be currently expensed. The result of
adopting the new standard is that operating results for fiscal 1995 will
absorb both costs incurred and deferred in prior years plus all costs
incurred in fiscal 1995, thus adversely affecting fiscal 1995 earnings when
compared to prior and future years. The Company has not followed deferral
accounting to the same extent as many other companies but, in accordance
with industry practice, has previously deferred some qualified marketing
costs when assured that related future revenues would be achieved. The
Company will continue to incur such costs. The full measure of the excess
costs impacting fiscal 1995 results will not be clearly identified until
the fourth quarter of fiscal 1995 when current year costs, which would have
been capitalized under the prior policy, are incurred. Such amount will be
separately identified in the Company's annual financial statements.
(f) Pro forma earnings per share, assuming net proceeds to the Company of
$194,916,000 from the Offerings were applied to outstanding debt as of the
beginning of the fiscal 1994 and 1995 years, would have been $1.51 for the
year ended January 7, 1995 and $0.47 for the six months ended July 8, 1995.
7
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of 8,800,000 shares of Common
Stock by the Company in the Offerings, after deducting the underwriting discount
and estimated expenses payable by the Company, are expected to be approximately
$194,916,000 (approximately $224,378,000 if the over-allotment options granted
by the Company to the Underwriters are exercised in full). The Company intends
to use such net proceeds to reduce bank debt under the Bank Credit Agreement, as
amended, between the Company and certain lenders (the 'Bank Credit Agreement').
Additional funds available under the revolving credit portion of the Bank Credit
Agreement (the 'Revolving Facility') may be used for strategic acquisitions, as
well as working capital and other corporate purposes. The Company from time to
time reviews and discusses acquisition opportunities. The Company, however, is
not currently a party to any acquisition agreement.
The aggregate amount of indebtedness outstanding under the Bank Credit
Agreement was approximately $437,500,000 on September 15, 1995. The Bank Credit
Agreement has a maturity date of December 31, 1999 and, on August 17, 1995, the
weighted average interest rate on borrowings under the Bank Credit Agreement was
approximately 6.4%. The Company will not receive any of the proceeds from the
sale of shares of Common Stock by the Selling Stockholder. The Company and the
Selling Stockholder have agreed to share certain expenses incurred in connection
with the Offerings.
RECENT DEVELOPMENTS
On September 5, 1995, the Company entered into a commitment letter with The
Bank of Nova Scotia ('Scotiabank') and Citibank, N.A. ('Citibank' and together
with Scotiabank, the 'Managing Agents') with respect to a new $550 million
credit agreement (the 'New Credit Agreement') and obtained commitments of $50
million from each of the Managing Agents. The Managing Agents have agreed in the
commitment letter to use their best efforts (without any obligation to
underwrite a syndication) to arrange a syndicate of lenders for the balance of
the financing under the Credit Agreement. The entry into the New Credit
Agreement by the Managing Agents and the lenders is conditioned upon, among
other things, the Company receiving a minimum of $140,000,000 of net proceeds in
the Offerings. The obligations of the Company under the Credit Agreement are
expected to be guaranteed by each of its domestic subsidiaries and will not be
secured by any collateral. The Company expects to use the proceeds of amounts
borrowed under the New Credit Agreement (i) to refinance its existing Bank
Credit Agreement, (ii) to provide working capital and (iii) for other general
corporate purposes.
It is anticipated that the New Credit Agreement will provide for (i) a
five-year $200 million senior term loan to be amortized on a semi-annual basis
commencing in June 1996, (ii) a 364-day $100 million senior revolving credit
facility and (iii) a five-year $250 million senior revolving credit facility
(which includes a sublimit of $100 million for standby and trade letters of
credit) of which $250 million will be available as a competitive bid facility.
The New Credit Agreement is expected to contain covenants with respect to the
conduct of the Company's and its subsidiaries' businesses which are customary
for similarly situated companies. Under the New Credit Agreement, it is
anticipated that the Company will be permitted to pay dividends up to 50% of its
cumulative net earnings since fiscal 1992.
Interest on borrowings under the New Credit Agreement is expected to be
payable, at the Company's option, (a) at Scotiabank's base rate plus a margin
which ranges from 0.00% to 0.250% (depending on the Company's implied senior
debt rating) or (b) at Scotiabank's eurodollar rate plus a margin which ranges
from 0.300% to 0.875% (depending on the Company's implied senior debt rating).
8
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company at July 8, 1995 and, as adjusted, to give effect to the sale of
8,800,000 shares of Common Stock by the Company in the Offerings at an estimated
offering price of $23.25 (based on the last sales price of $23.25 per share of
Common Stock on September 18, 1995) and the application of the net proceeds
therefrom to repay outstanding indebtedness as described in 'Use of Proceeds.'
<TABLE>
<CAPTION>
JULY 8, 1995
-----------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Current:
Borrowing under revolving loan facility............................................ $184,620 $ --
Borrowing under foreign facilities................................................. 12,434 2,138
Current portion of long-term debt.................................................. 46,681 46,681
-------- -----------
Total current................................................................. $243,735 $ 48,819
-------- -----------
-------- -----------
Long-term debt:
Term note.......................................................................... $178,000 $ 178,000
Capitalized leases/other........................................................... 19,309 19,309
-------- -----------
Total long-term debt.......................................................... 197,309 197,309
-------- -----------
Stockholders' equity:
Preferred Stock, par value $0.01 per share; 10,000,000 shares authorized; no shares
issued and outstanding............................................................ -- --
Class A Common Stock, par value $0.01 per share; 130,000,000 shares authorized;
42,026,912 shares issued and outstanding; 51,199,912 shares issued and
outstanding, as adjusted(a)....................................................... 421 512
Capital in excess of par value..................................................... 337,752 532,577
Cumulative translation adjustment.................................................. (2,449) (2,449)
Accumulated deficit................................................................ (66,952) (66,952)
Treasury stock, at cost............................................................ (5,000) (5,000)
Notes receivable for common stock issued........................................... (6,427) (6,427)
-------- -----------
Total stockholders' equity.................................................... 257,345 452,261
-------- -----------
Total capitalization..................................................... $454,654 $ 649,570
-------- -----------
-------- -----------
</TABLE>
------------
(a) Based upon shares outstanding as of September 18, 1995 and excludes
5,182,500 shares of Common Stock issuable upon exercise of outstanding
employee stock options, of which 3,595,500 are presently exercisable at an
average price of $16.36 per share.
9
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is listed on the New York Stock Exchange
('NYSE') under the symbol 'WAC.' The table below sets forth, for the calendar
periods indicated, the high and low sales price per share of the Company's
Common Stock as reported on the NYSE Composite Tape. Amounts have been adjusted
to reflect the two-for-one stock split on October 3, 1994.
<TABLE>
<CAPTION>
1992 HIGH LOW
---- ---- ---
<S> <C> <C>
First Quarter.................................................................. $19 $123/16
Second Quarter................................................................. 19 13 3/4
Third Quarter.................................................................. 18 1/8 14
Fourth Quarter................................................................. 20 1/2 16 3/8
1993
----
First Quarter.................................................................. $19 5/8 $133/8
Second Quarter................................................................. 18 15/16 14 /16
Third Quarter.................................................................. 17 1/16 14 3/8
Fourth Quarter................................................................. 17 13/16 14 1/4
1994
----
First Quarter.................................................................. $15 5/8 $131/8
Second Quarter................................................................. 17 5/8 14 5/8
Third Quarter.................................................................. 18 5/8 14 /16
Fourth Quarter................................................................. 19 1/4 14 1/8
1995
----
First Quarter.................................................................. $17 7/8 $147/8
Second Quarter................................................................. 20 3/8 16 1/2
Third Quarter (through September 18, 1995)..................................... 24 3/8 19 3/4
</TABLE>
The last sales price for the shares of Common Stock as reported on the NYSE
Composite Tape on September 18, 1995 was $23.25.
DIVIDEND POLICY
On June 30, 1995 the Company paid its initial dividend of $0.07 per share
of Common Stock to stockholders of record as of May 30, 1995. On August 9, 1995
the Company declared its regular quarterly cash dividend of $0.07 per share
payable on October 9, 1995 to stockholders of record on August 30, 1995. It is
the Company's present intent to continue paying quarterly dividends; however,
the payment of future dividends necessarily depends upon earnings, capital
requirements, financial conditions and other factors. The terms of the Bank
Credit Agreement permit the Company to pay dividends, based on the Company's
present implied senior debt rating, equal to 25% of the Company's net earnings
accumulated since fiscal 1992 through the fiscal year prior to the fiscal year
in which the dividend is being paid. The approximate amount of net earnings
available for payment of dividends as of July 8, 1995 was $84,505,000.
10
<PAGE>
BUSINESS
The Company designs, manufactures and markets a broad line of women's
intimate apparel and men's apparel and accessories sold under a variety of
internationally recognized owned and licensed brand names. The Company operates
three divisions, Intimate Apparel, Menswear and Retail Outlet Stores, which
accounted for 75%, 20% and 5%, respectively, of net revenues in the first six
months of fiscal 1995.
The Company's products are distributed to over 5,000 customers operating
more than 15,000 department, specialty and mass merchandise stores, including
such leading retailers in the United States as Dayton-Hudson, Dillard's
Department Stores, Federated Department Stores/Macy's, J.C. Penney, Kmart,
Victoria's Secret, The May Department Stores and Wal-Mart and such leading
retailers in Canada as Eaton's and The Hudson Bay Company. The Company's
products are also distributed to such leading European retailers as Marks &
Spencer, House of Fraser, Harrods, Galeries Lafayette, Au Printemps and El Corte
Ingles.
INTIMATE APPAREL
The Company's Intimate Apparel Division designs, manufactures and markets
women's intimate apparel which includes bras, panties, daywear and sleepwear.
The Company also designs and markets men's underwear. The Company's bra brands
accounted for approximately 30% market share in bra sales over the last three
years in department and specialty stores in the United States, nearly twice its
nearest competitor. The Intimate Apparel Division markets its lines under the
following brand names:
<TABLE>
<CAPTION>
BRAND NAME PRICE RANGE TYPE OF APPAREL
----------------------------------- ----------------------------------- ---------------------------------
<S> <C> <C>
Warner's........................... upper moderate to better intimate apparel
Olga............................... better intimate apparel
Valentino Intimo................... premium intimate apparel
Calvin Klein(a).................... better intimate apparel/men's underwear
Scaasi............................. moderate sleepwear
Blanche............................ better to premium sleepwear
Van Raalte(b)...................... moderate intimate apparel
Fruit of the Loom.................. moderate intimate apparel
White Stag......................... moderate intimate apparel
</TABLE>
------------
(a) In March 1994, the Company acquired the worldwide trademarks, rights and
business of Calvin Klein men's underwear and, effective January 1, 1995,
the worldwide trademarks and rights of Calvin Klein women's intimate
apparel.
(b) Shipments to begin in August 1995.
The Company owns the Warner's, Olga, Calvin Klein (men's underwear and
women's intimate apparel), Blanche and Van Raalte brand names and trademarks.
The Company has an exclusive license in perpetuity for the White Stag brand for
women's sportswear and intimate apparel. The Company licenses the other brand
names under which it markets its product lines, primarily on an exclusive basis.
The Company also manufactures intimate apparel on a private and exclusive label
basis for certain leading specialty and department stores. The Intimate Apparel
Division's net revenues are primarily generated by sales of the Company's own
brand names. The Warner's and Olga brands are 121 years and 54 years old,
respectively, and commanded approximately 30% market share in bra sales over the
last three years in department and specialty stores in the United States. The
Company also has an exclusive license with Fruit of the Loom, Inc. for the
design, manufacture and marketing of moderately-priced bras, daywear, full
slips, half slips and petticoats as well as coordinated fashion sets (bras and
panties) and certain control bottoms and sleepwear.
In March 1994, the Company acquired the worldwide trademarks, rights and
business of Calvin Klein men's underwear and, effective January 1, 1995, the
worldwide trademarks and rights for Calvin Klein women's intimate apparel. The
purchase price was approximately $60,924,000 and consisted of cash payments of
$33,103,000 in fiscal 1994, $5,000,000 in fiscal 1995 and the issuance of
1,699,492 shares of the Company's Common Stock valued at fair market value
($22,821,000) for such shares. In addition, the Company entered into an
exclusive license agreement to produce men's accessories and small leather goods
under the Calvin Klein label. The growth potential of the Calvin Klein brand is
reflected
11
<PAGE>
in the Company's financial results for the second quarter of fiscal 1995 in
which net revenues for the Calvin Klein brand more than doubled compared to the
second quarter of fiscal 1994. If current sales trends and the Company's
objectives for the Calvin Klein brand continue and are met, revenues for that
brand could reach $140 million for the Company's current fiscal year and as much
as approximately $500 million within 3 or 4 years. Estimates of this type are
necessarily general and speculative and should not be regarded as forecasts or
predictions of results since sales of any product are necessarily subject to
many unpredictable factors including business conditions, product acceptance,
competition with other industry participants (some of which have greater
resources than the Company) and numerous other factors, many of which are beyond
the control of the Company. Accordingly, there can be no assurance regarding any
particular future level of sales of Calvin Klein brand products.
The Intimate Apparel Division's net revenues have increased at a 16%
compounded annual growth rate since fiscal 1990 to $565.3 million in fiscal
1994. Intimate Apparel Division net revenues for the first six months of fiscal
1995 increased 27% to $305.4 million from $240.5 million in the comparable
fiscal 1994 period as the Company increased its penetration with existing
accounts, expanded sales to new customers by capitalizing on the growth in such
specialty stores as Victoria's Secret and sales of Fruit of the Loom to mass
merchandisers such as Wal-Mart, Venture and Kmart and broadened its product
lines to include men's underwear. The Intimate Apparel Division has reduced
operating expenses as a percentage of net revenues by narrowing its product
lines, controlling selling, administrative and general expenses and improving
manufacturing efficiency. The Company believes that it is one of the low cost
producers of intimate apparel worldwide. The Intimate Apparel Division produces
over eight million dozen garments per year.
The Company's bras are sold primarily in the department and specialty
stores that have been the Company's traditional customer base for intimate
apparel. In June 1992, the Company expanded into a new channel of distribution,
mass merchandisers, with its Fruit of the Loom product line, which offers a
range of styles designed to meet the needs of the consumer profile of this
market. In late 1993 the Company further expanded its channels of distribution
by signing an agreement with Avon Products, Inc. to distribute Warner's and
Fruit of the Loom bras on an exclusive basis and Scaasi sleepwear throughout the
United States. In August 1995 the Company will begin shipping intimate apparel
to Sears under the Van Raalte label, which was acquired in December 1994. The
Company also sees opportunities for continued growth in the Intimate Apparel
Division for bras specifically designed for the 'full figure' market, as well as
in the panties and daywear product lines.
The Intimate Apparel Division has subsidiaries in Canada, Mexico, the
United Kingdom, France, Belgium, Ireland, Spain and Germany. International sales
accounted for approximately 14.8% of the Intimate Apparel Division's net
revenues in fiscal 1994. Net revenues attributable to the international
divisions of the Intimate Apparel Division were $79.1 million, $84.5 million and
$84.1 million in fiscal years 1992, 1993 and 1994, respectively. In 1994 the
Company began distributing its products directly in Spain, Portugal and Italy,
having taken back these territories from its previous licensee. For the first
six months of fiscal 1995, international net revenues of the Intimate Apparel
Division have increased 14.6% to $45.4 million from $39.6 million in the first
six months of fiscal 1994.
The Company's intimate apparel products are manufactured principally in the
Company's facilities in North America, Central America, the Caribbean Basin, the
United Kingdom and Ireland. Over the last three years, the Company has opened
five new manufacturing facilities in response to increased demand. Certain
direct and incremental plant start-up costs associated with the establishment of
new manufacturing facilities in countries where special efforts are needed to
recruit and train entire work forces are capitalized and amortized over five
years from the commencement of operations. This amortization together with the
initial inefficiencies associated with the new facilities has resulted in a
lower gross margin (gross profit as a percentage of net revenues) during the
past two years. In the Company's experience, it is at least five years before
new facilities achieve the manufacturing efficiencies of established plants and
accordingly some continuing impact is likely to occur.
Although the Intimate Apparel Division generally markets its product lines
for three retail selling seasons (spring, fall and holiday), its sales and
revenues are somewhat seasonal with approximately 57% of net revenues and 58% of
operating income generated during the second half of fiscal 1994.
12
<PAGE>
MENSWEAR
The Company's Menswear Division designs, manufactures, imports and markets
moderate to better-priced dress shirts and neckwear, sportswear and men's
accessories. Management considers the Menswear Division's primary strengths to
include its strong brand recognition, product quality, reputation for fashion
styling, strong relationships with department and specialty stores and its
ability to deliver merchandise rapidly. The Menswear Division markets its lines
under the following brand names:
<TABLE>
<CAPTION>
BRAND NAME PRICE RANGE TYPE OF APPAREL
------------------------------------ ------------------------------------ ---------------------------------
<S> <C> <C>
Hathaway............................ better dress shirts, knit and woven
sportshirts and sweaters
Calvin Klein........................ better men's underwear(a) and
accessories
Chaps by Ralph Lauren............... upper moderate dress shirts, neckwear, knit and
woven sportshirts, sweaters and
sportswear
Catalina............................ moderate men's and women's sportswear,
dress shirts and furnishings
</TABLE>
------------
(a) See Intimate Apparel Division.
The Hathaway brand name is owned by the Company. The Calvin Klein brand
name for accessories and the Chaps by Ralph Lauren and Catalina brand names are
licensed on an exclusive basis by the Company.
Due to the strategic decision to discontinue $98.9 million of net revenues
in underperforming brands including Christian Dior accessories, neckwear,
sportswear and dress shirts, Golden Bear by Jack Nicklaus, Pringle and Puritan
menswear, the Menswear Division's net revenues have only decreased from $196.3
million in fiscal 1990 to $183.8 million in fiscal 1994. The negative impact of
these discontinued brands has been partially offset by the success of the Chaps
by Ralph Lauren brand, which has increased its net revenues to $120.9 million in
fiscal 1994 from $28.6 million in fiscal 1990, a compounded annual growth rate
of 43%. Chaps by Ralph Lauren net revenues for the first six months of fiscal
1995 increased 22.5% to $60.5 million. Primarily as a result of the strategic
decision to discontinue these underperforming brands, operating margins in the
Menswear Division have increased 100 basis points to 11.5% in fiscal 1994 from
10.5% in fiscal 1990.
International sales accounted for approximately 6% of net revenues of the
Menswear Division in fiscal 1994. Net revenues attributable to international
divisions of the Menswear Division were $12.7 million, $14.1 million and $10.2
million in fiscal years 1992, 1993 and 1994, respectively. The decrease in
international sales in fiscal 1994 compared to fiscal 1993 reflects the
Company's strategic decision to restructure its men's dress shirt and neckwear
businesses and to terminate its Christian Dior licenses.
The Menswear Division's sportswear is sourced principally from the Far
East. The Menswear Division manufactures its dress shirts in North America and
sources certain styles of dress shirts in the Far East and in Central America.
Accessories are sourced in the United States, Europe and the Far East. Neckwear
is sourced primarily in the United States.
The Menswear Division, like the Intimate Apparel Division, generally
markets its apparel products for three retail selling seasons (spring, fall and
holiday). The Menswear Division introduces new styles, fabrics and colors based
upon consumer preferences, market trends and to coincide with the appropriate
retail selling season. The sales of the Menswear Division's product lines follow
individual seasonal shipping patterns ranging from one season to three seasons,
with multiple releases in some of the Division's more fashion-oriented lines.
Consistent with industry and consumer buying patterns, approximately 56% of the
Menswear Division's net revenues and 67% of the Menswear Division's operating
profit are generated in the second half of the calendar year, reflecting the
strength of the fall and holiday shopping seasons.
RETAIL OUTLET STORES DIVISION
The Company's Retail Outlet Stores Division operates 53 retail outlet
stores, of which 35 carry intimate apparel only, three carry menswear only and
15 carry both lines. The Company's business strategy with respect to its Retail
Outlet Stores Division is to provide a channel for disposing of the Company's
excess and irregular inventory, thereby limiting its exposure to off-price
retailers without increasing the total number of stores to any significant
extent. The Company's retail outlet stores are
13
<PAGE>
situated in areas where they generally do not conflict with the Company's
principal channels of distribution. The Company's newer retail outlet stores are
principally intimate apparel stores located in outlet malls.
INTERNATIONAL OPERATIONS
The Company has subsidiaries in Canada and Mexico in North America and in
the United Kingdom, Ireland, Belgium, France, Spain and Germany in Europe which
engage in sales and marketing activities. With the exception of the fluctuation
of local currencies against the United States dollar, the Company does not
believe that the operations in Canada and western Europe are subject to risks
which are significantly different from those of its domestic operations. Mexico
has historically been subject to high rates of inflation and currency
restrictions which may, from time to time, impact the Mexican operation. The
recent devaluation of the Mexican peso has had a favorable impact on the
Company. The Company also sells directly to customers in Mexico, which
represents less than 1% of the Company's total sales. The Company maintains
manufacturing facilities in Mexico, Honduras, Costa Rica, the Dominican
Republic, Canada, Ireland and the United Kingdom and warehousing facilities in
Canada, Mexico, the United Kingdom and Spain. The majority of the Company's
imported purchases are invoiced in United States dollars and, therefore, are not
subject to short-term currency fluctuations.
MANAGEMENT
The executive officers of the Company, their ages and their positions are
set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
--------------------------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Linda J. Wachner................................... 49 Director, Chairman of the Board,
President and Chief Executive Officer
William S. Finkelstein............................. 47 Director, Senior Vice President and Chief Financial
Officer
Stanley P. Silverstein............................. 43 Vice President, General Counsel and Secretary
Wallis H. Brooks................................... 40 Vice President and Controller
</TABLE>
Mrs. Wachner has been a Director, President and Chief Executive Officer of
the Company since August 1987, and the Chairman of the Board since August 1991.
Mrs. Wachner was a Director and President of the Company from March 1986 to
August 1987. Mrs. Wachner held various positions, including President and Chief
Executive Officer, with Max Factor and Company from December 1978 to October
1984. Mrs. Wachner also serves as a Director of The Travelers Group, Inc. and
the Chairman and Chief Executive Officer of Authentic Fitness Corporation.
Mr. Finkelstein has been Senior Vice President of the Company since May
1992 and a Director and Chief Financial Officer of the Company since May 1995.
Mr. Finkelstein served as Vice President and Controller of the Company between
November 1988 and May 1992 and as Vice President of Finance of the Company's
Activewear and Olga Divisions from March 1988 until his appointment as
Controller of the Company. Mr. Finkelstein served as Vice President and
Controller of SPI Pharmaceuticals Inc. from February 1986 to March 1988 and held
various financial positions, including Assistant Corporate Controller with Max
Factor and Company, between 1977 and 1985. Mr. Finkelstein also serves as a
Director of Authentic Fitness Corporation and Herman's Sporting Goods, Inc.
Mr. Silverstein has been Vice President, General Counsel and Secretary of
the Company since December 1990. Mr. Silverstein served as Assistant Secretary
of the Company from June 1986 until his appointment as Secretary in January
1987.
Mr. Brooks has been Vice President and Controller of the Company since May
1995. Mr. Brooks served as Senior Vice President and Chief Financial Officer of
Authentic Fitness Corporation from November 1993 through April 1995. Mr. Brooks
held various financial positions including Treasurer of the Company from
November 1988 through September 1993. Prior to joining the Company, Mr. Brooks
was associated with the international accounting and auditing firm Ernst &
Young, LLP from 1984 to 1988.
14
<PAGE>
OTHER KEY EMPLOYEES
The following managers of the Company's divisions are considered by the
Company to be key employees.
Alexander Cannon has been President of the Chaps by Ralph Lauren Division
of the Company since September 1994. Mr. Cannon joined the Company in December
1987 as Designer for Furnishings, Chaps by Ralph Lauren Division and served
successively as Vice President Merchandising and Design for Sportswear and Dress
Furnishings and Executive Vice President, Chaps by Ralph Lauren Division until
his appointment as Division President.
Joseph DiPonti has been President of the Company's Olga Division since
1991. Prior to that time, he was associated with Sara Lee Foundations, an
intimate apparel manufacturer, for 19 years, most recently serving as President
of that company. Before joining Sara Lee Foundations in the U.S., Mr. DiPonti
was President of Canadelle, the Sara Lee intimate apparel division in Canada.
Edward Johnson has served as President of the Company's Retail Outlet
Stores Division since November 1989. Mr. Johnson served as General Merchandise
Manager and Buyer with the Retail Outlet Stores Divison from October 1987 until
his appointment as Division President. Before joining the Company, Mr. Johnson
held several buying and store management positions with J W Robinson's in Los
Angeles, California.
John Kourakos has been President of the Company's Calvin Klein Men's
Underwear and Accessories and Calvin Klein Women's Intimate Apparel Divisions
since March 1994. Prior to the Company's acquisition of the Calvin Klein men's
underwear and women's intimate apparel businesses, Mr. Kourakos served as
President of CK Jeans and Sportswear and Calvin Klein Underwear from 1987 to
1994. Mr. Kourakos served in various capacities with Biderman Industries from
1980 to 1987 including Executive Vice President of Merchandise for Calvin Klein
Men's Wear.
Maurice Reznick has served as President of the Company's Warner's Division
since March of 1994. Mr. Reznick served as Vice President of Sales for the
Warner's and Valentino Divisions of the Company from January 1994 until his
appointment as Division President. Prior to joining the Company, Mr. Reznick
served as Vice President of National Sales, Playtex and Jogbra by Champion from
1992 to 1994 and held various sales positions, including Vice President of Sales
for Vanity Fair Mills from 1977 to 1992.
SELLING STOCKHOLDER
The following table sets forth certain information concerning the
beneficial ownership of Common Stock by the Selling Stockholder as of September
18, 1995 and as adjusted to reflect the sale in the Offerings of 800,000 shares
of Common Stock offered by the Selling Stockholder. The table does not reflect
the possible sale of additional shares by the Company and the Selling
Stockholder if the Underwriters' over-allotment options are exercised in full.
<TABLE>
<CAPTION>
OWNERSHIP PRIOR OWNERSHIP
TO THE OFFERINGS AFTER THE OFFERINGS
----------------------------- -----------------------------
NO. OF PERCENT OF NO. OF NO. OF PERCENT OF
SHARES OF COMMON SHARES SHARES OF COMMON
NAME OF BENEFICIAL OWNER COMMON STOCK(a) STOCK(a) BEING OFFERED COMMON STOCK(a) STOCK(a)
----------------------------------- --------------- ---------- ------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Linda J. Wachner(b) ............... 7,002,000 15.5% 800,000 6,202,000 12.2%
Chairman, President and Chief
Executive Officer
</TABLE>
------------
(a) Includes 2,900,000 shares of Common Stock which are presently issuable upon
the exercise of options held by the Selling Stockholder and 275,000 shares
of 'Restricted Stock' issued under the Company's Amended and Restated 1993
Stock Plan.
(b) Includes 50,000 shares of Common Stock held by the Linda J. Wachner
Charitable Trust of which Mrs. Wachner is the Trustee. Mrs. Wachner has the
sole power to vote and no power to dispose of such 50,000 shares.
15
<PAGE>
CERTAIN UNITED STATES FEDERAL TAX CONSEQUENCES
TO NON-U.S. STOCKHOLDERS
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of shares of
Common Stock by 'Non-U.S. Holders.' In general, a 'Non-U.S. Holder' is an
individual or entity other than (i) a citizen or resident of the United States;
(ii) a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any State; or (iii)
an estate or trust, the income of which is includible in gross income for United
States federal income tax purposes regardless of its source. This discussion is
for general information only and does not consider any specific facts or
circumstances that may apply to a particular Non-U.S. Holder. Furthermore, the
following discussion is based on current provisions of the Internal Revenue Code
of 1986, as amended (the 'Code'), and administrative and judicial
interpretations as of the date hereof, all of which are subject to change. EACH
PROSPECTIVE NON-U.S. HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISER WITH RESPECT
TO THE UNITED STATES FEDERAL INCOME AND ESTATE TAX CONSEQUENCES OF OWNING AND
DISPOSING OF SHARES OF COMMON STOCK, AS WELL AS ANY TAX CONSEQUENCES ARISING
UNDER THE LAWS OF ANY STATE, LOCAL OR OTHER TAXING JURISDICTION.
DIVIDENDS
In general, dividends paid to a Non-U.S. Holder will be subject to United
States withholding tax at a 30% rate (or a lower rate prescribed by an
applicable tax treaty) unless the dividends are either (i) effectively connected
with a trade or business carried on by the Non-U.S. Holder within the United
States or (ii) if certain income tax treaties apply, attributable to a United
States permanent establishment maintained by the Non-U.S. Holder. Dividends
effectively connected with such a trade or business or attributable to such a
permanent establishment generally will not be subject to U.S. withholding tax
(if the Non-U.S. Holder timely and properly files certain forms, including
Internal Revenue Service Form 4224, with the payor of the dividend) and
generally will be subject to United States federal income tax on a net income
basis, in the same manner as if the Non-U.S. Holder were a resident of the
United States. A Non-U.S. Holder that is a corporation may be subject to an
additional branch profits tax at a rate of 30% (or such lower rate as may be
specified by an applicable treaty) on the repatriation from the United States of
its 'effectively connected earnings and profits,' subject to certain
adjustments. For purposes of the withholding discussed above and in order to
determine the applicability of a tax treaty providing for a lower rate of
withholding, dividends paid to an address in a foreign country are presumed
under current Treasury regulations to be paid to a resident of that country,
absent knowledge to the contrary. However, if Treasury regulations proposed in
1984 are finally adopted, Non-U.S. Holders would be required to file certain
forms to obtain the benefit of any applicable tax treaty providing for a lower
rate of withholding tax on dividends. Such forms would contain the Non-U.S.
Holder's name and address and an official statement by the competent authority
(as designated in the applicable treaty) in the foreign country attesting to the
Non-U.S. Holder's status as a resident thereof.
GAIN ON DISPOSITION
A Non-U.S. Holder generally will not be subject to United States federal
income tax (and no tax will generally be withheld) on any gain recognized upon
the disposition of Common Stock unless (i) the Company is or has been a 'U.S.
real property holding corporation' for United States federal income tax purposes
(which the Company does not believe that it has been, is or is likely to become)
and the Non-U.S. Holder disposing of the Common Stock owned, directly or
constructively, at any time during the five-year period preceding the
disposition, more than five percent of the Common Stock; (ii) the gain is
effectively connected with the conduct of a trade or business within the United
States of the Non-U.S. Holder or, if certain tax treaties apply, attributable to
a permanent establishment maintained within the United States by the Non-U.S.
Holder; (iii) in the case of a Non-U.S. Holder who is a non-resident alien
individual and who holds shares as a capital asset, such individual is present
in the United States for 183 days or more in the taxable year of the
disposition, and either (a) such individual has a
16
<PAGE>
'tax home,' for U.S. federal income tax purposes, in the United States, and the
gain from the disposition is not attributable to an office or other fixed
place of business maintained by such individual in a foreign country, or (b) the
gain from the disposition is attributable to an office or fixed place of
business maintained by such individual in the United States; or (iv) the
Non-U.S. Holder is subject to tax pursuant to provisions of the Code applicable
to certain United States expatriates.
FEDERAL ESTATE TAX
Shares of Common Stock owned or treated as owned by an individual who is
not a citizen or resident (as defined for United States federal tax purposes) of
the United States at the time of death will be includible in the individual's
gross estate for United States federal estate tax purposes unless an applicable
estate tax treaty provides otherwise, and therefore may be subject to United
States federal estate tax.
BACKUP WITHHOLDING, INFORMATION RETURN AND INFORMATION REPORTING REQUIREMENTS
The Company must make an information return annually to the Internal
Revenue Service and to each Non-U.S. Holder of the amount of dividends paid to,
and the tax withheld with respect to, each Non-U.S. Holder. These information
return requirements apply regardless of whether withholding was reduced or
eliminated by an applicable tax treaty. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement to
the tax authorities in the country in which the Non-U.S. Holder resides or is
established.
United States backup withholding (which generally is imposed at the rate of
31% on certain payments to persons who fail to furnish the information required
under the United States information reporting requirements) and information
reporting generally will not apply to dividends that are subject to the 30%
withholding discussed above or are not so subject because a tax treaty applies,
and are paid on Common Stock to a Non-U.S. Holder at an address outside the
United States.
The payment of proceeds from the disposition of Common Stock by a Non-U.S.
Holder to or through the United States office of a broker will be subject to
information reporting and backup withholding at a rate of 31% unless the owner
certifies, among other things, its status as a Non-U.S. Holder under penalties
of perjury or otherwise establishes an exemption. The payment of proceeds from
the disposition by a Non-U.S. Holder of Common Stock to or through a non-U.S.
office of a non-U.S. broker will generally not be subject to backup withholding
and information reporting. However, in the case of proceeds from a disposition
of Common Stock paid to or through a non-U.S. office of a broker that is (i) a
United States person, (ii) a 'controlled foreign corporation' for U.S. federal
income tax purposes or (iii) a foreign person 50% or more of whose gross income
from all sources for a certain three-year period was effectively connected with
a United States trade or business, (a) backup withholding will not apply unless
such broker has actual knowledge that the owner is not a Non-U.S. Holder, and
(b) information reporting will apply unless the broker has documentary evidence
in its files of the owner's status as a Non-U.S. Holder (and the broker has no
actual knowledge to the contrary) or the owner otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules from payments to a
Non-U.S. Holder will be refunded or credited against the Non-U.S. Holder's
United States federal income tax liability, if any, provided that the required
information is furnished to the Internal Revenue Service.
The backup withholding and information reporting rules are currently under
review by the Treasury Department, and their application to the Common Stock is
subject to change.
17
<PAGE>
UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated and Oppenheimer & Co., Inc. are acting as representatives (the
'U.S. Representatives') of the U.S. Underwriters. Subject to the terms and
conditions set forth in the United States Purchase Agreement (the 'U.S. Purchase
Agreement') among the Company, the Selling Stockholder and each of the
Underwriters named below (the 'U.S. Underwriters'), and concurrently with the
sale of 1,920,000 shares of Common Stock to the International Managers (as
defined below), the Company and the Selling Stockholder severally have agreed to
sell to each of the U.S. Underwriters, and each of the U.S. Underwriters
severally has agreed to purchase, the aggregate number of shares of Common Stock
set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------------------------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch & Co. .................................................................................
Donaldson, Lufkin & Jenrette Securities Corporation..................................................
Bear, Stearns & Co., Inc. ...........................................................................
Morgan Stanley & Co., Incorporated...................................................................
Oppenheimer & Co., Inc. .............................................................................
The Buckingham Research Group Incorporated...........................................................
A.G. Edwards & Sons, Inc. ...........................................................................
Lehman Brothers Inc. ................................................................................
J.P. Morgan Securities Inc. .........................................................................
Smith Barney Inc. ...................................................................................
Sutro & Co. Incorporated.............................................................................
Tucker Anthony Incorporated..........................................................................
UBS Securities Inc. .................................................................................
J.C. Bradford & Co. .................................................................................
Interstate/Johnson Lane Corporation..................................................................
Piper Jaffray Inc. ..................................................................................
The Robinson-Humphrey Company, Inc. .................................................................
Rodman & Renshaw, Inc. ..............................................................................
Muriel Siebert & Co., Inc. ..........................................................................
Wheat, First Securities, Inc. .......................................................................
---------
Total................................................................................. 7,680,000
---------
---------
</TABLE>
The Company and the Selling Stockholder have also entered into an
International Purchase Agreement (the 'International Purchase Agreement' and,
together with the U.S. Purchase Agreement, the 'Purchase Agreements') with
Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns International Limited, Morgan Stanley & Co.
International Limited, Oppenheimer International Ltd. and UBS Limited (the 'Lead
Managers'), and certain other underwriters outside the United States and Canada
(the 'International Managers' and, together with the U.S. Underwriters, the
'Underwriters'). Subject to the terms and conditions set forth in the
International Purchase Agreement, and concurrently with the sale of 7,680,000
shares of Common Stock to the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, the Company and the Selling Stockholder severally have agreed to sell
to the International Managers, and the International Managers severally have
agreed to purchase, an aggregate of 1,920,000 shares of Common Stock. The
offering price per share and the total underwriting discount per share are
identical under the U.S. Purchase Agreement and the International Purchase
Agreement.
In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any of such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting U.S.
Underwriters or International Managers (as the case may be) may be increased.
The sale of Common Stock to the U.S. Underwriters is conditioned upon the sale
of shares of Common Stock to the International Managers.
18
<PAGE>
The U.S. Representatives have advised the Company and the Selling
Stockholder that the U.S. Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $ per share of Common Stock. The U.S. Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per share of Common
Stock on sales to certain other dealers. After the public offering, the public
offering price, concession and discount may be changed.
The Company and the Selling Stockholder have each granted an option to the
U.S. Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an additional 1,032,000 shares and 120,000 shares,
respectively, of Common Stock at the public offering price set forth on the
cover page hereof, less the underwriting discount. The U.S. Underwriters may
exercise this option only to cover over-allotments, if any, made on the sale of
shares of Common Stock offered hereby. To the extent that the U.S. Underwriters
exercise this option, each U.S. Underwriter will be obligated, subject to
certain conditions, to purchase approximately the number of additional shares of
Common Stock proportionate to such U.S. Underwriter's initial amount reflected
in the foregoing table. The Company has also granted an option to the
International Managers, exercisable during the 30-day period after the date of
this Prospectus, to purchase up to an additional 288,000 shares of Common Stock
to cover over-allotments, if any, on terms similar to those granted to the U.S.
Underwriters.
The U.S. Representatives have advised the Company and the Selling
Stockholder that the U.S. Underwriters and the International Managers have
entered into an Intersyndicate Agreement (the 'Intersyndicate Agreement') that
provides for the coordination of their activities. Pursuant to the
Intersyndicate Agreement, the U.S. Underwriters and the International Managers
are permitted to sell shares of Common Stock to each other for purposes of
resale at the public offering price, less an amount not greater than the selling
concession. Under the terms of the Intersyndicate Agreement, the International
Managers and any dealer to whom they sell shares of Common Stock will not offer
to sell or sell shares of Common Stock to persons who are United States or
Canadian persons or to persons they believe intend to resell to persons who are
United States or Canadian persons, and the U.S. Underwriters and any dealer to
whom they sell shares of Common Stock will not offer to sell or sell shares of
Common Stock to non-United States or non-Canadian persons or to persons they
believe intend to resell to non-United States or non-Canadian persons, except,
in each case, for transactions pursuant to the Intersyndicate Agreement.
The Company, the Selling Stockholder and certain officers and directors of
the Company have agreed that they will not, directly or indirectly, for a period
of 90 days following the date of the Prospectus, except with the prior consent
of Merrill Lynch, on behalf of the Underwriters, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Common Stock. Calvin Klein,
Inc., which is the beneficial owner of 566,498 shares of Common Stock, has
agreed that it will not, directly or indirectly, until October 30, 1995, except
with prior consent of Merrill Lynch, on behalf of the Underwriters, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, any Common
Stock.
The Company and the Selling Stockholder have agreed to indemnify the U.S.
Underwriters and the International Managers against certain liabilities,
including liabilities under the Securities Act.
Oppenheimer Capital, a U.S. money manager and an affiliate of Oppenheimer &
Co., Inc., holds approximately 2.3 million shares of the Company's Common Stock
in connection with its money management activities. Because Oppenheimer & Co.,
Inc. may be deemed to be an affiliate of the Company, the U.S. Offering will be
conducted in accordance with Schedule E to the Bylaws of the National
Association of Securities Dealers, Inc.
19
<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the Common Stock and the validity of
the Common Stock offered hereby will be passed upon for the Company by Stanley
P. Silverstein, Esq., Vice President, General Counsel and Secretary of the
Company, and by Skadden, Arps, Slate, Meagher & Flom, New York, New York.
Certain legal matters will be passed upon for the Underwriters by Fried, Frank,
Harris, Shriver & Jacobson (a partnership which includes professional
corporations), New York, New York. Mr. Silverstein owns 33,400 shares of Common
Stock, including 7,000 shares of Restricted Stock, and options to acquire 57,000
shares of Common Stock.
EXPERTS
The consolidated financial statements of The Warnaco Group, Inc.
incorporated by reference in this Prospectus from the Company's Annual Report
(Form 10-K) for the fiscal year ended January 7, 1995, have been audited by
Ernst & Young, LLP, independent auditors, as set forth in their report, included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement (which term shall encompass any
amendments thereto) on Form S-3 (the 'Registration Statement') under the
Securities Act of 1933, as amended (the 'Securities Act'), for the registration
of the Common Stock. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement, including the exhibits
thereto, and the financial statements and notes filed or incorporated by
reference as a part thereof. Statements made in this Prospectus concerning the
contents of any document referred to herein are not necessarily complete. With
respect to each such document filed with the Commission as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement and the
exhibits thereto filed by the Company with the Commission may be inspected at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
be obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission may be inspected and copied at the
locations described above. The Company will furnish all reports and other
information required by the periodic reporting and informational requirements of
the Exchange Act to the Commission and will furnish copies of such reports and
other information to the holders of the Common Stock.
20
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended January
7, 1995.
2. The Company's Current Report on Form 8-K, dated May 11, 1995.
3. The Company's Proxy Statement for the Company's 1995 Annual Meeting
of Shareholders held on May 11, 1995.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 8, 1995.
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
July 8, 1995 (attached as Annex I to this Prospectus).
6. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since January 7, 1995.
7. The description of the Common Stock which is contained in the
Company's Form 8-A dated September 10, 1991, including any
amendments or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the shares
of Common Stock hereunder shall be deemed to be incorporated by reference herein
and to be part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any and all of the documents that are incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to Stanley P. Silverstein, Vice President, General
Counsel and Secretary, The Warnaco Group, Inc., 90 Park Avenue, New York, New
York 10016, telephone (212) 661-1300.
21
<PAGE>
ANNEX I
________________________________________________________________________________
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 JULY 8, 1995
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)
------------------------
<TABLE>
<S> <C>
DELAWARE 95-4032739
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
</TABLE>
90 PARK AVENUE
NEW YORK, NEW YORK 10016
(ADDRESS OF REGISTRANT'S 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.
[x] Yes [ ] No
The number of shares outstanding of the registrant's Class A Common Stock
as of August 7, 1995 is as follows: 42,026,912
________________________________________________________________________________
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 8, JANUARY 7,
1995 1995
----------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................................... $ 2,147 $ 3,791
Accounts receivable -- net......................................................... 143,724 148,659
Inventories:
Finished goods..................................................................... 181,645 131,450
Work in process.................................................................... 64,289 60,513
Raw materials...................................................................... 67,696 60,220
----------- -----------
Total inventories............................................................. 313,630 252,183
Other current assets.................................................................... 27,644 15,892
----------- -----------
Total current assets.......................................................... 487,145 420,525
Property, plant and equipment -- net of accumulated depreciation of $73,308 and
$68,203............................................................................... 84,766 80,932
Intangible and other assets -- net...................................................... 277,075 279,096
----------- -----------
$ 848,986 $ 780,553
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Borrowing under revolving credit facility.......................................... $ 184,620 $ 115,679
Current portion of long term debt.................................................. 46,681 50,315
Borrowing under foreign credit facilities.......................................... 12,434 9,822
Accounts payable and accrued liabilities........................................... 136,538 137,624
Federal and other income taxes..................................................... 1,883 2,611
----------- -----------
Total current liabilities..................................................... 382,156 316,051
Long-term debt.......................................................................... 197,309 206,792
Other long-term liabilities............................................................. 12,176 17,238
Stockholders' equity:
Preferred stock; $.01 par value.................................................... -- --
Common stock; $.01 par value....................................................... 421 421
Capital in excess of par value..................................................... 337,752 337,872
Cumulative translation adjustment.................................................. (2,449) (1,732)
Accumulated deficit................................................................ (66,952) (83,897)
Treasury stock, at cost............................................................ (5,000) (5,000)
Notes receivable for common stock issued........................................... (6,427) (7,192)
----------- -----------
Total stockholders' equity.................................................... 257,345 240,472
----------- -----------
$ 848,986 $ 780,553
----------- -----------
----------- -----------
</TABLE>
This statement should be read in conjunction with the accompanying Notes to
Consolidated Condensed Financial Statements.
2
<PAGE>
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SECOND QUARTER ENDED SIX MONTHS ENDED
---------------------- ----------------------
<S> <C> <C> <C> <C>
JULY 8, JULY 9, JULY 8, JULY 9,
1995 1994 1995 1994
-------- -------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
Net revenues......................................... $210,395 $190,302 $405,551 $338,033
Cost of goods sold................................... 142,176 133,312 270,508 230,667
-------- -------- -------- --------
Gross profit......................................... 68,219 56,990 135,043 107,366
Selling, administrative and general expenses......... 43,800 38,846 85,135 69,106
-------- -------- -------- --------
Income before loss on California earthquake.......... 24,419 18,144 49,908 38,260
Loss on California earthquake........................ -- -- -- 3,000
-------- -------- -------- --------
Income before interest and income taxes.............. 24,419 18,144 49,908 35,260
Interest expense..................................... 9,475 8,308 17,835 15,713
-------- -------- -------- --------
Income before income taxes........................... 14,944 9,836 32,073 19,547
Provision for income taxes........................... 5,679 750 12,188 1,500
-------- -------- -------- --------
Net income........................................... $ 9,265 $ 9,086(1) $ 19,885 $ 18,047(1)
-------- -------- -------- --------
-------- -------- -------- --------
Net income per share................................. $ 0.22 $ 0.22(1) $ 0.48 $ 0.44(1)
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average number of common shares
outstanding........................................ 42,003 41,671 41,699 40,715
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
------------
(1) Net income and net income per share before the loss on the California
earthquake and after a normalized provision for income taxes at an effective
income tax rate of 38% was $6,098 or $0.15 per share for the second quarter
of fiscal 1994 and $13,979 or $0.34 per share for the first six months of
fiscal 1994.
This statement should be read in conjunction with the accompanying Notes to
Consolidated Condensed Financial Statements.
3
<PAGE>
THE WARNACO GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------
JULY 8, JULY 9,
1995 1994
-------- --------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Cash flow from operations:
Net income........................................................................... $ 19,885 $ 18,047
Non-cash items included in net income:
Depreciation and amortization................................................... 9,400 9,365
Interest........................................................................ 831 545
Income taxes paid.................................................................... (1,758) (2,605)
Net change in other operating accounts............................................... (68,337) (59,655)
Other................................................................................ (2,615) (3,889)
-------- --------
Cash used in operations......................................................... (42,594) (38,192)
Cash flow from investing activities:
Proceeds from the sale of fixed and other assets..................................... 5,942 115
Purchase of property, plant and equipment............................................ (9,858) (9,882)
Payment for purchase of Calvin Klein underwear businesses and trademarks............. (5,000) (33,103)
Repurchase of Calvin Klein license -- Canada......................................... (6,200) --
-------- --------
Cash used in investing activities............................................... (15,116) (42,870)
Cash flow from financing activities:
Borrowings under revolving credit facility........................................... 65,598 81,056
Net proceeds from sale of common stock and repayment of notes receivable from
stockholders........................................................................ 644 988
Proceeds from other financing........................................................ 5,955 8,626
Cash dividends paid.................................................................. (2,922) --
Increase in deferred financing costs................................................. (92) (405)
Repayments of debt................................................................... (13,117) (9,111)
-------- --------
Cash provided from financing activities......................................... 56,066 81,154
-------- --------
Increase (decrease) in cash............................................................... (1,644) 92
Cash at beginning of period............................................................... 3,791 4,651
-------- --------
Cash at end of period..................................................................... $ 2,147 $ 4,743
-------- --------
-------- --------
</TABLE>
<TABLE>
<S> <C> <C>
Net change in other operating accounts:
Accounts receivable.................................................................. $ 4,935 $(18,001)
Inventories.......................................................................... (61,447) (3,898)
Other current assets................................................................. (11,752) (6,025)
Accounts payable and accrued liabilities............................................. (1,103) (33,231)
Income taxes payable................................................................. 1,030 1,500
-------- --------
$(68,337) $(59,655)
-------- --------
-------- --------
</TABLE>
This statement should be read in conjunction with the accompanying Notes to
Consolidated Condensed Financial Statements.
4
<PAGE>
THE WARNACO GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. In the opinion of the Company, the accompanying consolidated condensed
financial statements contain all the adjustments (all of which were of a
normal recurring nature) necessary to present fairly the financial
position of the Company as of July 8, 1995 as well as its results of
operations and cash flows for the periods ended July 8, 1995 and July 9,
1994. 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 February 1995, the Company terminated the license agreement for the
production of men's underwear and women's intimate apparel bearing the
Calvin Klein name in Canada. The Company will directly design, produce
and market Calvin Klein men's underwear and women's intimate apparel in
Canada. The cost of terminating the license agreement before its
expiration in the year 2000 was $6.2 million.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
STATEMENT OF OPERATIONS
(SELECTED DATA)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
------------------ ------------------
JULY 8, JULY 9, JULY 8, JULY 9,
1995 1994 1995 1994
------- ------- ------- -------
(IN MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C>
Net revenues............................................................... $ 210.4 $ 190.3 $ 405.6 $ 338.0
Cost of goods sold......................................................... 142.2 133.3 270.5 230.7
------- ------- ------- -------
Gross profit............................................................... 68.2 57.0 135.0 107.4
% of net revenues..................................................... 32.4% 29.9% 33.2% 31.8%
Selling, administrative and general expenses............................... 43.8 38.8 85.1 69.2
Loss on California earthquake.............................................. -- -- -- 3.0
------- ------- ------- -------
Income before interest and income taxes.................................... 24.4 18.1 49.9 35.2
% of net revenues..................................................... 11.6% 9.5% 12.3% 10.4%
Interest expense........................................................... 9.5 8.3 17.8 15.7
Provision for income taxes................................................. 5.7 0.7 12.2 1.5
------- ------- ------- -------
Net income................................................................. $9.3 $9.1 $19.9 $18.0
------- ------- ------- -------
------- ------- ------- -------
Income before loss on California earthquake and after giving effect to a
normalized tax provision of 38%.......................................... $9.3 $6.1 $19.9 $14.0
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Net revenues in the second quarter of fiscal 1995 were $210.4 million,
10.6% higher than the $190.3 million recorded in the second quarter of fiscal
1994. Net revenues for the first six months of fiscal 1995 were $405.6 million,
20.0% higher than the $338.0 million recorded in the first six months of fiscal
1994.
Intimate Apparel Division net revenues increased 12.4% in the second
quarter of fiscal 1995 to $159.0 million from $141.4 million in the second
quarter of fiscal 1994. The increase was achieved despite the comparison to the
launch of Avon in the second quarter of fiscal of 1994 where Avon sales were
$15.3 million higher. Excluding the Avon launch, Intimate Apparel Division net
revenues increased 27.9% in the second quarter of fiscal 1995 compared to fiscal
1994. Calvin Klein net revenues are up 121% due to the successful launch of the
women's intimate apparel business on January 1, 1995 and improved market
penetration in the men's underwear business. Fruit of the Loom net revenues
increased 54.9% and international net revenues increased 12.8% over the prior
year period. Intimate Apparel Division net revenues in the first six months of
fiscal 1995 increased 27% to $305.4 million from the $240.5 million recorded in
the first six months of fiscal 1994. The higher net revenues reflect increases
in all brands including an increase of 227% in Calvin Klein net revenues, which
compares a full six months in fiscal 1995 to 3 1/2 months in fiscal 1994,
increases in domestic Warner's and Olga net revenues of 10.6%, international net
revenues of 11.5% and Fruit of the Loom net revenues of 28.7%.
Menswear Division net revenues increased 3.6% to $40.8 million from the
$39.4 million in the second quarter of fiscal 1994. Included in 1994 are brands
that have been discontinued of Puritan, Dior and Nicklaus. Excluding the
discontinued brands from the prior year's net revenues, Menswear Division net
revenues in the second quarter of fiscal 1995 increased 11.8% over the second
quarter of fiscal 1994 primarily due to an increase of 16.5% in Chaps by Ralph
Lauren. Menswear Division net revenues for the first six months of fiscal 1995
increased 2.2% to $82.6 million compared to $80.8 million. Excluding the
discontinued brands, Menswear Division net revenues increased 16.9% compared to
the first six months of fiscal 1994 due primarily to an increase in Chaps by
Ralph Lauren of 22.5%.
6
<PAGE>
Gross profit in the second quarter of fiscal 1995 increased 19.7% to $68.2
million from the $57.0 million recorded in the second quarter of fiscal 1994.
Gross profit as a percentage of net revenues improved 250 basis points to 32.4%
in the second quarter of fiscal 1995 from 29.9% in the comparable fiscal 1994
period. The increase in gross profit as a percentage of net revenues reflects
increased manufacturing efficiencies and a more favorable mix of regular price
sales. Gross profit for the first six months of fiscal 1995 increased 25.8% to
$135.0 million compared to the $107.4 million in the first six months of fiscal
1994. Gross profit as a percentage of net revenues increased to 33.3% in the
first six months of fiscal 1995 compared to 31.8% in the first six months of the
prior year. The increase in gross profit reflects manufacturing efficiencies and
the more favorable mix as noted above.
Selling, administrative and general expenses increased to $43.8 million
(20.8% of net revenues) from the $38.8 million (20.4% of net revenues) recorded
in the second quarter of fiscal 1994. The increase in selling, administrative
and general expenses reflect the increased sales volume noted above and an
increase in marketing expenses of 50 basis points to support the launch of
Calvin Klein women's intimate apparel. This was partially offset by an
improvement in selling and administrative expenses. Selling, administrative and
general expenses for the first six months of fiscal 1995 increased to $85.1
million (21.0% of net revenues) from $69.1 million (20.4% of net revenues)
recorded in the first six months of fiscal 1994. The increase in selling,
administrative and general expenses in the first six months of fiscal 1995
compared to fiscal 1994 reflects higher sales volume and the increase in
marketing expenses noted above.
Interest expense increased to $9.5 million in the second quarter of fiscal
1995 from $8.3 million recorded in the second quarter of fiscal 1994. Interest
expense increased to $17.8 million in the first six months of fiscal 1995 from
$15.7 million recorded in the first half of fiscal 1994. The increase in
interest expense is due primarily to an increase in interest rates of over 200
basis points since the end of the first half of fiscal 1994. The Company has
purchased interest rate swap agreements which effectively fix the interest rate
on $275 million of the Company's approximately $400 million of debt at an all-in
interest rate of 6.25% through 1996, which limits the impact of future increases
in interest rates.
The provision for income taxes for the second quarter of fiscal 1995 was
$5.7 million compared to $0.7 million in the second quarter of fiscal 1994. The
Company's effective tax rate for the first six months of fiscal 1995 was 38%
compared to 7% for the first six months of fiscal 1994. The increase in
effective tax rate in 1995 compared to 1994 reflects the utilization of the
Company's net operating loss carryforwards in the first six months of fiscal
1994, which offset the Company's 1994 federal income tax provision, leaving only
a 7% state tax provision.
The first quarter of fiscal 1994 includes a non-recurring loss 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
Division's distribution center.
Net income for the second quarter of 1995 was $9.3 million compared to $9.1
million in the second quarter of fiscal 1994. Income for the second quarter of
fiscal 1994, adjusted to reflect a normalized tax provision of 38%, was $6.1
million. Net income for the second quarter of fiscal 1995 of $10.6 million is
51.9% higher than the fully taxed income of $6.1 million recorded in the second
quarter of fiscal 1994. Net income for the first six months of fiscal 1995 of
$19.9 million was 42.2% higher than the fully taxed income before the loss on
the California earthquake of $14.0 million recorded in the first six months of
fiscal 1994.
CAPITAL RESOURCES AND LIQUIDITY
Consistent with the Company's goal of providing increased shareholder
value, on May 11, 1995, the Company declared a quarterly cash dividend of $0.07
per share. The dividend of $2.9 million was paid on June 30, 1995 to
shareholders of record as of May 30, 1995.
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
7
<PAGE>
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 operations in the first six months of fiscal 1995 was $42.6
million compared to a use of $38.2 million in the comparable 1994 period. The
use of cash in the first six months of the Company's fiscal year is a result of
seasonal increases in working capital, primarily inventory. The slight increase
in cash used in operations in the first six months of fiscal 1995 compared to
fiscal 1994 reflects higher investment in working capital, primarily inventory,
to support the increased sales volume in the second half of fiscal 1995, as well
as the strong growth of the Calvin Klein business. The increased investment in
inventory was partially offset by increased net income and an improvement in
accounts receivable where days sales outstanding was reduced by 6 days to 51
days.
The Company anticipates filing a Registration Statement with the Securities
and Exchange Commission to sell 7,500,000 shares of its common stock in an
underwritten public offering on August 9, 1995. The estimated net proceeds from
the proposed offering are expected to be approximately $150 million which will
be used to repay certain amounts outstanding under the Company's Bank Credit
Agreement. Additional funds available under the Company's revolving facility may
be used for strategic acquisitions as well as for working capital and other
corporate purposes. The Company believes that the 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 dividend, interest and principal payments on
outstanding debt obligations, for the foreseeable future.
8
<PAGE>
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of shareholders was held on May 11, 1995. The
following matters were voted upon by the shareholders:
(1) Election of Directors
(a) Mr. William S. Finkelstein was elected to the Board of
Directors to serve a three year term expiring at the 1998
Annual Meeting of Stockholders. 35,836,891 votes were cast for
the election of Mr. Finkelstein, none against and 165,290
withheld, abstained and broker non votes.
(b) Mr. Stewart A. Resnick was re-elected to the Board of Directors
to serve a three year term expiring at the 1998 Annual Meeting
of Stockholders. 35,867,561 votes were cast for the election of
Mr. Resnick, none against and 103,690 withheld, abstained and
broker non votes.
(2) The shareholders approved a proposed amendment to the Company's
Restated Certificate of Incorporation which increased the number
of authorized shares of common stock of the Company from
65,000,000 to 130,000,000. 34,315,509 votes were cast for the
amendment, 1,641,010 shares were cast against the amendment,
14,862 votes were withheld, abstained and broker non votes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
11.1 -- Earnings per share.
(b) Reports on Form 8-K.
The Company's current report on Form 8-K was filed with the
Securities and Exchange Commission on May 18, 1995. The report discussed
the Board of Directors decision to replace Ernst & Young LLP as the
Company's independent auditors with Price Waterhouse LLP.
9
<PAGE>
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: August 9, 1995 By /s/ WILLIAM S. FINKELSTEIN
...................................
(WILLIAM S. FINKELSTEIN)
DIRECTOR, SENIOR VICE PRESIDENT
AND CHIEF FINANCIAL OFFICER
PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER
Date: August 9, 1995 By /s/ WALLIS H. BROOKS
...................................
(WALLIS H. BROOKS)
VICE PRESIDENT AND
CORPORATE CONTROLLER
10
<PAGE>
EXHIBIT 11.1
THE WARNACO GROUP INC.
CALCULATION OF INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
FOR THE
QUARTER ENDED FOR THE
------------------- SIX MONTHS ENDED
JULY JULY ---------------------
8, 9, JULY 8, JULY 9,
1995 1994 1995 1994
------ ------ ------- -------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C> <C> <C>
Net income.......................................... $9,265 $9,086(1) $19,885 $18,047(1)
------ ------ ------- -------
------ ------ ------- -------
Weighted average number of shares outstanding during
the period........................................ 37,499,492 38,435,644 37,499,492 37,609,920
Add: common equivalent shares using the treasury
stock method...................................... 4,789,822 3,235,476 4,486,455 3,104,824
Less: treasury stock................................ (286,600) -- (286,600) --
---------- ---------- ---------- ----------
Weighted average number of shares................... 42,002,714 41,671,120 41,699,347 40,714,744
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share................................ $0.22 $0.22(1) $0.48 $0.44(1)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
------------
(1) Net income and net income per share before the loss on the California
earthquake and after a pro forma provision for income taxes at an effective
income tax rate of 38% was $6.098 or $0.15 per share for the second quarter
of fiscal 1994 and $13,979 or $0.34 per share for the first six months of
fiscal 1994.
<PAGE>
_____________________________________ _____________________________________
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE U.S. UNDERWRITERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH
IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company.................................... 3
The Offerings.................................. 4
Risk Factors................................... 5
Selected Financial Information................. 6
Use of Proceeds................................ 8
Recent Developments............................ 8
Capitalization................................. 9
Price Range of Common Stock.................... 10
Dividend Policy................................ 10
Business....................................... 11
Management..................................... 14
Selling Stockholder............................ 15
Certain United States Federal Tax Consequences
to Non-U.S. Stockholders..................... 16
Underwriting................................... 18
Legal Matters.................................. 20
Experts........................................ 20
Available Information.......................... 20
Documents Incorporated by Reference............ 21
Annex I: Quarterly Report on Form 10-Q for the
fiscal quarter ended July 8, 1995
</TABLE>
_____________________________________ _____________________________________
_____________________________________ _____________________________________
9,600,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO.
INCORPORATED
OPPENHEIMER & CO., INC.
, 1995
_____________________________________ _____________________________________
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED SEPTEMBER 19, 1995
PROSPECTUS
9,600,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
Of the 9,600,000 shares of Class A Common Stock offered, 8,800,000 are
being offered by The Warnaco Group, Inc. and 800,000 shares are being offered by
the Selling Stockholder of the Company. See 'Selling Stockholder' and
'Underwriting.' The Company will not receive any of the proceeds from the sale
of shares of Class A Common Stock by the Selling Stockholder.
Of the 9,600,000 shares of Class A Common Stock offered, 1,920,000 shares
are being offered initially outside the United States and Canada by the
International Managers and 7,680,000 shares are being offered initially in the
United States and Canada by the U.S. Underwriters. The initial offering price
and the aggregate underwriting discount per share are identical for both
Offerings. See 'Underwriting.'
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol 'WAC.' On September 18, 1995, the last sale price of the Class A Common
Stock as reported on the New York Stock Exchange was $23.25 per share. See
'Price Range of Common Stock.'
FOR INFORMATION CONCERNING CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY
PROSPECTIVE INVESTORS, SEE 'RISK FACTORS' APPEARING ON PAGE 5.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDER(2)
<S> <C> <C> <C> <C>
Per Share............................... $ $ $ $
Total(3)................................ $ $ $ $
</TABLE>
(1) The Company and the Selling Stockholder have agreed to indemnify the several
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See 'Underwriting.'
(2) Before deducting expenses estimated at $ payable by the Company
and $ payable by the Selling Stockholder.
(3) The Company has granted the International Managers and the U.S. Underwriters
options to purchase up to 288,000 and 1,032,000 additional shares of Class A
Common Stock, respectively, and the Selling Stockholder has granted the U.S.
Underwriters an option to purchase up to 120,000 additional shares of Class
A Common Stock, in each case, exercisable within 30 days after the date
hereof and solely to cover over-allotments, if any. If such options are
exercised in full, the total Price to Public, Underwriting Discount,
Proceeds to Company and Proceeds to Selling Stockholder will be $ ,
$ , $ and $ , respectively. See 'Underwriting.'
------------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to the approval of certain legal matters by counsel for the Underwriters and
certain other conditions. The Underwriters reserve the right to withdraw, cancel
or modify such offer and to reject orders in whole or in part. It is expected
that delivery of the shares of Class A Common Stock will be made in New York,
New York on or about , 1995.
------------------------
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO.
INTERNATIONAL
OPPENHEIMER INTERNATIONAL LTD.
UBS LIMITED
------------------------
The date of this Prospectus is , 1995.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
UNDERWRITING
Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation, Bear, Stearns International Limited, Morgan Stanley &
Co. International Limited, Oppenheimer International Ltd. and UBS Limited are
acting as lead managers (the 'Lead Managers') of the International Managers.
Subject to the terms and conditions set forth in an international purchase
agreement (the 'International Purchase Agreement') among the Company, the
Selling Stockholder and each of the underwriters named below (the 'International
Managers'), and concurrently with the sale of 7,680,000 shares of Common Stock
to the U.S. Underwriters (as defined below), the Company and the Selling
Stockholder severally have agreed to sell to the International Managers, and
each of the International Managers severally has agreed to purchase, the
aggregate number of shares of Common Stock set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
------------------------------------------------------------------------------------------- ---------
<S> <C>
Merrill Lynch International Limited........................................................
Donaldson, Lufkin & Jenrette Securities Corporation........................................
Bear, Stearns International Limited........................................................
Morgan Stanley & Co., International Limited................................................
Oppenheimer International Limited..........................................................
UBS Limited................................................................................
---------
Total....................................................................... 1,920,000
---------
---------
</TABLE>
The Company and the Selling Stockholder have also entered into a purchase
agreement (the 'U.S. Purchase Agreement' and, together with the International
Purchase Agreement, the 'Purchase Agreements'), with certain underwriters in the
United States and Canada (the 'U.S. Underwriters' and, together with the
International Managers, the 'Underwriters') for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Donaldson, Lufkin & Jenrette Securities
Corporation, Bear, Stearns & Co. Inc., Morgan Stanley & Co. Incorporated and
Oppenheimer & Co., Inc. are acting as U.S. Representatives. Subject to the terms
and conditions set forth in the U.S. Purchase Agreement, and concurrently with
the sale of 1,920,000 shares of Common Stock to the International Managers
pursuant to the International Purchase Agreement, the Company and the Selling
Stockholder have agreed to sell to the U.S. Underwriters, and the U.S.
Underwriters severally have agreed to purchase, an aggregate of 7,680,000 shares
of Common Stock. The offering price per share and the total underwriting
discount per share are identical under the International Purchase Agreement and
the U.S. Purchase Agreement.
In each Purchase Agreement, the several International Managers and the
several U.S. Underwriters, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting
International Managers or U.S. Underwriters (as the case may be) may be
increased. The sale of Common Stock to the International Managers is conditioned
upon the sale of the shares of Common Stock to the U.S. Underwriters.
The Lead Managers have advised the Company and the Selling Stockholder that
the International Managers propose initially to offer the shares of Common Stock
to the public at the public offering price set forth on the cover page of this
Prospectus and to certain dealers at such price less a concession not in excess
of $ per share of Common Stock. The International Managers may allow, and
such dealers may reallow, a discount not in excess of $ per share of Common
Stock on sales to certain other dealers. After the public offering, the public
offering price, concession and discount may be changed.
The Company has granted an option to the International Managers,
exercisable during the 30-day period after the date of this Prospectus, to
purchase up to an aggregate of 288,000 additional shares of Common Stock at the
public offering price set forth on the cover page hereof, less the underwriting
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
discount. The International Managers may exercise this option only to cover
over-allotments, if any, made on the sale of shares of Common Stock offered
hereby. To the extent that the International Managers exercise this option, each
International Manager will be obligated, subject to certain conditions, to
purchase the number of additional shares of Common Stock proportionate to such
International Manager's initial amount reflected in the foregoing table. The
Company and the Selling Stockholder have each granted an option to the U.S.
Underwriters, exercisable during the 30-day period after the date of this
Prospectus, to purchase up to an additional 1,032,000 shares and 120,000 shares,
respectively, of Common Stock to cover over-allotments, if any, on terms similar
to those granted to the International Managers.
The Lead Managers have advised the Company and the Selling Stockholder that
the International Managers and the U.S. Underwriters have entered into an
Intersyndicate Agreement (the 'Intersyndicate Agreement') that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Managers and the U.S. Underwriters are permitted to sell shares of
Common Stock to each other for purposes of resale at the public offering price,
less an amount not greater than the selling concession. Under the terms of the
Intersyndicate Agreement, the U.S. Underwriters and any dealer to whom they sell
shares of Common Stock will not offer to sell or sell shares of Common Stock to
persons who are non-United States and non-Canadian persons or to persons they
believe intend to resell to persons who are non-United States and non-Canadian
persons, and the International Managers and any dealer to whom they sell shares
of Common Stock will not offer to sell or sell shares of Common Stock to persons
who are United States persons or Canadian persons or to persons they believe
intend to resell to United States persons or Canadian persons, except in each
case for transactions pursuant to such agreement.
Each International Manager has agreed that (i) it has not offered or sold,
and it will not offer or sell any shares of Common Stock to persons in the
United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995 (the
'Regulations'), (ii) it has complied and will comply with all applicable
provisions of the Financial Services Act of 1986 and the Regulations with
respect to anything done by it in relation to the Common Stock in, from or
otherwise involving the United Kingdom and (iii) it has only issued or passed on
and will only issue or pass on to any person in the United Kingdom any document
received by it in connection with the issuance of Common Stock if that person is
of a kind who is described in Article 11(3) of the Financial Services Act of
1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom
such document may otherwise lawfully be issued or passed on.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practice of the country of
purchase, in addition to the offering price set forth on the cover page hereof.
The Company, the Selling Stockholder and certain officers and directors of
the Company have agreed that they will not, directly or indirectly, for a period
of 90 days following the date of this Prospectus, except with the prior consent
of Merrill Lynch, on behalf of the Underwriters, sell, offer to sell, grant any
option for the sale of, or otherwise dispose of, any Common Stock. Calvin Klein,
Inc., which is the beneficial owner of 566,498 shares of Common Stock, has
agreed that it will not, directly or indirectly, until October 30, 1995, except
with prior consent of Merrill Lynch, on behalf of the Underwriters, sell, offer
to sell, grant any option for the sale of, or otherwise dispose of, any Common
Stock.
The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters with respect to the Common Stock offered hereby and
the validity of the Common Stock offered hereby will be passed upon for the
Company by Stanley P. Silverstein, Esq., Vice President, General Counsel and
Secretary of the Company, and by Skadden, Arps, Slate, Meagher
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
& Flom, New York, New York. Certain legal matters will be passed upon for the
Underwriters by Fried, Frank, Harris, Shriver & Jacobson (a partnership which
includes professional corporations), New York, New York. Mr. Silverstein owns
33,400 shares of Common Stock, including 7,000 shares of Restricted Stock, and
options to acquire 57,000 shares of Common Stock.
EXPERTS
The consolidated financial statements of The Warnaco Group, Inc.
incorporated by reference in this Prospectus from the Company's Annual Report
(Form 10-K) for the fiscal year ended January 7, 1995, have been audited by
Ernst & Young, LLP, independent auditors, as set forth in their report, included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
'Commission') a Registration Statement (which term shall encompass any
amendments thereto) on Form S-3 (the 'Registration Statement') under the
Securities Act of 1933, as amended (the 'Securities Act'), for the registration
of the Common Stock. This Prospectus, which constitutes a part of the
Registration Statement, does not contain all of the information set forth in the
Registration Statement, certain items of which are contained in exhibits to the
Registration Statement as permitted by the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement, including the exhibits
thereto, and the financial statements and notes filed or incorporated by
reference as a part thereof. Statements made in this Prospectus concerning the
contents of any document referred to herein are not necessarily complete. With
respect to each such document filed with the Commission as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement and the
exhibits thereto filed by the Company with the Commission may be inspected at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, or at its regional offices located
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
be obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. Such materials can
also be inspected at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
The Company is subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended (the 'Exchange
Act'), and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed with the Commission may be inspected and copied at the
locations described above. The Company will furnish all reports and other
information required by the periodic reporting and informational requirements of
the Exchange Act to the Commission and will furnish copies of such reports and
other information to the holders of the Common Stock.
<PAGE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended January
7, 1995.
2. The Company's Current Report on Form 8-K, dated May 11, 1995.
3. The Company's Proxy Statement for the Company's 1995 Annual Meeting
of Shareholders held on May 11, 1995.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
April 8, 1995.
5. The Company's Quarterly Report on Form 10-Q for the quarter ended
July 8, 1995 (attached as Annex I to this Prospectus).
6. All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since January 7, 1995.
7. The description of the Common Stock which is contained in the
Company's Form 8-A dated September 10, 1991, including any
amendments or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act prior to the termination of the offering of the shares
of Common Stock hereunder shall be deemed to be incorporated by reference herein
and to be part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is incorporated or deemed to be incorporated by reference
herein modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any and all of the documents that are incorporated by reference in this
Prospectus (other than exhibits to such documents unless such exhibits are
specifically incorporated by reference into such documents). Requests for such
copies should be directed to Stanley P. Silverstein, Vice President, General
Counsel and Secretary, The Warnaco Group, Inc., 90 Park Avenue, New York, New
York 10016, telephone (212) 661-1300.
<PAGE>
_____________________________________ _____________________________________
NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE INTERNATIONAL MANAGERS. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, THE CLASS A COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO
WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH
IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF CLASS A COMMON STOCK OFFERED
HEREBY IN THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL
SERVICES ACT OF 1986 AND THE COMPANIES ACT OF 1985 WITH RESPECT TO ANYTHING DONE
BY ANY PERSON IN RELATION TO THE CLASS A COMMON STOCK IN, FROM OR OTHERWISE
INVOLVING THE UNITED KINGDOM MUST BE COMPLIED WITH. SEE 'UNDERWRITING.'
IN THE PROSPECTUS, REFERENCES TO 'DOLLARS' AND '$' ARE TO UNITED STATES
DOLLARS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company.................................... 3
The Offerings.................................. 4
Risk Factors................................... 5
Selected Financial Information................. 6
Use of Proceeds................................ 8
Recent Developments............................ 8
Capitalization................................. 9
Price Range of Common Stock.................... 10
Dividend Policy................................ 10
Business....................................... 11
Management..................................... 14
Selling Stockholder............................ 15
Certain United States Federal Tax Consequences
to Non-U.S. Stockholders..................... 16
Underwriting................................... 18
Legal Matters.................................. 20
Experts........................................ 20
Available Information.......................... 20
Documents Incorporated by Reference............ 21
Annex I: Quarterly Report on Form 10-Q for the
fiscal quarter ended July 8, 1995
</TABLE>
ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS
_____________________________________ _____________________________________
9,600,000 SHARES
THE WARNACO GROUP, INC.
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO.
INTERNATIONAL
OPPENHEIMER INTERNATIONAL LTD.
UBS LIMITED
, 1995
_____________________________________ _____________________________________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................. $ 84,470
Printing and Engraving.......................................................... 500,000
Legal Fees and Expenses......................................................... 300,000
National Association of Securities Dealers fees................................. 20,625
Blue Sky Qualifications and Expenses (including counsel fees)................... 20,000
New York Stock Exchange fees.................................................... 30,000
Transfer Agent and Registrar fees............................................... 30,000
Miscellaneous................................................................... 514,905
----------
Total...................................................................... $1,500,000
----------
----------
</TABLE>
------------
* All amounts except registration and National Association of Securities
Dealers fees are estimates.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the 'DGCL'), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty, except
(i) for any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to Section
174 of the DGCL (providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions) or (iv) for any
transaction from which a director derived an improper personal benefit. The
Company has adopted an amendment to its Certificate of Incorporation, which
eliminates the liability of directors to the extent permitted by Section
102(b)(7) of the DGCL.
Reference is made to Section 145 of the DGCL which provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement in connection with specified actions, suits or
proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation (a 'derivative action')),
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with defense or settlement of such
action, and the statute requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation. The statute provides that it is not exclusive of other
indemnification that may be granted by a corporation's charter, by-laws,
disinterested director vote, stockholder vote, agreement or otherwise. The
Bylaws of the Company provide for indemnification of its directors and officers
to the fullest extent permitted by Delaware law.
Reference is made to the Restated Certificate of Incorporation of the
Company and Article VIII of the Bylaws of the Company.
In addition, the Company maintains a directors' and officers' liability
insurance policy and has entered into indemnification agreements with each of
its executive officers and directors.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
---------- ------------------------------------------------------------------------------------------------------------
<S> <C>
1.1 -- Form of U.S. Purchase Agreement.**
1.2 -- Form of International Purchase Agreement.**
4.1 -- 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.)
4.2 -- Amendment to Restated Certificate of Incorporation of the Company. (Incorporated by reference to Exhibit
3.1 to the Company's Form 10-Q filed on August 11, 1993.)
4.3 -- Amendment to Restated Certificate of Incorporation of the Company.*
4.4 -- 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.)
4.5 -- Registration Rights Agreement, dated as of March 14, 1994, between the Company and CKI. (Incorporated
herein by reference to Exhibit 4.1 to the Company's Form 10-Q filed on May 24, 1994.)
5.1 -- Opinion of Stanley P. Silverstein, General Counsel of the Company, regarding the legality of the shares
of Common Stock being offered hereby.**
23.1 -- Consent of Ernst & Young, L.L.P., independent auditors.**
23.2 -- Consent of Stanley P. Silverstein, General Counsel of the Company (included in Exhibit 5.1).**
24.1 -- Power of Attorney.*
</TABLE>
------------
* Previously filed.
** Filed herewith.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(b)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
September 19, 1995.
THE WARNACO GROUP, INC.
(Registrant)
By /s/ WILLIAM S. FINKELSTEIN
...................................
WILLIAM S. FINKELSTEIN
SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed below by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------------ -------------------------------------------- -------------------
<S> <C> <C>
* Chairman of the Board; Director; President September 19, 1995
......................................... and Chief Executive Officer (Principal
(LINDA J. WACHNER) Executive Officer)
/s/ WILLIAM S. FINKELSTEIN Director; Senior Vice President and Chief September 19, 1995
......................................... Financial Officer (Principal Financial
(WILLIAM S. FINKELSTEIN) Officer and Principal Accounting Officer)
* Director September 19, 1995
.........................................
(JOSEPH A. CALIFANO, JR.)
* Director September 19, 1995
.........................................
(ANDREW G. GALEF)
* Director September 19, 1995
.........................................
(STEWART A. RESNICK)
* Director September 19, 1995
.........................................
(ROBERT D. WALTER)
/S/ WILLIAM S. FINKELSTEIN
*By:
.........................................
WILLIAM S. FINKELSTEIN
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION PAGE NO.
-------- ------------------------------------------------------------------------------------------------ --------
<S> <C> <C>
1.1 -- Form of U.S. Purchase Agreement.**...........................................................
1.2 -- Form of International Purchase Agreement.**..................................................
4.1 -- 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.)..........
4.2 -- Amendment to Restated Certificate of Incorporation of the Company. (Incorporated by reference
to Exhibit 3.1 to the Company's Form 10-Q filed on August 11, 1993.)..........................
4.3 -- Amendment to Restated Certificate of Incorporation of the Company.*..........................
4.4 -- 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.).......................................
4.5 -- Registration Rights Agreement, dated as of March 14, 1994, between the Company and CKI.
(Incorporated herein by reference to Exhibit 4.1 to the Company's Form 10-Q filed on May 24,
1994.)........................................................................................
5.1 -- Opinion of Stanley P. Silverstein, General Counsel of the Company, regarding the legality of
the shares of Common Stock being offered hereby.**............................................
23.1 -- Consent of Ernst & Young, L.L.P., independent auditors**.....................................
23.2 -- Consent of Stanley P. Silverstein, General Counsel of the Company (included in Exhibit
5.1)**........................................................................................
24.1 -- Power of Attorney*...........................................................................
</TABLE>
------------
* Previously filed.
** Filed herewith.
<PAGE>
THE WARNACO GROUP, INC.
(a Delaware corporation)
Offering of
8,832,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
Dated: __________, 1995
<PAGE>
THE WARNACO GROUP, INC.
(a Delaware corporation)
Offering of
8,832,000 Shares of Common Stock
U.S. PURCHASE AGREEMENT
____________, 1995
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Donaldson, Lufkin & Jenrette Securities Corporation
Bear, Stearns & Co. Inc.
Morgan Stanley & Co. Incorporated
Oppenheimer & Co., Inc.
As Representatives of the several U.S. Underwriters
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
The Warnaco Group, Inc., a Delaware corporation (the
"Company") and Linda J. Wachner, Chairman, President and Chief Executive Officer
of the Company (the "Selling Stockholder") confirm their respective agreements
with Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc.,
Morgan Stanley & Co. Incorporated, Oppenheimer & Co., Inc., and each of the
other Underwriters named in Schedule A hereto (collectively, the "U.S.
Underwriters," which term shall also include any underwriter substituted as
hereinafter provided in Section 11), for whom Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Donaldson, Lufkin & Jenrette Securities Corporation, Bear,
Stearns & Co.
1
<PAGE>
Inc., Morgan Stanley & Co. Incorporated and Oppenheimer & Co., Inc. are acting
as representatives (in such capacity, the "U.S. Representatives"), with respect
to (i) the sale by the Company and the purchase by the several U.S.
Underwriters, acting severally and not jointly, of an aggregate of 7,040,000
shares of Class A Common Stock, par value $.01 per share, of the Company (the
"Common Stock"), (ii) the sale by the Selling Stockholder and the purchase by
the several U.S. Underwriters, acting severally and not jointly, of an aggregate
of 640,000 shares of Common Stock and (iii) the grant by the Company and the
Selling Stockholder to the U.S. Underwriters, acting severally and not jointly,
of the option described in Section 2(e) hereof to purchase all or any part of
the 1,032,000 and 120,000 additional shares of Common Stock, respectively, to
cover over-allotments. The 7,680,000 shares of Common Stock (the "Initial U.S.
Shares") and all or any part of the 1,152,000 shares of Common Stock subject to
the options described in Section 2(e) hereof (the "U.S. Option Shares") to be
purchased by the U.S. Underwriters are collectively hereinafter called the "U.S.
Shares." The 1,440,000 shares of Common Stock subject to the option described in
Section 2(e) hereof are hereinafter collectively called the "Option Shares."
It is understood that the Company and the Selling Stockholder
are entering into an agreement, dated the date hereof (the "International
Purchase Agreement"), providing for the issuance and sale by the Company and the
sale by the Selling Stockholder of 1,760,000 shares and 160,000 shares of Common
Stock, respectively (collectively, the "Initial International Shares"), through
arrangements with certain underwriters outside the United States and Canada (the
"Managers" and, together with the U.S. Underwriters, the "Underwriters"), for
whom Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation, Bear, Stearns International Limited, Morgan Stanley &
Co. International Limited, Oppenheimer International Ltd. and UBS Limited are
acting as lead managers (the "Lead Managers") and the grant by the Company to
the Managers, acting severally and not jointly, of an option described in
Section 2(e) of the International Purchase Agreement to purchase all or any part
of the Managers' pro rata portion of 288,000 additional shares of Common Stock
to cover over-allotments. It is understood that the Company is not obligated to
sell, and the U.S. Underwriters are not obligated to purchase, any Initial U.S.
Shares unless all of the Initial International Shares are contemporaneously
purchased by the Managers. The U.S. Shares and the International Shares are
hereinafter collectively referred to as the "Offered Shares."
The Company and the Selling Stockholder understand that the
U.S. Underwriters will simultaneously enter into an agreement with the Managers
dated the date hereof (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the U.S. Underwriters and the
Managers, under the direction of Merrill Lynch.
2
<PAGE>
You have advised us that you and the other U.S. Underwriters,
acting severally and not jointly, desire to purchase the Initial U.S. Shares
and, if the U.S. Underwriters so elect, the U.S. Option Shares, and that you
have been authorized by the other U.S. Underwriters to execute this Agreement
and the U.S. Price Determination Agreement referred to below on their behalf.
The initial public offering price per share for the U.S.
Shares and the purchase price per share for the U.S. Shares to be paid by the
several U.S. Underwriters shall be agreed upon by the Company, the Selling
Stockholder and the U.S. Representatives, acting on behalf of the several U.S.
Underwriters, and such agreement shall be set forth in a separate written
instrument substantially in the form of Exhibit A hereto (the "U.S. Price
Determination Agreement"). The U.S. Price Determination Agreement may take the
form of an exchange of any standard form of written telecommunication between
the Company, the Selling Stockholder and the U.S. Representatives and shall
specify such applicable information as included in Exhibit A hereto. The
offering of the U.S. Shares will be governed by this Agreement, as supplemented
by the U.S. Price Determination Agreement. From and after the date of the
execution and delivery of the U.S. Price Determination Agreement, this Agreement
shall be deemed to incorporate, and all references herein to "this Agreement" or
"herein" shall be deemed to include, the U.S. Price Determination Agreement.
The initial public offering price per share and the purchase
price per share for the International Shares to be paid by the Managers pursuant
to the International Purchase Agreement shall be set forth in a separate
agreement (the "International Price Determination Agreement"), the form of which
is attached to the International Purchase Agreement. The purchase price per
share for the International Shares to be paid by the several Managers shall be
identical to the purchase price per share for the U.S. Shares to be paid by the
several U.S. Underwriters hereunder. This Agreement (including the related U.S.
Price Determination Agreement) and the International Purchase Agreement
(including the related International Price Determination Agreement) are
collectively referred to herein as the "Purchase Agreements."
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 33-61701) covering the registration of the Offered Shares under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus or preliminary prospectuses, and either (A) has prepared
and proposes to file, prior to the effective date of such registration
statement, an amendment to such registration statement, including final
prospectuses, or (B) if the Company has elected to rely upon Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"), will prepare and file (i) prospectuses, in accordance
with the provisions of Rule 430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act
Regulations, or
3
<PAGE>
(ii) a term sheet, in accordance with the provisions of Rule 434 ("Rule 434") of
the 1933 Act Regulations and Rule 424(b), as applicable, promptly after
execution and delivery of the U.S. Price Determination Agreement.* The
information, if any, included in such prospectuses or term sheet, as the case
may be, that was omitted from any prospectus included in such registration
statement at the time it becomes effective but that is deemed, pursuant to Rule
430A(b) or Rule 434, as the case may be, to be part of such registration
statement at the time it becomes effective is referred to herein as the "Rule
430A Information." Each form of U.S. Prospectus and form of International
Prospectus used before the time such registration statement becomes effective,
and any form of U.S. Prospectus and form of International Prospectus that omits
the Rule 430A Information that is used after such effectiveness and prior to the
execution and delivery of the U.S. Price Determination Agreement or the
International Price Determination Agreement, is herein called a "preliminary
prospectus." If the Company elects to rely on Rule 434, all references to the
U.S. Prospectus shall be deemed to include, without limitation, the Form of U.S.
Prospectus and the term sheet, taken together, provided to the U.S. Underwriters
by the Company in reliance on Rule 434 and all references to the International
Prospectus shall be deemed to include, without limitation, the Form of
International Prospectus and the term sheet, taken together, provided to the
Managers by the Company in reliance on Rule 434. If the Company files a
registration statement to register a portion of the Common Stock and relies on
Rule 462(b) for such registration statement to become effective upon filing with
the Commission (the "Rule 462 Registration Statement"), then any reference to
"Registration Statement" herein shall be deemed to be to both the registration
statement referred to above (No. 33-61701) and the Rule 462 Registration
Statement, as each such registration statement may be amended pursuant to the
1933 Act. Any reference to any preliminary prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the 1933 Act as of the date of such preliminary prospectus.
Such registration statement, including the exhibits thereto and the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act, as amended at the time it becomes effective and including, if applicable,
the Rule 430A Information, is herein called the "Registration Statement," and
the form of U.S. Prospectus, including the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act and form of
International Prospectus, including the documents incorporated by reference
------------
* Two forms of prospectus are to be used in connection with the offering and
sale of the Offered Shares: one relating to the U.S. Shares (the "Form of
U.S. Prospectus") and one relating to the International Shares (the "Form
of International Prospectus"). The Form of International Prospectus is
identical to the Form of U.S. Prospectus, except for the front cover page,
an "Underwriting," a "Legal Matters," an "Experts," an "Available
Information" and a "Documents Incorporated by Reference" section and the
back cover page.
4
<PAGE>
therein pursuant to Item 12 of Form S-3 under the 1933 Act included in the
Registration Statement at the time it becomes effective are herein called the
"U.S. Prospectus" and the "International Prospectus," respectively, and,
collectively, the "Prospectuses" and, individually, a "Prospectus," except that,
if the final U.S. Prospectus or International Prospectus, as the case may be,
first furnished to the U.S. Underwriters or the Managers after the execution of
the U.S. Price Determination Agreement or the International Price Determination
Agreement for use in connection with the offering of the Offered Shares differs
from the prospectuses included in the Registration Statement at the time it
becomes effective (whether or not such prospectuses are required to be filed
pursuant to Rule 424(b)), the terms "U.S. Prospectus," "International
Prospectus," "Prospectuses" and "Prospectus" shall refer to the final U.S.
Prospectus or International Prospectus, as the case may be, first furnished to
the U.S. Underwriters or the Managers, as the case may be, for such use.
The Company and the Selling Stockholder understand that the
U.S. Underwriters propose to make a public offering of the U.S. Shares as soon
as you deem advisable after the Registration Statement becomes effective and the
U.S. Price Determination Agreement has been executed and delivered.
Section 1. Representations and Warranties. (a) The Company
represents and warrants to and agrees with each of the U.S. Underwriters that:
(i) The Company meets the requirements for use of
Form S-3 under the 1933 Act, and when the Registration
Statement shall become effective, and if the Company has
elected to rely upon Rule 430A, on the date of the U.S. Price
Determination Agreement or the International Price
Determination Agreement, and on the effective or issue date of
each amendment or supplement to the Registration Statement or
the Prospectuses, and at the Closing Time referred to below,
and if any U.S. Option Shares are purchased, up to and
including the Date of Delivery referred to below, (A) the
Registration Statement and any amendments and supplements
thereto will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations; (B)
neither the Registration Statement nor any amendment or
supplement thereto will contain 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; and (C) neither of the Prospectuses nor any
amendment or supplement to either of them include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, this representation
and warranty does not apply to statements or omissions from
the Registration
5
<PAGE>
Statement or the Prospectuses or any amendments or supplements
thereto made in reliance upon and in conformity with
information furnished or confirmed in writing to the Company
by or on behalf of any Underwriter through you or the Lead
Managers expressly for use in the Registration Statement or
the Prospectuses or any amendments or supplements thereto.
(ii) The documents incorporated by reference in the
Prospectuses pursuant to Item 12 of Form S-3 under the 1933
Act, at the time they were filed with the Commission,
conformed in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), and, when read
together with the information in the Prospectuses, at the time
the Registration Statement shall become effective, and if the
Company has elected to rely upon Rule 430A, on the date of the
U.S. Price Determination Agreement or the International Price
Determination Agreement, and on the effective or issue date of
each amendment or supplement to the Registration Statement or
the Prospectuses, and at the Closing Time referred to below,
and, if any Option Shares are purchased, on the Date of
Delivery referred to below, will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
(iii) Ernst & Young LLP, who are reporting upon the
audited consolidated financial statements and schedules
included or incorporated by reference in the Registration
Statement, are independent public accountants as required by
the 1933 Act, the 1934 Act, the 1933 Act Regulations and the
1934 Act Regulations.
(iv) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under this Agreement, the U.S. Price Determination Agreement,
the International Purchase Agreement and the International
Price Determination Agreement, and this Agreement and the
International Purchase Agreement have been, and the U.S. Price
Determination Agreement and the International Price
Determination Agreement on the date thereof will be, duly
authorized, executed and delivered by the Company.
(v) The consolidated financial statements included or
incorporated by reference in the Registration Statement and
the Prospectuses, together with the related schedules and
notes, present fairly,
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the consolidated financial position of the Company and its
Subsidiaries (as hereinafter defined) as of the dates
indicated and the consolidated statements of operations,
shareholders' equity and cash flows of the Company and its
Subsidiaries for the periods specified. Such financial
statements have been prepared in conformity with generally
accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved. The
financial statement schedules, if any, included or
incorporated by reference in the Registration Statement
present fairly in accordance with GAAP the information
required to be stated therein and have been compiled on a
basis consistent with that of the audited consolidated
financial statements included in the Registration Statement.
The selected financial data included in the Prospectuses
present fairly in accordance with GAAP the information shown
therein and have been compiled on a basis consistent with that
of the audited consolidated financial statements included in
the Registration Statement.
(vi) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority under
such laws to own, lease and operate its properties and to
conduct its business as described in the Prospectuses; and the
Company is duly qualified as a foreign corporation to transact
business and is in good standing under the laws of each other
jurisdiction in which the nature of its business or its
ownership or leasing of its properties requires qualification,
except to the extent that the failure to so qualify or be in
good standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs
or business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(vii) Each of the Company's significant subsidiaries
(as such term is defined in Regulation S-X promulgated by the
Commission, each such subsidiary is hereinafter referred to as
a "Significant Subsidiary," and all of the Company's
subsidiaries are collectively hereinafter referred to as the
"Subsidiaries") is a corporation duly incorporated and validly
existing under the laws of its jurisdiction of incorporation,
with power and authority to own, lease and operate its
properties and conduct its business as described in the
Prospectuses, is duly qualified as a foreign corporation to
transact business and is in good standing under the laws of
each jurisdiction in which the nature of its business or its
ownership or leasing of its properties required qualification,
except where the failure to be so qualified or in good
standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs
and business prospects of the Company and the Subsidiaries
considered as one enterprise; and all the
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<PAGE>
outstanding shares of capital stock of the Subsidiaries of the
Company have been duly authorized and validly issued, are
fully-paid and non-assessable, and are owned by the Company
(other than directors' qualifying shares), directly or
indirectly, free and clear of all liens, encumbrances,
security interests and claims (other than pursuant to the
Collateral Documents (as defined under the $800,000,000 Credit
Agreement, dated October 14, 1993, among the Company, Warnaco
Inc., the Bank of Nova Scotia and Citibank U.S.A.)); none of
the outstanding shares of capital stock of the Subsidiaries
was issued in violation of the preemptive or similar rights of
any stockholder of such corporation arising by operation of
law, under the charter or by-laws of any Subsidiary or under
any agreement to which the Company or any Subsidiary is a
party.
(viii) The Company had at the date indicated in the
Prospectuses a duly authorized, issued and outstanding
capitalization as set forth in the Prospectuses under the
caption "Capitalization," and the Offered Shares will conform
in all material respects to the descriptions thereof
incorporated by reference into the Prospectuses.
(ix) The Offered Shares to be sold by the Company
pursuant to this Agreement and the International Purchase
Agreement have been duly authorized and, when issued and
delivered by the Company upon receipt of the payment therefor
in accordance with this Agreement and the International
Purchase Agreement, will be validly issued fully paid and
non-assessable; such Offered Shares are not subject to the
preemptive or other similar rights of any stockholder of the
Company arising by operation of law, under the charter and
by-laws of the Company or under any agreement to which the
Company or any of its Subsidiaries is a party.
(x) All of the outstanding shares of capital stock of
the Company, including the Offered Shares to be sold by the
Selling Stockholder pursuant to this Agreement and the
International Purchase Agreement, have been duly authorized
and validly issued and are fully paid and non-assessable; and
none of the outstanding shares of Common Stock of the Company
was issued in violation of the preemptive or other similar
rights or any stockholder of the Company arising by operation
of law, under the charter or by-laws of the Company or under
any agreement to which the Company or any of its Subsidiaries
is a party.
(xi) Except as disclosed in the Prospectuses, there
are no outstanding options, warrants or other rights calling
for issuance of, and no commitments, plans or arrangements to
issue, any shares of capital stock of
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the Company or any of its Subsidiaries or any security
convertible into or exchangeable for capital stock of the
Company or any of its Subsidiaries.
(xii) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectuses, except as otherwise stated therein or
contemplated thereby, there has not been (A) any material
adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, (B)
any transaction entered into by the Company or any Subsidiary,
other than in the ordinary course of business, that is
material to the Company and its Subsidiaries, considered as
one enterprise, or (C) other than its regular quarterly
dividend, any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(xiii) Neither the Company nor any Subsidiary is in
violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets
is subject, except for such defaults that would not in the
aggregate have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xiv) The execution, delivery and performance of this
Agreement, the U.S. Price Determination Agreement, the
International Purchase Agreement and the International Price
Determination Agreement, the issuance, sale and delivery of
the Offered Shares, the consummation by the Company of the
transactions contemplated thereby and in the Registration
Statement and compliance by the Company with the terms of the
foregoing have been duly authorized by all necessary corporate
action on the part of the Company and do not and will not
result in any violation of the charter or by-laws of the
Company or any Subsidiary, and do not, and at the Closing Time
will not, conflict with, or result in a breach or violation of
any of the terms or provisions of, or constitute a default
under, or result in the creation or imposition of any lien or
encumbrance upon any property or assets of the Company or any
Subsidiary under (A) any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary is bound
or to which any of their respective properties or assets are
subject or (B) any law, statute, rule, regulation,
9
<PAGE>
judgment, order, writ or decree applicable to the Company or
any of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or
any Subsidiary or any of their respective properties, assets
or operations.
(xv) No authorization, approval, consent or license
of any government, governmental instrumentality or court
(other than under the 1933 Act and the 1933 Act Regulations
and the securities or blue sky laws of the various states) is
necessary in connection with the due authorization, execution,
delivery and performance by the Company of this Agreement, the
U.S. Price Determination Agreement, the International Purchase
Agreement and the International Price Determination Agreement,
and the issuance, sale and delivery of the Offered Shares.
(xvi) Except as disclosed in the Prospectuses, there
is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign,
now pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary that is
required to be disclosed in the Registration Statement or
Prospectuses or that, if determined adversely to the Company
or any of its Subsidiaries, individually or in the aggregate
might have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise, or which might materially and
adversely affect the consummation of the transactions
contemplated in this Agreement, the International Purchase
Agreement and in the Registration Statement.
(xvii) There are no contracts or documents of a
character to which the Company or any Subsidiary is a party or
by which any of them are bound required to be described in the
Registration Statement, the Prospectuses or the documents
incorporated by reference therein or to be filed as exhibits
thereto that are not described and filed as required.
(xviii) The Company and its Subsidiaries are in
compliance with, and each such entity has not received any
notice of any outstanding violation of, all laws, ordinances,
rules and regulations applicable to it and its operations
except, in either case, where any failure by the Company or
any Subsidiary to comply with any such law, regulation,
ordinance or rule would not have, individually or in the
aggregate, a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
10
<PAGE>
(xix) Neither the Company nor any of its affiliates
has taken or will take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the
Common Stock; and neither the Company nor any of its
affiliates has distributed or will distribute any prospectus
(as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the
Offered Shares other than any preliminary prospectus filed
with the Commission or the Prospectuses or other material
permitted by the 1933 Act or the 1933 Act Regulations.
(xx) The Company is not an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(xxi) No labor dispute exists with the Company's
employees or with employees of its Subsidiaries or, to the
knowledge of the Company, is imminent that could reasonably be
expected to materially and adversely affect the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xxii) The Company and each of its Subsidiaries have
good and marketable title to all properties and assets owned
by them, free and clear of all liens, encumbrances or
restrictions, except such as (A) are described in the
Prospectuses or (B) do not materially impair or interfere with
the current use made of such properties or could reasonably be
expected to materially and adversely affect the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise or (C) are neither material in
amount nor materially significant or (D) are granted for
borrowed money, in each case in relation to the business of
the Company and its Subsidiaries, considered as one
enterprise; all of the leases and subleases material to the
businesses of the Company and its Subsidiaries, considered as
one enterprise, and under which the Company or any Subsidiary
holds properties described in the Prospectuses, are in full
force and effect and neither the Company nor any Subsidiary
has received any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of the leases or subleases mentioned
above or affecting or questioning the rights of the Company or
any Subsidiary, to the continued possession of the leased or
subleased premises under any such lease or sublease, which
claims, in the aggregate might be expected to have a material
adverse effect on the condition (financial or otherwise),
earnings,
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<PAGE>
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxiii) The Company and each of its Subsidiaries own
or possess all foreign and domestic governmental licenses,
permits, certificates, consents, orders, approvals and other
authorizations (collectively, "Governmental Licenses")
necessary to own or lease, as the case may be, and to operate
its properties and to carry on its business as presently
conducted, except where the failure to possess such
Governmental Licenses might be expected to have a material
adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise,
and neither the Company nor any Subsidiary has received any
notice of proceedings relating to revocation or modification
of any such Governmental Licenses that, singly or in the
aggregate, might be expected to have a material adverse effect
on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxiv) The Company, directly or through its
Subsidiaries, is the owner of record for the uses described in
the Prospectuses of the trademarks "WARNER'S", "HATHAWAY",
"OLGA", "CALVIN KLEIN" (for or in connection with men's and
boys' underwear, sleepwear, loungewear, bodywear and related
products, and women's and girls' intimate apparel, sleepwear,
loungewear, bodywear and related products) incident to its
ownership of the trust certificates therefor in the Calvin
Klein Trademark Trust, "Blanche" and "Van Raalte" and
variations and formatives thereof (collectively, the
"Principal Trademarks"); and the Company has the right to use,
pursuant to trademark license agreements (collectively, the
"Licenses"), other names and marks currently employed by them
in connection with the business now operated by them
(including, without limitation, "VALENTINO INTIMO", "SCAASI",
"WHITE STAG", "CATALINA", "CALVIN KLEIN" (for men's
accessories), "CHAPS BY RALPH LAUREN", and "FRUIT OF THE
LOOM"); and (i) neither the Company nor any of its
Subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of
the Principal Trademarks which, singularly or in the
aggregate, if the subject of an unfavorable final
determination, would result in any material adverse change in
the ability of the Company and its Subsidiaries, taken as a
whole to conduct their business as described in the
Prospectuses; (ii) the Company and each of its Subsidiaries
has fulfilled and performed all of its material obligations
with respect to the Licenses and the Licenses remain in full
force and effect; (iii) to the best of the Company's
knowledge, no event
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<PAGE>
has occurred with respect to the Licenses which would result
in a material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects
of the Company and its Subsidiaries, considered as one
enterprise; and (iv) to the best of the Company's knowledge,
the Calvin Klein Trademark 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, indenture or instrument to which
it is a party or by which it is bound, which violation or
default could affect (a) ownership by the Trust of the
trademarks which are the subject of its organizational
documents or (b) the Company's and its Subsidiaries right to
use the "CALVIN KLEIN" trademarks referred to in the
Prospectuses. The Company and its Subsidiaries own or have the
right to use pursuant to license, sublicense, agreement or
permission all Intellectual Property (as defined below)
necessary or desirable for the operation of the business as
previously conducted and proposed to be conducted in the
Prospectuses. (As used herein, "Intellectual Property" means
trademark and service marks, copyrights, know-how, patent and
tradesecrets rights, confidential and other proprietary
rights.)
(xxv) The Company and each of its Subsidiaries comply
in all material respects with all Environmental Laws (as
defined below) except to the extent that failure to comply
with such Environmental Laws would not have a material adverse
effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise. Neither the
Company nor any of its Subsidiaries (i) is the subject of any
pending or, to the knowledge of the Company, threatened
federal, state or local investigation evaluating whether any
remedial action by the Company or any Subsidiary is needed to
respond to a release of any Hazardous Materials (as defined
below) into the environment, resulting from the Company's or
any of its Subsidiaries' business operations or ownership or
possession of any of their properties or assets or (ii) is in
contravention of any Environmental Laws that, in the case of
(i) or (ii), might be expected to have a material adverse
effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise. Neither the
Company nor any Subsidiary has received any notice or claim,
nor are there pending or, to the knowledge of the Company,
threatened lawsuits against them, with respect to violations
of an Environmental Law or in connection with any release of
any Hazardous Material into the environment that, in the
aggregate, if the subject of any unfavorable
13
<PAGE>
decision, ruling or finding, might have a material adverse
effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise. As used herein,
"Environmental Laws" means any foreign, federal, state or
local law or regulation applicable to the Company's or any of
its Subsidiaries' business operations or ownership or
possession of any of their properties or assets relating to
environmental matters, and "Hazardous Materials" means those
substances that are regulated by or form the basis of
liability under any Environmental Laws.
(xxvi) All United States federal income tax returns
of the Company and its Subsidiaries required by law to be
filed have been filed and all taxes shown by such returns or
otherwise assessed, which are due and payable, have been paid,
except tax assessments, if any, as are being contested in good
faith and as to which adequate reserves have been provided.
Except as disclosed in the Prospectuses, all other franchise
and income tax returns of the Company and its Subsidiaries
required to be filed pursuant to applicable foreign, state or
local law have been filed, except insofar as the failure to
file such returns would not have a material adverse effect on
the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, and all taxes
shown on such returns or otherwise assessed which are due and
payable have been paid, except for such taxes, if any, as are
being contested in good faith and as to which adequate
reserves have been provided. To the best of the Company's
knowledge, the charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of any income and
corporate franchise tax liability for any years not finally
determined are adequate to meet any assessments or
re-assessments for additional income or corporate franchise
tax for any years not finally determined, except as disclosed
in the Prospectuses and except to the extent of any inadequacy
that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xxvii) The Company has obtained the written
agreements of each of (i) Linda J. Wachner, William S.
Finkelstein, Stanley P. Silverstein, Wallis H. Brooks, Joseph
A. Califano, Jr., Andrew G. Galef, Stewart A. Resnick and
Robert D. Walter, in the forms previously furnished to you
that, for a period of 90 days from the date hereof and (ii)
from Calvin Klein, Inc., in the form previously furnished to
you, that until October 30, 1995, such parties will not,
without the prior written consent of Merrill Lynch on behalf
of the Underwriters, directly or indirectly, sell, offer to
sell, grant any
14
<PAGE>
option for the sale of, or otherwise dispose of any shares of
Common Stock or securities or rights convertible into or
exercisable or exchangeable for Common Stock, other than with
respect to Linda J. Wachner with respect to the sale of the
Offered Shares pursuant to this Agreement and the
International Purchase Agreement.
(xxviii) Except as set forth in the Prospectuses,
there are no holders of securities (debt or equity) of the
Company, or holders of rights (including, without limitation,
preemptive rights), warrants or options to obtain securities
of the Company or its Subsidiaries, who have the right to
request the Company to register securities held by them under
the 1933 Act, other than holders who will not have such rights
for the 90-day period after the date hereof (or, in the case
of Calvin Klein, Inc., until October 30, 1995), or who have
waived their rights with respect to the inclusion of their
securities in the registration statement on Form S-3 relating
to the Offered Shares.
(xxix) The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general and specific
authorizations; (ii) transactions are recorded as necessary to
permit preparations of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(b) The Selling Stockholder represents and warrants to, and
agrees with, each of the U.S. Underwriters as follows:
(i) The Selling Stockholder is not prompted to sell
the Offered Shares to be sold by the Selling Stockholder by
any information concerning the Company that is not set forth
in the Prospectuses or other documents filed by the Company
with the Commission pursuant to the periodic reporting and
other informational requirements of the Exchange Act.
(ii) The Selling Stockholder does not have any
knowledge or any reason to believe that the Registration
Statement or the Prospectuses (or any amendment or supplement
thereto or any documents incorporated by reference therein)
contain any untrue statements of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the
15
<PAGE>
statements therein not misleading; except that the foregoing
shall only apply to statements in or omissions from any such
document in reliance upon, and in conformity with, information
furnished to the Company by or on behalf of the Selling
Stockholder, specifically for use in the preparation thereof.
(iii) This Agreement and the International Purchase
Agreement have been, and the U.S. Price Determination
Agreement and the International Price Determination Agreement
on the date thereof will be, duly executed and delivered by
such Selling Stockholder.
(iv) Except as set forth in the Prospectuses, there
is no action, suit, investigation (of which the Selling
Stockholder has received written notice) or proceeding before
or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the
Selling Stockholder, threatened to which the Selling
Stockholder is or would be a party or of which the property of
the Selling Stockholder is or may be subject, that (i) seeks
to restrain, enjoin, prevent the consummation of or otherwise
challenge the sale of Offered Shares by the Selling
Stockholder or any of the other transactions contemplated
hereby or (ii) questions the legality or validity of any such
transactions or seeks to recover damages or obtain other
relief in connection with any such transactions.
(v) No authorization, approval, consent or license of
any government, governmental instrumentality or court (other
than under the 1933 Act and the 1933 Act Regulations and the
securities or blue sky laws of the various states) is required
for the execution and delivery by the Selling Stockholder of
this Agreement, the International Purchase Agreement, the U.S.
Price Determination Agreement and the International Price
Determination Agreement and the valid sale and delivery of the
Offered Shares to be sold by the Selling Stockholder hereunder
and thereunder.
(vi) The execution and delivery of this Agreement,
the International Purchase Agreement, the U.S. Price
Determination Agreement and the International Price
Determination Agreement by the Selling Stockholder, the sale
of the Offered Shares by the Selling Stockholder hereunder and
thereunder, the compliance by the Selling Stockholder with all
of the provisions of this Agreement, the International
Purchase Agreement, the U.S. Price Determination Agreement and
the International Price Determination Agreement and the
consummation of the transactions herein and therein
contemplated will not result in a breach by the Selling
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<PAGE>
Stockholder of, or constitute a default by the Selling
Stockholder under, any agreement, instrument, decree, judgment
or order to which the Selling Stockholder is a party or by
which the Selling Stockholder may be bound or the properties
of the Selling Stockholder may be subject.
(vii) The Selling Stockholder has, and will at the
Closing Time have, good and valid title to the U.S. Shares to
be sold by the Selling Stockholder pursuant to this Agreement,
free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind; and, upon delivery
of such U.S. Shares and payment of the purchase price therefor
as contemplated in this Agreement and the International
Purchase Agreement, each of the U.S. Underwriters will receive
good and valid title to the U.S. Shares purchased by it from
the Selling Stockholder, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any
kind.
(viii) Certificates for all of the Offered Shares to
be sold by the Selling Stockholder pursuant to this Agreement
and the International Purchase Agreement, in suitable form for
transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures
guaranteed will be delivered to the U.S. Underwriters pursuant
to this Agreement and the Managers pursuant to the
International Purchase Agreement.
(ix) The Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to cause
or result in stabilization or manipulation of the price of the
Common Stock; and the Selling Stockholder has not distributed
and will not distribute any prospectus (as such term is
defined in the 1933 Act and the 1933 Act Regulations) in
connection with the offering and sale of the Offered Shares
other than any preliminary prospectus filed with the
Commission or the Prospectuses or other material permitted by
the 1933 Act or the 1933 Act Regulations.
(c) Any certificate signed by any officer of the Company or
any Subsidiary and delivered to you or to Fried, Frank, Harris, Shriver &
Jacobson as counsel for the Underwriters at or prior to the Closing Time
pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such Subsidiary, as the
case may be, to each U.S. Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Stockholder as such and
delivered to you or to counsel for the Underwriters at or prior to the Closing
Time pursuant to the terms of this Agreement or the transactions
17
<PAGE>
contemplated hereby shall be deemed a representation and warranty by the Selling
Stockholder to each U.S. Underwriter, as to the matters covered thereby.
Section 2. Sale and Delivery to the U.S. Underwriters;
Closing. (a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Company
agrees to sell to each U.S. Underwriter, severally and not jointly, and each
U.S. Underwriter agrees, severally and not jointly, to purchase from the
Company, at the purchase price per share set forth in the U.S. Price
Determination Agreement, that proportion of the number of Initial U.S. Shares
being sold by the Company which the number of Initial Shares set forth in
Schedule A opposite the name of such U.S. Underwriter (plus such additional
number of Initial U.S. Shares that such U.S. Underwriter may become obligated to
purchase pursuant to Section 11 hereof) bears to the total number of Initial
U.S. Shares subject, in each case, to such adjustments as the U.S. underwriters
in their discretion shall make to eliminate any sale or purchases of fractional
shares.
(b) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Selling
Stockholder agrees to sell to each U.S. Underwriter, severally and not jointly,
and each U.S. Underwriter agrees, severally and not jointly, to purchase from
the Selling Stockholder, at the purchase price per share set forth in the U.S.
Price Determination Agreement, that proportion of the number of Initial U.S.
Shares being sold by the Selling Stockholder which the number of Initial U.S.
Shares set forth in Schedule A opposite the name of such U.S. Underwriter (plus
such additional number of Initial U.S. Shares that such U.S. Underwriter may
become obligated to purchase pursuant to Section 11 hereof) bears to the total
number of Initial U.S. Shares, subject, in each case, to such adjustments as the
U.S. Underwriters in their discretion shall make to eliminate any sales or
purchases of fractional shares.
(c) If the Company has elected not to rely upon Rule 430A, the
initial public offering price per share for the Initial U.S. Shares and the
purchase price per share for the Initial U.S. Shares to be paid by the several
U.S. Underwriters shall be agreed upon and set forth in the U.S. Price
Determination Agreement, dated the date hereof, and an amendment to the
Registration Statement containing such per share price information will be filed
before the Registration Statement becomes effective.
(d) If the Company has elected to rely upon Rule 430A, the
initial public offering price per share for the Initial U.S. Shares and the
purchase price per share for the Initial U.S. Shares to be paid by the several
U.S. Underwriters shall be agreed upon and set forth in the U.S. Price
Determination Agreement. In the event that the U.S. Price Determination
Agreement has not been executed by the close of business on the fourteenth
business day following the date on which the Registration Statement becomes
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effective, this Agreement shall terminate forthwith, without liability of any
party to any other party except that Sections 7 and 8 shall remain in effect.
(e) In addition, on the basis of the representations,
warranties and covenants herein contained, and subject to the terms and
conditions herein set forth, the Company and the Selling Stockholder hereby
grant options to the Underwriters, severally and not jointly, to purchase up to
an additional 1,440,000 shares of Common Stock at the same purchase price per
share as shall be applicable to the Initial U.S. Shares, of which 1,152,000
shares shall be the pro rata portion of the U.S. Underwriters (consisting of
1,032,000 and 120,000 shares of Common Stock from the Company and the Selling
Stockholder, respectively) and 288,000 shares shall be the pro rata portion of
the Managers. The option hereby granted to the U.S. Underwriters will expire 30
days after the date upon which the Registration Statement becomes effective or,
if the Company has elected to rely upon Rule 430A, the date of the U.S. Price
Determination Agreement, and, in any case, may be exercised in whole or from
time to time in part only for the purpose of covering over-allotments that may
be made in connection with the offering and distribution of the Initial Shares
upon delivery of notice by the U.S. Representatives and the Lead Managers to the
Company setting forth the number of Option Shares as to which the several U.S.
Underwriters are exercising the option, and the time and date of payment and
delivery thereof. Such time and date of delivery (the "Date of Delivery") shall
be determined by you but shall not be later than three full business days after
the exercise of such option, nor in any event prior to the Closing Time, unless
otherwise agreed by Merrill Lynch and the Company. If the option is exercised as
to all or any portion of the Option Shares, the U.S. Option Shares as to which
the option is exercised shall be purchased by the U.S. Underwriters, severally
and not jointly, in the respective proportions that bear the same relationship
to the number of U.S. Option Shares to be purchased at the Date of Delivery as
the number of Initial U.S. Shares set forth opposite the name of each U.S.
Underwriter in Schedule A hereto bears to the total number of Initial U.S.
Shares (such proportions are hereinafter referred to as each U.S. Underwriter's
"underwriting obligation proportion").
(f) Payment of the purchase price for, and delivery of
certificates for, the Initial U.S. Shares shall be made at the offices of Fried,
Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004,
or at such other place as shall be agreed upon by the Company, the Selling
Stockholder and you, at 10:00 A.M. (New York time) either (x) on the third full
business day after the effective date of the Registration Statement, or (y) if
the Company has elected to rely upon Rule 430A, on the third full business day
after execution of the U.S. Price Determination Agreement (unless, in either
case, postponed pursuant to Section 11 or 12), or at such other time not more
than ten full business days thereafter as you, the Company and the Selling
Stockholder shall determine (such date and time of payment and delivery being
herein called the "Closing Time"). In addition, in the event that any or all of
the U.S. Option Shares are
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purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Shares shall be made at the
offices of Fried, Frank, Harris, Shriver & Jacobson set forth above, or at such
other place as the Company and you shall determine, on the Date of Delivery as
specified in the notice from you to the Company. Payment shall be made to the
Selling Stockholder and the Company by certified or official bank check or
checks or wire transfer in New York Clearing House funds payable to the order of
the Company and to the Selling Stockholder, as the case may be, against delivery
to you for the respective accounts of the several U.S. Underwriters of
certificates for the U.S. Shares to be purchased by them.
(g) Certificates for the Initial U.S. Shares and U.S. Option
Shares to be purchased by the U.S. Underwriters shall be in such denominations
and registered in such names as you may request in writing at least one full
business day before the Closing Time or the Date of Delivery, as the case may
be. The certificates for the Initial U.S. Shares and U.S. Option Shares will be
made available in New York City for examination and packaging by you not later
than 3:00 P.M. (New York time) on the last business day prior to the Closing
Time or the Date of Delivery, as the case may be.
(h) It is understood that each U.S. Underwriter has authorized
the U.S. Representatives, for its account, to accept delivery of, receipt for,
and make payment of the purchase price for, the U.S. Shares that it has agreed
to purchase. You, individually and not as U.S. Representatives, may (but shall
not be obligated to) make payment of the purchase price for the U.S. Shares or
U.S. Option Shares to be purchased by any U.S. Underwriter whose check or checks
shall not have been received by the Closing Time or the Date of Delivery, as the
case may be.
(i) The several and not joint obligations of the Company and
the Selling Stockholder, to sell to each U.S. Underwriter the Initial U.S.
Shares, the obligation of the Company to sell to each U.S. Underwriter the U.S.
Option Shares, respectively, and the several and not joint obligations of the
U.S. Underwriters to purchase and pay for the U.S. Shares, upon the terms and
subject to the conditions of this Agreement, are subject to the concurrent
closing of the sale of the International Shares and the International Option
Shares, respectively, to the Managers pursuant to the terms of the International
Purchase Agreement.
Section 3. Certain Covenants of the Company. The Company
covenants with each U.S. Underwriter as follows:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and, if the Company elects to rely
upon Rule 430A and subject to Section 3(b), will comply with the requirements of
Rule 430A and will notify you promptly, (i) when the Registration Statement, or
any post-effective amendment to
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the Registration Statement, shall have become effective, or any supplement to
the Prospectuses or any amended Prospectuses shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission to amend the Registration Statement, to amend or supplement any
Prospectus or for additional information and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Offered Shares for
offering or sale in any jurisdiction, or of the institution or threatening of
any proceedings for any of such purposes. The Company will make every reasonable
effort to prevent the issuance of any such stop order or of any order preventing
or suspending such use and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment. If the Company elects to rely on Rule
434 under the 1933 Act Regulation, the Company will use an abbreviated term
sheet that complies with the requirements of Rule 434 under the 1933 Act
Regulations. If the Company elects not to rely on Rule 434, the Company will
provide the U.S. Underwriters with copies of the U.S. Prospectus, in such number
as the U.S. Underwriters may reasonably request, and file or transmit for filing
with the Commission such U.S. Prospectus in accordance with Rule 424(b) of the
1933 Act Regulations by the close of business in New York on the business day
immediately succeeding the date of the U.S. Price Determination Agreement. If
the Company elects to rely on Rule 434 of the 1933 Act Regulations, the Company
will provide the U.S. Underwriters with copies of the abbreviated term sheet, in
such number as the U.S. Underwriters may reasonably request, and file or
transmit for filing with the Commission a U.S. Prospectus complying with Rule
434(c)(2) of the 1933 Act Regulations in accordance with Rule 424(b) of the 1933
Act Regulations by the close of business in New York or the business day
immediately succeeding the date of the U.S. Price Determination Agreement.
(b) The Company will not at any time file or make any
amendment to the Registration Statement, or any amendment or supplement thereto,
or any document incorporated by reference therein (i) if the Company has not
elected to rely upon Rule 430A, to the Prospectuses or (ii) if the Company has
elected to rely upon Rule 430A, to either the prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectuses,
of which you shall not have previously been advised and furnished a copy or to
which you or Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S.
Underwriters shall reasonably object.
(c) The Company has furnished or will furnish to you and your
counsel, without charge, signed copies of the Registration Statement (as
originally filed) and of all amendments thereto (including exhibits filed
therewith and documents incorporated by reference therein), whether filed before
or after the Registration Statement becomes effective, copies of all exhibits
and documents filed therewith, and signed copies of all consents and
certificates of experts, and has furnished or will furnish to you, for each
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<PAGE>
other U.S. Underwriter, one conformed copy of the Registration Statement as
originally filed and each amendment thereto.
(d) The Company will deliver to each U.S. Underwriter, without
charge, from time to time until the effective date of the Registration Statement
(or, if the Company has elected to rely upon Rule 430A, until the time the U.S.
Price Determination Agreement is executed and delivered), as many copies of each
preliminary prospectus as such U.S. Underwriter may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will deliver to each U.S. Underwriter, without charge, as
soon as the Registration Statement shall have become effective (or, if the
Company has elected to rely upon Rule 430A, as soon as practicable after the
U.S. Price Determination Agreement has been executed and delivered) and
thereafter from time to time as requested during the period when the
Prospectuses are required to be delivered under the 1933 Act, such number of
copies of the Prospectuses (as supplemented or amended) as such U.S. Underwriter
may reasonably request.
(e) The Company will comply to the best of its ability with
the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Offered
Shares as contemplated in this Agreement, the International Purchase Agreement
and the Prospectuses. If at any time when a prospectus is required by the 1933
Act to be delivered in connection with sales of the Offered Shares any event
shall occur or condition exist as a result of which it is necessary, in the
opinion of counsel for the U.S. Underwriters, to amend the Registration
Statement or amend or supplement any Prospectus in order that the Prospectuses
will not include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not misleading
in the light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration Statement or amend or supplement any
Prospectus in order to comply with the requirements of the 1933 Act, the 1933
Act Regulations, the 1934 Act or the 1934 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such untrue statement or
omission or to make the Registration Statement or the Prospectuses comply with
such requirements.
(f) The Company will endeavor, in cooperation with the U.S.
Underwriters, to qualify the Offered Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as you may
designate and to maintain such qualifications in effect for a period of not less
than one year from the effective date of the Registration Statement; provided,
however, that neither the Company nor any Subsidiary shall be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so
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<PAGE>
qualified or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. The Company will file such
statements and reports as may be required by the laws of each jurisdiction in
which the Offered Shares have been qualified as above provided.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the close of
the period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations), covering
a period of 12 months beginning after the effective date of the Registration
Statement but not later than the first day of the Company's fiscal quarter next
following such effective date.
(h) For a period of 90 days from the date hereof, the Company
will not, without the prior written consent of Merrill Lynch on behalf of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, other than to
(i) the U.S. Underwriters pursuant to this Agreement and the Managers pursuant
to the International Purchase Agreement and (ii) eligible participants in the
Company's employee stock plans pursuant to the terms thereof as in effect on the
date hereof.
(i) The Company will use its best efforts to effect the
listing of the Common Stock on the New York Stock Exchange on the date of the
U.S. Price Determination Agreement.
(j) The Company, during the period when the Prospectuses are
required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Sections 13, 14
or 15 of the 1934 Act subsequent to the time the Registration Statement becomes
effective.
(k) For a period of five years after the Closing Time, the
Company will furnish to you and each U.S. Underwriter that so requests copies of
all annual reports, quarterly reports and current reports filed with the
Commission on Forms 10-K and 10-Q and, to the extent requested, Form 8-K or such
other similar forms as may be designated by the Commission, and such other
documents, reports and information as shall be furnished by the Company to its
stockholders generally.
(l) If the Company has elected to rely upon Rule 430A, it will
take such steps as it deems necessary to ascertain promptly whether the forms of
prospectuses transmitted for filing under Rule 424(b) were received for filing
by the Commission and, in the event that they were not, it will promptly file
such prospectuses.
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<PAGE>
(m) The Company has complied, and will comply, with all of the
provisions of Florida H.B. 1771, as codified in sec. 517.075 Florida Statutes,
1987, as amended, and all regulations promulgated thereunder relating to issuers
or their affiliates doing business with the government of Cuba or with any
person or affiliate located in Cuba.
(n) The Company will use the net proceeds received by it from
the sale of the Offered Shares in the manner specified in the Prospectuses under
the caption "Use of Proceeds."
Section 4. Payment of Expenses. (a) The Company will pay all
expenses incident to the performance of its obligations under this Agreement and
the International Purchase Agreement, including (i) the printing and filing of
the Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectuses and the
Prospectuses and any amendments or supplements thereto, and the cost of
furnishing copies thereof to the Underwriters, (ii) the copying or printing, as
applicable, and distribution of this Agreement (including the U.S. Price
Determination Agreement), the Intersyndicate Agreement among the U.S.
Underwriters and the Managers, the International Purchase Agreement (including
the International Price Determination Agreement), the Agreement among Managers,
the certificates for the Offered Shares and a survey of state securities or blue
sky laws (the "Blue Sky Survey"), (iii) the delivery of the certificates for the
Offered Shares to the Underwriters, including any capital duties, stamp duties
and stock or other transfer taxes payable upon the sale of the Offered Shares to
the Underwriters and the transfer of the Offered Shares between the U.S.
Underwriters and the Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisers, (v) the qualification of the Offered
Shares under the applicable securities laws in accordance with Section 3(f) and
any filing fees for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and reasonable fees and
disbursements of Fried, Frank, Harris, Shriver & Jacobson as counsel for the
Underwriters in connection therewith and in connection with the Blue Sky Survey,
(vi) the fees and expenses of any transfer agent or registrar for the Offered
Shares, and (vii) the listing fees and expenses incurred in connection with
listing the Offered Shares on the New York Stock Exchange, if any.
(b) The Selling Stockholder will pay any transfer taxes
attributable to the sale by the Selling Stockholder of Initial U.S. Shares and
any fees and disbursements of such Selling Stockholder's counsel, if any, not
paid or payable by the Company pursuant to Section 4(a) or otherwise.
(c) If this Agreement is terminated by you in accordance with
the provisions of Section 5, 10(a)(i) or 12, the Company shall reimburse the
U.S. Underwriters through you for all of their reasonable out-of-pocket
expenses, including the
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reasonable fees and disbursements of Fried, Frank, Harris, Shriver & Jacobson as
counsel for the U.S. Underwriters.
Section 5. Conditions of U.S. Underwriters' Obligations. In
addition to the execution and delivery of the U.S. Price Determination
Agreement, the obligations of the several U.S. Underwriters to purchase and pay
for the U.S. Shares that they have respectively agreed to purchase hereunder
(including any U.S. Option Shares as to which the option granted in Section 2(e)
has been exercised in the event the Date of Delivery determined by you is the
same as the Closing Time) are subject to the accuracy of the representations and
warranties of the Company and the Selling Stockholder contained herein
(including those contained in the U.S. Price Determination Agreement) or in
certificates of any officer of the Company or any Subsidiary and the Selling
Stockholder delivered pursuant to the provisions hereof, to the performance by
the Company and the Selling Stockholder of their respective obligations
hereunder in all material respects, and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:00 P.M. on the first business day
following the date hereof, or at such later time or on such later date as you
may agree to in writing with the approval of a majority in interest of the
several U.S. Underwriters; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company, shall have
been threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S.
Underwriters. If the Company has elected to rely upon Rule 430A, Prospectuses
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) At the Closing Time, you shall have received the signed
opinion of Stanley P. Silverstein, Esq., Vice President, General Counsel and
Secretary for the Company, dated as of the Closing Time, in the form attached
hereto as Exhibit B, together with reproduced copies of such opinions for each
of the U.S. Underwriters, and in form and substance satisfactory to counsel for
the U.S. Underwriters.
(c) At the Closing Time, you shall have received the signed
opinions of Skadden, Arps, Slate, Meagher & Flom, counsel for the Company, dated
as of the Closing Time, in the forms attached hereto as Exhibit C, together with
reproduced copies of such
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<PAGE>
opinions for each of the U.S. Underwriters, in form and substance satisfactory
to counsel for the U.S. Underwriters.
(d) At the Closing Time, you shall have received the signed
opinion of counsel for the Selling Stockholder reasonably acceptable to you, as
requested by the U.S. Underwriters, dated as of the Closing Time, in the form
attached hereto as Exhibit D, together with reproduced copies of such opinions
for each of the U.S. Underwriters, and in form and substance satisfactory to
counsel for the U.S. Underwriters.
(e) At the Closing Time, you shall have received the signed
opinion of Amster, Rothstein & Ebenstein, special license and trademark counsel
for the Company reasonably acceptable to you, as requested by the U.S.
Underwriters, dated as of the Closing Time, in the form attached hereto as
Exhibit E, together with reproduced copies of such opinions for each of the U.S.
Underwriters, and in form and substance satisfactory to counsel for the U.S.
Underwriters.
(f) At the Closing Time, you shall have received the favorable
opinion of Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S.
Underwriters, dated as of the Closing Time, together with reproduced copies of
such opinion for each of the other U.S. Underwriters, to the effect that the
opinions delivered pursuant to Sections 5(b), (c), (d) and (e) appear on their
face to be appropriately responsive to the requirements of this Agreement
except, specifying the same, to the extent waived by you, and with respect to
the legal existence of the Company, the Offered Shares, this Agreement and the
International Purchase Agreement, the Registration Statement, the Prospectuses
and such other related matters as you may require. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the federal law of the United States, the law of the State of New York and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to you. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers or other appropriate representatives of
the Company, the Subsidiaries and the Selling Stockholder and certificates of
public officials.
(g) At the Closing Time, (i) the Registration Statement and
the Prospectuses, as they may then be amended or supplemented, shall conform in
all material respects to the requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, the Company shall have
complied in all material respects with Rule 430A (if it shall have elected to
rely thereon), the Registration Statement, as it may then be amended or
supplemented, shall not contain 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 in the Registration Statement not misleading, and the Prospectuses,
as they may be amended or supplemented, shall not contain an untrue
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statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements in the Prospectuses, in light
of the circumstances under which they were made, not misleading, (ii) there
shall not have been, since the respective dates as of which information is given
in the Prospectuses, any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the Company and
its Subsidiaries, considered as one enterprise, whether or not arising in the
ordinary course of business, (iii) no action, suit or proceeding at law or in
equity shall be pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary that would be required to be set forth in the
Prospectuses other than as set forth therein and no proceedings shall be pending
or, to the knowledge of the Company, threatened against the Company or any
Subsidiary before or by any federal, state or other commission, board or
administrative agency that could reasonably be expected to materially and
adversely affect the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries, considered as
one enterprise, other than as set forth in the Prospectuses, (iv) the Company
shall have complied with all agreements and satisfied all conditions on their
parts to be performed or satisfied at or prior to the Closing Time, and (v) the
other representations and warranties of the Company set forth in Section 1(a)
shall be accurate as though expressly made at and as of the Closing Time. At the
Closing Time, you shall have received a certificate of the President or Vice
President and the chief financial officer or chief accounting officer of the
Company, dated as of the Closing Time, to such effect. As used in Section
5(g)(ii) and (iii), the term "Prospectuses" means the Prospectuses in the form
first used to confirm sales of the Offered Shares.
(h) At the Closing Time, (i) the representations and
warranties of the Selling Stockholder set forth in Section 1(b) and in any
certificates by or on behalf of the Selling Stockholder delivered pursuant to
the provisions hereof shall be accurate as though expressly made at and as of
the Closing Time, (ii) the Selling Stockholder shall have performed its
obligations under this Agreement and the International Purchase Agreement in all
material respects and (iii) you shall have received a certificate of the Selling
Stockholder to the effect that the representations and warranties of the Selling
Stockholder set forth in 1(b) are accurate as though expressly made at and as of
the Closing Time.
(i) At the time that this Agreement is executed by the
Company, you shall have received from Ernst & Young LLP ("E&Y") and Price
Waterhouse LLP letters dated such date, in form and substance satisfactory to
you, together with signed or reproduced copies of such letter for each of the
other U.S. Underwriters, confirming that they are independent public accountants
with respect to the Company within the meaning of the 1933 Act and the
applicable published 1933 Act Regulations, and stating in effect that (in the
case of E&Y, as to clause (i) and to the extent applicable clause (iii) only):
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(i) in their opinion, the audited financial
statements and the related financial statement schedules
included or incorporated by reference in the Registration
Statement and the Prospectuses which were audited by them
comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1933 Act
Regulations;
(ii) on the basis of procedures (but not an
examination in accordance with generally accepted auditing
standards) consisting of a reading of the minutes of all
meetings of the shareholders and directors of the Company and
its Subsidiaries and each committee of the board of directors
of each of the Company and its Subsidiaries, inquiries of
certain officials of the Company and its Subsidiaries
responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to
believe that:
(A) at September 2, 1995 and at a specified
date not more than five days prior to the date of this
Agreement, there was (i) any change in the consolidated
stockholders' equity or capital stock or any decrease in
consolidated current assets, with any current or total assets
or (ii) any increase in long-term debt of the Company and its
Subsidiaries as compared with the amounts shown in the latest
balance sheet included or incorporated by reference in the
Registration Statement, except in each case for changes,
decreases or increases which the Registration Statement
discloses have occurred or may occur; or
(B) for the period from January 7, 1995 to
September 2, 1995 and to a specified date not more than five
days prior to the date of this Agreement, there was any
decrease in consolidated net revenues, income from continuing
operations before income taxes, or in the total or per-share
amounts of consolidated net income or in other amounts
specified by the U.S. Representatives, in each case as
compared with the comparable period in the preceding year,
except in each case, for any decreases that the Registration
Statement discloses have occurred or may occur; and
(iii) in addition to the procedures referred to in
clause (ii) above, they have performed other specified
procedures, not constituting an audit, with respect to certain
amounts, percentages, numerical data and financial information
appearing or incorporated by reference in the Registration
Statement, which have previously been specified by you and
which shall be specified in such letter, and have compared
certain of such items with, and
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have found such items to be in agreement with, the accounting
and financial records of the Company and its Subsidiaries.
(j) At the Closing Time, you shall have received from Ernst &
Young LLP and Price Waterhouse letters, in form and substance satisfactory to
you and dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letters furnished pursuant to Section 5(i) above, except
that (i) the specified date referred to shall be a date not more than five days
prior to the Closing Time. In the event the Company relies on Rule 430A and the
final Prospectuses furnished to the Underwriters in connection with the offering
of the Offered Shares differ from the Prospectuses included in the Registration
Statement at the time of effectiveness, such letter shall update the procedures
referred to in clauses 5(i) above.
(k) At the Closing Time, you shall have received a certificate
of the Chief Financial Officer of the Company as to certain agreed upon
accounting matters not covered by the letters referred to in clauses 5(i) and
5(j) above.
(l) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions as they
may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Offered Shares as contemplated in this Agreement and
the International Purchase Agreement and the matters referred to in Section 5(g)
and in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company and the Selling
Stockholder, the performance of any of the covenants of the Company and the
Selling Stockholder, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling Stockholder
at or prior to the Closing Time in connection with the authorization, issuance
and sale of the Offered Shares as contemplated in this Agreement and the
International Purchase Agreement shall be reasonably satisfactory in form and
substance to you and to Fried, Frank, Harris, Shriver & Jacobson as counsel for
the Underwriters.
(m) The Offered Shares shall have been duly authorized for
listing by the New York Stock Exchange in the date of the U.S. Price
Determination Agreement, subject only to official notice of issuance thereof.
(n) The Selling Stockholder shall have delivered to you on or
prior to the Closing Time a properly completed and executed United States
Treasury Department Form W/9 (or other applicable form or statement specified by
Treasury Department regulations).
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be
29
<PAGE>
terminated by you on notice to the Company and the Selling Stockholder at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other party, except as provided in Section 4
herein. Notwithstanding any such termination, the provisions of Section 7 and 8
herein shall remain in effect.
Section 6. Conditions to Purchase of U.S. Option Shares. In
the event that the U.S. Underwriters exercise their option granted in Section 2
to purchase all or any of the U.S. Option Shares and the Date of Delivery
determined by you pursuant to Section 2 is later than the Closing Time, the
obligations of the several U.S. Underwriters to purchase and pay for the U.S.
Option Shares that they shall have respectively agreed to purchase pursuant to
this Agreement are subject to the accuracy of the representations and warranties
of the Company and the Selling Stockholder herein contained, to the performance
of the Company and the Selling Stockholder of their respective obligations in
all material respects hereunder and to the following further conditions:
(a) The Registration Statement shall remain effective at the
Date of Delivery, and at the Date of Delivery no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company or the Selling
Stockholder shall have been threatened by the Commission, and any request on the
part of the Commission for additional information shall have been complied with
to the reasonable satisfaction of Fried, Frank, Harris, Shriver & Jacobson as
counsel for the U.S. Underwriters.
(b) At the Date of Delivery, the provisions of Section 5(g)
shall have been complied with at and as of the Date of Delivery and, at the Date
of Delivery, you shall have received a certificate of the President or a Vice
President and chief financial officer or chief accounting officer of the Company
with respect to the provisions of Section 5(g), dated as of the Date of
Delivery, to such effect.
(c) At the Date of Delivery, the provisions of Section 5(h)
shall have been complied with at and as of the Date of Delivery.
(d) At the Date of Delivery, you shall have received the
favorable opinions of Stanley P. Silverstein, Esq.,Vice President, General
Counsel and Secretary of the Company and, Skadden, Arps, Slate, Meagher & Flom,
counsel for the Company together with reproduced copies of such opinion for each
of the other U.S. Underwriters in form and substance satisfactory to Fried,
Frank, Harris, Shriver & Jacobson as counsel for the U.S. Underwriters, dated as
of the Date of Delivery, relating to the Option Shares and otherwise to the same
effect as the opinions required by Sections 5(b), (c), (d) and (e).
30
<PAGE>
(e) At the Date of Delivery, you shall have received the
favorable opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
U.S. Underwriters, dated as of the Date of Delivery, relating to the U.S. Option
Shares and otherwise to the same effect as the opinion required by Section 5(f).
(f) At the Date of Delivery, you shall have received letters
from Ernst & Young LLP in form and substance satisfactory to you and dated as of
the Date of Delivery, to the effect that they reaffirm the statements made in
the letter furnished pursuant to Section 5(i), except that the specified date
referred to shall be a date not more than five days prior to the Date of
Delivery.
(g) At the Date of Delivery, Fried, Frank, Harris, Shriver &
Jacobson as counsel for the U.S. Underwriters shall have been furnished with all
such documents, certificates and opinions as they may reasonably request for the
purpose of enabling them to pass upon the sale of the Option Shares as
contemplated in this Agreement and the matters referred to in Section 6(d) and
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the performance of any
of the covenants of the Company, or the fulfillment of any of the conditions
herein contained; and all actions taken by the Company at or prior to the Date
of Delivery in connection with the authorization, issuance and sale of the
Option Shares as contemplated in this Agreement shall be reasonably satisfactory
in form and substance to you and to Fried, Frank, Harris, Shriver & Jacobson as
counsel for the U.S. Underwriters.
Section 7. Indemnification. (a) The Company agrees to
indemnify and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of Section 15 of the 1933 Act
to the extent and in the manner set forth in clauses (i), (ii) and (iii) below.
In addition, subject to subsection (d) of this Section, the Selling Stockholder,
severally and not jointly, agrees to indemnify and hold harmless each U.S.
Underwriter and each person, if any, who controls any U.S. Underwriter within
the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of an
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, if applicable,
or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue
statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or
any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements
31
<PAGE>
therein, in the light of the circumstances under which they
were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company and the
Selling Stockholder; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to the last sentence of Section
7(c), fees and disbursements of counsel chosen by you),
reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by any U.S. Underwriter expressly
for use in the Registration Statement (or any amendment thereto) and (ii) such
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any U.S. Underwriter (or any persons controlling such U.S.
Underwriter) from whom the person asserting such loss, claim, damage or
liability purchased the Offered Shares which are the subject thereof if such
person did not receive a copy of the U.S. Prospectus (or the U.S. Prospectus as
amended or supplemented) at or prior to the confirmation of the sale of such
Offered Shares to such person in any case where such delivery is required by the
1933 Act and the untrue statement or omission or alleged untrue statement or
omission of a material fact contained in such preliminary prospectus was
corrected in the U.S. Prospectus (or the U.S. Prospectus as amended or
supplemented).
In making a claim for indemnification under this Section 7
(other than pursuant to clause (a)(iii) of this Section 7) or contribution under
Section 8 by the Company or the Selling Stockholder, the indemnified parties may
proceed against either (i) both the Company and the Selling Stockholder or (ii)
the Company only, but may not
32
<PAGE>
proceed solely against the Selling Stockholder. In the event that the
indemnified parties are entitled to seek indemnity or contribution hereunder
against any loss, liability, claim, damage and expense incurred with respect to
a final judgment from a trial court then, as a precondition to any indemnified
party obtaining indemnification or contribution from the Selling Stockholder,
the indemnified parties shall first obtain a final judgment from a trial court
that such indemnified parties are entitled to indemnity or contribution under
this Agreement with respect to such loss, liability, claim, damage or expense
(the "Final Judgment") from the Company and the Selling Stockholder and shall
seek to satisfy such Final Judgment in full from the Company by making a written
demand upon the Company for such satisfaction. Only in the event such Final
Judgment shall remain unsatisfied in whole or in part 45 days following the date
of receipt by the Company of such demand shall any indemnified party have the
right to take action to satisfy such Final Judgment by making demand directly on
the Selling Stockholder (but only if and to the extent the Company has not
already satisfied such Final Judgment, whether by settlement, release or
otherwise). The indemnified parties may exercise this right to first seek to
obtain payment from the Company and thereafter obtain payment from the Selling
Stockholder without regard to the pursuit by any party of its rights to the
appeal of such Final Judgment. The indemnified parties shall, however, be
relieved of their obligation to first obtain a Final Judgment, seek to obtain
payment from the Company with respect to such Final Judgment or, having sought
such payment, to wait such 45 days after failure by the Company to immediately
satisfy any such Final Judgment if (i) the Company files a petition for relief
under the United States Bankruptcy Code (the "Bankruptcy Code"), (ii) an order
for relief is entered against the Company in an involuntary case under the
Bankruptcy Code, (iii) the Company makes an assignment for the benefit of its
creditors, or (iv) any court orders or approves the appointment of a receiver or
custodian for the Company or a substantial portion of its assets. The foregoing
provisions of this paragraph are not intended to require any indemnified party
to obtain a Final Judgment against the Company or the Selling Stockholder before
obtaining reimbursement of expenses pursuant to clause (a)(iii) of this Section
7. However, the indemnified parties shall first seek to obtain such
reimbursement in full from the Company by making a written demand upon the
Company for such reimbursement. Only in the event such expenses shall remain
unreimbursed in whole or in part 45 days following the date of receipt by the
Company of such demand shall any indemnified party have the right to receive
reimbursement of such expenses from the Selling Stockholder by making written
demand directly on the Selling Stockholder (but only if and to the extent the
Company has not already satisfied the demand for reimbursement, whether by
settlement, release or otherwise). The indemnified parties shall, however, be
relieved of their obligation to first seek to obtain such reimbursement in full
from the Company or, having made written demand therefor, to wait such 45 days
after failure by the Company to immediately reimburse such expenses if (i) the
Company files a petition for relief under the Bankruptcy Code, (ii) an order for
relief is entered against the Company in an involuntary
33
<PAGE>
case under the Bankruptcy Code, (iii) the Company makes an assignment for the
benefit of its creditors, or (iv) any court orders or approves the appointment
of a receiver or custodian for the Company or a substantial portion of its
assets.
(b) Each U.S. Underwriter agrees, severally and not jointly,
to indemnify and hold harmless the Company, its directors, each of its officers
who signed the Registration Statement and, each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act and the Selling
Stockholder against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 7(a), as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished to the Company by
such U.S. Underwriter expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, if applicable, or such
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. Any indemnifying party may participate
at its own expense in the defense of such action. If it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved by the indemnified
parties defendant in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying party or parties be liable for
the fees and expenses of more than one counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdictions arising out of the same general allegations or circumstances.
(d) The Selling Stockholder shall not be responsible for the
payment of an amount, pursuant to this Section 7, which exceeds the net proceeds
received by the Selling Stockholder from the sale of the Offered Shares by such
Selling Stockholder hereunder and under the International Purchase Agreement.
34
<PAGE>
(e) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding. No indemnifying party shall be liable for any settlement of any
action or claim for monetary damages which an indemnified party may effect
without the written consent of the indemnifying party.
Section 8. Contribution. In order to provide for just and
equitable contribution in circumstances under which the indemnity provided for
in Section 7 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, subject to the last
paragraph of Section 7(b) hereof, the Company, the Selling Stockholder and the
U.S. Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by such indemnity incurred by
the Company, the Selling Stockholder and one or more of the U.S. Underwriters,
as incurred, in such proportion that (a) the U.S. Underwriters responsible for
that portion represented by the percentage that the underwriting discount
appearing on the cover page of the U.S. Prospectus in respect of the U.S. Shares
bears to the initial public offering price appearing thereon and (b) the Company
and the Selling Stockholder are severally liable for the balance on the same
basis as each of them would have been obligated to provide indemnification
pursuant to Section 7; provided, further, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls a U.S. Underwriter within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as the U.S. Underwriter, and each
director of the Company, each officer of the Company who signed the Registration
Statement, the Selling Stockholder and each director, officer or employee
thereof and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
Company and the Selling Stockholder. Notwithstanding the provisions of this
Section 8, the Selling Stockholder shall not be required to contribute any
amount under this Section 8 in excess of the amount by which the proceeds
received by such Selling Stockholder in connection herewith exceed the aggregate
amount such Selling Stockholder has otherwise paid pursuant hereto and to
Section 7(a).
Section 9. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Company, its officers and the Selling Stockholder the
set forth in or made pursuant to this Agreement will remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Company, the Selling Stockholder or any U.S.
35
<PAGE>
Underwriter or controlling person and will survive delivery of and payment for
the Offered Shares.
Section 10. Termination of Agreement. (a) You may terminate
this Agreement, by notice to the Company and the Selling Stockholder, at any
time at or prior to the Closing Time (i) if there has been, since the date as of
which information is given in the Prospectuses, any material adverse change, or
any development involving a prospective material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and its Subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, (ii) if there has occurred any
material adverse change in the financial markets in the United States or any
outbreak or escalation of hostilities or other calamity or crisis the effect of
which in each case is such as to make it, in your judgment, impracticable to
market the U.S. Shares or enforce contracts for the sale of the U.S. Shares,
(iii) if trading in any securities of the Company has been suspended by the
Commission or the New York Stock Exchange, or if trading generally on either the
American Stock Exchange or the New York Stock Exchange or in the
over-the-counter market has been suspended, or minimum or maximum prices for
trading have been fixed, or maximum ranges for prices for securities have been
required, by such exchanges or by order of the Commission, the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc. or any other governmental authority or (iv) if a banking
moratorium has been declared by either federal or New York authorities. As used
in this Section 10(a), the term "Prospectuses" means the Prospectuses in the
form first used to confirm sales of the Offered Shares.
(b) If this Agreement is terminated pursuant to this Section
10, such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 7 and 8 shall remain in effect.
(c) This Agreement may also terminate pursuant to the
provisions of Section 2(d), with the effect stated in such Section.
Section 11. Default by One or More of the U.S. Underwriters.
If one or more of the U.S. Underwriters shall fail at the Closing Time to
purchase the Initial U.S. Shares that it or they are obligated to purchase
pursuant to this Agreement (the "Defaulted U.S. Shares"), you shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted U.S. Shares in such amounts as may be
agreed upon and upon the terms set forth in this Agreement; if, however, you
have not completed such arrangements within such 24-hour period, then:
36
<PAGE>
(a) if the number of Defaulted U.S. Shares does not exceed 10%
of the total number of Initial U.S. Shares to be purchased pursuant to this
Agreement, the non-defaulting U.S. Underwriters shall be obligated to purchase
the full amount thereof in the proportions that their respective Initial U.S.
Shares underwriting obligation proportions bear to the underwriting obligation
proportions of all non-defaulting U.S. Underwriters, or
(b) if the number of Defaulted U.S. Shares exceeds 10% of the
total number of Initial U.S. Shares, this Agreement shall terminate without
liability on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section 11 shall relieve any
defaulting U.S. Underwriter from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either you or the Company or the Selling
Stockholder shall have the right to postpone the Closing Time for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectuses or in any other documents or arrangements. As used
herein, the term "U.S. Underwriter" includes any person substituted for a U.S.
Underwriter under this Section 11.
Section 12. Default by the Company or the Selling Stockholder.
(a) If the Company shall fail at the Closing Time to sell and deliver the number
of Offered Shares that it is obligated to sell, then this Agreement shall
terminate without any liability on the part of any non-defaulting party except
to the extent provided in Section 4 and except that the provisions of Sections 7
and 8 shall remain in effect. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.
(b) If the Selling Stockholder shall fail at the Closing Time
to sell and deliver the number of Offered Shares that she is obligated to sell,
then the U.S. Representatives may, at their option, by notice to the Company and
the Selling Stockholder either (a) terminate this Agreement without any
liability on the part of any non-defaulting party except to the extent provided
in Section 4 and except the provisions of Sections 7 and 8 shall remain in
effect or (b) elect to purchase the Offered Shares which the non-defaulting
party has agreed to sell thereunder. No action taken pursuant to this Section
shall relieve the Selling Stockholder from liability, if any, in respect of such
default.
Section 13. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to you or the U.S. Underwriters shall be directed to
you, c/o Merrill Lynch, Pierce, Fenner & Smith
37
<PAGE>
Incorporated at Merrill Lynch World Headquarters, North Tower, World Financial
Center, New York, New York 10261, attention of Ian B. MacTaggart with a copy to
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, NY
10004, attention of Valerie Ford Jacob, Esq.; and notices to the Company and the
selling stockholder shall be directed to the Company at 90 Park Avenue, New
York, New York 10016, attention of Stanley P. Silverstein, Esq. with a copy to
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, NY 10022,
attention of Kenneth J. Bialkin, Esq.
Section 14. Parties. This Agreement is made solely for the
benefit of the several U.S. Underwriters, the Selling Stockholder, the Company,
and, to the extent expressed, any person controlling the Company, or any of the
U.S. Underwriters, and the directors of the Company, the officers of the Company
who have signed the Registration Statement, and the executors, administrators,
successors and assigns of such persons and, no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from any of the
several U.S. Underwriters of the U.S. Shares. All of the obligations of the U.S.
Underwriters hereunder are several and not joint.
SECTION 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS. SPECIFIED TIMES OF THE DAY REFER TO NEW YORK CITY TIME.
Section 16. Jurisdiction. Each of the undersigned hereby
irrevocably submits in any suit, action or proceeding arising out of or in
relation to this Agreement, or any of the transactions contemplated hereby, to
the jurisdiction and venue of any federal or state court in the Borough of
Manhattan, City of New York, State of New York.
Section 17. Counterparts. This Agreement may be executed in
one or more counterparts and, when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the same
agreement.
Section 18. Representation of Underwriters. You will act for
the several U.S. Underwriters in connection with the transactions contemplated
by this Agreement, and any action under or in respect of this Agreement taken by
you as U.S. Representatives will be binding upon all U.S. Underwriters.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument
38
<PAGE>
will become a binding agreement among the Company, the Selling Stockholder and
the several U.S. Underwriters in accordance with its terms.
Very truly yours,
THE WARNACO GROUP, INC.
By________________________
Name:
Title:
________________________
Linda J. Wachner
Confirmed and accepted as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
OPPENHEIMER & CO., INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By _____________________________
Name:
Title:
For themselves and as U.S. Representatives of the
other U.S. Underwriters named in Schedule A.
39
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Initial
U.S. Shares to
U.S. Underwriters be Purchased
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................
Donaldson, Lufkin & Jenrette Securities Corporation.....................................
Bear, Stearns & Co. Inc.................................................................
Morgan Stanley & Co. Incorporated.......................................................
Oppenheimer & Co., Inc..................................................................
The Buckingham Research Group Incorporated .............................................
A.G. Edwards & Sons, Inc................................................................
Lehman Brothers Inc.....................................................................
J.P. Morgan Securities Inc..............................................................
Smith Barney Inc........................................................................
Sutro & Co. Incorporated................................................................
Tucker Anthony Incorporated.............................................................
UBS Securities Inc......................................................................
J.C. Bradford & Co......................................................................
Interstate/Johnson Lane Corporation.....................................................
Piper Jaffray Inc.......................................................................
The Robinson-Humphrey Company, Inc......................................................
Rodman & Renshaw, Inc...................................................................
Muriel Siebert & Co., Inc...............................................................
Wheat, First Securities, Inc............................................................
Total........................................................................... 7,680,000
=========
</TABLE>
<PAGE>
THE WARNACO GROUP, INC.
(a Delaware corporation)
7,680,000 Shares of Common Stock
U.S. PRICE DETERMINATION AGREEMENT
__________, 1995
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
OPPENHEIMER & CO., INC.
As Representatives of the several U.S. Underwriters
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Reference is made to the U.S. Purchase Agreement dated
___________, 1995 (the "U.S. Purchase Agreement") among The Warnaco Group, Inc.,
a Delaware corporation (the "Company"), Linda J. Wachner, Chairman, President
and Chief Executive Officer of the Company (the "Selling Stockholder"), and the
several U.S. Underwriters named in Schedule A thereto and hereto (the "U.S.
Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc.,
Morgan Stanley & Co. Incorporated and Oppenheimer & Co., Inc. are acting as
representatives (the "U.S. Representatives"). The U.S. Purchase Agreement
provides for the purchase by the U.S. Underwriters from the Company and the
Selling Stockholder, subject to the terms and conditions set forth therein, of
an aggregate of 7,680,000 shares (the "Initial U.S. Shares") of the Company's
common stock, par value $.01 per share. This Agreement is the U.S. Price
Determination Agreement referred to in the U.S. Purchase Agreement.
Pursuant to Section 2 of the U.S. Purchase Agreement, the undersigned
agree with the U.S. Representatives as follows:
<PAGE>
1. The initial public offering price per share for the Initial
U.S. Shares shall be $_________.
2. The purchase price per share for the Initial U.S. Shares to
be paid by the several U.S. Underwriters shall be $_______, representing an
amount equal to the initial public offering price set forth above, less
$________ per share.
The Company represents and warrants to each of the U.S. Underwriters
that the representations and warranties of the Company set forth in Section 1(a)
of the U.S. Purchase Agreement are accurate as though expressly made at and as
of the date hereof.
The Selling Stockholder represents and warrants to each of the U.S.
Underwriters that the representations and warranties of the Selling Stockholder
set forth in Section 1(b) of the U.S. Purchase Agreement are accurate as though
expressly made at and as of the date hereof.
As contemplated by Section 2 of the U.S. Purchase Agreement,
attached as Schedule A is a completed list of the several U.S. Underwriters,
which shall be part of this Agreement and the U.S. Purchase Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts and together with the U.S. Purchase
Agreement shall be a binding agreement among the U.S. Underwriters, the Company
and the Selling Stockholder in accordance with its terms and the terms of the
U.S. Purchase Agreement.
Very truly yours,
THE WARNACO GROUP, INC.
By: ______________________
Name:
Title
-----------------------
Linda J. Wachner
<PAGE>
Confirmed and accepted as of the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
MORGAN STANLEY & CO. INCORPORATED
OPPENHEIMER & CO., INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: _______________________________________
Name:
Title:
For themselves and as U.S. Representatives of the other U.S. Underwriters named
in Schedule A attached hereto.
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Initial
U.S. Shares to
U.S. Underwriters be Purchased
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................
Donaldson, Lufkin & Jenrette Securities Corporation.....................................
Bear, Stearns & Co. Inc.................................................................
Morgan Stanley & Co. Incorporated.......................................................
Oppenheimer & Co., Inc..................................................................
The Buckingham Research Group Incorporated .............................................
A.G. Edwards & Sons, Inc................................................................
Lehman Brothers Inc.....................................................................
J.P. Morgan Securities Inc..............................................................
Smith Barney Inc........................................................................
Sutro & Co. Incorporated................................................................
Tucker Anthony Incorporated.............................................................
UBS Securities Inc......................................................................
J.C. Bradford & Co......................................................................
Interstate/Johnson Lane Corporation.....................................................
Piper Jaffray Inc.......................................................................
The Robinson-Humphrey Company, Inc......................................................
Rodman & Renshaw, Inc...................................................................
Muriel Siebert & Co., Inc...............................................................
Wheat, First Securities, Inc............................................................
Total........................................................................... 7,680,000
=========
</TABLE>
<PAGE>
Annex A
Agreements
<PAGE>
THE WARNACO GROUP, INC.
(a Delaware corporation)
Offering of
2,208,000 Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
Dated: __________, 1995
<PAGE>
THE WARNACO GROUP, INC.
(a Delaware corporation)
Offering of
2,208,000 Shares of Common Stock
INTERNATIONAL PURCHASE AGREEMENT
____________, 1995
Merrill Lynch International Limited
Donaldson, Lufkin & Jenrette Securities Corporation
Bear, Stearns International Limited
Morgan Stanley & Co. International Limited
Oppenheimer International Ltd.
UBS Limited
As Representatives of the several Managers
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
The Warnaco Group, Inc., a Delaware corporation (the
"Company") and Linda J. Wachner, Chairman, President and Chief Executive Officer
of the Company (the "Selling Stockholder") confirm their respective agreements
with Merrill Lynch International Limited, Donaldson, Lufkin & Jenrette
Securities Corporation, Bear, Stearns International Limited, Morgan Stanley &
Co. International Limited, Oppenheimer International Ltd., UBS Limited, and each
of the other Underwriters named in Schedule A hereto (collectively, the
"Managers," which term shall also include any underwriter substituted as
hereinafter provided in Section 11), for whom Merrill Lynch International
Limited, Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns
International Limited, Morgan Stanley & Co. International Limited, Oppenheimer
International Ltd. and UBS Limited are acting as representatives (in such
capacity, the "Lead Managers"),
1
<PAGE>
with respect to (i) the sale by the Company and the purchase by the several
Managers, acting severally and not jointly, of an aggregate of 1,760,000 shares
of Class A Common Stock, par value $.01 per share, of the Company (the "Common
Stock"), (ii) the sale by the Selling Stockholder and the purchase by the
several Managers, acting severally and not jointly, of an aggregate of 160,000
shares of Common Stock and (iii) the grant by the Company to the Managers,
acting severally and not jointly, of the option described in Section 2(e) hereof
to purchase all or any part of the 288,000 additional shares of Common Stock to
cover over-allotments. The 1,920,000 shares of Common Stock (the "Initial
International Shares") and all or any part of the 288,000 shares of Common Stock
subject to the option described in Section 2(e) hereof (the "International
Option Shares") to be purchased by the Managers are collectively hereinafter
called the "International Shares." The 1,440,000 shares of Common Stock subject
to the option described in Section 2(e) hereof are hereinafter collectively
called the "Option Shares."
It is understood that the Company and the Selling Stockholder are entering
into an agreement, dated the date hereof (the "U.S. Purchase Agreement"),
providing for the issuance and sale by the Company and the sale by the Selling
Stockholder of 7,040,000 shares and 640,000 shares of Common Stock, respectively
(collectively, the "Initial U.S. Shares"), through arrangements with certain
underwriters in the United States and Canada (the "U.S. Underwriters" and,
together with the Managers, the "Underwriters"), for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("Merrill Lynch"), Donaldson, Lufkin & Jenrette
Securities Corporation, Bear, Stearns & Co. Inc., Morgan Stanley & Co.
Incorporated and Oppenheimer & Co., Inc. are acting as representatives (the
"U.S. Representatives") and the grant by the Company and the Selling Stockholder
to the U.S. Underwriters, acting severally and not jointly, of an option
described in Section 2(e) of the U.S. Purchase Agreement to purchase all or any
part of the U.S. Underwriters' pro rata portion of 1,032,000 and 120,000
additional shares of Common Stock, respectively, to cover over-allotments. It is
understood that the Company is not obligated to sell, and the Managers are not
obligated to purchase, any Initial International Shares unless all of the
Initial U.S. Shares are contemporaneously purchased by the U.S. Underwriters.
The International Shares and the U.S. Shares are hereinafter collectively
referred to as the "Offered Shares."
The Company and the Selling Stockholder understand that the
Managers will simultaneously enter into an agreement with the U.S. Underwriters
dated the date hereof (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Managers and the U.S.
Underwriters, under the direction of Merrill Lynch.
You have advised us that you and the other Managers, acting
severally and not jointly, desire to purchase the Initial International Shares
and, if the Managers so elect, the International Option Shares, and that you
have been authorized by the other
2
<PAGE>
Managers to execute this Agreement and the International Price Determination
Agreement referred to below on their behalf.
The initial public offering price per share for the
International Shares and the purchase price per share for the International
Shares to be paid by the several Managers shall be agreed upon by the Company,
the Selling Stockholder and the Lead Managers, acting on behalf of the several
Managers, and such agreement shall be set forth in a separate written instrument
substantially in the form of Exhibit A hereto (the "International Price
Determination Agreement"). The International Price Determination Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company, the Selling Stockholder and the Lead Managers and shall
specify such applicable information as included in Exhibit A hereto. The
offering of the International Shares will be governed by this Agreement, as
supplemented by the International Price Determination Agreement. From and after
the date of the execution and delivery of the International Price Determination
Agreement, this Agreement shall be deemed to incorporate, and all references
herein to "this Agreement" or "herein" shall be deemed to include, the
International Price Determination Agreement.
The initial public offering price per share and the purchase
price per share for the U.S. Shares to be paid by the U.S. Underwriters pursuant
to the U.S. Purchase Agreement shall be set forth in a separate agreement (the
"U.S. Price Determination Agreement"), the form of which is attached to the U.S.
Purchase Agreement. The purchase price per share for the U.S. Shares to be paid
by the several U.S. Underwriters shall be identical to the purchase price per
share for the International Shares to be paid by the several Managers hereunder.
This Agreement (including the related International Price Determination
Agreement) and the U.S. Purchase Agreement (including the related U.S. Price
Determination Agreement) are collectively referred to herein as the "Purchase
Agreements."
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 33-61701) covering the registration of the Offered Shares under the
Securities Act of 1933, as amended (the "1933 Act"), including the related
preliminary prospectus or preliminary prospectuses, and either (A) has prepared
and proposes to file, prior to the effective date of such registration
statement, an amendment to such registration statement, including final
prospectuses, or (B) if the Company has elected to rely upon Rule 430A ("Rule
430A") of the rules and regulations of the Commission under the 1933 Act (the
"1933 Act Regulations"), will prepare and file (i) prospectuses, in accordance
with the provisions of Rule 430A and Rule 424(b) ("Rule 424(b)") of the 1933 Act
Regulations, or (ii) a term sheet, in accordance with the provisions of Rule 434
("Rule 434") of the 1933 Act Regulations and Rule 424(b), as applicable,
promptly after execution and delivery of
3
<PAGE>
the International Price Determination Agreement.* The information, if any,
included in such prospectuses or term sheet, as the case may be, that was
omitted from any prospectus included in such registration statement at the time
it becomes effective but that is deemed, pursuant to Rule 430A(b) or Rule 434,
as the case may be, to be part of such registration statement at the time it
becomes effective is referred to herein as the "Rule 430A Information." Each
form of International Prospectus and form of U.S. Prospectus used before the
time such registration statement becomes effective, and any form of
International Prospectus and form of U.S Prospectus that omits the Rule 430A
Information that is used after such effectiveness and prior to the execution and
delivery of the International Price Determination Agreement or the U.S. Price
Determination Agreement, is herein called a "preliminary prospectus." If the
Company elects to rely on Rule 434, all references to the International
Prospectus shall be deemed to include, without limitation, the Form of
International Prospectus and the term sheet, taken together, provided to the
Managers by the Company in reliance on Rule 434 and all references to the U.S.
Prospectus shall be deemed to include, without limitation, the Form of U.S.
Prospectus and the term sheet, taken together, provided to the U.S. Underwriters
by the Company in reliance on Rule 434. If the Company files a registration
statement to register a portion of the Common Stock and relies on Rule 462(b)
for such registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference to
"Registration Statement" herein shall be deemed to be to both the registration
statement referred to above (No. 33-61701) and the Rule 462 Registration
Statement, as each such registration statement may be amended pursuant to the
1933 Act. Any reference to any preliminary prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the 1933 Act as of the date of such preliminary prospectus.
Such registration statement, including the exhibits thereto and the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act, as amended at the time it becomes effective and including, if applicable,
the Rule 430A Information, is herein called the "Registration Statement," and
the form of International Prospectus, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act and form of
U.S. Prospectus, including the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act included in the Registration
Statement at the time it becomes effective are herein called
--------
* Two forms of prospectus are to be used in connection with the offering
and sale of the Offered Shares: one relating to the International Shares
(the "Form of International Prospectus") and one relating to the U.S.
Shares (the "Form of U.S. Prospectus"). The Form of U.S. Prospectus is
identical to the Form of International Prospectus, except for the front
cover page, an "Underwriting," a "Legal Matters," an "Experts," an
"Available Information" and a "Documents Incorporated by Reference"
section and the back cover page.
4
<PAGE>
the "International Prospectus" and the "U.S. Prospectus," respectively, and,
collectively, the "Prospectuses" and, individually, a "Prospectus," except that,
if the final International Prospectus or U.S. Prospectus, as the case may be,
first furnished to the Managers or the U.S. Underwriters after the execution of
the International Price Determination Agreement or the U.S. Price Determination
Agreement for use in connection with the offering of the Offered Shares differs
from the prospectuses included in the Registration Statement at the time it
becomes effective (whether or not such prospectuses are required to be filed
pursuant to Rule 424(b)), the terms "International Prospectus," "U.S.
Prospectus," "Prospectuses" and "Prospectus" shall refer to the final
International Prospectus or U.S. Prospectus, as the case may be, first furnished
to the Managers or the U.S. Underwriters, as the case may be, for such use.
The Company and the Selling Stockholder understand that the
Mangers propose to make a public offering of the International Shares as soon as
you deem advisable after the Registration Statement becomes effective and the
International Price Determination Agreement has been executed and delivered.
Section 1. Representations and Warranties. (a) The Company
represents and warrants to and agrees with each of the Managers that:
(i) The Company meets the requirements for use of
Form S-3 under the 1933 Act, and when the Registration
Statement shall become effective, and if the Company has
elected to rely upon Rule 430A, on the date of the
International Price Determination Agreement or the U.S. Price
Determination Agreement, and on the effective or issue date of
each amendment or supplement to the Registration Statement or
the Prospectuses, and at the Closing Time referred to below,
and if any International Option Shares are purchased, up to
and including the Date of Delivery referred to below, (A) the
Registration Statement and any amendments and supplements
thereto will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations; (B)
neither the Registration Statement nor any amendment or
supplement thereto will contain 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; and (C) neither of the Prospectuses nor any
amendment or supplement to either of them include an untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, this representation
and warranty does not apply to statements or omissions from
the Registration Statement or the Prospectuses or any
amendments or supplements thereto made in reliance upon and in
conformity with
5
<PAGE>
information furnished or confirmed in writing to the Company
by or on behalf of any Underwriter through you or the U.S.
Representatives expressly for use in the Registration
Statement or the Prospectuses or any amendments or supplements
thereto.
(ii) The documents incorporated by reference in the
Prospectuses pursuant to Item 12 of Form S-3 under the 1933
Act, at the time they were filed with the Commission,
conformed in all material respects with the requirements of
the Securities Exchange Act of 1934, as amended (the "1934
Act"), and the rules and regulations of the Commission
thereunder (the "1934 Act Regulations"), and, when read
together with the information in the Prospectuses, at the time
the Registration Statement shall become effective, and if the
Company has elected to rely upon Rule 430A, on the date of the
International Price Determination Agreement or the U.S. Price
Determination Agreement, and on the effective or issue date of
each amendment or supplement to the Registration Statement or
the Prospectuses, and at the Closing Time referred to below,
and, if any Option Shares are purchased, on the Date of
Delivery referred to below, will not contain an untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading.
(iii) Ernst & Young LLP who are reporting upon the
audited consolidated financial statements and schedules
included or incorporated by reference in the Registration
Statement, are independent public accountants as required by
the 1933 Act, the 1934 Act, the 1933 Act Regulations and the
1934 Act Regulations.
(iv) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under this Agreement, the International Price Determination
Agreement, the U.S. Purchase Agreement and the U.S. Price
Determination Agreement, and this Agreement and the U.S.
Purchase Agreement have been, and the International Price
Determination Agreement and the U.S. Price Determination
Agreement on the date thereof will be, duly authorized,
executed and delivered by the Company.
(v) The consolidated financial statements included or
incorporated by reference in the Registration Statement and
the Prospectuses, together with the related schedules and
notes, present fairly the consolidated financial position of
the Company and its Subsidiaries (as
6
<PAGE>
hereinafter defined) as of the dates indicated and the
consolidated statements of operations, shareholders' equity
and cash flows of the Company and its Subsidiaries for the
periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout
the periods involved. The financial statement schedules, if
any, included or incorporated by reference in the Registration
Statement present fairly in accordance with GAAP the
information required to be stated therein and have been
compiled on a basis consistent with that of the audited
consolidated financial statements included in the Registration
Statement. The selected financial data included in the
Prospectuses present fairly in accordance with GAAP the
information shown therein and have been compiled on a basis
consistent with that of the audited consolidated financial
statements included in the Registration Statement.
(vi) The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority under
such laws to own, lease and operate its properties and to
conduct its business as described in the Prospectuses; and the
Company is duly qualified as a foreign corporation to transact
business and is in good standing under the laws of each other
jurisdiction in which the nature of its business or its
ownership or leasing of its properties requires qualification,
except to the extent that the failure to so qualify or be in
good standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs
or business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(vii) Each of the Company's significant subsidiaries
(as such term is defined in Regulation S-X promulgated by the
Commission, each such subsidiary is hereinafter referred to as
a "Significant Subsidiary," and all of the Company's
subsidiaries are collectively hereinafter referred to as the
"Subsidiaries") is a corporation duly incorporated and validly
existing under the laws of its jurisdiction of incorporation,
with power and authority to own, lease and operate its
properties and conduct its business as described in the
Prospectuses, is duly qualified as a foreign corporation to
transact business and is in good standing under the laws of
each jurisdiction in which the nature of its business or its
ownership or leasing of its properties required qualification,
except where the failure to be so qualified or in good
standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs
and business prospects of the Company and the Subsidiaries
considered as one enterprise; and all the outstanding shares
of capital stock of the Subsidiaries of the Company have
7
<PAGE>
been duly authorized and validly issued, are fully-paid and
non-assessable, and are owned by the Company (other than
directors' qualifying shares), directly or indirectly, free
and clear of all liens, encumbrances, security interests and
claims (other than pursuant to the Collateral Documents (as
defined under the $800,000,000 Credit Agreement, dated October
14, 1993, among the Company, Warnaco Inc., the Bank of Nova
Scotia and Citibank U.S.A.)); none of the outstanding shares
of capital stock of the Subsidiaries was issued in violation
of the preemptive or similar rights of any stockholder of such
corporation arising by operation of law, under the charter or
by-laws of any Subsidiary or under any agreement to which the
Company or any Subsidiary is a party.
(viii) The Company had at the date indicated in the
Prospectuses a duly authorized, issued and outstanding
capitalization as set forth in the Prospectuses under the
caption "Capitalization," and the Offered Shares will conform
in all material respects to the descriptions thereof
incorporated by reference into the Prospectuses.
(ix) The Offered Shares to be sold by the Company
pursuant to this Agreement and the U.S. Purchase Agreement
have been duly authorized and, when issued and delivered by
the Company upon receipt of the payment therefor in accordance
with this Agreement and the U.S. Purchase Agreement, will be
validly issued fully paid and non-assessable; such Offered
Shares are not subject to the preemptive or other similar
rights of any stockholder of the Company arising by operation
of law, under the charter and by-laws of the Company or under
any agreement to which the Company or any of its Subsidiaries
is a party.
(x) All of the outstanding shares of capital stock of
the Company, including the Offered Shares to be sold by the
Selling Stockholder pursuant to this Agreement and the U.S.
Purchase Agreement, have been duly authorized and validly
issued and are fully paid and non-assessable; and none of the
outstanding shares of Common Stock of the Company was issued
in violation of the preemptive or other similar rights or any
stockholder of the Company arising by operation of law, under
the charter or by-laws of the Company or under any agreement
to which the Company or any of its Subsidiaries is a party.
(xi) Except as disclosed in the Prospectuses, there
are no outstanding options, warrants or other rights calling
for issuance of, and no commitments, plans or arrangements to
issue, any shares of capital stock of
8
<PAGE>
the Company or any of its Subsidiaries or any security
convertible into or exchangeable for capital stock of the
Company or any of its Subsidiaries.
(xii) Since the respective dates as of which
information is given in the Registration Statement and the
Prospectuses, except as otherwise stated therein or
contemplated thereby, there has not been (A) any material
adverse change in the condition (financial or otherwise),
earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, (B)
any transaction entered into by the Company or any Subsidiary,
other than in the ordinary course of business, that is
material to the Company and its Subsidiaries, considered as
one enterprise, or (C) other than its regular quarterly
dividend, any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock.
(xiii) Neither the Company nor any Subsidiary is in
violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets
is subject, except for such defaults that would not in the
aggregate have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xiv) The execution, delivery and performance of this
Agreement, the International Price Determination Agreement,
the U.S. Purchase Agreement and the U.S. Price Determination
Agreement, the issuance, sale and delivery of the Offered
Shares, the consummation by the Company of the transactions
contemplated thereby and in the Registration Statement and
compliance by the Company with the terms of the foregoing have
been duly authorized by all necessary corporate action on the
part of the Company and do not and will not result in any
violation of the charter or by-laws of the Company or any
Subsidiary, and do not, and at the Closing Time will not,
conflict with, or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien or
encumbrance upon any property or assets of the Company or any
Subsidiary under (A) any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other
agreement or instrument to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary is bound
or to which any of their respective properties or assets are
subject or (B) any law, statute, rule, regulation,
9
<PAGE>
judgment, order, writ or decree applicable to the Company or
any of any government, governmental instrumentality or court,
domestic or foreign, having jurisdiction over the Company or
any Subsidiary or any of their respective properties, assets
or operations.
(xv) No authorization, approval, consent or license
of any government, governmental instrumentality or court
(other than under the 1933 Act and the 1933 Act Regulations
and the securities or blue sky laws of the various states) is
necessary in connection with the due authorization, execution,
delivery and performance by the Company of this Agreement, the
International Price Determination Agreement, the U.S. Purchase
Agreement and the U.S. Price Determination Agreement, and the
issuance, sale and delivery of the Offered Shares.
(xvi) Except as disclosed in the Prospectuses, there
is no action, suit or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign,
now pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary that is
required to be disclosed in the Registration Statement or
Prospectuses or that, if determined adversely to the Company
or any of its Subsidiaries, individually or in the aggregate
might have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise, or which might materially and
adversely affect the consummation of the transactions
contemplated in this Agreement, the U.S. Purchase Agreement
and in the Registration Statement.
(xvii) There are no contracts or documents of a
character to which the Company or any Subsidiary is a party or
by which any of them are bound required to be described in the
Registration Statement, the Prospectuses or the documents
incorporated by reference therein or to be filed as exhibits
thereto that are not described and filed as required.
(xviii) The Company and its Subsidiaries are in
compliance with, and each such entity has not received any
notice of any outstanding violation of, all laws, ordinances,
rules and regulations applicable to it and its operations
except, in either case, where any failure by the Company or
any Subsidiary to comply with any such law, regulation,
ordinance or rule would not have, individually or in the
aggregate, a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
10
<PAGE>
(xix) Neither the Company nor any of its affiliates
has taken or will take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or
result in stabilization or manipulation of the price of the
Common Stock; and neither the Company nor any of its
affiliates has distributed or will distribute any prospectus
(as such term is defined in the 1933 Act and the 1933 Act
Regulations) in connection with the offering and sale of the
Offered Shares other than any preliminary prospectus filed
with the Commission or the Prospectuses or other material
permitted by the 1933 Act or the 1933 Act Regulations.
(xx) The Company is not an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(xxi) No labor dispute exists with the Company's
employees or with employees of its Subsidiaries or, to the
knowledge of the Company, is imminent that could reasonably be
expected to materially and adversely affect the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xxii) The Company and each of its Subsidiaries have
good and marketable title to all properties and assets owned
by them, free and clear of all liens, encumbrances or
restrictions, except such as (A) are described in the
Prospectuses or (B) do not materially impair or interfere with
the current use made of such properties or could reasonably be
expected to materially and adversely affect the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise or (C) are neither material in
amount nor materially significant or (D) are granted for
borrowed money, in each case in relation to the business of
the Company and its Subsidiaries, considered as one
enterprise; all of the leases and subleases material to the
businesses of the Company and its Subsidiaries, considered as
one enterprise, and under which the Company or any Subsidiary
holds properties described in the Prospectuses, are in full
force and effect and neither the Company nor any Subsidiary
has received any notice of any claim of any sort that has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary under any of the leases or subleases mentioned
above or affecting or questioning the rights of the Company or
any Subsidiary, to the continued possession of the leased or
subleased premises under any such lease or sublease, which
claims, in the aggregate might be expected to have a material
adverse effect on the condition (financial or otherwise),
earnings,
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business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxiii) The Company and each of its Subsidiaries own
or possess all foreign and domestic governmental licenses,
permits, certificates, consents, orders, approvals and other
authorizations (collectively, "Governmental Licenses")
necessary to own or lease, as the case may be, and to operate
its properties and to carry on its business as presently
conducted, except where the failure to possess such
Governmental Licenses might be expected to have a material
adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise,
and neither the Company nor any Subsidiary has received any
notice of proceedings relating to revocation or modification
of any such Governmental Licenses that, singly or in the
aggregate, might be expected to have a material adverse effect
on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxiv) The Company, directly or through its
Subsidiaries, is the owner of record for the uses described in
the Prospectuses of the trademarks "WARNER'S", "HATHAWAY",
"OLGA", "CALVIN KLEIN" (for or in connection with men's and
boys' underwear, sleepwear, loungewear, bodywear and related
products, and women's and girls' intimate apparel, sleepwear,
loungewear, bodywear and related products) incident to its
ownership of the trust certificates therefor in the Calvin
Klein Trademark Trust, "Blanche" and "Van Raalte" and
variations and formatives thereof (collectively, the
"Principal Trademarks"); and the Company has the right to use,
pursuant to trademark license agreements (collectively, the
"Licenses"), other names and marks currently employed by them
in connection with the business now operated by them
(including, without limitation, "VALENTINO INTIMO", "SCAASI",
"WHITE STAG", "CATALINA", "CALVIN KLEIN" (for men's
accessories), "CHAPS BY RALPH LAUREN", and "FRUIT OF THE
LOOM"); and (i) neither the Company nor any of its
Subsidiaries has received any notice of infringement of or
conflict with asserted rights of others with respect to any of
the Principal Trademarks which, singularly or in the
aggregate, if the subject of an unfavorable final
determination, would result in any material adverse change in
the ability of the Company and its Subsidiaries, taken as a
whole to conduct their business as described in the
Prospectuses; (ii) the Company and each of its Subsidiaries
has fulfilled and performed all of its material obligations
with respect to the Licenses and the Licenses remain in full
force and effect; (iii) to the best of the Company's
knowledge, no event
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has occurred with respect to the Licenses which would result
in a material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects
of the Company and its Subsidiaries, considered as one
enterprise; and (iv) to the best of the Company's knowledge,
the Calvin Klein Trademark 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, indenture or instrument to which
it is a party or by which it is bound, which violation or
default could affect (a) ownership by the Trust of the
trademarks which are the subject of its organizational
documents or (b) the Company's and its Subsidiaries right to
use the "CALVIN KLEIN" trademarks referred to in the
Prospectuses. The Company and its Subsidiaries own or have the
right to use pursuant to license, sublicense, agreement or
permission all Intellectual Property (as defined below)
necessary or desirable for the operation of the business as
previously conducted and proposed to be conducted in the
Prospectuses. (As used herein, "Intellectual Property" means
trademark and service marks, copyrights, know-how, patent and
tradesecrets rights, confidential and other proprietary
rights.)
(xxv) The Company and each of its Subsidiaries comply
in all material respects with all Environmental Laws (as
defined below) except to the extent that failure to comply
with such Environmental Laws would not have a material adverse
effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise. Neither the
Company nor any of its Subsidiaries (i) is the subject of any
pending or, to the knowledge of the Company, threatened
federal, state or local investigation evaluating whether any
remedial action by the Company or any Subsidiary is needed to
respond to a release of any Hazardous Materials (as defined
below) into the environment, resulting from the Company's or
any of its Subsidiaries' business operations or ownership or
possession of any of their properties or assets or (ii) is in
contravention of any Environmental Laws that, in the case of
(i) or (ii), might be expected to have a material adverse
effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise. Neither the
Company nor any Subsidiary has received any notice or claim,
nor are there pending or, to the knowledge of the Company,
threatened lawsuits against them, with respect to violations
of an Environmental Law or in connection with any release of
any Hazardous Material into the environment that, in the
aggregate, if the subject of any unfavorable
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<PAGE>
decision, ruling or finding, might have a material adverse
effect on the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise. As used herein,
"Environmental Laws" means any foreign, federal, state or
local law or regulation applicable to the Company's or any of
its Subsidiaries' business operations or ownership or
possession of any of their properties or assets relating to
environmental matters, and "Hazardous Materials" means those
substances that are regulated by or form the basis of
liability under any Environmental Laws.
(xxvi) All United States federal income tax returns
of the Company and its Subsidiaries required by law to be
filed have been filed and all taxes shown by such returns or
otherwise assessed, which are due and payable, have been paid,
except tax assessments, if any, as are being contested in good
faith and as to which adequate reserves have been provided.
Except as disclosed in the Prospectuses, all other franchise
and income tax returns of the Company and its Subsidiaries
required to be filed pursuant to applicable foreign, state or
local law have been filed, except insofar as the failure to
file such returns would not have a material adverse effect on
the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, and all taxes
shown on such returns or otherwise assessed which are due and
payable have been paid, except for such taxes, if any, as are
being contested in good faith and as to which adequate
reserves have been provided. To the best of the Company's
knowledge, the charges, accruals and reserves on the books of
the Company and its Subsidiaries in respect of any income and
corporate franchise tax liability for any years not finally
determined are adequate to meet any assessments or
re-assessments for additional income or corporate franchise
tax for any years not finally determined, except as disclosed
in the Prospectuses and except to the extent of any inadequacy
that would not have a material adverse effect on the condition
(financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries,
considered as one enterprise.
(xxvii) The Company has obtained the written
agreements of each of (i) Linda J. Wachner, William S.
Finkelstein, Stanley P. Silverstein, Wallis H. Brooks, Joseph
A. Califano, Jr., Andrew G. Galef, Stewart A. Resnick and
Robert D. Walter, in the forms previously furnished to you
that, for a period of 90 days from the date hereof and (ii)
from Calvin Klein, Inc., in the form previously furnished to
you, that until October 30, 1995, such parties will not,
without the prior written consent of Merrill Lynch on behalf
of the Underwriters, directly or indirectly, sell, offer to
sell, grant any
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<PAGE>
option for the sale of, or otherwise dispose of any shares of
Common Stock or securities or rights convertible into or
exercisable or exchangeable for Common Stock, other than with
respect to Linda J. Wachner with respect to the sale of the
Offered Shares pursuant to this Agreement and the U.S.
Purchase Agreement.
(xxviii) Except as set forth in the Prospectuses,
there are no holders of securities (debt or equity) of the
Company, or holders of rights (including, without limitation,
preemptive rights), warrants or options to obtain securities
of the Company or its Subsidiaries, who have the right to
request the Company to register securities held by them under
the 1933 Act, other than holders who will not have such rights
for the 90-day period after the date hereof (or, in the case
of Calvin Klein, Inc., until October 30, 1995), or who have
waived their rights with respect to the inclusion of their
securities in the registration statement on Form S-3 relating
to the Offered Shares.
(xxix) The Company and its Subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in
accordance with management's general and specific
authorizations; (ii) transactions are recorded as necessary to
permit preparations of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific
authorizations; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(b) The Selling Stockholder represents and warrants to, and
agrees with, each of the Managers as follows:
(i) The Selling Stockholder is not prompted to sell
the Offered Shares to be sold by the Selling Stockholder by
any information concerning the Company that is not set forth
in the Prospectuses or other documents filed by the Company
with the Commission pursuant to the periodic reporting and
other informational requirements of the Exchange Act.
(ii) The Selling Stockholder does not have any
knowledge or any reason to believe that the Registration
Statement or the Prospectuses (or any amendment or supplement
thereto or any documents incorporated by reference therein)
contain any untrue statements of a material fact or omit to
state any material fact required to be stated therein or
necessary to make the
15
<PAGE>
statements therein not misleading; except that the foregoing
shall only apply to statements in or omissions from any such
document in reliance upon, and in conformity with, information
furnished to the Company by or on behalf of the Selling
Stockholder, specifically for use in the preparation thereof.
(iii) This Agreement and the U.S. Purchase Agreement
have been, and the International Price Determination Agreement
and the U.S. Price Determination Agreement on the date thereof
will be, duly executed and delivered by such Selling
Stockholder.
(iv) Except as set forth in the Prospectuses, there
is no action, suit, investigation (of which the Selling
Stockholder has received written notice) or proceeding before
or by any government, governmental instrumentality or court,
domestic or foreign, now pending or, to the knowledge of the
Selling Stockholder, threatened to which the Selling
Stockholder is or would be a party or of which the property of
the Selling Stockholder is or may be subject, that (i) seeks
to restrain, enjoin, prevent the consummation of or otherwise
challenge the sale of Offered Shares by the Selling
Stockholder or any of the other transactions contemplated
hereby or (ii) questions the legality or validity of any such
transactions or seeks to recover damages or obtain other
relief in connection with any such transactions.
(v) No authorization, approval, consent or license of
any government, governmental instrumentality or court (other
than under the 1933 Act and the 1933 Act Regulations and the
securities or blue sky laws of the various states) is required
for the execution and delivery by the Selling Stockholder of
this Agreement, the U.S. Purchase Agreement, the International
Price Determination Agreement and the U.S. Price Determination
Agreement and the valid sale and delivery of the Offered
Shares to be sold by the Selling Stockholder hereunder and
thereunder.
(vi) The execution and delivery of this Agreement,
the U.S. Purchase Agreement, the International Price
Determination Agreement and the U.S. Price Determination
Agreement by the Selling Stockholder, the sale of the Offered
Shares by the Selling Stockholder hereunder and thereunder,
the compliance by the Selling Stockholder with all of the
provisions of this Agreement, the U.S. Purchase Agreement, the
International Price Determination Agreement and the U.S. Price
Determination Agreement and the consummation of the
transactions herein and therein contemplated will not result
in a breach by the Selling Stockholder of, or constitute a
default by the Selling Stockholder under, any
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<PAGE>
agreement, instrument, decree, judgment or order to which the
Selling Stockholder is a party or by which the Selling
Stockholder may be bound or the properties of the Selling
Stockholder may be subject.
(vii) The Selling Stockholder has, and will at the
Closing Time have, good and valid title to the International
Shares to be sold by the Selling Stockholder pursuant to this
Agreement, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind;
and, upon delivery of such International Shares and payment of
the purchase price therefor as contemplated in this Agreement
and the U.S. Purchase Agreement, each of the Managers will
receive good and valid title to the International Shares
purchased by it from the Selling Stockholder, free and clear
of any pledge, lien, security interest, charge, claim, equity
or encumbrance of any kind.
(viii) Certificates for all of the Offered Shares to
be sold by the Selling Stockholder pursuant to this Agreement
and the U.S. Purchase Agreement, in suitable form for transfer
by delivery or accompanied by duly executed instruments of
transfer or assignment in blank with signatures guaranteed
will be delivered to the Managers pursuant to this Agreement
and the U.S. Underwriters pursuant to the U.S. Purchase
Agreement.
(ix) The Selling Stockholder has not taken and will
not take, directly or indirectly, any action designed to cause
or result in stabilization or manipulation of the price of the
Common Stock; and the Selling Stockholder has not distributed
and will not distribute any prospectus (as such term is
defined in the 1933 Act and the 1933 Act Regulations) in
connection with the offering and sale of the Offered Shares
other than any preliminary prospectus filed with the
Commission or the Prospectuses or other material permitted by
the 1933 Act or the 1933 Act Regulations.
(c) Any certificate signed by any officer of the Company or
any Subsidiary and delivered to you or to Fried, Frank, Harris, Shriver &
Jacobson as counsel for the Underwriters at or prior to the Closing Time
pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such Subsidiary, as the
case may be, to each Manager as to the matters covered thereby; and any
certificate signed by or on behalf of the Selling Stockholder as such and
delivered to you or to counsel for the Underwriters at or prior to the Closing
Time pursuant to the terms of this Agreement or the transactions contemplated
hereby shall be deemed a representation and warranty by the Selling Stockholder
to each Manager, as to the matters covered thereby.
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<PAGE>
Section 2. Sale and Delivery to the Managers; Closing. (a) On
the basis of the representations and warranties herein contained, and subject to
the terms and conditions herein set forth, the Company agrees to sell to each
Manager, severally and not jointly, and each Manager agrees, severally and not
jointly, to purchase from the Company, at the purchase price per share set forth
in the International Price Determination Agreement, that proportion of the
number of Initial International Shares being sold by the Company which the
number of Initial Shares set forth in Schedule A opposite the name of such
Manager (plus such additional number of Initial International Shares that such
Manager may become obligated to purchase pursuant to Section 11 hereof) bears to
the total number of Initial International Shares subject, in each case, to such
adjustments as the Managers in their discretion shall make to eliminate any sale
or purchases of fractional shares.
(b) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Selling
Stockholder agrees to sell to each Manager, severally and not jointly, and each
Manager agrees, severally and not jointly, to purchase from the Selling
Stockholder, at the purchase price per share set forth in the International
Price Determination Agreement, that proportion of the number of Initial
International Shares being sold by the Selling Stockholder which the number of
Initial International Shares set forth in Schedule A opposite the name of such
Manager (plus such additional number of Initial International Shares that such
Manager may become obligated to purchase pursuant to Section 11 hereof) bears to
the total number of Initial International Shares, subject, in each case, to such
adjustments as the Managers in their discretion shall make to eliminate any
sales or purchases of fractional shares.
(c) If the Company has elected not to rely upon Rule 430A, the
initial public offering price per share for the Initial International Shares and
the purchase price per share for the Initial International Shares to be paid by
the several Managers shall be agreed upon and set forth in the International
Price Determination Agreement, dated the date hereof, and an amendment to the
Registration Statement containing such per share price information will be filed
before the Registration Statement becomes effective.
(d) If the Company has elected to rely upon Rule 430A, the
initial public offering price per share for the Initial International Shares and
the purchase price per share for the Initial International Shares to be paid by
the several Managers shall be agreed upon and set forth in the International
Price Determination Agreement. In the event that the International Price
Determination Agreement has not been executed by the close of business on the
fourteenth business day following the date on which the Registration Statement
becomes effective, this Agreement shall terminate forthwith, without liability
of any party to any other party except that Sections 7 and 8 shall remain in
effect.
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<PAGE>
(e) In addition, on the basis of the representations,
warranties and covenants herein contained, and subject to the terms and
conditions herein set forth, the Company and the Selling Stockholder hereby
grant options to the Underwriters, severally and not jointly, to purchase up to
an additional 1,440,000 shares of Common Stock at the same purchase price per
share as shall be applicable to the Initial International Shares, of which
288,000 shares shall be the pro rata portion of the Managers and 1,152,000
shares shall be the pro rata portion of the U.S. Underwriters (consisting of
1,032,000 and 120,000 shares of Common Stock from the Company and the Selling
Stockholder, respectively). The option hereby granted to the Managers will
expire 30 days after the date upon which the Registration Statement becomes
effective or, if the Company has elected to rely upon Rule 430A, the date of the
International Price Determination Agreement, and, in any case, may be exercised
in whole or from time to time in part only for the purpose of covering
over-allotments that may be made in connection with the offering and
distribution of the Initial Shares upon delivery of notice by the Lead Managers
and the U.S. Representatives to the Company setting forth the number of Option
Shares as to which the several Managers are exercising the option, and the
time and date of payment and delivery thereof. Such time and date of delivery
(the "Date of Delivery") shall be determined by you but shall not be later than
three full business days after the exercise of such option, nor in any event
prior to the Closing Time, unless otherwise agreed by Merrill Lynch and the
Company. If the option is exercised as to all or any portion of the Option
Shares, the International Option Shares as to which the option is exercised
shall be purchased by the Managers, severally and not jointly, in the respective
proportions that bear the same relationship to the number of International
Option Shares to be purchased at the Date of Delivery as the number of Initial
International Shares set forth opposite the name of each Manager in Schedule A
hereto bears to the total number of Initial International Shares (such
proportions are hereinafter referred to as each Manager's "underwriting
obligation proportion").
(f) Payment of the purchase price for, and delivery of
certificates for, the Initial International Shares shall be made at the offices
of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York 10004, or at such other place as shall be agreed upon by the Company, the
Selling Stockholder and you, at 10:00 A.M. (New York time) either (x) on the
third full business day after the effective date of the Registration Statement,
or (y) if the Company has elected to rely upon Rule 430A, on the third full
business day after execution of the International Price Determination Agreement
(unless, in either case, postponed pursuant to Section 11 or 12), or at such
other time not more than ten full business days thereafter as you, the Company
and the Selling Stockholder shall determine (such date and time of payment and
delivery being herein called the "Closing Time"). In addition, in the event that
any or all of the International Option Shares are purchased by the Managers,
payment of the purchase price for, and delivery of certificates for, such
International Option Shares shall be made at the offices
19
<PAGE>
of Fried, Frank, Harris, Shriver & Jacobson set forth above, or at such other
place as the Company and you shall determine, on the Date of Delivery as
specified in the notice from you to the Company. Payment shall be made to the
Selling Stockholder and the Company by certified or official bank check or
checks or wire transfer in New York Clearing House funds payable to the order of
the Company and to the Selling Stockholder, as the case may be, against delivery
to you for the respective accounts of the several Managers of certificates for
the International Shares to be purchased by them.
(g) Certificates for the Initial International Shares and
International Option Shares to be purchased by the Managers shall be in such
denominations and registered in such names as you may request in writing at
least one full business day before the Closing Time or the Date of Delivery, as
the case may be. The certificates for the Initial International Shares and
International Option Shares will be made available in New York City for
examination and packaging by you not later than 3:00 P.M. (New York time) on the
last business day prior to the Closing Time or the Date of Delivery, as the case
may be.
(h) It is understood that each Manager has authorized the Lead
Managers, for its account, to accept delivery of, receipt for, and make payment
of the purchase price for, the Initial International Shares that it has agreed
to purchase. You, individually and not as Lead Managers, may (but shall not be
obligated to) make payment of the purchase price for the Initial International
Shares or International Option Shares to be purchased by any Manager whose check
or checks shall not have been received by the Closing Time or the Date of
Delivery, as the case may be.
(i) The several and not joint obligations of the Company and
the Selling Stockholder, to sell to each Manager the Initial International
Shares, the obligation of the Company to sell to each Manager the International
Option Shares, respectively, and the several and not joint obligations of the
Managers to purchase and pay for the International Shares, upon the terms and
subject to the conditions of this Agreement, are subject to the concurrent
closing of the sale of the Initial U.S. Shares and the U.S. Option Shares,
respectively, to the U.S. Underwriters pursuant to the terms of the U.S.
Purchase Agreement.
Section 3. Certain Covenants of the Company. The Company
covenants with each Manager as follows:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective and, if the Company elects to rely
upon Rule 430A and subject to Section 3(b), will comply with the requirements of
Rule 430A and will notify you promptly, (i) when the Registration Statement, or
any post-effective amendment to the Registration Statement, shall have become
effective, or any supplement to the
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Prospectuses or any amended Prospectuses shall have been filed, (ii) of the
receipt of any comments from the Commission, (iii) of any request by the
Commission to amend the Registration Statement, to amend or supplement any
Prospectus or for additional information and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Offered Shares for
offering or sale in any jurisdiction, or of the institution or threatening of
any proceedings for any of such purposes. The Company will make every reasonable
effort to prevent the issuance of any such stop order or of any order preventing
or suspending such use and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment. If the Company elects to rely on Rule
434 under the 1933 Act Regulation, the Company will use an abbreviated term
sheet that complies with the requirements of Rule 434 under the 1933 Act
Regulations. If the Company elects not to rely on Rule 434, the Company will
provide the Managers with copies of the International Prospectus, in such number
as the Managers may reasonably request, and file or transmit for filing with the
Commission such International Prospectus in accordance with Rule 424(b) of the
1933 Act Regulations by the close of business in New York on the business day
immediately succeeding the date of the International Price Determination
Agreement. If the Company elects to rely on Rule 434 of the 1933 Act
Regulations, the Company will provide the Managers with copies of the
abbreviated term sheet, in such number as the Underwriters may reasonably
request, and file or transmit for filing with the Commission an International
Prospectus complying with Rule 434(c)(2) of the 1933 Act Regulations in
accordance with Rule 424(b) of the 1933 Act Regulations by the close of business
in New York or the business day immediately succeeding the date of the
International Price Determination Agreement.
(b) The Company will not at any time file or make any
amendment to the Registration Statement, or any amendment or supplement thereto,
or any document incorporated by reference therein (i) if the Company has not
elected to rely upon Rule 430A, to the Prospectuses or (ii) if the Company has
elected to rely upon Rule 430A, to either the prospectus included in the
Registration Statement at the time it becomes effective or to the Prospectuses,
of which you shall not have previously been advised and furnished a copy or to
which you or Fried, Frank, Harris, Shriver & Jacobson as counsel for the
Managers shall reasonably object.
(c) The Company has furnished or will furnish to you and your
counsel, without charge, signed copies of the Registration Statement (as
originally filed) and of all amendments thereto (including exhibits filed
therewith and documents incorporated by reference therein), whether filed before
or after the Registration Statement becomes effective, copies of all exhibits
and documents filed therewith, and signed copies of all consents and
certificates of experts, and has furnished or will furnish to you, for each
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<PAGE>
other Manager, one conformed copy of the Registration Statement as originally
filed and each amendment thereto.
(d) The Company will deliver to each Manager, without charge,
from time to time until the effective date of the Registration Statement (or, if
the Company has elected to rely upon Rule 430A, until the time the International
Price Determination Agreement is executed and delivered), as many copies of each
preliminary prospectus as such Manager may reasonably request, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will deliver to each Manager, without charge, as soon as the
Registration Statement shall have become effective (or, if the Company has
elected to rely upon Rule 430A, as soon as practicable after the International
Price Determination Agreement has been executed and delivered) and thereafter
from time to time as requested during the period when the Prospectuses are
required to be delivered under the 1933 Act, such number of copies of the
Prospectuses (as supplemented or amended) as such Manager may reasonably
request.
(e) The Company will comply to the best of its ability with
the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Offered
Shares as contemplated in this Agreement, the U.S. Purchase Agreement and the
Prospectuses. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Offered Shares any event shall occur
or condition exist as a result of which it is necessary, in the opinion of
counsel for the Managers, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act, the 1933 Act Regulations, the 1934
Act or the 1934 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements.
(f) The Company will endeavor, in cooperation with the
Managers, to qualify the Offered Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as you may
designate and to maintain such qualifications in effect for a period of not less
than one year from the effective date of the Registration Statement; provided,
however, that neither the Company nor any Subsidiary shall be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in
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<PAGE>
which it is not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the Offered
Shares have been qualified as above provided.
(g) The Company will make generally available to its security
holders as soon as practicable, but not later than 60 days after the close of
the period covered thereby, an earnings statement of the Company (in form
complying with the provisions of Rule 158 of the 1933 Act Regulations), covering
a period of 12 months beginning after the effective date of the Registration
Statement but not later than the first day of the Company's fiscal quarter next
following such effective date.
(h) For a period of 90 days from the date hereof, the Company
will not, without the prior written consent of Merrill Lynch on behalf of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, other than to
(i) the U.S. Underwriters pursuant to the U.S. Purchase Agreement and the
Managers pursuant to this Agreement and (ii) eligible participants in the
Company's employee stock plans pursuant to the terms thereof as in effect on the
date hereof.
(i) The Company will use its best efforts to effect the
listing of the Common Stock on the New York Stock Exchange on the date of the
International Price Determination Agreement.
(j) The Company, during the period when the Prospectuses are
required to be delivered under the 1933 Act or the 1934 Act, will file all
documents required to be filed with the Commission pursuant to Sections 13, 14
or 15 of the 1934 Act subsequent to the time the Registration Statement becomes
effective.
(k) For a period of five years after the Closing Time, the
Company will furnish to you and each Manager that so requests copies of all
annual reports, quarterly reports and current reports filed with the Commission
on Forms 10-K and 10-Q and, to the extent requested, Form 8-K or such other
similar forms as may be designated by the Commission, and such other documents,
reports and information as shall be furnished by the Company to its stockholders
generally.
(l) If the Company has elected to rely upon Rule 430A, it will
take such steps as it deems necessary to ascertain promptly whether the forms of
prospectuses transmitted for filing under Rule 424(b) were received for filing
by the Commission and, in the event that they were not, it will promptly file
such prospectuses.
(m) The Company has complied, and will comply, with all of the
provisions of Florida H.B. 1771, as codified in sec. 517.075 Florida Statutes,
1987, as
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amended, and all regulations promulgated thereunder relating to issuers or their
affiliates doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(n) The Company will use the net proceeds received by it from
the sale of the Offered Shares in the manner specified in the Prospectuses under
the caption "Use of Proceeds."
Section 4. Payment of Expenses. (a) The Company will pay all
expenses incident to the performance of its obligations under this Agreement and
the U.S. Purchase Agreement, including (i) the printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectuses and the
Prospectuses and any amendments or supplements thereto, and the cost of
furnishing copies thereof to the Underwriters, (ii) the copying or printing, as
applicable, and distribution of this Agreement (including the International
Price Determination Agreement), the Intersyndicate Agreement among the U.S.
Underwriters and the Managers, the U.S. Purchase Agreement (including the U.S.
Price Determination Agreement), the Agreement among Managers, the certificates
for the Offered Shares and a survey of state securities or blue sky laws (the
"Blue Sky Survey"), (iii) the delivery of the certificates for the Offered
Shares to the Underwriters, including any capital duties, stamp duties and stock
or other transfer taxes payable upon the sale of the Offered Shares to the
Underwriters and the transfer of the Offered Shares between the U.S.
Underwriters and the Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisers, (v) the qualification of the Offered
Shares under the applicable securities laws in accordance with Section 3(f) and
any filing fees for review of the offering with the National Association of
Securities Dealers, Inc., including filing fees and reasonable fees and
disbursements of Fried, Frank, Harris, Shriver & Jacobson as counsel for the
Underwriters in connection therewith and in connection with the Blue Sky Survey,
(vi) the fees and expenses of any transfer agent or registrar for the Offered
Shares, and (vii) the listing fees and expenses incurred in connection with
listing the Offered Shares on the New York Stock Exchange, if any.
(b) The Selling Stockholder will pay any transfer taxes
attributable to the sale by the Selling Stockholder of Initial International
Shares and any fees and disbursements of such Selling Stockholder's counsel, if
any, not paid or payable by the Company pursuant to Section 4(a) or otherwise.
(c) If this Agreement is terminated by you in accordance with
the provisions of Section 5, 10(a)(i) or 12, the Company shall reimburse the
Managers through you for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of Fried, Frank, Harris, Shriver
& Jacobson as counsel for the Managers.
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Section 5. Conditions of Managers' Obligations. In addition to
the execution and delivery of the International Price Determination Agreement,
the obligations of the several Managers to purchase and pay for the
International Shares that they have respectively agreed to purchase hereunder
(including any International Option Shares as to which the option granted in
Section 2(e) has been exercised in the event the Date of Delivery determined by
you is the same as the Closing Time) are subject to the accuracy of the
representations and warranties of the Company and the Selling Stockholder
contained herein (including those contained in the International Price
Determination Agreement) or in certificates of any officer of the Company or any
Subsidiary and the Selling Stockholder delivered pursuant to the provisions
hereof, to the performance by the Company and the Selling Stockholder of their
respective obligations hereunder in all material respects, and to the following
further conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 P.M. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:00 P.M. on the first business day
following the date hereof, or at such later time or on such later date as you
may agree to in writing with the approval of a majority in interest of the
several Managers; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company, shall have
been threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Fried, Frank, Harris, Shriver & Jacobson as counsel for the
Managers. If the Company has elected to rely upon Rule 430A, Prospectuses
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) At the Closing Time, you shall have received the signed
opinion of Stanley P. Silverstein, Esq., Vice President, General Counsel and
Secretary for the Company, dated as of the Closing Time, in the form attached
hereto as Exhibit B, together with reproduced copies of such opinions for each
of the Managers, and in form and substance satisfactory to counsel for the
Managers.
(c) At the Closing Time, you shall have received the signed
opinions of Skadden, Arps, Slate, Meagher & Flom, counsel for the Company, dated
as of the Closing Time, in the forms attached hereto as Exhibit C, together with
reproduced copies of such opinions for each of the Managers, in form and
substance satisfactory to counsel for the Managers.
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(d) At the Closing Time, you shall have received the signed
opinion of counsel for the Selling Stockholder reasonably acceptable to you, as
requested by the Managers, dated as of the Closing Time, in the form attached
hereto as Exhibit D, together with reproduced copies of such opinions for each
of the Managers, and in form and substance satisfactory to counsel for the
Managers.
(e) At the Closing Time, you shall have received the signed
opinion of Amster, Rothstein & Ebenstein, special license and trademark counsel
for the Company reasonably acceptable to you, as requested by the Managers,
dated as of the Closing Time, in the form attached hereto as Exhibit E, together
with reproduced copies of such opinions for each of the Managers, and in form
and substance satisfactory to counsel for the Managers.
(f) At the Closing Time, you shall have received the favorable
opinion of Fried, Frank, Harris, Shriver & Jacobson as counsel for the Managers,
dated as of the Closing Time, together with reproduced copies of such opinion
for each of the other Managers, to the effect that the opinions delivered
pursuant to Sections 5(b), (c), (d) and (e) appear on their face to be
appropriately responsive to the requirements of this Agreement except,
specifying the same, to the extent waived by you, and with respect to the legal
existence of the Company, the Offered Shares, this Agreement and the U.S.
Purchase Agreement, the Registration Statement, the Prospectuses and such other
related matters as you may require. In giving such opinion such counsel may
rely, as to all matters governed by the laws of jurisdictions other than the
federal law of the United States, the law of the State of New York and the
General Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to you. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem proper, upon
certificates of officers or other appropriate representatives of the Company,
the Subsidiaries and the Selling Stockholder and certificates of public
officials.
(g) At the Closing Time, (i) the Registration Statement and
the Prospectuses, as they may then be amended or supplemented, shall conform in
all material respects to the requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations, the Company shall have
complied in all material respects with Rule 430A (if it shall have elected to
rely thereon), the Registration Statement, as it may then be amended or
supplemented, shall not contain 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 in the Registration Statement not misleading, and the Prospectuses,
as they may be amended or supplemented, shall not contain 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 in the Prospectuses, in light of the
circumstances under which they were made, not misleading, (ii) there shall not
have been, since the respective dates as of which information is given in the
Prospectuses, any material adverse change in
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the condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, (iii) no action, suit
or proceeding at law or in equity shall be pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary that would be required
to be set forth in the Prospectuses other than as set forth therein and no
proceedings shall be pending or, to the knowledge of the Company, threatened
against the Company or any Subsidiary before or by any federal, state or other
commission, board or administrative agency that could reasonably be expected to
materially and adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise, other than as set forth in the
Prospectuses, (iv) the Company shall have complied with all agreements and
satisfied all conditions on their parts to be performed or satisfied at or prior
to the Closing Time, and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate as though expressly made at
and as of the Closing Time. At the Closing Time, you shall have received a
certificate of the President or Vice President and the chief financial officer
or chief accounting officer of the Company, dated as of the Closing Time, to
such effect. As used in Section 5(g)(ii) and (iii), the term "Prospectuses"
means the Prospectuses in the form first used to confirm sales of the Offered
Shares.
(h) At the Closing Time, (i) the representations and
warranties of the Selling Stockholder set forth in Section 1(b) and in any
certificates by or on behalf of the Selling Stockholder delivered pursuant to
the provisions hereof shall be accurate as though expressly made at and as of
the Closing Time, (ii) the Selling Stockholder shall have performed her
obligations under this Agreement and the U.S. Purchase Agreement in all material
respects and (iii) you shall have received a certificate of the Selling
Stockholder to the effect that the representations and warranties of the Selling
Stockholder set forth in 1(b) are accurate as though expressly made at and as of
the Closing Time.
(i) At the time that this Agreement is executed by the
Company, you shall have received from Ernst & Young LLP ("E&Y")and Price
Waterhouse LLP letters, dated such date, in form and substance satisfactory to
you, together with signed or reproduced copies of such letter for each of the
other Managers, confirming that they are independent public accountants with
respect to the Company within the meaning of the 1933 Act and the applicable
published 1933 Act Regulations, and stating in effect that (in the case of E&Y,
as to clause (i) and to the extent applicable clause (iii) only):
(i) in their opinion, the audited financial
statements and the related financial statement schedules
included or incorporated by reference in the Registration
Statement and the Prospectuses comply as to form in all
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material respects with the applicable accounting requirements
of the 1933 Act and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an
examination in accordance with generally accepted auditing
standards) consisting of a reading of the minutes of all
meetings of the shareholders and directors of the Company and
its Subsidiaries and each committee of the board of directors
of each of the Company and its Subsidiaries, inquiries of
certain officials of the Company and its Subsidiaries
responsible for financial and accounting matters and such
other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to
believe that:
(A) at September 2, 1995 and at a specified
date not more than five days prior to the date of this
Agreement, there was (i) any change in the consolidated
stockholders' equity or capital stock or any decrease in
consolidated current assets, with any current or total assets
or (ii) any increase in long-term debt of the Company and its
Subsidiaries as compared with the amounts shown in the latest
balance sheet included or incorporated by reference in the
Registration Statement, except in each case for changes,
decreases or increases which the Registration Statement
discloses have occurred or may occur; or
(B) for the period from January 7, 1995 to
September 2, 1995 and to a specified date not more than five
days prior to the date of this Agreement, there was any
decrease in consolidated net revenues, income from continuing
operations before income taxes, or in the total or per-share
amounts of consolidated net income or in other amounts
specified by the Lead Managers, in each case as compared with
the comparable period in the preceding year, except in each
case, for any decreases that the Registration Statement
discloses have occurred or may occur; and
(iii) in addition to the procedures referred to in
clause (ii) above, they have performed other specified
procedures, not constituting an audit, with respect to certain
amounts, percentages, numerical data and financial information
appearing or incorporated by reference in the Registration
Statement, which have previously been specified by you and
which shall be specified in such letter, and have compared
certain of such items with, and have found such items to be in
agreement with, the accounting and financial records of the
Company and its Subsidiaries.
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(j) At the Closing Time, you shall have received from Ernst &
Young LLP and Price Waterhouse letters, in form and substance satisfactory to
you and dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letters furnished pursuant to Section 5(i) above, except
that (i) the specified date referred to shall be a date not more than five days
prior to the Closing Time. In the event the Company relies on Rule 430A and the
final Prospectuses furnished to the Underwriters in connection with the offering
of the Offered Shares differ from the Prospectuses included in the Registration
Statement at the time of effectiveness, such letter shall update the procedures
referred to in clauses 5(i) above.
(k) At the Closing Time, you shall have received a certificate
of the Chief Financial Officer of the Company as to certain agreed upon
accounting matters not covered by the letters referred to in clauses 5(i) and
5(j) above.
(l) At the Closing Time, counsel for the Underwriters shall
have been furnished with all such documents, certificates and opinions as they
may reasonably request for the purpose of enabling them to pass upon the
issuance and sale of the Offered Shares as contemplated in this Agreement and
the U.S. Purchase Agreement and the matters referred to in Section 5(g) and in
order to evidence the accuracy and completeness of any of the representations,
warranties or statements of the Company and the Selling Stockholder, the
performance of any of the covenants of the Company and the Selling Stockholder,
or the fulfillment of any of the conditions herein contained; and all
proceedings taken by the Company and the Selling Stockholder at or prior to the
Closing Time in connection with the authorization, issuance and sale of the
Offered Shares as contemplated in this Agreement and the U.S. Purchase Agreement
shall be reasonably satisfactory in form and substance to you and to Fried,
Frank, Harris, Shriver & Jacobson as counsel for the Underwriters.
(m) The Offered Shares shall have been duly authorized for
listing by the New York Stock Exchange in the date of the International Price
Determination Agreement, subject only to official notice of issuance thereof.
(n) The Selling Stockholder shall have delivered to you on or
prior to the Closing Time a properly completed and executed United States
Treasury Department Form W/9 (or other applicable form or statement specified by
Treasury Department regulations).
If any of the conditions specified in this Section 5 shall not
have been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company and the Selling
Stockholder at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to
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any other party, except as provided in Section 4 herein. Notwithstanding any
such termination, the provisions of Section 7 and 8 herein shall remain in
effect.
Section 6. Conditions to Purchase of International Option
Shares. In the event that the Managers exercise their option granted in Section
2 to purchase all or any of the International Option Shares and the Date of
Delivery determined by you pursuant to Section 2 is later than the Closing Time,
the obligations of the several Managers to purchase and pay for the
International Option Shares that they shall have respectively agreed to purchase
pursuant to this Agreement are subject to the accuracy of the representations
and warranties of the Company and the Selling Stockholder herein contained, to
the performance of the Company and the Selling Stockholder of their respective
obligations in all material respects hereunder and to the following further
conditions:
(a) The Registration Statement shall remain effective at the
Date of Delivery, and at the Date of Delivery no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company or the Selling
Stockholder shall have been threatened by the Commission, and any request on the
part of the Commission for additional information shall have been complied with
to the reasonable satisfaction of Fried, Frank, Harris, Shriver & Jacobson as
counsel for the Managers.
(b) At the Date of Delivery, the provisions of Section 5(g)
shall have been complied with at and as of the Date of Delivery and, at the Date
of Delivery, you shall have received a certificate of the President or a Vice
President and chief financial officer or chief accounting officer of the Company
with respect to the provisions of Section 5(g), dated as of the Date of
Delivery, to such effect.
(c) At the Date of Delivery, the provisions of Section 5(h)
shall have been complied with at and as of the Date of Delivery.
(d) At the Date of Delivery, you shall have received the
favorable opinions of Stanley P. Silverstein, Esq., Vice President, General
Counsel and Secretary of the Company and, Skadden, Arps, Slate, Meagher & Flom,
counsel for the Company together with reproduced copies of such opinion for each
of the other Managers in form and substance satisfactory to Fried, Frank,
Harris, Shriver & Jacobson as counsel for the Managers, dated as of the Date of
Delivery, relating to the Option Shares and otherwise to the same effect as the
opinions required by Sections 5(b), (c), (d) and (e).
(e) At the Date of Delivery, you shall have received the
favorable opinion of Fried, Frank, Harris, Shriver & Jacobson, counsel for the
Managers, dated as
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of the Date of Delivery, relating to the International Option Shares and
otherwise to the same effect as the opinion required by Section 5(f).
(f) At the Date of Delivery, you shall have received letters
from Ernst & Young LLP in form and substance satisfactory to you and dated as of
the Date of Delivery, to the effect that they reaffirm the statements made in
the letter furnished pursuant to Section 5(i), except that the specified date
referred to shall be a date not more than five days prior to the Date of
Delivery.
(g) At the Date of Delivery, Fried, Frank, Harris, Shriver &
Jacobson as counsel for the Managers shall have been furnished with all such
documents, certificates and opinions as they may reasonably request for the
purpose of enabling them to pass upon the sale of the Option Shares as
contemplated in this Agreement and the matters referred to in Section 6(d) and
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company, the performance of any
of the covenants of the Company, or the fulfillment of any of the conditions
herein contained; and all actions taken by the Company at or prior to the Date
of Delivery in connection with the authorization, issuance and sale of the
Option Shares as contemplated in this Agreement shall be reasonably satisfactory
in form and substance to you and to Fried, Frank, Harris, Shriver & Jacobson as
counsel for the Managers.
Section 7. Indemnification. (a) The Company agrees to
indemnify and hold harmless each Manager and each person, if any, who controls
any Manager within the meaning of Section 15 of the 1933 Act to the extent and
in the manner set forth in clauses (i), (ii) and (iii) below. In addition,
subject to subsection (d) of this Section, the Selling Stockholder, severally
and not jointly, agrees to indemnify and hold harmless each Manager and each
person, if any, who controls any Manager within the meaning of Section 15 of the
1933 Act, as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of an
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, if applicable,
or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of an untrue
statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or
any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
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(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of
the aggregate amount paid in settlement of any litigation, or
investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever
based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company and the
Selling Stockholder; and
(iii) against any and all expense whatsoever, as
incurred (including, subject to the last sentence of Section
7(c), fees and disbursements of counsel chosen by you),
reasonably incurred in investigating, preparing or defending
against any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that (i) this indemnity does not apply to any loss,
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by any Manager expressly for use in
the Registration Statement (or any amendment thereto) and (ii) such indemnity
with respect to any preliminary prospectus shall not inure to the benefit of any
Manager (or any persons controlling such Manager) from whom the person asserting
such loss, claim, damage or liability purchased the Offered Shares which are the
subject thereof if such person did not receive a copy of the International
Prospectus (or the International Prospectus as amended or supplemented) at or
prior to the confirmation of the sale of such Offered Shares to such person in
any case where such delivery is required by the 1933 Act and the untrue
statement or omission or alleged untrue statement or omission of a material fact
contained in such preliminary prospectus was corrected in the International
Prospectus (or the International Prospectus as amended or supplemented).
In making a claim for indemnification under this Section 7
(other than pursuant to clause (a)(iii) of this Section 7) or contribution under
Section 8 by the Company or the Selling Stockholder, the indemnified parties may
proceed against either (i) both the Company and the Selling Stockholder or (ii)
the Company only, but may not proceed solely against the Selling Stockholder. In
the event that the indemnified parties are entitled to seek indemnity or
contribution hereunder against any loss, liability, claim, damage and expense
incurred with respect to a final judgment from a trial court then, as a
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precondition to any indemnified party obtaining indemnification or contribution
from the Selling Stockholder, the indemnified parties shall first obtain a final
judgment from a trial court that such indemnified parties are entitled to
indemnity or contribution under this Agreement with respect to such loss,
liability, claim, damage or expense (the "Final Judgment") from the Company and
the Selling Stockholder and shall seek to satisfy such Final Judgment in full
from the Company by making a written demand upon the Company for such
satisfaction. Only in the event such Final Judgment shall remain unsatisfied in
whole or in part 45 days following the date of receipt by the Company of such
demand shall any indemnified party have the right to take action to satisfy such
Final Judgment by making demand directly on the Selling Stockholder (but only if
and to the extent the Company has not already satisfied such Final Judgment,
whether by settlement, release or otherwise). The indemnified parties may
exercise this right to first seek to obtain payment from the Company and
thereafter obtain payment from the Selling Stockholder without regard to the
pursuit by any party of its rights to the appeal of such Final Judgment. The
indemnified parties shall, however, be relieved of their obligation to first
obtain a Final Judgment, seek to obtain payment from the Company with respect to
such Final Judgment or, having sought such payment, to wait such 45 days after
failure by the Company to immediately satisfy any such Final Judgment if (i) the
Company files a petition for relief under the United States Bankruptcy Code (the
"Bankruptcy Code"), (ii) an order for relief is entered against the Company in
an involuntary case under the Bankruptcy Code, (iii) the Company makes an
assignment for the benefit of its creditors, or (iv) any court orders or
approves the appointment of a receiver or custodian for the Company or a
substantial portion of its assets. The foregoing provisions of this paragraph
are not intended to require any indemnified party to obtain a Final Judgment
against the Company or the Selling Stockholder before obtaining reimbursement of
expenses pursuant to clause (a)(iii) of this Section 7. However, the indemnified
parties shall first seek to obtain such reimbursement in full from the Company
by making a written demand upon the Company for such reimbursement. Only in the
event such expenses shall remain unreimbursed in whole or in part 45 days
following the date of receipt by the Company of such demand shall any
indemnified party have the right to receive reimbursement of such expenses from
the Selling Stockholder by making written demand directly on the Selling
Stockholder (but only if and to the extent the Company has not already satisfied
the demand for reimbursement, whether by settlement, release or otherwise). The
indemnified parties shall, however, be relieved of their obligation to first
seek to obtain such reimbursement in full from the Company or, having made
written demand therefor, to wait such 45 days after failure by the Company to
immediately reimburse such expenses if (i) the Company files a petition for
relief under the Bankruptcy Code, (ii) an order for relief is entered against
the Company in an involuntary case under the Bankruptcy Code, (iii) the Company
makes an assignment for the benefit
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of its creditors, or (iv) any court orders or approves the appointment of a
receiver or custodian for the Company or a substantial portion of its assets.
(b) Each Manager agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement and, each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act and the Selling
Stockholder against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 7(a), as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished to the Company by
such Manager expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, if applicable, or such
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. Any indemnifying party may participate
at its own expense in the defense of such action. If it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved by the indemnified
parties defendant in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying party or parties be liable for
the fees and expenses of more than one counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdictions arising out of the same general allegations or circumstances.
(d) The Selling Stockholder shall not be responsible for the
payment of an amount, pursuant to this Section 7, which exceeds the net proceeds
received by the Selling Stockholder from the sale of the Offered Shares by such
Selling Stockholder hereunder and under the U.S. Agreement.
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(e) No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding. No indemnifying party shall be liable for any settlement of any
action or claim for monetary damages which an indemnified party may effect
without the written consent of the indemnifying party.
Section 8. Contribution. In order to provide for just and
equitable contribution in circumstances under which the indemnity provided for
in Section 7 is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms subject to the last
paragraph of Section 7(b) hereof, the Company, the Selling Stockholder and the
Managers shall contribute to the aggregate losses, liabilities, claims, damages
and expenses of the nature contemplated by such indemnity incurred by the
Company, the Selling Stockholder and one or more of the Managers, as incurred in
such proportion that (a) the Managers are responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus in respect of the International Shares bears to the
initial public offering price appearing thereon and (b) the Company and the
Selling Stockholder are severally liable for the balance on the same basis as
each of them would have been obligated to provide indemnification pursuant to
Section 7; provided, further, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person, if any, who
controls a Manager within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Manager, and each director of the
Company, each officer of the Company who signed the Registration Statement, the
Selling Stockholder and each director, officer or employee thereof and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the Company and the
Selling Stockholder. Notwithstanding the provisions of this Section 8, the
Selling Stockholder shall not be required to contribute any amount under this
Section 8 in excess of the amount by which the proceeds received by such Selling
Stockholder in connection herewith exceed the aggregate amount such Selling
Stockholder has otherwise paid pursuant hereto and to Section 7(a).
Section 9. Representations, Warranties and Agreements to
Survive Delivery. The representations, warranties, indemnities, agreements and
other statements of the Company, its officers and the Selling Stockholder the
set forth in or made pursuant to this Agreement will remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Company, the Selling Stockholder or any
35
<PAGE>
Manager or controlling person and will survive delivery of and payment for the
Offered Shares.
Section 10. Termination of Agreement. (a) You may terminate
this Agreement, by notice to the Company and the Selling Stockholder, at any
time at or prior to the Closing Time (i) if there has been, since the date as of
which information is given in the Prospectuses, any material adverse change, or
any development involving a prospective material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and its Subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, (ii) if there has occurred any
material adverse change in the financial markets in the United States or any
outbreak or escalation of hostilities or other calamity or crisis the effect of
which in each case is such as to make it, in your judgment, impracticable to
market the International Shares or enforce contracts for the sale of the
International Shares, (iii) if trading in any securities of the Company has been
suspended by the Commission or the New York Stock Exchange, or if trading
generally on either the American Stock Exchange or the New York Stock Exchange
or in the over-the-counter market has been suspended, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices for securities
have been required, by such exchanges or by order of the Commission, the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc. or any other governmental authority or (iv) if a
banking moratorium has been declared by either federal or New York authorities.
As used in this Section 10(a), the term "Prospectuses" means the Prospectuses in
the form first used to confirm sales of the Offered Shares.
(b) If this Agreement is terminated pursuant to this Section
10, such termination shall be without liability of any party to any other party,
except to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 7 and 8 shall remain in effect.
(c) This Agreement may also terminate pursuant to the
provisions of Section 2(d), with the effect stated in such Section.
Section 11. Default by One or More of the Managers. If one or
more of the Managers shall fail at the Closing Time to purchase the Initial
International Shares that it or they are obligated to purchase pursuant to this
Agreement (the "Defaulted International Shares"), you shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Managers, or any other underwriters, to purchase all, but not
less than all, of the Defaulted International Shares in such amounts as may be
agreed upon and upon the terms set forth in this Agreement; if, however, you
have not completed such arrangements within such 24-hour period, then:
36
<PAGE>
(a) if the number of Defaulted International Shares does not
exceed 10% of the total number of Initial International Shares to be purchased
pursuant to this Agreement, the non-defaulting Managers shall be obligated to
purchase the full amount thereof in the proportions that their respective
Initial International Shares underwriting obligation proportions bear to the
underwriting obligation proportions of all non-defaulting Managers, or
(b) if the number of Defaulted International Shares exceeds
10% of the total number of Initial International Shares, this Agreement shall
terminate without liability on the part of any non-defaulting Managers.
No action taken pursuant to this Section 11 shall relieve any
defaulting Manager from liability in respect of its default.
In the event of any such default that does not result in a
termination of this Agreement, either you or the Company or the Selling
Stockholder shall have the right to postpone the Closing Time for a period not
exceeding seven days in order to effect any required changes in the Registration
Statement or Prospectuses or in any other documents or arrangements. As used
herein, the term "Manager" includes any person substituted for a Manager under
this Section 11.
Section 12. Default by the Company or the Selling Stockholder.
(a) If the Company shall fail at the Closing Time to sell and deliver the number
of Offered Shares that it is obligated to sell, then this Agreement shall
terminate without any liability on the part of any non-defaulting party except
to the extent provided in Section 4 and except that the provisions of Sections 7
and 8 shall remain in effect. No action taken pursuant to this Section shall
relieve the Company from liability, if any, in respect of such default.
(b) If the Selling Stockholder shall fail at the Closing Time
to sell and deliver the number of Offered Shares that she is obligated to sell,
then the Lead Managers may, at their option, by notice to the Company and the
Selling Stockholder either (a) terminate this Agreement without any liability on
the part of any non-defaulting party except to the extent provided in Section 4
and except the provisions of Sections 7 and 8 shall remain in effect or (b)
elect to purchase the Offered Shares which the non-defaulting party has agreed
to sell thereunder. No action taken pursuant to this Section shall relieve the
Selling Stockholder from liability, if any, in respect of such default.
Section 13. Notices. All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given if delivered, mailed or transmitted by any standard form of
telecommunication. Notices to you or the Managers shall be directed to you, c/o
Merrill Lynch, Pierce, Fenner & Smith Incorporated at Merrill Lynch World
Headquarters, North Tower, World Financial
37
<PAGE>
Center, New York, New York 10261, attention of Ian B. MacTaggart with a copy to
Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, NY
10004, attention of Valerie Ford Jacob, Esq.; and notices to the Company and the
selling stockholder shall be directed to the Company at 90 Park Avenue, New
York, New York 10016, attention of Stanley P. Silverstein, Esq. with a copy to
Skadden, Arps, Slate, Meagher & Flom, 919 Third Avenue, New York, NY 10022,
attention of Kenneth J. Bialkin, Esq.
Section 14. Parties. This Agreement is made solely for the
benefit of the several Managers, the Selling Stockholder, the Company, and, to
the extent expressed, any person controlling the Company or any of the Managers,
and the directors of the Company, the officers of the Company who have signed
the Registration Statement, and the executors, administrators, successors and
assigns of such persons and, no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from any of the several Managers
of the International Shares. All of the obligations of the Managers hereunder
are several and not joint.
SECTION 15. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS. SPECIFIED TIMES OF THE DAY REFER TO NEW YORK CITY TIME.
Section 16. Jurisdiction. Each of the undersigned hereby
irrevocably submits in any suit, action or proceeding arising out of or in
relation to this Agreement, or any of the transactions contemplated hereby, to
the jurisdiction and venue of any federal or state court in the Borough of
Manhattan, City of New York, State of New York.
Section 17. Counterparts. This Agreement may be executed in
one or more counterparts and, when a counterpart has been executed by each
party, all such counterparts taken together shall constitute one and the same
agreement.
Section 18. Representation of Managers. You will act for the
several Managers and any action under or in respect of this Agreement taken by
you as Lead Managers will be binding upon all Managers.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument
38
<PAGE>
will become a binding agreement among the Company, the Selling Stockholder and
the several Managers in accordance with its terms.
Very truly yours,
THE WARNACO GROUP, INC.
By________________________
Name:
Title:
_______________________
Linda J. Wachner
Confirmed and accepted as of the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
OPPENHEIMER INTERNATIONAL LTD.
UBS LIMITED
By: MERRILL LYNCH INTERNATIONAL LIMITED
By ____________________________
Name:
Title:
For themselves and as Lead Managers of the other Managers named in Schedule A.
39
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Initial
International Shares to
International Managers be Purchased
<S> <C>
Merrill Lynch International Limited.................................................
Donaldson, Lufkin & Jenrette Securities Corporation.................................
Bear, Stearns International Limited.................................................
Morgan Stanley & Co. International Limited..........................................
Oppenheimer International Ltd.......................................................
UBS Limited.........................................................................
---------
Total.................................................................. 1,920,000
=========
</TABLE>
<PAGE>
Exhibit A
THE WARNACO GROUP, INC.
(a Delaware corporation)
1,920,000 Shares of Common Stock
INTERNATIONAL PRICE DETERMINATION AGREEMENT
__________, 1995
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
OPPENHEIMER INTERNATIONAL LTD.
UBS LIMITED
As Representatives of the several Managers
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Reference is made to the International Purchase Agreement dated
___________, 1995 (the "International Purchase Agreement") among The Warnaco
Group, Inc., a Delaware corporation (the "Company"), Linda J. Wachner, Chairman,
President and Chief Executive Officer of the Company (the "Selling
Stockholder"), and the several Managers named in Schedule A thereto and hereto
(the "Managers"), for whom Merrill Lynch International Limited, Donaldson,
Lufkin & Jenrette Securities Corporation, Bear, Stearns International Limited,
Morgan Stanley & Co. International Limited, Oppenheimer International Ltd. and
UBS Limited are acting as representatives (the "Lead Managers"). The
International Purchase Agreement provides for the purchase by the Managers from
the Company and the Selling Stockholder, subject to the terms and conditions set
forth therein, of an aggregate of 1,920,000 shares (the "Initial International
Shares") of the Company's common stock, par value $.01 per share. This Agreement
is the International Price Determination Agreement referred to in the
International Purchase Agreement.
<PAGE>
Pursuant to Section 2 of the International Purchase Agreement, the
undersigned agree with the Lead Managers as follows:
1. The initial public offering price per share for the Initial
International Shares shall be $_________.
2. The purchase price per share for the Initial International
Shares to be paid by the several Managers shall be $_______, representing an
amount equal to the initial public offering price set forth above, less
$________ per share.
The Company represents and warrants to each of the Managers that the
representations and warranties of the Company set forth in Section 1(a) of the
International Purchase Agreement are accurate as though expressly made at and as
of the date hereof.
The Selling Stockholder represents and warrants to each of the Managers
that the representations and warranties of the Selling Stockholder set forth in
Section 1(b) of the International Purchase Agreement are accurate as though
expressly made at and as of the date hereof.
As contemplated by Section 2 of the International Purchase Agreement,
attached as Schedule A is a completed list of the several U.S. Underwriters,
which shall be part of this Agreement and the International Purchase Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument along with all counterparts and together with the International
Purchase Agreement shall be a binding agreement among the Managers, the Company
and the Selling Stockholder in accordance with its terms and the terms of the
International Purchase Agreement.
Very truly yours,
THE WARNACO GROUP, INC.
By: ___________________
Name:
Title
-------------------
Linda J. Wachner
<PAGE>
Confirmed and accepted as of the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
BEAR, STEARNS INTERNATIONAL LIMITED
MORGAN STANLEY & CO. INTERNATIONAL LIMITED
OPPENHEIMER INTERNATIONAL LTD.
UBS LIMITED
By: MERRILL LYNCH INTERNATIONAL LIMITED
By: _______________________________________
Name:
Title:
For themselves and as Lead Managers of the other Managers named in Schedule A
attached hereto.
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Number of Initial
International Shares to
International Managers be Purchased
<S> <C>
Merrill Lynch International Limited................................................
Donaldson, Lufkin & Jenrette Securities Corporation................................
Bear, Stearns International Limited................................................
Morgan Stanley & Co. International Limited.........................................
Oppenheimer International Ltd......................................................
UBS Limited........................................................................
---------
Total................................................................. 1,920,000
=========
</TABLE>
<PAGE>
September 19, 1995
Board of Directors
The Warnaco Group, Inc.
90 Park Avenue
New York, New York 10016
Gentlemen:
I am General Counsel of The Warnaco Group, Inc., a Delaware
corporation (the "Company"), and have acted as such in connection with the
Registration Statement on Form S-3 (No. 33-61701) (the "Registration
Statement"), which was filed with the Securities and Exchange Commission (the
"Commission") on August 9, 1995, as amended by Amendment No. 1 to the
Registration Statement filed with the Commission on August 21, 1995, as amended
by Amendment No. 2 to the Registration Statement filed with the Commission on
September 12, 1995, relating to the registration of 11,040,000 shares of the
Company's Class A Common Stock, par value $.01 per share (the "Shares").
This opinion is being delivered pursuant to the requirements
of Item 601(b)(5) of Regulation S-K under the Securities Act.
In connection with this opinion, I have examined and am
familiar with originals or copies, certified or otherwise identified to my
satisfaction, of (i) the Registration Statement; (ii) the Restated Certificate
of Incorporation of the Company, as amended; (iii) the By-Laws of the Company;
(iv) resolutions of the Board of Directors of the Company relating to, among
other things, the issuance and sale of the Shares, (v) the form of a specimen
certificate representing the Shares; (vi) the form of the U.S. Purchase
Agreement (the "U.S. Purchase
<PAGE>
New York Stock Exchange, Inc.
May 4, 1995
Page 2
Agreement") to be entered into by and among the Company, Merrill Lynch & Co.,
Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns & Co. Inc.,
Morgan Stanley & Co. Incorporated and Oppenheimer & Co., Inc., acting severally
on behalf of themselves and the several Underwriters named therein (the "U.S.
Underwriters"), and a Selling Stockholder; (vii) the form of the International
Purchase Agreement (the "International Purchase Agreement," and together with
the U.S. Purchase Agreement, the "Purchase Agreements") to be entered into by
and among the Company, the Selling Stockholder and Merrill Lynch International
Limited, Donaldson, Lufkin & Jenrette Securities Corporation, Bear, Stearns
International Limited, Morgan Stanley & Co. International, Oppenheimer
International Ltd. and UBS Limited, Inc., acting severally on behalf of
themselves and the several International Managers named therein (collectively,
the "International Managers," and together with the U.S. Underwriters, the
"Underwriters");(viii) such other documents as I have deemed necessary or
appropriate as a basis for the opinion set forth below. In my examination, I
have assumed the genuineness of all signatures, the legal capacity of all
natural persons, the authenticity of all documents submitted to me as originals,
the conformity to the original documents of all documents submitted to me as
certified or photostatic copies and the authenticity of the originals of such
latter documents. As to any facts material to this opinion that I did not
independently establish or verify, I have relied upon statements and
representations of officers and other representatives of the Company and others.
I am admitted to the Bar of the State of New York and, except
as set forth in the paragraph immediately below, I express no opinion as to the
laws of any other jurisdiction other than the General Corporation Law of the
State of Delaware and the laws of the United States of America to the extent
expressly set forth herein.
Based upon and subject to the foregoing, I am of the opinion
that (i) the issuance and sale of the Shares have been duly authorized by all
requisite corpo-
<PAGE>
New York Stock Exchange, Inc.
May 4, 1995
Page 3
rate action on the part of the Company and (ii) when the Purchase Agreements
have been duly executed by the parties thereto and the Shares are issued,
delivered and paid for in accordance with the terms of the Purchase Agreements,
the Shares will be validly issued, fully paid and nonassessable.
I hereby consent to the use of my name in the Registration
Statement under the caption "Legal Matters" and to the filing of this opinion as
Exhibit 5.1 to the Registration Statement. In giving this consent, I do not
admit that I am an expert within the meaning of the Securities Act or that this
consent is required pursuant to Section 7 of the Securities Act.
Very truly yours,
/s/ STANLEY P. SILVERSTEIN
Stanley P. Silverstein
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption 'Experts' in the
Registration Statement (Form S-3 No. 33-61701) and related prospectus of The
Warnaco Group, Inc. for the registration of 11,040,000 shares of its common
stock and to the incorporation by reference therein of our report dated February
23, 1995, with respect to the consolidated financial statements and schedules of
The Warnaco Group, Inc. included in its Annual Report (Form 10-K) for the year
ended January 7, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG, LLP
New York, New York
September 19, 1995
