OMB APPROVAL
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)
THE WARNACO GROUP, INC.
(Name of Issuer)
Class A Common Stock, par value $0.01 per share
(Title of Class of Securities)
934390105
(CUSIP number)
Glenn M. Feit, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036-8299
(212) 969-3000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
October 14, 1997
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-
1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
SCHEDULE 13D
CUSIP No. 934390105
1 NAME OF REPORTING PERSONS
New Rio, L.L.C.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
51-0364695
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER None
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 5,267,752(1)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER None
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 5,267,752(1)
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,267,752(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.43%(2)
14 TYPE OF REPORTING PERSON*
00
(1) Represents the number of shares of Common Stock (as
hereinafter defined) received by New Rio, L.L.C. upon the
Exchange (as hereinafter defined) referred to in Items 3 and
4 below.
(2) Gives effect to the total number of outstanding shares of
Common Stock, as of September 22, 1997, plus the number of
shares of Common Stock to be issued in the Exchange and the
Merger referred to in Items 3 and 4 below.
CUSIP No. 934390105
1 NAME OF REPORTING PERSONS
Charterhouse Equity Partners II, L.P.
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
13-3752442
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER 2,602,951(1)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER None
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 2,602,951(1)
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER None
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,602,951(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.16%(2)
14 TYPE OF REPORTING PERSON*
PN
(1) Based on the portion of shares of Common Stock allocable to
Charterhouse Equity Partners II, L.P. in accordance with the
Third Amended and Restated Limited Liability Company
Agreement of New Rio, L.L.C., dated as of May 9, 1996,
referred to in Item 6 below.
(2) Gives effect to the total number of outstanding shares of
Common Stock as of September 22, 1997, plus the number of
shares of Common Stock to be issued in the Exchange and the
Merger referred to in Items 3 and 4 below.
CUSIP No. 934390105
1 NAME OF REPORTING PERSONS
A.S. Enterprises, LLC
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
NUMBER OF 7 SOLE VOTING POWER 98,147(1)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER None
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 98,147(1)
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER None
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
98,147(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.16%(2)
14 TYPE OF REPORTING PERSON*
00
(1) Based on the portion of shares of Common Stock allocable to
A.S. Enterprises, LLC in accordance with the Third Amended
and Restated Limited Liability Company Agreement of New Rio,
L.L.C., dated as of May 9, 1996, referred to in Item 6
below.
(2) Gives effect to the total number of outstanding shares of
Common Stock, as of September 22, 1997, plus the number of
shares of Common Stock to be issued in the Exchange and the
Merger referred to in Items 3 and 4 below.
CUSIP No. 934390105
1 NAME OF REPORTING PERSONS
Arnold H. Simon
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
NUMBER OF 7 SOLE VOTING POWER 2,529,083(1)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER 194,400(2)
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 2,529,083(1)
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER 194,400(2)
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,529,083(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [x]
See Item 5(a)
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.05%(3)
14 TYPE OF REPORTING PERSON*
IN
(1) Based on the portion of shares of Common Stock allocable to
Arnold H. Simon and A.S. Enterprises, LLC in accordance with
the Third Amended and Restated Limited Liability Company
Agreement of New Rio, L.L.C., dated as of May 9, 1996,
referred to in Item 6 below.
(2) Represents shares of Common Stock owned by the Arnold Simon
Family Foundation, as described in Item 5, following the
Merger(as hereinafter defined). Mr. Simon disclaims
beneficial ownership of the 194,400 shares of Common Stock
owned by the Arnold Simon Family Foundation.
(3) Gives effect to the total number of outstanding shares of
Common Stock as of September 22, 1997, plus the number of
shares of Common Stock to be issued in the Exchange and the
Merger referred to in Items 3 and 4 below.
CUSIP No. 934390105
1 NAME OF REPORTING PERSONS
Covino Denim Partners
S.S. or I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [x]
(b) [ ]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
NUMBER OF 7 SOLE VOTING POWER 73,021(1)
SHARES
BENEFICIALLY 8 SHARED VOTING POWER None
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER 73,021(1)
REPORTING
PERSON 10 SHARED DISPOSITIVE POWER None
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
73,021(1)
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* [ ]
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.12%(2)
14 TYPE OF REPORTING PERSON*
PN
(1) Based on the portion of shares of Common Stock allocable to
Covino Denim Partners in accordance with the Third Amended
and Restated Limited Liability Company Agreement of New Rio,
L.L.C., dated as of May 9, 1996, referred to in Item 6
below.
(2) Gives effect to the total number of outstanding shares of
Common Stock as of September 22, 1997, plus the number of
shares of Common Stock to be issued in the Exchange and the
Merger referred to in Items 3 and 4 below.
AMENDMENT NO. 1
to
Statement on Schedule 13D
Pursuant to Rule 13D-1
under the
Securities Exchange Act of 1934, as Amended
Item 1. Security and Issuer
This amends and supplements the statement on Schedule 13D
("Schedule 13D") filed with the Commission jointly on behalf of
New Rio, L.L.C. ("New Rio"), Charterhouse Equity Partners II,
L.P.("CEP II"), A.S. Enterprises, LLC ("ASE"), Arnold H. Simon
("Mr. Simon") and Covino Denim Partners ("Covino") with respect
to the Class A Common Stock, par value $.01 per share (the
"Common Stock"), of The Warnaco Group, Inc., a Delaware
corporation ("Warnaco"). The address of the principal executive
offices of Warnaco is 90 Park Avenue, New York, NY 10016. This
statement is Amendment No. 1 to the Schedule 13D. Unless
otherwise defined herein, all capitalized terms used herein shall
have the meanings ascribed to them in the Schedule 13D.
Item 2 of the Schedule 13D is hereby amended and restated in its
entirety as follows:
Item 2. Identity and Background
(a) This Schedule 13D is being filed jointly by New Rio, a
Delaware limited liability company, CEP II, a Delaware
limited partnership, ASE, a New Jersey limited
liability company, Mr. Simon, a U.S. citizen, and
Covino, a New York general partnership.
(b) The principal executive offices of New Rio is:
1385 Broadway
New York, NY 10018
The principal executive offices of CEP II is:
535 Madison Avenue
New York, NY 10022
The principal executive offices of ASE is:
1385 Broadway
New York, NY 10018
The business address of Mr. Simon is:
1385 Broadway
New York, NY 10018
The business address of Covino is:
10 Cottage Place
Suite 36
White Plains, NY 10601
(c) New Rio was formed by CEP II and Mr. Simon to invest in
Designer Holdings Ltd., a Delaware corporation
("Designer Holdings"), which develops, sources and
markets designer sportswear collections under the
Calvin Klein Jeans(R), CK/Calvin Klein Jeans(R), and
CK/Calvin Klein Khakis(R) labels.
CEP II is a Delaware limited partnership. The general
partner of CEP II is CHUSA Equity Investors II, L.P.,
whose general partner is Charterhouse Equity II, Inc.
("Charterhouse Inc."), a wholly-owned subsidiary of
Charterhouse Group International, Inc.
("Charterhouse"). Accordingly, the management of CEP
II is ultimately controlled by Charterhouse.
Charterhouse is a privately owned investment firm that
initiates, structures and arranges financing for
private equity investments. For certain information
concerning the directors and executive officers of
Charterhouse Inc. and Charterhouse, reference is made
to Schedules I and II, respectively, to this Schedule
13D, which are incorporated herein by reference.
ASE is a New Jersey limited liability company formed by
Mr. Simon, Debra Simon and Apparel Ventures, Inc.
("Apparel"), a New Jersey corporation, to invest in New
Rio. For certain information concerning the directors
and executive officers of Apparel, reference is made to
Schedule III to this Schedule 13D, which is
incorporated herein by reference.
Mr. Simon is the President and Chief Executive Officer
of Designer Holdings. The address of Designer Holdings
is 1385 Broadway, New York, NY 10018.
Covino is a New York general partnership. The managing
partner of Covino is Michael A. Covino ("Mr. Covino").
Covino was established as a holding company.
(d) Not applicable.
(e) Not applicable.
(f) New Rio is a Delaware limited liability company; CEP II
is a Delaware limited partnership; ASE is a New Jersey
limited liability company; Mr. Simon is a U.S. Citizen;
and Covino is a New York general partnership.
Item 3 of the Schedule 13D is hereby amended and restated in its
entirety as follows:
Item 3. Source and Amount of Funds or Other Consideration
Pursuant to a Stock Exchange Agreement, dated as of
September 25, 1997 (the "Exchange Agreement"), among Warnaco, New
Rio and the members of New Rio (including CEP II, ASE and
Mr. Simon), as described in Item 4 below, New Rio exchanged (the
"Exchange") all of its 16,258,494 shares of common stock, par
value $.01 per share (the "DSH Stock"), of Designer Holdings
(which excludes 600,000 shares of DSH Stock beneficially owned by
the Simon Foundation, as defined below) for 5,267,752 shares of
Common Stock (which excludes 194,400 shares of Common Stock
beneficially owned by the Simon Foundation, as defined below,
following the Merger).
Item 4 of the Schedule 13D is hereby amended as follows:
Item 4. Purpose of Transaction
In connection with the qualification of the Exchange and the
Merger together as a tax-free reorganization under the provisions
of Section 368 of the Internal Revenue Code of 1986, as amended,
New Rio and each of the members of New Rio have entered into that
certain Continuity of Interest Agreement, dated as of September
25, 1997 (the "Continuity Agreement"), which provides among other
things, that for a period of one year after the Merger, neither
New Rio nor any member will dispose of (i) a number of shares of
Common Stock that would reduce such member's ownership of Common
Stock to a number of shares that is less than 20% of the number
of shares of Common Stock to be received by New Rio in the
Exchange and which are beneficially attributable to such member
or (ii) more than 80% of such member's percentage interest in New
Rio.
The Continuity Agreement is included as Exhibit 5 and is
incorporated herein by reference thereto. The description of the
Continuity Agreement is qualified in its entirety by reference
thereto.
Item 5 of the Schedule 13D is hereby amended as follows:
Item 5. Interest in Securities of the Issuer
(a) Upon consummation of the transactions contemplated by
the Merger Agreement and the Exchange Agreement, New Rio will own
5,267,752 shares of Common Stock of Warnaco, which represents
8.43% of the outstanding Common Stock of Warnaco based upon (i)
the number of shares of Common Stock received by New Rio upon the
Exchange and (ii) the total number of outstanding shares of
Common Stock as set forth in the Merger Agreement plus the number
of shares of Common Stock issued in the Exchange referred to in
Items 3 and 4 above. Of the 5,267,752 shares of Common Stock to
be owned by New Rio, CEP II will beneficially own 2,602,951
shares of Common Stock of Warnaco, which represents 4.16% of the
outstanding Common Stock of Warnaco; ASE will beneficially own
98,147 shares of Common Stock, which represents .16% of the
outstanding Common Stock of Warnaco; Mr. Simon will beneficially
own 2,529,083 shares of Common Stock (which includes 98,147
shares of Common Stock owned by ASE), which represents 4.05% of
the outstanding Common Stock of Warnaco; and Covino will
beneficially own 73,021 shares of Common Stock, which represents
.12% of the outstanding Common Stock of Warnaco. With respect to
Mr. Simon, the 2,529,083 shares of Common Stock does not include
194,400 shares of Common Stock to be owned following the Merger
by the Arnold Simon Family Foundation (the "Simon Foundation"), a
not-for-profit corporation. Mr. Simon, as one of three trustees
of the Simon Foundation, shares voting and disposition rights
with two other trustees. Mr. Simon disclaims beneficial
ownership of the 194,400 shares to be owned by the Simon
Foundation following the Merger. The foregoing number of shares
of Common Stock allocable to CEP II, ASE, Mr. Simon and Covino
are based on the allocation set forth in that certain Third
Amended and Restated Limited Liability Company Agreement of New
Rio, dated as of May 9, 1996, and referred to in Item 6 below.
(b) As of the Exchange, New Rio has shared voting and
disposition power over 5,267,752 shares of Common Stock. Except
as otherwise provided in Item 4, CEP II has sole voting and
disposition power over 2,602,951 shares of Common Stock acquired
in the Exchange, ASE has sole voting and disposition power over
98,147 shares of Common Stock acquired in the Exchange, Mr. Simon
has sole voting and disposition power over 2,529,083 shares of
Common Stock acquired in the Exchange (which includes 98,147
shares of Common Stock owned by ASE) and Covino has sole voting
and disposition power over 73,021 shares of Common Stock acquired
in the Exchange.
Item 6 of the Schedule 13D is hereby amended as follows:
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
New Rio and Mr. Covino have entered into that certain Escrow
Agreement, dated as of September 25, 1997 (the "Escrow
Agreement"), pursuant to which, among other things, New Rio
agreed to transfer to Mr. Covino, or his order, the number of
shares of Common Stock received by New Rio in the Exchange that
are beneficially attributable to Mr. Covino. Notwithstanding any
such transfer, Mr. Covino is bound by the terms of the Exchange
Agreement and the Continuity Agreement.
The Escrow Agreement is included as Exhibit 6 and is
incorporated herein by reference thereto. The description of the
Escrow Agreement is qualified in its entirety by reference
thereto.
Item 7 of the Schedule 13D is hereby amended as follows:
Item 7. Material to Be Filed as Exhibits
Exhibit 5 Continuity of Interest Agreement between New Rio
and each of the members of New Rio, dated as of
September 25, 1997.
Exhibit 6 Escrow Agreement between New Rio and Covino, dated
as of September 25, 1997.
Schedule I
DIRECTORS AND EXECUTIVE OFFICERS OF
CHARTERHOUSE EQUITY II, INC.
Set forth below is the name, office(s) held, business or
residence address, and present principal occupation or employment
of each director and executive officer of Charterhouse Equity II,
Inc. The business address of each person listed below is 535
Madison Avenue, New York, New York 10022. Each person listed
below is a citizen of the United States.
Name and Offices Present Principal
Occupation or Employment
Merril M. Halpern Chairman and Chief Executive
Chairman, Chief Executive Officer of Charterhouse Group
Officer and Director International, Inc.
("Charterhouse") for more than
the past five years. Mr.
Halpern is also a director of
American Disposal Services,
Inc., Designer Holdings Ltd.,
Insignia Financial Group,
Inc., and Microwave Power
Devices, Inc.
A. Lawrence Fagan President and Chief Operating
President, Chief Operating Officer of Charterhouse for
Officer and Director more than the past five years.
Mr. Fagan is also a director
of American Disposal Services,
Inc., Designer Holdings Ltd.,
and Microwave Power Devices,
Inc.
Richard T. Henshaw, III Managing Director of
Senior Vice President Charterhouse. Mr. Henshaw is
also a director of American
Disposal Services, Inc., and
Cornell Corrections, Inc.
Patricia R. Merrick Senior Vice President of
Senior Vice President Charterhouse.
Thomas C. Dircks Managing Director of
Vice President Charterhouse.
Phyllis Haberman Senior Vice President of
Vice President Charterhouse.
Wai Wah Chin Senior Vice President of
Vice President Charterhouse.
Cheri E. Lieberman Vice President of Finance of
Vice President and Controller Charterhouse.
Glenn M. Feit Partner, Proskauer Rose LLP.
Secretary
Schedule II
DIRECTORS AND EXECUTIVE OFFICERS OF
CHARTERHOUSE GROUP INTERNATIONAL, INC.
Set forth below is the name, office(s) held, business or
residence address, and present principal occupation or employment
of each director and executive officer of Charterhouse Group
International, Inc. Unless otherwise indicated, the business
address of each person listed below is 535 Madison Avenue, New
York, New York 10022. Unless otherwise indicated, each person
listed below is a citizen of the United States.
Name and Offices Position with Charterhouse/
Present Principal Occupation
or Employment
Merril M. Halpern See Schedule I
A. Lawrence Fagan See Schedule I
John F. Brown Deputy Managing Director of
Hobart House CIN Venture Managers Limited,
Grosvenor Place advisors to the British Coal
London SWIX 7AD Pension Funds, for more than
England the past five years.
(Citizen of the United Kingdom)
Peter Carnwath Managing Director of Electra
Electra Fleming, Inc. Fleming Inc., an investment
70 East 55th Street fund, and various other
New York, New York 10022 executive positions with its
(Citizen of the United Kingdom) affiliates, for more than the
past five years.
Cees de Bruin Chairman of the Indofin Group,
Indofin Group an international group of
Veerkade 7 holding and management
Postbus 23341 companies, for more than the
3001 KH Rotterdam, past five years.
The Netherlands
(Citizen of The Netherlands)
Sir G. Nigel Mobbs Chairman of the Board and
234 Bath Road Chief Executive Officer of
Slough Slough Estates plc, a United
Berkshire SL1 YEE Kingdom company engaged
England principally in real estate
(Citizen of the United Kingdom) activities, for more than the
past five years.
Alfred Schechter Mr. Schechter was most
recently Chairman and Chief
Executive Officer of Cryenco
Sciences, Inc., a manufacturer
of sophisticated leak-tight
container systems, from 1991
to 1997 and Charter-Crellin,
Inc. from 1985 to 1989. Prior
to that time, Mr. Schechter
was affiliated in various
capacities with Charterhouse
and several of its portfolio
companies.
Coen N. Teulings Chairman of the Merifin Group,
Merifin B.V. a Netherlands investment
VeerKade 7 banking company, for more
3016 DeRotterdam than the past five years.
The Netherlands
(Citizen of The Netherlands)
Robert L. Berner III Managing Director of
Charterhouse
Thomas C. Dircks See Schedule I
Richard T. Henshaw III See Schedule I
David C. Stoller Managing Director of
Charterhouse and Chairman and
Director of American Disposal
Services, Inc. Mr. Stoller is
also Of Counsel at the law
firm of Millbank, Tweed,
Hadley & McCloy.
Wai Wah Chin See Schedule I
Phyllis Haberman See Schedule I
Patricia R. Merrick See Schedule I
Cheri E. Lieberman See Schedule I
Jay Gates Vice President of Charterhouse
Lori Livers Vice President of Charterhouse
Glenn M. Feit See Schedule I
Schedule III
DIRECTORS AND EXECUTIVE OFFICERS OF
APPAREL VENTURES, INC.
Set forth below is the name, offices(s) held, business or
residence address, and present principal occupation or employment
of each director and executive officer of Apparel Ventures, Inc.
The business address of each person listed below is 1385
Broadway, New York, New York 10018. Each person listed below is
a citizen of the United States.
Name and Offices Present Principal
Occupation or Employment
Arnold H. Simon
President, Treasurer President and Chief Executive
and Sole Director Officer of Designer Holdings,
Ltd.
Debra Simon Executive Vice President of
Vice President Designer Holdings, Ltd.
and Secretary
Signature
After reasonable inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set forth
in this statement is true, complete and correct.
October 16, 1997 NEW RIO, L.L.C.
By: /s/ Arnold H. Simon
Title: Member Manager
By: CHARTERHOUSE EQUITY PARTNERS II, L.P.
A Member Manager
By: CHUSA EQUITY INVESTORS II, L.P.
By: CHARTERHOUSE EQUITY II, INC.
By: /s/ A. Lawrence Fagan
Title: President
CHARTERHOUSE EQUITY PARTNERS II, L.P.
By: CHUSA EQUITY INVESTORS II, L.P.
General Partner
By: CHARTERHOUSE EQUITY II, INC.
General Partner
By: /s/ A. Lawrence Fagan
Title: President
A.S. ENTERPRISES, LLC
By: APPAREL VENTURES, INC.
By: /s/ Arnold H. Simon
Title: President
By: /s/ Arnold H. Simon
Title: Member Manager
/s/ Arnold H. Simon
Arnold H. Simon
COVINO DENIM PARTNERS
By: /s/ Michael A. Covino
Title: Managing Partner
CONTINUITY OF INTEREST AGREEMENT
New Rio, L.L.C. ("New Rio"), and each of the
undersigned members of New Rio (the "Members" and, including New
Rio, the "Shareholders"), hereby enter into this Agreement as of
September 25, 1997.
WHEREAS, the Shareholders and The Warnaco Group, Inc.
("Warnaco") have entered into a Stock Exchange Agreement, dated
as of September 25, 1997 (the "Exchange Agreement"), pursuant to
which New Rio will transfer all of its shares of common stock of
Designer Holdings Ltd. ("DSH Common Stock") to Warnaco in
exchange for certain shares of Warnaco Class A Common Stock (the
"Exchange");
WHEREAS, Warnaco, Warnaco Acquisition Corporation
("WAC"), and Designer Holdings Ltd. ("DSH") have entered into an
Agreement and Plan of Merger, dated as of September 25, 1997 (the
"Merger Agreement"), pursuant to which WAC will merge with and
into DSH (the "Merger");
WHEREAS, as an inducement to Warnaco, WAC and DSH to
effect the Exchange and consummate the Merger, the Shareholders
are executing this Agreement in connection with qualifying the
Exchange and the Merger together as a tax-free reorganization
under the provisions of Section 368 of the Internal Revenue Code
of 1986, as amended (the "Code").
Now, therefore, the parties hereto, intending legally
to be bound, hereby agree as follows:
1. Each Shareholder represents that such Shareholder
has not purchased, sold, exchanged, distributed, transferred by
gift or otherwise disposed of (including through transactions
which had the economic effect of a disposition such as through
the use of puts and calls, short sales, equity swaps or any
similar type of arrangement) (collectively, "dispose" or
"disposition") shares of DSH Common Stock or Warnaco Class A
Common Stock prior to the date hereof either in contemplation of
or as part of the Exchange or the Merger.
2. New Rio represents that it does not have any plan
or intention to sell, exchange, distribute, transfer by gift, or
otherwise dispose of any interest in a number of shares (as
adjusted for stock splits or other similar transactions) of
Warnaco Class A Common Stock exceeding 80% of the number of
shares (as adjusted for stock splits or other similar
transactions) of Warnaco Class A Common Stock to be received in
the Exchange, other than a transfer of such shares pursuant to a
plan of complete liquidation of New Rio.
3. Each Member represents that it does not have any
plan or intention to sell, exchange, transfer by gift, or
otherwise dispose of (i) a number of shares of Warnaco Class A
Common Stock that would reduce such Member's ownership of Warnaco
Class A Common Stock (including any beneficial ownership
attributable to such Member's interest in New Rio) to a number of
shares (as adjusted for stock splits or other similar
transactions) that is less than 20% of the number of shares (as
adjusted for stock splits or other similar transactions) of the
Warnaco Class A Common Stock to be received by New Rio in the
Exchange which are beneficially attributable to such Member, or
(ii) more than 80% of such Member's Percentage Interest (as
defined in the Third Amended and Restated Limited Liability
Company Agreement of New Rio, dated as of May 9, 1996) in New Rio
as of the date hereof.
4. Each Shareholder will immediately notify Simpson
Thacher & Bartlett ("Simpson") and Skadden, Arps, Slate, Meagher
& Flom LLP ("Skadden") if such Shareholder has obtained knowledge
or information which indicates that any of the foregoing
representations by such Shareholder may cease to be true or
accurate.
5. Subject to the provisions of Section 7, except
pursuant to a plan of complete liquidation, New Rio, for a period
of one year after the Merger, will not sell, exchange, transfer
by gift or otherwise dispose of a number of shares (as adjusted
for stock splits or other similar transactions) of Warnaco Class
A Common Stock exceeding 80% of the number of shares (as adjusted
for stock splits or other similar transactions) of Warnaco Class
A Common Stock received in the Exchange.
6. Each Member, for a period of one year after the
Merger, will not (and, to the extent otherwise permitted, will
not direct New Rio to) sell, exchange, distribute, transfer by
gift or otherwise dispose of (i) a number of shares of Warnaco
Class A Common Stock that would reduce such Member's ownership of
Warnaco Class A Common Stock (including any beneficial ownership
attributable to such Member's interest in New Rio) to a number of
shares (as adjusted for stock splits or other similar
transactions) that is less than 20% of the number of shares (as
adjusted for stock splits or other similar transactions) of the
Warnaco Class A Common Stock to be received by New Rio in the
Exchange which are beneficially attributable to such Member, or
(ii) more than 80% of such Member's Percentage Interest in New
Rio as of the date hereof.
7. A disposition shall not be in contravention of
paragraphs 5 and 6 of this Agreement if (i) there has been an
unforseen change in circumstances and such Shareholder has
obtained the written opinion of Skadden (which opinion will have
been delivered to, and found reasonably satisfactory by, Simpson)
that such transaction will not prevent the Exchange and the
Merger from together qualifying as a tax-free reorganization
under the provisions of Section 368 of the Code, or (ii) with
respect only to transactions described in paragraph 6, such
Shareholder has died or, in the case of a Member classified as a
partnership for federal income tax purposes (the distributees of
which have agreed in writing, in a form reasonably satisfactory
to Skadden and Simpson, to be legally bound by this Agreement),
has distributed all of its assets pursuant to a plan of complete
liquidation.
8. The Shareholders will, for a period of one year
after the Merger, notify Skadden no later than 10 business days
after any sale, exchange, transfer by gift or other disposition
of any New Rio membership interest or Warnaco Class A Common
Stock received pursuant to the Exchange, which notice will
describe (i) the number of Warnaco Class A Common Shares disposed
of, and (ii) the exact manner of such disposition.
9. Each Shareholder understands that the provisions
of this Agreement (i) have been expressly relied upon by Warnaco,
WAC and DSH in connection with entering into the Exchange
Agreement and the Merger Agreement, and (ii) will be relied upon
by Skadden and Simpson in connection with the rendering of their
respective opinions concerning certain federal income tax
consequences of the Merger, the rendering and delivery of which
are conditions precedent to the consummation of the Merger.
10. If the Merger Agreement is terminated at any time
or the Merger has not been consummated by September 30, 1998,
this Agreement shall automatically terminate and be of no force
and effect, and the parties hereto shall not be bound by any of
the provisions hereof.
11. This Agreement shall be binding upon and
enforceable against the successors and assigns of the parties
hereto.
12. This Agreement may not be modified, amended,
altered or supplemented except by a written agreement executed by
all of the parties hereto and approved in writing by Skadden and
Simpson.
13. All notices to Skadden should be sent to:
Katherine M. Bristor, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
14. All notices to Simpson should be sent to:
Charles O. Rappaport, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
15. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which together shall constitute one instrument.
16. This Agreement constitutes the entire agreement
among the parties hereto with respect to the subject matter
hereof.
In witness whereof, the parties hereto have caused this
Agreement to be duly executed on the date first set forth above.
NEW RIO, L.L.C.
By: A.S. Enterprises, L.L.C.
Member Manager
By: Apparel Ventures, Inc.
By: ______________________________
Name:
Title:
By: CHARTERHOUSE EQUITY PARTNERS II, L.P.
Member Manager
By: CHUSA EQUITY INVESTORS II, L.P.
General Partner
By: CHARTERHOUSE EQUITY II, INC.
General Partner
By: ______________________________
Name:
Title:
______________________________
Arnold H. Simon
CHARTERHOUSE EQUITY PARTNERS II, L.P.
By: CHUSA EQUITY INVESTORS II, L.P.
General Partner
By: CHARTERHOUSE EQUITY II, INC.
General Partner
By: ______________________________
Name:
Title:
CHEF NOMINEES LIMITED
By: ______________________________
Name:
Title:
A.S. ENTERPRISES, L.L.C.
By: Apparel Ventures, Inc.
By: ______________________________
Name:
Title:
______________________________
Martin L. Berman
______________________________
Phyllis West Berman
______________________________
Steven E. Berman
______________________________
Mark N. Kaplan as Trustee f/b/o
Alison A. Berman and Mark K. Berman
______________________________
Michael A. Covino
EXECUTION COPY
ESCROW AGREEMENT
THIS ESCROW AGREEMENT is dated as of September 25,
1997, by and among WALTER, CONSTON, ALEXANDER & GREEN, P.C., a
New York professional corporation ("WCA&G"), NEW RIO, L.L.C., a
Delaware limited liability company ("New Rio"), and MICHAEL A.
COVINO, an individual ("Covino"). Reference is made to that
certain Stock Exchange Agreement dated as of September 25, 1997
between the Warnaco Group, Inc., New Rio, and each of the members
of New Rio signatory thereto (the "Exchange Agreement"). Terms
used and defined or defined by reference in the Exchange
Agreement and not otherwise defined herein shall be used herein
as therein defined.
R E C I T A L S:
WHEREAS, Covino has requested that New Rio make a
Transfer to him of his Allocated Shares.
WHEREAS, New Rio is willing to make such transfer on
the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing pre-
mises and the mutual covenants hereinafter contained, the parties
hereto agree as follows:
ARTICLE I
1. Appointment of Escrow Agent. New Rio and Covino
hereby appoint WCA&G, having offices at 90 Park Avenue, New York,
New York, as escrow agent for the purposes herein set forth
("Escrow Agent"), and Escrow Agent hereby accepts such
appointment and agrees to be bound by the terms and conditions of
this Escrow Agreement.
ARTICLE II
2. Delivery of the Escrow Documents. Covino and New
Rio shall deliver or cause there to be delivered to Escrow Agent,
and Escrow Agent shall accept receipt of, the documents set forth
on Exhibit A hereto (the "Escrow Documents").
ARTICLE III
3.1 Release of Escrow Documents
A. The Escrow Agent is instructed by the parties
to deliver, and it hereby agrees to deliver, all of the Escrow
Documents (except the Company stock certificate representing
225,337 shares of the Company registered in the name of Covin
Denim Partners (the "Stock Certificate")) to the appropriate
parties as set forth in Exhibit A upon receipt of all of the
Escrow Documents.
B. The Escrow Agent is instructed by the parties
to deliver, and it hereby agrees to deliver, the Stock
Certificate, duly endorsed for transfer, to Parent at Closing.
Upon its receipt of the 73,021 shares of Parent Class A Common
Stock to be received in exchange therefor, the Escrow Agent is
instructed by the parties to deliver, and the Escrow Agent hereby
agrees to deliver, the Exchanged Shares to Covino or his order.
C. Until the Escrow Agent has received all of the
Escrow Documents, it shall continue to hold any such documents
received in escrow and shall not release any of them to any
person.
3.2 Dispute
In the event of a dispute among any of the parties
to this Escrow Agreement, Escrow Agent shall not comply with any
claims or demands from either Covino or New Rio as long as such
dispute may continue, and in so refusing, the Escrow Agent shall
make no delivery or other disposition of the Escrow Documents
then held by it under this Escrow Agreement until it has received
a final court order from a court of competent jurisdiction
directing disposition of the Escrow Documents, or until it has
received appropriate written instructions signed by both Covino
and New Rio.
3.3 Release of the Escrow Documents in accordance with
Joint Instructions
Notwithstanding the provisions of Sections 3.1
through 3.2 above, Escrow Agent, upon receipt of written in-
structions signed by both Covino and New Rio on the release of
the Escrow Documents, shall release the Escrow Documents in
accordance with such instructions.
ARTICLE IV
Rights and Responsibilities of Escrow Agent
4.1 Generally
To induce Escrow Agent to act hereunder, it is
further agreed by Covino and New Rio that:
(a) Escrow Agent shall not be under any duty to give
any documents held in escrow by it hereunder any greater degree
of care than it gives its own similar property.
(b) This Escrow sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent
hereto, and no implied duties or obligations shall be read into
this Escrow Agreement against Escrow Agent.
(c) Escrow Agent shall not be liable to New Rio or
Covino except for its own gross negligence or willful misconduct.
Except with respect to those claims based upon gross negligence
or willful misconduct that are successfully asserted against
Escrow Agent, the other parties hereto shall jointly and
severally indemnify and hold harmless Escrow Agent from and
against any and all losses, liabilities, claims, actions, damages
and expenses, including reasonable attorneys' fees and
disbursements, arising out of and in connection with this Escrow
Agreement.
(d) Escrow Agent may act pursuant to the advice of
counsel with respect to any matter relating to this Escrow Agree-
ment and shall not be liable for any action taken or omitted in
accordance with such advice.
(e) Escrow Agent makes no representation as to the
validity, value, genuineness or collectability of any security or
other document or instrument held by or delivered to it.
(f) Escrow Agent may rely without any liability upon
the contents of any writing of any court, arbitrator or other
third party contemplated herein as a means to resolve disputes.
4.2 Resignation
Escrow Agent may, at any time upon not less than
20 days prior notice, and, upon the joint written request of New
Rio and Covino, shall, resign as such by delivering the Escrow
Documents then held by it in escrow hereunder to any successor
escrow agent jointly designated by Covino and New Rio in writing,
or any court of competent jurisdiction, whereupon Escrow Agent
shall be discharged of any and all further obligations arising in
connection with this Escrow Agreement. The resignation of Escrow
Agent shall take effect on the appointment of a successor
(including a court of competent jurisdiction) and Escrow Agent
shall continue to serve as Escrow Agent hereunder until such
appointment has been made.
ARTICLE V
General
5.1 Expenses. The parties hereto shall bear their own
respective expenses incurred in connection with this Escrow
Agreement and in connection with all obligations required to be
performed by each of them under this Escrow Agreement.
5.2 Amendment and Waiver. No amendment of any
provision of this Escrow Agreement shall in any event be
effective, unless the same shall be in writing and signed by the
parties hereto.
5.3 Notices. Any notices or other communications re-
quired to be given pursuant to this Escrow Agreement shall be in
writing and shall be deemed given: (i) upon delivery, if by hand;
(ii) on the date of mailing, if sent by registered or certified
mail, postage prepaid, return receipt requested or by express
mail or air courier; or (iii) upon transmission, if sent by telex
or facsimile. All notices hereunder shall be given as follows:
If to Escrow Agent:
Walter, Conston, Alexander & Green, P.C.
90 Park Avenue
New York, New York 10036-1387
Attn: William S. Sterns, III
Telecopy: (212) 219-9444
If to Covino:
10 Cottage Place
Suite 3-G
White Plains, New York 10601
Telecopy: (914) 592-0393
If to New Rio:
1338 Broadway
New York, New York 10018
Att: John J. Jones, General Counsel
Telecopy: (212) 556-0116
Any party may change its address for receiving notice by
written notice given to the others named above in the manner
provided above.
5.4 Counterparts. This Escrow Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same agreement.
5.5 Parties in Interest. This Escrow Agreement shall
bind and inure to the benefit of the parties named herein and
their respective heirs, successors and assigns. This Escrow
Agreement shall not be assignable by any party without the prior
written consent of the other party, and any attempted assignment
in violation of this provision shall be null and void and without
legal effect.
5.6 Entire Agreement. This Escrow Agreement, together
with the exhibits attached hereto contains the entire agreement
and understanding of the parties hereto with respect to the
matters herein set forth, and all prior negotiations and under-
standings relating to the subject matter of this Escrow Agreement
are merged herein and are superseded and canceled by this Escrow
Agreement.
5.7 Governing Law. This Escrow Agreement shall be
governed by and construed in accordance with the internal sub-
stantive laws of the State of New York, without giving effect to
the principles of conflicts of law thereof.
IN WITNESS WHEREOF, this Escrow Agreement has been duly
executed by or on behalf of each of the parties hereto as of the
date first above written.
WALTER, CONSTON, ALEXANDER
& GREEN, P.C.
AS ESCROW AGENT
By_______________________ _____________________________
Name: Michael A. Covino
Title:
NEW RIO, L.L.C.
By___________________________
Name:
Title:
Exhibit A
Escrow Documents
- - Stock Exchange Agreement dated as of September 25, 1997 *
- - Stock Certificate of Designer Holdings Ltd. ("DHL")
representing 225,337 shares (CUSIP 250571.10.6). **
- - Indemnification Agreement executed by Michael A. Covino
("Covino") in favor of Charterhouse Equity
Partners II, L.P. ("CEP") ***
- - Continuity of Interest Agreement dated as of September 25,
1997. *
- - Release dated September 25, 1997 executed by Arnold Simon in
favor of Covino. ****
- - Release dated September 25, 1997 executed by Debbie Simon in
favor of Covino. ****
- - Undertaking of Covino dated September 25, 1997 to pay
allocable share of certain transaction bonuses. *****
_________________________________
* Each of Covino, The Warnaco Group, Inc.
("Warnaco"), and New Rio, LLC ("New Rio") to
receive an original execution copy.
** Escrow Agent to deliver this stock certificate to
Warnaco at Closing under the Stock Exchange
Agreement.
*** Original execution copy to CEP.
**** Original execution copy to Covino.
***** Original executed copy to New Rio.
