CONFORMED COPY
LETTER WAIVER
Dated as of May 16, 2001
To the banks, financial institutions
and other institutional lenders
(collectively, the "Lender Parties")
party to the Intercreditor Agreement
referred to below and to The Bank
of Nova Scotia and Citibank, N.A.,
as debt coordinators (the "Debt Coordinators")
Ladies and Gentlemen:
We refer to the (i) Amendment, Modification, Restatement
and General Provisions Agreement dated as of October 6, 2000 (as amended,
supplemented or otherwise modified through the date hereof, the "Facility
Agreement") among The Warnaco Group, Inc. ("Group"), Warnaco Inc., the
other direct and indirect Subsidiaries of Group party thereto, The Bank of
Nova Scotia ("Scotiabank"), as Administrative Agent (the "Administrative
Agent"), Scotiabank and Citibank, N.A., as Debt Coordinators (the "Debt
Coordinators"), for themselves and as representatives of each of the Lender
Parties, and State Street Bank and Trust Company, as Collateral Trustee
(the "Collateral Trustee") and (ii) Intercreditor Agreement referred to in
the Facility Agreement. Capitalized terms not otherwise defined in this
Letter Waiver have the same meanings as specified in Annex A to the
Facility Agreement.
We hereby request that you waive, solely for the period
commencing on the date hereof through 5:00 pm (New York time) on June 15,
2001 (the "Waiver Termination Date"), the requirements of Section 2.7 of
the Facility Agreement for the Fiscal Quarters ended December 30, 2000 and
April 7, 2001.
We agree that we will (i) not, and will not permit any
other Loan Party to, request the issuance of any letter of credit under the
New Trade Credit Facility or the facility numbered B.7 on Schedule II to
the Intercreditor Agreement (the "Bilateral L/C Facility") for the period
commencing on the date hereof through the Waiver Termination Date if, in
either case, the issuance of any such letter of credit would cause the
aggregate outstanding amount of letters of credit, bankers' acceptances and
other credit extensions under such facility to exceed the Stated Amount (as
defined below); it being further understood and agreed with respect to
letters of credit that (A) letters of credit may be requested under the
Incremental L/C Facility (as defined below) when available through the
Waiver Termination Date and (B) all letters of credit requested under the
New Trade Credit Facility or the Bilateral L/C Facility for the period
commencing on the date hereof through the Waiver Termination Date must, if
the underlying goods are supported by bills of lading and other applicable
documents of title, provide for the due delivery of such bills of lading
and other documents to the letter of credit issuing bank at such time, if
any, as required to perfect a security interest in the goods covered by
such bills of lading and other documents (it being further understood that
Group will take such actions as reasonably requested by the Debt
Coordinators in order to provide the Collateral Trustee or letter of credit
issuing bank a perfected security interest in the goods covered by such
bills of lading and other documents), (ii) deliver weekly on each Tuesday
(or if Tuesday is not a Business Day, on the next succeeding Business Day),
(A) a 13-week rolling forecast of domestic cash flow for Group, setting
forth a variance analysis (with explanation) of weekly results as compared
to the forecast delivered the previous week, (B) a summary of availability
under each Covered Facility, (C) a summary of accounts receivable, (D) a
flash sales report (it being understood that (1) if such report is
available on a more frequent basis, it will be delivered to the Debt
Coordinators when available and (2) such reports may be subject to
month-end adjustments) and (E) such other financial reports as may be
agreed by the Debt Coordinators and Group, in each case under this clause
(ii) duly certified by a Responsible Officer as having been prepared in a
manner consistent, if applicable, with the comparable reports previously
delivered by Group to the Lender Parties at the bank meeting on May 14,
2001, or otherwise in form satisfactory to the Debt Coordinators and KPMG,
as financial adviser to the Debt Coordinators, and (iii) cooperate with and
assist KPMG and each other consulting firm (collectively, the "Financial
Advisers") retained by or on behalf of the Debt Coordinators pursuant to
any engagement agreed to among Group, the Debt Coordinators and the
respective Financial Adviser, in the performance of its services,
including, without limitation, providing each such Financial Adviser with
adequate facilities and timely access to data (including, without
limitation, true, complete and correct copies of electronic files with all
formulas intact), information and personnel of, in each case, the operating
divisions and corporate function of Group and its Subsidiaries, all as may
be reasonably requested by such Financial Adviser. The undersigned further
agrees and acknowledges that the covenants set forth in this paragraph
shall be treated for all purposes (including Article V of the Facility
Agreement) as if they were covenants in the Facility Agreement. For
purposes of this paragraph, the term (i) "Incremental L/C Facility" means,
collectively, all documents, instruments and agreements (including, without
limitation, security and intercreditor arrangements) to be executed by
Group, all other applicable Credit Parties and other necessary parties to
provide for the issuance through the Waiver Termination Date of certain
letters of credit (which shall be sight draft letters of credit), secured
in each case by a first priority perfected security interest in any bills
of lading, airway bills, receipts and other applicable documents of title
(and inventory and goods covered thereby) delivered with respect to such
letters of credit and such other collateral as may be determined by the
Debt Coordinators and (ii) "Stated Amount" means an amount equal to the
aggregate amount of letters of credit, bankers' acceptances and other
credit extensions outstanding as of the date hereof under, respectively,
the New Trade Credit Facility and the Bilateral L/C Facility. Each Lender
Party party hereto hereby (i) acknowledges that any Incremental L/C
Facility approved by the Debt Coordinators acting reasonably and in good
faith is hereby approved by such Lender Party, and each such Lender Party
instructs the Debt Coordinators and the Collateral Trustee to execute and
deliver such Incremental L/C Facility and (ii) authorizes the Debt
Coordinators to approve a time extension requested by Group to finalize the
necessary filings, recordings and other actions specified in Section
2.14(c) of the Facility Agreement with respect to the assets specified on
Exhibit A hereto.
This Letter Waiver and the agreements contained herein
shall become effective as of the date first above written when, and only
when, on or before the date hereof, the Administrative Agent shall have
received (i) counterparts of this Letter Waiver executed by all of the Loan
Parties and the Supermajority Lenders or, as to any of the Lender Parties,
advice satisfactory to the Debt Coordinators that such Lender Party has
executed this Letter Waiver, (ii) payment of all fees and expenses of the
Debt Coordinators for which statements have been delivered on or prior to
the date hereof (including the accrued fees and expenses and retainers of
counsel and other advisers to the Debt Coordinators), (iii) executed
counterparts of all supplemental collateral and related documents delivered
by or on behalf of the Debt Coordinators on or prior to the date hereof to
Group for signature and (iv) a summary letter from counsel to Group in form
and substance satisfactory to the Debt Coordinators. This Letter Waiver is
requested pursuant to the provisions of Section 2.2 of the Intercreditor
Agreement.
The Facility Agreement and each of the other Loan
Documents, except to the extent of the waiver specifically provided above,
are and shall continue to be in full force and effect and are hereby in all
respects ratified and confirmed. The execution, delivery and effectiveness
of this Letter Waiver shall not, except as expressly provided herein,
operate as a waiver of any right, power or remedy of any Lender Party, the
Debt Coordinators, the Administrative Agent or the Collateral Trustee under
any of the Loan Documents or Covered Documents, nor constitute a waiver of
any provision of any of the Loan Documents or Covered Documents.
On the day following the Waiver Termination Date, without
any further action by any Lender Party, the Debt Coordinators, the
Administrative Agent or the Collateral Trustee, all of the terms and
provisions set forth in the Loan Documents shall have the same force and
effect as if this Letter Waiver had not been entered into by the parties
hereto, and each Lender Party, the Debt Coordinators, the Administrative
Agent and the Collateral Trustee shall have all of the rights and remedies
afforded to them under the Loan Documents and Covered Documents as though
no waiver had been granted hereunder.
Each of the undersigned Loan Parties, as Guarantors under
the Parent Guaranty or the Subsidiary Guaranty, as applicable, hereby
consents to the execution and delivery of this Letter Waiver and hereby
confirms and agrees that (a) notwithstanding the effectiveness of this
Letter Waiver, the Guaranty to which such Loan Party is a party is, and
shall continue to be, in full force and effect and is hereby ratified and
confirmed in all respects and (b) the Collateral Documents to which such
Grantor is a party and all of the Collateral described therein do, and
shall continue to, secure the payment of all of the Secured Obligations (in
each case, as defined therein).
Each of the undersigned Loan Parties hereby acknowledges
and agrees that it does not have any defenses, counterclaims, offsets,
cross-complaints, claims or demands of any kind or nature whatsoever that
can be asserted to reduce or eliminate all or any part of the obligation of
any Loan Party to pay any amounts owed in respect of any Obligations of any
Loan Party under this Letter Waiver, the Loan Documents or the Covered
Documents or to seek affirmative relief or damages of any kind or nature
from any Lender Party or Agent. Each of the undersigned Loan Parties hereby
voluntarily and knowingly releases and forever discharges each Lender Party
and Agent and each of their respective agents, employees, successors and
assigns, from all possible claims, actions, demands, causes of action,
damages, costs, or expenses, and liabilities whatsoever, known or unknown,
anticipated or unanticipated, suspected or unsuspected, fixed, contingent,
or conditional, at law or in equity, originating in whole or in part on or
before the date hereof, which each Loan Party may now or hereafter have
against any Lender Party or Agent or their respective agents, employees,
successors and assigns, if any, and irrespective of whether any such claims
arise out of contract, tort, violation of law or regulations, or otherwise,
including, without limitation, the exercise of any rights and remedies
under this Letter Waiver, the Loan Documents or the Covered Documents, or
the negotiation and execution of this Letter Waiver.
If you agree to the terms and provisions of this Letter
Waiver, please evidence such agreement by (i) faxing your signature page to
Xxxxxx Fine (tel. 000-000-0000; fax 000-000-0000) by no later than 12:00
noon (New York time) on Wednesday, May 16 and (ii) executing and returning
two counterparts of this Letter Waiver to Xxxxxx Fine, Shearman & Sterling,
000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at your earliest
convenience.
This Letter Waiver may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement. Delivery
of an executed counterpart of a signature page to this Letter Waiver by
telecopier shall be effective as delivery of a manually executed
counterpart of this Letter Waiver.
[remainder of this page intentionally left blank]
This Letter Waiver shall be governed by, and construed in
accordance with, the laws of the State of New York.
Very truly yours,
THE WARNACO GROUP, INC.
By /s/ Xxxxxxx Xxxxxxxxxxx
-------------------------
Title: Vice President and
Secretary
Agreed as of the date first above written:
WARNACO INC.
DESIGNER HOLDINGS LTD.
OUTLET STORES, INC.
OUTLET HOLDINGS, INC.
RIO SPORTSWEAR, INC.
AEI MANAGEMENT CORPORATION
JEANSWEAR HOLDINGS, INC.
XXXXXX XXXXX JEANSWEAR COMPANY
CKJ HOLDINGS, INC.
CKJ SOURCING, INC.
ABBEVILLE MANUFACTURING COMPANY
KAI JAY MANUFACTURING COMPANY
XXXXXXX INC.
000 XXXXXX XXXXXX INC.
WARNACO INTERNATIONAL INC.
WARMANA LIMITED
WARNACO SOURCING INC.
WARNER'S DE COSTA RICA INC.
AUTHENTIC FITNESS CORPORATION
AUTHENTIC FITNESS PRODUCTS INC.
WARNACO U.S., INC.
WARNACO MEN'S SPORTSWEAR, INC.
X.X. XXXXXXXX COMPANY
WARNACO VENTURES LTD.
VENTURES LTD.
A.B.S. CLOTHING COLLECTION, INC.
WARNACO INTERNATIONAL, L.L.C.
AUTHENTIC FITNESS RETAIL INC.
AUTHENTIC FITNESS ON-LINE, INC.
CCC ACQUISITION CORP.
CCC ACQUISITION REALTY CORP.
UBERTECH PRODUCTS, INC.
WARNACO PUERTO RICO, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxx
--------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: Vice President and Secretary
MYTRLE AVENUE, INC.
By: /s/ Xxxx Xxxxxxx
-------------------
Name: Xxxx Xxxxxxx
Title: Assistant Treasurer
XXXXXXX STREET, INC.
By: /s/ Xxxx Xxxxxxx
----------------------
Name: Xxxx Xxxxxxx
Title: Treasurer
PENHALIGON'S BY REQUEST, INC.
By: /s/ Xxxxxxx Xxxxxxxxxxx
--------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: Attorney-in-Fact
XXXXX VISTA DE TLAXCALA, S.A. DE C.V.
WAC INTERNATINAL DISTRIBUCION DE PUEBLA, S.A. DE C.V.
CENTRO DE CORTE TETLA, S.A. DE C.V.
VISTA DE HUAMANTLA, S.A. DE C.V.
VISTA DE PUEBLA, S.A. DE C.V.
XXXXX VISTA DE VERACRUZ, S.A. DE C.V.
OLGUITA DE MEXICO, S.A. DE C.V.
JUARMEX, S.A. DE C.V.
AUTHENTIC FITNESS DE MEXICO, S.A. DE C.V.
VISTA DE YUCATAN, S.A. DE X.X.
XXXXXX'X DE MEXICO, S.A. DE C.V.
By: /s/ Xxxxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Director
WARNACO (HK) LTD
PENHALIGON'S LIMITED
PENHALIGON'S PACIFIC LIMITED
AUTHENTIC FITNESS (HK) LTD
G.J.M. (H.K.) MANUFACTURING LIMITED
DESIGNER HOLDINGS OVERSEAS LIMITED
WARNER'S AIGLON S.A.
WARNACO FRANCE SARL
EURALIS S.A.S.
LEJABY S.A.S.
XXXXXX XXXXX FRANCE S.N.C.
IZKA S.C.
PMJ S.A.
WARNACO OF CANADA COMPANY
AUTHENTIC FITNESS OF CANADA INC.
WARNACO LAC ONE GMBH
WARNACO LAC TWO GMBH
ERATEX-WARNACO LAC TWO GMBH & CO. KG
WARNER'S (UNITED KINGDOM) LIMITED
PENHALIGON'S & JEAVONS INVESTMENT COMPANY LIMITED
MULMKION B.V.
DONATEX-WARNACO X.X.
XXXXXX'X COMPANY (BELGIUM)
By: /s/ Xxxxxxx Xxxxxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Director
WARNACO HOLLAND B.V.
WARNACO NETHERLANDS B.V.
WARNACO B.V.
By: /s/ Xxxxxxx Xxxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Director
By: /s/ Xxxxxxx Xxxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Director
Agreed as of the date first above written:
CITICORP USA, INC. THE BANK OF NOVA SCOTIA
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ X. X. Xxxxxxxxx
------------------------- -------------------
Title: Vice President Title: Managing Director
THE BANK OF NOVA SCOTIA, SCOTIABANK EUROPE PLC
HONG KONG BRANCH
By: /s/ X. X. Xxxxxx
By: /s/ Xxxxxxx X. Xxxxxx -------------------------
------------------------- Title: Director
Title: Vice President and Manager
XXXXXX GUARANTY TRUST FLEET BANK
COMPANY OF NEW YORK
By: /s/ Xxxxx X. Xxxxx
By: /s/ Houston X. Xxxxxxxx -------------------------
----------------------- Title: Senior Vice President
Title: Managing Director
XXXXXXX XXXXX PRIME RATE PORTFOLIO XXXXXX BANK PLC
By: Xxxxxxx Xxxxx Investment Managers, L.P. By: /s/ Xxxxxxx Xxxxx
--------------------
as Investment Advisor Title: Senior Vice President
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxx Xxxxx
-------------------- --------------------
Title: Authorized Signatory Title: Vice President
MASTER SENIOR FLOATING RATE TRUST SOCIETE GENERALE
[Xxxxxxx Xxxxx]
By: /s/ R. Xxxxx Xxxxxx
By: /s/ Xxxxxx X. Xxxxxx -------------------------
-------------------- Title: Director
Title: Authorized Signatory
THE DAI-ICHI KANGYO BANK, LIMITED GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxx Hanabaugh
------------------- --------------------------
Title: Senior Vice President Title: Duly Authorized Signatory
COMMERZBANK AG, NEW YORK & XXX XXX COMMERCIAL BANK, LTD.,
GRAND CAYMAN BRANCHES LOS ANGELES BRANCH
By: /s/ Xxxxxx Xxxxxxx By: /s/ Xxxxxx Xxxxx-i Xxxxx
--------------------- ------------------------
Title: Senior Vice President Title: SVP & General Manager
By: /s/ Xxxxx Xxxxx
----------------------
Title: Vice President
Exhibit A to
Letter Waiver
Certain Assets
Paris Apartment
