Exhibit 99-3
PLEDGE AND SECURITY AGREEMENT
Dated as of February 4, 2003
among
WARNACO INC.,
as a Grantor
and
Each Other Grantor
From Time to Time Party Hereto
and
CITICORP NORTH AMERICA, INC.
as Administrative Agent
WEIL, GOTSHAL & XXXXXX LLP
000 XXXXX XXXXXX
XXX XXXX, XXX XXXX 00000-0000
TABLE OF CONTENTS
Page
ARTICLE I. DEFINED TERMS..................................................................2
Section 1.1 Definitions.................................................................2
ARTICLE II. GRANT OF SECURITY INTEREST.....................................................8
Section 2.1 Collateral..................................................................8
Section 2.2 Grant of Security Interest in Collateral....................................8
Section 2.3 Cash Collateral Accounts....................................................9
ARTICLE III. REPRESENTATIONS AND WARRANTIES.................................................9
Section 3.1 Title; No Other Liens.......................................................9
Section 3.2 Perfection and Priority.....................................................9
Section 3.3 Jurisdiction of Organization; Chief Executive Office.......................10
Section 3.4 Inventory and Equipment....................................................10
Section 3.5 Pledged Collateral.........................................................10
Section 3.6 Deposit Accounts; Securities Accounts......................................11
Section 3.7 Accounts...................................................................11
Section 3.8 Intellectual Property......................................................11
Section 3.9 Commercial Tort Claims.....................................................12
ARTICLE IV. COVENANTS.....................................................................12
Section 4.1 Generally..................................................................12
Section 4.2 Maintenance of Perfected Security Interest; Further Documentation..........13
Section 4.3 Changes in Locations, Name, Etc............................................13
Section 4.4 Pledged Collateral.........................................................14
Section 4.5 Delivery of Instruments and Chattel Paper..................................15
Section 4.6 Intellectual Property......................................................15
Section 4.7 Cash Management; Deposit Accounts..........................................17
Section 4.8 Vehicles...................................................................18
Section 4.9 Payment of Obligations.....................................................19
Section 4.10 Notice of Commercial Tort Claims...........................................19
ARTICLE V. REMEDIAL PROVISIONS...........................................................19
Section 5.1 Code and Other Remedies....................................................19
Section 5.2 Accounts and Payments in Respect of General Intangibles....................20
Section 5.3 Pledged Collateral.........................................................21
Section 5.4 Proceeds to be Turned Over To Administrative Agent.........................22
Section 5.5 Registration Rights........................................................22
Section 5.6 Deficiency.................................................................23
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TABLE OF CONTENTS
(continued)
ARTICLE VI. THE ADMINISTRATIVE AGENT......................................................23
Section 6.1 Administrative Agent's Appointment as Attorney-in-Fact.....................23
Section 6.2 Duty of Administrative Agent...............................................25
Section 6.3 Execution of Financing Statements..........................................25
Section 6.4 Authority of Administrative................................................26
ARTICLE VII. MISCELLANEOUS.................................................................26
Section 7.1 Amendments in Writing......................................................26
Section 7.2 Notices....................................................................26
Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies........................26
Section 7.4 Successors and Assigns.....................................................27
Section 7.5 Counterparts...............................................................27
Section 7.6 Severability...............................................................27
Section 7.7 Section Headings...........................................................27
Section 7.8 Entire Agreement...........................................................27
Section 7.9 Governing Law..............................................................28
Section 7.10 Additional Grantors........................................................28
Section 7.11 Release of Collateral......................................................28
Section 7.12 Reinstatement..............................................................29
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TABLE OF CONTENTS
(continued)
Annexes and Schedules
Annex 1-A Form of Blocked Account Letter
Annex 1-B Form of Restricted Account Letter
Annex 2 Form of Control Account Agreement
Annex 3 Form of Pledge Amendment
Annex 4 Form of Joinder Agreement
Annex 5 Form of Short Form Copyright Security Agreement
Annex 6 Form of Short Form Patent Security Agreement
Annex 7 Form of Short Form Trademark Security Agreement
Schedule 1 Jurisdiction of Organization; Principal Executive Office
Schedule 2 Pledged Collateral
Schedule 3 Filings
Schedule 4 Location of Inventory and Equipment
Schedule 5 Intellectual Property
Schedule 6 Commercial Tort Claims
Schedule 7 Deposit Accounts and Securities Accounts
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PLEDGE AND SECURITY AGREEMENT, dated as of February 4, 2003, by
WARNACO INC., a Delaware Corporation (the "Borrower") and each of the other
entities listed on the signature pages hereof or that becomes a party hereto
pursuant to Section 7.10 (Additional Grantors) (each a "Grantor" and,
collectively, the "Grantors"), in favor of CITICORP NORTH AMERICA, INC.
("CNAI"), as agent for the Secured Parties (as defined below) (in such capacity,
the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, on June 11, 2001, each of the Grantors filed a voluntary
petition for relief (collectively, the "Cases") under chapter 11 of the
Bankruptcy Code with the United States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy Court");
WHEREAS, on October 1, 2002, the Grantors filed a Plan of
Reorganization (as amended and restated as of November 8, 2002, the "Plan of
Reorganization") and related Disclosure Statement with the Bankruptcy Court in
the Cases;
WHEREAS, on the Effective Date (as defined in the Plan of
Reorganization), the Grantors shall consummate the restructuring of their
corporate and capital structures, on the terms provided in the Plan of
Reorganization;
WHEREAS, pursuant to the Plan of Reorganization, as a condition
to the effectiveness of such Plan of Reorganization, the Borrower is required to
establish, as of the Effective Date, a secured revolving line of credit or
liquidity facility of a maximum principal amount of $275,000,000 for the
provision of working capital to The Warnaco Group, Inc., a Delaware corporation
("Group") and its Subsidiaries after such Effective Date, and the Borrower has
requested that the Lenders and Issuers make available to the Borrower a
revolving credit and a letter of credit facility to satisfy such condition; and
WHEREAS, pursuant to the Senior Secured Revolving Credit
Agreement, dated as of February 4, 2003 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among the Borrower, Group, the Lenders and Issuers party thereto, CNAI, as agent
for the Lenders and Issuers, and JPMorgan Chase Bank, as syndication agent for
the Lenders and Issuers, the Lenders and the Issuers have severally agreed to
make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;
WHEREAS, the Grantors other than the Borrower are party to the
Guaranty pursuant to which they have guaranteed the Obligations of the Borrower
under the Credit Agreement;
WHEREAS, the Plan of Reorganization also provides for the
issuance of the Second Lien Notes (as defined below), to, inter alia, the
holders of certain prepetition indebtedness (the "Noteholders") as partial
repayment of such prepetition indebtedness of the Grantors to the Noteholders;
WHEREAS, the Borrower, as issuer (in such capacity, the "Note
Issuer"), Group, as parent guarantor, and each of the other Grantors, as
subsidiary guarantors (together with Group, the "Note Guarantors"), and Xxxxx
Fargo Bank N.A., as the indenture trustee (the "Noteholder Indenture Trustee")
have entered into an Indenture, dated as of February 4, 2003 (as such Indenture
may be amended, amended and restated, supplemented or otherwise modified
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pursuant to the terms hereof, the "Indenture") which governs the rights and
duties of the Note Issuer, the Note Guarantors and the Noteholders under the
Second Lien Notes due 2008 (the "Second Lien Notes");
WHEREAS, pursuant to the Intercreditor Agreement dated as of
February 4, 2003, among the Administrative Agent, the Noteholder Indenture
Trustee, the Noteholder Collateral Trustee (as defined therein) and the
Grantors, the Secured Parties (as defined below) and the Noteholder Secured
Parties (as defined below) have agreed, among other things, to share the Shared
Collateral (as defined therein) and payments in respect thereof in such a manner
that the Liens on the Shared Collateral granted by the Grantors in favor of the
Noteholders are subordinated and rank junior in priority to the Liens on the
Collateral (as defined below) which secure the Secured Obligations;
WHEREAS, a condition precedent to the obligation of the Lenders
and the Issuers to make their respective extensions of credit to the Borrower
under the Credit Agreement is that the Grantors shall have executed and
delivered this Agreement to the Administrative Agent;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders, the Issuers and the Administrative Agent to enter into the Credit
Agreement and to induce the Lenders and the Issuers to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby agrees with
the Administrative Agent as follows:
ARTICLE I. DEFINED TERMS
Section 1.1 Definitions
(a) Unless otherwise defined herein, terms defined in the
Credit Agreement and used herein have the meanings given to them in the
Credit Agreement.
(b) Terms used herein that are defined in the UCC have the
meanings given to them in the UCC, including the following terms (which are
capitalized herein):
"Account Debtor"
"Accounts"
"Certificated Security"
"Chattel Paper"
"Commercial Tort Claim"
"Commodity Account"
"Deposit Account"
"Documents"
"Entitlement Holder"
"Entitlement Order"
"Equipment"
"Financial Asset"
"General Intangibles"
"Instruments"
"Inventory"
"Investment Property"
"Letter-of-Credit Right"
"Proceeds"
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"Securities Account"
"Securities Intermediary"
"Security"
"Security Entitlement"
"Supporting Obligation"
(c) The following terms shall have the following meanings:
"Additional Pledged Collateral" means any Pledged Collateral
acquired by any Grantor after the date hereof and on which a security interest
is granted pursuant to Section 2.2 (Grant of Security Interest in Collateral),
including, to the extent a security interest is granted thereon pursuant to
Section 2.2 (Grant of Security Interest in Collateral), (i) all Stock and Stock
Equivalents of any Person that are acquired by any Grantor after the date
hereof, together with all certificates, instruments or other documents
representing any of the foregoing and all Security Entitlements of any Grantor
in respect of any of the foregoing, (ii) all additional indebtedness from time
to time owed to any Grantor by any obligor on the Pledged Debt Instruments and
the instruments evidencing such indebtedness and (iii) all interest, cash,
instruments and other property or Proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for any of the
foregoing. "Additional Pledged Collateral" may be General Intangibles (including
Intellectual Property) or Investment Property.
"Agreement" means this Pledge and Security Agreement.
"Blocked Account Bank" means a financial institution approved
(such approval not to be unreasonably withheld) by the Administrative Agent and
with respect to which a Grantor has delivered to the Administrative Agent an
executed Blocked Account Letter.
"Blocked Account Letter" means a letter agreement, substantially
in the form of Annex I-A (Form of Blocked Account Letter) to this Agreement
(with such changes thereto as may be agreed to by the Administrative Agent),
executed by the relevant Grantor and the Administrative Agent and acknowledged
and agreed to by the relevant Blocked Account Bank.
"Cash Collateral Account" means any Deposit Account or Securities
Account that is (a) established by the Administrative Agent from time to time in
its sole discretion to receive cash and Cash Equivalents (or purchase cash or
Cash Equivalents with funds received) from the Grantors or their Subsidiaries or
Affiliates or Persons acting on their behalf pursuant to the Loan Documents, (b)
with such depositaries and securities intermediaries as the Administrative Agent
may determine in its sole discretion, (c) in the name of the Administrative
Agent (although such account may also have words referring to the Borrower and
the account's purpose), (d) under the control of the Administrative Agent and
(e) in the case of a Securities Account, with respect to which the
Administrative Agent shall be the Entitlement Holder and the only Person
authorized to give Entitlement Orders with respect thereto, except as otherwise
provided in Section 2.3.
"Collateral" has the meaning specified in Section 2.1
(Collateral).
"Control Account Agreement" means a letter agreement,
substantially in the form of Annex II (Form of Control Account Agreement) (with
such changes as may be agreed to by the Administrative Agent), executed by the
relevant Grantor, the Administrative Agent and the
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relevant Approved Securities Intermediary (as defined in Annex 2 (Form of
Control Account Agreement) hereto.
"Copyright Licenses" means any agreement, whether written or
oral, providing for the grant by or to any Grantor of any right under any
Copyright, including the grant of any right to use, copy, publicly perform,
display, create derivative works of, manufacture, distribute, exploit or sell
materials derived from any Copyright.
"Copyrights" means (a) all copyrights arising under the laws of
the United States, any other country or any political subdivision thereof,
whether registered or unregistered and whether published or unpublished, all
registrations and recordings thereof and all applications for registration or
recording in connection therewith, including all registrations, recordings and
applications for registration or recording in the United States Copyright Office
or in any foreign counterparts thereof, and (b) the right to obtain all
renewals, reversions and extensions thereof.
"Discharge of Lender Claims" shall mean, the payment in full in
cash of the principal of, interest and premium, if any, on all Secured
Obligations and, with respect to Hedging Obligations or letters of credit
outstanding thereunder, delivery of cash collateral or backstop letters of
credit in respect thereof in compliance with the terms hereof, in each case
after or concurrently with termination of all Commitments thereunder, and
payment in full in cash of any other Secured Obligations that are due and
payable at or prior to the time such principal and interest are paid.
"Excluded Equity" means, collectively, any Voting Stock of any
direct Subsidiary of any Grantor, which Subsidiary is a Foreign Person, in
excess of 65% of the total outstanding Voting Stock of such Subsidiary. For the
purposes of this definition, "Voting Stock" means, as to any issuer, the issued
and outstanding shares of each class of capital stock or other ownership
interests of such issuer entitled to vote (within the meaning of Treasury
Regulations Section 1.956-2(c)(2)).
"Excluded Property" means, collectively, (i) Excluded Equity,
(ii) any permit, lease, license, contract or other agreement held by any Grantor
that validly prohibits the creation by such Grantor of a Lien thereon, or any
permit, lease, license contract or other agreement held by any Grantor to the
extent that any Requirement of Law applicable thereto prohibits the creation of
a Lien thereon, but only, in each case, to the extent, and for so long as, such
prohibition is not removed, terminated or rendered unenforceable or otherwise
deemed ineffective by the UCC or any other Requirement of Law; and (iii) any
Equipment owned by any Grantor that is subject to a purchase money Lien or a
Capital Lease Obligation if the contract or other agreement in which such Lien
is granted (or in the documentation providing for such Capital Lease Obligation)
prohibits or requires the consent of any Person other than the Borrower and its
Affiliates as a condition to the creation of any other Lien on such Equipment;
provided, however, "Excluded Property" shall not include any Proceeds,
substitutions or replacements of Excluded Property (unless such Proceeds,
substitutions or replacements would constitute Excluded Property).
"Foreign Person" means any Person not organized under the laws of
any state of the United States of America or the District of Columbia.
"Grantor" has the meaning specified in the recitals to this
Agreement.
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"Hedging Obligations" means all obligations of any Person under
any Hedging Contract.
"Intellectual Property" means, collectively, (a) all right, title
and interest of any Grantor relating to intellectual or industrial property,
whether arising under United States, multinational or foreign laws or otherwise,
including Copyrights, Copyright Licenses, Patents, Patent Licenses, Trademarks,
Trademark Licenses, trade secrets, Internet domain names, Websites, advertising
rights, rights in designs, including registrations thereof, and rights in data,
and (b) all rights to income, royalties, proceeds and damages now or hereafter
due and/or payable under and with respect thereto, including all rights to xxx
and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof.
"Intercompany Note" means any promissory note evidencing loans
made by any Grantor or any of its Subsidiaries to any of its Subsidiaries or
another Grantor.
"LLC" means each limited liability company in which a Grantor has
an equity interest, including those set forth on Schedule 2 (Pledged
Collateral).
"LLC Agreement" means each operating agreement with respect to an
LLC, as each agreement has heretofore been, and may hereafter be, amended,
restated, supplemented or otherwise modified from time to time.
"Material Intellectual Property" means Intellectual Property
owned by or licensed to a Grantor and material to any Grantor's business.
"Noteholder Claims" has the meaning specified in the Credit
Agreement.
"Noteholder Indenture Trustee" has the meaning specified in the
recitals to this Agreement.
"Noteholder Secured Parties" means the Noteholder Indenture
Trustee, the Noteholder Collateral Trustee and each Noteholder.
"Noteholders" has the meaning specified in the recitals to this
Agreement.
"Partnership" means each partnership in which a Grantor has an
equity interest, including those set forth on Schedule 2 (Pledged Collateral).
"Partnership Agreement" means each partnership agreement
governing a Partnership, as each such agreement has heretofore been, and may
hereafter be, amended, restated, supplemented or otherwise modified.
"Patents" means (a) all patents of the United States or any other
country or patent rights arising under multinational laws, (b) all applications
for patents of the United States or any other country or patent rights arising
under multinational laws and (c) all rights to obtain any reissues, extensions,
divisions, continuations and continuations-in-part of the foregoing.
"Patent License" means all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture, have
manufactured, use, import, lease, sell or offer for sale any product, design or
process covered in whole or in part by a Patent.
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"Pledged Certificated Stock" means all Certificated Securities
and any other Stock and Stock Equivalent of a Person evidenced by a certificate,
Instrument or other equivalent document, in each case owned by any Grantor,
including all Stock listed on Schedule 2 (Pledged Collateral),but excluding
Excluded Equity.
"Pledged Collateral" means, collectively, the Pledged Stock,
Pledged Debt Instruments, any other Investment Property of any Grantor (other
than Pledged Stock, Pledged Debt Instruments and other Investment Property whose
value, in the aggregate, does not exceed $500,000), all certificates or other
instruments representing any of the foregoing and all Security Entitlements of
any Grantor in respect of any of the foregoing. Pledged Collateral may be
General Intangibles or Investment Property.
"Pledged Debt Instruments" means all right, title and interest of
any Grantor in Instruments evidencing any Indebtedness owed to such Grantor,
including all Indebtedness described on Schedule 2 (Pledged Collateral), issued
by the obligors named therein.
"Pledged Stock" means all Pledged Certificated Stock and all
Pledged Uncertificated Stock.
"Pledged Uncertificated Stock" means any Stock or Stock
Equivalent of any Person that is not a Pledged Certificated Stock (excluding
Excluded Equity), including all right, title and interest of any Grantor as a
limited or general partner in any Partnership or as a member of any LLC and all
right, title and interest of any Grantor in, to and under any Partnership
Agreement or LLC Agreement to which it is a party.
"Restricted Account" means a deposit account maintained by any
Grantor with a Restricted Account Bank which account is the subject of an
effective Restricted Account Letter, and includes all monies on deposit therein
and all certificates and instruments, if any, representing or evidencing such
Restricted Account.
"Restricted Account Bank" means a financial institution selected
or approved (such approval not to be unreasonably withheld) by the
Administrative Agent and with respect to which a Grantor has delivered an
executed Restricted Account Letter.
"Restricted Account Letter" means a letter agreement,
substantially in the form of Annex I-B (Form of Restricted Account Letter) or as
otherwise acceptable to the Administrative Agent, executed by the relevant
Grantor.
"Securities Act" means the Securities Act of 1933, as amended.
"Secured Parties" has the meaning specified in the Credit
Agreement.
"Third Party Intellectual Property Rights" means any right, title
or interest of any Person under patent, copyright, trademark or trade secret law
or any other statutory provision or common law doctrine relating to intellectual
property or proprietary rights.
"Trademark License" means any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right under any Trademark.
"Trademarks" means (a) all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
trade dress, service marks, logos
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and other source or business identifiers, and, in each case, all goodwill
associated therewith, whether now existing or hereafter adopted or acquired, all
registrations and recordings thereof and all applications for registration or
recording in connection therewith, in each case whether in the United States
Patent and Trademark Office or in any similar office or agency of the United
States, any State thereof or any other country or any political subdivision
thereof, and all common-law rights related thereto, and (b) the right to obtain
all renewals thereof.
"UCC" means the Uniform Commercial Code as from time to time in
effect in the State of New York; provided, however, that, in the event that, by
reason of mandatory provisions of law, any of the attachment, perfection or
priority of any Secured Party's security interest in any Collateral is governed
by the Uniform Commercial Code as in effect in a jurisdiction other than the
State of New York, the term "UCC" (as it applies to such security interest)
shall mean the Uniform Commercial Code as in effect in such other jurisdiction
for purposes of the provisions hereof relating to such attachment, perfection or
priority and for purposes of definitions related to such provisions.
"Vehicles" means all vehicles covered by a certificate of title
law of any state.
Certain Other Terms
(d) In this Agreement, in the computation of periods of time
from a specified date to a later specified date, the word "from" means
"from and including" and the words "to" and "until" each mean "to but
excluding" and the word "through" means "to and including."
(e) The terms "herein," "hereof," "hereto" and "hereunder"
and similar terms refer to this Agreement as a whole and not to any
particular Article, Section, subsection or clause in this Agreement.
(f) References herein to an Annex, Schedule, Article,
Section, subsection or clause refer to the appropriate Annex or Schedule
to, or Article, Section, subsection or clause in this Agreement.
(g) The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms.
(h) Where the context requires, provisions relating to any
Collateral, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or any relevant part thereof.
(i) Any reference in this Agreement to a Loan Document shall
include all appendices, exhibits and schedules thereto, and, unless
specifically stated otherwise all amendments, restatements, supplements or
other modifications thereto, and as the same may be in effect at any time
such reference becomes operative.
(j) The term "including" means "including without
limitation" except when used in the computation of time periods.
(k) The terms "Lender," "Issuer," "Administrative Agent",
and "Secured Party" include their respective successors.
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(l) References in this Agreement to any statute shall be to
such statute as amended or modified and in effect from time to time.
ARTICLE II. GRANT OF SECURITY INTEREST
Section 2.1 Collateral
For the purposes of this Agreement, all of the following property
now owned or at any time hereafter acquired by a Grantor or in which a Grantor
now has or at any time in the future may acquire any right, title or interests
(other than, in each case, Excluded Property) is collectively referred to as the
"Collateral":
(a) all Accounts;
(b) all Chattel Paper;
(c) all Deposit Accounts;
(d) all Documents;
(e) all Equipment;
(f) all General Intangibles;
(g) all Instruments;
(h) all Inventory;
(i) all Investment Property;
(j) all Letter-of-Credit Rights;
(k) all Vehicles;
(l) the Commercial Tort Claims described on Schedule
6(Commercial Tort Claims) and on any supplement thereto received by the
Administrative Agent pursuant to Section 4.10 (Notice of Commercial Tort
Claims);
(m) all books and records pertaining to the other property
described in this Section 2.1;
(n) all other goods and personal property of such Grantor,
whether tangible or intangible and wherever located; and
(o) to the extent not otherwise included, all Proceeds;
Section 2.2 Grant of Security Interest in Collateral
Each Grantor, as collateral security for the full, prompt and
complete payment and performance when due (whether at stated maturity, by
acceleration or otherwise) of the Secured Obligations of such Grantor, hereby
mortgages, pledges and hypothecates to the Administrative Agent for the benefit
of the Secured Parties, and grants to the Administrative
8
Agent for the benefit of the Secured Parties a lien on and security interest in,
all of its right, title and interest in, to and under the Collateral of such
Grantor; provided, however, that the foregoing grant of security interest shall
not include a security interest in any Excluded Property; and provided, further,
that, if and when any property shall cease to be Excluded Property, the
Administrative Agent for the benefit of the Secured Parties shall have, and at
all times from and after the date hereof deemed to have had, a security interest
in such property.
Section 2.3 Cash Collateral Accounts
The Administrative Agent may establish one or more Cash
Collateral Accounts with such depositaries and Securities Intermediaries as it
in its sole discretion shall determine. Each Grantor agrees that each such Cash
Collateral Account shall be under the control of the Administrative Agent and
that the Administrative Agent shall be the Entitlement Holder with respect to
each such Cash Collateral Account that is a Securities Account and the only
Person authorized to give Entitlement Orders with respect to each such
Securities Account. Without limiting the foregoing, funds on deposit in any Cash
Collateral Account may be invested (but the Administrative Agent shall be under
no obligation to make any such investment) in Cash Equivalents at the direction
of the Administrative Agent and, except during the continuance of an Event of
Default, the Administrative Agent agrees with each Grantor to issue Entitlement
Orders for such investments in Cash Equivalents as requested by the Borrower;
provided, however, that the Administrative Agent shall not have any
responsibility for, or bear any risk of loss of, any such requested investment
or income thereon. Except as provided in Section 2.9(b)(i) & (e) of the Credit
Agreement, neither any Warnaco Entity nor any other Person claiming on behalf of
or through any Warnaco Entity shall have any right to demand payment of any
funds held in any Cash Collateral Account at any time prior to Discharge of
Lender Claims. The Administrative Agent shall apply all funds on deposit in a
Cash Collateral Account as provided in Section 2.9 (e) of the Credit Agreement
and, following Discharge of Lender Claims, the Administrative Agent shall
deliver to the Noteholder Collateral Trustee all remaining funds in the Cash
Collateral Accounts in accordance with the terms of the Intercreditor Agreement.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
To induce the Lenders, the Issuers and the Administrative Agent
to enter into the Credit Agreement, each Grantor hereby represents and warrants
each of the following to the Secured Parties:
Section 3.1 Title; No Other Liens
Except for the Liens granted to the Administrative Agent pursuant
to this Agreement and the other Liens permitted to exist on the Collateral under
the Credit Agreement, such Grantor is the record and beneficial owner of the
Pledged Collateral pledged by it hereunder constituting Instruments or
Certificated Securities, is the Entitlement Holder of all such Pledged
Collateral constituting Investment Property held in a Securities Account and has
rights in or the power to collaterally transfer each other item of Collateral in
which a Lien is granted by it hereunder, free and clear of any Lien (other than
Liens for taxes not yet due and payable).
Section 3.2 Perfection and Priority
The security interests granted pursuant to this Agreement shall
constitute valid and continuing perfected security interests in favor of the
Administrative Agent in the Collateral for which perfection is governed by the
UCC or filing with the United States Copyright Office or
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with the United States Patent and Trademark Office upon (i) the completion of
the filings and other actions specified on Schedule 3 (Filings) (which, in the
case of all filings and other documents referred to on such schedule, have been
delivered to the Administrative Agent in completed and duly executed form), (ii)
the delivery to the Administrative Agent of all Collateral consisting of
Instruments and Certificated Securities, in each case properly endorsed for
transfer to the Administrative Agent or in blank, (iii) the execution of Control
Account Agreements with respect to Investment Property not in certificated form,
(iv) the execution of a Blocked Account Letter with respect to all Deposit
Accounts of a Grantor as specified in Section 4.7(a)(i) hereto, (v) all
appropriate filings having been made with the United States Copyright Office and
(vi) the receipt by the Administrative Agent of the consent of the issuer or
nominated person with respect to each Letter-of-Credit Right that is not a
Supporting Obligation. Such security interests shall be prior to all other Liens
on the Collateral except for Customary Permitted Liens having priority over the
Administrative Agent's Liens by operation of law or otherwise as permitted
hereunder or under the Credit Agreement.
Section 3.3 Jurisdiction of Organization; Chief Executive
Office
On the Closing Date, such Grantor's jurisdiction of organization,
legal name, organizational identification number, if any, and the location of
such Grantor's chief executive office or sole place of business is specified on
Schedule 1 (Jurisdiction of Organization; Principal Executive Office) and such
Schedule 1 (Jurisdiction of Organization; Principal Executive Office) also lists
all jurisdictions of incorporation, legal names and locations of such Grantor's
chief executive office or sole place of business for the period beginning five
years preceding the date hereof and ending on July 1, 2001.
Section 3.4 Inventory and Equipment
Schedule 4 (Location of Inventory and Equipment) sets forth each
location at which such Grantor's Inventory and Equipment (other than mobile
goods and Inventory or Equipment in transit) (i) is kept on the Closing Date and
(ii) was kept during the period from October 1, 2000 to July 1, 2001, and to the
best of such Grantor's knowledge, in the period from February 1, 1998 to July 1,
2001, such Grantor did not kept Inventory or Equipment in any State within the
United States of America other than a location set forth on Schedule 4 (Location
of Inventory and Equipment).
Section 3.5 Pledged Collateral
(a) The Pledged Stock that constitutes Pledged Collateral
pledged hereunder by such Grantor is listed on Schedule 2 (Pledged
Collateral) and constitutes that percentage of the issued and outstanding
equity of all classes of each issuer thereof as set forth on Schedule 2
(Pledged Collateral).
(b) All of the Pledged Stock (other than Pledged Stock in
limited liability companies and partnerships) that constitutes Pledged
Collateral has been duly and validly issued and are fully paid and
nonassessable .
(c) All Pledged Collateral and, if applicable, any
Additional Pledged Collateral, consisting of Certificated Securities or
Instruments has been delivered to the Administrative Agent in accordance
with Section 4.4(a) (Pledged Collateral).
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(d) Subject to Section 4.7, all Pledged Collateral held by a
Securities Intermediary in a Securities Account is in a Control Account.
(e) Other than Pledged Stock constituting General
Intangibles, there is no Pledged Collateral other than (i) that represented
by Certificated Securities or (ii) Instruments in the possession of the
Administrative Agent or that consisting of Financial Assets held in a
Securities Account subject to a Control Account Agreement.
(f) The Constituent Documents of any Person governing any
Pledged Stock do not prohibit (i) the Administrative Agent, upon the
occurrence and during the continuance of an Event of Default, from
exercising all of the rights of the Grantor granting the security interest
therein, and (ii) a transferee or assignee of Stock of such Person from
becoming a member, partner or, as the case may be, other holder of such
Pledged Stock to the same extent as the Grantor entitled to participate in
the management of such Person and, pursuant to the Constituent Documents of
any Person governing any Pledged Stock, upon the transfer of the entire
interest of such Grantor, such Grantor shall cease to be a member, partner
or, as the case may be, other holder of such Pledged Stock.
Section 3.6 Deposit Accounts; Securities Accounts
The only Deposit Accounts, Securities Accounts or Commodity
Accounts maintained by any Grantor on the Closing Date are those listed on
Schedule 7 (Deposit Accounts and Securities Accounts), which sets forth such
information separately for each Grantor and which clearly identifies each
Deposit Account which is maintained as a concentration account by such Grantor.
Section 3.7 Accounts
No amount payable to such Grantor under or in connection with any
Account is evidenced by any Instrument or Chattel Paper that has not been
delivered to the Administrative Agent, properly endorsed for transfer, to the
extent delivery is required by Section 4.5 (Delivery of Instruments and Chattel
Paper).
Section 3.8 Intellectual Property
(a) Schedule 5 (Intellectual Property) sets forth a true and
complete list of all Intellectual Property of such Grantor on the date
hereof (other than licenses to commercial off-the-shelf software),
separately identifying (i) that owned by such Grantor and that licensed by
or to such Grantor and (ii) sets forth a true and complete list of all
Material Intellectual Property owned by or licensed to such Grantor on the
date hereof (other than licenses to commercial off-the-shelf software),
separately identifying that owned by such Grantor and that licensed by or
to such Grantor. The Material Intellectual Property set forth on Schedule 5
(Intellectual Property) constitutes all of the material intellectual
property rights necessary for the Grantors to conduct their business as
currently and as proposed to be conducted.
(b) On the date hereof, all Material Intellectual Property
owned by such Grantor is valid, in full force and effect, subsisting,
unexpired and enforceable, has not been adjudged invalid and has not been
abandoned. To the knowledge of such Grantor, the business of such Grantor,
and the use of the Material Intellectual Property in connection therewith,
does not infringe, misappropriate, dilute or violate any Third Party
Intellectual Property Rights. Such Grantor is not party to or the subject
of any pending or, to such Grantor's knowledge,
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threatened claim of infringement, misappropriation, dilution or violation
of any Third Party Intellectual Property Rights, and there are no facts or
circumstances that such Grantor reasonably believes are likely to form the
basis for any such claim, and such Grantor has not received written notice
of any such claim, or a written offer of a license to any Third Party
Intellectual Property Rights, or any written notice regarding the existence
of any Third Party Intellectual Property Rights that would be likely to
have a Material Adverse Effect on any Grantor or otherwise would impair any
Material Intellectual Property.
(c) Except as set forth in Schedule 5(c) (Intellectual
Property), on the date hereof, none of the Material Intellectual Property
owned by such Grantor is the subject of any licensing or franchise
agreement pursuant to which such Grantor is the licensor or franchisor.
(d) No holding, decision or judgment has been rendered by
any Governmental Authority challenging such Grantor's rights in the
Material Intellectual Property or that would limit or otherwise impair the
ownership, use, validity or enforceability of any Material Intellectual
Property.
(e) No action or proceeding challenging such Grantor's
rights in the Intellectual Property or the ownership, use, validity or
enforceability of any Material Intellectual Property owned by such Grantor
is on the date hereof pending or, to the knowledge of such Grantor,
threatened. There are no claims, judgments or settlements to be paid by
such Grantor relating to the Material Intellectual Property. To such
Grantor's knowledge, no Person has been or is infringing, misappropriating,
diluting or violating the Material Intellectual Property owned by such
Grantor.
(f) No Grantor is in material breach of any Copyright
License, Patent License or Trademark License and no Grantor in breach of
any Material License. The consummation of the transactions contemplated by
this Agreement shall not impair any of such Grantor's right in, cause a
breach of, or impair the validity or enforceability of, any Material
Intellectual Property.
Section 3.9 Commercial Tort Claims
The only Commercial Tort Claims (with a reasonable expectation of
recovery of at least $500,000) of any Grantor existing on the Closing Date
(regardless of whether the amount, defendant or other material facts can be
determined and regardless of whether such Commercial Tort Claim has been
asserted, threatened or has otherwise been made known to the obligee thereof or
whether litigation has been commenced for such claims) are those listed on
Schedule 6 (Commercial Tort Claims), which sets forth such information
separately for each Grantor.
ARTICLE IV. COVENANTS
Each Grantor agrees with the Administrative Agent to the
following, as long as any Secured Obligation or Commitment remains outstanding
and, in each case, unless the Requisite Lenders otherwise consent in writing:
Section 4.1 Generally
Such Grantor shall (a) except for the security interest created
by this Agreement, not create or suffer to exist any Lien upon or with respect
to any Collateral, except Liens permitted under Section 8.2 (Liens, Etc.) of the
Credit Agreement, (b) not use or permit any
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Collateral to be used unlawfully or in violation of any provision of this
Agreement, any other Loan Document, any Requirement of Law or any policy of
insurance covering the Collateral, (c) not sell, transfer or assign (by
operation of law or otherwise) any Collateral except as permitted under the
Credit Agreement, (d) not enter into any agreement or undertaking restricting
the right or ability of such Grantor or the Administrative Agent to sell, assign
or transfer any Collateral except in connection with an Asset Sale (i) that is
permitted under Section 8.4 of the Credit Agreement or (ii) that is pursuant to
a contract which contains a condition precedent that consent under the Credit
Agreement be obtained.
Section 4.2 Maintenance of Perfected Security Interest;
Further Documentation
(a) Such Grantor shall maintain the security interests
created by this Agreement as perfected security interests having at least
the priority described in Section 3.2 (Perfection and Priority) and shall
defend such security interests against the claims and demands of all
Persons.
(b) Such Grantor shall furnish to the Administrative Agent
from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request in writing,
all in detail and in form and substance reasonably satisfactory to the
Administrative Agent.
(c) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense of such
Grantor, such Grantor shall promptly and duly execute and deliver, and have
recorded, such further instruments and documents and take such further
action as the Administrative Agent may reasonably request for the purpose
of obtaining or preserving the full benefits of this Agreement and of the
rights and powers herein granted, including the filing of any financing or
continuation statement under the UCC (or other similar laws) in effect in
any jurisdiction with respect to the security interests created hereby and
the execution and delivery of Blocked Account Letters or Restricted Account
Letters and Control Account Agreements.
Section 4.3 Changes in Locations, Name, Etc.
(a) Except upon 15 or more days' prior written notice to the
Administrative Agent and delivery to the Administrative Agent of (i) all
additional executed financing statements and other documents reasonably
requested by the Administrative Agent to maintain the validity, perfection
and priority of the security interests provided for herein and (ii) if
applicable, a written supplement to Schedule 4 (Location of Inventory and
Equipment) showing (A) any additional locations at which Inventory or
Equipment shall be kept or (B) any changes in any location where Inventory
or Equipment shall be kept that would require the Administrative Agent to
take any action to maintain perfected security interests in such
Collateral, such Grantor shall not do any of the following:
(i) permit any Inventory or Equipment to be kept at a location
other than those listed on Schedule 4 (Location of Inventory and
Equipment), except for Inventory or Equipment in transit;
(ii) change its jurisdiction of organization from that referred
to in Section 3.3 (Jurisdiction of Organization; Chief Executive
Office); or
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(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed in connection with this
Agreement would become misleading.
(b) Such Grantor shall keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral, including a
record of all payments received and all credits granted with respect to the
Collateral and all other dealings with the Collateral.
Section 4.4 Pledged Collateral
(a) Such Grantor shall (i) deliver to the Administrative
Agent for the benefit of Secured Parties, all certificates and Instruments
representing or evidencing any Pledged Collateral (including Additional
Pledged Collateral), whether now existing or hereafter acquired, in
suitable form for transfer by delivery or, as applicable, accompanied by
such Grantor's endorsement, where necessary, or duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory
to the Administrative Agent, together, in respect of any Additional Pledged
Collateral, with a Pledge Amendment, duly executed by the Grantor, in
substantially the form of Annex 3 (Form of Pledge Amendment), an
acknowledgment and agreement to a Joinder Agreement duly executed by any
new Grantor, in substantially the form in the form of Annex 4 (Form of
Joinder Agreement), or such other documentation acceptable to the
Administrative Agent and (ii) maintain all other Pledged Collateral
constituting Investment Property in a Securities Account subject to a
Control Account Agreement. The Grantors authorize the Administrative Agent
to attach each Pledge Amendment to this Agreement. The Administrative Agent
shall have the right, at any time in its discretion and without notice to
the Grantor, to transfer to or to register in its name or in the name of
its nominees any Pledged Collateral. The Administrative Agent shall have
the right at any time to exchange any certificate or instrument
representing or evidencing any Pledged Collateral for certificates or
instruments of smaller or larger denominations.
(b) Except as provided in ARTICLE V (Remedial Provisions),
such Grantor shall be entitled to receive all cash dividends paid in
respect of the Pledged Collateral (other than liquidating or distributing
dividends). Any sums paid upon or in respect of any Pledged Collateral
upon the liquidation or dissolution of any issuer of any Pledged
Collateral, any distribution of capital made on or in respect of
any Pledged Collateral or any property distributed upon or with
respect to any Pledged Collateral pursuant to the recapitalization
or reclassification of the capital of any issuer of Pledged Collateral
or pursuant to the reorganization thereof (except, in each case, to
the extent resulting in cash being distributed to a Grantor) shall,
unless otherwise subject to a perfected security interest in favor
of the Administrative Agent, be delivered to the Administrative Agent to be
held by it hereunder as additional collateral security for the Secured
Obligations. If any sum of money or property so paid or distributed in
respect of any Pledged Collateral shall be received by such Grantor, such
Grantor shall, until such money or property is paid or delivered to the
Administrative Agent, hold such money or property in trust for the
Administrative Agent, segregated from other funds of such Grantor, as
additional security for the Secured Obligations.
(c) Except as provided in ARTICLE V (Remedial Provisions),
such Grantor shall be entitled to exercise all voting, consent and
corporate, partnership, limited liability company and similar rights
with respect to the Pledged Collateral; provided, however, that no vote
shall be cast, consent given or right exercised or other action taken by
such Grantor that would impair the Collateral, be inconsistent with or
result in any violation of any provision of the Credit Agreement, this
Agreement, any other Loan Document or, without prior notice to the
Administrative Agent, enable or permit any issuer of Pledged Collateral
to issue any Stock
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or other equity Securities of any nature or to issue any other securities
convertible into or granting the right to purchase or exchange for any
Stock or other equity Securities of any nature of any issuer of Pledged
Collateral.
(d) Such Grantor shall not grant control over any Investment
Property to any Person other than the Administrative Agent.
(e) In the case of each Grantor that is an issuer of Pledged
Collateral, such Grantor agrees to be bound by the terms of this Agreement
relating to the Pledged Collateral issued by it and shall comply with such
terms insofar as such terms are applicable to it. In the case of any
Grantor that is a holder of any Stock or Stock Equivalent in any Person
that is an issuer of Pledged Collateral, such Grantor consents to (i) the
exercise of the rights granted to the Administrative Agent hereunder
(including those described in Section 5.3 (Pledged Collateral)), and (ii)
the pledge by each other Grantor, pursuant to the terms hereof, of the
Pledged Stock in such Person and to the transfer of such Pledged Stock to
the Administrative Agent or its nominee and to the substitution of the
Administrative Agent or its nominee as a holder of such Pledged Stock with
all the rights, powers and duties of other holders of Pledged Stock of the
same class and, if the Grantor having pledged such Pledged Stock hereunder
had any right, power or duty at the time of such pledge or at the time of
such substitution beyond that of such other holders, with all such
additional rights, powers and duties. Such Grantor agrees to execute and
deliver to the Administrative Agent such certificates, agreements and other
documents as may be necessary to evidence, formalize or otherwise give
effect to the consents given in this clause (e).
(f) Such Grantor shall not, and shall not permit any of its
Subsidiaries (to the extent the Stock of such Subsidiary constitutes
Collateral), without the consent of the Administrative Agent, agree to any
amendment of any Constituent Document that in any way adversely affects the
perfection of the security interest of the Administrative Agent in the
Pledged Collateral pledged by such Grantor hereunder, including any
amendment electing to treat any membership interest or partnership interest
that is part of the Pledged Collateral as a security under Section 8-103 of
the UCC, or any election to turn any previously uncertificated Stock that
is part of the Pledged Collateral into certificated Stock.
Section 4.5 Delivery of Instruments and Chattel Paper
If any amount in excess of $100,000 payable under or in
connection with any Collateral owned by such Grantor shall be or become
evidenced by an Instrument or Chattel Paper, such Grantor shall promptly deliver
such Instrument or Chattel Paper to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent, or, if consented to by the
Administrative Agent, shall xxxx all such Instruments and Chattel Paper with the
following legend: "This writing and the obligations evidenced or secured hereby
are subject to the security interest of Citicorp North America, Inc., as
Administrative Agent for the benefit of the Secured Parties".
Section 4.6 Intellectual Property
(a) Such Grantor (either itself or through licensees) shall
(and shall cause all licensees or sublicensees thereof to) (i) continue to
use each Trademark that is Material Intellectual Property in order to
maintain such Trademark in full force and effect with respect to each class
of goods for which such Trademark is currently used, free from any claim of
abandonment for non-use, (ii) maintain as in the past the quality of
products and services
15
offered under such Trademark, (iii) use such Trademark with the appropriate
notice of registration and all other notices and legends required by
applicable Requirements of Law, (iv) execute and file all documents
necessary to perfect a security interest pursuant to this Agreement in
favor of the Administrative Agent promptly upon adopting or using any xxxx
that is confusingly similar or a colorable imitation of such Trademark and
(v) not do any act or knowingly omit to do any act (and not permit or
direct by express act or omission any licensee or sublicensee thereof to do
any act) whereby such Trademark (or any goodwill associated therewith) may
become destroyed, invalidated, impaired or harmed in any way; provided,
however, that (i)-(iii) and (v) above shall be subject to the good faith
exercise by such Grantor of its reasonable business judgment consistent
with past practices.
(b) Such Grantor shall not (and shall not permit or direct
by express act or omission any licensee or sublicensee thereof to) do any
act, or omit to do any act, whereby any Patent that is Material
Intellectual Property may become forfeited, abandoned or dedicated to the
public.
(c) Such Grantor (i) shall not (and shall not permit or
direct by express act or omission any licensee or sublicensee thereof to)
do any act or omit to do any act whereby any portion of the Copyrights that
is Material Intellectual Property may become invalidated or otherwise
impaired and (ii) shall not (and shall not permit or direct by express act
or omission any licensee or sublicensee thereof to) do any act whereby any
portion of the Copyrights that is Material Intellectual Property may fall
into the public domain.
(d) Such Grantor shall not knowingly (and shall not permit
or direct by express act or omission any licensee or sublicensee thereof
to) do any act, or knowingly omit to do any act, whereby any trade secret
that is Material Intellectual Property may become publicly available or
otherwise unprotectable.
(e) Such Grantor shall not (and shall not permit or direct
by express act or omission any licensee or sublicensee thereof to) do any
act that knowingly infringes, misappropriates, dilutes or violates any
Third Party Intellectual Property Rights.
(f) Such Grantor shall notify the Administrative Agent
immediately if it knows, or has reason to know, that any application for
registration or recording, registration or recording relating to any
Material Intellectual Property may become forfeited, abandoned or dedicated
to the public, or of any adverse determination or development (including
the institution of, or any such determination or development in, any
proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding
such Grantor's ownership of, right to use, interest in, or the validity or
enforceability of, any Material Intellectual Property or such Grantor's
right to register the same or to own and maintain the same.
(g) As set forth below, whenever such Grantor, either by
itself or through its counsel or any agent or designee, shall file an
application for the registration or recording of any Intellectual Property
with the United States Patent and Trademark Office, the United States
Copyright Office or any similar office or agency within or outside the
United States or register any Internet domain name, such Grantor shall
report such filing to the Administrative Agent within five Business Days
after the last day of the fiscal quarter in which such filing occurs. Upon
request of the Administrative Agent, such Grantor shall execute and
deliver, and have recorded, all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's security interest in any such Copyright,
16
Patent, Trademark or Internet domain name and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.
(h) Such Grantor shall take all reasonable actions that are
(i) necessary (subject to the good faith exercise by such Grantor of its
reasonable business judgment consistent with past practices) or (ii)
requested by the Administrative Agent, including in any proceeding before
the United States Patent and Trademark Office, the United States Copyright
Office or any similar office or agency and any Internet domain name
registrar, to maintain and pursue each application for registration or
recording (and to obtain the relevant registration or recording) and to
maintain each registration and recording of any Copyright, Trademark,
Patent or Internet domain name that is Material Intellectual Property,
including filing of applications for renewal, affidavits of use, affidavits
of incontestability and opposition and interference and cancellation
proceedings.
(i) In the event that any Material Intellectual Property is
infringed, misappropriated, diluted or violated by a third party, such
Grantor shall notify the Administrative Agent promptly after such Grantor
learns thereof. Such Grantor shall take appropriate action in response to
any infringement, misappropriation, dilution or violation of the Material
Intellectual Property, including promptly bringing suit for infringement,
misappropriation, dilution or violation and to recover all damages for such
infringement, misappropriation, dilution or violation, and shall take such
other actions may be appropriate under the circumstances to protect such
Intellectual Property; provided, however, that the foregoing shall be
subject to the good faith exercise by such Grantor of its reasonable
business judgment consistent with past practices.
(j) Unless otherwise agreed to by the Administrative Agent
such Grantor shall execute and deliver to the Administrative Agent for
filing in (i) the United States Copyright Office a short-form copyright
security agreement in the form attached hereto as Annex 5 (Form of Short
Form Copyright Security Agreement) for all Copyrights of such Grantor, (ii)
in the United States Patent and Trademark Office a short-form patent
security agreement in the form attached hereto as Annex 6 (Form of Short
Form Patent Security Agreement ) for all Patents of such Grantor, (iii) the
United States Patent and Trademark Office and with the appropriate
department or division of all appropriate States of the United States a
short-form trademark security agreement in form attached hereto as Annex 7
(Form of Short Form Trademark Security Agreement) for all Trademarks of
such Grantor and (iv) with the appropriate Internet domain name registrar,
a duly executed form of assignment of all Internet domain names of such
Grantor to the Administrative Agent (together with appropriate supporting
documentation as may be requested by the Administrative Agent) in form and
substance reasonably acceptable to the Administrative Agent. In the case of
clause (iv) above, such Grantor hereby authorizes the Administrative Agent
to file such assignment in such Grantor's name and to otherwise perform in
the name of such Grantor all other necessary actions to complete such
assignment, and each Grantor agrees to perform all appropriate actions
deemed necessary by the Administrative Agent for the Administrative Agent
to ensure such Internet domain name is registered in the name of the
Administrative Agent.
Section 4.7 Cash Management; Deposit Accounts
(a) On the Effective Date (or such later date as agreed by
the Administrative Agent), each Grantor shall cause to be delivered (i) to
the Administrative Agent, a duly executed and effective Blocked Account
Letter for each existing Deposit Account identified as a concentration
account on Schedule 7 maintained by any Grantor and (ii) to each Restricted
17
Account Bank (with a copy to the Administrative Agent, a Restricted Account
Letter for each other Deposit Account (subject only to clause (b) below)
duly executed by the appropriate Grantor to each such Deposit Account.
(b) Each Grantor shall (i) deposit in a Blocked Account or
Restricted Account all cash and all Proceeds received by such Grantor and
(ii) not establish or maintain any Deposit Account with any financial or
other institution other than a Blocked Account Bank, a Restricted Account
Bank, a Lender or an Affiliate of a Lender; provided, however, that the
Warnaco Entities may at any time maintain the following accounts not
subject to this Section 4.8(b) (i) Deposit Accounts or Securities Accounts
(or their foreign equivalents) located outside of the United States with
cash or Cash Equivalents not in excess of an aggregate amount of
$30,000,000, (ii) Deposit Accounts or Securities Accounts located in the
United States with cash or Cash Equivalents not in excess of an aggregate
amount of $10,000,000 and (iii) payroll, withholding tax and other
fiduciary accounts as required for operations in the ordinary course of
business.
(c) Each Grantor shall instruct each Account Debtor or other
Person obligated to make a payment to such Grantor to make payment, or to
continue to make payment, as the case may be, to a lock-box linked to a
Blocked Account or a Restricted Account, as the case may be, and each
Grantor shall deposit in a Blocked Account or a Restricted Account all
Proceeds received by such Grantor from any other Person immediately upon
receipt.
(d) In the event (i) any Grantor or a Blocked Account Bank
or Restricted Account Bank shall, after the date hereof, terminate an
agreement with respect to the maintenance of a Blocked Account or
Restricted Account, as the case may be, for any reason, (ii) the
Administrative Agent shall demand termination of a Blocked Account Letter
or a Restricted Account Letter as a result of the failure of a Blocked
Account Bank or Restricted Account Bank, as the case may be, to comply with
the terms of the applicable letter agreement or (iii) the Administrative
Agent determines in its sole discretion that the financial condition of a
Blocked Account Bank or Restricted Account Bank has materially
deteriorated, then, in each case, Group shall, or shall cause the
applicable Grantor to, notify all of its Account Debtors that were making
payments to such terminated Blocked Account Bank or Restricted Account Bank
to make all future payments to such other Blocked Account Bank or
Restricted Account Bank, as specified by the Administrative Agent.
Section 4.8 Vehicles
Upon the request of the Administrative Agent, within 30 days
after the date of such request and, with respect to any Vehicle acquired by such
Grantor subsequent to the date of any such request, within 30 days after the
date of acquisition thereof, such Grantor shall file all applications for
certificates of title or ownership indicating the Administrative Agent's first
priority security interest in the Vehicle covered by such certificate and any
other necessary documentation, in each office in each jurisdiction that the
Administrative Agent shall deem advisable to perfect its security interests in
the Vehicles; provided, however, that the aggregate value of all Vehicles
excepted from the application of this Section 4.9 shall not exceed $1,000,000.
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Section 4.9 Payment of Obligations
Such Grantor shall pay and discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all taxes,
assessments and governmental charges or levies imposed upon the Collateral or in
respect of income or profits therefrom, as well as all claims of any kind
(including claims for labor, materials and supplies) against or with respect to
the Collateral, except that no such charge need be paid if the amount or
validity thereof is currently being contested in good faith by appropriate
proceedings, reserves in conformity with GAAP with respect thereto have been
provided on the books of such Grantor and such proceedings could not reasonably
be expected to result in the sale, forfeiture or loss of any material portion of
the Collateral or any interest therein.
Section 4.10 Notice of Commercial Tort Claims
Such Grantor agrees that, if it shall acquire any interest in any
Commercial Tort Claim with a reasonable expectation of recovery of at least
$500,000 (whether from another Person or because such Commercial Tort Claim
shall have come into existence), (i) such Grantor shall, immediately upon such
acquisition, deliver to the Administrative Agent, in each case in form and
substance satisfactory to the Administrative Agent, a notice of the existence
and nature of such Commercial Tort Claim and deliver a supplement to Schedule 6
(Commercial Tort Claims) containing a specific description of such Commercial
Tort Claim, (ii) the provision of Section 2.1 (Collateral) shall apply to such
Commercial Tort Claim and (iii) such Grantor shall execute and deliver to the
Administrative Agent, in each case in form and substance satisfactory to the
Administrative Agent, any certificate, agreement and other document, and take
all other action, deemed by the Administrative Agent to be reasonably necessary
or appropriate for the Administrative Agent to obtain, on behalf of the Secured
Parties, a first-priority, perfected security interest in all such Commercial
Tort Claims. Any supplement to Schedule 6 (Commercial Tort Claims) delivered
pursuant to this Section 4.10 (Notice of Commercial Tort Claims) shall, after
the receipt thereof by the Administrative Agent, become part of Schedule 6
(Commercial Tort Claims) for all purposes hereunder other than in respect of
representations and warranties made prior to the date of such receipt.
ARTICLE V. REMEDIAL PROVISIONS
Section 5.1 Code and Other Remedies
During the continuance of an Event of Default, the Administrative
Agent may exercise, in addition to all other rights and remedies granted to it
in this Agreement and in any other instrument or agreement securing, evidencing
or relating to the Secured Obligations, all rights and remedies of a secured
party under the UCC or any other applicable law. Without limiting the generality
of the foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon any Grantor or any
other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon any Collateral, and may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver any Collateral (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange, broker's board or
office of the Administrative Agent or any Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it may deem best,
for cash or on credit or for future delivery without assumption of any credit
risk. The Administrative Agent shall have the right upon any such public sale or
sales, and, to the
19
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived and released.
Each Grantor further agrees, at the Administrative Agent's request, to assemble
the Collateral and make it available to the Administrative Agent at places that
the Administrative Agent shall reasonably select, whether at such Grantor's
premises or elsewhere. The Administrative Agent shall apply the net proceeds of
any action taken by it pursuant to this Section 5.1, after deducting all
reasonable costs and expenses of every kind incurred in connection therewith or
incidental to the care or safekeeping of any Collateral or in any way relating
to the Collateral or the rights of the Administrative Agent and any other
Secured Party hereunder, including reasonable attorneys' fees and disbursements,
(i) to the payment in whole or in part of the Secured Obligations, in such order
as the Credit Agreement shall prescribe and (ii) after Discharge of Lender
Claims, to the Noteholder Collateral Trustee in accordance with the terms of the
Intercreditor Agreement, and only after such application and after the payment
by the Administrative Agent of any other amount required by any provision of
law, need the Administrative Agent, as the case may be, account for the surplus,
if any, to any Grantor. To the extent permitted by applicable law, each Grantor
waives all claims, damages and demands it may acquire against the Administrative
Agent, or any other Secured Party arising out of the exercise by them of any
rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and
proper if given at least 10 days before such sale or other disposition.
Section 5.2 Accounts and Payments in Respect of General
Intangibles
(a) In addition to, and not in substitution for, any similar
requirement in the Credit Agreement, if required by the Administrative
Agent at any time during the continuance of an Event of Default, any
payment of Accounts or payment in respect of General Intangibles, when
collected by any Grantor, shall be forthwith (and, in any event, within two
Business Days) deposited by such Grantor in the exact form received, duly
indorsed by such Grantor to the Administrative Agent, in a Blocked Account
or a Cash Collateral Account, subject to withdrawal by the Administrative
Agent as provided in Section 5.4 (Proceeds to be Turned Over To
Administrative Agent). Until so turned over, such payment shall be held by
such Grantor in trust for the Administrative Agent, segregated from other
funds of such Grantor. Each such deposit of Proceeds of Accounts and
payments in respect of General Intangibles shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments
included in the deposit.
(b) At the Administrative Agent's request, during the
continuance of an Event of Default, each Grantor shall deliver to the
Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions that gave rise to the Accounts
or payments in respect of General Intangibles, including all original
orders, invoices and shipping receipts.
(c) The Administrative Agent may, without notice, at any
time during the continuance of an Event of Default, limit or terminate the
authority of a Grantor to collect its Accounts or amounts due under General
Intangibles or any thereof.
(d) The Administrative Agent in its own name or in the name
of others may at any time during the continuance of an Event of Default
communicate with Account Debtors to verify with them to the Administrative
Agent's satisfaction the existence, amount and terms of any Account or
amounts due under any General Intangible.
20
(e) Upon the request of the Administrative Agent at any time
during the continuance of an Event of Default, each Grantor shall notify
Account Debtors that it has granted to the Administrative Agent a lien on
and security interest in, all of its right, title and interest in, to and
under the Accounts or General Intangibles and that payments in respect
thereof shall be made directly to the Administrative Agent. In addition,
the Administrative Agent may at any time during the continuance of an Event
of Default, to the extent permitted by applicable law, enforce such
Grantor's rights against such Account Debtors and obligors of General
Intangibles.
(f) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Accounts and payments in
respect of General Intangibles to observe and perform all the conditions
and obligations to be observed and performed by it thereunder, all in
accordance with the terms of any agreement giving rise thereto. Neither the
Administrative Agent, nor any other Secured Party shall have any obligation
or liability under any agreement giving rise to an Account or a payment in
respect of a General Intangible by reason of or arising out of this
Agreement or the receipt by the Administrative Agent nor any other Secured
Party of any payment relating thereto, nor shall the Administrative Agent,
nor any other Secured Party be obligated in any manner to perform any
obligation of any Grantor under or pursuant to any agreement giving rise to
an Account or a payment in respect of a General Intangible, to make any
payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any
party thereunder, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts that may
have been assigned to it or to which it may be entitled at any time or
times.
Section 5.3 Pledged Collateral
(a) During the continuance of an Event of Default, upon
notice by the Administrative Agent to the relevant Grantor or Grantors, (i)
the Administrative Agent shall have the right to receive any Proceeds of
the Pledged Collateral and make application thereof to the Obligations in
the order set forth in the Credit Agreement and the Intercreditor Agreement
and (ii) the Administrative Agent or its nominee may exercise (A) any
voting, consent, corporate and other right pertaining to the Pledged
Collateral at any meeting of shareholders, partners or members, as the case
may be, of the relevant issuer or issuers of Pledged Collateral or
otherwise and (B) any right of conversion, exchange and subscription and
any other right, privilege or option pertaining to the Pledged Collateral
as if it were the absolute owner thereof (including the right to exchange
at its discretion any of the Pledged Collateral upon the merger,
consolidation, reorganization, recapitalization or other fundamental change
in the corporate structure of any issuer of Pledged Stock, the right to
deposit and deliver any Pledged Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without
liability except to account for property actually received by it; provided,
however, that the Administrative Agent shall have no duty to any Grantor to
exercise any such right, privilege or option and shall not be responsible
for any failure to do so or delay in so doing.
(b) In order to permit the Administrative Agent to exercise
the voting and other consensual rights that it may be entitled to exercise
pursuant hereto and to receive all dividends and other distributions that
it may be entitled to receive hereunder, (i) each Grantor shall promptly
execute and deliver (or cause to be executed and delivered) to the
Administrative Agent all such proxies, dividend payment orders and other
instruments as the
21
Administrative Agent may from time to time reasonably request and (ii)
without limiting the effect of clause (i) above, such Grantor hereby grants
to the Administrative Agent an irrevocable proxy to vote all or any part of
the Pledged Collateral and to exercise all other rights, powers, privileges
and remedies to which a holder of the Pledged Collateral would be entitled
(including giving or withholding written consents of shareholders, partners
or members, as the case may be, calling special meetings of shareholders,
partners or members, as the case may be, and voting at such meetings),
which proxy shall be effective, automatically and without the necessity of
any action (including any transfer of any Pledged Collateral on the record
books of the issuer thereof) by any other person (including the issuer of
such Pledged Collateral or any officer or agent thereof) during the
continuance of an Event of Default and which proxy shall only terminate
upon Discharge of Lender Claims.
(c) Each Grantor hereby expressly authorizes and instructs
each issuer of any Pledged Collateral pledged hereunder by such Grantor to
(i) comply with any instruction received by it from the Administrative
Agent in writing that (A) states that an Event of Default has occurred and
is continuing and (B) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from such Grantor, and
each Grantor agrees that such issuer shall be fully protected in so
complying and (ii) unless otherwise expressly permitted hereby, pay any
dividend or other payment with respect to the Pledged Collateral directly
to the Administrative Agent
Section 5.4 Proceeds to be Turned Over To Administrative
Agent
Unless otherwise expressly provided herein, in the Credit
Agreement, all Proceeds received by the Administrative Agent hereunder in cash
or Cash Equivalents shall be held by the Administrative Agent in a Cash
Collateral Account. All Proceeds constituting Reinvestment Prepayment Amounts
(as defined in the Credit Agreement) or the cash collateralization of Letters of
Credit (as defined in the Credit Agreement) while held by the Administrative
Agent in a Cash Collateral Account (or by such Grantor in trust for the
Administrative Agent) shall continue to be held as collateral security for the
Secured Obligations and shall not constitute payment thereof until applied as
provided in the Credit Agreement.
Section 5.5 Registration Rights
(a) During the continuance of an Event of Default, if the
Administrative Agent shall determine to exercise its right to sell any the
Pledged Collateral pursuant to Section 5.1 (Code and Other Remedies), and
if in the opinion of the Administrative Agent it is necessary or advisable
to have the Pledged Collateral, or any portion thereof to be registered
under the provisions of the Securities Act, the relevant Grantor shall use
its reasonable efforts to cause the issuer thereof to (i) execute and
deliver, and cause the directors and officers of such issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all
such other acts as may be, in the opinion of the Administrative Agent,
necessary or advisable to register the Pledged Collateral, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use
its reasonable efforts to cause the registration statement relating thereto
to become effective and to remain effective for a period of one year from
the date of the first public offering of the Pledged Collateral, or that
portion thereof to be sold and (iii) make all amendments thereto or to the
related prospectus that, in the opinion of the Administrative Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Grantor agrees to cause such issuer to
comply with the provisions of the securities or "Blue Sky" laws of any
jurisdiction that the Administrative Agent shall
22
designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) satisfying
the provisions of Section 11(a) of the Securities Act.
(b) Each Grantor recognizes that the Administrative Agent
may be unable to effect a public sale of any Pledged Collateral by reason
of certain prohibitions contained in the Securities Act and applicable
state securities laws or otherwise or may determine that a public sale is
impracticable or not commercially reasonable and, accordingly, may resort
to one or more private sales thereof to a restricted group of purchasers
that shall be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges and agrees that
any such private sale may result in prices and other terms less favorable
than if such sale were a public sale and, notwithstanding such
circumstances, agrees that any such private sale shall be deemed to have
been made in a commercially reasonable manner. The Administrative Agent
shall be under no obligation to delay a sale of any Pledged Collateral for
the period of time necessary to permit the issuer thereof to register such
securities for public sale under the Securities Act, or under applicable
state securities laws, even if such issuer would agree to do so.
(c) During the continuance of an Event of Default, each
Grantor agrees to use its best efforts to do or cause to be done all such
other acts as may be necessary to make such sale or sales of all or any
portion of the Pledged Collateral pursuant to this Section 5.5 valid and
binding and in compliance with all other applicable Requirements of Law.
Each Grantor further agrees that a breach of any covenant contained in this
Section 5.5 will cause irreparable injury to the Administrative Agent and
the other Secured Parties, that the Administrative Agent, and the other
Secured Parties have no adequate remedy at law in respect of such breach
and, as a consequence, that each and every covenant contained in this
Section 5.5 shall be specifically enforceable against such Grantor, and
such Grantor hereby waives and agrees not to assert any defense against an
action for specific performance of such covenants except for a defense that
no Event of Default has occurred under the Credit Agreement.
Section 5.6 Deficiency
Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay the Secured Obligations and the fees and disbursements of any attorney
employed by the Administrative Agent, or any other Secured Party, to collect
such deficiency.
ARTICLE VI. THE ADMINISTRATIVE AGENT
Section 6.1 Administrative Agent's Appointment as
Attorney-in-Fact
(a) Each Grantor hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Grantor and
in the name of such Grantor or in its own name, for the purpose of carrying
out the terms of this Agreement, to take any appropriate action and to
execute any document or instrument that may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the
generality of the foregoing, each Grantor hereby gives
23
the Administrative Agent the power and right, on behalf of such Grantor,
without notice to or assent by such Grantor, to do any of the following:
(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any check,
draft, note, acceptance or other instrument for the payment of moneys
due under any Account or General Intangible or with respect to any
other Collateral and file any claim or take any other action or
proceeding in any court of law or equity or otherwise deemed
appropriate by the Administrative Agent for the purpose of collecting
any such moneys due under any Account or General Intangible or with
respect to any other Collateral whenever payable;
(ii) in the case of any Intellectual Property, execute and
deliver, and have recorded, any agreement, instrument, document or
paper as the Administrative Agent may request to evidence the
Administrative Agent's security interests in such Intellectual
Property and the goodwill and General Intangibles of such Grantor
relating thereto or represented thereby;
(iii) pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, effect any repair or pay any
insurance called for by the terms of this Agreement (including all or
any part of the premiums therefor and the costs thereof);
(iv) execute, in connection with any sale provided for in
Section 5.1 (Code and Other Remedies) or 5.5 (Registration Rights),
any endorsement, assignment or other instrument of conveyance or
transfer with respect to the Collateral; or
(v) (A) direct any party liable for any payment under any
Collateral to make payment of any moneys due or to become due
thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct, (B) ask or demand for, collect, and
receive payment of and receipt for, any moneys, claims and other
amounts due or to become due at any time in respect of or arising out
of any Collateral, (C) sign and indorse any invoice, freight or
express xxxx, xxxx of lading, storage or warehouse receipt, draft
against debtors, assignment, verification, notice and other document
in connection with any Collateral, (D) commence and prosecute any
suit, action or proceeding at law or in equity in any court of
competent jurisdiction to collect any Collateral and to enforce any
other right in respect of any Collateral, (E) defend any suit, action
or proceeding brought against such Grantor with respect to any
Collateral, (F) settle, compromise or adjust any such suit, action or
proceeding and, in connection therewith, give such discharges or
releases as the Administrative Agent may deem appropriate, (G) assign
any Copyright, Patent or Trademark (along with the goodwill of the
business to which any such Trademark pertains) throughout the world
for such term or terms, on such conditions, and in such manner as the
Administrative Agent shall in its sole discretion determine, including
the execution and filing of any document necessary to effectuate or
record such assignment and (H) generally, sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any
Collateral as fully and completely as though the Administrative Agent
were the absolute owner thereof for all purposes, and do, at the
Administrative Agent's option and such Grantor's expense, at any time,
or from time to time, all acts and things that the Administrative
Agent deems necessary to protect, preserve or realize upon the
Collateral and the Administrative Agent's and the other Secured
Parties' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.
24
Anything in this clause (a) to the contrary notwithstanding, the Administrative
Agent agrees that it shall not exercise any right under the power of attorney
provided for in this clause (a) unless an Event of Default shall be continuing.
(b) If any Grantor fails to perform or comply with any of
its agreements contained herein, the Administrative Agent, at its option,
but without any obligation so to do, may perform or comply, or otherwise
cause performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 6.1,
together with interest thereon at a rate per annum equal to the rate per
annum at which interest would then be payable on past due Revolving Loans
that are Base Rate Loans under the Credit Agreement, from the date of
payment by the Administrative Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Administrative Agent on
demand.
(d) Each Grantor hereby ratifies all that said attorneys
shall lawfully do or cause to be done by virtue hereof. All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the
security interests created hereby are released.
Section 6.2 Duty of Administrative Agent
The Administrative Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession shall
be to deal with it in the same manner as the Administrative Agent deals with
similar property for its own account. Neither the Administrative Agent, any
other Secured Party, nor any of their respective officers, directors, employees
or agents shall be liable for failure to demand, collect or realize upon any
Collateral or for any delay in doing so or shall be under any obligation to sell
or otherwise dispose of any Collateral upon the request of any Grantor or any
other Person or to take any other action whatsoever with regard to any
Collateral. The powers conferred on the Administrative Agent hereunder are
solely to protect the Administrative Agent's and the Secured Parties' respective
interests in the Collateral and shall not impose any duty upon the
Administrative Agent, or any other Secured Party to exercise any such powers.
The Administrative Agent and the other Secured Parties shall be accountable only
for amounts that they actually receive as a result of the exercise of such
powers, and neither they nor any of their respective officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
Section 6.3 Execution of Financing Statements
Each Grantor authorizes the Administrative Agent and each of its
Affiliates, counsel and other representatives, at any time and from time to time
until Discharge of Lender Claims, to file or record financing statements,
amendments to financing statements, and other filing or recording documents or
instruments with respect to the Collateral without the signature of such Grantor
in such form and in such offices as the Administrative Agent reasonably
determines appropriate to perfect the security interests of the Administrative
Agent under this Agreement, and such financing statements and amendments may
described the Collateral covered thereby as "all assets of the debtor", "all
personal property of the debtor" or words of similar effect. Each Grantor hereby
also authorizes the Administrative Agent and each of its Affiliates, counsel and
other representatives, at any time and from time to time, to file continuation
statements with respect to previously filed financing statements. A photographic
or other
25
reproduction of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or recording in any
jurisdiction.
Section 6.4 Authority of Administrative
Each Grantor acknowledges that the rights and responsibilities of
the Administrative Agent under this Agreement with respect to any action taken
by the Administrative Agent or the exercise or non-exercise by the
Administrative Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, (i) as between the Administrative Agent and the other Secured
Parties, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, and (ii) as between
the Administrative Agent, the Secured Parties, the Noteholder Collateral Trustee
and the other Noteholder Secured Parties, be governed by the Intercreditor
Agreement and by such other agreements with respect thereto as may exist from
time to time among them, but, as between the Administrative Agent and the
Grantors, the Administrative Agent shall be conclusively presumed to be acting
(x) as agent for itself and the other Secured Parties and (y) as set forth in
Section 5.5 of the Intercreditor Agreement, as agent and bailee for the
Noteholder Collateral Trustee and the other Noteholder Secured Parties, in each
case with full and valid authority so to act or refrain from acting, and no
Grantor shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
ARTICLE VII. MISCELLANEOUS
Section 7.1 Amendments in Writing
None of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except in accordance with Section
11.1 (Amendments, Waivers, Etc.) of the Credit Agreement and Section 5.3 of the
Intercreditor Agreement; provided, however, that annexes to this Agreement may
be supplemented (but not existing provisions may be modified and no Collateral
may be released) through Pledge Amendments and Joinder Agreements, in
substantially the form of Annex 3 (Form of Pledge Amendment) and Annex 4 (Form
of Joinder Agreement) respectively, in each case duly executed by the
Administrative Agent and each Grantor directly affected thereby.
Section 7.2 Notices
All notices, requests and demands (i) to or upon the
Administrative Agent shall be effected in the manner provided for in Section
11.8 (Notices, Etc.) of the Credit Agreement and (ii) to or upon any Grantor
shall be addressed care of the Borrower at the Borrower's notice address set
forth in Section 11.8 (Notices, Etc.) of the Credit Agreement.
Section 7.3 No Waiver by Course of Conduct; Cumulative
Remedies
Neither the Administrative Agent nor any other Secured Party
shall by any act (except by a written instrument pursuant to Section 7.1
(Amendments in Writing), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any Default
or Event of Default. No failure to exercise, nor any delay in exercising, on the
part of the Administrative Agent any other Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise
26
of any other right, power or privilege. A waiver by the Administrative Agent or
any other Secured Party of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy that the Administrative
Agent or such other Secured Party would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided
by law.
Section 7.4 Successors and Assigns
This Agreement shall be binding upon the successors and assigns
of each Grantor and shall inure to the benefit of the Administrative Agent, each
other Secured Party and their successors and assigns; provided, however, that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Administrative Agent.
Section 7.5 Counterparts
This Agreement may be executed by one or more of the parties to
this Agreement on any number of separate counterparts (including by telecopy),
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. Signature
pages may be detached from multiple counterparts and attached to a single
counterpart so that all signature pages are attached to the same document.
Delivery of an executed counterpart by telecopy shall be effective as delivery
of a manually executed counterpart.
Section 7.6 Severability
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 7.7 Section Headings
The Article and Section titles contained in this Agreement are,
and shall be, without substantive meaning or content of any kind whatsoever and
are not part of the agreement of the parties hereto.
Section 7.8 Entire Agreement
(a) This Agreement together with the other Loan Documents
and the Intercreditor Agreement represents the entire agreement of the
parties and supersedes all prior agreements and understandings relating to
the subject matter hereto concerning the Secured Obligations.
(b) In the event of any conflict between the provisions of
this Agreement and the provisions of the Intercreditor Agreement, the
provisions of the Intercreditor Agreement shall govern.
27
Section 7.9 Governing Law
This Agreement and the rights and obligations of the parties
hereto shall be governed by, and construed and interpreted in accordance with,
the law of the State of New York.
Section 7.10 Additional Grantors
If, pursuant to Section 7.11 (Additional Personal Property
Collateral and Guaranties) of the Credit Agreement, the Borrower shall be
required to cause any Subsidiary that is not a Grantor to become a Grantor
hereunder, such Subsidiary shall execute and deliver to the Administrative Agent
a Joinder Agreement substantially in the form of Annex 4 (Form of Joinder
Agreement) and shall thereafter for all purposes be a party hereto and have the
same rights, benefits and obligations as a Grantor party hereto on the Effective
Date.
Section 7.11 Release of Collateral
(a) At the time provided in Section 10.7(b)(i) (Concerning
the Collateral and the Collateral Documents) of the Credit Agreement, the
Collateral shall be released from the Lien granted to the Administrative
Agent for the benefit of the Secured Parties created hereby and to the
extent that this Agreement relates to such Lien, this Agreement and all
obligations (other than those expressly stated to survive such termination)
of the Administrative Agent and each Grantor hereunder shall terminate, all
without delivery of any instrument or performance of any act by any party,
and, subject to the obligations of the Administrative Agent under the
Intercreditor Agreement, all rights to the Collateral shall revert to the
Grantors. Subject to the obligations of the Administrative Agent under the
Intercreditor Agreement, at the request and sole expense of any Grantor
following any such termination, the Administrative Agent shall deliver to
such Grantor any Collateral of such Grantor held by the Administrative
Agent hereunder and execute and deliver to such Grantor, at the sole
expense of the Borrower, such documents as such Grantor shall reasonably
request to evidence such termination.
(b) If the Administrative Agent shall be directed or
permitted pursuant to Section 10.7(b)(ii) or (iii) (Concerning the
Collateral and the Collateral Documents) of the Credit Agreement to release
any Lien created hereby upon any Collateral (including any Collateral sold
or disposed of by any Grantor in a transaction permitted by the Credit
Agreement), such Collateral shall be released from the Lien created hereby
to the extent provided under, and subject to the terms and conditions set
forth in, Section 10.7(b)(ii) or (iii) (Concerning the Collateral and the
Collateral Documents) of the Credit Agreement. In connection therewith but
subject to the terms of the Intercreditor Agreement, the Administrative
Agent, at the request and sole expense of the Grantors, shall execute and
deliver to the Borrower, all releases or other documents reasonably
necessary or desirable for the release of the Lien created hereby on such
Collateral.
(c) At the request and sole expense of the Grantors, a
Grantor shall be released from its obligations hereunder in the event that
all the capital stock of such Grantor shall be so sold or disposed;
provided, however, that the Borrower shall have delivered to the
Administrative Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Grantor and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower in form and
substance satisfactory to
28
the Administrative Agent stating that such transaction is in compliance
with the Loan Documents.
Section 7.12 Reinstatement
Each Grantor further agrees that, if any payment made by any
Grantor or other Person and applied to the Secured Obligations is at any time
annulled, avoided, set aside, rescinded, invalidated, declared to be fraudulent
or preferential or otherwise required to be refunded or repaid, or the proceeds
of Collateral are required to be returned by any Secured Party to such Grantor,
its estate, trustee, receiver or any other party, under any bankruptcy law,
state or federal law, common law or equitable cause, then, to the extent of such
payment or repayment, any Lien or other Collateral securing such liability shall
be and remain in full force and effect, as fully as if such payment had never
been made or, if prior thereto the Lien granted hereby or other Collateral
securing such liability hereunder shall have been released or terminated by
virtue of such cancellation or surrender), such Lien or other Collateral shall
be reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect any Lien or
other Collateral securing the obligations of any Grantor in respect of the
amount of such payment.
[SIGNATURE PAGES FOLLOW]
29
IN WITNESS WHEREOF, each of the undersigned has caused this
Pledge and Security Agreement to be duly executed and delivered as of the date
first above written.
WARNACO INC.,
as Grantor
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title:
000 Xxxxxx Xxxxxx Inc.
A.B.S. Clothing Collection, Inc.
Abeville Manufacturing Company
Authentic Fitness Corporation
Authentic Fitness On-Line, Inc.
Authentic Fitness Products Inc.
Authentic Fitness Retail Inc.
Xxxxxx Xxxx Jeanswear Company
CCC Acquisition Corp.
X.X. Xxxxxxxx Company
CKJ Holdings, Inc.
Designer Holdings Ltd.
Xxxxxxx Street, Inc.
Jeanswear Holdings, Inc.
Kai Jay Manufacturing Company
Myrtle Avenue, Inc.
Outlet Holdings, Inc.
Outlet Stores, Inc.
Rio Sportswear, Inc.
Ubertech Products, Inc.
Warnaco Men's Sportswear, Inc.
Warnaco Puerto Rico, Inc.
Warnaco Sourcing Inc.
Warnaco U.S. Inc.
Warner's De Costa Rica Inc.
as Grantors
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title:
30
PENHALIGON'S BY REQUEST, INC.,
as Grantor
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title:
THE WARNACO GROUP, INC.,
as Grantor
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title:
Warnaco International, LLC,
as Grantor
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxxxxxx
Title:
31
ACCEPTED AND AGREED
as of the date first above written:
CITICORP NORTH AMERICA, INC.,
as Administrative Agent
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
32
