EXECUTION COPY
AMENDMENT NO. 1 TO THE
CREDIT AGREEMENT
Dated as of July 31, 1998
AMENDMENT NO. 1 TO THE CREDIT AGREEMENT among Warnaco Inc., a
Delaware corporation (the "Borrower"), The Warnaco Group, Inc., a Delaware
corporation ("Group"), the banks, financial institutions and other institutional
lenders parties to the Credit Agreement referred to below (collectively, the
"Lenders"), The Bank of Nova Scotia, as managing agent and administrative agent
(the "Administrative Agent"), and Citibank, N.A., as managing agent for the
Lenders.
PRELIMINARY STATEMENTS:
(1) The Borrower, the Lenders and the Administrative Agent
have entered into a Credit Agreement dated as of November 26, 1997 (as amended,
supplemented or otherwise modified through the date hereof, the "Credit
Agreement"). Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified in the Credit Agreement.
(2) The Borrower and the Required Lenders have agreed to amend
the Credit Agreement as hereinafter set forth.
SECTION 1. Amendments to Credit Agreement. The Credit
Agreement is, effective as of the date hereof and subject to the satisfaction of
the conditions precedent set forth in Section 2, hereby amended as follows:
(a) The definition of "Funded Debt" is amended by deleting the
parenthetical "(other than Debt incurred pursuant to Section
5.02(c)(iii) hereof)" therein and substituting therefor the following:
(other than Debt incurred on terms customary for
comparable transactions in the good faith judgment of
the Board of Directors of the Borrower in connection
with any obligation under or resulting from any
agreement referred to in Section 5.02(a)(ii))
(b) The definition of "Trade Credit Facility" is amended by
deleting the figure "$300,000,000" and substituting therefor the figure
"$500,000,000".
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(c) Section 5.01(b) is amended by deleting the words "the
Borrower" therein and substituting therefor the word "Group".
(d) Section 5.01(h) is amended in its entirety to read as
follows:
(h) Transactions with Affiliates. Conduct, and cause
each of its Subsidiaries to conduct, other than with respect
to transactions among Group and/or its wholly owned
Subsidiaries, all transactions otherwise permitted under the
Loan Documents with any of their Affiliates on terms that are
no less favorable to Group or such Subsidiary than it would
obtain in a comparable arm's-length transaction with a Person
not an Affiliate, provided, however, that the foregoing
restriction shall not apply to transactions pursuant to any
agreement referred to in Section 5.02(a)(ii) and provided,
further, that the Borrower shall not engage in any transaction
with any such Subsidiary that would render such Subsidiary
insolvent or cause a default under, or a breach of, any
material contract to which such Subsidiary is a party.
(e) Section 5.01(j) is amended by deleting the words "and
consolidating" in Subsection (i) thereof in each instance where they
appear therein.
(f) Section 5.01(k) is amended by deleting the word
"thereafter" where it first appears in Subsection (ii) thereof and
substituting therefor the words "after the delivery of such
guarantees".
(g) Section 5.02(a) is amended as follows:
(i) Subsection (ii) thereof is amended in its
entirety to read as follows:
(ii) Liens on receivables of any kind (and
in property securing or otherwise supporting such
receivables) in connection with agreements for
limited recourse sales or financings by the Borrower
or any of its Subsidiaries or by Designer Holdings or
any of its Subsidiaries for cash of such receivables
or interests therein, provided that (A) any such
agreement is of a type and on terms customary for
comparable transactions in the good faith judgment of
the Board of Directors of Group and (B) such
agreement does not create any interest in any asset
other than receivables (and property securing or
otherwise supporting such receivables), related
general intangibles and proceeds of the foregoing,
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(ii) Subsection (iii) thereof is amended by deleting
the figure "20%" and substituting therefor the figure "10%".
(iii) Subsection (iv) thereof is amended in its
entirety to read as follows:
(iv) Liens arising from covenants by the
Borrower or its Subsidiaries to grant security
interests in the assets of Warnaco of Canada Limited
or its Subsidiaries (the "Canadian Subsidiaries") to
secure Debt of the Canadian Subsidiaries in the event
that the Lenders hereunder or under the Five Year
Credit Agreement or Trade Credit Facility (as defined
therein) are granted Liens by Group or its
Subsidiaries in their respective assets to secure the
Obligations under the Loan Documents, the Five Year
Credit Agreement or the Trade Credit Facility, as the
case may be, and
(h) Section 5.02(c) is amended in its entirety to read as
follows:
(c) Debt. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create,
incur, assume or suffer to exist, any Debt if after
giving effect thereto the Borrower shall fail to be
in compliance with each of the covenants set forth in
Section 5.03, provided that the aggregate principal
amount of Debt created, incurred, assumed or existing
under the Trade Credit Facility or any similar
financing arrangements shall not exceed $500,000,000
at any time outstanding.
(i) Section 5.02(d) is amended as follows:
(i) Subsection (ii) thereof is amended in its
entirety to read as follows:
(ii) sales, leases, transfers or other disposals of
assets, or grants of any option or other right to
purchase, lease or otherwise acquire assets,
following the date hereof for fair value (valued at
the time of any such sale, lease, transfer or other
disposal), in an aggregate amount in each Fiscal Year
not to exceed 15% per annum of the Consolidated total
assets of Group and its Subsidiaries as valued at the
end of the preceding Fiscal Year of the Borrower, and
the fair value of such assets shall have been
determined in good faith by the Board of Directors of
Group;
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(ii) Subsection (iii) thereof is amended by deleting
the words "the Borrower" and substituting therefor the word
"Group".
(iii) Subsection (iv) thereof is amended by deleting
the words ", and, in the case of the Borrower, subject to
Section 5.02(f)(ii)" at the end thereof.
(iv) Subsections (vii), (viii), (ix) and (x) thereof
are amended by deleting the words "the Borrower" in each
instance where they appear therein and substituting therefor
the word "Group".
(j) Section 5.02(e) is deleted in its entirety and the phrase
"[Intentionally Deleted]" is substituted therefor.
(k) Section 5.02(f) is amended in its entirety to read as
follows:
(f) Nature of Business. Make, or permit any
of its Subsidiaries to make, (A) except as otherwise
permitted pursuant to subsection (B) below, any
change in the nature of its business as carried on at
the date hereof in a manner materially adverse to the
Agents and the Lender Parties or (B) any investments
(except Investments in a net aggregate amount (after
giving effect to any dividends or other returns of
capital) invested from the date hereof not to exceed
$55,000,000) other than in apparel manufacturing or
wholesaling businesses or apparel accessories
manufacturing or wholesaling businesses or in related
retail businesses, provided that on an annual basis,
at least 51% of the revenue of Group and its
Subsidiaries on a Consolidated basis is derived from
apparel manufacturing or wholesaling businesses or
apparel accessories manufacturing or wholesaling
businesses.
SECTION 2. Conditions of Effectiveness. This Amendment shall
become effective as of the date first above written when, and only when, the
Administrative Agent shall have received counterparts of this Amendment executed
by the Borrower and the Required Lenders or, as to any of the Lenders, advice
satisfactory to the Administrative Agent that such Lender has executed this
Amendment and the consent attached hereto executed by Group and each Subsidiary
Guarantor. This Amendment is subject to the provisions of Section 8.01 of the
Credit Agreement.
SECTION 3. Reference to and Effect on the Loan Documents. (a)
On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Credit Agreement, and each reference in the Notes and each of
the other Loan Documents to "the Credit
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Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement, shall mean and be a reference to the Credit Agreement, as
amended by this Amendment.
(b) The Credit Agreement, the Notes and each of the other Loan
Documents, as specifically amended by this Amendment, are and shall continue to
be in full force and effect and are hereby in all respects ratified and
confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Lender or the Administrative Agent under any
of the Loan Documents, nor constitute a waiver of any provision of any of the
Loan Documents.
SECTION 4. Costs and Expenses. The Borrower agrees to pay on
demand all costs and expenses of the Agent in connection with the preparation,
execution, delivery and administration, modification and amendment of this
Amendment and the other instruments and documents to be delivered hereunder
(including, without limitation, the reasonable fees and expenses of counsel for
the Agent) in accordance with the terms of Section 8.04 of the Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New York.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
WARNACO INC.
By [signature illegible]
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Title:
Agreed as of the date first above written:
THE BANK OF NOVA SCOTIA
By
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Title:
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
WARNACO INC.
By
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Title:
Agreed as of the date first above written:
THE BANK OF NOVA SCOTIA
By [signature illegible]
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Title: Senior Relationship Manager
CITIBANK, N.A.
By Xxxxxx X. Xxxxxx
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Title: Xxxxxx X. Xxxxxx
Citibank, N.A.
Attorney-in-Fact
BANKBOSTON, N.A.
By [signature illegible]
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Title: Director
THE BANK OF NEW YORK
By [signature illegible]
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Title: VP
BANK OF TOKYO-MITSUBISHI
TRUST COMPANY
By X. Xxxxxx
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Title: X. Xxxxxx
Vice-President
COMMERZBANK A.G., NEW YORK
BRANCH
By Xxxxxx Xxxxxxx
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Title: Xxxxxx Xxxxxxx
Vice President
By Xxxxx Xxxxx
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Title: Xxxxx Xxxxx
Assistant Vice President
CREDITO ITALIANO
By [signature illegible]
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Title: First Vice President
By [signature illegible]
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Title: First Vice President
DAI-ICHI KANGYO BANK, LIMITED
By [signature illegible]
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Title: Sr. Vice President
FIRST UNION NATIONAL BANK
By [signature illegible]
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Title: Sr. Portfolio Manager
FLEET BANK, N.A.
By [signature illegible]
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Title: SVP
THE FUJI BANK, LIMITED, NEW YORK
BRANCH
By [signature illegible]
---------------------------------
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN,
LTD., NEW YORK BRANCH
By J. Xxxxxxx Xxxxxx
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Title: J. Xxxxxxx Xxxxxx
Senior Vice President
MARINE MIDLAND BANK
By Xxxxxxx X. Xxxxxxxx
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Title: Senior Vice President
XXXXXX GUARANTY TRUST
COMPANY OF NEW YORK
By Xxxxx X. Xxxxx
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Title: VP
SOCIETE GENERALE
By [signature illegible]
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Title: Vice President
WACHOVIA BANK, N.A.
By [signature illegible]
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Title: Vice President
CONSENT
Dated as of July 31, 1998
The undersigned, each a Guarantor under either the Subsidiary
Guaranty or the Group Guaranty, as the case may be, each dated August 12, 1997
(the "Guaranties") in favor of the Administrative Agent and the Lenders parties
to the Credit Agreement referred to in the foregoing Amendment, hereby consents
to such Amendment and hereby confirms and agrees that notwithstanding the
effectiveness of such Amendment, the Guaranties are, and shall continue to be,
in full force and effect and are hereby ratified and confirmed in all respects.
THE WARNACO GROUP, INC.
XXXXXXX INC.
X.X. XXXXXXXX COMPANY
DESIGNER HOLDINGS, LTD.
XXXXXXX STREET, INC.
ML, INC.
MYRTLE AVENUE, INC.
000 XXXXXX XXXXXX INC.
WARMANA LIMITED
WARNACO INTERNATIONAL INC.
WARNACO INTERNATIONAL, L.L.C.,
By Warnaco Inc., its Member
WARNACO MEN'S SPORTSWEAR INC.
WARNACO SOURCING INC.
WARNER'S DE COSTA RICA INC.
BROADWAY JEANSWEAR COMPANY, INC.
BROADWAY JEANSWEAR SOURCING, INC.
BROADWAY JEANSWEAR HOLDINGS, INC.
OUTLET STORES, INC.
OUTLET HOLDINGS, INC.
RIO SPORTSWEAR INC.
AEI MANAGEMENT CORP.
JEANSWEAR HOLDINGS, INC.
XXXXXX XXXXX JEANSWEAR COMPANY
CKJ HOLDINGS INC.
KAIJAI ACQUISITION COMPANY
ABBEVILLE ACQUISITION COMPANY
NEW BEDFORD SHIPPERS CORP.
CKJ SOURCING INC.
By [signature illegible]
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Name:
Title:
