Exhibit 4.2
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WARNACO INC.
$210,000,000
8 7/8% SENIOR NOTES DUE 2013
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INDENTURE
Dated as of June 12, 2003
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WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee
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TABLE OF CONTENTS Page
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE.............................................1
Section 1.01. Definitions........................................................................1
Section 1.02. Other Definitions.................................................................27
Section 1.03. Incorporation by Reference of Trust Indenture Act.................................27
Section 1.04. Rules of Construction.............................................................27
ARTICLE 2. THE NOTES.............................................................................28
Section 2.01. Form and Dating...................................................................28
Section 2.02. Execution and Authentication......................................................29
Section 2.03. Registrar and Paying Agent........................................................29
Section 2.04. Paying Agent to Hold Money in Trust...............................................30
Section 2.05. Holder Lists......................................................................30
Section 2.06. Transfer and Exchange.............................................................30
Section 2.07. Replacement Notes.................................................................42
Section 2.08. Outstanding Notes.................................................................42
Section 2.09. Treasury Notes....................................................................42
Section 2.10. Temporary Notes...................................................................42
Section 2.11. Cancellation......................................................................43
Section 2.12. Defaulted Interest................................................................43
Section 2.13. CUSIP or ISIN Numbers.............................................................43
Section 2.14. Special Interest..................................................................43
Section 2.15. Issuance of Additional Notes......................................................44
ARTICLE 3. REDEMPTION AND PREPAYMENT.............................................................44
Section 3.01. Notices to Trustee................................................................44
Section 3.02. Selection of Notes to Be Redeemed.................................................44
Section 3.03. Notice of Redemption..............................................................45
Section 3.04. Effect of Notice of Redemption....................................................46
Section 3.05. Deposit of Redemption Price.......................................................46
Section 3.06. Notes Redeemed in Part............................................................46
Section 3.07. Optional Redemption...............................................................46
Section 3.08. Mandatory Redemption..............................................................47
Section 3.09. Offers To Purchase................................................................47
ARTICLE 4. COVENANTS.............................................................................49
Section 4.01. Payment of Notes..................................................................49
Section 4.02. Maintenance of Office or Agency...................................................50
Section 4.03. Reports...........................................................................50
Section 4.04. Compliance Certificate............................................................51
Section 4.05. Taxes.............................................................................51
Section 4.06. Stay, Extension and Usury Laws....................................................51
Section 4.07. Corporate Existence...............................................................51
Section 4.08. Payment for Consents..............................................................52
Section 4.09. Limitation on Debt................................................................52
Section 4.10. Limitation on Restricted Payments.................................................54
Section 4.11. Limitation on Liens...............................................................56
Section 4.12. Limitation on Asset Sales.........................................................56
Section 4.13. Limitation on Restrictions on Distributions from Restricted Subsidiaries..........58
Section 4.14. Limitation on Transactions with Affiliates........................................59
Section 4.15. Limitation on Sale and Leaseback Transactions.....................................60
Section 4.16. Designation of Restricted and Unrestricted Subsidiaries...........................60
Section 4.17. Repurchase at the Option of Holders Upon a Change of Control......................62
Section 4.18. Limitation Warnaco's and Holdco's Businesses......................................62
TABLE OF CONTENTS
Page
Section 4.19. Future Guarantors.................................................................62
ARTICLE 5. SUCCESSORS............................................................................62
Section 5.01. Merger, Consolidation or Sale of Property of Warnaco and Guarantors...............62
Section 5.02. Successor Corporation Substituted.................................................64
ARTICLE 6. DEFAULTS AND REMEDIES.................................................................64
Section 6.01. Events of Default.................................................................64
Section 6.02. Acceleration......................................................................66
Section 6.03. Other Remedies....................................................................67
Section 6.04. Waiver of Past Defaults...........................................................67
Section 6.05. Control by Majority...............................................................67
Section 6.06. Limitation on Suits...............................................................68
Section 6.07. Rights of Holders to Receive Payment..............................................68
Section 6.08. Collection Suit by Trustee........................................................68
Section 6.09. Trustee May File Proofs of Claim..................................................68
Section 6.10. Priorities........................................................................69
Section 6.11. Undertaking for Costs.............................................................69
ARTICLE 7. TRUSTEE...............................................................................69
Section 7.01. Duties of Trustee.................................................................69
Section 7.02. Rights of Trustee.................................................................70
Section 7.03. Individual Rights of Trustee......................................................71
Section 7.04. Trustee's Disclaimer..............................................................71
Section 7.05. Notice of Defaults................................................................71
Section 7.06. Reports by Trustee to Holders.....................................................72
Section 7.07. Compensation and Indemnity........................................................72
Section 7.08. Replacement of Trustee............................................................73
Section 7.09. Successor Trustee by Merger, etc..................................................74
Section 7.10. Eligibility; Disqualification.....................................................74
Section 7.11. Preferential Collection of Claims Against Company.................................74
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE..............................................74
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance..........................74
Section 8.02. Legal Defeasance and Discharge....................................................74
Section 8.03. Covenant Defeasance...............................................................75
Section 8.04. Conditions to Legal or Covenant Defeasance........................................75
Section 8.05. Deposited Cash and Government Securities to be Held in Trust; Other Miscellaneous
Provisions........................................................................76
Section 8.06. Repayment to Company..............................................................77
Section 8.07. Reinstatement.....................................................................77
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER......................................................77
Section 9.01. Without Consent of Holders of Notes...............................................77
Section 9.02. With Consent of Holders of Notes..................................................78
Section 9.03. Compliance with Trust Indenture Act...............................................79
Section 9.04. Revocation and Effect of Consents.................................................79
Section 9.05. Notation on or Exchange of Notes..................................................80
Section 9.06. Trustee to Sign Amendments, etc...................................................80
ARTICLE 10. GUARANTEES............................................................................80
Section 10.01. Guarantee.........................................................................80
Section 10.02. Limitation on Guarantor Liability.................................................81
Section 10.03. Execution and Delivery of Guarantee...............................................82
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TABLE OF CONTENTS
Page
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms................................82
ARTICLE 11. SATISFACTION AND DISCHARGE............................................................83
Section 11.02. Deposited Cash and Government Securities to be Held in Trust; Other Miscellaneous
Provisions........................................................................84
Section 11.03. Repayment to Warnaco..............................................................84
ARTICLE 12. MISCELLANEOUS.........................................................................85
Section 12.01. Trust Indenture Act Controls......................................................85
Section 12.02. Notices...........................................................................85
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.....................86
Section 12.04. Certificate and Opinion as to Conditions Precedent................................86
Section 12.05. Statements Required in Certificate or Opinion.....................................86
Section 12.06. Rules by Trustee and Agents.......................................................86
Section 12.07. No Personal Liability of Directors, Officers, Employees and Shareholders..........87
Section 12.08. Governing Law.....................................................................87
Section 12.09. No Adverse Interpretation of Other Agreements.....................................87
Section 12.10. Successors........................................................................87
Section 12.11. Severability......................................................................87
Section 12.12. Counterpart Originals.............................................................87
Section 12.13. Table of Contents, Headings, etc..................................................87
Section 12.14. Qualification of this Indenture...................................................87
D-iii
CROSS-REFERENCE TABLE
TIA Section Indenture
Reference Section
310(a)(1)............................................................................... 7.10
(a)(2).................................................................................. 7.10
(a)(3).................................................................................. N.A.
(a)(4).................................................................................. N.A.
(a)(5).................................................................................. 7.10
(b)..................................................................................... 7.08, 7.10
(c)..................................................................................... N.A.
311(a).................................................................................. 7.11
(b)..................................................................................... 7.11
(c)..................................................................................... N.A.
312(a).................................................................................. 2.05
(b)..................................................................................... 12.03
(c)..................................................................................... 12.03
313(a).................................................................................. 7.06
(b)(1).................................................................................. N.A.
(b)(2).................................................................................. 7.06, 7.07
(c)..................................................................................... 7.06, 12.02
(d)..................................................................................... 7.06
314(a).................................................................................. 4.03, 4.04,
12.02
(b)..................................................................................... N.A.
(c)(1).................................................................................. 12.04
(c)(2).................................................................................. 12.04
(c)(3).................................................................................. N.A.
(d)..................................................................................... N.A.
(e)..................................................................................... 12.05
315(a).................................................................................. 7.01
(b)..................................................................................... 7.05, 12.02
(c)..................................................................................... 7.01
(d)..................................................................................... 7.01
(e)..................................................................................... 6.11
316(a) (last sentence).................................................................. 2.09
(a)(1)(A)............................................................................... 6.05
(a)(1)(B)............................................................................... 6.04
(a)(2).................................................................................. N.A.
(b)..................................................................................... 6.07
317(a)(1)............................................................................... 6.08
(a)(2).................................................................................. 6.09
(b)..................................................................................... 2.04
318(a).................................................................................. 12.01
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
This INDENTURE, dated as of June 12, 2003, is entered into by
and among Warnaco Inc., a Delaware corporation ("Warnaco"), each Guarantor
listed on the signature pages hereto, and Wells Fargo Bank Minnesota, National
Association, as Trustee (the "Trustee").
Warnaco, the Guarantors and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the Holders
of the 8 7/8% Senior Notes due 2013 (the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
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For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
"144A Global Note" means a Global Note in the form of Exhibit
A hereto bearing the Global Note Legend and the Private Placement Legend and
deposited with and registered in the name of the Depositary or its nominee that
shall be issued in a denomination equal to the outstanding principal amount of
the Notes sold for initial resale in reliance on Rule 144A.
"Additional Assets" means:
(a) any Property (other than cash, Temporary Cash Investments
and securities) owned by Holdco or any Restricted Subsidiary and used in a
Permitted Business; or
(b) Capital Stock of a Person that is or becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock by Holdco or
another Restricted Subsidiary from any Person other than Holdco or a controlled
Affiliate of Holdco; provided, however, that, in the case of clause (b), such
Restricted Subsidiary is primarily engaged in a Permitted Business.
"Additional Notes" means any Notes (other than Initial Notes
and Notes issued under Sections 2.06, 2.07, 2.10, 3.06 and 3.09), issued under
this Indenture in accordance with Sections 2.02 and 2.15, as part of the same
series as the Initial Notes or as an additional series.
"Affiliate" of any specified Person means:
(a) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with such specified
Person, or
(b) any other Person who is a director or officer of:
(1) such specified Person,
(2) any Subsidiary of such specified Person, or
(3) any Person described in clause (a) above.
For the purposes of this definition, "control," when used with
respect to any Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of
Sections 4.12 and 4.14 and the definition of "Additional Assets" only,
"Affiliate" shall also mean any beneficial owner of shares representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis) of
Holdco
or of rights or warrants to purchase such Voting Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Agent" means any Registrar, co-registrar, Paying Agent or
additional paying agent.
"Applicable Procedures" means, with respect to any transfer,
redemption or exchange of or for beneficial interests in any Global Note, the
rules and procedures of the Depositary, Euroclear and Clearstream that apply to
such transfer, redemption or exchange.
"Asset Sale" means any sale, lease, transfer, issuance or
other disposition (or series of related sales, leases, transfers, issuances or
dispositions) by Holdco or any Restricted Subsidiary, including any disposition
by means of a merger, consolidation or similar transaction (each referred to for
the purposes of this definition as a "disposition"), of
(a) any shares of Capital Stock of a Restricted Subsidiary
(other than directors' qualifying shares or shares required by applicable law to
be held by a person other than Holdco or a Restricted Subsidiary), or
(b) any other Property of Holdco or any Restricted Subsidiary
outside of the ordinary course of business of Holdco or such Restricted
Subsidiary, other than,
(1) any disposition by a Restricted Subsidiary to Warnaco or
by Holdco or a Restricted Subsidiary to a Restricted Subsidiary,
(2) any disposition that constitutes a Permitted Investment or
Restricted Payment permitted by Section 4.10,
(3) any disposition effected in compliance with the first
or second paragraph of Section 5.01,
(4) any disposition in a single transaction or a series of
related transactions of assets for aggregate consideration of less than $2.5
million,
(5) any disposition of obsolete, damaged or worn-out equipment
or property, or property that is no longer useful in the conduct of the business
of Holdco and its Restricted Subsidiaries,
(6) any disposition of cash or Temporary Cash Investments, and
(7) any sale of accounts receivable and related assets
(including contract rights) of the type specified in the definition of
"Qualified Securitization Transaction" to or by a Securitization Entity for the
fair market value thereof.
For the avoidance of doubt, the sale or disposition of
inventory in the ordinary course of business shall be considered dispositions
not outside of the ordinary course of business.
"Attributable Debt" in respect of a Sale and Leaseback
Transaction means, at any date of determination,
(a) if such Sale and Leaseback Transaction is a Capital Lease
Obligation, the amount of Debt represented thereby according to the definition
of "Capital Lease Obligations," and
(b) in all other instances, the greater of:
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(1) the Fair Market Value of the Property subject to such Sale
and Leaseback Transaction at the time of the consummation thereof, and
(2) the present value (discounted at the interest rate borne
by the Notes, compounded annually) of the total obligations of the lessee for
rental payments during the remaining term of the lease included in such Sale and
Leaseback Transaction at the time of consummation thereof (including any period
for which such lease has been extended).
"Average Life" means, as of any date of determination, with
respect to any Debt or Preferred Stock, the quotient obtained by dividing:
(a) the sum of the product of the numbers of years (rounded to
the nearest one-twelfth of one year) from the date of determination to the dates
of each successive scheduled principal payment of such Debt or redemption or
similar payment with respect to such Preferred Stock multiplied by the amount of
such payment by
(b) the sum of all such payments.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors, or the law of any other
jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person" (as such term is used in Section
13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition.
"Board of Directors" means the board of directors of Warnaco.
"Board Resolution" means a copy of a resolution certified by
the secretary or an assistant secretary (or individual performing comparable
duties) of the applicable Person to have been duly adopted by the Board of
Directors of such Person and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligations" means any obligation under a lease
that is required to be capitalized for financial reporting purposes in
accordance with GAAP; and the amount of Debt represented by such obligation
shall be the capitalized amount of such obligations determined in accordance
with GAAP; and the Stated Maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
For purposes of Section 4.11, a Capital Lease Obligation shall be deemed secured
by a Lien on the Property being leased.
"Capital Stock" means, with respect to any Person, any shares
or other equivalents (however designated) of any class of corporate stock or
partnership interests or any other participations, rights, warrants, options or
other interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Capital Stock Sale Proceeds" means the aggregate cash
proceeds received by Holdco from the issuance or sale (other than to a
Subsidiary of Holdco or an employee stock ownership plan or trust established by
Holdco or any such Subsidiary for the benefit of their employees) by Holdco of
its
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Capital Stock (other than Disqualified Stock) after the Issue Date, net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Change of Control" means the occurrence of any of the
following events:
(a) Holdco shall at any time cease to be the beneficial owner
(as defined in Rule 13d-3 of the Exchange Act) of 100% of the Capital Stock of
Warnaco; or
(b) any "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act or any successor provisions to
either of the foregoing), including any group acting for the purpose of
acquiring, holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act, becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act, except that a person will be deemed to
have "beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total voting power of
the Voting Stock of Holdco (for purposes of this clause (b), such person or
group shall be deemed to beneficially own any Voting Stock of a corporation held
by any other corporation (the "parent corporation") so long as such person or
group beneficially owns, directly or indirectly, in the aggregate at least a
majority of the total voting power of the Voting Stock of such parent
corporation); or
(c) the sale, transfer, assignment, lease, conveyance or other
disposition, directly or indirectly, of all or substantially all the Property of
Holdco, Warnaco and their Restricted Subsidiaries, considered as a whole (other
than a disposition of such Property as an entirety or virtually as an entirety
to a Wholly Owned Restricted Subsidiary), shall have occurred, or Holdco or
Warnaco merges, consolidates or amalgamates with or into any other Person or any
other Person merges, consolidates or amalgamates with or into Holdco or Warnaco,
in any such event pursuant to a transaction in which the outstanding Voting
Stock of Holdco or Warnaco is reclassified into or exchanged for cash,
securities or other Property, other than any such transaction where:
(1) the outstanding Voting Stock of Holdco or Warnaco is
reclassified into or exchanged for other Voting Stock of Holdco or Warnaco or
for Voting Stock of the Surviving Person, and
(2) the holders of the Voting Stock of Holdco or Warnaco
immediately prior to such transaction own, directly or indirectly, not less than
a majority of the Voting Stock of Holdco or Warnaco or the Surviving Person
immediately after such transaction and in substantially the same proportion as
before the transaction; or
(d) during any period of two consecutive years, individuals
who at the beginning of such period constituted the board of directors of, as
relevant, Holdco or Warnaco (together with any new directors whose election or
appointment by such board or whose nomination for election by the shareholders
of, as relevant, Holdco or Warnaco was approved by a vote of not less than a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute at least a majority
of the relevant board of directors then in office; or
(e) the shareholders of Holdco or Warnaco shall have approved
any plan of liquidation or dissolution of Holdco or Warnaco, as applicable.
"Clearstream" means Clearstream Banking S.A. and any successor
thereto.
"Code" means the U.S. Internal Revenue Code of 1986, as
amended.
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"Commodity Price Protection Agreement" means, in respect of a
Person, any forward contract, commodity swap agreement, commodity option
agreement or other similar agreement or arrangement designed to protect such
Person against fluctuations in commodity prices.
"Comparable Treasury Issue" means the United States treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Notes that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such Notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with
Warnaco.
"Comparable Treasury Price" means, with respect to any
redemption date:
(a) the average of the bid and ask prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such redemption date, as set forth in the
most recently published statistical release designated "H.15(519)" (or any
successor release) published by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States treasury
securities adjusted to constant maturity under the caption "Treasury Constant
Maturities," or
(b) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, the average of
the Reference Treasury Dealer Quotations for such redemption date.
"Consolidated Interest Coverage Ratio" means, as of any date
of determination, the ratio of:
(a) the aggregate amount of EBITDA for the most recent four
consecutive fiscal quarters in respect of which financial statements are
publicly available on or prior to the date of determination to
(b) Consolidated Interest Expense for such four fiscal
quarters;
provided, however, that:
(1) if
(A) since the beginning of such period Holdco or any
Restricted Subsidiary has Incurred any Debt that remains outstanding or Repaid
any Debt, or
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is an Incurrence or Repayment of Debt,
Consolidated Interest Expense for such period shall be calculated after giving
effect on a pro forma basis to such Incurrence or Repayment as if such Debt was
Incurred or Repaid on the first day of such period, provided that the amount of
Debt Incurred under revolving credit facilities shall be deemed to be the
average daily balance of such Debt during such four- quarter period (or any
shorter period in which such facilities are in effect) and, provided further, in
the event of any such Repayment of Debt, EBITDA for such period shall be
calculated as if Holdco or such Restricted Subsidiary had not earned any
interest income actually earned during such period in respect of the funds used
to Repay such Debt, and
(2) if
5
(A) since the beginning of such period Holdco or any
Restricted Subsidiary shall have made any Asset Sale or an Investment (by merger
or otherwise) in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition of Property which constitutes all or
substantially all of an operating unit of a business,
(B) the transaction giving rise to the need to calculate the
Consolidated Interest Coverage Ratio is such an Asset Sale, Investment or
acquisition, or
(C) since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with or into Holdco or
any Restricted Subsidiary since the beginning of such period) shall have made
such an Asset Sale, Investment or acquisition,
then EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect to such Asset Sale, Investment or
acquisition as if such Asset Sale, Investment or acquisition had occurred on the
first day of such period.
If any Debt bears a floating rate of interest and is being
given pro forma effect, the interest expense on such Debt shall be calculated as
if the interest rate in effect for such floating rate of interest on the date of
determination had been the applicable interest rate for the entire period
(taking into account any Interest Rate Agreement applicable to such Debt if such
Interest Rate Agreement has a remaining term in excess of 12 months). In the
event the Capital Stock of any Restricted Subsidiary is sold during the period,
Holdco shall be deemed, for purposes of clause (1) above, to have Repaid during
such period the Debt of such Restricted Subsidiary to the extent Holdco and its
continuing Restricted Subsidiaries are no longer liable for such Debt after such
sale.
"Consolidated Interest Expense" means, for any period, the
total interest expense of Holdco and its consolidated Restricted Subsidiaries
(net of interest income and payments received in respect of Interest Rate
Agreements), plus, to the extent not included in such total interest expense,
and to the extent Incurred by Holdco or its Restricted Subsidiaries,
(a) interest expense attributable to leases constituting part
of a Sale and Leaseback Transaction and to Capital Lease Obligations,
(b) amortization of debt discount and debt issuance cost,
including commitment fees,
(c) capitalized interest,
(d) non-cash interest expense,
(e) commissions, discounts and other fees and charges owed
with respect to letters of credit and banker's acceptance financing,
(f) costs associated with Interest Rate Agreements (including
amortization of fees),
(g) Disqualified Stock Dividends,
(h) Preferred Stock Dividends,
(i) interest Incurred in connection with Investments in
discontinued operations,
(j) interest accruing on any Debt of any other Person to the
extent such Debt is Guaranteed by Holdco or any of its Restricted Subsidiaries,
and
6
(k) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such plan or
trust to pay interest or fees to any Person (other than Holdco) in connection
with Debt Incurred by such plan or trust.
Notwithstanding the foregoing, there shall be excluded from
Consolidated Interest Expense the interest expense attributable to any Debt of a
Foreign Restricted Subsidiary, but only if (x) the Debt of the Foreign
Restricted Subsidiary giving rise to such interest expense is without recourse
to or guaranteed by Holdco, Warnaco, any Subsidiary Guarantor or any other
Domestic Restricted Subsidiary of Holdco and (y) the net income of such Foreign
Restricted Subsidiary is not included in the calculation of Consolidated Net
Income for the same period.
"Consolidated Net Income" means, for any period, the net
income (loss) of Holdco and its consolidated Restricted Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income:
(a) any net income (loss) of any Person if such Person is not
Holdco or a Restricted Subsidiary, except that:
(1) subject to the exclusion contained in clause (c) below,
equity of Holdco and its consolidated Restricted Subsidiaries in the net income
of any such Person for such period shall be included in such Consolidated Net
Income up to the aggregate amount of cash distributed by such Person during such
period to Holdco or a Restricted Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (b) below), and
(2) the equity of Holdco and its consolidated Restricted
Subsidiaries in a net loss of any such Person other than an Unrestricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income to the extent such loss has been funded with cash or other property
from Holdco or a Restricted Subsidiary,
(b) any net income (loss) of any Restricted Subsidiary to the
extent that such Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of distributions, directly
or indirectly, to Holdco or Warnaco, except that:
(1) subject to the exclusion contained in clause (c) below,
the equity of Holdco and its consolidated Restricted Subsidiaries in the net
income of any such Restricted Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash distributed by
such Restricted Subsidiary during such period to Holdco or another Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution to another Restricted Subsidiary, to the
limitation contained in this clause), and
(2) the equity of Holdco and its consolidated Restricted
Subsidiaries in a net loss of any such Restricted Subsidiary for such period
shall be included in determining such Consolidated Net Income,
(c) any gain or loss realized upon the sale or other
disposition of any Property of Holdco or any of its consolidated Restricted
Subsidiaries (including pursuant to any Sale and Leaseback Transaction) that is
not sold or otherwise disposed of in the ordinary course of business,
(d) any extraordinary gain or loss,
(e) the cumulative effect of a change in accounting principles
and
7
(f) any non-cash compensation expense realized for grants of
performance shares, stock options or other rights to officers, directors and
employees of Holdco or any Restricted Subsidiary, provided that such shares,
options or other rights can be redeemed at the option of the holder only for
Capital Stock of Holdco (other than Disqualified Stock).
Notwithstanding the foregoing, for purposes of Section 4.10 only, there shall be
excluded from Consolidated Net Income any dividends, returns of capital,
repayments of loans or advances, interest or other transfers of Property from
Unrestricted Subsidiaries to Holdco or a Restricted Subsidiary to the extent
such dividends, returns, repayments, interest or transfers increase the amount
of Restricted Payments permitted under such covenant pursuant to clause (c)(4)
thereof.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.02, or such other address as to
which the Trustee may give notice to Warnaco.
"Credit Facilities" means, with respect to Holdco or any
Restricted Subsidiary, one or more debt or credit facilities with banks or other
lenders (including the Senior Credit Facility) providing for revolving credit
loans, term loans, notes, receivables or inventory financing (including through
the sale of receivables or inventory to such lenders or to special purpose,
bankruptcy remote entities formed to borrow from such lenders against such
receivables or inventory) or trade or standby letters of credit, in each case as
such facility may be amended (including any amendment and restatement thereof),
supplemented or otherwise modified from time to time, including any agreements
extending the maturity of, refinancing, replacing (whether or not
contemporaneously) or otherwise restructuring (including increasing the amount
of available borrowings thereunder (provided that such increase in borrowings is
permitted by Section 4.09) or adding Restricted Subsidiaries as additional
borrowers or collateral guarantors thereunder) all or any portion of the Debt
under such agreement or any successor or replacement agreements and whether by
the same or any other agent, lender or group of lenders or investors and whether
such refinancing or replacement is under one or more debt facilities or
commercial paper facilities, indentures or other agreements, in each case with
banks or other lenders or trustees or investors providing for revolving credit
loans, term loans, notes or letters or credit, together with related documents
thereto (including, without limitation, any guaranty agreements and security
documents).
"Currency Exchange Protection Agreement" means, in respect of
a Person, any foreign exchange contract, currency swap agreement, currency
option, forward contract or other similar agreement or arrangement, in each
case, including any Guarantee and collateral documents referred to therein,
designed to protect such Person against fluctuations in currency exchange rates.
"Custodian" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section
2.03(c) as Custodian with respect to the Notes, and any and all successors
thereto appointed as custodian hereunder and having become such pursuant to the
applicable provisions of this Indenture.
"Debt" means, with respect to any Person on any date of
determination (without duplication):
(a) the principal of and premium (if any) in respect of:
(1) debt of such Person for money borrowed, and
(2) debt evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable;
(b) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale and Leaseback Transactions entered into by
such Person;
8
(c) all obligations of such Person representing the deferred
purchase price of Property, all conditional sale obligations of such Person and
all obligations of such Person under any title retention agreement (but
excluding trade accounts payable arising in the ordinary course of business and
other accrued liabilities arising in the ordinary course of business that are
not overdue or are being contested in good faith and are not required to be
reflected as debt in Holdco's consolidated financial statements under GAAP);
(d) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance (other than obligations
with respect to letters of credit securing obligations (other than obligations
described in (a) through (c) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not drawn upon
or, if and to the extent drawn upon, such drawing is reimbursed no later than
the third Business Day following receipt by such Person of a demand for
reimbursement following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect
to the Repayment of any Disqualified Stock or, with respect to any Subsidiary of
such Person, any Preferred Stock (but excluding, in each case, any accrued
dividends);
(f) all obligations of the type referred to in clauses (a)
through (e) above of other Persons and all dividends of other Persons for the
payment of which, in either case, such Person is responsible or liable, directly
or indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(g) all obligations of the type referred to in clauses (a)
through (f) above of other Persons secured by any Lien on any Property of such
Person (whether or not such obligation is assumed by such Person), the amount of
such obligation being deemed to be the lesser of the Fair Market Value of such
Property and the amount of the obligation so secured; and
(h) to the extent not otherwise included in this definition,
Hedging Obligations of such Person.
The amount of Debt of any Person at any date shall be the outstanding balance,
or the accreted value of such Debt in the case of Debt issued with original
issue discount, at such date of all unconditional obligations as described above
and the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date. The amount of Debt
represented by a Hedging Obligation shall be equal to:
(1) zero if such Hedging Obligation has been Incurred pursuant
to clause (f), (g) or (h) of the second paragraph of Section 4.09, or
(2) the notional amount of such Hedging Obligation if not
Incurred pursuant to such clauses.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06, in
substantially the form of Exhibit A hereto except that such Note shall not bear
the Global Note Legend and shall not have the "Schedule of Exchanges of
Interests in the Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
as the Depositary with respect to the Notes, and any and
9
all successors thereto appointed as depositary hereunder and having become such
pursuant to the applicable provisions of this Indenture.
"Disqualified Stock" means any Capital Stock of Holdco or any
of its Restricted Subsidiaries that by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable, in either
case at the option of the holder thereof) or otherwise:
(a) matures or is mandatorily redeemable (other than
redeemable only for Capital Stock of such Person which is not itself
Disqualified Stock) pursuant to a sinking fund obligation or otherwise,
(b) is or may become redeemable or repurchaseable at the
option of the holder thereof, in whole or in part, including upon a change of
control, provided, however, that such Capital Stock shall not constitute
Disqualified Stock if the terms of such Capital Stock (and any such securities
into which it is directly or indirectly convertible or exchangeable) provide
that Holdco or any of its Restricted Subsidiaries may not repurchase or redeem
any such Capital Stock (and any such securities into which it is directly or
indirectly convertible or exchangeable) pursuant to a change of control
provision:
(1) unless the events giving rise to such change of control
would constitute a Change of Control pursuant to which Warnaco is required to
make a Change of Control Offer, and
(2) prior to any such repurchase or redemption of any such
Capital Stock (and any such securities into which it is convertible or
exchangeable), Warnaco shall have completed such Change of Control Offer and
repurchased all Notes validly tendered for payment in connection with such
Change of Control Offer, or
(c) is convertible or exchangeable at the option of the holder
thereof for Debt or Disqualified Stock,
on or prior to, in the case of clause (a), (b) or (c), the
first anniversary of the Stated Maturity of the Notes.
"Disqualified Stock Dividends" means all dividends with
respect to Disqualified Stock of Holdco held by Persons other than a Wholly
Owned Restricted Subsidiary. The amount of any such dividend shall be equal to
the quotient of such dividend divided by the difference between one and the
maximum statutory federal income tax rate (expressed as a decimal number between
1 and 0) then applicable to Holdco.
"Distribution Compliance Period" means the 40-day distribution
compliance period as defined in Regulation S.
"Domestic Restricted Subsidiary" means any Restricted
Subsidiary other than (a) a Foreign Restricted Subsidiary or (b) a Subsidiary of
a Foreign Restricted Subsidiary.
"EBITDA" means, for any period, an amount equal to, for Holdco
and its consolidated Restricted Subsidiaries:
(a) the sum of Consolidated Net Income for such period, plus
the following to the extent deducted in determining Consolidated Net Income for
such period:
(1) the provision for taxes based on income or profits or
utilized in computing net loss,
(2) Consolidated Interest Expense,
10
(3) depreciation,
(4) amortization of intangibles,
(5) any other non-cash items (other than any such non-cash
item to the extent that it represents an accrual of, or reserve for, cash
expenditures in any future period), and
(6) any one-time, non-recurring expenses or charges relating
to, or arising from the recapitalization and restructuring of Holdco, Warnaco
and certain other Subsidiaries in proceedings under Chapter 11 of the U.S.
Bankruptcy Code, minus
(b) all non-cash items increasing Consolidated Net Income for
such period.
Notwithstanding the foregoing clause (a), the provision for
taxes and the depreciation, amortization and non-cash items of a Restricted
Subsidiary shall be added to Consolidated Net Income to compute EBITDA only to
the extent (and in the same proportion) that the net income of such Restricted
Subsidiary was included in calculating Consolidated Net Income and only if a
corresponding amount would be permitted at the date of determination to be
dividended to Holdco by such Restricted Subsidiary.
"Equity Registration Rights Agreement" means the Registration
Rights Agreement, dated as of February 4, 2003, among Holdco and certain former
creditors of Warnaco.
"Euroclear" means Euroclear Bank, S.A./N.V., as operator of
the Euroclear systems, and any successor thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" means the notes issued in exchange for the
Initial Notes or any Additional Notes pursuant to the Registration Rights
Agreement.
"Exchange Offer" has the meaning set forth in a Registration
Rights Agreement relating to an exchange of Notes registered under the
Securities Act for Notes not so registered.
"Exchange Offer Registration Statement" has the meaning set
forth in a Registration Rights Agreement.
"Fair Market Value" means, with respect to any Property, the
price that could be negotiated in an arm's-length free market transaction, for
cash, between a willing seller and a willing buyer, neither of whom is under
undue pressure or compulsion to complete the transaction. Fair Market Value
shall be determined, except as otherwise provided,
(a) if such Property has a Fair Market Value equal to or less
than $10.0 million, by any Officer of Warnaco, or
(b) if such Property has a Fair Market Value in excess of
$10.0 million, by at least a majority of the Board of Directors and evidenced by
a Board Resolution, dated within 30 days of the relevant transaction.
"Foreign Borrowing Base" means the sum of the amounts equal to
(a) 85% of the book value of the accounts receivable of all Foreign Restricted
Subsidiaries plus (b) 50% of the book value of the inventory of such Foreign
Restricted Subsidiaries.
"Foreign Restricted Subsidiary" means any Restricted
Subsidiary which is (a) not organized under the laws of the United States of
America or any State thereof or the District of Columbia
11
or (b) any other Restricted Subsidiary whose assets consist, directly or
indirectly, solely of the Capital Stock of one or more Subsidiaries which are
not organized under the laws of the United States of America or any State
thereof or the District of Columbia.
"GAAP" means United States generally accepted accounting
principles as in effect on the Issue Date, including those set forth in:
(a) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants,
(b) the statements and pronouncements of the Financial
Accounting Standards Board,
(c) such other statements by such other entity as approved by
a significant segment of the accounting profession, and
(d) the rules and regulations of the SEC governing the
inclusion of financial statements (including pro forma financial statements) in
periodic reports required to be filed pursuant to Section 13 of the Exchange
Act, including opinions and pronouncements in staff accounting bulletins and
similar written statements from the accounting staff of the SEC.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Global Notes" means the global Notes in the form of Exhibit A
hereto issued in accordance with Article 2.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Debt of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person:
(a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt of such other Person (whether arising by
virtue of partnership arrangements, or by agreements to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise), or
(b) entered into for the purpose of assuring in any other
manner the obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "Guarantee" shall not
include:
(1) endorsements for collection or deposit in the ordinary
course of business, or
(2) a contractual commitment by one Person to invest in
another Person for so long as such Investment is reasonably expected to
constitute a Permitted Investment under clause (a), (b) or (c) of the definition
of "Permitted Investment."
The term "Guarantee" used as a verb has a corresponding
meaning.
"Guarantor" means Holdco, each Domestic Restricted Subsidiary
(other than Warnaco and any Securitization Entity) and any other Person that
becomes a Guarantor pursuant to Section 4.19 or who otherwise executes and
delivers a supplemental indenture to the Trustee providing for a Note Guaranty.
12
"Hedging Obligation" of any Person means any obligation or
liability, direct or indirect, contingent or otherwise, of such Person in
respect of any Interest Rate Agreement, Currency Exchange Protection Agreement,
Commodity Price Protection Agreement or any other similar agreement or
arrangement.
"Holdco" means The Warnaco Group, Inc., a Delaware
corporation, the owner of 100% of the common stock of Warnaco.
"Holder" means a Person in whose name a Note is registered in
the Security Register.
"IAI Global Note" means a Global Note in the form of Exhibit A
hereto, bearing the name of the Depositary or its nominee that will be issued in
a denomination equal to the outstanding principal amounts of the Notes sold to
Institutional Accredited Investors, if any.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by merger, conversion, exchange or
otherwise), extend, assume, Guarantee or become liable in respect of such Debt
or other obligation or the recording, as required pursuant to GAAP or otherwise,
of any such Debt or obligation on the balance sheet of such Person (and
"Incurrence" and "Incurred" shall have meanings correlative to the foregoing);
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time, and is not theretofore classified as Debt,
becoming Debt shall not be deemed an Incurrence of such Debt; provided further,
however, that any Debt or other obligations of a Person existing at the time
such Person becomes a Subsidiary (whether by merger, consolidation, acquisition
or otherwise) shall be deemed to be Incurred by such Subsidiary at the time it
becomes a Subsidiary.
"Indenture" means this instrument, as originally executed or
as it may from time to time be supplemented or amended in accordance with
Article 9.
"Independent Financial Advisor" means an investment banking
firm of national standing or any third party appraiser of national standing,
provided that such firm or appraiser is not an Affiliate of Holdco.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Initial Notes" means $210.0 million aggregate principal
amount of Notes issued under this Indenture on the date hereof.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under
the Securities Act.
"Interest Payment Dates" shall have the meaning set forth in
paragraph 1 of each Note.
"Interest Rate Agreement" means, for any Person, any interest
rate swap agreement, interest rate cap agreement, interest rate collar agreement
or other similar agreement, in each case, including any Guarantee and collateral
documents referred to therein designed to protect such Person against
fluctuations in interest rates and including, without limitation, any such
arrangement whereby, directly or indirectly, such Person is entitled to receive
from time to time periodic payments calculated by applying either a fixed or
floating rate of interest on a stated notional amount in exchange for periodic
payments made by such Person calculated by applying a fixed or floating rate of
interest on the same notional amount.
"Investment" by any Person means any direct or indirect loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet
13
of such Person), advance or other extension of credit or capital contribution
(by means of transfers of cash or other Property to others or payments for
Property or services for the account or use of others, or otherwise) to, or
Incurrence of a Guarantee of any obligation, or purchase or acquisition of
Capital Stock, bonds, notes, debentures or other securities or evidence of Debt
issued by, any other Person, provided, that none of the following will be deemed
to be an Investment:
(1) Hedging Obligations entered into in the ordinary course of
business and in compliance with this Indenture;
(2) endorsements of negotiable instruments and documents in
the ordinary course of business; and
(3) an acquisition of assets, Capital Stock or other
securities by Holdco, Warnaco or a Restricted Subsidiary for consideration to
the extent such consideration consists of Capital Stock of Warnaco or Holdco,
other than Disqualified Stock.
For purposes of Sections 4.10 and 4.16, and the definition of
"Restricted Payment," the term "Investment" shall include the portion
(proportionate to Holdco's beneficial equity interest in such Subsidiary) of the
Fair Market Value of the net worth of any Subsidiary of Holdco at the time that
such Subsidiary is designated an Unrestricted Subsidiary; provided, however,
that upon a redesignation of such Subsidiary as a Restricted Subsidiary, Holdco
shall be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary of an amount (if positive) equal to:
(a) Holdco's "Investment" in such Subsidiary at the time of
such redesignation, less
(b) the portion (proportionate to Holdco's equity interest in
such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary
at the time of such redesignation.
In determining the amount of any Investment made by transfer of any Property
other than cash, such Property shall be valued at its Fair Market Value at the
time of such Investment.
"Issue Date" means the date on which the Notes (other than any
Additional Notes) are initially issued.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in each of the City of New York, New York, the city in
which the Corporate Trust Office of the Trustee is located or any other place of
payment on the Notes are authorized by law, regulation or executive order to
remain closed.
"Letter of Transmittal" means the letter of transmittal, or
its electronic equivalent in accordance with the Applicable Procedures, to be
prepared by Warnaco and sent to all Holders of the Initial Notes or any
Additional Notes for use by such Holders in connection with an Exchange Offer.
"Lien" means, with respect to any Property of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrance, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such Property (including any Capital
Lease Obligation, conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing or any Sale and
Leaseback Transaction).
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.
14
"Net Available Cash" from any Asset Sale means cash payments
received therefrom (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Debt or other obligations
relating to the Property that is the subject of such Asset Sale or received in
any other non-cash form), in each case net of:
(a) all legal, accounting, financial advisory, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all Federal, state, provincial, foreign and local taxes required to be accrued
as a liability under GAAP, as a consequence of such Asset Sale,
(b) all payments made on or in respect of any Debt that is
secured by any Property subject to such Asset Sale, in accordance with the terms
thereof, or which must by its terms, or in order to obtain a necessary consent
to such Asset Sale, or by applicable law, be repaid out of the proceeds of such
Asset Sale,
(c) all distributions and other payments required to be made
to minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Sale, and
(d) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the Property disposed of in such Asset Sale and retained by Holdco or any
Restricted Subsidiary after such Asset Sale.
"Note Guaranty" means a Guarantee of Warnaco's obligations
with respect to the Notes pursuant to Article 10.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Debt.
"Officer" means the Chief Executive Officer, the President,
the Chief Financial Officer or any Executive Vice President of Warnaco.
"Officers' Certificate" means a certificate signed by two
Officers of Warnaco, at least one of whom shall be the principal executive
officer or principal financial officer of Warnaco, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to Warnaco or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear
or Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively, and, with respect to DTC, shall include Euroclear and
Clearstream.
"Permitted Business" means the business conducted on the date
hereof by Holdco and its Subsidiaries and businesses that are similar,
ancillary, complementary or related thereto.
"Permitted Holdco Business" means (a) holding shares of
Capital Stock of Warnaco or any other Restricted Subsidiary, (b) paying taxes,
(c) preparing proper reports to governmental authorities, including the SEC, the
Nasdaq National Market and to its stockholders, (d) being a party to, and taking
all actions required to be taken under, this Indenture and any Credit Facilities
and (e) holding meetings of the Board of Directors and of the stockholders of
Holdco, preparing corporate records and other corporate activities required to
maintain its separate corporate structure.
15
"Permitted Investment" means any Investment by Holdco, Warnaco
or any of their Restricted Subsidiaries in:
(a) Holdco or any Restricted Subsidiary,
(b) any Person that will, upon the making of such Investment,
become a Restricted Subsidiary, provided that the primary business of such
Restricted Subsidiary is a Permitted Business;
(c) any Person if as a result of such Investment such Person
is merged or consolidated with or into, or transfers or conveys all or
substantially all its Property to, Holdco or a Restricted Subsidiary, provided
that such Person's primary business is a Permitted Business;
(d) Cash and Temporary Cash Investments;
(e) receivables owing to Holdco or a Restricted Subsidiary, if
created or acquired in the ordinary course of business and payable or
dischargeable in accordance with customary trade terms; provided, however, that
such trade terms may include such concessionary trade terms as Holdco or such
Restricted Subsidiary deems reasonable under the circumstances;
(f) payroll, travel, relocation and similar advances to cover
matters that are expected at the time of such advances ultimately to be treated
as expenses for accounting purposes and that are made in the ordinary course of
business;
(g) loans and advances to employees made in the ordinary
course of business consistent with past practices of Holdco or such Restricted
Subsidiary, as the case may be, provided that such loans and advances do not
exceed $2.5 million in the aggregate at any one time outstanding;
(h) stock, obligations or other securities received in
settlement of obligations created in the ordinary course of business and owing
to Holdco or a Restricted Subsidiary or in satisfaction of judgments or pursuant
to any plan of reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(i) any Person to the extent such Investment represents the
non-cash portion of the consideration received in connection with (A) an Asset
Sale consummated in compliance with Section 4.12, or (B) any disposition of
Property not constituting an Asset Sale;
(j) a Securitization Entity or any Investment by a
Securitization Entity in any other Person in connection with a Qualified
Securitization Transaction provided that any Investment in a Securitization
Entity is in the form of a Purchase Money Note, contribution of additional
receivables and related assets or any equity interests;
(k) Investments by Warnaco or any Restricted Subsidiary in any
Unrestricted Subsidiary or joint venture the primary business of which is a
Permitted Business, provided that the amount of all Investments made pursuant to
this clause (k) in the aggregate does not exceed $15.0 million outstanding at
any one time;
(l) Currency Exchange Protection Agreements, Interest Rate
Agreements and Guarantees to the extent otherwise permitted under this
Indenture;
(m) any Debt or extension of credit represented by a bank
deposit other than a time deposit; and
(n) other Investments made for Fair Market Value that do not
exceed $20.0 million in the aggregate outstanding at any one time.
16
"Permitted Liens" means:
(a) Liens to secure Debt permitted to be Incurred under
clauses (b) and (j) of the definition of "Permitted Debt" in the second
paragraph of Section 4.09, including, in the case of such clause (b), any
related hedging or cash management services provided by the lenders under the
Credit Facilities;
(b) Liens to secure Debt permitted to be Incurred under clause
(c) of the second paragraph of Section 4.09, provided that any such Lien may not
extend to any Property of Holdco or any Restricted Subsidiary, other than the
Property acquired, constructed or leased with the proceeds of such Debt and any
improvements or accessions to such Property;
(c) Liens for taxes, assessments or governmental charges or
levies on the Property of Holdco or any Restricted Subsidiary if the same shall
not at the time be delinquent or thereafter can be paid without penalty, or are
being contested in good faith and by appropriate proceedings, provided that any
reserve or other appropriate provision that shall be required in conformity with
GAAP shall have been made therefor;
(d) Liens imposed by law, such as carriers', supplier's,
workmen's, warehousemen's, landlord's, materialmen's and mechanics' Liens and
other similar Liens and judgment liens on the Property of Holdco or any
Restricted Subsidiary arising in the ordinary course of business and securing
payment of obligations that are not more than 60 days past due or are being
contested in good faith and by appropriate proceedings;
(e) Liens on the Property of Holdco or any Restricted
Subsidiary Incurred in the ordinary course of business to secure performance of
obligations with respect to statutory or regulatory requirements, performance or
return-of-money bonds, surety bonds or other obligations of a like nature and
Incurred in a manner consistent with industry practice, in each case which are
not Incurred in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of Property and
which do not in the aggregate impair in any material respect the use of Property
in the operation of the business of Holdco and the Restricted Subsidiaries taken
as a whole;
(f) Liens on Property at the time Holdco or any Restricted
Subsidiary acquired such Property, including any acquisition by means of a
merger or consolidation with or into Holdco or any Restricted Subsidiary;
provided, however, that any such Lien may not extend to any other Property of
Holdco or any Restricted Subsidiary; provided further, however, that such Liens
shall not have been Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Property was
acquired by Holdco or any Restricted Subsidiary;
(g) Liens on the Property of a Person at the time such Person
becomes a Restricted Subsidiary; provided, however, that any such Lien may not
extend to any other Property of Holdco or any other Restricted Subsidiary that
is not a direct Subsidiary of such Person; provided further, however, that any
such Lien was not Incurred in anticipation of or in connection with the
transaction or series of transactions pursuant to which such Person became a
Restricted Subsidiary;
(h) pledges or deposits by Holdco or any Restricted Subsidiary
under workers' compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids, tenders, contracts
(other than for the payment of Debt) or leases to which Holdco or any Restricted
Subsidiary is party, or deposits to secure public or statutory obligations of
Holdco, or deposits for the payment of rent, in each case Incurred in the
ordinary course of business;
(i) utility easements, building and zoning restrictions and
such other encumbrances or charges against real Property as are of a nature
generally existing with respect to properties of a similar character;
17
(j) Liens on the Capital Stock of any joint venture that is
not a Subsidiary of Holdco or any Restricted Subsidiary, provided, that such
Lien secures only obligations of Holdco or any Restricted Subsidiary to such
joint venture or the obligations of such joint venture;
(k) Liens existing on the Issue Date not otherwise
described in clauses (a) through (j) above;
(l) Liens not otherwise described in clauses (a) through (k)
above on the Property of any Restricted Subsidiary that is not a Guarantor to
secure any Debt permitted to be Incurred by such Restricted Subsidiary pursuant
to Section 4.09;
(m) Liens on the Property of Holdco or any Restricted
Subsidiary to secure any Refinancing, in whole or in part, of any Debt secured
by Liens referred to in clause (b), (f), (g) or (k) above; provided, however,
that any such Lien shall be limited to all or part of the same Property that
secured the original Lien (together with improvements and accessions to such
Property), and the aggregate principal amount of Debt that is secured by such
Lien shall not be increased to an amount greater than the sum of:
(1) the outstanding principal amount, or, if greater, the
committed amount, of the Debt secured by Liens described under clause (b), (f),
(g) or (k) above, as the case may be, at the time the original Lien became a
Permitted Lien under this Indenture;
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs related to such Refinancing; and
(3) accrued and unpaid interest on the Debt being Refinanced;
(n) Liens on accounts receivable and related assets (including
contract rights) of the type specified in the definition of "Qualified
Securitization Transaction" transferred to a Securitization Entity in a
Qualified Securitization Transaction;
(o) Liens on amounts payable to Holdco or any Restricted
Subsidiary under any insurance policy (including any gross unearned premiums and
any payment on account of loss which results in a reduction of an earned premium
with respect to the underlying policy), provided that such Liens secure solely
Debt Incurred solely for the purpose of financing the payment of insurance
premiums for such insurance policy in the ordinary course of business and,
provided, further, that such Debt is permitted to be Incurred under Section 4.09
and the amount of Debt secured by a Lien pursuant to this clause (o) does not
exceed $15.0 million outstanding at any time;
(p) encumbrances consisting of leases or subleases of real
property owned by Holdco or any Restricted Subsidiary which do not in the
aggregate materially detract from the value of such real property or interfere
with the ordinary conduct of the business conducted and proposed to be conducted
at such real property;
(q) financing statements reflecting a lessor's rights in and
to personal property leased to Holdco or any Restricted Subsidiary in the
ordinary course of such lessor's business;
(r) Liens in favor of lessors under operating leases with
respect to any property leased by Holdco or any Restricted Subsidiary to the
extent such Liens relate solely to the lessors' interest in the leased property;
(s) Liens on any bills of lading, airway bills, receipts and
other applicable documents of title (and inventory and goods covered thereby)
delivered with respect to letters of credit
18
issued for the benefit of suppliers of inventory pursuant to facilities
provided to a Foreign Subsidiary provided that such inventory is located
outside the United States; and
(t) Liens not otherwise permitted by clauses (a) through (s)
above encumbering Property having an aggregate Fair Market Value not in excess
of $5.0 million.
"Permitted Refinancing Debt" means any Debt that Refinances
any other Debt, including any successive Refinancings, so long as:
(a) such Debt is in an aggregate principal amount (or if
Incurred with original issue discount, an aggregate issue price) not in excess
of the sum of:
(1) the aggregate principal amount (or if Incurred with
original issue discount, the aggregate accreted value) then outstanding of the
Debt being Refinanced plus accrued and unpaid interest, and
(2) an amount necessary to pay any fees and expenses,
including premiums and defeasance costs, related to such Refinancing,
(b) the Average Life of such Debt is equal to or greater than
the Average Life of the Debt being Refinanced, and
(c) the Stated Maturity of such Debt is no earlier than the
Stated Maturity of the Debt being Refinanced or after maturity of the Notes.
provided, however, that Permitted Refinancing Debt shall not
include:
(x) Debt of a Subsidiary of Holdco other than Warnaco that is
not a Guarantor that Refinances Debt of Warnaco or a Guarantor, or
(y) Debt of Holdco or a Restricted Subsidiary that Refinances
Debt of an Unrestricted Subsidiary.
"Person" means any individual, corporation, company (including
any limited liability company), association, partnership, joint venture, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same Debt as that evidenced by such
particular Note; and any Note authenticated and delivered under Section 2.07 in
lieu of a lost, destroyed or stolen Note shall be deemed to evidence the same
Debt as the lost, destroyed or stolen Note.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
the payment of dividends, or as to the distribution of assets upon any voluntary
or involuntary liquidation or dissolution of such Person, over shares of any
other class of Capital Stock issued by such Person.
"Preferred Stock Dividends" means all dividends with respect
to Preferred Stock of Restricted Subsidiaries held by Persons other than Holdco
or a Wholly Owned Restricted Subsidiary. The amount of any such dividend shall
be equal to the quotient of such dividend divided by the difference between one
and the maximum statutory federal income rate (expressed as a decimal number
between 1 and 0) then applicable to the issuer of such Preferred Stock.
19
"Private Placement Legends" means the legends set forth in
Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except
as otherwise permitted by the provisions of this Indenture.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms hereof, a calculation performed in
accordance with Article 11 of Regulation S-X promulgated under the Securities
Act, as interpreted in good faith by the Board of Directors after consultation
with the independent certified public accountants of Warnaco, or otherwise a
calculation made in good faith by the Board of Directors after consultation with
the independent certified public accountants of Warnaco, as the case may be.
"Property" means, with respect to any Person, any interest of
such Person in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including Capital Stock in, and other securities of,
any other Person. For purposes of any calculation required pursuant to this
Indenture, the value of any Property shall be its Fair Market Value.
"Public Equity Offering" means an underwritten public offering
of common stock of Holdco pursuant to an effective registration statement under
the Securities Act.
"Purchase Money Debt" means Debt:
(a) consisting of the deferred purchase price of Property,
conditional sale obligations, obligations under any title retention agreement,
other purchase money obligations and obligations in respect of industrial
revenue bonds, and
(b) Incurred to finance the acquisition, construction or lease
by Warnaco or a Guarantor of Property, including additions and improvements
thereto;
provided, however, that such Debt is Incurred within 180 days
after the acquisition, construction or lease of such Property by Warnaco or such
Guarantor.
"Purchase Money Note" means a promissory note evidencing a
line of credit, or evidencing other Debt owed to Holdco or any Restricted
Subsidiary in connection with a Qualified Securitization Transaction, which note
shall be repaid from cash available to the maker of such note, other than
amounts required to be established as reserves, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts paid in connection with the purchase of newly generated accounts
receivable.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Securitization Transaction" means any transaction
or series of transactions that may be entered into by Holdco or any Restricted
Subsidiary pursuant to which Holdco or any Restricted Subsidiary may sell,
convey or otherwise transfer pursuant to customary terms to (a) a Securitization
Entity (in the case of a transfer by Holdco or any Restricted Subsidiary) and
(b) any other Person (in the case of transfer by a Securitization Entity), or
may grant a security interest in any accounts receivable (whether now existing
or arising or acquired in the future) of Holdco or any Restricted Subsidiary,
and any assets related thereto including all collateral securing such accounts
receivable, all contracts and contract rights and all guarantees or other
obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets (including contract rights) which are customarily
transferred or in respect of which security interests are customarily granted in
connection with asset securitization transactions involving accounts receivable.
"Reference Treasury Dealer" means Citigroup Global Markets
Inc. and its successors; provided, however, that if the foregoing shall cease to
be a primary U.S. Government securities dealer in
20
New York City (a "Primary Treasury Dealer"), Warnaco shall substitute therefor
another Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any redemption date, the average, as
determined by the Trustee, of the bid and ask prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
"Refinance" means, in respect of any Debt, to refinance,
extend, renew, refund or Repay, or to issue other Debt, in exchange or
replacement for, such Debt. "Refinanced" and "Refinancing" shall have
correlative meanings.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, among Warnaco, the Guarantors and the
initial purchasers named therein, as such agreement may be amended, modified or
supplemented from time to time and, with respect to any Additional Notes, one or
more registration rights agreements between Warnaco and the other parties
thereto, as such agreement(s) may be amended, modified or supplemented from time
to time, relating to rights given by Warnaco to the purchasers of Additional
Notes to register such Additional Notes, or exchange such Additional Notes for
registered Notes, under the Securities Act.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the applicable date specified as a "Record Date" on the face
of the Note.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Regulation S Global Note" means a Global Note in the form of
Exhibit A hereto bearing the Global Note Legend and the Private Placement Legend
and deposited with and registered in the name of the Depositary or its nominee
that shall be issued in a denomination equal to the outstanding principal amount
of the Notes sold for initial resale in reliance on Rule 904.
"Repay" means, in respect of any Debt, to repay, prepay,
repurchase, redeem, legally defease or otherwise retire such Debt. "Repayment"
and "Repaid" shall have correlative meanings. For purposes of Section 4.12 and
the definition of "Consolidated Interest Coverage Ratio," Debt shall be
considered to have been Repaid only to the extent the related loan commitment,
if any, shall have been permanently reduced in connection therewith.
"Responsible Officer," when used with respect to the Trustee,
means any officer within the Corporate Trust Department of the Trustee (or any
successor group of the Trustee) with direct responsibility for the
administration of this Indenture and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Restricted Definitive Note" means one or more Definitive
Notes bearing the Private Placement Legend.
"Restricted Global Notes" means 144A Global Note, IAI Global
Note and Regulation S Global Note.
"Restricted Payment" means:
(a) any dividend or distribution (whether made in cash,
securities or other Property) declared or paid on or with respect to any shares
of Capital Stock of Holdco or any Restricted Subsidiary (including any payment
in connection with any merger or consolidation with or into Holdco or any
21
Restricted Subsidiary), except for any dividend or distribution that is made
solely to Holdco or a Restricted Subsidiary (and, if such Restricted Subsidiary
is not a Wholly Owned Restricted Subsidiary, to the other shareholders of such
Restricted Subsidiary on a pro rata basis or on a basis that results in the
receipt by Holdco or a Restricted Subsidiary of dividends or distributions of
greater value than it would receive on a pro rata basis) or any dividend or
distribution payable solely in shares of Capital Stock (other than Disqualified
Stock) of Holdco;
(b) the purchase, repurchase, redemption, acquisition or
retirement for value of any Capital Stock of Holdco or any Restricted Subsidiary
or any securities exchangeable for or convertible into any such Capital Stock
(other than from Holdco or a Restricted Subsidiary), including the exercise of
any option to exchange any Capital Stock (other than for or into Capital Stock
of Holdco that is not Disqualified Stock), but excluding net settlements to
satisfy tax withholding in connection with vesting of restricted shares and
delivery of shares in connection with the exercise of options granted to
employees pursuant to an equity incentive plan;
(c) the purchase, repurchase, redemption, acquisition or
retirement for value, prior to the date for any scheduled maturity, sinking fund
or amortization or other installment payment, of any Subordinated Obligation
(other than the purchase, repurchase or other acquisition of any Subordinated
Obligation purchased in anticipation of satisfying a scheduled maturity, sinking
fund or amortization or other installment obligation, in each case due within
one year of the date of acquisition);
(d) any Investment (other than Permitted Investments) in any
Person; or
(e) the issuance, sale or other disposition of Capital Stock
of any Restricted Subsidiary to a Person other than Holdco or a Restricted
Subsidiary if the result thereof is that such Restricted Subsidiary shall cease
to be a Restricted Subsidiary, in which event the amount of such "Restricted
Payment" shall be the Fair Market Value of the remaining interest, if any, in
such former Restricted Subsidiary held by Holdco and the other Restricted
Subsidiaries.
"Restricted Subsidiary" means Warnaco and any other Subsidiary
of Holdco other than an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities
Act.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated under the Securities
Act.
"S&P" means Standard & Poor's Ratings Services or any
successor to the rating agency business thereof.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement relating to Property now owned or hereafter acquired whereby Holdco
or a Restricted Subsidiary transfers such Property to another Person and Holdco
or a Restricted Subsidiary leases it from such Person, provided, however, that a
Sale and Leaseback Transaction shall not include any transfer and leaseback of
any Property completed within 90 days of the acquisition of such Property by
Holdco or any Restricted Subsidiary.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
22
"Securitization Entity" means any wholly owned Subsidiary of
Holdco or any Restricted Subsidiary (or another Person in which Holdco or any
Restricted Subsidiary make an Investment and to which Holdco or any Restricted
Subsidiary transfers accounts receivable and related assets) (a) which engages
in no activities other than in connection with the financing of accounts
receivable or related assets, (b) which is designated by the Board of Directors
(as provided below) as a Securitization Entity, (c) no portion of the Debt or
any other Obligations (contingent or otherwise) of which (i) is guaranteed by
Holdco or any Restricted Subsidiary (excluding guarantees of Obligations (other
than the principal of, and interest on, Debt) pursuant to Standard
Securitization Undertakings and guarantees by the Securitization Entity, (ii) is
recourse to or obligates Holdco or any Restricted Subsidiary (other than the
Securitization Entity) in any way other than pursuant to Standard Securitization
Undertakings or (iii) subjects any property or asset of Holdco or any Restricted
Subsidiary (other than the Securitization Entity), directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings and other than any interest in the accounts
receivable and related assets being financed (whether in the form of any equity
interest in such assets or subordinated indebtedness payable primarily from such
financed assets) retained or acquired by Holdco or any Restricted Subsidiary,
(d) with which none of Holdco nor any Restricted Subsidiary has any material
contract, agreement, arrangement or understanding other than those customary for
a Qualified Securitization Transaction and, in any event, on terms no less
favorable to Holdco or such Restricted Subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of Holdco or such
Restricted Subsidiary, and (e) to which none of Holdco nor any Restricted
Subsidiary has any obligation to maintain or preserve such entity's financial
condition or cause such entity to achieve certain levels of operating results.
Any such designation by the Board of Directors shall be evidenced to the Trustee
by filing with the Trustee a certified copy of the resolution of the Board of
Directors giving effect to such designation and an officers' certificate
certifying that such designation complied with the foregoing conditions.
"Senior Credit Facility" means the facility provided by the
Senior Secured Revolving Credit Agreement, dated as of February 4, 2003, among
Warnaco, Holdco, the Administrative Agent, the Lenders, the Issuing Banks, the
Syndication Agent, Citigroup Global Markets Inc. and J.P. Morgan Securities
Inc., as joint lead arrangers and joint lead book managers, and the several
banks and other financial institutions or entities from time to time parties
thereto, including any related notes, collateral documents, letters of credit
and documentation and guarantees and any appendices, exhibits or schedules to
any of the preceding, as any or all of such agreements may be in effect from
time to time, in each case, as any or all of such agreements (or any other
agreement that Refinances any or all of such agreements) may be amended,
restated, modified, or supplemented from time to time, or renewed, refunded,
refinanced, restructured, replaced, repaid or extended from time to time,
whether with the original agents and lenders or other agents or lenders
(including increasing the available borrowings thereunder to the extent
permitted under this Indenture).
"Senior Debt" of Warnaco means:
(a) all obligations consisting of the principal, premium, if
any, and accrued and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization relating to
Warnaco to the extent post-filing interest is allowed in such proceeding) in
respect of:
(1) Debt of Warnaco for borrowed money, and
(2) Debt of Warnaco evidenced by notes, debentures, bonds or
other similar instruments permitted under this Indenture for the payment of
which Warnaco is responsible or liable;
(b) all Capital Lease Obligations of Warnaco and all
Attributable Debt in respect of Sale and Leaseback Transactions entered into by
Warnaco;
(c) all obligations of Warnaco
23
(1) for the reimbursement of any obligor on any letter of
credit, banker's acceptance or similar credit transaction or to provide cash
collateral in respect of any undrawn letter of credit, banker's acceptance or
similar credit transaction,
(2) under Hedging Obligations, or
(3) issued or assumed as the deferred purchase price of
Property and all conditional sale obligations of Warnaco and all obligations
under any title retention agreement permitted under this Indenture; and
(d) all obligations of other Persons of the type referred to
in clauses (a), (b) and (c) for the payment of which Warnaco is responsible or
liable as Guarantor;
provided, however, that Senior Debt shall not include:
(A) Debt of Warnaco that is by its terms subordinate in right
of payment to the Notes, including any Subordinated Debt;
(B) any Debt Incurred in violation of the provisions of this
Indenture;
(C) accounts payable or any other obligations of Warnaco to
trade creditors created or assumed by Warnaco in the ordinary course of business
in connection with the obtaining of materials or services (including Guarantees
thereof or instruments evidencing such liabilities);
(D) any liability for Federal, state, local or other taxes
owed or owing by Warnaco;
(E) any obligation of Warnaco to any of its Subsidiaries; or
(F) any obligations with respect to any Capital Stock of
Warnaco.
"Senior Debt" of any Guarantor shall have a correlative
meaning.
"Shelf Registration Statement" has the meaning set forth in
any Registration Rights Agreement relating to registering Notes under the
Securities Act.
"Significant Subsidiary" means any "significant Subsidiary" of
Holdco within the meaning of Rule 1-02 under Regulation S-X promulgated by the
SEC.
"Special Interest" means the additional interest, if any, to
be paid on the Notes as described under Section 2.14.
"Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by Holdco or any Restricted
Subsidiary which are reasonably customary in an accounts receivable
securitization transaction so long as none of the same constitute Debt, a
Guarantee or otherwise require the provision of credit support.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
24
"Subordinated Debt" means any Debt of Warnaco or any Guarantor
(whether outstanding on the Issue Date or thereafter Incurred) that is expressly
subordinate or junior in right of payment to the Notes or the applicable Note
Guaranty pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
company (including any limited liability company), association, partnership,
joint venture or other business entity of which at least a majority of the total
voting power of the Voting Stock is at the time owned or controlled, directly or
indirectly, by:
(a) such Person,
(b) such Person and one or more Subsidiaries of such Person,
or
(c) one or more Subsidiaries of such Person.
"Surviving Person" means the surviving Person formed by a
merger, consolidation or amalgamation and, for purposes of Section 5.01, a
Person to whom all or substantially all of the Property of Warnaco or a
Guarantor is sold, transferred, assigned, leased, conveyed or otherwise
disposed.
"Temporary Cash Investments" means any of the following:
(a) any investment in direct obligations of the United States
or any agency thereof or obligations guaranteed by the United States or any
agency thereof maturing within 365 days of the date of acquisition thereof;
(b) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within 365 days of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States, any State thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $250.0 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Securities Act);
(c) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (a) above
entered into with a bank meeting the qualifications described in clause (b)
above;
(d) investments in commercial paper, maturing not more than
270 days after the date of acquisition, issued by a corporation (other than an
Affiliate of Holdco or Warnaco) organized and in existence under the laws of the
United States with a rating at the time as of which any investment therein is
made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1"
(or higher) according to Standard & Poor's Ratings Group; and
(e) investments in securities with maturities of 270 days or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, or by any political subdivision
or taxing authority thereof, and rated at least "A" by Standard & Poor's Ratings
Group or "A" by Moody's Investors Service, Inc.
"TIA" means the U.S. Trust Indenture Act of 1939, as amended,
and the rules and regulations thereunder, including any successor legislation
and rules and regulations.
"Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to the yield to maturity of the Comparable Treasury
Issue, compounded semi-annually, assuming a price for
25
such Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Definitive Notes" means one or more Definitive
Notes that do not and are not required to bear the Private Placement Legend.
"Unrestricted Global Notes" means one or more Global Notes
that do not and are not required to bear the Private Placement Legend and are
deposited with and registered in the name of the Depositary or its nominee.
"Unrestricted Subsidiary" means:
(a) any Subsidiary of Holdco that is designated after the
Issue Date as an Unrestricted Subsidiary as permitted or required pursuant to
Section 4.16 and is not thereafter redesignated as a Restricted Subsidiary as
permitted pursuant thereto; and
(b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Dollar Equivalent" means, with respect to any monetary
amount in a currency other than U.S. dollars, at any time of determination
thereof, the amount of U.S. dollars obtained by converting such foreign currency
involved in such computation into U.S. dollars at the spot rate for purchase of
U.S. dollars with the applicable foreign currency as published in the Financial
Times on the date two Business Days prior to such determination, provided, that
if any such amount is subject to at least a coterminous Currency Exchange
Protection Agreement with respect to U.S. dollars covering all principal,
premium, if any, and interest payable on such amount, the amount of such
currency will be as provided in the Currency Exchange Protection Agreement.
Whenever it is necessary to determine whether Holdco or a
Restricted Subsidiary has complied with any covenant in this Indenture or a
Default has occurred or is continuing and an amount is expressed in a currency
other than U.S. dollars, such amount will be treated as the U.S. Dollar
Equivalent determined as of the date such amount is initially determined in such
currency.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of any Person means all classes of Capital
Stock or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means, at any time, a
Restricted Subsidiary all the Voting Stock of which (except directors'
qualifying shares and other de minimis amounts of shares required to be issued
to third parties pursuant to local law requirements) is at such time owned,
directly or indirectly, by Holdco and its other Wholly Owned Subsidiaries.
26
Section 1.02. Other Definitions.
------------------
Defined in
Term Section
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"Acceleration Notice"......................................... 6.02
"Affiliate Transaction"....................................... 4.15
"Authentication Order"........................................ 2.02(d)
"Benefited Party"............................................. 10.01
"Change of Control Offer"..................................... 4.17(a)
"Change of Control Amount".................................... 4.17(a)
"Covenant Defeasance"......................................... 8.03
"DTC"......................................................... 2.03(b)
"Event of Default"............................................ 6.01
"Excess Proceeds"............................................. 4.12(c)
"Legal Defeasance"............................................ 8.02
"losses"...................................................... 7.07
"Notes"....................................................... Preamble
"Offer Amount"................................................ 3.09(c)(ii)
"Offer Period"................................................ 3.09(d)
"Offer to Purchase"........................................... 3.09(a)
"Paying Agent"................................................ 2.03(a)
"Prepayment Offer"............................................ 4.12(d)
"Purchase Date"............................................... 3.09(d)
"Registrar"................................................... 2.03(a)
"Security Register"........................................... 3.03
"Warnaco"..................................................... Preamble
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Section 1.03. Incorporation by Reference of Trust Indenture Act.
--------------------------------------------------
(a) Whenever this Indenture refers to a provision of the TIA,
the provision is incorporated by reference in and made a part of this Indenture.
(b) The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes and the Note
Guarantees;
"indenture security holder" means a Holder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes means Warnaco, the Guarantors and any
successor obligor upon the Notes or the Note Guarantees.
(c) All other terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
under the TIA and not otherwise defined herein have the meanings so assigned to
them either in the TIA, by another statute or SEC rule, as applicable.
Section 1.04. Rules of Construction.
----------------------
(a) Unless the context otherwise requires:
(i) a term has the meaning assigned to it;
27
(ii) an accounting term not otherwise defined herein has
the meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) words in the singular include the plural, and in the
plural include the singular;
(v) all references in this instrument to "Articles,"
"Sections" and other subdivisions are to the designated Articles,
Sections and subdivisions of this instrument as originally executed;
(vi) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole and
not to any particular Article, Section or other subdivision.
(vii) "including" means "including without limitation;"
(viii) provisions apply to successive events and
transactions; and
(ix) references to sections of or rules under the
Securities Act, the Exchange Act or the TIA shall be deemed to include
substitute, replacement or successor sections or rules adopted by the
SEC from time to time thereunder.
ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
----------------
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form included in Exhibit A hereto,
which is hereby incorporated in and expressly made part of this Indenture. The
Notes may have notations, legends or endorsements required by law, exchange rule
or usage in addition to those set forth on Exhibit A. Each Note shall be dated
the date of its authentication. The Notes shall be in denominations of $1,000
and integral multiples thereof. The terms and provisions contained in the Notes
shall constitute a part of this Indenture, and Warnaco, the Guarantors and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby. To the extent any provision
of any Note conflicts with the express provisions of this Indenture, the
provisions of this Indenture shall govern and be controlling.
(b) Form of Notes. The Notes shall be issued initially in
global form and shall be substantially in the form of Exhibit A attached hereto
(including the Global Note Legend thereon and the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but without the
Global Note Legend thereon and without the "Schedule of Exchanges of Interests
in the Global Note" attached thereto). Each Global Note shall represent such
aggregate principal amount of the outstanding Notes as shall be specified
therein and each shall provide that it shall represent the aggregate principal
amount of outstanding Notes from time to time endorsed thereon and that the
aggregate principal amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions and transfers of interests therein. Any endorsement of a Global Note
to reflect the amount of any increase or decrease in the aggregate principal
amount of outstanding Notes represented thereby shall be made by the Trustee or
the Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06.
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(c) Book-Entry Provisions. This Section 2.01(c) shall apply
only to Global Notes deposited with the Trustee, as custodian for the
Depositary. Participants and Indirect Participants shall have no rights under
this Indenture or any Global Note with respect to any Global Note held on their
behalf by the Depositary or by the Trustee as custodian for the Depositary, and
the Depositary shall be treated by Warnaco, the Trustee and any agent of Warnaco
or the Trustee as the absolute owner of such Global Note for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent Warnaco,
the Trustee or any agent of Warnaco or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
or impair, as between the Depositary and its Participants or Indirect
Participants, the Applicable Procedures or the operation of customary practices
of the Depositary governing the exercise of the rights of a holder of a
beneficial interest in any Global Note.
(d) Euroclear and Clearstream Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream" and "Customer Handbook" of Clearstream shall be applicable to
transfers of beneficial interests in Global Notes that are held by Participants
through Euroclear or Clearstream.
Section 2.02. Execution and Authentication.
-----------------------------
(a) One Officer shall execute the Notes on behalf of Warnaco
by manual or facsimile signature.
(b) If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated by the Trustee, the Note shall
nevertheless be valid.
(c) A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence that
the Note has been authenticated under this Indenture. The form of Trustee's
certificate of authentication to be borne by the Note shall be substantially as
set forth in Exhibit A hereto.
(d) The Trustee shall, upon a written order of Warnaco signed
by an Officer (an "Authentication Order"), authenticate Notes for original
issue.
(e) The Trustee may appoint an authenticating agent acceptable
to Warnaco to authenticate Notes. Unless otherwise provided in such appointment,
an authenticating agent may authenticate Notes whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent shall have the same rights
as an Agent with respect to Holders.
Section 2.03. Registrar and Paying Agent.
---------------------------
(a) Warnaco shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
Warnaco may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. Warnaco may enter into an
appropriate agency agreement with any Agent not party to this Indenture, which
may incorporate the provisions of the TIA. Such Agreement shall implement the
provisions of this Indenture that relate to such Agent. Warnaco may change any
Paying Agent or Registrar without notice to any Holder. Warnaco shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If Warnaco fails to appoint or maintain another entity as Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation in accordance with Section 7.07. Warnaco, any Guarantor
or any of their Subsidiaries may act as Paying Agent or Registrar.
29
(b) Warnaco initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
(c) Warnaco initially appoints the Trustee to act as Registrar
and Paying Agent, agent for service of notices and demands in connection with
the Global Note and to act as Custodian with respect to the Global Notes, and
the Trustee hereby agrees so to initially act.
Section 2.04. Paying Agent to Hold Money in Trust.
------------------------------------
Warnaco shall require each Paying Agent other than the Trustee
to agree in writing that the Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium, if any, or interest on the Notes, and shall notify the
Trustee of any Default by Warnaco in making any such payment. While any such
Default continues, the Trustee may require a Paying Agent to pay all funds held
by it relating to the Notes to the Trustee. Warnaco at any time may require a
Paying Agent to pay all funds held by it relating to the Notes to the Trustee.
Upon payment over to the Trustee, the Paying Agent (if other than Warnaco, any
Guarantor or any of their Subsidiaries) shall have no further liability for such
funds. If Warnaco, any Guarantor or any of their Subsidiaries acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all funds held by it as Paying Agent. Upon any Event of Default
under Sections 6.01(a)(9) or (10) relating to Warnaco or any Guarantor, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
-------------
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA 'SS'312(a). If the
Trustee is not the Registrar, Warnaco shall furnish or cause to be furnished to
the Trustee at least seven Business Days before each Interest Payment Date and
at such other times as the Trustee may request in writing, a list in such form
and as of such date or such shorter time as the Trustee may allow, as the
Trustee may reasonably require of the names and addresses of the Holders and
Warnaco shall otherwise comply with TIA 'SS'312(a).
Section 2.06. Transfer and Exchange.
----------------------
(a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. Warnaco shall
exchange Global Notes for Definitive Notes if: (1) Warnaco delivers to the
Trustee a notice from the Depositary that the Depositary is unwilling or unable
to continue to act as Depositary for the Global Notes or that it has ceased to
be a clearing agency registered under the Exchange Act and, in either case, a
successor Depositary is not appointed by Warnaco within 120 days after the date
of such notice from the Depositary; (2) Warnaco at its option determines that
the Global Notes shall be exchanged for Definitive Notes and delivers a written
notice to such effect to the Trustee; or (3) a Default or Event of Default shall
have occurred and be continuing. Upon the occurrence of any of the events in
clauses (1), (2) or (3) above, Definitive Notes shall be issued in denominations
of $1,000 or integral multiples thereof and in such names as the Depositary
shall instruct the Trustee in writing. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10. Except as
provided above, every Note authenticated and delivered in exchange for, or in
lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10, shall be authenticated and delivered in the form of, and
shall be, a Global Note. A Global Note may not be exchanged for another Note
other than as provided in this Section 2.06(a), and beneficial interests in a
Global Note may not be transferred and exchanged other than as provided in
Section 2.06(b), (c) or (f).
30
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary in accordance with the provisions
of this Indenture and the Applicable Procedures. Beneficial interests in
Restricted Global Notes shall be subject to restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Transfers of beneficial interests in Global Notes also shall require compliance
with either clause (i) or (ii) below, as applicable, as well as one or more of
the other following clauses, as applicable:
(i) Transfer of Beneficial Interests in the Same Global
Note. Beneficial interests in any Restricted Global Note may be
transferred to Persons who take delivery thereof in the form of a
beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement
Legend and any Applicable Procedures; provided, however, that prior to
the expiration of the Distribution Compliance Period, transfers of
beneficial interests in a Regulation S Global Note may not be made to
or for the account or benefit of a "U.S. Person" (as defined in Rule
902(k) of Regulation S) (other than a "distributor" (as defined in Rule
902(d) of Regulation S)). Beneficial interests in any Unrestricted
Global Note may be transferred to Persons who take delivery thereof in
the form of a beneficial interest in an Unrestricted Global Note.
Except as may be required by any Applicable Procedures, no written
orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial
Interests in Global Notes. In connection with all transfers and
exchanges of beneficial interests that are not subject to Section
2.06(b)(i) above, the transferor of such beneficial interest must
deliver to the Registrar either (A)(1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to
credit or cause to be credited a beneficial interest in another Global
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given in accordance with the Applicable
Procedures containing information regarding the Participant account to
be credited with such increase or (B) if permitted under Section
2.06(a), (1) a written order from a Participant or an Indirect
Participant given to the Depositary in accordance with the Applicable
Procedures directing the Depositary to cause to be issued a Definitive
Note in an amount equal to the beneficial interest to be transferred or
exchanged and (2) instructions given by the Depositary to the Registrar
containing information regarding the Person in whose name such
Definitive Note shall be registered to effect the transfer or exchange
referred to in (B)(1) above. With respect to the an Exchange Offer by
Warnaco in accordance with Section 2.06(f), the requirements of this
Section 2.06(b)(ii) shall be deemed to have been satisfied upon receipt
by the Registrar of the instructions contained in the Letter of
Transmittal delivered by the Holder of such beneficial interests in the
Restricted Global Notes. Upon satisfaction of all of the requirements
for transfer or exchange of beneficial interests in Global Notes
contained in this Indenture and the Notes or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of
the relevant Global Note(s) pursuant to Section 2.06(h).
(iii) Transfer of Beneficial Interests in a Restricted
Global Note to Another Restricted Global Note. A beneficial interest in
any Restricted Global Note may be transferred to a Person who takes
delivery thereof in the form of a beneficial interest in another
Restricted Global Note if the transfer complies with the requirements
of Section 2.06(b)(ii) above and the Registrar receives the following:
(A) if the transferee shall take delivery in the
form of a beneficial interest in a 144A Global Note, then
the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (1)
thereof or, if permitted by Applicable Procedures, item (3)
thereof;
31
(B) if the transferee shall take delivery in the
form of a beneficial interest in a Regulation S Global
Note, then the transferor must deliver a certificate in
the form of Exhibit B hereto, including the certifications
in item (2) thereof; and
(C) if the transferee will take delivery in the form
of a beneficial interest in the IAI Global Note, then the
transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications and
certificates and Opinion of Counsel required by item (3)
thereof, if applicable.
(iv) Transfer and Exchange of Beneficial Interests in a
Restricted Global Note for Beneficial Interests in an Unrestricted
Global Note. A beneficial interest in any Restricted Global Note may be
exchanged by any holder thereof for a beneficial interest in an
Unrestricted Global Note or transferred to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note only if the exchange or transfer complies with the requirements of
Section 2.06(b)(ii) above and:
(A) such exchange or transfer is effected pursuant
to an Exchange Offer in accordance with a Registration
Rights Agreement and the holder of the beneficial interest
to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, makes any and all
certifications in the applicable Letter of Transmittal (or
is deemed to have made such certifications if delivery is
made through the Applicable Procedures) as may be required
by such Registration Rights Agreement;
(B) such transfer is effected pursuant to a Shelf
Registration Statement in accordance with a Registration
Rights Agreement;
(C) such transfer is effected by a broker-dealer
pursuant to an Exchange Offer Registration Statement in
accordance with a Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest
in a Restricted Global Note proposes to exchange such
beneficial interest for a beneficial interest in an
Unrestricted Global Note, a certificate from such
holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest
in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this clause (D), if the
Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
shall be effected in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the
Private Placement Legend shall no longer be required in order
to maintain compliance with the Securities Act.
If any such transfer is effected pursuant to clause (B) or (D)
above at a time when an Unrestricted Global Note has not yet been issued,
Warnaco shall execute and, upon receipt of an
32
Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate principal
amount equal to the aggregate principal amount of beneficial interests
transferred pursuant to clause (B) or (D) above.
(v) Transfer or Exchange of Beneficial Interests in
Unrestricted Global Notes for Beneficial Interests in Restricted Global
Notes Prohibited. Beneficial interests in an Unrestricted Global Note
may not be exchanged for, or transferred to Persons who take delivery
thereof in the form of, beneficial interests in a Restricted Global
Note.
(c) Transfer or Exchange of Beneficial Interests for
Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to
Restricted Definitive Notes. Subject to Section 2.06(a), if any holder
of a beneficial interest in a Restricted Global Note proposes to
exchange such beneficial interest for a Restricted Definitive Note or
to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt
by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Restricted Definitive Note, a certificate
from such holder in the form of Exhibit C hereto, including
the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred
to a QIB in accordance with Rule 144A, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such beneficial interest is being transferred
to a "non-U.S. Person" (as defined in Rule 902(k) of
Regulation S) in an offshore transaction in accordance with
Rule 903 or Rule 904, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item
(2) thereof;
(D) if such beneficial interest is being transferred
pursuant to an exemption from the registration requirements
of the Securities Act in accordance with Rule 144 under the
Securities Act, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item
(3)(a) thereof;
(E) if such beneficial interest is being transferred
to Warnaco, any Guarantor or any of their respective
Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item
(3)(b) thereof;
(F) if such beneficial interest is being transferred
to an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the
Securities Act other than those listed in clauses (B)
through (D) above, a certificate to the effect set forth in
Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d)
thereof,
the Trustee shall reduce or cause to be reduced in a corresponding
amount pursuant to Section 2.06(h) the aggregate principal amount of
the applicable Restricted Global Note, and Warnaco shall execute and,
upon receipt of an Authentication Order in accordance with Section
2.02, the Trustee shall authenticate and deliver a Restricted
Definitive Note in the appropriate principal amount to the Person
designated by the holder of such beneficial interest in instructions
delivered to the Registrar by the Depositary and the applicable
Participant or Indirect Participant on behalf of such holder. Any
Restricted Definitive Note issued in exchange for a beneficial
33
interest in a Restricted Global Note pursuant to this Section
2.06(c)(i) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such
beneficial interest shall designate in such instructions. The Trustee
shall deliver such Restricted Definitive Notes to the Persons in whose
names such Notes are so registered. Any Restricted Definitive Note
issued in exchange for a beneficial interest in a Restricted Global
Note pursuant to this Section 2.06(c)(i) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer
contained therein.
(ii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. Subject to Section 2.06(a), a holder of
a beneficial interest in a Restricted Global Note may exchange such
beneficial interest for an Unrestricted Definitive Note or may transfer
such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant
to an Exchange Offer in accordance with a Registration
Rights Agreement and the holder of such beneficial
interest, in the case of an exchange, or the transferee, in
the case of a transfer, makes any and all certifications in
the applicable Letter of Transmittal (or is deemed to have
made such certifications if delivery is made through the
Applicable Procedures) as may be required by such
Registration Rights Agreement;
(B) such transfer is effected pursuant to a Shelf
Registration Statement in accordance with a Registration
Rights Agreement;
(C) such transfer is effected by a broker-dealer
pursuant to an Exchange Offer Registration Statement in
accordance with a Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest
in a Restricted Global Note proposes to exchange such
beneficial interest for an Unrestricted Definitive Note, a
certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(b)
thereof; or
(2) if the holder of such beneficial interest
in a Restricted Global Note proposes to transfer such
beneficial interest to a Person who shall take delivery
thereof in the form of an Unrestricted Definitive Note, a
certificate from such holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this clause (D), if the
Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
shall be effected in compliance with the Securities Act and
that the restrictions on transfer contained herein and in the
Private Placement Legend shall no longer be required in order
to maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the clauses of
this Section 2.06(c)(ii) Warnaco shall execute, and, upon receipt of an
Authentication Order in accordance with Section 2.02, the Trustee shall
authenticate and deliver an Unrestricted Definitive Note in the
appropriate principal amount to the Person designated by the holder of
such beneficial interest in instructions delivered to the Registrar by
the Depositary and the applicable Participant or Indirect Participant
34
on behalf of such holder, and the Trustee shall reduce or cause to be
reduced in a corresponding amount pursuant to Section 2.06(h) the
aggregate principal amount of the applicable Restricted Global Note.
(iii) Beneficial Interests in Unrestricted Global Notes
to Unrestricted Definitive Notes. Subject to Section 2.06(a), if any
holder of a beneficial interest in an Unrestricted Global Note proposes
to exchange such beneficial interest for an Unrestricted Definitive
Note or to transfer such beneficial interest to a Person who takes
delivery thereof in the form of an Unrestricted Definitive Note, then,
upon satisfaction of the applicable conditions set forth in Section
2.06(b)(ii), the Trustee shall reduce or cause to be reduced in a
corresponding amount pursuant to Section 2.06(h) the aggregate
principal amount of the applicable Unrestricted Global Note, and
Warnaco shall execute and, upon receipt of an Authentication Order in
accordance with Section 2.02, the Trustee shall authenticate and
deliver an Unrestricted Definitive Note in the appropriate principal
amount to the Person designated by the holder of such beneficial
interest in instructions delivered to the Registrar by the Depositary
and the applicable Participant or Indirect Participant on behalf of
such holder. Any Unrestricted Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall designate
in such instructions. The Trustee shall deliver such Unrestricted
Definitive Notes to the Persons in whose names such Notes are so
registered. Any Unrestricted Definitive Note issued in exchange for a
beneficial interest pursuant to this Section 2.06(c)(iii) shall not
bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial
Interests.
(i) Restricted Definitive Notes to Beneficial Interests
in Restricted Global Notes. If any holder of a Restricted Definitive
Note proposes to exchange such Note for a beneficial interest in a
Restricted Global Note or to transfer such Restricted Definitive Note
to a Person who takes delivery thereof in the form of a beneficial
interest in a Restricted Global Note, then, upon receipt by the
Registrar of the following documentation:
(A) if the holder of such Restricted Definitive Note
proposes to exchange such Note for a beneficial interest in
a Restricted Global Note, a certificate from such holder in
the form of Exhibit C hereto, including the certifications
in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being
transferred to a QIB in accordance with Rule 144A, a
certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being
transferred to a "non-U.S. Person" (as defined in Rule
902(k) of Regulation S) in an offshore transaction in
accordance with Rule 903 or Rule 904, a certificate to the
effect set forth in Exhibit B hereto, including the
certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being
transferred pursuant to an exemption from the registration
requirements of the Securities Act in accordance with Rule
144, a certificate to the effect set forth in Exhibit B
hereto, including the certifications in item (3)(a)
thereof;
(E) if such Restricted Definitive Note is being
transferred to Warnaco, any Guarantor, or any of their
respective Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in
item (3)(b) thereof;
35
(F) if such Restricted Definitive Note is being
transferred to an Institutional Accredited Investor in
reliance on an exemption from the registration requirements
of the Securities Act other than those listed in clauses
(B) through (D) above, a certificate to the effect set
forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3)(d)
thereof; or
(G) if such Restrictive Definitive Note is being
transferred pursuant to an effective registration statement
under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certification in
item 3(c) thereof,
the Trustee shall cancel the Restricted Definitive Note and increase or
cause to be increased in a corresponding amount pursuant to Section
2.06(h) the aggregate principal amount of the appropriate Restricted
Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests
in Unrestricted Global Notes. A holder of a Restricted Definitive Note
may exchange such Note for a beneficial interest in an Unrestricted
Global Note or transfer such Restricted Definitive Note to a Person who
takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant
to a Exchange Offer in accordance with a Registration
Rights Agreement and the holder of such beneficial
interest, in the case of an exchange, or the transferee, in
the case of a transfer, makes such certifications in the
applicable Letter of Transmittal (or is deemed to have made
such certifications if delivery is made through the
Applicable Procedures) as may be required by such
Registration Rights Agreement;
(B) such transfer is effected pursuant to a Shelf
Registration Statement in accordance with a Registration
Rights Agreement;
(C) such transfer is effected by a broker-dealer
pursuant to an Exchange Offer Registration Statement in
accordance with a Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Restricted
Definitive Note proposes to exchange such Note for a
beneficial interest in an Unrestricted Global Note, a
certificate from such holder in the form of Exhibit C
hereto, including the certifications in item (1)(c)
thereof; or
(2) if the holder of such Restricted
Definitive Note proposes to transfer such Note to a Person
who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from
such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this clause (D), if the
Registrar so requests or if the Applicable Procedures so
require, an Opinion of Counsel in form reasonably acceptable
to the Registrar to the effect that such exchange or transfer
shall be effected in compliance with the Securities Act and
that the restrictions on transfer contained herein
36
and in the Private Placement Legend shall no longer be
required in order to maintain compliance with the Securities
Act.
Upon satisfaction of the conditions of any of the clauses in
this Section 2.06(d)(ii), the Trustee shall cancel such Restricted Definitive
Note and increase or cause to be increased in a corresponding amount pursuant to
Section 2.06(h) the aggregate principal amount of the Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial
Interests in Unrestricted Global Notes. A holder of an Unrestricted
Definitive Note may exchange such Note for a beneficial interest in an
Unrestricted Global Note or transfer such Unrestricted Definitive Note
to a Person who takes delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note at any time. Upon receipt of a
request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be
increased in a corresponding amount pursuant to Section 2.06(h) the
aggregate principal amount of one of the Unrestricted Global Notes.
(iv) Transfer or Exchange of Unrestricted Definitive
Notes to Beneficial Interests in Restricted Global Notes Prohibited. An
Unrestricted Definitive Note may not be exchanged for, or transferred
to Persons who take delivery thereof in the form of, beneficial
interests in a Restricted Global Note.
(v) Issuance of Unrestricted Global Notes. If any such
exchange or transfer of a Definitive Note for a beneficial interest in
an Unrestricted Global Note is effected pursuant to clause (ii) above
at a time when an Unrestricted Global Note has not yet been issued,
Warnaco shall issue and, upon receipt of an Authentication Order in
accordance with Section 2.02, the Trustee shall authenticate one or
more Unrestricted Global Notes in an aggregate principal amount equal
to the principal amount of Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a holder of Definitive Notes and such holder's compliance
with the provisions of this Section 2.06(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such holder. In
addition, the requesting holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive
Notes. Any Restricted Definitive Note may be transferred to and
registered in the name of Persons who take delivery thereof in the form
of a Restricted Definitive Note if the Registrar receives the
following:
(A) if the transfer shall be made pursuant to Rule
144A, a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer shall be made pursuant to Rule
903 or Rule 904, a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof;
and
(C) if the transfer shall be made pursuant to any
other exemption from the registration requirements of the
Securities Act, a certificate in the form of Exhibit B
hereto, including the certifications, certificates and
Opinion of Counsel required by item (3) thereof, if
applicable.
37
(ii) Restricted Definitive Notes to Unrestricted
Definitive Notes. Any Restricted Definitive Note may be exchanged by
the holder thereof for an Unrestricted Definitive Note or transferred
to a Person or Persons who take delivery thereof in the form of an
Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant
to an Exchange Offer in accordance with a Registration
Rights Agreement and the holder of such beneficial
interest, in the case of an exchange, or the transferee, in
the case of a transfer, makes such certifications in the
applicable Letter of Transmittal (or is deemed to have made
such certifications if delivery is made through the
Applicable Procedures) as may be required by such
Registration Rights Agreement;
(B) any such transfer is effected pursuant to a
Shelf Registration Statement in accordance with a
Registration Rights Agreement;
(C) any such transfer is effected by a broker-dealer
pursuant to an Exchange Offer Registration Statement in
accordance with a Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such Restricted Definitive
Notes proposes to exchange such Notes for an
Unrestricted Definitive Note, a certificate from
such holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof;
or
(2) if the holder of such Restricted Definitive
Notes proposes to transfer such Notes to a Person
who shall take delivery thereof in the form of an
Unrestricted Definitive Note, a certificate from
such holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this clause (D), if the
Registrar so requests, an Opinion of Counsel in form
reasonably acceptable to the Registrar to the effect that such
exchange or transfer shall be effected in compliance with the
Securities Act and that the restrictions on transfer contained
herein and in the Private Placement Legend shall no longer be
required in order to maintain compliance with the Securities
Act.
Upon satisfaction of the conditions of any of the clauses of
Section 2.06(e)(ii) the Trustee shall cancel the prior
Restricted Definitive Note and Warnaco shall execute, and,
upon receipt of an Authentication Order in accordance with
Section 2.02, the Trustee shall authenticate and deliver an
Unrestricted Definitive Note in the appropriate principal
amount to the Person designated by the holder of such prior
Restricted Definitive Note in instructions delivered to the
Registrar by such holder.
(iii) Unrestricted Definitive Notes to Unrestricted
Definitive Notes. A holder of Unrestricted Definitive Notes may
transfer such Notes to a Person who takes delivery thereof in the form
of an Unrestricted Definitive Note. Upon receipt of a request to
register such a transfer, the Registrar shall register the Unrestricted
Definitive Notes pursuant to the instructions from the Holders thereof.
(f) Exchange Offer. Upon the occurrence of an Exchange Offer
in accordance with a Registration Rights Agreement, Warnaco shall issue and,
upon receipt of an Authentication Order in
38
accordance with Section 2.02, the Trustee shall authenticate (i) one or more
Unrestricted Global Notes in an aggregate principal amount equal to the
principal amount of the beneficial interests in the applicable Restricted Global
Notes (A) tendered for acceptance by Persons that make any and all
certifications in the applicable Letters of Transmittal (or are deemed to have
made such certifications if delivery is made through the Applicable Procedures)
as may be required by such Registration Rights Agreement, and (B) accepted for
exchange in the Exchange Offer and (ii) Unrestricted Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes tendered for acceptance by Persons who made the foregoing
certification and accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall reduce or cause to be reduced in a
corresponding amount the aggregate principal amount of the applicable Restricted
Global Notes, and Warnaco shall execute and the Trustee shall authenticate and
deliver to the Persons designated by the Holders of Restricted Definitive Notes
so accepted Unrestricted Definitive Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legends.
(A) Except as permitted by clause (B) below, each
Global Note and each Definitive Note (and all Notes issued
in exchange therefor or substitution thereof) shall bear
the legends in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM,
OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY
(OR ANY PREDECESSOR OF SUCH SECURITY), ONLY: (A) TO THE COMPANY OR ANY
OF ITS SUBSIDIARIES; (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT; (C) FOR SO LONG AS
THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A; (D) PURSUANT TO OFFERS AND SALES TO NON-U.S.
PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT; (E) TO AN "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL
AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
39
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT; OR (F) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F)
TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE."
(B) Notwithstanding the foregoing, any Global Note
or Definitive Note issued pursuant to clauses (b)(iv),
(c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or
(f) to this Section 2.06 (and all Notes issued in exchange
therefor or substitution thereof) shall not bear the
Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a
legend in substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF
THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT
IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES
IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY
THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITARY UNLESS THIS NOTE IS PRESENTED BY
AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER
STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
(h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or cancelled in whole and not in part, each such Global Note shall be returned
to or retained and cancelled by the Trustee in accordance with Section 2.11. At
any time prior to such cancellation, if any beneficial interest in a Global Note
is exchanged for or transferred to a Person who shall take delivery thereof in
the form of a beneficial interest in another Global Note or for Definitive
Notes, the principal amount of Notes represented by such Global Note shall be
reduced accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the
40
Trustee to reflect such reduction; and if the beneficial interest is being
exchanged for or transferred to a Person who shall take delivery thereof in the
form of a beneficial interest in another Global Note, such other Global Note
shall be increased accordingly and an endorsement shall be made on such Global
Note by the Trustee or by the Depositary at the direction of the Trustee to
reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) No service charge shall be made to a Holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but Warnaco may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other than
any such transfer taxes or similar governmental charge payable upon
exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.12, 4.17
and 9.05).
(ii) All Global Notes and Definitive Notes issued upon
any registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of Warnaco, evidencing the same
Debt, as the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange and shall be entitled to all of
the benefits of this Indenture equally and proportionately with all
other Notes duly issued hereunder.
(iii) Neither the Registrar nor Warnaco shall be required
(A) to issue, to register the transfer of or to exchange any Notes
during a period beginning at the opening of business 15 days before the
day of any selection of Notes for redemption under Section 3.02 and
ending at the close of business on the date of selection, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part or (C) to register the transfer of or to
exchange a Note between a record date (including a Regular Record Date)
and the next succeeding Interest Payment Date.
(iv) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and Warnaco may deem and
treat the Person in whose name any Note is registered as the absolute
owner of such Note for the purpose of receiving payment of principal of
and interest on such Note and for all other purposes, in each case
regardless of any notice to the contrary.
(v) All certifications, certificates and Opinions of
Counsel required to be submitted to the Registrar pursuant to this
Section 2.06 to effect a registration of transfer or exchange may be
submitted by facsimile.
(vi) The Trustee is hereby authorized and directed to
enter into a letter of representation with the Depositary in the form
provided by Warnaco and to act in accordance with such letter.
(vii) To permit registrations of transfers and exchanges,
Warnaco shall execute, and the Trustee shall authenticate, Global Notes
and Definitive Notes upon Warnaco's order or at the Registrar's
request.
(viii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of any Note being redeemed in
part.
(ix) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02.
41
Section 2.07. Replacement Notes.
------------------
If any mutilated Note is surrendered to the Trustee or Warnaco
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Note, Warnaco shall issue and the Trustee, upon receipt of an
Authentication Order in accordance with Section 2.02, shall authenticate a
replacement Note. If required by the Trustee or Warnaco, the Holder of such Note
shall provide indemnity sufficient, in the judgment of the Trustee or Warnaco,
as applicable, to protect Warnaco, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer in connection with such
replacement. If required by Warnaco, such Holder shall reimburse Warnaco for its
reasonable expenses in connection with such replacement.
Every replacement Note issued in accordance with this Section
2.07 shall be the valid obligation of Warnaco evidencing the same Debt as the
destroyed, lost or stolen Note and shall be entitled to all of the benefits of
this Indenture equally and proportionately with all other Notes duly issued
hereunder.
Section 2.08. Outstanding Notes.
------------------
(a) The Notes outstanding at any time shall be the entire
principal amount of Notes represented by all the Global Notes and Definitive
Notes authenticated by the Trustee except for those cancelled by it, those
delivered to it for cancellation, those subject to reductions in beneficial
interests effected by the Trustee in accordance with Section 2.06, and those
described in this Section 2.08 as not outstanding. Except as set forth in
Section 2.09, a Note shall not cease to be outstanding because Warnaco or an
Affiliate of Warnaco holds the Note; provided, however, that Notes held by
Warnaco, a Guarantor or any of their respective Subsidiaries shall be deemed not
to be outstanding for purposes of Section 3.07(b).
(b) If a Note is replaced pursuant to Section 2.07, it shall
cease to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
(c) If the principal amount of any Note is considered paid
under Section 4.01, it shall cease to be outstanding and interest on it shall
cease to accrue.
(d) If the Paying Agent (other than Warnaco, a Guarantor or
any of their respective Subsidiaries or an Affiliate of any thereof) holds, on a
redemption date, a Purchase Date or maturity date, funds sufficient to pay Notes
payable on that date, then on and after that date such Notes shall be deemed to
be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
---------------
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by Warnaco, a Guarantor, any of their respective Subsidiaries or any of
Affiliates or any thereof, shall be considered as though not outstanding, except
that for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes that the Trustee
knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
----------------
Until certificates representing Notes are ready for delivery,
Warnaco may prepare and the Trustee, upon receipt of an Authentication Order in
accordance with Section 2.02, shall authenticate temporary Notes. Temporary
Notes shall be substantially in the form of Definitive Notes but may have
variations that Warnaco considers appropriate for temporary Notes and as shall
be reasonably acceptable to the Trustee. Without unreasonable delay, Warnaco
shall prepare and the Trustee shall authenticate Global Notes or Definitive
Notes in exchange for temporary Notes, as applicable.
42
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture equally and proportionately with all other Notes duly
issued hereunder.
Section 2.11. Cancellation.
-------------
Warnaco at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
Upon sole direction of Warnaco, the Trustee and no one else shall cancel all
Notes surrendered for registration of transfer, exchange, payment, replacement
or cancellation and shall destroy cancelled Notes (subject to the record
retention requirements of the Exchange Act or other applicable laws) unless
Warnaco directs them to be returned to it. Certification of the destruction of
all cancelled Notes shall be delivered to Warnaco from time to time upon request
unless by a written order, signed by an Officer of Warnaco, Warnaco shall direct
that cancelled Notes be returned to it. Warnaco may not issue new Notes to
replace Notes that it has paid or that have been delivered to the Trustee for
cancellation.
Section 2.12. Defaulted Interest.
-------------------
If Warnaco defaults in a payment of interest on the Notes, it
shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01. Warnaco shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. Warnaco shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, Warnaco (or, upon the
written request of Warnaco, the Trustee in the name and at the expense of
Warnaco) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
Section 2.13. CUSIP or ISIN Numbers.
----------------------
Warnaco in issuing the Notes may use "CUSIP" and/or "ISIN"
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP"
and/or "ISIN" numbers in notices of redemption as a convenience to Holders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption or notice of an Offer to Purchase and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption or Offer to Purchase shall not be affected by
any defect in or omission of such numbers. Warnaco shall promptly notify the
Trustee of any change in the "CUSIP" and/or "ISIN" numbers.
Section 2.14. Special Interest.
-----------------
If Special Interest is payable by Warnaco pursuant to a
Registration Rights Agreement and paragraph 1 of the Notes, Warnaco shall
deliver to the Trustee a certificate to that effect stating (i) the amount of
such Special Interest that is payable and (ii) the date on which such interest
is payable pursuant to Section 4.01. Unless and until a Responsible Officer of
the Trustee receives such a certificate or instruction or direction from the
Holders in accordance with the terms of this Indenture, the Trustee may assume
without inquiry that no Special Interest is payable. The foregoing shall not
prejudice the rights of the Holders with respect to their entitlement to Special
Interest as otherwise set forth in this Indenture or the Notes and pursuing any
action against Warnaco directly or otherwise directing the Trustee to take any
such action in accordance with the terms of this Indenture and the Notes. If
Warnaco has paid Special Interest directly to the Persons entitled to it,
Warnaco shall deliver to the Trustee an Officers' Certificate setting forth the
details of such payment.
43
Section 2.15. Issuance of Additional Notes.
-----------------------------
Warnaco shall be entitled, subject to its compliance with
Section 4.09, to issue Additional Notes under this Indenture which shall have
identical terms as the Initial Notes issued on the date hereof, other than with
respect to the date of issuance, issue price and rights under a related
Registration Rights Agreement, if any. The Initial Notes issued on the date
hereof, any Additional Notes and all Exchange Notes issued in exchange therefor
shall be treated as a single class for all purposes under this Indenture,
including, directions, waivers, amendments, consents, redemptions and Offers to
Purchase.
With respect to any Additional Notes, Warnaco shall set forth
in a Board Resolution and an Officers' Certificate, a copy of each of which
shall be delivered to the Trustee, the following information:
(a) the aggregate principal amount of such Additional Notes to
be authenticated and delivered pursuant to this Indenture;
(b) the issue price, the issue date and the CUSIP and/or ISIN
number of such Additional Notes; provided, however, that no Additional Notes may
be issued at a price that would cause such Additional Notes to have "original
issue discount" within the meaning of Section 1273 of the Code, other than a de
minimis original issue discount within the meaning of Section 1273 of the Code;
and
(c) whether such Additional Notes shall be subject to the
restrictions on transfer set forth in Section 2.06 relating to Restricted Global
Notes and Restricted Definitive Notes.
Section 2.16. Record Date.
The record date for purposes of determining the identity of
Holders of Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided for
in TIA Section 316(c).
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
--------------------
If Warnaco elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07, it shall furnish to the Trustee, at least
30 days but not more than 60 days before a redemption date (or such shorter
period as allowed by the Trustee), an Officers' Certificate setting forth (a)
the applicable section of this Indenture pursuant to which the redemption shall
occur, (b) the redemption date, (c) the principal amount of Notes to be redeemed
and (d) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
----------------------------------
If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes to be redeemed among the Holders in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not so listed, on a
pro rata basis, by lot or in accordance with any other method the Trustee deems
fair and appropriate (and in compliance with applicable legal requirements).
However, no Notes of a principal amount of $1,000 or less shall be redeemed in
part, and, if a partial redemption of Notes is made with the proceeds of a
public offering of common equity securities of Holdco, selection of the Notes or
portions of the Notes for redemption shall be made by the Trustee only on a
proportional basis or on as nearly a proportional basis as is practicable
(except as required by the procedures of DTC), unless that method is otherwise
prohibited. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless
44
otherwise provided herein, not less than 30 nor more than 60 days prior to the
redemption date by the Trustee from the outstanding Notes not previously called
for redemption.
The Trustee shall promptly notify Warnaco in writing of the
Notes selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or integral multiples of $1,000,
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not an integral
multiple of $1,000, shall be redeemed. Except as provided in the preceding
sentence, provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
---------------------
At least 30 days but not more than 60 days prior to a
redemption date, Warnaco shall mail or cause to be mailed, by first class mail,
a notice of redemption to each Holder whose Notes are to be redeemed at such
Holder's address appearing in the securities register maintained in respect of
the Notes by the Registrar (the "Security Register").
The notice shall identify the Notes to be redeemed and shall
state:
(a) the redemption date;
(b) The appropriate calculation of the redemption price, but
need not include the redemption price itself. The actual redemption price,
calculated as described above, shall be set forth in an Officers' Certificate
delivered to the Trustee no later than two (2) Business Days prior to the
redemption date unless clause (2) of the definition of "Comparable Treasury
Price" is applicable, in which case such Officer's Certificate should be
delivered on the redemption date;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, if applicable, a new Note or Notes in principal
amount equal to the unredeemed portion shall be issued upon cancellation of the
original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless Warnaco defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the applicable section of this Indenture pursuant to which
the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness of
the CUSIP and/or ISIN numbers, if any, listed in such notice or printed on the
Notes.
At Warnaco's request, the Trustee shall give the notice of
redemption in Warnaco's name and at its expense; provided, however, that Warnaco
shall have delivered to the Trustee, at least 40 days (or such shorter period
allowed by the Trustee) prior to the redemption date, an Officers' Certificate
requesting that the Trustee give such notice (in the name and at the expense of
Warnaco) and setting forth the information to be stated in such notice as
provided in this Section 3.03.
45
Section 3.04. Effect of Notice of Redemption.
-------------------------------
Once notice of redemption is mailed in accordance with Section
3.03, Notes called for redemption shall become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
Section 3.05. Deposit of Redemption Price.
----------------------------
On or prior to 11:00 a.m. Eastern time on the Business Day
prior to any redemption date, Warnaco shall deposit with the Trustee or with the
Paying Agent money sufficient to pay the redemption price of and, if applicable,
accrued and unpaid interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly, and in any event within two (2)
Business Days after the redemption date, return to Warnaco any money deposited
with the Trustee or the Paying Agent by Warnaco in excess of the amounts
necessary to pay the redemption price of, and, accrued and unpaid interest, if
any, on all Notes to be redeemed.
If Warnaco complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
Notes or portions of Notes called for purchase or redemption in accordance with
Section 2.08(d), whether or not such Notes are presented for payment. If a Note
is redeemed on or after a Regular Record Date but on or prior to the related
Interest Payment Date, then any accrued and unpaid interest, if any, shall be
paid to the Person in whose name such Note was registered at the close of
business on such Regular Record Date. If any Note called for redemption shall
not be so paid upon surrender for redemption because of the failure of Warnaco
to comply with the preceding paragraph, interest shall be paid on the unpaid
principal from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case at
the rate provided in the Notes and in Section 4.01.
Section 3.06. Notes Redeemed in Part.
-----------------------
Upon surrender of a Note that is redeemed in part, Warnaco
shall issue and, upon Warnaco's written request, the Trustee shall authenticate
for the Holder at the expense of Warnaco a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
Section 3.07. Optional Redemption.
--------------------
(a) At any time prior to June 15, 2008, Warnaco may redeem all
or any portion of the Notes, at once or over time, upon notice in accordance
with Section 3.03, at a redemption price equal to the greater of:
(A) 100% of the principal amount of the Notes to be
redeemed, and
(B) the sum of the present values of (A) the
redemption price of the Notes at June 15, 2008 (as set
forth below) and (B) the remaining scheduled payments of
interest from the redemption date through June 15, 2008,
but excluding accrued and unpaid interest through the
redemption date, discounted to the redemption date
(assuming a 360-day year consisting of twelve 30-day
months), at the Treasury Rate plus 75 basis points,
plus, in either case, accrued and unpaid interest, including Special Interest,
if any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant Interest Payment
Date).
46
(b) At any time and from time to time prior to June 15, 2006,
Warnaco may redeem up to a maximum of 35% of the aggregate principal amount of
the Notes (including any Additional Notes) with the proceeds of one or more
Public Equity Offerings at a redemption price equal to 108.875% of the principal
amount thereof, plus accrued and unpaid interest, including Special Interest, if
any, to the redemption date (subject to the right of holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided, however, that after giving effect to any such redemption, at
least 65% of the aggregate principal amount of the Notes (including any
Additional Notes) remains outstanding. Any such redemption shall be made within
90 days of such Public Equity Offering upon not less than 30 nor more than 60
days' prior notice.
(c) At any time on or after on or after June 15, 2008, Warnaco
may redeem all or a part of the Notes upon notice in accordance with Section
3.03, at the redemption prices set forth below, plus accrued and unpaid
interest, including Special Interest, if any, to but excluding the redemption
date (subject to the right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date). The following
prices are for Notes redeemed during the 12-month period commencing on June 15
of the years set forth below, and are expressed as percentages of principal
amount:
Year Percentage
2008..................................................................................... 104.438%
2009..................................................................................... 102.958%
2010..................................................................................... 101.479%
2011 and thereafter...................................................................... 100.000%
(d) Any prepayment pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06.
Section 3.08. Mandatory Redemption.
---------------------
Except as set forth in Sections 4.12 and 4.17, Warnaco shall
not be required to make mandatory redemption or sinking fund payments with
respect to, or offers to purchase, the Notes.
Section 3.09. Offers To Purchase.
-------------------
(a) In the event that, pursuant to Section 4.12 or 4.17,
Warnaco shall be required to commence a Prepayment Offer or Change of Control
Offer (each, an "Offer to Purchase"), it shall follow the procedures specified
below.
(b) Warnaco shall cause a notice of the Offer to Purchase to
be sent at least once to the Dow Jones News Service or similar business news
service in the United States; and
(c) Warnaco shall commence the Offer to Purchase by sending,
by first-class mail, with a copy to the Trustee, to each Holder, at such
Holder's address appearing in the Security Register a notice, the terms of which
shall govern the Offer to Purchase, stating:
(i) that the Offer to Purchase is being made pursuant to
this Section 3.09 and Section 4.12 or 4.17, as the case may be, and, in
the case of a Change of Control Offer, that a Change of Control has
occurred, the circumstances and relevant facts regarding the Change of
Control, and that a Change of Control Offer is being made pursuant to
Section 4.17;
(ii) the principal amount of Notes required to be
purchased pursuant to Section 4.12 or 4.17 (the "Offer Amount"), the
purchase price, the Offer Period and the Purchase Date (each as defined
below);
47
(iii) except as provided in clause (ix), that all Notes
timely tendered and not withdrawn shall be accepted for payment;
(iv) that any Note not tendered or accepted for payment
shall continue to accrue interest;
(v) that, unless Warnaco defaults in making such payment,
any Note accepted for payment pursuant to the Offer to Purchase shall
cease to accrue interest after the Purchase Date;
(vi) that Holders electing to have a Note purchased
pursuant to the Offer to Purchase may elect to have Notes purchased in
integral multiples of $1,000 only;
(vii) that Holders electing to have a Note purchased
pursuant to the Offer to Purchase shall be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Note completed, or transfer by book-entry transfer,
to Warnaco, a Depositary, if appointed by Warnaco, or a Paying Agent,
if any, at the address specified in the notice before the close of
business on the third Business Day before the Purchase Date;
(viii) that Holders shall be entitled to withdraw their
election if Warnaco, the Depositary or the Paying Agent, as the case
may be, receives, not later than the expiration of the Offer Period, a
telegram, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Note (or portions thereof) the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(ix) that, in the case of an Prepayment Offer, if the
aggregate principal amount of Notes surrendered by Holders exceeds the
Offer Amount, Warnaco shall select the Notes to be purchased on a pro
rata basis (with such adjustments as may be deemed appropriate by
Warnaco so that only Notes in denominations of $1,000 or integral
multiples thereof shall be purchased);
(x) that Holders whose Notes were purchased in part shall
be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer); and
(xi) any other procedures that Holders must follow in
order to tender their Notes (or portions thereof) for payment and the
procedures that Holders must follow in order to withdraw an election to
tender Notes (or portions thereof) for payment.
(d) The Offer to Purchase shall remain open for a period of at
least 30 days but no more than 60 days following its commencement, except to the
extent that a longer period is required by applicable law (the "Offer Period").
No later than five (5) Business Days after the termination of the Offer Period
(the "Purchase Date"), Warnaco shall purchase the Offer Amount or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Offer
to Purchase. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
(e) On or prior to the Purchase Date, Warnaco shall, to the
extent lawful:
(i) accept for payment (on a pro rata basis to the extent
necessary in connection with an Prepayment Offer) the Offer Amount of
Notes or portions of Notes properly tendered pursuant to the Offer to
Purchase, or if less than the Offer Amount has been tendered, all Notes
tendered;
48
(ii) deposit with the Paying Agent the purchase price as
set forth in Section 4.12 or 4.17, as applicable, in respect of all
Notes or portions of Notes properly tendered; and
(iii) deliver or cause to be delivered to the Trustee the
Notes so accepted together with an Officers' Certificate stating the
aggregate principal amount of Notes or portions of Notes being
purchased by Warnaco and that such Notes or portions thereof were
accepted for payment by Warnaco in accordance with the terms of this
Section 3.09.
(f) Warnaco, the Depositary or the Paying Agent, as the case
may be, shall promptly (but in any event not later than five (5) Business Days
after the Purchase Date) deliver to each tendering Holder of Notes properly
tendered and accepted by Warnaco for purchase the purchase price as set forth in
Section 4.12 or 4.17, as applicable, for such Notes, and Warnaco shall promptly
execute and issue a new Note, and the Trustee, upon receipt of an Authentication
Order shall authenticate and deliver (or cause to be transferred by book-entry)
such new Note to such Holder, in a principal amount equal to any unpurchased
portion of the Note surrendered; provided, however, that each such new Note
shall be in a principal amount of $1,000 or an integral multiple of $1,000. Any
Note not so accepted shall be promptly mailed or delivered by Warnaco to the
Holder thereof. Warnaco shall publicly announce the results of the Offer to
Purchase on the Purchase Date.
(g) If the Purchase Date is on or after a Regular Record Date
and on or before the related Interest Payment Date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such Regular Record Date, and no additional interest shall
be payable to Holders who tender Notes pursuant to the Offer to Purchase.
(h) Warnaco shall comply, to the extent applicable, with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent those laws and regulations are
applicable in connection with the Offer to Purchase. To the extent that the
provisions of any securities laws or regulations conflict with Section 4.12 or
4.17, as applicable, this Section 3.09 or other provisions of this Indenture,
Warnaco shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under Section 4.12 or 4.17,
as applicable, this Section 3.09 or such other provision by virtue of such
compliance.
(i) Other than as specifically provided in this Section 3.09,
any purchase pursuant to this Section 3.09 shall be made in accordance with the
provisions of Section 3.01 through 3.06.
ARTICLE 4.
COVENANTS
For the purposes of determining compliance with any covenant, the U.S.
Dollar Equivalent will be used, if and to the extent relevant.
Section 4.01. Payment of Notes.
-----------------
(a) Warnaco shall pay or cause to be paid the principal of,
premium, if any, and interest on, the Notes on the dates and in the manner
provided in this Indenture and the Notes. Principal, premium, if any, and
interest shall be considered paid on the date due if the Paying Agent, if other
than Holdco or a Subsidiary thereof, holds as of 11:00 a.m. Eastern Time on the
due date money deposited by Warnaco in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest then due. Such Paying Agent shall return to Warnaco promptly, and in
any event, no later than five (5) Business Days following the date of payment,
any money (including accrued interest) that exceeds such amount of principal,
premium, if any, and interest paid on the Notes. Warnaco shall pay Special
Interest, if any, in the same manner, on the dates and in the amounts set forth
in a Registration Rights Agreement, the Notes and this Indenture. If a payment
date is a Legal Holiday at a place of
49
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue on such payment for the
intervening period.
(b) Warnaco shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal and
premium, if any, from time to time on demand at a rate that is 1% per annum in
excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace periods), from
time to time on demand at the same rate to the extent lawful.
(c) Interest shall be computed on the basis of a 360-day year
of twelve 30-day months.
Section 4.02. Maintenance of Office or Agency.
--------------------------------
(a) Warnaco shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office or drop facility
of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
Notes may be presented or surrendered for registration of transfer or for
exchange and where notices and demands to or upon Warnaco in respect of the
Notes and this Indenture may be served. Warnaco shall give prompt written notice
to the Trustee of any change in the location of such office or agency. If at any
time Warnaco shall fail to maintain any such required office or agency or shall
fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and Warnaco hereby appoints the Trustee as its agent to
receive all such presentations, surrenders, notices and demands.
(b) Warnaco may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations.
Warnaco shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
(c) Warnaco hereby designates the Corporate Trust Office of
the Trustee, as one such office, drop facility or agency of Warnaco in
accordance with Section 2.03.
Section 4.03. Reports.
--------
(a) Notwithstanding that Warnaco may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, Warnaco shall
file with the SEC and provide the Trustee and Holders with such annual reports
and such information, documents and other reports as are specified in Sections
13 and 15(d) of the Exchange Act and applicable to a U.S. corporation subject to
such Sections, such information, documents and reports to be so filed with the
SEC and provided at the times specified for the filing of such information,
documents and reports under such Sections; provided, however, that Warnaco shall
not be so obligated to file such information, documents and reports with the SEC
if the SEC does not permit such filings. Notwithstanding the foregoing, it is
understood that for so long as Warnaco is exempt from the reporting requirements
of Section 13(a) or 15(d) of the Exchange Act pursuant to Rule 12h-5 of the
Exchange Act and Holdco files with the SEC and provides the Trustee and Holders
with such annual reports and such information, documents and other reports as
are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a
U.S. corporation subject to such Sections (such information, documents and
reports to be so filed with the SEC and provided at the times specified for the
filing of such information, documents and reports under such Sections), Warnaco
shall not be required to file such information, documents and reports with the
SEC or provide such information, documents and reports to the Trustee and the
Holders as otherwise required pursuant to this Section 4.03(a).
(b) Warnaco shall furnish to Holders and to prospective
investors, upon the request of such Holders, any information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities
50
Act so long as the Notes are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act.
Section 4.04. Compliance Certificate.
-----------------------
(a) Warnaco shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of Warnaco, the Guarantors and their respective Subsidiaries
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether Warnaco, the Guarantors and
their respective Subsidiaries have kept, observed, performed and fulfilled their
obligations under this Indenture, and further stating, as to each such Officer
signing such certificate, that to the best of his or her knowledge, Warnaco, the
Guarantors and their Subsidiaries have kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and are not in default in
the performance or observance of any of the terms, provisions and conditions of
this Indenture (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which he or she may have
knowledge and what action Warnaco is taking or proposes to take with respect
thereto) and that to the best of his or her knowledge no event has occurred and
remains in existence by reason of which payments on account of the principal of,
premium, if any, or interest on the Notes is prohibited or if such event has
occurred, a description of the event and what action Warnaco is taking or
proposes to take with respect thereto.
(b) Warnaco shall otherwise comply with TIA 'SS'314(a)(2).
(c) Warnaco shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice in the form of an Officers' Certificate
of any Default or Event of Default, its status and what action Warnaco is taking
or proposes to take with respect thereto.
Section 4.05. Taxes.
------
Warnaco and Holdco shall pay, and shall cause each of their
respective Subsidiaries to pay, prior to delinquency, all material taxes,
assessments, and governmental levies, except such as are being contested in good
faith and by appropriate proceedings or where the failure to effect such payment
is not adverse in any material respect to the Holders.
Section 4.06. Stay, Extension and Usury Laws.
-------------------------------
Warnaco covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and Warnaco (to the extent that
it may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it shall not, by resort to any such law, hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
has been enacted.
Section 4.07. Corporate Existence.
--------------------
Subject to Article 5, each of Warnaco and Holdco shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence, and the corporate, partnership or other
existence of each Restricted Subsidiary, in accordance with the respective
organizational documents (as the same may be amended from time to time) of
Warnaco, Holdco or any such Restricted Subsidiary; provided, however, that
Warnaco and Holdco shall not be required to preserve the corporate, partnership
or other existence of any Restricted Subsidiary, if the board of directors of
each of Warnaco and Holdco shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Warnaco, Holdco and the
Restricted Subsidiaries, taken as a whole, and that the loss
51
thereof is not adverse in any material respect to the Holders, or that such
preservation is not necessary in connection with any transaction not prohibited
by this Indenture.
Section 4.08. Payment for Consents.
---------------------
Holdco and Warnaco will not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Holder for
or as an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or is paid to all Holders that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.09. Limitation on Debt.
-------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, Incur, directly or indirectly, any Debt
unless, after giving effect to the application of the proceeds thereof, no
Default or Event of Default would occur as a consequence of such Incurrence or
be continuing following such Incurrence and either:
(1) such Debt is Debt of Warnaco or a Guarantor and after giving
effect to the Incurrence of such Debt and the application of the proceeds
thereof, the Consolidated Interest Coverage Ratio would be greater than
2.25 to 1.00 or
(2) such Debt is Permitted Debt.
The term "Permitted Debt" is defined to include the following:
(a) (1) Debt of Warnaco evidenced by the Initial Notes issued
pursuant to this Indenture and Exchange Notes issued in exchange for such
Initial Notes and in exchange for any Additional Notes and (2) Debt of
the Guarantors evidenced by Note Guaranties relating to the Initial Notes
issued pursuant to this Indenture and the Exchange Notes issued in
exchange for such Initial Notes and in exchange for any Additional Notes;
(b) Debt of Warnaco or a Guarantor under Credit Facilities or Debt
Incurred by a Securitization Entity in a Qualified Securitization
Transaction that is not recourse to Holdco or any Restricted Subsidiary
(except for Standard Securitization Undertakings), provided that the
aggregate principal amount of all such Debt under this clause (b) at any
one time outstanding shall not exceed the greater of:
(1) $325.0 million, which amount shall be permanently reduced by
the amount of proceeds from Asset Sales used to Repay Senior Debt, and
not subsequently reinvested in Additional Assets or used to purchase
Notes or Repay other Debt, pursuant to Section 4.12 and
(2) the sum of the amounts equal to
(A) 85% of the book value of the accounts receivable of
Holdco and the Restricted Subsidiaries, plus
(B) 50% of the book value of the inventory of Holdco and the
Restricted Subsidiaries,
minus, in the case of each of subsections (1) and (2) under this clause
(b), the Debt of any Foreign Restricted Subsidiary Incurred under clause
(j) below that is then outstanding;
(c) Debt of Warnaco or a Guarantor in respect of Capital Lease
Obligations, Purchase Money Debt and (without double counting)
Attributable Debt in respect of Sale and Leaseback Transactions otherwise
permitted by this Indenture, provided that
52
(1) the aggregate principal amount of such Debt does not exceed the
Fair Market Value (on the date of the Incurrence thereof) of the Property
acquired, constructed or leased, and
(2) the aggregate principal amount of all Debt Incurred and then
outstanding pursuant to this clause (c) (together with all Permitted
Refinancing Debt Incurred and then outstanding in respect of Debt
previously Incurred pursuant to this clause (c)) does not exceed $25.0
million aggregate principal amount outstanding at any one time;
(d) Debt of Holdco owing to and held by any Restricted Subsidiary
and Debt of a Restricted Subsidiary owing to and held by Holdco or any
Restricted Subsidiary, provided, however, that any subsequent issue or
transfer of Capital Stock or other event that results in any such
Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of any such Debt (except to Holdco or a Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Debt by the obligor thereof, and provided, that for purposes of
this provision, a pledge or collateral assignment shall not be deemed to
constitute a transfer until the disposition of the collateral upon
foreclosure thereon), and provided, further, that if Warnaco or any
Guarantor is the obligor on such Debt, such Debt must be expressly
subordinated in right of payment to the prior payment in full in cash of
all obligations with respect to the Notes, in the case of Warnaco, or the
Note Guaranty, in the case of a Guarantor;
(e) Debt of a Restricted Subsidiary outstanding on the date on
which such Restricted Subsidiary is acquired by Holdco or a Restricted
Subsidiary or otherwise becomes a Restricted Subsidiary (other than Debt
Incurred as consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, the transaction or series
of transactions pursuant to which such Restricted Subsidiary became a
Subsidiary of Holdco or was otherwise acquired by Holdco), provided that
at the time such Restricted Subsidiary is acquired by Holdco or a
Restricted Subsidiary or otherwise becomes a Restricted Subsidiary and
after giving effect to the Incurrence of such Debt, Holdco would have
been able to Incur $1.00 of additional Debt pursuant to clause (1) of the
first paragraph of this Section 4.09, or the incurrence of such Debt is
otherwise permitted by this Section 4.09;
(f) Debt of Holdco or any Restricted Subsidiary under Interest Rate
Agreements entered into for the purpose of limiting interest rate risks
in the ordinary course of the financial management of Holdco or such
Restricted Subsidiary and not for speculative purposes, provided that the
obligations under such agreements are, at the time of Incurrence thereof,
related to payment obligations on Debt otherwise permitted by the terms
of this Section 4.09;
(g) Debt of Holdco or any Restricted Subsidiary under Currency
Exchange Protection Agreements entered into for the purpose of limiting
currency exchange rate risks in the ordinary course of the financial
management of Holdco or such Restricted Subsidiary and not for
speculative purposes;
(h) Debt of Holdco or any Restricted Subsidiary (1) under Commodity
Price Protection Agreements entered into in the ordinary course of the
financial management of Holdco or such Restricted Subsidiary and not for
speculative purposes, and (2) in respect of ordinary course of business
cash management services provided by lenders under Credit Facilities;
(i) Debt in connection with one or more standby letters of credit
or surety or performance bonds issued by Holdco or any Restricted
Subsidiary in the ordinary course of business or pursuant to
self-insurance obligations and not in connection with the borrowing of
money or the obtaining of advances or credit;
(j) Debt of Foreign Restricted Subsidiaries in an aggregate
principal amount outstanding at any one time not to exceed the Foreign
Borrowing Base;
(k) Debt of Holdco or any Restricted Subsidiary outstanding on the
Issue Date, after giving effect to the issuance of the Initial Notes
pursuant to this Indenture and the application of the net proceeds
therefrom not otherwise described in clauses (a) through (j) above;
53
(l) Debt of Holdco, Warnaco or a Restricted Subsidiary in an
aggregate principal amount outstanding at any one time not to exceed
$30.0 million; and
(m) Permitted Refinancing Debt Incurred in respect of Debt Incurred
pursuant to clause (1) of the first paragraph of this Section 4.09 and
clauses (a), (c), (e) and (k) of this Section 4.09.
Notwithstanding anything to the contrary contained in this Section 4.09,
(a) Holdco and Warnaco shall not, and shall not permit any
Guarantors to, Incur any Debt pursuant to this Section 4.09 if the
proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Debt unless such Debt shall be subordinated to the Notes or
the applicable Note Guaranty, as the case may be, to at least the same
extent as such Subordinated Debt; and
(b) accrual of interest, accretion or amortization of original
issue discount and the payment of interest or dividends in the form of
additional Debt will be deemed not to be an Incurrence of Debt for
purposes of this Section 4.09.
For purposes of determining compliance with this Section 4.09, in the
event that an item of Debt meets the criteria of more than one of the categories
of Permitted Debt described in clauses (a) through (m) of this Section 4.09 or
is entitled to be incurred pursuant to clause (1) of the first paragraph of this
Section 4.09, Warnaco shall, in its sole discretion, classify (or later
reclassify in whole or in part, in its sole discretion) such item of Debt in any
manner that complies with this Section 4.09.
Section 4.10. Limitation on Restricted Payments.
----------------------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, make, directly or indirectly, any
Restricted Payment if at the time of, and after giving effect to, such proposed
Restricted Payment,
(a) a Default or Event of Default shall have occurred and be
continuing,
(b) Holdco could not Incur at least $1.00 of additional Debt
pursuant to clause (1) of the first paragraph of Section 4.09, or
(c) the aggregate amount of such Restricted Payment and all other
Restricted Payments declared or made since the Issue Date (the amount of
any Restricted Payment, if made in Property other than in cash, to be
based upon Fair Market Value of such Property at the time such Restricted
Payment is paid) would exceed an amount equal to the sum of:
(1) 50% of the aggregate amount of Consolidated Net Income accrued
during the period (treated as one accounting period) from the beginning
of the fiscal quarter in which the Issue Date occurs to the end of the
most recent fiscal quarter in respect of which financial statements have
been delivered in accordance with the terms of this Indenture (or if the
aggregate amount of Consolidated Net Income for such period shall be a
deficit, minus 100% of such deficit), plus
(2) 100% of Capital Stock Sale Proceeds, plus
(3) the sum of:
(A) the aggregate net cash proceeds received by Holdco or any
Restricted Subsidiary from the issuance or sale after the Issue
Date of convertible or exchangeable Debt that has been converted
into or exchanged for Capital Stock (other than Disqualified Stock)
of Holdco, and
(B) the aggregate amount by which Debt (other than
Subordinated Debt) of Holdco or any Restricted Subsidiary is
reduced on Holdco's consolidated balance sheet on or after the
Issue Date upon the conversion or exchange of any Debt issued or
sold on or prior to the Issue Date into Capital Stock (other than
Disqualified Stock) of Holdco,
excluding, in the case of clause (A) or (B):
54
(x) any such Debt issued or sold to Holdco or a Subsidiary of
Holdco or an employee stock ownership plan or trust established by
Holdco or any such Subsidiary for the benefit of their employees,
and
(y) the aggregate amount of any cash or other Property
distributed by Holdco or any Restricted Subsidiary upon any such
conversion or exchange, plus
(4) an amount equal to the sum of:
(A) the aggregate reduction in Investments in any Person
other than Holdco or a Restricted Subsidiary resulting from
dividends, returns of capital, repayments of loans or advances,
interest or other transfers of Property, in each case to Holdco or
any Restricted Subsidiary from such Person, and
(B) the portion (proportionate to Holdco's equity interest in
such Unrestricted Subsidiary) of the Fair Market Value of the net
worth of an Unrestricted Subsidiary at the time such Unrestricted
Subsidiary is designated a Restricted Subsidiary; plus
(C) $10.0 million.
Notwithstanding the foregoing limitation, Holdco may:
(a) pay dividends on its Capital Stock within 60 days of the
declaration thereof if, on the declaration date, such dividends could
have been paid in compliance with this Indenture; provided, however, that
at the time of such payment of such dividend, no Event of Default shall
have occurred and be continuing (or result therefrom); provided further,
however, that such dividend shall be included in the calculation of the
amount of Restricted Payments;
(b) purchase, repurchase, redeem, legally defease, acquire or
retire for value Capital Stock of Holdco or Subordinated Debt in exchange
for, or out of the proceeds of the substantially concurrent sale of,
Capital Stock of Holdco (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary of Holdco or an employee
stock ownership plan or trust established by Holdco or any such
Subsidiary for the benefit of their employees); provided, however, that
(1) such purchase, repurchase, redemption, legal defeasance,
acquisition or retirement shall be excluded in the calculation of the
amount of Restricted Payments and
(2) the Capital Stock Sale Proceeds from such exchange or sale
shall be excluded from the calculation pursuant to clause (c)(2) above;
(c) purchase, repurchase, redeem, legally defease, acquire or
retire for value any Subordinated Debt in exchange for, or out of the
proceeds of the substantially concurrent sale of, Permitted Refinancing
Debt; provided, however, that such purchase, repurchase, redemption,
legal defeasance, acquisition or retirement shall be excluded in the
calculation of the amount of Restricted Payments;
(d) so long as no Default or Event of Default has occurred and is
continuing,
(1) purchase, repurchase, redeem, legally defease, acquire or
retire for value Capital Stock, or any options, warrants or other rights
to acquire Capital Stock, from any officer, director or employee of
Holdco or its Restricted Subsidiaries for an amount not to exceed $2.0
million per year, and
(2) purchase, repurchase, redeem, legally defease, retire,
refinance or acquire for value shares of Capital Stock upon a change of
control if required pursuant to director and employee equity incentive
plans for an amount not to exceed $10.0 million; provided, however, in
the event that, in connection with the events giving rise to such change
of control, there shall have occurred a Change of Control pursuant to
which Warnaco is required to make a Change of Control Offer, then no
purchase, repurchase, redemption, legal defeasance, retirement,
refinancing or acquisition for value shall be made pursuant to this
clause (d)(2) until the completion of such Change of Control Offer and
55
the repurchase of the Notes validly tendered for payment in connection
with such Change of Control Offer; and
provided, however, that any such purchase, repurchase, redemption, legal
defeasance, retirement, refinancing or acquisition for value under
subsections (1) and (2) of this clause (d) shall be excluded in the
calculation of the amount of Restricted Payments; and
(e) purchase, repurchase, redeem, legally defease, retire,
refinance or acquire for value Subordinated Debt at a purchase price not
greater than 101% of the principal amount of such Subordinated Debt in
the event of a change of control under the terms of such Subordinated
Debt pursuant to a provision similar to Section 4.17; provided, however,
that prior to any such purchase, repurchase, redemption, legal
defeasance, retirement, refinancing or acquisition for value, Warnaco has
consummated a Change of Control Offer with respect to the Notes as
provided in Section 4.17 and has repurchased all Notes validly tendered
for payment in connection with such Change of Control Offer; and
provided, further however, that any repurchase, redemption, defeasance,
retirement, refinancing or acquisition for value of Subordinated Debt
pursuant to this clause (e) shall be included in subsequent calculations
of the amount of Restricted Payments.
Section 4.11. Limitation on Liens.
--------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, directly or indirectly, Incur or suffer
to exist, any Lien (other than Permitted Liens) upon any of their Property
(including Capital Stock of a Restricted Subsidiary), whether owned at the Issue
Date or thereafter acquired, or any interest therein or any income or profits
therefrom, unless it has made or will make effective provision whereby the Notes
or the applicable Note Guaranty will be secured by such Lien equally and ratably
with (or, if such other Debt constitutes Subordinated Debt, prior to) all other
Debt of Holdco or any Restricted Subsidiary secured by such Lien for so long as
such other Debt is secured by such Lien.
Section 4.12. Limitation on Asset Sales.
--------------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, directly or indirectly, consummate any
Asset Sale unless:
(a) Holdco, Warnaco or such Restricted Subsidiary receives
consideration at the time of such Asset Sale at least equal to the Fair
Market Value of the Property subject to such Asset Sale; and
(b) at least 75% of the consideration paid to Holdco, Warnaco or
their respective Restricted Subsidiaries in connection with such Asset
Sale is in the form of cash or Temporary Cash Investments (or securities,
notes or other obligations received by Holdco, Warnaco or such Restricted
Subsidiary that are converted within 90 days by Holdco, Warnaco or the
Restricted Subsidiary into cash) or the assumption by the purchaser of
liabilities of Holdco, Warnaco or any of their respective Restricted
Subsidiaries (other than contingent liabilities or liabilities that are
by their terms subordinated to the Notes or the applicable Note Guaranty)
as a result of which Holdco, Warnaco and the Restricted Subsidiaries are
no longer obligated with respect to such liabilities.
The Net Available Cash (or any portion thereof) from Asset Sales may be
applied by Holdco or a Restricted Subsidiary, to the extent Holdco or a
Restricted Subsidiary elects (or is required by the terms of any Debt):
(i) to Repay Senior Debt of Warnaco or any Guarantor (excluding, in
any such case, any Debt owed to Holdco or Warnaco); or
(ii) to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by Holdco or another Restricted Subsidiary).
56
Any Net Available Cash from an Asset Sale not applied in accordance with
the preceding paragraph within 365 days from the date of the receipt of such Net
Available Cash or that is not segregated from the general funds of Warnaco for
investment in identified Additional Assets in respect of a project that shall
have been commenced (including by paydown of revolving loans without a related
commitment reduction), and for which binding contractual commitments have been
entered into, prior to the end of such 365-day period and that shall not have
been abandoned shall constitute "Excess Proceeds"; provided, however, that the
amount of any Net Available Cash that ceases to be so segregated as contemplated
above and any Net Available Cash that is segregated in respect of a project that
is abandoned or completed shall also constitute "Excess Proceeds" at the time
any such Net Available Cash ceases to be so segregated or at the time the
relevant project is so abandoned or completed, as applicable.
When the aggregate amount of Excess Proceeds exceeds $15.0 million
(taking into account income earned on such Excess Proceeds, if any), Warnaco
will be required to make an offer to repurchase (the "Prepayment Offer") the
Notes, which offer shall be in the amount of the Allocable Excess Proceeds
(rounded to the nearest $1,000), on a pro rata basis according to principal
amount, at a purchase price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest, including Special Interest, if any, to the
repurchase date (subject to the right of holders of record on the relevant
record date to receive interest due on the relevant interest payment date), in
accordance with the procedures (including prorating in the event of
oversubscription) set forth in Section 3.09. To the extent that any portion of
the amount of Net Available Cash remains after compliance with the preceding
sentence and provided that all Holders have been given the opportunity to tender
their Notes for repurchase in accordance with Section 3.09, Holdco or such
Restricted Subsidiary may use such remaining amount for any purpose permitted by
this Indenture, and the amount of Excess Proceeds will be reset to zero.
The term "Allocable Excess Proceeds" shall mean the product of:
(a) the Excess Proceeds and
(b) a fraction,
(1) the numerator of which is the aggregate principal amount of the
Notes outstanding on the date of the Prepayment Offer, and
(2) the denominator of which is the sum of the aggregate principal
amount of the Notes outstanding on the date of the Prepayment Offer
and the aggregate principal amount of other Debt of Holdco, Warnaco
or a Restricted Subsidiary outstanding on the date of the
Prepayment Offer that is pari passu in right of payment with the
Notes and subject to terms and conditions in respect of Asset Sales
similar in all material respects to this Section 4.12 and requiring
Holdco, Warnaco or such Restricted Subsidiary to make an offer to
repurchase such Debt at substantially the same time as the
Prepayment Offer.
Within 30 Business Days after Warnaco is obligated to make a Prepayment
Offer as described in the preceding paragraph, Warnaco shall send a written
notice, by first-class mail, to the Holders, accompanied by such information
regarding the Asset Sale as Warnaco in good faith believes will enable such
Holders to make an informed decision with respect to such Prepayment Offer. Such
notice shall state, among other things, the purchase price and the repurchase
date, which shall be, subject to any contrary requirements of applicable law, a
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed.
Warnaco will comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of Notes pursuant to this Section 4.12. To the
extent that the provisions of any securities laws or regulations conflict with
provisions of this Section 4.12, Warnaco will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this Section 4.12 by virtue thereof.
57
Notwithstanding the foregoing, any disposition of the Properties
constituting all or a portion of the A.B.S. by Allen Schwartz and White Stag
businesses shall not be subject to the requirements of the first clause (b) of
this Section 4.12, provided, however, that the aggregate consideration paid to
Holdco or any Restricted Subsidiary for all such dispositions shall not exceed
$70.0 million.
Section 4.13. Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
------------------------------------------------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist any consensual restriction on the right of
any of their respective Restricted Subsidiaries to:
(a) pay dividends, in cash or otherwise, or make any other
distributions on or in respect of its Capital Stock, or pay any Debt or
other obligation owed, to Holdco or any Restricted Subsidiaries,
(b) make any loans or advances to Holdco or any Restricted
Subsidiary, or
(c) transfer any of its Property to Holdco or any Restricted
Subsidiary.
The foregoing limitations will not apply:
(1) with respect to clauses (a), (b) and (c) to:
(i) any encumbrance or restriction pursuant to an agreement in
effect on the Issue Date,
(ii) restrictions arising under Debt of a Restricted Subsidiary and
existing at the time it became a Restricted Subsidiary if such
restriction was not created in connection with or in anticipation of the
transaction or series of transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by Holdco or
Warnaco,
(iii) any encumbrance or restriction pursuant to an agreement
effecting a Refinancing of Debt Incurred pursuant to an agreement
referred to in clause (i) or (ii) of clause (1) of this Section 4.13 or
this clause (iii) or contained in any amendment to an agreement referred
to in clause (i) or (ii) of clause (1) of this Section 4.13 or this
clause (iii); provided, however, that the encumbrances and restrictions
with respect to such Restricted Subsidiary contained in any such
Refinancing or amendment are no less favorable in any material respect to
the holders of the Notes than encumbrances and restrictions with respect
to such Restricted Subsidiary contained in such predecessor agreements,
(iv) any customary encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered into for
the sale or disposition of all or substantially all of the Capital Stock
or assets of such Restricted Subsidiary pending the closing of such sale
or disposition and provided, that the consummation of such transaction
would not result in a Default or Event of Default,
(v) any encumbrance or restriction under applicable corporate law
or regulation relating to the payment of dividends or distributions,
(vi) any encumbrance or restriction arising under Debt or other
contractual requirements of a Securitization Entity in connection with a
Qualified Securitization Transaction; provided that such restrictions
apply only to such Securitization Entity and
(vii) any encumbrance with respect to Debt described in clause (j)
under the definition of "Permitted Debt" in Section 4.09, or
(2) with respect to clause (c) only, to:
(i) any encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests or in
licenses or similar contracts entered into in the ordinary course of
business to the extent such provisions restrict the transfer of the lease
or license or the property leased or licensed thereunder or pursuant to
customary provisions restricting dispositions of
58
real property interest set forth in any reciprocal easement agreement of
Holdco, Warnaco or a Restricted Subsidiary,
(ii) any encumbrance or restriction contained in security
agreements or mortgages securing Debt of a Restricted Subsidiary
otherwise permitted under this Indenture to the extent such encumbrance
or restriction restricts the transfer of the property subject to such
security agreements or mortgages,
(iii) restrictions relating to Debt that is permitted to be
Incurred and secured without also securing the Notes or the applicable
Note Guaranty pursuant to Sections 4.09 and 4.11 that limit the right of
the debtor to dispose of or transfer the Property securing such Debt, and
(iv) encumbering Property at the time such Property was acquired by
Holdco or any Restricted Subsidiary, so long as such restrictions relate
solely to the Property so acquired and were not created in connection
with or in anticipation of such acquisition.
Section 4.14. Limitation on Transactions with Affiliates.
-------------------------------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, directly or indirectly, conduct any
business or enter into or suffer to exist any transaction or series of
transactions (including the purchase, sale, transfer, assignment, lease,
conveyance or exchange of any Property or the rendering of any service) with, or
for the benefit of, any Affiliate of Holdco or Warnaco (an "Affiliate
Transaction"), unless:
(a) the terms of such Affiliate Transaction are:
(1) set forth in writing, and
(2) no less favorable to Holdco, Warnaco or such Restricted
Subsidiary, as the case may be, than those that could be obtained in a
comparable arm's-length transaction with a Person that is not an
Affiliate of Holdco, Warnaco or such Restricted Subsidiary,
(b) if such Affiliate Transaction involves aggregate payments or
value in excess of $10.0 million, the Board of Directors (including at
least a majority of the disinterested members of the Board of Directors)
approves such Affiliate Transaction and, in its good faith judgment,
concludes that such Affiliate Transaction complies with clause (a)(2) of
this paragraph as evidenced by a Board Resolution promptly delivered to
the Trustee, and
(c) if such Affiliate Transaction involves aggregate payments or
value in excess of $25.0 million, Holdco or Warnaco obtains a written
opinion from an Independent Financial Advisor to the effect that the
consideration to be paid or received in connection with such Affiliate
Transaction is fair, from a financial point of view, to Holdco, Warnaco
or such Restricted Subsidiary, as the case may be.
Notwithstanding the foregoing limitation, Holdco, Warnaco or any of their
respective Restricted Subsidiaries may enter into, suffer to exist and perform
its obligations under the following:
(a) any transaction or series of transactions between Holdco and
one or more Restricted Subsidiaries or between two or more Restricted
Subsidiaries in the ordinary course of business;
(b) any Restricted Payment permitted to be made pursuant to Section
4.10 or any Permitted Investment;
(c) the payment of compensation (including amounts paid pursuant to
employee benefit plans) for the personal services of officers, directors
and employees of Holdco, Warnaco or any of their respective Restricted
Subsidiaries, so long as the Board of Directors in good faith shall have
approved the terms thereof and deemed the services theretofore or
thereafter to be performed for such compensation to be fair consideration
therefor;
59
(d) loans and advances to employees made in the ordinary course of
business and consistent with the past practices of Holdco or such
Restricted Subsidiary, provided that such loans and advances do not
exceed $2.5 million in the aggregate at any one time outstanding;
(e) agreements in effect on the Issue Date and described in the
Offering Memorandum dated June 5, 2003 relating to the Initial Notes
(including but not limited to the Equity Registration Rights Agreement
and any modifications, extensions or renewals thereto that are no less
favorable in any material respect to Holdco, Warnaco or any Restricted
Subsidiary than such agreements as in effect on the Issue Date);
(f) any transactions between or among any of Holdco, Warnaco, any
Restricted Subsidiary and any Securitization Entity in connection with a
Qualified Securitization Transaction, in each case provided that such
transactions are not otherwise prohibited by terms of this Indenture; and
(g) any agreements for the provision of commercial or investment
banking or consulting services entered into in good faith and approved by
the Board of Directors (including at least a majority of the
disinterested members of the Board of Directors).
Section 4.15. Limitation on Sale and Leaseback Transactions.
----------------------------------------------
Holdco and Warnaco shall not, and shall not permit any of their
respective Restricted Subsidiaries to, enter into any Sale and Leaseback
Transaction with respect to any Property unless:
(a) Holdco, Warnaco or such Restricted Subsidiary would be entitled
to:
(1) Incur Debt in an amount equal to the Attributable Debt
with respect to such Sale and Leaseback Transaction pursuant to
Section 4.09, and
(2) create a Lien on such Property securing such Attributable
Debt without also securing the Notes or the applicable Note
Guaranty pursuant to Section 4.11, and
(b) such Sale and Leaseback Transaction is effected in compliance
with Section 4.12.
Section 4.16. Designation of Restricted and Unrestricted Subsidiaries.
--------------------------------------------------------
The Board of Directors may designate any Subsidiary of Holdco other than
Warnaco to be an Unrestricted Subsidiary if such Subsidiary:
(a) does not own any Capital Stock or Debt of, or own or hold any
Lien on any Property of, Holdco or any Restricted Subsidiary;
(b) has no Debt other than Debt:
(1) as to which neither Holdco nor any of its Restricted
Subsidiaries (A) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Debt),
(B) is directly or indirectly liable as a Guarantor or otherwise,
or (C) constitutes the lender, provided, however, that Holdco or a
Restricted Subsidiary may loan, advance or extend credit to, or
Guarantee the Debt of, an Unrestricted Subsidiary concurrently with
or after the designation of such Subsidiary as an Unrestricted
Subsidiary in accordance with Section 4.10.
(2) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary) would permit upon notice, lapse
of time or both any holder of any Debt (other than any Guarantee
permitted by the proviso to the preceding clause (1)) of Holdco or
any Restricted Subsidiaries to declare a default on such Debt or
cause the payment thereof to be accelerated or payable prior to its
Stated Maturity, and
60
(3) as to which the lenders have been notified in writing
that they will not have any recourse to the stock or other Property
of Holdco or any Restricted Subsidiaries, except for Debt that has
been Guaranteed as permitted by the proviso to the preceding clause
(1);
(c) is not party to any agreement, contract, arrangement or
understanding with Holdco or any Restricted Subsidiary unless the terms
of any such agreement, contract, arrangement or understanding are no less
favorable to Holdco or such Restricted Subsidiary than those that might
be obtained at the time from Persons who are not Affiliates of Holdco;
(d) is a Person with respect to which neither Holdco nor any
Restricted Subsidiaries has any direct or indirect obligation (1) to
subscribe for additional Capital Stock or (2) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(e) has not Guaranteed or otherwise directly or indirectly provided
credit support for any Debt of Holdco or any Restricted Subsidiaries.
Unless so designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of Holdco will be classified as a Restricted Subsidiary;
provided, however, that such Subsidiary shall not be designated a Restricted
Subsidiary and shall be automatically classified as an Unrestricted Subsidiary
if either of the requirements set forth in clauses (x) and (y) of this Section
4.16 will not be satisfied after giving pro forma effect to such classification
or if such Person is a Subsidiary of an Unrestricted Subsidiary.
Except as provided in the first sentence of the preceding paragraph, no
Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary, and
none of Holdco, Warnaco nor any Restricted Subsidiary shall at any time be
directly or indirectly liable for any Debt that provides that the holder thereof
may (with the passage of time or notice or both) declare a default thereon or
cause the payment thereof to be accelerated or payable prior to its Stated
Maturity upon the occurrence of a default with respect to any Debt, Lien or
other obligation of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary). Upon designation of a
Restricted Subsidiary as an Unrestricted Subsidiary in compliance with this
Section 4.16, such Restricted Subsidiary shall, by execution and delivery of a
supplemental indenture in form satisfactory to the Trustee in its reasonable
judgment, be released from any Note Guaranty previously made by such Restricted
Subsidiary.
The Board of Directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary if, immediately after giving pro forma effect to such
designation,
(x) Holdco could Incur at least $1.00 of additional Debt pursuant
to clause (1) of the first paragraph of Section 4.09, and
(y) no Default or Event of Default shall have occurred and be
continuing or would result therefrom.
Any such designation or redesignation by the Board of Directors will be
evidenced to the Trustee by filing with the Trustee a Board Resolution giving
effect to such designation or redesignation and an Officers' Certificate of
Warnaco that:
(a) certifies that such designation or redesignation complies with
the foregoing provisions, and
(b) gives the effective date of such designation or redesignation,
such filing with the Trustee to occur within 45 days after the end of the fiscal
quarter of Warnaco in which such designation or redesignation is made (or, in
the case of a designation or redesignation made during the last fiscal quarter
of Holdco's fiscal year, within 90 days after the end of such fiscal year).
61
Section 4.17. Repurchase at the Option of Holders Upon a Change of Control.
------------------------------------------------------------
(a) Upon the occurrence of a Change of Control, Warnaco shall,
within 30 days of a Change of Control, make an offer (the "Change of Control
Offer") pursuant to the procedures set forth in Section 3.09. Each Holder shall
have the right to accept such offer and require Warnaco to repurchase all or any
portion (equal to $1,000 or an integral multiple of $1,000) of such Holder's
Notes pursuant to the Change of Control Offer at a purchase price, in cash (the
"Change of Control Amount"), equal to 101% of the aggregate principal amount of
Notes repurchased, plus accrued and unpaid interest, including Special Interest,
if any, on the Notes repurchased to the Purchase Date.
(b) Warnaco shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes a Change of Control Offer
in the manner, at the times and otherwise in compliance with the requirements
set forth in this Indenture applicable to a Change of Control Offer made by
Warnaco and purchases all Notes or portions of Notes validly tendered and not
withdrawn under the Change of Control Offer.
Section 4.18. Limitation Warnaco's and Holdco's Businesses.
--------------------------------------------
Warnaco shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, engage in any business other than the
Permitted Business. Holdco shall not engage in any business other than the
Permitted Holdco Business.
Section 4.19. Future Guarantors.
-----------------
Holdco and Warnaco shall cause each Person that becomes a
Domestic Restricted Subsidiary following the Issue Date, other than any
Securitization Entities, to execute and deliver to the Trustee a Note Guaranty
at the time such Person becomes a Domestic Restricted Subsidiary.
In addition, Holdco and Warnaco will cause each of their
existing non-Guarantor Subsidiaries and each of their Foreign Restricted
Subsidiaries created or acquired after the Issue Date which has Guaranteed or
which Guarantees any Debt of Holdco or any Domestic Restricted Subsidiary, to
execute and deliver to the Trustee a Guarantee agreement pursuant to which such
non-Guarantor or Foreign Restricted Subsidiary will Guarantee payment of
Warnaco's obligations under the Notes on the same terms and conditions as set
forth in the Guarantee of such other Debt of Holdco or any Domestic Restricted
Subsidiary given by such non-Guarantor or Foreign Restricted Subsidiary.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Property of Warnaco and
Guarantors.
--------------------------------------------------------------
Warnaco shall not merge, consolidate or amalgamate with or
into any other Person (other than a merger of a Wholly Owned Restricted
Subsidiary into Warnaco) or sell, transfer, assign, lease, convey or otherwise
dispose of all or substantially all its Property in any one transaction or
series of transactions unless:
(a) Warnaco shall be the Surviving Person in such merger,
consolidation or amalgamation, or the Surviving Person (if other than Warnaco)
formed by such merger, consolidation or amalgamation or to which such sale,
transfer, assignment, lease, conveyance or disposition is made shall be a
corporation organized and existing under the laws of the United States of
America, any State thereof or the District of Columbia;
62
(b) the Surviving Person (if other than Warnaco) expressly
assumes, by supplemental indenture in form reasonably satisfactory to the
Trustee in its reasonable judgment, executed and delivered to the Trustee by
such Surviving Person, the due and punctual payment of the principal of, and
premium, if any, and interest on, all the Notes, according to their tenor, and
the due and punctual performance and observance of all the covenants and
conditions of this Indenture to be performed by Warnaco;
(c) in the case of a sale, transfer, assignment, lease,
conveyance or other disposition of all or substantially all the Property of
Warnaco, such Property shall have been transferred as an entirety or
substantially as an entirety to one Person or a group of related persons;
(d) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (and treating, for purposes of this
clause (d) and clause (e) below, any Debt that becomes, or is anticipated to
become, an obligation of the Surviving Person or any Restricted Subsidiary as a
result of such transaction or series of transactions as having been Incurred by
the Surviving Person or such Restricted Subsidiary at the time of such
transaction or series of transactions), no Default or Event of Default shall
have occurred and be continuing;
(e) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, either Warnaco or the Surviving
Person, as the case may be, would be able to Incur at least $1.00 of additional
Debt under clause (1) of the first paragraph of Section 4.09; and
(f) Warnaco shall deliver, or cause to be delivered, to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
such transaction or series of transactions and the supplemental indenture, if
any, in respect thereto comply with this Section 5.01 and that all conditions
precedent herein provided for relating to such transaction or series of
transactions have been satisfied.
Holdco shall not, and Holdco and Warnaco shall not permit any
other Guarantor to, merge, consolidate or amalgamate with or into any other
Person (other than a merger of a Wholly Owned Restricted Subsidiary into Warnaco
or a Guarantor) or sell, transfer, assign, lease, convey or otherwise dispose of
all or substantially all of its Property in any one transaction or series of
transactions unless:
(a) the Surviving Person (if other than such Guarantor) formed
by such merger, consolidation or amalgamation or to which such sale, transfer,
assignment, lease, conveyance or disposition is made shall be a corporation,
limited liability company or partnership organized and existing under the laws
of the United States of America, any State thereof or the District of Columbia;
(b) the Surviving Person (if other than such Guarantor)
expressly assumes, by supplemental indenture in form reasonably satisfactory to
the Trustee in its reasonable judgment, executed and delivered to the Trustee by
such Surviving Person, the due and punctual performance and observance of all
the obligations of such Guarantor under its Note Guaranty and, in the case of
Holdco, due and punctual performance and observance of all the covenants and
conditions of this Indenture to be performed by Holdco;
(c) in the case of a sale, transfer, assignment, lease,
conveyance or other disposition of all or substantially all the Property of such
Guarantor, such Property shall have been transferred as an entirety or
substantially as an entirety to one Person;
(d) immediately after giving effect to such transaction or
series of transactions on a pro forma basis (and treating, for purposes of this
clause (d) and clause (e) below, any Debt that becomes, or is anticipated to
become, an obligation of the Surviving Person, Warnaco or any Guarantor as a
result of such transaction or series of transactions as having been Incurred by
the Surviving Person, Warnaco or such Guarantor at the time of such transaction
or series of transactions), no Default or Event of Default shall have occurred
and be continuing;
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(e) immediately after giving effect to such transaction or
series of transactions on a pro forma basis, Holdco would be able to Incur at
least $1.00 of additional Debt under clause (1) of the first paragraph of
Section 4.09; and
(f) Warnaco shall deliver, or cause to be delivered, to the
Trustee an Officers' Certificate and an Opinion of Counsel of Warnaco, each
stating that such transaction or series of transactions and such Note Guaranty,
if any, in respect thereto comply with this Section 5.01and that all conditions
precedent herein provided for relating to such transaction or series of
transactions have been satisfied.
The foregoing provisions (other than clause (d)) shall not
apply to any transaction or series of transactions which constitute an Asset
Sale if Holdco has complied with the covenant described under Section 4.12.
Notwithstanding the preceding clause (e), any Restricted
Subsidiary of Holdco may consolidate with, merge into or transfer all or
substantially all its Property to Warnaco or a Subsidiary Guarantor.
Section 5.02. Successor Corporation Substituted.
---------------------------------
The Surviving Person shall succeed to, and be substituted for,
and may exercise every right and power of Holdco and Warnaco under this
Indenture (or of the Guarantor under the Note Guaranty, as the case may be), but
the predecessor of Holdco or Warnaco, as the case may be, in the case of:
(a) a sale, transfer, assignment, conveyance or other
disposition (unless such sale, transfer, assignment, conveyance or other
disposition is of all the assets of Holdco or Warnaco as an entirety or
substantially as an entirety), or
(b) a lease,
shall not be released from any of the obligations or covenants under this
Indenture, including with respect to the payment of the Notes.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
-----------------
(a) Each of the following constitutes an "Event of Default"
with respect to the Notes:
(1) failure to make the payment of any interest, including Special
Interest, if any, on the Notes when the same becomes due and payable, and
such failure continues for a period of 30 days;
(2) failure to make the payment of any principal of, or premium, if
any, on, any of the Notes when the same becomes due and payable at its
Stated Maturity, upon acceleration, redemption, optional redemption,
required repurchase or otherwise;
(3) failure to comply with the covenant described under Section
5.01;
(4) failure to comply with any other covenant or agreement in the
Notes or in this Indenture (other than a failure that is the subject of
the foregoing clause (1), (2) or (3)), and such failure continues for 30
days after written notice is given to Warnaco as provided below;
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(5) a default under any Debt in an aggregate amount in excess of
$25.0 million by Holdco or any Restricted Subsidiary that results in
acceleration of the maturity of such Debt, or failure to pay any such
Debt within any applicable grace period at maturity;
(6) any judgment or judgments for the payment of money in an
aggregate amount in excess of $25.0 million (net of applicable insurance,
if any, that is not subject to any reservation of rights by the insurer)
that shall be rendered against Holdco or any Restricted Subsidiaries and
that shall not be waived, satisfied, vacated, bonded or discharged for
any period of 60 consecutive days during which a stay of enforcement
shall not be in effect;
(7) the Note Guaranty of Holdco or any Note Guaranty of a
Significant Subsidiary or a group of Subsidiary Guarantors that, taken as
a whole, would constitute a Significant Subsidiary, ceases to be in full
force and effect (other than in accordance with the terms of such Note
Guaranty), or Holdco, any Guarantor that is a Significant Subsidiary or a
group of Subsidiary Guarantors that, taken together, would constitute a
Significant Subsidiary denies or disaffirms its obligations under its
Note Guaranty; and
(8) any security interest securing the notes shall, at any time,
cease to be in full force and effect for any reason other than the
satisfaction in full of all obligations under this Indenture and
discharge of this Indenture, the release of the security interest in
accordance with its terms or the release of the Lien securing such other
Debt as gave rise to the granting of the security interest securing the
notes (the "other lien"), or any security interest created thereunder
shall be declared invalid or unenforceable or Warnaco or any Guarantor
shall assert, in any pleading in any court of competent jurisdiction,
that any such security interest is invalid or unenforceable, except that
no Event of Default under this clause (8) shall occur to the extent that
(a) the other lien also ceases to be in full force and effect, (b) the
other lien shall be declared invalid or unenforceable or (c) Warnaco or
the applicable Guarantor shall assert that the other lien is invalid or
unenforceable.
(9) Holdco, Warnaco, or any Significant Subsidiary, or any group of
Holdco's Subsidiaries that, when taken together, would constitute a
Significant Subsidiary, pursuant to or within the meaning of any
Bankruptcy Law:
(a) commences a voluntary case or gives notice of
intention to make a proposal under any Bankruptcy Law;
(b) consents to the entry of an order for relief
against it in an involuntary case or consents to its
dissolution or winding up;
(c) consents to the appointment of a receiver,
interim receiver, receiver and manager, liquidator, trustee or
custodian of it or for all or substantially all of its
property;
(d) makes a general assignment for the benefit of its
creditors;
(e) admits in writing its inability to pay its debts
as they become due or otherwise admits its insolvency; or
seeks a stay of proceedings against it or proposes or gives notice
or intention to propose a compromise, arrangement or reorganization of
any of its debts or obligations under any Bankruptcy Law; and
(10) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
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(a) is for relief against Holdco, Warnaco or any
Significant Subsidiary, or any group of Holdco's Subsidiaries
that, when taken together, would constitute a Significant
Subsidiary, in an involuntary case; or
(b) appoints a receiver, interim receiver, receiver
and manager, liquidator, trustee or custodian of Holdco,
Warnaco or any Significant Subsidiary, any group of Holdco's
Subsidiaries that, when taken together, would constitute a
Significant Subsidiary, or for all or substantially all of the
property of Holdco, Warnaco or any Significant Subsidiaries,
any group of Holdco's Subsidiaries that, when taken together,
would constitute a Significant Subsidiary;
(c) orders the liquidation of Holdco, Warnaco or any
of Holdco's Significant Subsidiaries, any group of Holdco's
Subsidiaries that, when taken together, would constitute a
Significant Subsidiary; or
(d) orders the presentation of any plan or
arrangement, compromise or reorganization of Holdco, Warnaco
or any Significant Subsidiaries or any group of Holdco's
Subsidiaries that, when taken together, would constitute a
Significant Subsidiary;
and such order or decree remains unstayed and in effect for 60
consecutive days.
(b) A Default under clause (a)(4) is not an Event of Default
until the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Notes and any Additional Notes then outstanding notify Warnaco of
the Default and Warnaco does not cause such Default to be cured within the time
specified after receipt of such notice. Such notice must specify the Default,
demand that it be remedied and state that such notice is a "Notice of Default."
(c) Warnaco shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice Warnaco of any event that with the giving
of notice or the lapse of time or both would become an Event of Default, its
status and what action Warnaco is taking or proposes to take with respect
thereto, provided, however, that if the event, giving rise to the requirement to
deliver such notice is cured, the failure to give such notice shall not, in and
of itself, constitute an Event of Default.
Section 6.02. Acceleration.
------------
If any Event of Default (other than those of the type
described in Section 6.01(a)(9) or (10)) occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of outstanding
Notes may, declare the principal of all the Notes, together with all accrued and
unpaid interest, and premium, if any, to be due and payable by notice in writing
to Warnaco and the Trustee specifying the respective Event of Default and that
such notice is a notice of acceleration (the "Acceleration Notice"), and the
same shall become immediately due and payable.
In the case of an Event of Default specified in Section
6.01(a)(9) or (10), all outstanding Notes shall become due and payable
immediately without declaration or other act on the part of the Trustee or the
Holders. Holders may not enforce this Indenture or the Notes except as provided
in this Indenture.
At any time after a declaration of acceleration with respect
to the Notes, the Holders of a majority in principal amount of the Notes then
outstanding (by notice to the Trustee) may rescind and cancel such declaration
and its consequences if:
(a) the rescission would not conflict with any judgment or
decree of a court of competent jurisdiction;
66
(b) all existing Events of Default have been cured or waived
except nonpayment of principal of or interest on the Notes that has become due
solely by reason of such declaration of acceleration;
(c) to the extent the payment of such interest is lawful,
interest (at the same rate specified in the Notes) on overdue installments of
interest and overdue payments of principal which has become due otherwise than
by such declaration of acceleration has been paid;
(d) Warnaco has paid the Trustee its reasonable compensation
and reimbursed the Trustee for its reasonable expenses, disbursements and
advances; and
(e) in the event of the cure or waiver of an Event of Default
of the type described in Section 6.01(a)(9) or (10), the Trustee has received an
Officers' Certificate and Opinion of Counsel that such Event of Default has been
cured or waived.
If an Event of Default occurs by reason of any willful action
or inaction taken or not taken by Warnaco or on Warnaco's behalf with the
intention of avoiding the premium required upon a redemption of the Notes under
Section 3.07(a) or Section 3.07(c), then the premium specified in Section
3.07(a) or Section 3.07(c), as applicable, shall also become immediately due and
payable to the extent permitted by law upon acceleration of the Notes.
Section 6.03. Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
shall be cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
-----------------------
The Holders of at least a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee may on behalf of
the Holders of all of the Notes waive any existing Default or Event of Default,
and its consequences, except a continuing Default or Event of Default (i) in the
payment of the principal of, premium, if any, or interest on, the Notes and (ii)
in respect of a covenant or provision which under this Indenture cannot be
modified or amended without the consent of the Holder of each Note affected by
such modification or amendment. Upon any waiver of a Default or Event of Default
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed cured for every purpose of this Indenture, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
Section 6.05. Control by Majority.
-------------------
Subject to Section 7.01, Section 7.02(f) (including the
Trustee's receipt of the security or indemnification described therein) and
Section 7.07, in case an Event of Default shall occur and be continuing, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee with respect to the Notes.
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Section 6.06. Limitation on Suits.
-------------------
No Holder shall have any right to institute any proceeding
with respect to this Indenture, or for the appointment of a receiver or trustee,
or for any remedy thereunder, unless:
(a) such Holder has previously given to the Trustee written
notice of a continuing Event of Default or the Trustee receives the notice from
Warnaco;
(b) Holders of at least 25% in aggregate principal amount of
the Notes then outstanding have made written request to the Trustee to pursue a
remedy;
(c) A Holder or Holders offer, and, if requested, provide to
the Trustee indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee shall have failed to comply with the request
within 60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during the 60-day period the Holders of a majority in
principal amount of the Notes then outstanding shall not have given the Trustee
a direction inconsistent with the request.
The preceding limitations shall not apply to a suit instituted
by a Holder for enforcement of payment of principal of, and premium, if any, or
interest on, a Note on or after the respective due dates for such payments set
forth in such Note.
A Holder may not use this Indenture to affect, disturb or
prejudice the rights of another Holder or to obtain a preference or priority
over another Holder.
Section 6.07. Rights of Holders to Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture
(including Section 6.06), the right of any Holder to receive payment of
principal, premium, if any, and interest on the Notes held by such Holder, on or
after the respective due dates expressed in the Notes (including in connection
with an offer to purchase), or to bring suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder.
Section 6.08. Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.01(a)(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against Warnaco for the whole amount
of principal of, premium, if any, and interest then due and owing (together with
interest on overdue principal and, to the extent lawful, interest) and such
further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
--------------------------------
The Trustee shall be authorized to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders allowed in any judicial proceedings relative to Warnaco (or any
other obligor upon the Notes), its creditors or its property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to
68
the Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07. To the extent that the payment of
any such compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel, and any other amounts due the Trustee under Section 7.07
out of the estate in any such proceeding, shall be denied for any reason,
payment of the same shall be secured by a Lien on, and shall be paid out of, any
and all distributions, moneys, securities and any other properties that the
Holders may be entitled to receive in such proceeding whether in liquidation or
under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or
to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding.
Section 6.10. Priorities.
----------
If the Trustee collects any money pursuant to this Article 6,
it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07, including payment of all compensation, expenses and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes
for principal, premium, if any, and interest ratably, without preference or
priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, if any, and interest, respectively; and
Third: to Warnaco or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
---------------------
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in such suit of an undertaking to pay the costs of such suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section 6.11 shall not apply to a suit by the Trustee, a suit by
a Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
-----------------
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Trustee need
perform only those duties that are specifically set forth in this
Indenture and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to
the requirements of this Indenture (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05.
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee shall be
under no obligation to exercise any of its rights and powers under this
Indenture at the request of any Holders, unless such Holders shall have offered
to the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Warnaco. Money
held in trust by the Trustee need not be segregated from other funds except to
the extent required by law.
Section 7.02. Rights of Trustee.
-----------------
Subject to TIA 'SS' 315:
(a) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in any such
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
(c) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
70
(d) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from Warnaco shall be sufficient if
signed by an Officer of Warnaco.
(e) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in compliance with such request or
direction.
(f) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Responsible Officer of the Trustee has
actual knowledge thereof or unless written notice of any event which is in fact
such a Default or Event of Default is received by a Responsible Officer of the
Trustee at the Corporate Trust Office of the Trustee from Warnaco or the Holders
of 25% in aggregate principal amount of the outstanding Notes, and such notice
references the specific Default or Event of Default, the Notes and this
Indenture.
(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its power and duties hereunder.
(h) The Trustee shall have no duty to inquire as to the
performance of Warnaco's covenants herein.
(i) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 7.03. Individual Rights of Trustee.
----------------------------
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with Warnaco or any
Affiliate of Warnaco with the same rights it would have if it were not Trustee.
However, in the event that the Trustee acquires any conflicting interest it must
eliminate such conflict within 90 days, apply to the SEC for permission to
continue as Trustee or resign. Any Agent may do the same with like rights and
duties. The Trustee shall also be subject to Sections 7.10 and 7.11.
Section 7.04. Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for Warnaco's use of the proceeds from the Notes or any
money paid to Warnaco upon the Warnaco's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
------------------
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders.
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Section 7.06. Reports by Trustee to Holders.
-----------------------------
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, and for so long as Notes remain
outstanding, the Trustee shall mail to the Holders a brief report dated as of
such reporting date that complies with TIA 'SS'313(a) (but if no event described
in TIA 'SS'313(a) has occurred within the twelve months preceding the reporting
date, no report need be transmitted). The Trustee also shall comply with TIA
'SS'313(b)(2). The Trustee shall also transmit by mail all reports as required
by TIA 'SS'313(c).
A copy of each report at the time of its mailing to the
Holders shall be mailed to Warnaco and filed with the SEC and each stock
exchange on which the Notes are listed in accordance with TIA 'SS'313(d).
Warnaco shall promptly notify the Trustee when the Notes are listed on any
stock exchange and any delisting thereof.
Section 7.07. Compensation and Indemnity.
--------------------------
Warnaco shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. Warnaco shall reimburse the Trustee promptly upon
request for all reasonable disbursements, advances and expenses incurred or made
by it in addition to the compensation for its services. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.
Warnaco shall indemnify the Trustee (in its capacity as
Trustee) or any predecessor Trustee (in its capacity as Trustee) against any and
all losses, claims, damages, penalties, fines, liabilities or expenses,
including incidental and out-of-pocket expenses and reasonable attorneys fees
(for purposes of this Article 7, "losses") incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
Warnaco (including this Section 7.07) and defending itself against any claim
(whether asserted by Warnaco or any Holder or any other Person) or liability in
connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent such losses may be attributable to its
negligence or bad faith. The Trustee shall notify Warnaco promptly of any claim
for which it may seek indemnity. Failure by the Trustee to so notify Warnaco
shall not relieve Warnaco of its obligations under this Section 7.07, to the
extent Warnaco has been prejudiced thereby. Warnaco shall defend the claim, and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel if the Trustee has been reasonably advised by counsel that there may be
one or more legal defenses available to it that are different from or additional
to those available to Warnaco and in the reasonable judgment of such counsel it
is advisable for the Trustee to engage separate counsel, and Warnaco shall pay
the reasonable fees and expenses of such counsel. Warnaco need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld. Warnaco need not reimburse any expense or indemnify against any loss
incurred by the Trustee through the Trustee's own negligence or bad faith.
The obligations of Warnaco under this Section 7.07 shall
survive the satisfaction and discharge of this Indenture, the resignation or
removal of the Trustee and payment in full of the Notes through the expiration
of the applicable statute of limitations.
To secure Warnaco's payment obligations in this Section, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal, premium,
if any, and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(a)(9) or (10) occurs, the expenses
and the compensation for the services (including the fees
72
and expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.08. Replacement of Trustee.
----------------------
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time upon 30 days'
prior notice to Warnaco and be discharged from the trust hereby created by so
notifying Warnaco. The Holders of a majority in aggregate principal amount of
the then outstanding Notes may remove the Trustee by so notifying the Trustee
and Warnaco in writing. Warnaco may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), Warnaco shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by Warnaco.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee, Warnaco,
or the Holders of at least 10% in aggregate principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee, after written request by any Holder who has
been a Holder for at least six months, fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Warnaco. Thereupon, the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. Subject to the Lien provided for in Section 7.07, the retiring Trustee
shall promptly transfer all property held by it as Trustee to the successor
Trustee provided, however; that all sums owing to the Trustee hereunder shall
have been paid. Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, Warnaco's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
In the case of an appointment hereunder of a separate or
successor Trustee with respect to the Notes, Warnaco, the Guarantors, any
retiring Trustee and each successor or separate Trustee with respect to the
Notes shall execute and deliver an Indenture supplemental hereto (1) which shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of any retiring Trustee with
respect to the Notes as to which any such retiring Trustee is not retiring shall
continue to be vested in such retiring Trustee and (2) that shall add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder
73
by more than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustee co-trustees of the same
trust and that each such separate, retiring or successor Trustee shall be
Trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any such other Trustee.
Section 7.09. Successor Trustee by Merger, etc.
---------------------------------
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking association, the successor corporation or banking
association without any further act shall, if such successor corporation or
banking association is otherwise eligible hereunder, be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
-----------------------------
There shall at all times be a Trustee hereunder that is a
Person organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50.0 million (or a wholly-owned Subsidiary of a bank or trust company, or
of a bank holding company, the principal Subsidiary of which is a bank or trust
company having a combined capital and surplus of at least $50.0 million) as set
forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA 'SS'310(a)(1), (2) and (5). The Trustee is subject to TIA
'SS'310(b).
Section 7.11. Preferential Collection of Claims Against Company.
-------------------------------------------------
The Trustee is subject to TIA 'SS'311(a), excluding any
creditor relationship listed in TIA 'SS'311(b). A Trustee who has resigned or
been removed shall be subject to TIA 'SS'311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
--------------------------------------------------------
Warnaco may, at its option and at any time, elect to have
either Section 8.02 or 8.03 be applied to all outstanding Notes upon compliance
with the conditions set forth below in this Article 8.
Section 8.02. Legal Defeasance and Discharge.
------------------------------
Upon Warnaco's exercise under Section 8.01 of the option
applicable to this Section 8.02, Holdco and Warnaco shall, subject to the
satisfaction of the conditions set forth in Section 8.04, be deemed to have been
discharged from their obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance") and each Guarantor shall be released from all of its obligations
under its guarantee. For this purpose, Legal Defeasance means that Holdco and
Warnaco shall be deemed to have paid and discharged the entire Debt represented
by the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.05 and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of Warnaco, shall execute proper instruments acknowledging
the same), except for the following provisions which shall survive until
otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04, and as more fully set
74
forth in such Section, payments in respect of the principal of, premium, if
any, and interest and Special Interest, if any, on such Notes when such payments
are due, (b) Holdco and Warnaco's obligations with respect to such Notes under
Article 2 and Section 4.01 and Section 4.02, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and Warnaco's obligations in
connection therewith and (d) this Article 8. If Warnaco exercises under
Section 8.01 the option applicable to this Section 8.02, subject to the
satisfaction of the conditions set forth in Section 8.04, payment of the
Notes may not be accelerated because of an Event of Default. Subject to
compliance with this Article 8, Warnaco may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section
8.03.
Section 8.03. Covenant Defeasance.
-------------------
Upon Warnaco's exercise under Section 8.01 of the option
applicable to this Section 8.03, Holdco and Warnaco shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.05, 4.06 and
4.08 through 4.19, and the operation of subsection (e) of the first and second
paragraphs of Section 5.01, with respect to the outstanding Notes on and after
the date the conditions set forth in Section 8.04 are satisfied (hereinafter,
"Covenant Defeasance") and each Guarantor shall be released from all of its
obligations under its Note Guaranty with respect to such covenants in connection
with such outstanding Notes, and the Notes shall thereafter be deemed not
"outstanding" for the purposes of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder (it being understood that such Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Notes, Holdco, Warnaco and the Guarantors may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section 6.01, but, except as specified above, the remainder of
this Indenture and such Notes shall be unaffected thereby. If Warnaco exercises
under Section 8.01 the option applicable to this Section 8.03, subject to the
satisfaction of the conditions set forth in Section 8.04, payment of the Notes
may not be accelerated because of an Event of Default specified in clauses
(a)(4) (with respect to the covenants contained in Sections 4.05, 4.06 and 4.08
through 4.19), (5), (6), (7), (8), (9) and (10) (but in the case of clauses (9)
and (10) of Section 6.01, with respect to Significant Subsidiaries only or
because of a failure of Warnaco to comply with subsection (e) of the first
paragraph of Section 5.01).
Section 8.04. Conditions to Legal or Covenant Defeasance.
------------------------------------------
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes.
The Legal Defeasance or Covenant Defeasance may be exercised
only if:
(a) Warnaco irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal of, premium,
if any, and interest, including Special Interest, if any, on, the Notes to
maturity or redemption, as the case may be;
(b) Warnaco delivers to the Trustee a certificate from a
nationally recognized firm of independent certified public accountants
expressing their opinion that the payments of principal, premium, if any, and
interest, including Special Interest, if any, when due and without reinvestment
on the deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal, premium, if any, and interest, including Special
Interest, if any, when due on all the Notes to be defeased to maturity or
redemption, as the case may be;
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(c) 123 days pass after the deposit is made and during the
123-day period no Default described in clauses (a) (9) or (10) under Section
6.01 occurs with respect to Warnaco or any other Person making such deposit
which is continuing at the end of the period;
(d) no Default or Event of Default has occurred and is
continuing on the date of such deposit and after giving effect thereto;
(e) such deposit does not constitute a default under any other
agreement or instrument binding on Warnaco;
(f) Warnaco delivers to the Trustee an Opinion of Counsel to
the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company Act of
1940;
(g) in the case of the Legal Defeasance option, Warnaco
delivers to the Trustee an Opinion of Counsel stating that:
(i) Warnaco has received from the Internal Revenue
Service a ruling, or
(ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, to the effect, in
either case, that, and based thereon such Opinion of Counsel shall
confirm that, the Holders will not recognize income, gain or loss for
Federal income tax purposes as a result of such defeasance and will be
subject to Federal income tax on the same amounts, in the same manner
and at the same time as would have been the case if such defeasance
has not occurred;
(h) in the case of the Covenant Defeasance option, Warnaco
delivers to the Trustee an Opinion of Counsel to the effect that the Holders
will not recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would have been
the case if such Covenant Defeasance had not occurred; and
(i) Warnaco delivers to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Notes have been complied with as required by
this Indenture.
Section 8.05. Deposited Cash and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
- ------------------------------------------------------------------------------
Subject to Section 8.06, all cash and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying Trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 in respect of the outstanding Notes shall be
held in trust and applied by the Trustee, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including Warnaco acting as Paying Agent) as the Trustee may
determine, to the Holders of all sums due and to become due thereon in respect
of principal, premium, if any, and interest but such cash and securities need
not be segregated from other funds except to the extent required by law.
Warnaco shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
76
Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to Warnaco from time to time upon the request
of Warnaco any cash or non-callable Government Securities held by it as provided
in Section 8.04 which, in the opinion of a nationally recognized firm of
independent certified public accountants of recognized international standing
expressed in a written certification thereof delivered to the Trustee (which may
be the certification delivered under Section 8.04(a)), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
--------------------
The Trustee shall promptly, and in any event, no later than
five (5) Business Days, pay to Warnaco after request therefor any excess money
held with respect to the Notes at such time in excess of amounts required to pay
any of the Warnaco's Obligations then owing with respect to the Notes.
Any cash or non-callable Government Securities deposited with
the Trustee or any Paying Agent, or then held by Warnaco, in trust for the
payment of the principal, premium, if any, or interest on any Note and remaining
unclaimed for one year after such principal, premium, if any, or interest has
become due and payable shall be paid to Warnaco on its request or (if then held
by Warnaco) shall be discharged from such trust; and the Holder shall
thereafter, as an unsecured creditor, look only to Warnaco for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such cash
and securities, and all liability of Warnaco as Trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of Warnaco cause to be
published once, in The New York Times and The Wall Street Journal (national
edition), notice that such cash and securities remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date of
such notification or publication, any unclaimed balance of such cash and
securities then remaining shall be repaid to Warnaco.
Section 8.07. Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any cash or
non-callable Government Securities in accordance with Section 8.02 or 8.03, as
the case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
Warnaco's obligations under this Indenture and the Notes shall be revived and
reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03
until such time as the Trustee or Paying Agent is permitted to apply all such
cash and securities in accordance with Section 8.02 or 8.03, as the case may be;
provided, however, that, if Warnaco makes any payment of principal of, premium,
if any, or interest on any Note following the reinstatement of its obligations,
Warnaco shall be subrogated to the rights of the Holders to receive such payment
from the cash and securities held by the Trustee or Paying Agent.
ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
-----------------------------------
Notwithstanding Section 9.02 of this Indenture, Warnaco, the
Guarantors and the Trustee may amend or supplement this Indenture or the Notes
without the consent of any Holder to:
(a) cure any ambiguity, omission, defect or inconsistency;
(b) provide for the assumption by a Surviving Person of the
obligations of Holdco and Warnaco under this Indenture;
77
(c) provide for uncertificated Notes in addition to or in
place of certificated Notes (provided that the uncertificated Notes are issued
in registered form for purposes of Section 163(f) and all other applicable
sections of the Code, or, with respect to Section 163(f), in a manner such that
the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);
(d) add additional Guarantors with respect to the Notes or
release Guarantors from Note Guaranties as provided or permitted by the terms of
this Indenture;
(e) secure the Notes, release all or any portion of any
security interest, add to the covenants of Holdco or Warnaco for the benefit of
the Holders or surrender any right or power conferred upon Holdco or Warnaco;
(f) make any change that does not adversely affect the rights
of any Holder;
(g) comply with any requirement of the SEC in connection with
the qualification of this Indenture under the TIA; or
(h) provide for the issuance of Additional Notes in accordance
with this Indenture.
Section 9.02. With Consent of Holders of Notes.
--------------------------------
Except as provided below in this Section 9.02, Warnaco, the
Guarantors and the Trustee may amend or supplement this Indenture and the Notes
with the consent of the Holders of at least a majority in aggregate principal
amount of the Notes, including Additional Notes, if any, then outstanding voting
as a single class (including consents obtained in connection with a purchase of
or tender offer or exchange offer for the Notes), and, subject to Sections 6.04
and 6.07, any existing Default or Event of Default (except a continuing Default
or Event of Default (i) in the payment of principal, premium, if any, interest,
including Special Interest, if any, on the Notes and (ii) in respect of a
covenant or provision which under this Indenture cannot be amended without the
consent of each Holder of an outstanding Note) or compliance with any provision
of this Indenture or the Notes may be waived with the consent of the Holders of
at least a majority in aggregate principal amount of the Notes, including
Additional Notes, if any, then outstanding voting as a single class (including
consents obtained in connection with a purchase of or tender offer or exchange
offer for the Notes).
Without the consent of each Holder, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the amount of Notes whose Holders must consent to
an amendment or waiver;
(b) reduce the rate of, or extend the time for payment of,
interest, including Special Interest, if any, on, any Note;
(c) reduce the principal of, or extend the Stated Maturity of,
any Note;
(d) make any Note payable in money other than that stated in
the Note;
(e) impair the right of any Holder to receive payment of
principal of, premium, if any, and interest, including Special Interest, if any,
on, such Holder's Notes on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such Holder's Notes or
any Note Guaranty;
(f) subordinate the Notes or any Note Guaranty to any other
obligation of Warnaco or the applicable Guarantor;
78
(g) release any security interest that may have been granted
in favor of the Holders other than pursuant to the terms of such security
interest;
(h) reduce the premium payable upon the redemption of any Note
or change the time at which any Note may be redeemed, as described under Section
3.07;
(i) reduce the premium payable upon a Change of Control or, at
any time after a Change of Control has occurred, change the time at which the
Change of Control Offer relating thereto must be made or at which the Notes must
be repurchased pursuant to such Change of Control Offer;
(j) at any time after Warnaco is obligated to make a
Prepayment Offer with the Excess Proceeds from Asset Sales, change the time at
which such Prepayment Offer must be made or at which the Notes must be
repurchased pursuant thereto; or
(k) make any change in any Note Guaranty that would adversely
affect the rights of Holders to receive payments under the Note Guaranty other
than any release of a Note Guaranty in accordance with the provisions of this
Indenture.
Warnaco may, but shall not be obligated to, fix a record date
for the purpose of determining the Persons entitled to consent to any
supplemental indenture. If a record date is fixed, the Holders on such record
date, or their duly designated proxies, and only such Persons, shall be entitled
to consent to such supplemental indenture, whether or not such Holders remain
Holders after such record date; provided that unless such consent shall have
become effective by virtue of the requisite percentage having been obtained
prior to the date which is 120 days after such record date, any such consent
previously given shall automatically and without further action by any Holder be
cancelled and of no further effect.
The consent of the Holders is not necessary under this Section
9.02 to approve the particular form of any proposed amendment or waive. It is
sufficient if such consent approves the substance of the proposed amendment or
waiver.
After an amendment, supplement or waiver under this Section
9.02 becomes effective, Warnaco shall mail to the Holder of each registered
Holder at such Holder's address appearing in the Security Register a notice
briefly describing the amendment, supplement or waiver. However, the failure to
give such notice to all Holders,, or any defect therein will not impair or
affect the validity of the amended or supplemental indenture or waiver.
Section 9.03. Compliance with Trust Indenture Act.
-----------------------------------
Every amendment or supplement to this Indenture or the Notes
shall be set forth in an amended or supplemental indenture that complies with
the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents.
---------------------------------
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion thereof that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder or subsequent Holder may revoke the
consent as to its Note or portion thereof if the Trustee receives written notice
of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver shall become effective in
accordance with its terms and thereafter shall bind every Holder.
79
Section 9.05. Notation on or Exchange of Notes.
--------------------------------
The Trustee may place an appropriate notation about an
amendment, supplement or waiver on any Note thereafter authenticated. Warnaco in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
Section 9.06. Trustee to Sign Amendments, etc.
--------------------------------
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
None of Warnaco nor any Guarantor may sign an amendment or supplemental
indenture until its board of directors (or committee serving a similar function)
approves it. In executing any amended or supplemental indenture, the Trustee
shall be entitled to receive and (subject to Section 7.01) shall be fully
protected in relying upon an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and that such amended or supplemental
indenture is the legal, valid and binding obligations of Warnaco enforceable
against it in accordance with its terms, subject to customary exceptions and
that such amended or supplemental indenture complies with the provisions hereof
(including Section 9.03).
ARTICLE 10.
GUARANTEES
Section 10.01. Guarantee.
---------
Subject to this Article 10, for good and valuable
consideration, the Guarantors hereby unconditionally guarantee to each Holder of
a Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns (a) the due and punctual payment of the principal of,
premium, if any, and interest on the Notes, subject to any applicable grace
period, whether at Stated Maturity, by acceleration, redemption or otherwise,
the due and punctual payment of interest on the overdue principal and premium,
if any, and to the extent permitted by law, interest, and the due and punctual
performance of all other obligations of Warnaco to the Holders or the Trustee
under this Indenture, the Registration Rights Agreement or any other agreement
with or for the benefit of the Holder or the Trustee, all in accordance with the
terms hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same shall be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at Stated Maturity, by acceleration pursuant to
Section 6.02, redemption or otherwise. Failing payment when due of any amount so
guaranteed or any performance so guaranteed for whatever reason, the Guarantors
shall be jointly and severally obligated to pay the same immediately. Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
Each Guarantor hereby agrees that its obligations with regard
to its guarantee shall be joint and several, unconditional, irrespective of the
validity or enforceability of the Notes or the obligations of Warnaco under this
Indenture, the absence of any action to enforce the same, the recovery of any
judgment against Warnaco or any other obligor with respect to this Indenture,
the Notes or the Obligations of Warnaco under this Indenture or the Notes, any
action to enforce the same or any other circumstances (other than complete
performance) which might otherwise constitute a legal or equitable discharge or
defense of a Guarantor. Each Guarantor further, to the extent permitted by law,
waives and relinquishes all claims, rights and remedies accorded by applicable
law to guarantors and agrees not to assert or take advantage of any such claims,
rights or remedies, including, but not limited to: (a) any right to require any
80
of the Trustee, the Holders or Warnaco (each a "Benefited Party"), as a
condition of payment or performance by such Guarantor, to (1) proceed against
Warnaco, any other guarantor (including any other Guarantor) of the Obligations
under the guarantees or any other Person, (2) proceed against or exhaust any
security held from Warnaco, any such other guarantor or any other Person, (3)
proceed against or have resort to any balance of any deposit account or credit
on the books of any Benefited Party in favor of Warnaco or any other Person, or
(4) pursue any other remedy in the power of any Benefited Party whatsoever; (b)
any defense arising by reason of the incapacity, lack of authority or any
disability or other defense of Warnaco including any defense based on or arising
out of the lack of validity or the unenforceability of the Obligations under the
guarantees or any agreement or instrument relating thereto or by reason of the
cessation of the liability of Warnaco from any cause other than payment in full
of the Obligations under the guarantees; (c) any defense based upon any statute
or rule of law which provides that the obligation of a surety must be neither
larger in amount nor in other respects more burdensome than that of the
principal; (d) any defense based upon any Benefited Party's errors or omissions
in the administration of the Obligations under the guarantees, except behavior
which amounts to bad faith; (e)(1) any principles or provisions of law,
statutory or otherwise, which are or might be in conflict with the terms of the
guarantees and any legal or equitable discharge of such Guarantor's obligations
hereunder, (2) the benefit of any statute of limitations affecting such
Guarantor's liability hereunder or the enforcement hereof, (3) any rights to
set-offs, recoupments and counterclaims and (4) promptness, diligence and any
requirement that any Benefited Party protect, secure, perfect or insure any
security interest or lien or any property subject thereto; (f) notices, demands,
presentations, protests, notices of protest, notices of dishonor and notices of
any action or inaction, including acceptance of the guarantees, notices of
Default under the Notes or any agreement or instrument related thereto, notices
of any renewal, extension or modification of the Obligations under the
guarantees or any agreement related thereto, and notices of any extension of
credit to Warnaco and any right to consent to any thereof; (g) to the extent
permitted under applicable law, the benefits of any "One Action" rule and (h)
any defenses or benefits that may be derived from or afforded by law which limit
the liability of or exonerate guarantors or sureties, or which may conflict with
the terms of the guarantees. Except to the extent expressly provided herein,
including Sections 8.02, 8.03 and 10.05, each Guarantor hereby covenants that
its guarantee shall not be discharged except by complete performance of the
obligations contained in its guarantee and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to Warnaco, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either Warnaco or the
Guarantors, any amount paid by either to the Trustee or such Holder, this
guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.02 for
the purposes of this guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such obligations as provided in Section 6.02, such obligations (whether or not
due and payable) shall forthwith become due and payable by the Guarantors for
the purpose of this guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the guarantee.
Section 10.02. Limitation on Guarantor Liability.
---------------------------------
(a) Each Guarantor, and by its acceptance of Notes, each
Holder, hereby confirms that it is the intention of all such parties that the
guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any guarantee. To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantors hereby
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irrevocably agree that each Guarantor's liability shall be that amount from time
to time equal to the aggregate liability of such Guarantor under the guarantee,
but shall be limited to the lesser of (a) the aggregate amount of Warnaco's
obligations under the Notes and this Indenture or (b) the amount, if any, which
would not have (1) rendered the Guarantor "insolvent" (as such term is defined
in the Federal Bankruptcy Code and in the Debtor and Creditor Law of the State
of New York) or (2) left it with unreasonably small capital at the time its
guarantee with respect to the Notes was entered into, after giving effect to the
incurrence of existing Debt immediately before such time; provided, however, it
shall be a presumption in any lawsuit or proceeding in which a Guarantor is a
party that the amount guaranteed pursuant to the guarantee with respect to the
Notes is the amount described in clause (a) above unless any creditor, or
representative of creditors of the Guarantor, or debtor in possession or Trustee
in bankruptcy of the Guarantor, otherwise proves in a lawsuit that the aggregate
liability of the Guarantor is limited to the amount described in clause (b).
(b) In making any determination as to the solvency or
sufficiency of capital of a Guarantor in accordance with the proviso of Section
10.2(a), the right of each Guarantor to contribution from other Guarantors and
any other rights such Guarantor may have, contractual or otherwise, shall be
taken into account.
Section 10.03. Execution and Delivery of Guarantee.
-----------------------------------
To evidence its guarantee set forth in Section 10.01, each
Guarantor hereby agrees that a notation of such guarantee in substantially the
form included in Exhibit E attached hereto shall be endorsed by an Officer of
such Guarantor on each Note authenticated and delivered by the Trustee and that
this Indenture shall be executed on behalf of such Guarantor by its President or
one of its Vice Presidents.
Each Guarantor hereby agrees that its guarantee set forth in
Section 10.01 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such guarantee.
If an Officer whose signature is on this Indenture or on the
guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a guarantee is endorsed, the guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the guarantee
set forth in this Indenture on behalf of each Guarantor.
Holdco and Warnaco each hereby agrees that it shall cause each
Person that becomes obligated to provide a Note Guaranty pursuant to Section
4.19 to execute a supplemental indenture in form and substance reasonably
satisfactory to the Trustee, pursuant to which such Person provides the
guarantee set forth in this Article 10 and otherwise assumes the obligations and
accepts the rights of a Guarantor under this Indenture, in each case with the
same effect and to the same extent as if such Person had been named herein as a
Guarantor. Holdco and Warnaco each also hereby agrees to cause each such new
Guarantor to evidence its guarantee by endorsing a notation of such guarantee on
each Note as provided in this Section 10.03.
Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.
--------------------------------------------------
Except as otherwise provided in Section 10.05, no Guarantor
may consolidate with or merge with or into (whether or not such Guarantor is the
surviving person) another Person whether or not affiliated with such Guarantor
unless:
(a) subject to Section 10.05, the Person formed by or
surviving any such consolidation or merger (if other than a Guarantor or
Warnaco) unconditionally assumes all the obligations of such Guarantor, pursuant
to a supplemental indenture in form and substance reasonably satisfactory to
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the Trustee, under this Indenture, the guarantee and any Registration Rights
Agreements on the terms set forth herein or therein; and
(b) Guarantor complies with the requirements of Article 5.
In case of any such consolidation or merger and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the
guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by Guarantor,
such successor Person shall succeed to and be substituted for Guarantor with the
same effect as if it had been named herein as a Guarantor. Such successor Person
thereupon may cause to be signed any or all of the guarantees to be endorsed
upon all of the Notes issuable hereunder which theretofore shall not have been
signed by Warnaco and delivered to the Trustee. All the guarantees so issued
shall in all respects have the same legal rank and benefit under this Indenture
as the guarantees theretofore and thereafter issued in accordance with the terms
of this Indenture as though all of such guarantees had been issued at the date
of the execution hereof.
Except as set forth in Articles 4 and 5, and notwithstanding
clauses (a) and (b) above, nothing contained in this Indenture or in any of the
Notes shall prevent any consolidation or merger of a Guarantor with or into
Warnaco or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to
Warnaco or another Guarantor.
Section 10.05. Releases Following Sale of Assets.
---------------------------------
In the event of a sale or other disposition of all or
substantially all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the Capital
Stock of any Guarantor, in each case to a Person that is not (either before or
after giving effect to such transactions) a Subsidiary or a parent of Warnaco,
then such Guarantor (in the event of a sale or other disposition, by way of
merger, consolidation or otherwise, of all of the Capital Stock of such
Guarantor) or the corporation acquiring the property (in the event of a sale or
other disposition of all or substantially all of the assets of such Guarantor)
shall be released and relieved of any obligations under its guarantee; provided
that the net proceeds of such sale or other disposition shall be subject to all
applicable provisions of this Indenture, including Section 4.12. If a Restricted
Subsidiary which is a Guarantor is designated as an Unrestricted Subsidiary in
accordance with the provisions of Section 4.16, such Guarantor shall be released
and relieved of any obligations under its guarantee. Upon delivery by Warnaco to
the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect
that such sale or other disposition or designation was made by Warnaco in
accordance with the provisions of this Indenture, including Section 4.12, the
Trustee shall execute any documents reasonably required in order to evidence the
release of any Guarantor from its obligations under its guarantee.
Any guarantor not released from its obligations under its
guarantee shall remain liable for the full amount of principal of and interest
on the Notes and for the other obligations of any Guarantor under this
Indenture.
ARTICLE 11.
SATISFACTION AND DISCHARGE
Section 11.01. Satisfaction and Discharge.
--------------------------
Warnaco may discharge this Indenture such that it will cease to be of
further effect, except as to surviving rights of registration of transfer or
exchange of the Notes, as to all outstanding Notes when:
(1) either
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(a) all the Notes previously authenticated (except lost, stolen or
destroyed Notes that have been replaced or paid and Notes for whose
payment money has previously been deposited in trust or segregated and
held in trust by Warnaco and is thereafter repaid to Warnaco or
discharged from the trust) have been delivered to the Trustee for
cancellation; or
(b) all Notes not previously delivered to the Trustee for
cancellation
(A) have become due and payable, or
(B) will become due and payable at their maturity within one
year, or
(C) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of a redemption by the Trustee, and
in the case of (A), (B) or (C), Warnaco has irrevocably deposited
or caused to be deposited with the Trustee as trust funds in trust
solely for the benefit of the holders, cash in U.S. dollars,
non-callable U.S. Government Obligations, or a combination of such
cash and non-callable U.S. Government Obligations, in such amounts
as will be sufficient without consideration of any reinvestment of
interest, to pay and discharge the entire Debt on the Notes not
previously delivered to the Trustee for cancellation or redemption,
for principal, premium, if any, and interest and Special Interest,
if any, on the Notes to the date of deposit, in the case of Notes
that have become due and payable, or to the Stated Maturity or
redemption date, as the case may be;
(2) Warnaco has paid or caused to be paid all other sums payable by it
under this Indenture; and
(3) if required by the Trustee, Warnaco delivers to the Trustee an
Officers' Certificate and Opinion of Counsel stating that all conditions
precedent under this Indenture relating to the satisfaction and discharge of
this Indenture have been satisfied.
Section 11.02. Deposited Cash and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
- -------------------------------------------------------------------------------
Subject to Section 11.03, all cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying Trustee, collectively for purposes of this Section 11.02, the
"Trustee") pursuant to Section 11.01 in respect of the outstanding Notes shall
be held in trust and applied by the Trustee, in accordance with the provisions
of such Notes and this Indenture, to the payment, either directly or through any
Paying Agent (including Warnaco acting as Paying Agent) as the Trustee may
determine, to the Holders of such Notes of all sums due and to become due
thereon in respect of principal, premium, if any, and interest but such cash and
securities need not be segregated from other funds except to the extent required
by law.
Section 11.03. Repayment to Warnaco.
---------------------
Any cash or U.S. Government Obligations deposited with the
Trustee or any Paying Agent, or then held by Warnaco, in trust for the payment
of the principal of, premium, if any, or interest on, any Note and remaining
unclaimed for two years after such principal, and premium, if any, or interest
has become due and payable shall be paid to Warnaco on its request or (if then
held by Warnaco) shall be discharged from such trust; and the Holder shall
thereafter, as an unsecured creditor, look only to Warnaco for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such cash
and securities, and all liability of Warnaco as Trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of Warnaco cause to be
published once, in The New York Times and The Wall Street Journal (national
edition), notice that such cash and securities remains unclaimed and that, after
a date specified therein,
84
which shall not be less than 30 days from the date of such notification or
publication, any unclaimed balance of such cash and securities then remaining
shall be repaid to Warnaco.
ARTICLE 12.
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the provision required by the TIA shall control.
Section 12.02. Notices.
-------
Any notice or communication by Warnaco and/or a Guarantor or
the Trustee to the other is duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return receipt requested),
facsimile transmission or overnight air courier guaranteeing next-day delivery,
to the other's address:
If to Warnaco or a Guarantor:
The Warnaco Group, Inc.
90 Park Avenue
New York, New York 10016
Attention: Jay A. Galluzzo, Esq., Vice President and General
Counsel
Facsimile No.: (212) 287-8536
If to the Trustee:
Wells Fargo Bank Minnesota, National Association
Corporate Trust Services
Sixth & Marquette; N9303-120
Minneapolis, MN 55479
Attention: Corporate Trust/Warnaco
Facsimile No. (612) 667-9825
Warnaco or the Trustee, by notice to the other, may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to the
Trustee or Holder) shall be deemed to have been duly given: at the time
delivered by hand, if personally delivered; five Business Days after being
deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if
sent by facsimile transmission; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next-day delivery.
All notices and communications to the Trustee or Holder shall be deemed duly
given and effective only upon receipt.
Any notice or communication to a Holder shall be mailed by
first class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next-day delivery to its address shown on the
Security Register. Any notice or communication shall also be so mailed to any
Person described in TIA 'SS' 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
85
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If Warnaco mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 12.03. Communication by Holders of Notes with Other Holders of Notes.
-------------------------------------------------------------
Holders may communicate pursuant to TIA 'SS'312(b) with other
Holders with respect to their rights under this Indenture or the Notes. Warnaco,
the Trustee, the Registrar and anyone else shall have the protection of TIA
'SS'312(c).
Section 12.04. Certificate and Opinion as to Conditions Precedent.
--------------------------------------------------
Upon any request or application by Warnaco to the Trustee to
take any action under any provision of this Indenture, Warnaco shall furnish to
the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05) stating that, in the opinion of the signers, all conditions
precedent and covenants, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been complied with.
Section 12.05. Statements Required in Certificate or Opinion.
---------------------------------------------
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA 'SS'314(a)(4)) shall comply with the provisions of TIA
'SS'314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable such Person
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with.
With respect to matters of fact, an Opinion of Counsel may rely on an Officers'
Certificate, certificates of public officials or reports or opinions of experts.
Section 12.06. Rules by Trustee and Agents.
---------------------------
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
86
Section 12.07. No Personal Liability of Directors, Officers, Employees and
Shareholders.
- ------------------------------------------------------------------------------
No past, present or future director, officer, employee,
incorporator or stockholder of Warnaco, any successor Person or any Guarantor,
as such, shall have any liability for any obligations of Warnaco or of the
Guarantors under the Notes, this Indenture, the guarantees or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder, by accepting a Note, waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes. The
waiver and release may not be effective to waive or release liabilities under
the federal securities laws.
Section 12.08. Governing Law.
-------------
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE AND THE NOTES WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 12.09. No Adverse Interpretation of Other Agreements.
---------------------------------------------
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of Warnaco, a Guarantor, or any of their
respective Subsidiaries or of any other Person. Any such indenture, loan or debt
agreement may not be used to interpret this Indenture.
Section 12.10. Successors.
----------
All covenants and agreements of Warnaco and the Guarantors in
this Indenture and the Notes shall bind their successors. All covenants and
agreements of the Trustee in this Indenture shall bind its successors.
Section 12.11. Severability.
------------
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 12.12. Counterpart Originals.
----------------------
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 12.13. Table of Contents, Headings, etc.
---------------------------------
The Table of Contents, Cross-Reference Table and Headings in
this Indenture have been inserted for convenience of reference only, are not to
be considered a part of this Indenture and shall in no way modify or restrict
any of the terms or provisions hereof.
Section 12.14. Qualification of this Indenture.
-------------------------------
Warnaco shall qualify this Indenture under the TIA in
accordance with the terms and conditions of any Registration Rights Agreements
and shall pay all reasonable costs and expenses (including attorneys' fees and
expenses for Warnaco, the Trustee and the Holders) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification of
this Indenture and the Notes and printing this Indenture and the Notes. The
Trustee shall be entitled to receive from Warnaco any such
87
Officers' Certificates, Opinions of Counsel or other documentation as it may
reasonably request in connection with any such qualification of this Indenture
under the TIA.
[Signatures on following page]
88
SIGNATURES
Dated as of June 12, 2003.
ISSUER:
WARNACO INC.
By: /s/ James P. Fogarty
------------------------------
Name: James P. Fogarty
Title: Chief Financial Officer
GUARANTORS:
THE WARNACO GROUP, INC.
By: /s/ James P. Fogarty
------------------------------
Name: James P. Fogarty
Title: Chief Financial Officer
184 BENTON STREET INC.
A.B.S. CLOTHING COLLECTION, INC.
ABBEVILLE MANUFACTURING COMPANY
AUTHENTIC FITNESS CORPORATION
AUTHENTIC FITNESS ON-LINE, INC.
AUTHENTIC FITNESS PRODUCTS INC.
AUTHENTIC FITNESS RETAIL INC.
CCC ACQUISITION CORP.
C.F. HATHAWAY COMPANY
CALVIN KLEIN JEANSWEAR COMPANY
CKJ HOLDINGS, INC.
DESIGNER HOLDINGS LTD.
GREGORY STREET, INC.
JEANSWEAR HOLDINGS, INC.
KAI JAY MANUFACTURING COMPANY
MYRTLE AVENUE, INC.
OUTLET HOLDINGS, INC.
OUTLET STORES, INC.
PENHALIGON'S BY REQUEST, INC.
RIO SPORTSWEAR, INC.
UBERTECH PRODUCTS, INC.
WARNACO INTERNATIONAL, L.L.C.
WARNACO MEN'S SPORTSWEAR INC.
WARNACO PUERTO RICO, INC.
WARNACO SOURCING INC.
WARNACO U.S., INC.
WARNER'S DE COSTA RICA INC.
By: /s/ Stanley P. Silverstein
-----------------------------
Name: Stanley P. Silverstein
Title: President
D-5
TRUSTEE:
WELLS FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, AS TRUSTEE
By: /s/ Timothy P. Mowdy
-------------------------------
Name: Timothy P. Mowdy
Title: Assistant Vice President
D-6