Exhibit 10.7





EXHIBIT 10.7




PORTIONS OF THIS EXHIBIT 10.7 MARKED BY AN *** HAVE BEEN OMITTED

PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED

SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.



 


 









 







GENERAL SECURITY AGREEMENT




EXECUTED by the parties as of the 26th day of August, 2008.



	 	 	 
	TO:

	 	BANK OF AMERICA, N.A.,
	 

	 	on its own behalf as Lender (acting through its Canada branch) and as
Collateral Agent, for itself and on behalf of the Secured Parties (as such
term is defined in the Credit Agreement, hereinafter defined)

335 Madison Avenue, New York, New York 10017
	 
	 	 
	 

	 	(hereinafter the “Collateral Agent”)
	 
	 	 
	GRANTED BY:

	 	WARNACO OF CANADA COMPANY
	 
	 	 
	 

	 	Having its registered office at 1959 Upper Water Street, Halifax, Nova
Scotia, Canada, B3J 3N2 and its principal place of business at 20600 Clark
Graham Blvd., Baie d’Urfé, Québec, Canada, H9X 4B6
	 
	 	 
	 

	 	(hereinafter the “Debtor”)






SECTION 1 — GRANT OF SECURITY INTEREST



1.1 Security Interest



As a general and continuing security for the payment and performance of the Secured
Obligations (as such term is defined in the Credit Agreement, hereinafter defined) of the Debtor,
the Debtor, IN CONSIDERATION OF THE SECURED OBLIGATIONS and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, hereby grants,
bargains, assigns and transfers to the Collateral Agent (for itself and on behalf of the Secured
Parties), and grants to the Collateral Agent (for itself and on behalf of the Secured Parties) a
continuing security interest in all of the Debtor’s right, title and interest in and to all the
personal property, assets and undertakings of the Debtor of whatsoever nature and kind, whether now
owned or hereafter-acquired by or on behalf of the Debtor, wherever located (the “Collateral”)
including, without limitation:




(a) Accounts Receivable




All debts, book debts, accounts, claims, demands, moneys and choses in action whatsoever
including, without limitation, claims against the Crown and claims under insurance policies,
which are now owned by or are due, owing or accruing due to the Debtor or which may
hereafter be owned by or become due, owing or accruing due to the Debtor together with all
contracts, securities, bills, notes, lien notes, judgments, chattel mortgages, mortgages and
all other rights, benefits and documents now or hereafter taken, vested in or held by the
Debtor in respect of or as security for the same and the full
benefit and advantage thereof, and all rights of action or claims which the Debtor now has
or may at any time hereafter have against any person or persons, firm or corporation in
respect thereof (all of the foregoing being herein collectively called the “Accounts
Receivable”);



General Security Agreement — Warnaco of Canada Company (2008)



 


 









 






(b) Inventory




All inventory of whatever kind now or hereafter owned by the Debtor or in which the Debtor
now or hereinafter has an interest or right of any kind, and all accessions thereto and
products thereof, including, without limitation, all goods, merchandise, raw materials,
goods in process, finished goods, packaging and packing material and other tangible personal
property now or hereafter held for sale, lease, rental or resale or that are to be furnished
or have been furnished under a contract of service or that are to be used or consumed in the
business of the Debtor (all of the foregoing being herein collectively called the
“Inventory”);




(c) Equipment




All goods now or hereafter owned by the Debtor which are not inventory or consumer goods as
defined in the PPSA (as hereinafter defined) including, without limitation, all fixtures,
equipment, machinery, tools, furniture, vehicles and other tangible personal property (all
of the foregoing being herein collectively called the “Equipment”);




(d) Chattel Paper, Instruments, Securities, etc.




All chattel paper, instruments, warehouse receipts, bills of lading and other documents of
title, whether negotiable or non-negotiable, shares, stock, warrants, bonds, debentures,
debenture stock or other securities (including, without limitation, those described in
Schedule “2” hereto), now or hereafter owned by the Debtor;




(e) Intangibles




All intangibles now or hereafter owned by the Debtor including, without limitation, all
contractual rights, goodwill, patents, trade marks, trade names, copyrights, industrial
designs and other industrial or intellectual property or rights therein, including, without
limitation, those described in Schedule “5” hereto;




(f) Books and Accounts, etc.




With respect to the personal property described in Paragraphs (a) to (e) inclusive, all
books, accounts, invoices, deeds, documents, writings, letters, papers, security
certificates and other records in any form evidencing or relating thereto and all contracts,
securities, instruments and other rights and benefits in respect thereof;


 


 









 






(g) Other Property




The uncalled capital, money, rights, bills of exchange, negotiable and non-negotiable
instruments, judgments and securities not otherwise described in Paragraphs (a) to (f)
inclusive;




(h) Replacements, etc.




With respect to the personal property described in Paragraphs (a) to (g) inclusive, all
substitutions and replacements thereof, increases, additions and accessions thereto and any
interest of the Debtor therein; and




(i) Proceeds




With respect to the personal property described in Paragraphs (a) to (h) inclusive, personal
property in any form or fixtures derived directly or indirectly from any dealing with such
property or that indemnifies or compensates for such property destroyed or damaged and
proceeds of proceeds whether of the same type, class or kind as the original proceeds;
provided, however, that the foregoing grant of security interest shall not include a
security interest in any Excluded Property; and provided, further, that, if and when any
property shall cease to be Excluded Property, the Collateral Agent for the benefit of the
Secured Parties shall have, and at all times from and after the date hereof be deemed to
have had, a security interest in such property.



1.2 Definitions and Interpretation





In the present General Security Agreement (this “Agreement”):




	 	(a)	 	Terms used herein and defined in the Personal Property Security Act (Ontario)
or similar legislation of any other Canadian jurisdiction, the laws of which are
required by such legislation to be applied in connection with the issue, perfection,
enforcement, opposability, validity or effect of security interests (collectively the
“PPSA”) shall have the same meanings as in the PPSA unless the context otherwise
requires;







	 	(b)	 	Terms used herein and defined in the Securities Transfer Act (Ontario) (the
“STA”) shall have the same meanings as in the STA unless the context otherwise
requires;







	 	(c)	 	Capitalized terms not otherwise defined herein shall have the same meanings as
ascribed to them in the Credit Agreement, unless the context otherwise requires;







	 	(d)	 	Any reference to “Collateral” shall, unless the context otherwise requires,
refer to “Collateral or any part thereof”;







	 	(e)	 	The term “security interest” and the grant of the “security interest” herein
provided for shall include, without limitation, a fixed mortgage, hypothecation,
pledge, charge and assignment of the Collateral in favour of the Collateral Agent (for
itself and on behalf of the Secured Parties);




 


 









 











	 	(f)	 	“Additional Pledged Collateral” means any Pledged Collateral acquired by the
Debtor after the date hereof and in which a security interest is granted pursuant to
Section 1 (Grant of Security Interest), including, to the extent a security interest is
granted therein pursuant to Section 1 (Grant of Security Interest), (i) all Stock and
Stock Equivalents of any Person that are acquired by the Debtor after the date hereof,
together with all certificates, instruments or other documents representing any of the
foregoing and all Security Entitlements of the Debtor in respect of any of the
foregoing, (ii) all additional Indebtedness from time to time owed to the Debtor by any
obligor on the Pledged Debt Instruments and the Instruments evidencing such
Indebtedness and (iii) all interest, cash, Instruments and other property or Proceeds
from time to time received, receivable or otherwise distributed in respect of or in
exchange for any of the foregoing. “Additional Pledged Collateral” may be Intangibles
(including Intellectual Property), Instruments or Investment Property;







	 	(g)	 	“Blocked Account” means a deposit account maintained by the Debtor with a
Blocked Account Bank which account is the subject of an effective Blocked Account
Letter, and includes all monies on deposit therein and all certificates and
instruments, if any, representing or evidencing such Blocked Account;







	 	(h)	 	“Blocked Account Bank” means a financial institution approved (such approval
not to be unreasonably withheld) by the Administrative Agent and with respect to which
the Debtor has delivered to the Collateral Agent an executed Blocked Account Letter
(hereinafter defined);







	 	(i)	 	“Blocked Account Letter” means a letter agreement in a form acceptable to the
Collateral Agent, executed by the Debtor and the Collateral Agent and acknowledged and
agreed to by the relevant Blocked Account Bank;







	 	(j)	 	“Cash Collateral Account” means any deposit account or Securities Account that
is (a) established by the Collateral Agent from time to time in its sole discretion to
receive cash and Cash Equivalents (or purchase cash or Cash Equivalents with funds
received) from the Debtor or any other Loan Party or their Subsidiaries or Affiliates
or Persons acting on their behalf pursuant to the Loan Documents, (b) with such
depositaries and securities intermediaries as the Collateral Agent may determine in its
sole discretion, (c) in the name of the Collateral Agent (although such account may
also have words referring to the Debtor and the account’s purpose), (d) under the
control of the Collateral Agent and (e) in the case of a Securities Account, with
respect to which the Collateral Agent shall be the Entitlement Holder and the only
Person authorized to give Entitlement Orders with respect thereto, except as otherwise
provided in Section 3.9 hereof. Notwithstanding the foregoing, the Special Cash
Collateral Account shall not constitute a Cash Collateral Account;







	 	(k)	 	“CCQ” means the Civil Code of Quebec;

	 
	 	(l)	 	“Certificated Security” has the meaning given to such term in the PPSA;

	 
	 	(m)	 	“CIPO” means the Canadian Intellectual Property Office;

	 
	 	(n)	 	“Collateral” has the meaning specified in Section 1.1 hereof;




 


 









 











	 	(o)	 	“Collateral Agent” shall include, in addition to the Collateral Agent referred
to in the preamble of the Credit Agreement, any successors and assigns to the
Collateral Agent appointed pursuant to the Credit Agreement and means the “Collateral
Agent” in its capacity as collateral agent for the benefit of the Secured Parties with
respect to the Secured Obligations;







	 	(p)	 	“Control Account” means a securities account maintained by the Debtor with the
relevant approved Securities Intermediary which account is the subject of an effective
Control Account Agreement, and includes all monies and other assets on deposit or
otherwise held therein;







	 	(q)	 	“Control Account Agreement” means a letter agreement in a form acceptable to
the Collateral Agent, executed by the Debtor, the Collateral Agent and the relevant
approved Securities Intermediary;







	 	(r)	 	“Copyright License” means any agreement, whether written or oral, providing for
the grant by or to the Debtor of any right under any Copyright, including the grant of
any right to use, copy, publicly perform, display, create derivative works of,
manufacture, distribute, exploit or sell materials derived from any Copyright;







	 	(s)	 	“Copyrights” means (a) all copyrights arising under the laws of Canada, any
other country or any political subdivision thereof, whether registered or unregistered
and whether published or unpublished, all registrations and recordings thereof and all
applications for registration or recording in connection therewith, including all
registrations, recordings and applications for registration or recording with CIPO or
in any foreign counterparts thereof, and (b) the right to obtain all renewals,
reversions and extensions thereof;







	 	(t)	 	“Credit Agreement” shall mean that certain Credit Agreement dated the date
hereof among, inter alia, the Debtor, as borrower, the financial institutions, together
with their respective successors and assigns, listed on the signature pages thereof
from time to time, as Lenders, and the Collateral Agent, as the same may be amended,
supplemented, revised, restated or replaced from time to time;







	 	(u)	 	“Discharge of Lender Claims” means the payment in full in cash of the principal
of, interest and premium, if any, on all Secured Obligations and, with respect to
Hedging Obligations, Hedging Obligations or letters of credit outstanding thereunder,
delivery of cash collateral or backstop letters of credit in respect thereof in
compliance with the terms hereof, of the Credit Agreement, in each case after or
concurrently with termination of all Commitments, and payment in full in cash of any
other Secured Obligations that are due and payable at or prior to the time such
principal and interest are paid;







	 	(v)	 	“Entitlement Holder” has the meaning given to such term in the PPSA;







	 	(w)	 	“Entitlement Order” has the meaning given to such term in the PPSA;




 


 









 











	 	(x)	 	“Excluded Property” means, collectively, (i) any permit, lease, license,
contract, instrument or other agreement held by the Debtor that validly prohibits the
creation by the Debtor of a Lien thereon, or any permit, lease, license, contract,
instrument or other agreement held by the Debtor to the extent that any Requirement of
Law applicable thereto prohibits the creation of a Lien thereon,
but only, in each case, to the extent, and for so long as, such prohibition is not
removed, terminated or rendered unenforceable or otherwise deemed ineffective by the
PPSA or any other Requirement of Law; and (ii) any Equipment owned by the Debtor
that is charged by a “purchase-money security interest” (as defined in the PPSA) or
subject to a Capital Lease if the contract or other agreement in which such Lien is
granted (or in the documentation providing for such Capital Lease) prohibits or
requires the consent of any Person other than the Debtor as a condition to the
creation of any other Lien on such Equipment; provided, however, “Excluded Property”
shall not include any Proceeds, substitutions or replacements of Excluded Property
(unless such Proceeds, substitutions or replacements would constitute Excluded
Property);







	 	(y)	 	“Financial Assets” has the meaning given to such term in the PPSA;







	 	(z)	 	“Hedging Obligations” means all obligations of any Person under any Hedging
Contract;







	 	(aa)	 	“Instrument” has the meaning given to such term in the PPSA;







	 	(bb)	 	“Intellectual Property” means, collectively, (a) all right, title and interest
of the Debtor in intellectual property, whether arising under Canadian, multinational
or foreign laws or otherwise, including Copyrights, Copyright Licenses, Patents, Patent
Licenses, Trademarks, Trademark Licenses, trade secrets, Internet domain names,
Websites, advertising rights, rights in designs, including registrations thereof, and
rights in data, and (b) all rights to income, royalties, proceeds and damages now or
hereafter due and/or payable under and with respect thereto, including all rights to
sue and recover at law or in equity for any past, present and future infringement,
misappropriation, dilution, violation or other impairment thereof;







	 	(cc)	 	“Investment Property” has the meaning given to such term in the PPSA;







	 	(dd)	 	“LLC” means each limited liability company in which the Debtor has an equity
interest, including those set forth on Schedule 2;







	 	(ee)	 	“LLC Agreement” means each operating agreement with respect to a LLC, as each
agreement has heretofore been, and may hereafter be, amended, restated, supplemented or
otherwise modified from time to time;







	 	(ff)	 	“Material Intellectual Property” means Intellectual Property owned by or
licensed to the Debtor and material to Debtor’s business;







	 	(gg)	 	“Partnership” means each partnership in which the Debtor has an equity
interest, including those set forth on Schedule 2;







	 	(hh)	 	“Partnership Agreement” means each partnership agreement governing a
Partnership, as each such agreement has heretofore been, and may hereafter be, amended,
restated, supplemented or otherwise modified;







	 	(ii)	 	“Patent License” means all agreements, whether written or oral, providing for
the grant by or to the Debtor of any right to manufacture, have manufactured, use,
import, lease, sell or offer for sale any product, design or process covered in whole
or in part by a Patent;




 


 









 











	 	(jj)	 	“Patents” means (a) all patents of Canada or any other country or patent rights
arising under multinational laws, (b) all applications for patents of Canada or any
other country or patent rights arising under multinational laws and (c) all rights to
obtain any reissues, extensions, divisions, continuations and continuations-in-part of
the foregoing;







	 	(kk)	 	“Pledged Certificated Stock” means all Certificated Securities and any other
Stock and Stock Equivalent of a Person evidenced by a certificate, Instrument or other
equivalent document, in each case owned by the Debtor, including all Stock listed on
Schedule 2;







	 	(ll)	 	“Pledged Collateral” means, collectively, the Pledged Stock, Pledged Debt
Instruments, any other Investment Property of the Debtor (other than Pledged Stock,
Pledged Debt Instruments and other Investment Property whose value, in the aggregate,
does not exceed $1,000,000), all chattel paper, certificates or other Instruments
representing any of the foregoing and all Security Entitlements of the Debtor in
respect of any of the foregoing. Pledged Collateral may be Intangibles, Instruments or
Investment Property;







	 	(mm)	 	“Pledged Debt Instrument” means all right, title and interest of the Debtor in
Instruments evidencing any Indebtedness owed to the Debtor, including all Indebtedness
described on Schedule 2, issued by the obligors named therein;







	 	(nn)	 	“Pledged Stock” means all Pledged Certificated Stock and all Pledged
Uncertificated Stock;







	 	(oo)	 	“Pledged Uncertificated Stock” means any Stock or Stock Equivalent of any
Person that is not a Pledged Certificated Stock, including all right, title and
interest of the Debtor as a limited or general partner in any Partnership or as a
member of any LLC and all right, title and interest of the Debtor in, to and under any
Partnership Agreement or LLC Agreement to which it is a party;







	 	(pp)	 	“Receiver” shall have the meaning provided to such term in Section 6.4 hereof;







	 	(qq)	 	“Registerable Intellectual Property” means any Intellectual Property in respect
of which ownership, title, security interests, hypothecs, charges or encumbrances are
capable of registration, recording or notation with any applicable authority pursuant
to applicable law;







	 	(rr)	 	“Restricted Account” means a deposit account maintained by the Debtor with a
Restricted Account Bank which account is the subject of an effective Restricted Account
Letter, and includes all monies on deposit therein and all certificates and
instruments, if any, representing or evidencing such Restricted Account;







	 	(ss)	 	“Restricted Account Bank” means a financial institution selected or approved
(such approval not to be unreasonably withheld) by the Administrative Agent and with
respect to which the Debtor has delivered an executed Restricted Account Letter;







	 	(tt)	 	“Restricted Account Letter” means a letter agreement in a form acceptable to
the Administrative Agent, executed by the Debtor;







	 	(uu)	 	“Securities Intermediaries” has the meaning given to such term in the PPSA;




 


 









 





	 	(vv)	 	“Securities Account” has the meaning given to such term in the PPSA;

	 
	 	(ww)	 	“Security Entitlement” has the meaning given to such term in the PPSA;







	 	(xx)	 	“Security Interest” means, collectively, each security interest, mortgage,
charge, assignment or transfer in or of Collateral granted or created by the Debtor
under this Agreement;







	 	(yy)	 	“Third Party Intellectual Property Rights” means any right, title or interest
of any Person under patent, copyright, trademark or trade secret law or any other
statutory provision or common law doctrine relating to intellectual property or
proprietary rights;







	 	(zz)	 	“Trademark License” means any agreement, whether written or oral, providing for
the grant by or to the Debtor of any right under any Trademark.;







	 	(aaa)	 	“Trademarks” means (a) all trademarks, trade names, corporate names, company
names, business names, fictitious business names, trade styles, trade dress, service
marks, logos and other source or business identifiers, and, in each case, all goodwill
associated therewith, whether now existing or hereafter adopted or acquired, all
registrations and recordings thereof and all applications for registration or recording
in connection therewith, in each case whether in CIPO or in any similar office or
agency of Canada, any Province or Territory thereof or any other country or any
political subdivision thereof and all common-law rights related thereto, and (b) the
right to obtain all renewals thereof; and







	 	(bbb)	 	“UCC” means the Uniform Commercial Code as from time to time in effect in the
State of New York.






1.3 Leases




The last day of the term of any lease, oral or written, or any agreement therefor, now held or
hereafter acquired by the Debtor, shall be excepted from the security interest hereby granted and
shall not form part of the Collateral, but the Debtor shall stand possessed of such one day
remaining, upon trust to assign and dispose of the same as the Collateral Agent or any assignee of
such lease or agreement shall direct. If any such lease or agreement therefor contains a provision
which provides in effect that such lease or agreement may not be assigned, sub-leased, charged or
encumbered without the leave, license, consent or approval of the lessor, the application of the
security interest created hereby to any such lease or agreement shall be conditional upon such
leave, license, consent or approval having been obtained.



1.4 Debtor Remains Liable





Notwithstanding anything herein to the contrary:




	 	(a)	 	the Debtor shall remain liable under the contracts and agreements included in
the Collateral to the extent set forth therein to perform all its duties and
obligations thereunder to the same extent as if this Agreement had not been executed;







	 	(b)	 	the exercise by the Collateral Agent of any of the rights or remedies hereunder
shall not release the Debtor from any of its duties or obligations under the contracts
and agreements included in the Collateral; and




 


 









 











	 	(c)	 	the Collateral Agent shall not have any obligation or liability under the
contracts and agreements included in the Collateral by reason of this Agreement, nor
shall the Collateral Agent be obligated to perform any of the obligations or duties of
the Debtor thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.






SECTION 2 —  REPRESENTATIONS AND WARRANTIES




To induce the Lenders, the Issuers, the Collateral Agent and the Administrative Agent to enter
into the Credit Agreement, the Debtor hereby represents and warrants each of the following to the
Lenders, the Issuers, the Collateral Agent, the Administrative Agent and the other Secured Parties:



2.1 Title; No Other Liens




Except for the Liens granted to the Collateral Agent pursuant to this Agreement and the other
Liens permitted to exist on the Collateral under the Credit Agreement, the Debtor (a) is the record
and beneficial owner of the Pledged Collateral pledged by it hereunder constituting Instruments or
Certificated Securities, (b) is the Entitlement Holder of all such Pledged Collateral constituting
Investment Property held in a Securities Account and (c) has rights in or the power to collaterally
transfer each other item of Collateral in which a Lien is granted by it hereunder, free and clear
of any Lien (other than Liens for taxes not yet due and payable).



2.2 Perfection and Priority




The security interests granted pursuant to this Agreement shall constitute valid and
continuing perfected security interests in favour of the Collateral Agent in the Collateral for
which perfection is governed by the PPSA or filing with CIPO upon (i) in the case of all Collateral
in which a security interest may be perfected by filing a financing statement under the PPSA, the
completion of the filings and other actions specified on Schedule 3 (which, in the case of all
filings and other documents referred to on such schedule, have been delivered to the Collateral
Agent in completed and duly executed form), (ii) the delivery to the Collateral Agent of all
Collateral consisting of Instruments and Certificated Securities, in each case properly endorsed
for transfer to the Collateral Agent or in blank, (iii) the execution of Control Account Agreements
with respect to Investment Property not in certificated form, (iv) the execution of a Blocked
Account Letter with respect to all deposit accounts of the Debtor as specified in Section 3.8(a)(i)
hereto, (v) all appropriate filings having been made with CIPO and (vi) the receipt by the
Collateral Agent of the consent of the issuer or nominated person with respect to each
letter-of-credit right. Such security interests shall be prior to all other Liens on the
Collateral except for Customary Permitted Liens having priority over the Collateral Agent’s Liens
by operation of law or otherwise as permitted hereunder or under the Credit Agreement.



2.3 Jurisdiction of Organization; Chief Executive Office




On the Closing Date, the Debtor’s jurisdiction of organization, legal name, organizational
identification number, if any, and the location of its chief executive office or sole place of
business is specified on Schedule 1 and, to the extent different from that on the Closing Date,
such Schedule 1 also lists all jurisdictions of organization, legal names and locations of
such Debtor’s chief executive office or sole place of business for the period beginning five years
preceding the date hereof.


 


 









 





2.4 Inventory and Equipment




Schedule 4 (Location of Inventory and Equipment) sets forth each location at which the
Debtor’s Inventory and Equipment (other than mobile goods and Inventory or Equipment in transit) is
kept on the Closing Date.



2.5 Pledged Collateral





	 	(a)	 	The Pledged Stock that constitutes Pledged Collateral pledged hereunder by the
Debtor is listed on Schedule 2 and constitutes that percentage of the issued and
outstanding equity of all classes of each issuer thereof as set forth on Schedule 2.







	 	(b)	 	All of the Pledged Stock (other than Pledged Stock in limited liability
companies and partnerships) that constitutes Pledged Collateral has been duly and
validly issued and are fully paid and nonassessable.







	 	(c)	 	All Pledged Collateral and, if applicable, any Additional Pledged Collateral,
consisting of Certificated Securities or Instruments has been delivered to the
Collateral Agent in accordance with Section 3.5(a) (Pledged Collateral) hereof, and
Section 7.11 of the Credit Agreement and such other pledge agreement or other
Collateral Documents entered into by the Debtor in favour of the Collateral Agent.







	 	(d)	 	Subject to Section 3.5(a), all Pledged Collateral held by a Securities
Intermediary in a Securities Account is subject to a Control Account Agreement.







	 	(e)	 	Other than Pledged Stock constituting Intangibles, there is no Pledged
Collateral other than (i) that represented by Certificated Securities or
(ii) Instruments in the possession of the Collateral Agent or that consisting of
Financial Assets held in a Securities Account that is subject to a Control Account
Agreement.







	 	(f)	 	The Constituent Documents of any Person governing any Pledged Stock do not
prohibit (i) the Collateral Agent, upon the occurrence and during the continuance of an
Event of Default, from exercising all of the rights of the Debtor granting the security
interest therein, and (ii) a transferee or assignee of Stock of such Person from
becoming a member, partner or, as the case may be, other holder of such Pledged Stock
to the same extent as the Debtor entitled to participate in the management of such
Person and, pursuant to the Constituent Documents of any Person governing any Pledged
Stock, upon the transfer of the entire interest of the Debtor, the Debtor shall cease
to be a member, partner or, as the case may be, other holder of such Pledged Stock.




 


 









 










2.6 Deposit Accounts; Securities Accounts




The only deposit accounts or Securities Accounts maintained by the Debtor on the Closing Date
are those listed on Schedule 7 (Deposit Accounts and Securities Accounts), which
sets forth such information for the Debtor and which clearly identifies each deposit account
which is maintained as a concentration account by the Debtor.



2.7 Accounts




No amount payable to the Debtor under or in connection with any account is evidenced by any
Instrument or Chattel Paper that has not been delivered to the Collateral Agent, properly endorsed
for transfer, to the extent delivery is required by Section 3.6 (Delivery of Instruments and
Chattel Paper).



2.8 Intellectual Property





	 	(a)	 	Schedule 5 (i) sets forth a true and complete list of all Intellectual Property
of the Debtor on the date hereof (other than licenses to commercial off-the-shelf
software), separately identifying that owned by the Debtor and that licensed by or to
such Debtor and (ii) sets forth a true and complete list of all Material Intellectual
Property owned by or licensed to the Debtor on the date hereof (other than licenses to
commercial off-the-shelf software), separately identifying that owned by the Debtor and
that licensed by or to the Debtor. The Material Intellectual Property set forth on
Schedule 5 constitutes all of the material intellectual property rights necessary for
the Debtor to conduct its business as currently and as proposed to be conducted.







	 	(b)	 	On the date hereof, all Material Intellectual Property owned by the Debtor is
valid, in full force and effect, subsisting, unexpired and enforceable, has not been
adjudged invalid and has not been abandoned. To the knowledge of the Debtor, the
business of the Debtor, and the use of the Material Intellectual Property in connection
therewith, does not infringe, misappropriate, dilute or violate any Third Party
Intellectual Property Rights. The Debtor is not party to or the subject of any pending
or, to the Debtor’s knowledge, threatened claim of infringement, misappropriation,
dilution or violation of any Third Party Intellectual Property Rights, and there are no
facts or circumstances that the Debtor reasonably believes are likely to form the basis
for any such claim, and the Debtor has not received written notice of any such claim,
or a written offer of a license to any Third Party Intellectual Property Rights, or any
written notice regarding the existence of any Third Party Intellectual Property Rights
that would be likely to have a Material Adverse Effect on the Debtor or otherwise would
impair any Material Intellectual Property.







	 	(c)	 	Except as set forth in Schedule 5(c), on the date hereof, none of the Material
Intellectual Property owned by the Debtor is the subject of any licensing or franchise
agreement pursuant to which the Debtor is the licensor or franchisor.







	 	(d)	 	No holding, decision or judgment has been rendered by any Governmental
Authority challenging the Debtor’s rights in the Material Intellectual Property or that
would limit or otherwise impair the ownership, use, validity or enforceability of any
Material Intellectual Property.




 


 









 











	 	(e)	 	No action or proceeding challenging the Debtor’s rights in the Intellectual
Property or the ownership, use, validity or enforceability of any Material Intellectual
Property owned by the Debtor is on the date hereof pending or, to the knowledge of the
Debtor, threatened. There are no claims, judgments or settlements to be paid by the
Debtor relating to the Material Intellectual Property. To the Debtor’s knowledge, no
Person has been or is infringing, misappropriating, diluting or violating the Material
Intellectual Property owned by the Debtor.







	 	(f)	 	The Debtor is not in material breach of any Copyright License, Patent License
or Trademark License nor in breach of any Material License. The consummation of the
transactions contemplated by this Agreement shall not impair any of the Debtor’s right
in, cause a breach of, or impair the validity or enforceability of, any Material
Intellectual Property.






SECTION 3 —  COVENANTS OF THE DEBTOR




The Debtor agrees with the Collateral Agent to the following, as long as any Secured
Obligation or Commitment remains outstanding and, in each case, unless the Requisite Lenders
otherwise consent in writing:



3.1 Generally




The Debtor shall (a) except for the security interest created by this Agreement, not create or
suffer to exist any Lien upon or with respect to any Collateral, except Liens permitted under
Section 8.2 (Liens, Etc.) of the Credit Agreement, (b) not use or permit any Collateral to be used
unlawfully or in violation of any provision of this Agreement, any other Loan Document, any
Requirement of Law or any policy of insurance covering the Collateral, (c) not sell, transfer or
assign (by operation of law or otherwise) any Collateral except as permitted under the Credit
Agreement, (d) not enter into any agreement or undertaking restricting the right or ability of the
Debtor or the Collateral Agent to sell, assign or transfer any Collateral except in connection with
an Asset Sale (i) that is permitted under Section 8.4 of the Credit Agreement or (ii) that is
pursuant to a contract which contains a condition precedent that consent under the Credit Agreement
be obtained.



3.2 Maintenance of Perfected Security Interest; Further Documentation





	 	(a)	 	The Debtor shall maintain the security interests created by this Agreement as
perfected security interests having at least the priority described in Section 2.2
(Perfection and Priority) and shall defend such security interests and such priority
against the claims and demands of all Persons.







	 	(b)	 	The Debtor shall furnish to the Collateral Agent from time to time statements
and schedules further identifying and describing the Collateral and such other reports
in connection with the Collateral as the Collateral Agent may reasonably request in
writing, all in detail and in form and substance reasonably satisfactory to the
Collateral Agent.




 


 









 











	 	(c)	 	At any time and from time to time, upon the written request of the Collateral
Agent, and at the sole expense of the Debtor, the Debtor shall promptly and duly
execute and deliver to the Collateral Agent, and have recorded, such further
instruments and documents and take such further action as the Collateral Agent may
reasonably request (or be directed to request by the Administrative Agent at the
Administrative Agent’s reasonable request) for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights and powers herein
granted, including the filing of any financing or continuation statement under the
PPSA (or other similar laws) in effect in any jurisdiction with respect to the
security interests created hereby and the execution and delivery of Blocked Account
Letters or Restricted Account Letters and Control Account Agreements.






3.3 Changes in Locations, Name, Etc.





	 	(a)	 	Except upon 15 or more days’ prior written notice to the Collateral Agent and
delivery to the Collateral Agent of (i) all additional financing statements and other
documents reasonably requested by the Collateral Agent to maintain the validity,
perfection and priority of the security interests provided for herein and (ii) if
applicable, a written supplement to Schedule 4 showing (A) any additional locations at
which Inventory or Equipment shall be kept or (B) any changes in any location where
Inventory or Equipment shall be kept that would require the Collateral Agent to take
any action to maintain perfected security interests in such Collateral, the Debtor
shall not do any of the following:







	 	(i)	 	permit any Inventory or Equipment to be kept at a location
other than those listed on Schedule 4, except for Inventory or Equipment in
transit;







	 	(ii)	 	change its jurisdiction of organization from that referred to
in Section 2.3 (Jurisdiction of Organization; Chief Executive Office); or







	 	(iii)	 	change its legal name, or organizational identification
number, if any, or corporation, unlimited liability company, limited liability
company or other organizational structure to such an extent that any financing
statement filed in connection with this Agreement would become misleading.







	 	(b)	 	The Debtor shall keep and maintain at its own cost and expense satisfactory and
complete records of the Collateral, including a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with the
Collateral.






3.4 Control




The Debtor shall not cause nor shall it permit any Person other than the Collateral Agent to
have control (as determined pursuant to the STA) of any Financial Asset or Investment Property
constituting part of the Collateral.


 


 









 





3.5 Pledged Collateral





	 	(a)	 	The Debtor shall (i) deliver to the Collateral Agent for the benefit of the
Secured Parties, all certificates and Instruments representing or evidencing any
Pledged Collateral (including Additional Pledged Collateral), whether now existing or
hereafter acquired, in suitable form for transfer by delivery or, as applicable,
accompanied by such Debtor’s endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance reasonably
satisfactory to the Collateral Agent, together, in respect of any Additional Pledged
Collateral, with a pledge amendment, duly executed by the Debtor, in a form
reasonably acceptable to the Collateral Agent, an acknowledgment, or such other
documentation acceptable to the Collateral Agent and (ii) maintain all other Pledged
Collateral constituting Investment Property in a Securities Account subject to a
Control Account Agreement. The Collateral Agent shall have the right, following an
Event of Default and without notice to the Debtor, to transfer to or to register in
its name or in the name of its nominees any Pledged Collateral. The Collateral
Agent shall have the right at any time to exchange any certificate or instrument
representing or evidencing any Pledged Collateral for certificates or instruments of
smaller or larger denominations.







	 	(b)	 	Except as provided in Section 6 (Remedies on Default), the Debtor shall be
entitled to receive all cash dividends paid in respect of the Pledged Collateral (other
than liquidating or distributing dividends). Any sums paid upon or in respect of any
Pledged Collateral upon the liquidation or dissolution of any issuer of any Pledged
Collateral, any distribution of capital made on or in respect of any Pledged Collateral
or any property distributed upon or with respect to any Pledged Collateral pursuant to
the recapitalization or reclassification of the capital of any issuer of Pledged
Collateral or pursuant to the reorganization thereof (except, in each case, to the
extent resulting in cash being distributed to the Debtor) shall, unless otherwise
subject to a perfected security interest (with the priorities contemplated herein) in
favour of the Collateral Agent, be delivered to the Collateral Agent to be held by it
hereunder as additional collateral security for the Secured Obligations. If any sum of
money or property so paid or distributed in respect of any Pledged Collateral shall be
received by the Debtor, the Debtor shall, until such money or property is paid or
delivered to the Collateral Agent, hold such money or property in trust for the
Collateral Agent, segregated from other funds of the Debtor, as additional security for
the Secured Obligations.







	 	(c)	 	Except as provided in Section 6 (Remedies on Default), the Debtor shall be
entitled to exercise all voting, consent and corporate, partnership, unlimited
liability company, limited liability company and similar rights with respect to the
Pledged Collateral; provided, however, that no vote shall be cast, consent given or
right exercised or other action taken by the Debtor that would impair the Collateral,
be inconsistent with or result in any violation of any provision of the Credit
Agreement, this Agreement or any other Loan Document or, without prior notice to the
Collateral Agent, enable or permit any issuer of Pledged Collateral to issue any Stock
or other equity Securities of any nature or to issue any other securities convertible
into or granting the right to purchase or exchange for any Stock or other equity
Securities of any nature of any issuer of Pledged Collateral.







	 	(d)	 	The Debtor shall not grant control (within the meaning of such term under the
STA) over any Investment Property to any Person other than the Collateral Agent.




 


 









 











	 	(e)	 	In the case the Debtor is an issuer of Pledged Collateral, the Debtor agrees to
be bound by the terms of this Agreement relating to the Pledged Collateral issued by it
and shall comply with such terms insofar as such terms are applicable to it. In the
case the Debtor is a holder of any Stock or Stock Equivalent in any Person that is an
issuer of Pledged Collateral, the Debtor consents to (i) the exercise of the rights
granted to the Collateral Agent hereunder (including those described in Section 6.10
(Pledged Collateral)), and to the transfer of such Pledged Stock to the Collateral
Agent or its nominee and to the substitution of the Collateral Agent or its nominee as
a holder of such Pledged Stock with all the rights, powers and duties of other holders
of Pledged Stock of the same class and, if the Debtor having pledged such Pledged Stock
hereunder had any right, power or duty at the time of such pledge or at the time of
such substitution beyond that of such other holders, with all such additional rights,
powers and duties. The Debtor agrees to execute and deliver to the Collateral Agent
such certificates, agreements and other documents as may be necessary to evidence,
formalize or otherwise give effect to the consents given in this clause (e).







	 	(f)	 	The Debtor shall not, and shall not permit any of its Subsidiaries (to the
extent the Stock of such Subsidiary constitutes Collateral), without the consent of the
Collateral Agent, agree to any amendment of any Constituent Document that in any way
adversely affects the perfection of the security interest of the Collateral Agent in
the Pledged Collateral pledged by the Debtor hereunder or any election to turn any
previously uncertificated Stock that is part of the Pledged Collateral into
certificated Stock.






3.6 Delivery of Instruments and Chattel Paper




If any amount in excess of $250,000 payable under or in connection with any Collateral owned
by the Debtor shall be or become evidenced by an Instrument or Chattel Paper, the Debtor shall
promptly deliver such Instrument or Chattel Paper to the Collateral Agent, duly indorsed in a
manner satisfactory to the Collateral Agent, or, if consented to by the Collateral Agent, shall
mark all such Instruments and Chattel Paper with the following legend: “This writing and the
obligations evidenced or secured hereby are subject to the security interest of Bank of America,
N.A., as Collateral Agent for the benefit of the Secured Parties” (which legend shall be
modified to reflect successor Collateral Agents).



3.7 Intellectual Property





	 	(a)	 	The Debtor (either itself or through licensees) shall (and shall cause all
licensees or sublicensees thereof to) (i) continue to use each Trademark that is
Material Intellectual Property in order to maintain such Trademark in full force and
effect with respect to each class of goods for which such Trademark is currently used,
free from any claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under such Trademark, (iii) use such Trademark
with the appropriate notice of registration and all other notices and legends required
by applicable Requirements of Law, (iv) execute and file all documents necessary to
perfect a security interest pursuant to this Agreement in favour of the Collateral
Agent promptly upon adopting or using any mark that is
confusingly similar or a colorable imitation of such Trademark and (v) not do any
act or knowingly omit to do any act (and not permit or direct by express act or
omission any licensee or sublicensee thereof to do any act) whereby such Trademark
(or any goodwill associated therewith) may become destroyed, invalidated, impaired
or harmed in any way; provided, however, that (i) to (iii) and (v) above shall be
subject to the good faith exercise by the Debtor of its reasonable business judgment
consistent with past practices.




 


 









 











	 	(b)	 	The Debtor shall not (and shall not permit or direct by express act or omission
any licensee or sublicensee thereof to) do any act, or omit to do any act, whereby any
Patent that is Material Intellectual Property may become forfeited, abandoned or
dedicated to the public.







	 	(c)	 	The Debtor (i) shall not (and shall not permit or direct by express act or
omission any licensee or sublicensee thereof to) do any act or omit to do any act
whereby any portion of the Copyrights that is Material Intellectual Property may become
invalidated or otherwise impaired and (ii) shall not (and shall not permit or direct by
express act or omission any licensee or sublicensee thereof to) do any act whereby any
portion of the Copyrights that is Material Intellectual Property may fall into the
public domain.







	 	(d)	 	The Debtor shall not knowingly (and shall not permit or direct by express act
or omission any licensee or sublicensee thereof to) do any act, or knowingly omit to do
any act, whereby any trade secret that is Material Intellectual Property may become
publicly available or otherwise unprotectable.







	 	(e)	 	The Debtor shall not (and shall not permit or direct by express act or omission
any licensee or sublicensee thereof to) do any act that knowingly infringes,
misappropriates, dilutes or violates any Third Party Intellectual Property Rights.







	 	(f)	 	The Debtor shall promptly inform the Collateral Agent in writing of the
acquisition by the Debtor of any Registerable Intellectual Property, and the Debtor
shall execute and deliver, at its own expense, from time to time amendments to this
Agreement or additional security agreements or schedules as may be required by the
Collateral Agent in order that the Security Interest shall attach to such Registerable
Intellectual Property.







	 	(g)	 	The Debtor shall notify the Collateral Agent immediately if it knows, or has
reason to know, that any application for registration or recording, registration or
recording relating to any Material Intellectual Property may become forfeited,
abandoned or dedicated to the public, or of any adverse determination or development
(including the institution of, or any such determination or development in, any
proceeding in CIPO, the Federal Court of Canada or any other court or tribunal in any
other country) regarding Debtor’s ownership of, right to use, interest in, or the
validity or enforceability of, any Material Intellectual Property or Debtor’s right to
register the same or to own and maintain the same.




 


 









 











	 	(h)	 	As set forth below, whenever the Debtor, either by itself or through its
counsel or any agent or designee, shall file an application for the registration or
recording of
any Intellectual Property with CIPO or any similar office or agency within or
outside Canada or register any Internet domain name, the Debtor shall report such
filing to the Collateral Agent within five Business Days after the last day of the
fiscal quarter in which such filing occurs. Upon request of the Collateral Agent,
the Debtor shall execute and deliver, and have recorded, all agreements,
instruments, documents and papers as the Collateral Agent may request to evidence
the Collateral Agent’s security interest in any such Copyright, Patent, Trademark or
Internet domain name and the goodwill and intangibles of the Debtor relating thereto
or represented thereby.







	 	(i)	 	The Debtor shall take all reasonable actions that are (i) necessary (subject to
the good faith exercise by the Debtor of its reasonable business judgment consistent
with past practices) or (ii) requested by the Collateral Agent, including in any
proceeding before CIPO or any similar office or agency and any Internet domain name
registrar, to maintain and pursue each application for registration or recording (and
to obtain the relevant registration or recording) and to maintain each registration and
recording of any Copyright, Trademark, Patent or Internet domain name that is Material
Intellectual Property, including filing of applications for renewal, affidavits of use,
affidavits of incontestability and opposition and interference and cancellation
proceedings.







	 	(j)	 	In the event that any Material Intellectual Property is infringed,
misappropriated, diluted or violated by a third party, the Debtor shall notify the
Collateral Agent promptly after the Debtor learns thereof. The Debtor shall take
appropriate action in response to any infringement, misappropriation, dilution or
violation of the Material Intellectual Property, including promptly bringing suit for
infringement, misappropriation, dilution or violation and to recover all damages for
such infringement, misappropriation, dilution or violation, and shall take such other
actions may be appropriate under the circumstances to protect such Intellectual
Property; provided, however, that the foregoing shall be subject to the good faith
exercise by the Debtor of its reasonable business judgment consistent with past
practices.







	 	(k)	 	Unless otherwise agreed to by the Collateral Agent the Debtor shall execute and
deliver to the Collateral Agent for filing in (i) the United States Copyright Office or
any similar office or agency a short-form copyright security agreement in the form
attached hereto as Annex 1 for all Copyrights of the Debtor registered therein from
time to time, (ii) in the United States Patent and Trademark Office or any similar
office or agency a short-form patent security agreement in the form attached hereto as
Annex 2 for all Patents of the Debtor registered therein from time to time, (iii) the
United States Patent and Trademark Office or any similar office or agency and with the
appropriate department or division of all appropriate States of the United States a
short-form trademark security agreement in form attached hereto as Annex 3 for all
Trademarks of the Debtor registered therein from time to time and (iv) with the
appropriate Internet domain name registrar, a duly executed form of assignment of all
Internet domain names of the Debtor to the Collateral Agent (together with appropriate
supporting documentation as may be requested by the Collateral Agent) in form and
substance reasonably
acceptable to the Collateral Agent. In the case of clause (iv) above, the Debtor
hereby authorizes the Collateral Agent to file such assignment in the Debtor’s name
and to otherwise perform in the name of the Debtor all other necessary actions to
complete such assignment, and the Debtor agrees to perform all appropriate actions
deemed necessary by the Collateral Agent for the Collateral Agent to ensure such
Internet domain name is registered in the name of the Collateral Agent.




 


 









 










3.8 Cash Management; Deposit Accounts





	 	(a)	 	On the Closing Date (or such later date as agreed by the Collateral Agent), the
Debtor shall cause to be delivered (i) to the Collateral Agent, a duly executed and
effective Blocked Account Letter for each existing deposit account identified as a
concentration account on Schedule 7 maintained by the Debtor and (ii) to each
Restricted Account Bank (with a copy to the Collateral Agent), a Restricted Account
Letter for each other deposit account (subject only to clause (b) below) duly executed
by the Debtor to each such deposit account.







	 	(b)	 	The Debtor shall (i) deposit in a Blocked Account or Restricted Account all
cash and all Proceeds received by the Debtor and (ii) not establish or maintain any
deposit account with any financial or other institution other than a Blocked Account
Bank, a Restricted Account Bank, the Collateral Agent or the Administrative Agent;
provided, however, that the Debtor may at any time maintain the following accounts not
subject to this Section 3.8(b)(i) deposit accounts or Securities Accounts (or their
foreign equivalents) located outside of Canada with cash or Cash Equivalents not in
excess of an aggregate amount of $3,000,000, (ii) deposit accounts or Securities
Accounts located in Canada with cash or Cash Equivalents not in excess of an aggregate
amount of $1,000,000 and (iii) payroll tax, employee deductions at source, withholding
tax, goods and services and sales tax, and other fiduciary accounts as required for
operations in the ordinary course of business.







	 	(c)	 	The Debtor shall instruct each account debtor or other Person obligated to make
a payment to the Debtor to make payment, or to continue to make payment, as the case
may be, to a lock-box linked to a Blocked Account or a Restricted Account, as the case
may be, and the Debtor shall deposit in a Blocked Account or a Restricted Account all
Proceeds received by the Debtor from any other Person immediately upon receipt.







	 	(d)	 	In the event (i) the Debtor or a Blocked Account Bank or Restricted Account
Bank shall, after the date hereof, terminate an agreement with respect to the
maintenance of a Blocked Account or Restricted Account, as the case may be, for any
reason, (ii) the Collateral Agent shall demand termination of a Blocked Account Letter
or a Restricted Account Letter as a result of the failure of a Blocked Account Bank or
Restricted Account Bank, as the case may be, to comply with the terms of the applicable
letter agreement or (iii) the Collateral Agent determines in its sole discretion that
the financial condition of a Blocked Account Bank or Restricted Account Bank has
materially deteriorated, then, in
each case, the Debtor shall notify all of its account debtors that were making
payments to such terminated Blocked Account Bank or Restricted Account Bank to make
all future payments to such other Blocked Account Bank or Restricted Account Bank,
as specified by the Collateral Agent.




 


 









 











	 	(e)	 	The Collateral Agent agrees that it shall not deliver to any Blocked Account
Bank a sweep activation notice under any Blocked Account Letter with such Blocked
Account Bank unless there has occurred and is continuing an Event of Default or
Available Credit has been less than 15% of the Aggregate Borrowing Limit for five or
more consecutive Business Days.






3.9 Cash Collateral Accounts





	 	(a)	 	The Collateral Agent may establish one or more Cash Collateral Accounts with
such depositaries and Securities Intermediaries as it in its sole discretion shall
determine. The Debtor agrees that each such Cash Collateral Account shall be under the
control of the Collateral Agent and that the Collateral Agent shall be the Entitlement
Holder with respect to each such Cash Collateral Account that is a Securities Account
and the only Person authorized to give Entitlement Orders with respect to each such
Securities Account. Without limiting the foregoing, funds on deposit in any Cash
Collateral Account may be invested in Permitted Cash Equivalents at the direction of
the Collateral Agent and, except during the continuance of an Event of Default (unless
otherwise agreed to by the Administrative Agent in its sole discretion), the Collateral
Agent agrees with the Debtor to issue Entitlement Orders for such investments in
Permitted Cash Equivalents as requested by the Debtor; provided, however, that the
Collateral Agent shall not have any responsibility for, or bear any risk of loss of,
any such requested investment or income thereon and the Collateral Agent shall have no
obligation to make or cause to be made any such investment absent a request by the
Borrower for a specific investment in Permitted Cash Equivalents. Neither any Warnaco
Entity nor any other Person claiming on behalf of or through any Warnaco Entity shall
have any right to demand payment of any funds held in any Cash Collateral Account at
any time prior to Discharge of Lender Claims, except (i) as provided in Section 2.9(f)
of the Credit Agreement and (ii) that the Debtor may request that the Collateral Agent
apply funds in any Cash Collateral Account directly to the immediate payment of the
Loans and if paid in full then to the cash collateralization of Letter of Credit
Obligations (and not to be delivered to any Warnaco Entity). The Collateral Agent
shall apply all funds on deposit in a Cash Collateral Account as provided in Section
2.9(f) of the Credit Agreement.






3.10 Vehicles




Upon the request of the Collateral Agent, within 30 days after the date of such request and,
with respect to any vehicle acquired by the Debtor subsequent to the date of any such request,
within 30 days after the date of acquisition thereof, the Debtor shall file all applications for
certificates of title or ownership indicating the Collateral Agent’s first priority security
interest in the vehicle covered by such certificate and any other necessary documentation, in each
office in each jurisdiction that the Collateral Agent shall deem advisable to perfect its security
interests in the vehicles; provided, however, that the aggregate value of all vehicles
excepted from the application of this Section 3.10 shall not exceed $1,000,000.


 


 









 





3.11 Payment of Obligations




The Debtor shall pay and discharge or otherwise satisfy at or before maturity or before they
become delinquent, as the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as well as all claims of
any kind (including claims for labor, materials and supplies) against or with respect to the
Collateral, except that no such charge need be paid if the amount or validity thereof is currently
being contested in good faith by appropriate proceedings, reserves in conformity with Agreement
Accounting Principles with respect thereto have been provided on the books of the Debtor and such
proceedings could not reasonably be expected to result in the sale, forfeiture or loss of any
material portion of the Collateral or any interest therein.



SECTION 4 —  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS




All representations, warranties, covenants, agreements, undertakings and conditions made in
the Loan Documents, which, if not true, accurate and complete when made and which, if not performed
in accordance with the terms thereof, are material, shall be considered to have been relied on by
the Agents and the Secured Parties and shall survive the execution and delivery of this Agreement
or any investigation made at any time by or on behalf of the Agents and any disposition or payment
of the Secured Obligations until repayment and performance in full of the Secured Obligations and
termination of all rights of the Debtor that, if exercised, would result in the existence of
Secured Obligations.



SECTION 5 — DEFAULT



5.1 Default



The Secured Obligations secured by this Agreement shall be immediately due and payable in full and
the security interests hereby constituted shall become enforceable upon the occurrence and during
the continuance of an Event of Default (herein called a “Default”).



5.2 Demand Nature of Secured Obligations




The Debtor agrees that the provision of defaults in section 5.1 shall not derogate from any
demand nature of the Secured Obligations as provided in the Credit Agreement as at any time without
restriction, whether or not the Debtor has complied with the provisions of this Agreement or any
other agreement or instrument between it and the Collateral Agent or any other Secured Party. The
Debtor agrees that upon the occurrence and during the continuance of a Default under section 5.1,
the security interests hereby constituted shall become enforceable and the Collateral Agent shall
be entitled to exercise and enforce any or all of the remedies herein provided or which may
otherwise be available to the Collateral Agent by statute, at law or in equity and, upon demand by
the Administrative Agent pursuant to Section 9.2 (Remedies) of the Credit Agreement, all amounts
secured hereby shall immediately be paid to the Collateral Agent (for itself and on behalf of the
Secured Parties) by the Debtor.


 


 









 





SECTION 6 —  REMEDIES ON DEFAULT




If the security interest hereby constituted becomes enforceable, the Collateral Agent shall
have, in addition to any other rights, remedies and powers which it may have at law, in equity or
under the PPSA, the CCQ or the UCC (whether or not the CCQ or the UCC applies to the affected
Collateral) the following rights, remedies and powers upon the occurrence and during the
continuance of an Event of Default:



6.1 Power of Entry




The Debtor shall forthwith upon demand assemble and deliver to the Collateral Agent possession
of all of the Collateral at such place or places as may be reasonably specified by the Collateral
Agent. The Collateral Agent may take such steps as it considers necessary or desirable to obtain
possession of all or any part of the Collateral and, to that end, the Debtor agrees that the
Collateral Agent, its servants or agents or Receiver (as hereinafter defined) may, at any time,
during the day or night, enter upon lands and premises where the Collateral may be found for the
purpose of taking possession of and/or removing the Collateral or any part thereof. In the event
of the Collateral Agent taking possession of the Collateral, or any part thereof, the Collateral
Agent shall have the right to maintain the same upon the premises on which the Collateral may then
be situate. The Collateral Agent may take such action or do such things as to render any Equipment
unusable.



6.2 Power of Sale




The Collateral Agent may sell, lease or otherwise dispose of all or any part of the
Collateral, as a whole or in separate parcels, by public auction, private tender or by private
contract, with or without notice, except as otherwise required by applicable law, with or without
advertising and without any other formality, all of which are hereby waived by the Debtor. Such
sale, lease or disposition shall be on such terms and conditions as to credit and otherwise and as
to upset or reserve bid or price as to the Collateral Agent, in its sole discretion, may seem
advantageous. If such sale, transfer or disposition is made on credit or part cash and part
credit, the Collateral Agent need only credit against the Secured Obligations the actual cash
received at the time of the sale. Any payments made pursuant to any credit granted at the time of
the sale shall be credited against the Secured Obligations as they are received. The Collateral
Agent may buy in or rescind or vary any contract for sale of all or any of the Collateral and may
resell without being answerable for any loss occasioned thereby. Any such sale, lease or
disposition may take place whether or not the Collateral Agent has taken possession of the
Collateral. The Collateral Agent may, before any such sale, lease or disposition, perform any
commercially reasonable repair, processing or preparation for disposition and the amount so paid or
expended shall be deemed advanced to the Debtor by the Collateral Agent, shall become part of the
Secured Obligations, shall bear interest at the highest rate per annum charged by the Collateral
Agent on the Secured Obligations or any part thereof and shall be secured by this Agreement.


 


 









 





6.3 Validity of Sale




No person dealing with the Collateral Agent or its servants or agents shall be concerned to
inquire whether the security hereby constituted has become enforceable, whether the powers
which the Collateral Agent is purporting to exercise have become exercisable, whether any
money remains due on the security of the Collateral, as to the necessity or expedience of the
stipulations and conditions subject to which any sale, lease or disposition shall be made,
otherwise as to the propriety or regularity of any sale or any other dealing by the Collateral
Agent with the Collateral or to see to the application of any money paid to the Collateral Agent.
In the absence of fraud on the part of such persons, such dealings shall be deemed, so far as
regards the safety and protection of such person, to be within the powers hereby conferred and to
be valid and effective accordingly.



6.4 Receiver-Manager




The Collateral Agent may, in addition to any other rights it may have, appoint by instrument
in writing a receiver or receiver and manager (both of which are herein called a “Receiver”) of all
or any part of the Collateral or may institute proceedings in any court of competent jurisdiction
for the appointment of such a Receiver. Any such Receiver is hereby given and shall have the same
powers and rights and exclusions and limitations of liability as the Collateral Agent has under
this Agreement, at law or in equity. In exercising any such powers, any such Receiver shall, to
the extent permitted by law, act as and for all purposes shall be deemed to be the agent of the
Debtor and the Collateral Agent and the Secured Parties shall not be responsible for any act or
default of any such Receiver. The Collateral Agent may appoint one or more Receivers hereunder and
may remove any such Receiver or Receivers and appoint another or others in his or their stead from
time to time. Any Receiver so appointed may be an officer or employee of the Collateral Agent. A
court need not appoint, ratify the appointment by the Collateral Agent of or otherwise supervise in
any manner the actions of any Receiver. Upon the Debtor receiving notice from the Collateral Agent
of the taking of possession of the Collateral or the appointment of a Receiver, all powers,
functions, rights and privileges of each of the directors and officers of the Debtor with respect
to the Collateral shall cease, unless specifically continued by the written consent of the
Collateral Agent.



6.5 Carrying on Business




The Collateral Agent may carry on, or concur in the carrying on of, all or any part of the
business or undertaking of the Debtor, may, to the exclusion of all others, including the Debtor,
enter upon, occupy and use all or any of the premises, buildings, plant and undertaking of or
occupied or used by the Debtor and may use all or any of the tools, machinery, equipment and
intangibles of the Debtor for such time as the Collateral Agent sees fit, free of charge, to carry
on the business of the Debtor and, if applicable, to manufacture or complete the manufacture of any
Inventory and to pack and ship the finished product.


 


 









 





6.6 Dealing with Collateral




The Collateral Agent may seize, collect, realize, dispose of, enforce, release to third
parties or otherwise deal with the Collateral or any part thereof in such manner, upon such terms
and conditions and at such time or times as may seem to it advisable, all of which without notice
to the Debtor except as otherwise required by any applicable law. The Collateral Agent may demand,
sue for and receive any Accounts Receivable with or without notice to the Debtor, give such
receipts, discharges and extensions of time and make such compromises in respect of any
Accounts Receivable which may, in the Agent’s absolute discretion, seem bad or doubtful. The
Collateral Agent may charge on its own behalf and pay to others, sums for costs and expenses
incurred including, without limitation, legal fees and expenses on a solicitor and his own client
scale and Receivers’ and accounting fees, in or in connection with seizing, collecting, realizing,
disposing, enforcing or otherwise dealing with the Collateral and in connection with the protection
and enforcement of the rights of the Collateral Agent hereunder including, without limitation, in
connection with advice with respect to any of the foregoing. The amount of such sums shall be
deemed advanced to the Debtor by the Collateral Agent, shall become part of the Secured
Obligations, shall bear interest at the highest rate per annum charged by the Collateral Agent on
the Secured Obligations or any part thereof and shall be secured by this Agreement.



6.7 Right to Use




For the purposes of enabling the Collateral Agent to exercise its rights and remedies under
this Agreement (including, without limiting the terms of this Section 6, in order to take
possession of, hold, preserve, process, assemble, prepare for sale, market for sale, complete
production of, advertise for sale and sell or otherwise dispose of the Collateral) at such time as
the Collateral Agent shall be lawfully entitled to exercise such rights and remedies, the Debtor
hereby grants to the Collateral Agent (for itself and on behalf of the Secured Parties) an
irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to
the Debtor) to use, license or sublicense all of the Debtor’s present and future property, whether
real or personal, including, without limitation, all labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, services marks, and advertising matter, or any
other property of any nature or of a similar nature now owned or hereafter acquired by the Debtor,
and wherever the same may be located, and including such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and programs used for
the compilation or printout thereof and all of the Debtor’s rights under all licenses and all
franchise agreements shall inure to the Collateral Agent.



6.8 Retention of Collateral




Upon notice to the Debtor and subject to any obligation to dispose of any of the Collateral,
as provided in the PPSA, the Collateral Agent may elect to retain all or any part of the Collateral
in satisfaction of the Secured Obligations or any of them.



6.9 Accounts and Payments in Respect of Intangibles





	 	(a)	 	In addition to, and not in substitution for, any similar requirement in the
Credit Agreement, if required by the Collateral Agent at any time during the
continuance of an Event of Default, any payment of Accounts Receivable or payment in
respect of Intangibles, when collected by the Debtor, shall be forthwith (and, in any
event, within two Business Days) deposited by the Debtor in the exact form received,
duly indorsed by the Debtor to the Collateral Agent, in a Blocked Account or a Cash
Collateral Account, subject to withdrawal by the Collateral Agent as provided in
Section 6.11 (Proceeds to be Turned Over To Collateral Agent). Until so turned over,
such payment shall be held by the Debtor in trust for the Collateral Agent, segregated
from other funds of the Debtor. Each such
deposit of Proceeds of Accounts Receivable and payments in respect of Intangibles
shall be accompanied by a report identifying in reasonable detail the nature and
source of the payments included in the deposit.




 


 









 











	 	(b)	 	At the Collateral Agent’s request, during the continuance of an Event of
Default, the Debtor shall deliver to the Collateral Agent all original and other
documents evidencing, and relating to, the agreements and transactions that gave rise
to the Accounts Receivable or payments in respect of Intangibles, including all
original orders, invoices and shipping receipts.







	 	(c)	 	Subject to the terms of the Credit Agreement, the Collateral Agent may, without
notice, at any time during the continuance of an Event of Default, limit or terminate
the authority of the Debtor to collect its Accounts Receivable or amounts due under
Intangibles or any thereof.







	 	(d)	 	The Collateral Agent in its own name or in the name of others may at any time
during the continuance of an Event of Default communicate with account debtors to
verify with them to the Collateral Agent’s satisfaction the existence, amount and terms
of any Account or amounts due under any Intangible.







	 	(e)	 	Upon the request of the Collateral Agent at any time during the continuance of
an Event of Default, the Debtor shall notify account debtors that it has granted to the
Collateral Agent a lien on and security interest in, all of its right, title and
interest in, to and under the Accounts Receivable or Intangibles that have been
collaterally assigned to the Collateral Agent and that payments in respect thereof
shall be made directly to the Collateral Agent. In addition, the Collateral Agent may
at any time during the continuance of an Event of Default, to the extent permitted by
applicable law, enforce the Debtor’s rights against such account debtors and obligors
of Intangibles.







	 	(f)	 	Anything herein to the contrary notwithstanding, the Debtor shall remain liable
under each of the Accounts Receivable and payments in respect of Intangibles to observe
and perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise thereto.
Neither the Collateral Agent nor any other Secured Party shall have any obligation or
liability under any agreement giving rise to an Account or a payment in respect of an
Intangible by reason of or arising out of this Agreement or the receipt by the
Collateral Agent or any other Secured Party of any payment relating thereto, nor shall
the Collateral Agent nor any other Secured Party be obligated in any manner to perform
any obligation of the Debtor under or pursuant to any agreement giving rise to an
Account or a payment in respect of an Intangible, to make any payment, to make any
inquiry as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any claim,
to take any action to enforce any performance or to collect the payment of any amounts
that may have been assigned to it or to which it may be entitled at any time or times.




 


 









 










6.10 Pledged Collateral




	 	(a)	 	During the continuance of an Event of Default, upon notice by the Collateral
Agent to the Debtor, (i) the Collateral Agent shall have the right to receive any
Proceeds of the Pledged Collateral and make application thereof to the Secured
Obligations in the order set forth in the Credit Agreement and (ii) the Collateral
Agent or its nominee may exercise (A) any voting, consent, corporate and other right
pertaining to the Pledged Collateral at any meeting of shareholders, partners or
members, as the case may be, of the relevant issuer or issuers of Pledged Collateral or
otherwise and (B) any right of conversion, exchange and subscription and any other
right, privilege or option pertaining to the Pledged Collateral as if it were the
absolute owner thereof (including the right to exchange at its discretion any of the
Pledged Collateral upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate structure of any issuer of Pledged Stock and
the right to deposit and deliver any Pledged Collateral with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and conditions as
the Collateral Agent may determine), all without liability except to account for
property actually received by it; provided, however, that the Collateral Agent shall
have no duty to the Debtor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.







	 	(b)	 	In order to permit the Collateral Agent to exercise the voting and other
consensual rights that it may be entitled to exercise pursuant hereto and to receive
all dividends and other distributions that it may be entitled to receive hereunder,
(i) the Debtor shall promptly execute and deliver (or cause to be executed and
delivered) to the Collateral Agent all such proxies, dividend payment orders and other
instruments as the Collateral Agent may from time to time reasonably request and
(ii) without limiting the effect of clause (i) above, the Debtor hereby grants to the
Collateral Agent an irrevocable proxy to vote all or any part of the Pledged Collateral
and to exercise all other rights, powers, privileges and remedies to which a holder of
the Pledged Collateral would be entitled (including giving or withholding written
consents of shareholders, partners or members, as the case may be, calling special
meetings of shareholders, partners or members, as the case may be, and voting at such
meetings), which proxy shall be effective, automatically and without the necessity of
any action (including any transfer of any Pledged Collateral on the record books of the
issuer thereof) by any other person (including the issuer of such Pledged Collateral or
any officer or agent thereof) during the continuance of an Event of Default and which
proxy shall only terminate upon Discharge of Lender Claims.







	 	(c)	 	The Debtor hereby expressly authorizes and instructs each issuer of any Pledged
Collateral pledged hereunder by the Debtor to (i) comply with any instruction received
by it from the Collateral Agent in writing that (A) states that an Event of Default has
occurred and is continuing and (B) is otherwise in accordance with the terms of this
Agreement, without any other or further instructions from the Debtor, and the Debtor
agrees that such issuer shall be fully protected in so complying and (ii) unless
otherwise expressly permitted hereby, pay any dividend or other payment with respect to
the Pledged Collateral directly to the Collateral Agent.




 


 









 










6.11 Proceeds to be Turned Over To Collateral Agent




Unless otherwise expressly provided in the Credit Agreement, all Proceeds received by the
Collateral Agent hereunder in cash or Cash Equivalents shall be held by the Collateral Agent in a
Cash Collateral Account. All Proceeds constituting Reinvestment Prepayment Amounts (as defined in
the Credit Agreement) or the cash collateralization of Letters of Credit (as defined in the Credit
Agreement) while held by the Collateral Agent in a Cash Collateral Account (or by the Debtor in
trust for the Collateral Agent) shall continue to be held as collateral security for the Secured
Obligations and shall not constitute payment thereof until applied as provided in the Credit
Agreement.



6.12 Registration Rights





	 	(a)	 	During the continuance of an Event of Default, if the Collateral Agent shall
determine to exercise its right to sell any of the Pledged Collateral, and if in the
reasonable opinion of the Collateral Agent it is necessary or advisable to have the
Pledged Collateral, or any portion thereof, registered under the provisions of the STA
or any similar securities laws in any other applicable jurisdiction (the “Securities
Act”), the Debtor shall use its reasonable efforts to cause the issuer thereof to
(i) execute and deliver, and cause the directors and officers of such issuer to execute
and deliver, all such instruments and documents, and do or cause to be done all such
other acts as may be, in the opinion of the Collateral Agent, necessary or advisable to
register the Pledged Collateral, or that portion thereof to be sold, under the
provisions of the Securities Act, (ii) use its reasonable efforts to cause the
registration statement relating thereto to become effective and to remain effective for
a period of one year from the date of the first public offering of the Pledged
Collateral, or that portion thereof to be sold and (iii) make all amendments thereto or
to the related prospectus that, in the opinion of the Collateral Agent, are necessary
or advisable, all in conformity with the requirements of the Securities Act and the
rules and regulations of any securities commission applicable thereto. The Debtor
agrees to cause such issuer to comply with the provisions of the applicable securities
laws of any jurisdiction that the Collateral Agent shall designate and to make
available to its security holders, as soon as practicable, an earnings statement (which
need not be audited) satisfying the provisions of the Securities Act.







	 	(b)	 	The Debtor recognizes that the Collateral Agent may be unable to effect a
public sale of any Pledged Collateral by reason of certain prohibitions contained in
the Securities Act and applicable regulations or otherwise or may determine that a
public sale is impracticable or not commercially reasonable and, accordingly, may
resort to one or more private sales thereof to a restricted group of purchasers that
shall be obliged to agree, among other things, to acquire such securities for their own
account for investment and not with a view to the distribution or resale thereof. The
Debtor acknowledges and agrees that any such private sale may result in prices and
other terms less favourable than if such sale were a public sale and, notwithstanding
such circumstances, agrees that any such private sale shall be deemed to have been made
in a commercially reasonable manner. The
Collateral Agent shall be under no obligation to delay a sale of any Pledged
Collateral for the period of time necessary to permit the issuer thereof to register
such securities for public sale under the Securities Act, even if such issuer would
agree to do so.




 


 









 











	 	(c)	 	During the continuance of an Event of Default, the Debtor agrees to use its
best efforts to do or cause to be done all such other acts as may be necessary to make
such sale or sales of all or any portion of the Pledged Collateral pursuant to this
Section 6.12 valid and binding and in compliance with all other applicable Requirements
of Law. The Debtor further agrees that a breach of any covenant contained in this
Section 6.12 will cause irreparable injury to the Collateral Agent and the other
Secured Parties, that the Collateral Agent and the other Secured Parties have no
adequate remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section 6.12 shall be specifically enforceable against
the Debtor, and the Debtor hereby waives and agrees not to assert any defense against
an action for specific performance of such covenants except for a defense that no Event
of Default has occurred under the Credit Agreement.






6.13 Pay Encumbrances




The Collateral Agent may pay any encumbrance that may exist or be threatened against the
Collateral. In addition, the Collateral Agent may borrow money required for the maintenance,
preservation or protection of the Collateral or for the carrying on of the business or undertaking
of the Debtor and may grant further security interests in the Collateral in priority to the
security interest created hereby as security for the money so borrowed. In every such case the
amounts so paid or borrowed together with costs, charges and expenses incurred in connection
therewith shall be deemed to have been advanced to the Debtor by the Collateral Agent, shall become
part of the Secured Obligations, shall bear interest at the highest rate per annum charged by the
Collateral Agent on the Secured Obligations or any part thereof and shall be secured by this
Agreement.



6.14 Application of Payments Against Secured Obligations




Any and all payments made in respect of the Secured Obligations from time to time and moneys
realized on the Collateral shall be applied in accordance with Section 2.13 of the Credit
Agreement. Any insurance moneys received by the Collateral Agent pursuant to this Agreement may,
at the option of the Collateral Agent, be applied to rebuilding or repairing the Collateral or be
applied against the Secured Obligations in accordance with the provisions of this Section.



6.15 Set-Off




The Secured Obligations will be paid by the Debtor without regard to any equities between the
Debtor and the Collateral Agent and/or any Secured Party or any right of set-off or cross-claim.
Any indebtedness owing by the Collateral Agent and/or any Secured Party to the Debtor may be set
off and applied by the Collateral Agent against the Secured Obligations at any time or from time to
time either before or after maturity, without demand upon or notice to anyone.


 


 









 





6.16 Deficiency




The Debtor shall remain liable for any deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay the Secured Obligations and the reasonable
fees and disbursements of any attorney employed by the Collateral Agent or any other Secured Party
to collect such deficiency.



6.17 Agent Not Liable




Neither the Collateral Agent nor any of the other Secured Parties shall be (a) liable or
accountable for any failure to seize, collect, realize, dispose of, enforce or otherwise deal with
the Collateral, (b) bound to institute proceedings for any such purposes or for the purpose of
preserving any rights of the Collateral Agent, the Debtor or any other person, firm or corporation
in respect of the Collateral, or (c) liable or responsible for any loss, cost or damage whatsoever
which may arise in respect of any such failure including, without limitation, resulting from the
negligence of the Collateral Agent or any of its officers, servants, agents, solicitors, attorneys,
Receivers or otherwise except for its, his, her or their gross negligence or willful misconduct.
Neither the Collateral Agent nor any of the other Secured Parties, nor their respective officers,
servants, agents or Receivers shall be liable by reason of any entry into possession of the
Collateral or any part thereof, to account as a mortgagee in possession, for anything except actual
receipts, for any loss on realization, for any act or omission for which a mortgagee in possession
might be liable, for any negligence in the carrying on or occupation of the business or undertaking
of the Debtor as provided in Section 6.5 or for any loss, cost, damage or expense whatsoever which
may arise in respect of any such actions, omissions or negligence except for its, his, her or their
gross negligence or willful misconduct.



6.18 Extensions of Time




The Collateral Agent and any of the Secured Parties may grant renewals, extensions of time and
other indulgences, take and give up securities, accept compositions, grant releases and discharges,
perfect or fail to perfect any securities, release any part of the Collateral to third parties and
otherwise deal or fail to deal with the Debtor, debtors of the Debtor, guarantors, sureties and
others and with the Collateral and other securities as they may see fit, all without prejudice to
the liability of the Debtor to the Collateral Agent and the Secured Parties or the Collateral
Agent’s and Secured Parties’ rights and powers under this Agreement.



6.19 Rights in Addition




The rights and powers conferred by this Section 6 are in supplement of and in addition to and
not in substitution for any other rights or powers the Collateral Agent may have from time to time
under this Agreement or under applicable law. The Collateral Agent may proceed by way of any
action, suit, remedy or other proceeding at law or in equity and no such remedy for the enforcement
of the rights of the Collateral Agent shall be exclusive of or dependent on any other such remedy.
Any one or more of such remedies may from time to time be exercised separately or in combination.


 


 









 





SECTION 7 — DEALING WITH COLLATERAL BY THE DEBTOR



7.1 Sale of Inventory



Prior to the occurrence of a Default, the Debtor may, to the extent permitted hereunder or as
permitted in the Credit Agreement, in the ordinary course of its business and on customary trade
terms, lease or sell items of Inventory, so that the purchaser thereof takes title clear of the
security interest hereby created. If such sale or lease results in an Account Receivable, such
Account Receivable shall be subject to the security interest hereby created.



SECTION 8 — GENERAL



8.1 Security in Addition



The security hereby constituted is not in substitution for any other security for the Secured
Obligations or for any other agreement between the parties creating a security interest or hypothec
in all or part of the Collateral, whether heretofore or hereafter made, and such security and such
agreements shall be deemed to be continued and not affected hereby unless expressly provided to the
contrary in writing and signed by the Collateral Agent and the Debtor. The taking of any action or
proceedings or refraining from so doing, or any other dealing with any other security for the
Secured Obligations or any part thereof, shall not release or affect the security interest created
by this Agreement and the taking of the security interest hereby created or any proceedings
hereunder for the realization of the security interest hereby created shall not release or affect
any other security held by the Collateral Agent for the repayment of or performance of the Secured
Obligations.



8.2 Amendments in Writing




None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 11.1 (Amendments, Waivers, Etc.) of the Credit
Agreement; provided, however, that annexes to this Agreement may be supplemented (but no existing
provisions may be modified and no Collateral may be released except as provided in Section 8.11)
through amendments in a form reasonably acceptable to the Collateral Agent, in each case duly
executed by the Collateral Agent and the Debtor.



8.3 Notices




All notices, requests and demands to or upon the Collateral Agent or the Debtor hereunder
shall be effected in the manner provided for in Section 11.8 (Notices, Etc.) of the Credit
Agreement; provided, however, that any such notice, request or demand to or upon the Debtor shall
be addressed to the Debtor’s notice address set forth in such Section 11.8 or to its principal
place of business as set forth herein.


 


 









 





8.4 No Waiver by Course of Conduct; Cumulative Remedies




Neither the Collateral Agent nor any other Secured Party shall by any act (except by a written
instrument pursuant to Section 8.2 (Amendments in Writing)), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Collateral Agent or any other Secured Party, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Collateral Agent or any other Secured
Party of any right or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy that the Collateral Agent or such other Secured Party would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any other rights or remedies provided by law.



8.5 Successors and Assigns




This Agreement shall be binding upon the successors and assigns of the Debtor and shall inure
to the benefit of the Collateral Agent and each other Secured Party and their successors and
assigns; provided, however, that the Debtor may not assign, transfer or delegate any of its rights
or obligations under this Agreement without the prior written consent of the Collateral Agent.



8.6 Counterparts




This Agreement may be executed by one or more of the parties to this Agreement on any number
of separate counterparts (including by telecopy), each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same agreement.
Signature pages may be detached from multiple counterparts and attached to a single counterpart so
that all signature pages are attached to the same document. Delivery of an executed counterpart by
telecopy or electronic transmission (in pdf format) shall be effective as delivery of a manually
executed counterpart.



8.7 Severability




Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.



8.8 Section Headings




The Section titles and subtitles contained in this Agreement are, and shall be, without
substantive meaning or content of any kind whatsoever and are not part of the agreement of the
parties hereto.



8.9 Entire Agreement 




This Agreement, together with the other Loan Documents, represents the entire agreement of the
parties and supersedes all prior agreements and understandings relating to the subject matter
hereto concerning the Secured Obligations.


 


 









 





8.10 Additional Debtors




Pursuant to Section 7.11 (Additional Personal Property Collateral and Guaranties) of the
Credit Agreement, the Debtor shall be required to cause any Subsidiary to execute and deliver to
the Collateral Agent a General Security Agreement substantially in the form hereof unless otherwise
agreed by the Administrative Agent.



8.11 Release of Collateral





	 	(a)	 	At the time provided in Section 10.7(b)(i) of the Credit Agreement, the
Collateral shall be released from the Liens hereby and this Agreement and all
obligations (other than those expressly stated to survive such termination) of the
Collateral Agent and the Debtor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the Collateral
shall revert to the Debtor. At the request and sole expense of the Debtor following
any such termination, the Collateral Agent shall deliver to the Debtor any Collateral
of the Debtor held by the Collateral Agent hereunder and execute and deliver to the
Debtor, at the sole expense of the Debtor, such documents as the Debtor shall
reasonably request to evidence such termination.







	 	(b)	 	If the Collateral Agent shall be directed or permitted pursuant to
Section 10.7(b)(ii) or (iii) of the Credit Agreement to release any Lien created hereby
upon any Collateral (including any Collateral sold or disposed of by the Debtor in a
transaction permitted by the Credit Agreement), such Collateral shall be released from
the Lien created hereby to the extent provided under, and subject to the terms and
conditions set forth in, Section 10.7(b)(ii) or (iii) of the Credit Agreement. In
connection therewith but subject to the terms of the Credit Agreement, the Collateral
Agent, at the request and sole expense of the Debtor, shall execute and deliver to the
Debtor, all releases or other documents reasonably necessary or desirable for the
release of the Lien created hereby on such Collateral.







	 	(c)	 	At the request and sole expense of the Debtor, the Debtor shall be released
from its obligations hereunder in the event that all the capital stock of the Debtor
shall be so sold or disposed (but only so long as such sale or other disposition is
permitted under the Credit Agreement); provided, however, that the Debtor shall have
delivered to the Collateral Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the Debtor and the terms of
the sale or other disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the Debtor in form
and substance satisfactory to the Collateral Agent stating that such transaction is in
compliance with the Loan Documents.




 


 









 










8.12 Reinstatement




The Debtor further agrees that, if any payment made by any Loan Party or other Person and
applied to any of the Secured Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be
refunded or repaid, or the proceeds of Collateral are required to be returned by any Secured
Party to such Loan Party or other Person, its estate, trustee, receiver or any other party,
including the Debtor, under any bankruptcy law, provincial or federal law, common law or equitable
cause, then, to the extent of such payment or repayment, any Lien or other Collateral securing such
liability shall be and remain in full force and effect, as fully as if such payment had never been
made or, if prior thereto the Lien granted hereby or other Collateral securing such liability
hereunder shall have been released or terminated, such Lien or other Collateral shall be reinstated
in full force and effect, and such prior release or termination shall not diminish, release,
discharge, impair or otherwise affect any Lien or other Collateral securing the obligations of the
Debtor in respect of the amount of such payment.



8.13 Submission to Jurisdiction; Service of Process





	 	(a)	 	Any legal action or proceeding with respect to this Agreement may be brought in
the courts of the Province of Ontario, and, by execution and delivery of this
Agreement, the Debtor hereby accepts for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid court. The Debtor
hereby irrevocably waives any objection, including any objection to the laying of venue
or based on the grounds of forum non conveniens, that it may now or hereafter have to
the bringing of any such action or proceeding in such respective jurisdictions.







	 	(b)	 	The Debtor hereby irrevocably consents to the service of any and all legal
process, summons, notices and documents in any suit, action or proceeding brought in
Canada arising out of or in connection with this Agreement by the mailing (by
registered or certified mail, postage prepaid) or delivering of a copy of such process
to the Debtor at the address specified in Section 11.8 (Notices, Etc.) of the Credit
Agreement. The Debtor agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law.







	 	(c)	 	Nothing contained in this Section 8.13 shall affect the right of the Collateral
Agent or any other Secured Party to serve process in any other manner permitted by law
or commence legal proceedings or otherwise proceed against the Debtor in any other
jurisdiction.






8.14 Further Assurances




The Debtor shall at all times do, execute, acknowledge and deliver or cause to be done,
executed, acknowledged or delivered all and singular every such further acts, deeds, conveyances,
instruments, transfers, assignments, security agreements and assurances as the Collateral Agent may
reasonably require in order to give effect to the provisions and purposes of this Agreement
including, without limitation, in respect of the Collateral Agent’s enforcement of the security and
its realization on the Collateral, and for the better granting, transferring, assigning, charging,
setting over, assuring, confirming and/or perfecting the security interest of the Collateral Agent
in the Collateral pursuant to this Agreement. The Debtor hereby constitutes and appoints any
officer of the Collateral Agent at its above address, or any Receiver appointed by the Court or the
Collateral Agent as provided herein, the true and lawful attorney of the
Debtor irrevocably with full power of substitution to do, make and execute all such
assignments, documents, acts, matters or things with the right to use the name of the Debtor
whenever and wherever it may be deemed necessary or expedient. The Debtor hereby authorizes the
Collateral Agent to file such proofs of claim and other documents as may be necessary or advisable
in order to prove its claim in any bankruptcy, proposed winding-up or other proceeding relating to
the Debtor. Notwithstanding anything to the contrary in this paragraph, the Collateral Agent
agrees that it shall not exercise any right under the power of attorney provided for in this
paragraph unless an Event of Default shall be continuing.


 


 









 






Without limiting the generality of the foregoing, the Debtor:




	 	(a)	 	shall, upon receipt of notice to do so by the Collateral Agent, mark
conspicuously each chattel paper evidencing or relating to Accounts Receivable and each
related contract and, at the request of the Collateral Agent, each of its records
pertaining to the Collateral with a legend, in form and substance satisfactory to the
Collateral Agent, indicating that such chattel paper, related contract or Collateral is
subject to the security interests granted hereby;







	 	(b)	 	shall, if any Accounts Receivable shall be evidenced by a promissory note or
other instrument or chattel paper, deliver and pledge to the Collateral Agent hereunder
such note, instrument or chattel paper duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to the
Collateral Agent;







	 	(c)	 	shall execute and file such financing or continuation statements, or
amendments, thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Collateral Agent may request, in order to perfect and preserve the
security interests granted or purported to be granted hereby;







	 	(d)	 	hereby authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, relative to all or any part of the
Collateral without the signature of the Debtor, where permitted by law; and







	 	(e)	 	shall furnish to the Collateral Agent from time to time, upon request,
statements and schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as the Collateral Agent may reasonably
request, all in reasonable detail.






8.15 Continuing Security Interest and Discharge




This Agreement shall create a continuing security interest in the Collateral and shall remain
in full force and effect until payment and performance in full of the Secured Obligations and the
termination of the Credit Agreement, notwithstanding any dealing between the Collateral Agent and
the Debtor or any guarantor in respect of the Secured Obligations or any release, exchange,
non-perfection, amendment, waiver, consent or departure from or in respect of any or all of the
terms or provision of any security held for the Secured Obligations.


 


 









 





8.16 Governing Law




This Agreement shall be governed by and construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable therein, except as required by mandatory provisions of
law and except to the extent that the validity or perfection of the security interests hereunder,
or remedies hereunder, in respect of any particular Collateral are governed by the laws of a
jurisdiction other than the Province of Ontario.



8.17 Provisions Reasonable




The Debtor expressly acknowledges and agrees that the provisions of this Agreement and, in
particular, those respecting remedies and powers of the Collateral Agent against the Debtor, its
business and the Collateral upon default, are commercially reasonable and not manifestly
unreasonable.



8.18 Precedence




In the event that any provisions of this Agreement contradict, are inconsistent with and are
otherwise incapable of being construed in conjunction with the provisions (including any rights,
remedies and covenants therein) of the Credit Agreement, the provisions of the Credit Agreement
shall take precedence over those contained in this Agreement. Notwithstanding the foregoing, in
the event that any provision of the Credit Agreement relating to the grant or perfection of a
security interest in Collateral, if any, conflict with, contradict, are inconsistent and are
otherwise incapable of being construed in conjunction with the provisions of this Agreement, such
provisions of this Agreement shall take precedence over those contained in the Credit Agreement.



8.19 Number and Gender




In this Agreement, words importing the singular number include the plural and vice-versa and
words importing gender include all genders.



8.20 Indemnity and Expenses





	 	(a)	 	The Debtor agrees to indemnify and save harmless the Collateral Agent and the
Secured Parties from and against any and all claims, losses and liabilities arising out
of or resulting out of or resulting from this Agreement (including, without limitation,
enforcement of this Agreement).







	 	(b)	 	The Debtor will upon demand pay to the Collateral Agent the amount of any and
all expenses, including the fees and disbursements of its counsel and of any experts
and agents, which the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or operation of,
or the sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights or remedies of the Collateral
Agent hereunder or (iv) the failure by the Debtor to perform or observe any of the
provisions hereunder.




 


 









 










8.21 Judgment Currency




If, for the purposes of obtaining or enforcing judgment in any court or for any other purpose
hereunder or in connection herewith, it is necessary to convert a sum due hereunder in any currency
into another currency, such conversion shall be carried out to the extent and in the manner
provided in the Credit Agreement.



8.22 Language




The parties hereto acknowledge that they have requested and are satisfied that this Agreement,
as well as all notices, actions and legal proceedings be drawn up in the English language. Les
parties à cette convention reconnaissent qu’elles ont exigé que cette convention ainsi que tous
avis, actions et procédures légales soient rédigés et exécutés en anglais et s’en déclarent
satisfaites.



[the remainder of this page is intentionally left blank]




[signature page follows]




 


 









 







IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement at the place and
as of the date first above written.



	 	 	 	 	 	 	 
	 	 	WARNACO OF CANADA COMPANY,

as Debtor	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Lawrence R. Rutkowski
 

Name: Lawrence R. Rutkowski

Title: Vice-President
	 	 
	 
	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,

as Collateral Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Kevin W. Corcoran
 

Name: Kevin W. Corcoran
	 	 
	 

	 	 	 	Title: Vice President	 	 






General Security Agreement — Warnaco of Canada Company (2008)




 


 









 







TABLE OF CONTENTS




ANNEXES AND SCHEDULES




	 	 	 
	Annex 1

	 	Form of Short Form Copyright Security Agreement
	Annex 2

	 	Form of Short Form Patent Security Agreement
	Annex 3

	 	Form of Short Form Trademark Security Agreement
	 
	 
	Schedule 1

	 	Jurisdiction of Organization; Principal Executive Office
	Schedule 2

	 	Pledged Collateral
	Schedule 3

	 	Filings
	Schedule 4

	 	Location of Inventory and Equipment
	Schedule 5

	 	Intellectual Property
	Schedule 6

	 	[Intentionally omitted]
	Schedule 7

	 	Deposit Accounts and Securities Accounts






General Security Agreement — Warnaco of Canada Company (2008)






 


 









 







Annex 1

To

General Security Agreement




Form of Short Form Copyright Security Agreement




Copyright Security Agreement, dated as of August
 _____, 2008, by [Warnaco of Canada
Company or 4278941 Canada Inc.] (the “Grantor”) in favour of Bank of America, N.A. (“BofA“), as
collateral agent for the Secured Parties (in such capacity, together with its successors and
assigns in such capacity, the “Collateral Agent”).



W i t n e s s e t h:




Whereas, pursuant to a Credit Agreement, dated as of August
 _____, 2008 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among, inter alia, Warnaco of Canada Company (the “Borrower”), the Lenders and Issuers
party thereto, BofA, as administrative agent and collateral agent for the Lenders and Issuers, the
Lenders and the Issuers have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;



Now, therefore, in consideration of the premises and to induce the Lenders, the
Issuers, the Administrative Agent and the Collateral Agent to enter into the Credit Agreement and
to induce the Lenders and the Issuers to make their respective extensions of credit to the Borrower
thereunder, the Grantor hereby agrees with the Collateral Agent as follows:




Section 1. Defined Terms



Unless otherwise defined herein, terms defined in the Security Agreement and used herein have
the meaning given to them in the Security Agreement.




Section 2. Grant of Security Interest in Copyright Collateral



The Grantor, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of
the Grantor, hereby conveys, mortgages, pledges and hypothecates to the Collateral Agent for the
benefit of the Secured Parties, and grants to the Collateral Agent for the benefit of the Secured
Parties a lien on and security interest in, all of its right, title and interest in, to and under
the following Collateral of the Grantor (the “Copyright Collateral”):




(a) all of its Copyrights and Copyright Licenses pursuant to which it has been
granted any exclusive rights to Copyrights, including, without limitation, those
referred to on Schedule I hereto;




 


 









 





(b) all renewals, reversions and extensions of the foregoing; and



(c) all Proceeds of any or all of the foregoing, including, without limitation, all
rights to income, royalties, proceeds and damages now or hereafter due and/or
payable under any Copyright and with respect thereto, including, without
limitation, all rights to sue and recover at law or in equity for any past, present
and future infringement, misappropriation, dilution, violation or other impairment
thereof.




Section 3. Security Agreement



The security interest granted pursuant to this Copyright Security Agreement is granted in
conjunction with the security interest granted to the Collateral Agent pursuant to the Security
Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the
Collateral Agent with respect to the security interest in the Copyright Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.



[Signature Pages Follow]



 


 









 





In witness whereof, the Grantor has caused this Copyright Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.



	 	 	 	 	 
	 	Very truly yours,



[Grantor],

as Grantor


 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 




Accepted and Agreed

as of the date first above written:



Bank of America, N.A.,

as Collateral Agent for the Secured Parties



	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:

Title:
	 	 






[Signature page to Copyright Security Agreement]




 


 









 







Acknowledgment of Grantor




	 	 	 	 	 	 	 	 	 
	State of 

	 	 	)	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 

	 	 	)	 	 	 	ss.	 
	County of 

	 	 	)	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 







On this
 _____ 
day of                     
 _____, 20_____ 
before me personally appeared



                                        , proved to me on the basis of satisfactory evidence to be the person
who executed the foregoing instrument on behalf of                                         , who being by me duly sworn did
depose and say that he is an authorized officer of said corporation, that the said instrument was
signed on behalf of said corporation as authorized by its Board of Directors and that he
acknowledged said instrument to be the free act and deed of said corporation.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 






[Acknowledgement of Grantor for Copyright Security Agreement]




 


 









 







Schedule I




to




Copyright Security Agreement




Copyright Registrations





	1. 	 	REGISTERED COPYRIGHTS










[Include Copyright Title, Country, Author, Claimant, Registration Number and Date]




	2. 	 	COPYRIGHT APPLICATIONS









[Include Copyright Title, Country, Claimant and Date Filed]




	3. 	 	EXCLUSIVE COPYRIGHT LICENSES








 


 









 







Annex 2

to

General Security Agreement




Form of Short Form Patent Security Agreement




Patent Security Agreement, dated as of August
 _____, 2008, by [Warnaco of Canada Company
or 4278941 Canada Inc.] (the “Grantor”) in favour of Bank of America, N.A. (“BofA“), as collateral
agent for the Secured Parties (as defined in the Credit Agreement referred to below) (in such
capacity, together with its successors and assigns in such capacity, the “Collateral Agent”).



W i t n e s s e t h:




Whereas, pursuant to a Credit Agreement, dated as of August
 _____, 2008 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among, inter alia, Warnaco of Canada Company (the “Borrower”), the Lenders and Issuers
party thereto, BofA, as administrative agent and collateral agent for the Lenders and Issuers, the
Lenders and the Issuers have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;



Now, therefore, in consideration of the premises and to induce the Lenders, the
Issuers, the Administrative Agent and the Collateral Agent to enter into the Credit Agreement and
to induce the Lenders and the Issuers to make their respective extensions of credit to the Borrower
thereunder, the Grantor hereby agrees with the Collateral Agent as follows:




Section 1. Defined Terms



Unless otherwise defined herein, terms defined in the Credit Agreement or in the Security
Agreement and used herein have the meaning given to them in the Credit Agreement or the Security
Agreement.


 


 









 






Section 2. Grant of Security Interest in Patent Collateral



The Grantor, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of
the Grantor, hereby conveys, mortgages, pledges and hypothecates to the Collateral Agent for the
benefit of the Secured Parties, and grants to the Collateral Agent for the benefit of the Secured
Parties a lien on and security interest in, all of its right, title and interest in, to and under
the following Collateral of the Grantor (the “Patent Collateral”):




(a) all of its Patents, including, without limitation, those referred to on
Schedule I hereto;




(b) all reissues, continuations, divisions, continuations, renewals and extensions
of the foregoing; and




(c) all Proceeds of any or all of the foregoing, including, without limitation, all
rights to income, royalties, proceeds and damages now or hereafter due and/or
payable under any Patent and with respect thereto, including, without limitation,
all rights to sue and recover at law or in equity for any past, present and future
infringement, misappropriation, dilution, violation or other impairment thereof.




Section 3. Security Agreement



The security interest granted pursuant to this Patent Security Agreement is granted in
conjunction with the security interest granted to the Collateral Agent pursuant to the Security
Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the
Collateral Agent with respect to the security interest in the Patent Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.



[Signature Pages Follow]



 


 









 





In witness whereof, the Grantor has caused this Patent Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.



	 	 	 	 	 
	 	Very truly yours,



[Grantor],

as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 




Accepted and Agreed

as of the date first above written:



Bank of America, N.A.,

as Collateral Agent for the Secured Parties



	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:

Title:
	 	 






[Signature Page to patent Security Agreement]




 


 









 







Acknowledgement of Grantor




	 	 	 	 	 	 	 	 	 
	State of 

	 	 	)	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 

	 	 	)	 	 	 	ss.	 
	County of 

	 	 	)	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 






On this
 _____ 
day of                     , 20_____ 
before me personally appeared                                         , proved
to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument
on behalf of                     , who being by me duly sworn did depose and say that he is an
authorized officer of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged said instrument to be
the free act and deed of said corporation.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 






Acknowledgement of Grantor for Patent Security Agreement



 


 









 





Schedule I




to




Patent Security Agreement




Patent Registrations





	1. 	 	PATENTS








[Include Patent Title, Patent Number, Country, Owner and Issue Date]




	2. 	 	PATENT APPLICATIONS








[Include Patent Title, Serial Number, Country, Owner and Filing Date]



 


 









 







Annex 3

to

General Security Agreement




Form of Short Form Trademark Security Agreement




Trademark Security Agreement, dated as of August
 _____, 2008, by [Warnaco of Canada
Company or 4278941 Canada Inc.] (the “Grantor”) in favour of Bank of America, N.A. (“BofA“), as
collateral agent for the Secured Parties (as defined in the Credit Agreement referred to below) (in
such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”).



W i t n e s s e t h:




Whereas, pursuant to a Credit Agreement, dated as of August
 _____, 2008 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”), among, inter alia, Warnaco of Canada Company (the “Borrower”), the Lenders and Issuers
party thereto, BofA, as administrative agent and collateral agent for the Lenders and Issuers, the
Lenders and the Issuers have severally agreed to make extensions of credit to the Borrower upon the
terms and subject to the conditions set forth therein;



Now, therefore, in consideration of the premises and to induce the Lenders, the
Issuers, the Administrative Agent and the Collateral Agent to enter into the Credit Agreement and
to induce the Lenders and the Issuers to make their respective extensions of credit to the Borrower
thereunder, the Grantor hereby agrees with the Collateral Agent as follows:




Section 1. Defined Terms



Unless otherwise defined herein, terms defined in the Credit Agreement or in the Security
Agreement and used herein have the meaning given to them in the Credit Agreement or the Security
Agreement.


 


 









 






Section 2. Grant of Security Interest in Trademark Collateral



The Grantor, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of
the Grantor, hereby mortgages, pledges and hypothecates to the Collateral Agent for the benefit of
the Secured Parties, and grants to the Collateral Agent for the benefit of the Secured Parties a
lien on and security interest in, all of its right, title and interest in, to and under the
following Collateral of the Grantor (the “Trademark Collateral”):



1. all of its Trademarks, including, without limitation, those referred to on Schedule I
hereto;




2. all renewals and extensions of the foregoing;



3. all goodwill of the business connected with the use of, and symbolized by, each such
Trademark; and



4. all Proceeds of any or all of the foregoing, including, without limitation, all rights to
income, royalties, proceeds and damages now or hereafter due and/or payable under any Trademark and
with respect thereto, including, without limitation, all rights to sue and recover at law or in
equity for any past, present and future infringement, misappropriation, dilution, violation or
other impairment thereof.




Section 3. Security Agreement



The security interest granted pursuant to this Trademark Security Agreement is granted in
conjunction with the security interest granted to the Collateral Agent pursuant to the Security
Agreement and the Grantor hereby acknowledges and affirms that the rights and remedies of the
Collateral Agent with respect to the security interest in the Trademark Collateral made and granted
hereby are more fully set forth in the Security Agreement, the terms and provisions of which are
incorporated by reference herein as if fully set forth herein.



[Signature Pages Follow]



 


 









 





In witness whereof, the Grantor has caused this Trademark Security Agreement to be
executed and delivered by its duly authorized officer as of the date first set forth above.



	 	 	 	 	 
	 	Very truly yours,



[Grantor],

as Grantor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 




Accepted and Agreed

as of the date first above written:



Bank of America, N.A.,

as Collateral Agent for the Secured Parties



	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:

Title:
	 	 






Signature Page to Trademark Security Agreement



 


 









 







Acknowledgement of Grantor




	 	 	 	 	 	 	 	 	 
	State of 

	 	 	)	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 
	 

	 	 	)	 	 	 	ss.	 
	County of 

	 	 	)	 	 	 	 	 
	 

	 	 

	 	 	 	 	 	 






On this
 _____ 
day of                     , 20_____ 
before me personally appeared                                         , proved
to me on the basis of satisfactory evidence to be the person who executed the foregoing instrument
on behalf of                                         , who being by me duly sworn did depose and say that he is an
authorized officer of said corporation, that the said instrument was signed on behalf of said
corporation as authorized by its Board of Directors and that he acknowledged said instrument to be
the free act and deed of said corporation.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 






Acknowledgement of Grantor for Trademark Security Agreement




 


 









 







Schedule I




to




Trademark Security Agreement




Trademark Registrations





	1. 	 	REGISTERED TRADEMARKS








[Include Trademark, Country, Owner, Registration Number and Date of Registration]




	2. 	 	TRADEMARK APPLICATIONS








[Include Trademark, Country, Owner, Application Number and Date of Filing]



 


 









 







SCHEDULE 1




TO




GENERAL SECURITY AGREEMENT




Jurisdiction of Organization; Principal Executive Office




Jurisdiction of Organization:



Province of Nova Scotia




Head Office:



1959 Upper Water Street, Halifax, Nova Scotia, B3J 3N2




Principal Executive Office:



20600 Clark Graham Blvd., Baie d’Urfe, Quebec, H9X 4B6




 


 









 







SCHEDULE 2




TO




GENERAL SECURITY AGREEMENT




Pledged Collateral




Two Thousand (2,000) Class A shares of 4278941 Canada Inc., represented by share certificate
number CA-1;



Two Hundred and Twenty-Five (225) Series B, Sub-Series II shares of Linda Vista de Vera Cruz S.A.
de C.V., represented by share certificate number 03.



 


 









 







SCHEDULE 3




TO




GENERAL SECURITY AGREEMENT




Filings




British Columbia



PPSA Registration No. 9369578 Debtor:

Warnaco of Canada Company 

Secured Party: Bank of America, N.A.

Registration Date (and Term): 2005-03-22 (10 years)

Collateral Description: A security interest is taken in all of the debtor’s present and after
acquired personal property.

Note — This registration is to be discharged at closing.




PPSA Registration No. 9369630 Debtor: 

Warnaco of Canada Company

Secured Party: Bank of America, National Association

Registration Date (and Term): 2005-03-22 (10 years)

Collateral Description: A security interest is taken in all of the debtor’s present and after
acquired personal property.

Note — This registration is to be discharged at closing.




PPSA Registration No. 14333355 Debtor: 

Warnaco of Canada Company

Secured Party: Bank of America, N.A., as Collateral Agent

Registration Date (and Term): 2008-08-22 (7 years)

Collateral Description: A security interest is taken in all of the debtor’s present and after
acquired personal property.




Alberta



See attached summary.



Ontario 



See attached summary.



Quebec 



See attached summary.



Nova Scotia



See attached summary.


 


 









 





Schedule 4




To




General Security Agreement




Location of Inventory and Equipment




(See Attached Page)





 


 











 




Warnaco of Canada

Locations

as at August 11, 2008




	 	 	 
	LOCATION	 	ADDRESS
	 
	 	 
	WARNACO OF CANADA COMPANY

(Administration & DC]

	 	20600 Clark Graham Avenue

Baie d’Urfe, Quebec H9X 4B6
	 
	 	 
	WARNACO OF CANADA

(Sales Office & Showroom)

	 	539 King Street West #200 & #300

Toronto, Ontario M5V 1M1
	 
	 	 
	CRESCENT STREET

(Showroom)

	 	2110 Crescent St. 3rd Floor

Montreal, Quebec H3G 2B8
	 
	 	 
	VANCOUVER

(Shworoom)

	 	171 West 6th Street, Unit B

Vancouver, B.C. V5Y 1K3
	 
	 	 
	CALGARY 

(Showroom)

	 	Unit 103

7710-5th Street SE

Calgary, Alberta T2H 2L9
	 
	 	 
	Bloor St., ON

	 	150 Bloor St.

Toronto, Ontario M5S 1M4
	 
	 	 
	Vaughan Mills, ON

	 	Vaughan Mills Shopping Centre

1 Bass Pro Mills Drive Unit 612

Vaughan, Ontario L4K 5W4
	 
	 	 
	Sherway Gardens, ON

	 	Sherway Gardens Mall

25 West Mall, Unit 1009B

Etobicoke, Ontario M9C IB8
	 
	 	 
	Mega-Centre Ste-Dorothee (Laval, QC)

	 	Calvin Klein

2268 Autoroute 13, Unit 24C

Laval, Quebec H7Y 4G8
	 
	 	 
	Heartland, ON

	 	Heartland Town Centre

5875 Rodeo Drive, Unit #1

Mississauga, Ontario L5R 4C1
	 
	 	 
	Brossard Dix30, QC

	 	Quartiers Dix30

9405 Leduc Avenue, Unit #25

Brossard, Quebec J4Y OA5
	 
	 	 
	West Edmonton Mall, AB

	 	West Edmonton Mall

8882-170th Street, Unit #2357

Edmonton, Alberta T5T 4J2





 


 









 





Warnaco of Canada

Locations

as at August 11, 2008




	 	 	 
	LOCATION	 	ADDRESS
	 
	 	 
	Vaughan Mills, ON

	 	Vaughan Mills Shopping Centre

1 Bass Pro Mills Drive Unit 632

Vaughan, Ontario L4K 5W4
	 
	 	 
	Queensborough Landing, BC

	 	Queensborough Landing

805 Boyd Street, Unit #H140

New Westminster, BC V3M 5X2
	 
	 	 
	Bromont, QC

	 	Carrefour Champêtre Bromont

555 Place Champêtre, Unit #200

Bromont, Quebec J2L 0A2
	 
	 	 
	Royal Bank Plaza, ON

	 	Royal Bank Plaza

200 Bay Street, Unit #UC 131

Toronto, Ontario M5J 2J1
	 
	 	 
	Promenade, Toronto, ON

	 	Promenade Shopping Centre

1 Promenade Circle, Unit #244B

Thornhill, Ontario L4J 4P8
	 
	 	 
	Vaudreuil, QC

	 	Mega-Centre Vaudreuil

3140 boul. de la Gare, Unit #110

Vaudreuil-Dorion, Quebec J7V OJ5





 


 









 





Schedule 5




To




General Security Agreement




Intellectual Property




NIL



 


 









 






Schedule 6




To




General Security Agreement




[Intentionally omitted]



 


 









 







CONFIDENTIAL TREATMENT




Schedule 7




To




General Security Agreement1




Deposit Accounts and Securities Accounts




Deposit accounts:




Bank of Nova Scotia, 1002 Sherbrooke Street West Montreal, Quebec, H3A 3L6:





***




***




***



Securities accounts




NIL



 





	 	 	 
	1	 	Clearly identify each Deposit Account which is
maintained as a concentration account of Grantor.