Exhibit 10.4





EXHIBIT 10.4




PORTIONS OF THIS EXHIBIT 10.4 MARKED BY AN *** HAVE BEEN OMITTED PURSUANT

TO A REQUEST FOR CONFIDENTIAL TREATMENT AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION.



 


 









 





EXECUTION VERSION




CREDIT AGREEMENT




Dated as of August 26, 2008




among




WARNACO OF CANADA COMPANY,

as Borrower




The Warnaco Group, Inc.,

as a Guarantor




The Lenders and Issuers from Time to Time Party Hereto




Bank of America, N.A.,

as Administrative Agent




Bank of America, N.A.,

as Collateral Agent




Banc of America Securities LLC and Deutsche Bank Securities Inc.,

as Joint Lead Arrangers and Joint Book Managers




and




Deutsche Bank Securities Inc.,

as Sole Syndication Agent



 


 









 





Credit Agreement, dated as of August 26, 2008, among Warnaco of Canada Company, a
Nova Scotia unlimited liability company (the “Borrower”), The Warnaco Group, Inc., a Delaware
corporation (“Group”), the Lenders (as defined below), the Issuers (as defined below), Bank of
America, N.A. (“BofA”), as administrative agent for the Revolving Credit Facility (as defined
below) (in such capacity, the “Administrative Agent”) and as collateral agent for the Lenders and
the Issuers (in such capacity, the “Collateral Agent”), Banc of America Securities LLC (“BAS”) and
Deutsche Bank Securities Inc., as joint lead arrangers and joint book managers (in such capacities,
the “Arrangers”), and Deutsche Bank Securities Inc., as sole syndication agent for the Lenders and
the Issuers (in such capacity, the “Syndication Agent” and together with the Administrative Agent
and the Collateral Agent, collectively, the “Agents“).



W i t n e s s e t h:




Whereas, the Borrower has requested that the Lenders and the Issuers make available
to the Borrower for the purposes specified in this Agreement (as defined below) a revolving credit
and letter of credit facility;



Whereas, the Lenders and Issuers are willing to make available to the Borrower such
revolving credit and letter of credit facility upon the terms and subject to the conditions set
forth herein;



Now, Therefore, in consideration of the premises and the covenants and agreements
contained herein, the parties hereto hereby agree as follows:



ARTICLE I




DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS




Section 1.1 Defined Terms. As used in this Agreement, the following terms have the following
meanings (such meanings to be equally applicable to both the singular and plural forms of the terms
defined):



“Accelerated Borrowing Base Certificate Delivery Date” means any date on which the Available
Credit has been less than 15% of the Aggregate Borrowing Limit for five consecutive Business Days.



“Accelerated Borrowing Base Certificate Delivery Period” means the period commencing on an
Accelerated Borrowing Base Certificate Delivery Date and ending on the first day after any 45
consecutive day period, commencing after such Accelerated Borrowing Base Certificate Delivery Date,
during which the Available Credit equals or exceeds 15% of the Aggregate Borrowing Limit for each
day during such 45 consecutive day period and no Event of Default has occurred or existed (or
ending such earlier time after the commencement of such Accelerated Borrowing Base Certificate
Delivery Date that the Available Credit equals or exceeds 15% of the Aggregate Borrowing Limit as
the Administrative Agent shall agree in writing in its sole discretion).



“Account” has the meaning specified in the PPSA (or, if such defined term is used with respect
to or otherwise applicable to a U.S. Loan Party, specified in the U.S. Pledge and Security
Agreement).


 


 









 





“Account Debtor” means a Person obligated on an Account (or, if such defined term is used with
respect to or otherwise applicable to a U.S. Loan Party, has the meaning specified in the U.S.
Pledge and Security Agreement).



“Adjusted Orderly Liquidation Value Rate” means 90% of the Orderly Liquidation Value Rate (or,
in the case of Eligible Inventory consisting of Documented Non-Letter of Credit Inventory or
Inventory covered by Documentary Letters of Credit, 85% of the Orderly Liquidation Value Rate).



“Administrative Agent” has the meaning specified in the preamble to this Agreement.



“Advance Rate” means, for each category of Collateral set forth below, the rate set forth
below (as a percentage of book value) opposite such category of Collateral:



	 	 	 	 	 
	Category	 	Rate	 
	Eligible Receivables
	 	 	85	%
	Eligible Inventory (other than Documented Non-Letter of
Credit Inventory and Inventory covered by Documentary
Letters of Credit)
	 	 	80	%






provided, that (a) if at any time the product of (i) the Adjusted Orderly Liquidation Value Rate
and (ii) the sum of Eligible Inventory (other than Documented Non-Letter of Credit Inventory and
Inventory covered by Documentary Letters of Credit) of each Canadian Loan Party (valued, in each
case, at the lower of cost and market on a first-in, first-out basis) is less than the aggregate
Borrowing Base attributable to such Inventory under clause (a)(ii)(x) of the definition of
Borrowing Base (calculated using the above Advance Rate), then, at the sole discretion of the
Administrative Agent, exercised reasonably, the effective Advance Rate for Eligible Inventory will
be adjusted (until delivery of the next Appraisal) to a level that would cause such Advance Rate to
effectively equal the Adjusted Orderly Liquidation Value Rate; and (b) any reduction in the
foregoing advance rates (or any increase up to the rates set forth above) shall be determined by
the Administrative Agent in its sole discretion exercised reasonably and shall take effect 10
Business Days (or, if pursuant to clause (a) above, three (3) Business Days) after the
Administrative Agent delivers written notice thereof to the Borrower.



“Affiliate” means, with respect to any Person, any other Person which, directly or indirectly,
controls, is controlled by or is under common control with such Person, each officer, director,
general partner or joint-venturer of such Person, and each Person who is the beneficial owner of
10% or more of any class of Voting Stock of such Person. For the purposes of this definition,
“control” means the possession of the power to direct or cause the direction of management and
policies of such Person, whether through the ownership of voting securities, by contract or
otherwise.



“Affiliated Account Debtor” means, (a) in relation to an Account Debtor that is a Governmental
Authority, any other Account Debtor that is a Governmental Authority, and (b) in relation to an
Account Debtor that is not a Governmental Authority, each Account Debtor that is an Affiliate of
such Account Debtor.



“Agent Affiliate” has the meaning specified in Section 10.9(c).



“Agents” has the meaning specified in the preamble to this Agreement.


 


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“Agreement” means this Credit Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time.



“Agreement Accounting Principles” means, subject to Section 1.3, GAAP or, if (x) the U.S.
Securities and Exchange Commission requires or permits United States reporting companies to utilize
the IFRS in lieu of GAAP for reporting purposes and (y) Group adopts the IFRS with the agreement of
its independent public accountants, the IFRS, each as in effect from time to time, applied in a
manner consistent with that used in the preparation of the audited annual Financial Statements
referred to in Section 6.1(c); provided that if the adoption by Group of the IFRS results in a
change in any of the calculations required by Article V, Article VI or Article VIII or in the
definition of “Applicable Margin” or “Permitted Acquisition”, the parties hereto agree to enter
into negotiations in order to amend such provisions so as to equitably reflect such change with the
desired result that the criteria for evaluating compliance with such covenants by Group and the
Borrower or the determination of the “Applicable Margin” or the calculation of the Fixed Charge
Coverage Ratio in the definition of “Permitted Acquisition” shall be the same after such adoption
as if such adoption had not been made; and provided, further, that the adoption of the IFRS (to the
extent that such adoption would affect a calculation that measures compliance with any covenant
contained in Article V, Article VI or Article VIII or in the definition of “Applicable Margin” or
“Permitted Acquisition”) shall not be given effect until such provisions are amended to reflect
such adoption.



“Aggregate Borrowing Base” means, at any time, the aggregate of the Borrowing Base and the
Borrowing Base (as defined in the U.S. Facility) at such time.



“Aggregate Borrowing Limit” means, at any time, the lesser of (i) the sum of the Revolving
Credit Commitments and Revolving Credit Commitments (as defined in the U.S. Facility) in effect at
such time and (ii) the Aggregate Borrowing Base at such time.



“Alternative Currency” means the lawful currency of each of the European Union, the United
Kingdom, the United States of America and Hong Kong, provided that in each case such currency is
freely transferable into U.S. Dollars.



“Anniversary Date” means each anniversary of the Closing Date.



“Applicable Margin” means, as of any date of determination, (a) from and after the Closing
Date but prior to the date 10 Business Days after delivery by Group to the Administrative Agent of
Financial Statements pursuant to Section 6.1(b) for the Fiscal Quarter ending on or about March 31,
2009, a per annum rate equal to 1.75% (in the case of BA Rate Loans) and .75% (in the case of Prime
Rate Loans) and (b) from and after the date 10 Business Days after delivery by Group to the
Administrative Agent of Financial Statements pursuant to Section 6.1(b) for the Fiscal Quarter
ending on or about March 31, 2009, a per annum rate equal to the rate set forth below opposite the
applicable type of Loan and the then applicable Leverage Ratio of Group (determined on the last day
of the most recent Fiscal Quarter for which Financial Statements have been delivered pursuant to
Section 6.1(b) or Section 6.1(c)) set forth below:




	 	 	 	 	 	 	 	 	 
	 	 	Prime Rate	 	 	 	 
	Leverage Ratio	 	Loans	 	 	BA Rate Loans	 
	Greater than 1.75 to 1
	 	 	1.00	%	 	 	2.00	%
	Less than or equal to 1.75 to
1 and greater than 0.50 to 1
	 	 	.75	%	 	 	1.75	%
	Less than or equal to 0.50 to 1
	 	 	.50	%	 	 	1.50	%





 


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Changes in the Applicable Margin resulting from a change in the Leverage Ratio on the last day of
any subsequent Fiscal Quarter shall become effective 10 Business Days after delivery by Group to
the Administrative Agent of new Financial Statements pursuant to Section 6.1(b) or Section 6.1(c)
as applicable. Notwithstanding anything to the contrary set forth in this Agreement (including the
then
effective Leverage Ratio of Group), if Group shall fail to deliver such Financial Statements within
any of the time periods required under Section 6.1(b) or Section 6.1(c) (as either such section has
been amended, waived or otherwise modified), the Applicable Margin from and including the day on
which such Financial Statements were due, to but not including the date 10 Business Days after
Group delivers to the Administrative Agent such Financial Statements, shall equal the highest
possible Applicable Margin provided for by this definition.



“Applicable Unused Commitment Fee Rate” means, as of any date of determination, a per annum
rate equal to the rate set forth below opposite the respective Level (i.e., Level 1 or Level 2, as
the case may be) of Average Revolver Usage for the calendar quarter most recently ended (or, for
the first payment of the Unused Commitment Fee under Section 2.12(a), for the period commencing on
the Closing Date and ending on the last day of the calendar quarter in which the Closing Date
occurred); provided that the Applicable Unused Commitment Fee Rate shall not change until 5
Business Days after the end of such calendar quarter (or shorter period).



	 	 	 	 	 	 	 	 	 
	 	 	Average	 	 	 	 
	Level	 	Revolver Usage	 	 	Unused Commitment Fee	 
	Level 1
	 	Less than 50%	 	 	0.50	%
	Level 2
	 	Equal to or | greater than 50%	 	 	 	0.375	%






“Appraisal” means each appraisal that is conducted prior to, on or after the Closing Date
pursuant to Section 6.12(b) for purposes of determining the Borrowing Base, in form and substance
acceptable to the Administrative Agent and performed by an appraiser that is satisfactory to the
Administrative Agent.



“Approved Electronic Communications” means each notice, demand, communication, information,
document and other material that any Loan Party is obligated to, or otherwise chooses to, provide
to any Agent pursuant to any Loan Document or the transactions contemplated therein, including (a)
any supplement to the Guaranty or the U.S. Loan Party Canadian Facility Guaranty, any joinder to
the Canadian Security Agreement, the Deed of Hypothec, the Canadian Pledge Agreement or the U.S.
Pledge and Security Agreement and any other written Contractual Obligation delivered or required to
be delivered in respect of any Loan Document or the transactions contemplated therein and (b) any
Financial Statement, financial and other report, notice, request, certificate and other information
material, provided, however, that, “Approved Electronic Communication” shall exclude (i) any Notice
of Borrowing, Letter of Credit Request, Swing Loan Request, Notice of Conversion or Continuation,
and any other notice, demand, communication, information, document and other material relating to a
request for a new, or a conversion of an existing, Borrowing (other than a Notice of Borrowing,
Swing Loan Request or Notice of Conversion or Continuation sent by e-mail in accordance with the
terms hereof; provided, that (A) the Borrower shall confirm each such notice by prompt delivery to
the Administrative Agent of a Notice of Borrowing, Swing Loan Request or Notice of Conversion or
Continuation, as applicable, in a manner permitted by Section 11.8 (other than by electronic mail,
Approved Electronic Platform, internet website or other electronic transmission), but if it differs
in any material respect from the action taken by any Facility Agent or Lender, the records of the
applicable Facility Agents and Lenders shall govern, (B) each Facility Agent and Lender shall be
entitled to rely on such e-mail notice (and regardless of whether any confirmation is received by
the Administrative Agent) and (C) no Facility Agent or Lender shall have any liability for any loss
suffered by the Borrower or any other Loan Party as a result of a Facility Agent or any Lender
acting upon such e-mailed instructions), (ii) any notice pursuant to Section 2.8 or Section 2.9 and
any other notice relating to the payment of any principal or other amount due under any Loan
Document prior to the scheduled date therefor, (iii) any notice of
any Default or Event of Default and (iv) any notice, demand, communication, information,
document and other material required to be delivered to satisfy any of the conditions set forth in
Article II or Section 2.4(a) or any other condition to any Borrowing or other extension of credit
hereunder or any condition precedent to the effectiveness of this Agreement.


 


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“Approved Electronic Platform” has the meaning specified in Section 10.9.



“Approved Fund” means any Fund that is advised or managed by (a) an Agent or a Lender, (b) an
Affiliate of any Agent or any Lender or (c) an entity or Affiliate of an entity that administers or
manages a Lender.



“Arrangers” has the meaning specified in the preamble to this Agreement.



“Asset Sale” has the meaning specified in Section 8.4.



“Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an
Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit
A.



“Availability Reserves” means, as of three (3) Business Days after the date of written notice
of any determination thereof to the Borrower by the Administrative Agent (except that no such
advance notice shall be required with respect to any amounts established on or prior to the Closing
Date, so long as the Administrative Agent notifies the Borrower of such amounts on or prior to the
Closing Date, which amounts shall be in effect as of the Closing Date), such amounts as the
Administrative Agent may from time to time establish against the Revolving Credit Facility, in the
Administrative Agent’s sole discretion exercised reasonably, in order to (a) preserve the value of
the Collateral or the Collateral Agent’s Lien thereon and/or (b) provide for the payment of
unanticipated liabilities of any of the Loan Parties arising after the Closing Date and, to the
extent that the Administrative Agent is not aware of same on the Closing Date, arising on or prior
to the Closing Date and/or (c) provide for the effect, or anticipated effect, of the loss of the
benefit to the Warnaco Entities of a Material License.



“Available Canadian Credit” means, at any time, (a) the lesser of (i) the Revolving Credit
Commitments in effect at such time and (ii) the Borrowing Base at such time minus (b) the sum of
(i) the U.S. Dollar Equivalent of the aggregate Revolving Credit Outstandings at such time and (ii)
the U.S. Dollar Equivalent of the aggregate amount of any Availability Reserve in effect at such
time.



“Available Credit” means, at any time, the sum of the U.S. Dollar Equivalent of the Available
Canadian Credit at such time and the Available U.S. Credit (as defined in the U.S. Facility) at
such time; provided that in no event shall the U.S. Dollar Equivalent of the amount of Available
Canadian Credit included in the determination of “Available Credit” at any time exceed 25% of the
Available Credit at such time.



“Average Revolver Usage” means, for any period, an amount equal to (i) the quotient of (x) the
sum of the U.S. Dollar Equivalent of the Revolving Credit Outstandings (excluding the U.S. Dollar
Equivalent of the amount of any outstanding Swing Loans) for each day during such period, divided
by (y) the number of days in such period, divided by (ii) the quotient of (x) the sum of the
Revolving Credit Commitments of the Lenders for each day during such period, divided by (y) the
number of days in such period, all as determined by the Administrative Agent.


 


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“BA Rate” means, for any Interest Period, with respect to any BA Rate Loan, the rate of
interest per annum equal to the annual rate of interest quoted on the Business Day which is the
first day of such Interest Period by BofA Canada Branch in accordance with its normal practice as
being its rate of interest for bankers’ acceptances in Dollars for a face amount similar to the
amount of such BA Rate Loan and for a term similar to such Interest Period.



“BA Rate Loan” means any Revolving Loan that, for an Interest Period, bears interest based on
the BA Rate.



“Bailee’s Letter” means a letter in form and substance acceptable to the Administrative Agent
and executed by any Person (other than a Loan Party) that is in possession of Inventory on behalf
of a Loan Party pursuant to which such Person acknowledges, among other things, the Collateral
Agent’s Lien with respect thereto.



“Bankruptcy Code” means title 11, United States Code, as amended from time to time.



“BAS” has the meaning specified in the preamble to this Agreement.



“Blocked Account” has the meaning specified in the Canadian Security Agreement (or, if such
defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified in the
U.S. Pledge and Security Agreement).



“Blocked Account Bank” has the meaning specified in the Canadian Security Agreement (or, if
such defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified
in the U.S. Pledge and Security Agreement).



“Blocked Account Letter” has the meaning specified in the Canadian Security Agreement (or, if
such defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified
in the U.S. Pledge and Security Agreement).



“BofA” has the meaning specified in the preamble to this Agreement.



“BofA Canada Branch” means Bank of America, N.A. (acting through its Canada branch).



“Borrower” has the meaning specified in the preamble to this Agreement.



“Borrowing” means a Revolving Credit Borrowing.



“Borrowing Base” means, at any time, the U.S. Dollar Equivalent of (a) the sum of (i) the
product of the Advance Rate then in effect for Eligible Receivables and the face amount of all
Eligible Receivables of each Canadian Loan Party (calculated net of all finance charges, late fees
and other fees which are unearned, sales, excise or similar taxes, and credits or allowances
granted at such time), (ii) the sum of (x) the product of the Advance Rate then in effect for
Eligible Inventory and the value of the Eligible Inventory (other than Documented Non-Letter of
Credit Inventory and Inventory covered by Documentary Letters of Credit) of each Canadian Loan
Party (valued, in each case, at the lower of cost and market on a first-in, first-out basis) and
(y) subject to the proviso in the last sentence of the definition of Eligible Inventory, the
product of the Adjusted Orderly Liquidation Value Rate then in effect and the sum of (1) the value
of the Eligible Inventory consisting of Documented Non-Letter of Credit Inventory of each Canadian
Loan Party (valued, in each case, at the lower of cost
and market on a first-in, first out basis) and (2) the value of the Eligible Inventory
consisting of Inventory covered by Documentary Letters of Credit of each Canadian Loan Party (which
value under this clause (2) shall be deemed to be the aggregate undrawn amount of such Documentary
Letters of Credit at such time) and (iii) the lesser of (x) U.S.$10,000,000 and (y) the U.S. Dollar
Equivalent of the aggregate amount of cash and Permitted Cash Equivalents held in the Special Cash
Collateral Account at such time (but only so long as such cash, Permitted Cash Equivalents and
account are subject to a valid and perfected first priority Lien in favor of the Collateral Agent)
minus (b) any Eligibility Reserve, and, in the case of Eligible Receivables, any Dilution Reserve
then in effect.


 


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“Borrowing Base Certificate” means a certificate to be executed and delivered from time to
time by the Borrower to the Administrative Agent substantially in the form of Exhibit E.



“Business Day” means a day of the year on which banks are not required or authorized to close
in New York, New York or Charlotte, North Carolina (and when used in connection with a Loan or a
Letter of Credit (including without limitation, with respect to notices, determinations, fundings,
issuances and payments relating thereto), additionally Toronto, Ontario, Canada), and, (a) in the
case of Letters of Credit Issued in Euros or within the European Union, in London and (b) in the
case of Letters of Credit Issued in Hong Kong dollars or in Hong Kong, in Hong Kong.



“Canadian Loan Party” means the Borrower and each Canadian Subsidiary Guarantor.



“Canadian Plan” means any pension or other employee benefit plan and which is: (a) a plan
maintained by the Borrower or any other Canadian Loan Party; (b) a plan to which the Borrower or
any other Canadian Loan Party contributes or is required to contribute; (c) a plan to which the
Borrower or any other Canadian Loan Party was required to make contributions at any time during the
five (5) calendar years preceding the date of this Agreement; or (d) any other plan with respect to
which the Borrower or any other Canadian Loan Party has incurred or may incur liability, including
contingent liability either to such plan or to any Person, administration or Governmental
Authority, including the FSCO.



“Canadian Pledge Agreement” means a pledge agreement, in form and substance reasonably
satisfactory to the Administrative Agent, executed by the Borrower and each Guarantor that is a
Canadian Subsidiary, pursuant to which each such Person pledges to the Collateral Agent all of its
right, title and interest in and to all Stock of each Subsidiary in which it has an interest, as
the same may be amended, restated, supplemented or otherwise modified from time to time.



“Canadian Priority Payables” means, at any time, with respect to the Borrowing Base:



(a) the amount past due and owing by the Borrower or any other Canadian Loan Party, or the
accrued amount for which the Borrower or any other Canadian Loan Party has an obligation to remit
to a Governmental Authority or other Person pursuant to any applicable law, rule or regulation, in
respect of (i) pension fund obligations; (ii) employment insurance; (iii) goods and services taxes,
sales taxes, employee income taxes and other taxes payable or to be remitted or withheld; (iv)
workers’ compensation; (v) vacation pay; and (vi) other like charges and demands, in each case, in
respect of which any Governmental Authority or other Person may claim a security interest,
hypothec, prior claim, lien, trust or other claim or Lien ranking or capable of ranking in priority
to or pari passu with one or more of the Liens granted in any of the Collateral Documents; and


 


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(b) the aggregate amount of any other liabilities of the Borrower or any other Canadian Loan
Parties (i) in respect of which a trust has been or may be imposed on any Collateral to provide for
payment or (ii) which are secured by a security interest, hypothec, prior claim, pledge, lien,
charge, right, or claim or other Lien on any Collateral, in each case, pursuant to any applicable
law, rule or regulation and which trust, security interest, hypothec, prior claim, pledge, lien,
charge, right, claim or Lien ranks or is capable of ranking in priority to or pari passu with one
or more of the Liens granted in any of the Collateral Documents.



“Canadian Security Agreement” means a general security agreement, in form and substance
reasonably satisfactory to the Administrative Agent, executed by the Borrower and each Guarantor
that is a Canadian Subsidiary, as the same may be amended, restated, supplemented or otherwise
modified from time to time.



“Canadian Subsidiary” means any Subsidiary of Group organized under the laws of Canada or any
province or territory thereof.



“Canadian Subsidiary Guarantor” means each Canadian Subsidiary party to or that becomes party
to the Guaranty.



“Capital Expenditures” means, with respect to any Person for any period, the aggregate of
amounts that would be reflected as additions to property, plant or equipment on a consolidated
balance sheet of such Person and its Subsidiaries on a consolidated basis prepared in conformity
with Agreement Accounting Principles, excluding (i) interest capitalized during construction, (ii)
amounts expended on leasehold improvements for which such Person has received a commitment of
reimbursement from the landlord; provided, that if any such amount is not reimbursed within six
months after the expenditure (the “Reimbursement Expiration Date”), such amount will be counted
towards Capital Expenditures as if such amount had been expended on the Reimbursement Expiration
Date, (iii) amounts credited to, or received by, any Warnaco Entity in connection with a
substantially contemporaneous trade in and (iv) reinvestments of Net Cash Proceeds in replacement
assets pursuant to Section 2.9(c)(i) and Section 2.9(c)(i) of the U.S. Facility.



“Capital Lease” means, with respect to any Person, any lease of property by such Person as
lessee which would be accounted for as a capital lease on a balance sheet of such Person prepared
in conformity with Agreement Accounting Principles.



“Capital Lease Obligations” means, with respect to any Person, the capitalized amount of all
obligations of such Person or any of its Subsidiaries under Capital Leases, as determined on a
consolidated basis in conformity with Agreement Accounting Principles.



“Cash Collateral Account” has the meaning specified in the Canadian Security Agreement (or, if
such defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified
in the U.S. Pledge and Security Agreement).


 


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“Cash Equivalents” means (a) securities issued or fully guaranteed or insured by the United
States government or any agency thereof (including, without limitation, the Federal Home Loan
Mortgage Association, the Federal Home Loan Bank, the Federal National Mortgage Association and the
Governmental National Mortgage Association) or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the government of the United States or,
in the case of a Foreign Subsidiary, securities issued or fully guaranteed or insured by the
federal government of the country under which such Foreign Subsidiary was formed or any agency
thereof or instrumentality thereof or obligations unconditionally guaranteed by the full faith and
credit
of such federal government, (b) certificates of deposit, eurodollar time deposits, overnight
bank deposits and bankers’ acceptances of any commercial bank organized under the laws of the
United States, any state thereof, the District of Columbia, any foreign bank, or its branches or
agencies (fully protected against currency fluctuations) which, at the time of acquisition, are
rated at least “A-1” by Standard & Poor’s Rating Services (“S&P”) or “P-1” by Moody’s Investors
Services, Inc. (“Moody’s”), (c) commercial paper of an issuer rated at least “A-1” by S&P or “P-1”
by Moody’s, and (d) shares of any money market fund that (i) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (a) through (c) above,
(ii) has net assets of not less than U.S.$500,000,000 and (iii) is rated at least “A-1” by S&P or
“P-1” by Moody’s; provided, however, that the maturities of all obligations of the type specified
in clauses (a) through (c) above shall not exceed 365 days.



“Cash Interest Expense” means, with respect to any Person for any period, the Interest Expense
of such Person for such period less the Non-Cash Interest Expense of such Person for such period.



“Cash Management Obligation” means, as applied to any Person, any direct or indirect
liability, contingent or otherwise, of such Person in respect of cash management services
(including treasury, depository, overdraft, credit or debit card, electronic funds transfer,
automatic clearing house and other cash management arrangements) provided by any Agent, Lender or
any Affiliate of any Agent or Lender in connection with this Agreement or any Loan Document,
including obligations for the payment of fees, interest, charges, expenses, attorneys’ fees and
disbursements in connection therewith.



“Cash on Hand” means an amount equal to the amount of cash and Cash Equivalents on deposit in
the Cash Collateral Accounts less the aggregate amount of accounts payable and other unpaid
expenses of the Warnaco Entities which, in Group’s reasonable judgment, are in excess of ordinary
course accounts payable and unpaid expenses as certified in a certificate of a Responsible Officer
of Group delivered to the Administrative Agent prior to the repurchase of any Senior Notes.



“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended from time to time.



“CERCLIS” means the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection Agency.



“Change of Control” means any of the following: (a) Group shall at any time cease to have
legal and beneficial ownership of 100% of the capital stock of the U.S. Borrower, or, directly or
indirectly, any other Loan Party (except if such other Loan Party shall be disposed of pursuant to
an Asset Sale permitted by Section 8.4 or if such parties shall merge, liquidate or dissolve in
accordance with Section 8.7); or (b) any Person, or two or more Persons acting in concert, shall
have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of
Group (or other securities convertible into such Voting Stock) representing 35% or more of the
combined voting power of all Voting Stock of Group; or (c) any Person, or two or more Persons
acting in concert, shall have acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or their acquisition of, the
power to exercise, directly or indirectly, a controlling influence over the management or policies
of Group, or control over Voting Stock of Group (or other securities convertible into such
securities) representing 35% or more of combined voting power of all Voting Stock of Group or (d)
so long as the Senior Note Indenture is in effect or any Senior Notes are outstanding, any “Change
of Control” as defined in the Senior Note Indenture.


 


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“Chargeback” means a deduction from a Receivable taken by a customer.



“Chattel Paper” has the meaning specified in the PPSA (or, if such defined term is used with
respect to or otherwise applicable to a U.S. Loan Party, specified in the U.S. Pledge and Security
Agreement).



“Closing Date” means August 26, 2008.



“Code” means the Internal Revenue Code of 1986 (or any successor legislation thereto), as
amended from time to time.



“Collateral” means all property and interests in property and proceeds thereof now owned or
hereafter acquired by any Loan Party in or upon which a Lien is granted under any Collateral
Document.



“Collateral Agent” has the meaning specified in the preamble to this Agreement.



“Collateral Documents” means the Canadian Security Agreement, the Canadian Pledge Agreement,
the Deed of Hypothec, other pledge or security agreements, the Mortgages, the Blocked Account
Letters, the Restricted Account Letters, the Control Account Agreements, the Collateral Documents
(as defined in the U.S. Facility) and any other document executed and delivered by a Loan Party
granting a Lien on any of its property to secure payment of any of the Secured Obligations.



“Collections” means, with respect to any Receivable: (a) all funds that are received by any
Loan Party in payment of any amounts owed in respect of such Receivable (including purchase price,
finance charges, interest and all other charges), or applied to amounts owed in respect of such
Receivable (including insurance payments and net proceeds of the sale or other disposition of
repossessed goods or other collateral or property of the related Account Debtor or any other Person
directly or indirectly liable for the payment of such Receivable and available to be applied
thereon) and (b) all other proceeds of such Receivable.



“Commitment” means, with respect to any Lender, such Lender’s Revolving Credit Commitment and
“Commitments” means the aggregate Revolving Credit Commitments of all Lenders.



“Compliance Certificate” has the meaning specified in Section 6.1(d).



“Consolidated Net Income” means, for any Person for any period, the net income (or loss) of
such Person and its Subsidiaries for such period, determined on a consolidated basis in conformity
with Agreement Accounting Principles; provided, however, that (a) the net income of any other
Person in which such Person or one of its Subsidiaries has a joint interest with a third party
(which interest does not cause the net income of such other Person to be consolidated into the net
income of such Person in accordance with Agreement Accounting Principles) shall be included only to
the extent of the amount of dividends or distributions paid to such Person or Subsidiary, (b) the
net income of any Subsidiary of such Person that is subject to any restriction or limitation on the
payment of dividends or the making of other distributions shall be excluded to the extent of such
restriction or limitation, (c) any net gain (or loss) resulting from an Asset Sale by such Person
or any of its Subsidiaries other than in the ordinary course of business shall be excluded, and (d)
extraordinary gains and losses and any one-time increase or decrease to net income which is
required to be recorded
because of the adoption of new accounting policies, practices or standards required by
Agreement Accounting Principles shall be excluded.


 


10









 





“Constituent Documents” means, with respect to any Person, (a) the articles/certificate of
incorporation (or the equivalent organizational documents) of such Person, (b) the by-laws (or the
equivalent governing documents) of such Person and (c) any document setting forth the manner of
election and duties of the directors or managing members of such Person (if any) and the
designation, amount and/or relative rights, limitations and preferences of any class or series of
such Person’s Stock.



“Contaminant” means any material, substance or waste that is classified, regulated or
otherwise characterized under any Environmental Law as hazardous, toxic, a contaminant or a
pollutant or by other words of similar meaning or regulatory effect, including any petroleum or
petroleum-derived substance or waste, asbestos and polychlorinated biphenyls.



“Contractual Obligation” of any Person means any obligation, agreement, undertaking or similar
provision of any Security issued by such Person or of any agreement, undertaking, contract, lease,
indenture, mortgage, hypothecation, deed of trust or other instrument (excluding a Loan Document)
to which such Person is a party or by which it or any of its property is bound or to which any of
its properties is subject.



“Control Account” has the meaning specified in the Canadian Security Agreement (or, if such
defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified in the
U.S. Pledge and Security Agreement).



“Control Account Agreement” has the meaning specified in the Canadian Security Agreement (or,
if such defined term is used with respect to or otherwise applicable to a U.S. Loan Party,
specified in the U.S. Pledge and Security Agreement).



“Corporate Chart” means a corporate organizational chart, list or other similar document in
each case in form reasonably acceptable to the Administrative Agent and setting forth, for each
Person that is a Loan Party, that is subject to Section 7.11 or that is a Subsidiary of any of
them, (a) the full legal name of such Person (and any trade name, fictitious name or other name
such Person may have had or operated under), (b) the jurisdiction of organization, the
organizational number (if any) and the tax identification number (if any) of such Person, (c) the
location of such Person’s chief executive office (or domicile or sole place of business) and (d)
the number of shares of each class of such Person’s Stock authorized (if applicable), the number
outstanding as of the date of delivery and the number and percentage of such outstanding shares for
each such class owned (directly or indirectly) by any Loan Party or any Subsidiary of any of them.



“Credit and Collection Policy” means, as the context may require, those receivables credit and
collection policies and practices of the Canadian Loan Parties in effect on the Closing Date and as
disclosed in writing to the Lenders, as such credit and collection policies and practices may be
modified in any material respect with the prior written consent of the Administrative Agent (which
consent shall not be unreasonably withheld or delayed) and with a copy of any such modification
(whether material or not) to be delivered to the Administrative Agent promptly after its
effectiveness.


 


11









 





“Customary Permitted Liens” means, with respect to any Person, any of the following Liens:



(a) Liens with respect to the payment of taxes, assessments or governmental charges in all
cases which are not yet due and payable or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate provisions are being
maintained to the extent required by Agreement Accounting Principles;



(b) Liens of landlords arising by statute and Liens of suppliers, mechanics, carriers,
materialmen, warehousemen, processors or workmen and other like Liens imposed by law or otherwise
incurred, in each instance, in the ordinary course of business for amounts not yet due or which are
being contested in good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained to the extent required by Agreement
Accounting Principles, or deposits or pledges to obtain the release of any such Liens;



(c) deposits made in the ordinary course of business in connection with worker’s compensation,
unemployment or employment insurance or other types of social security benefits or to secure the
performance of bids, tenders, sales, contracts (other than for the repayment of borrowed money),
public or statutory obligations, and surety, stay, appeal, customs or performance bonds, or similar
obligations arising in each case in the ordinary course of business;



(d) encumbrances arising by reason of zoning restrictions, easements, servitudes, licenses,
reservations, covenants, rights-of-way, utility easements, building restrictions and other similar
encumbrances or such other matters as disclosed in Mortgagee’s Title Insurance Policy on the use of
Real Property which do not materially detract from the value of such Real Property or interfere
with the ordinary conduct of the business conducted and proposed to be conducted at such Real
Property;



(e) encumbrances arising under leases or subleases of Real Property which do not in the
aggregate materially detract from the value of such Real Property or interfere with the ordinary
conduct of the business conducted and proposed to be conducted at such Real Property; and



(f) financing statements of a lessor’s rights in and to personal property leased to such
Person in the ordinary course of such Person’s business.



“Deed of Hypothec” means a deed of hypothec, in form and substance reasonably satisfactory to
the Administrative Agent, executed by the Borrower and each Guarantor that is a Canadian Subsidiary
granting a Lien as required for Quebec law purposes on any of its property to secure payment of any
of the Secured Obligations, as the same may be amended, restated, supplemented or otherwise
modified from time to time.



“Default” means any event which with the passing of time or the giving of notice or both would
become an Event of Default.



“Defaulted Receivable” means a Receivable:



(a) in the case of a Receivable that is not an Extended Term Receivable, as to which any
payment, or part thereof, remains unpaid for 91 days or more from the original due date for such
payment,


 


12









 





(b) in the case of a Receivable that is an Extended Term Receivable, as to which any payment,
or part thereof, remains unpaid for 30 days or more from the original due date for such payment,



(c) unless otherwise agreed in writing by the Administrative Agent in its sole discretion
exercised reasonably, the Account Debtor of such Receivable (or any other Person obligated thereon
or owning any Related Security with respect thereto) has: (i) filed a petition for bankruptcy or
any other relief under any of the Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the
Companies’ Creditors Arrangement Act (Canada) or any other law relating to bankruptcy, insolvency,
reorganization or relief of debtors; (ii) made an assignment for the benefit of creditors; (iii)
had filed against it any petition or other application for relief under any of the Bankruptcy Code,
the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada) or
any such other law; (iv) has failed, suspended business operations, become insolvent, called a
meeting of its creditors for the purpose of obtaining any financial concession or accommodation; or
(v) had or suffered a receiver or a trustee to be appointed for all or a significant portion of its
assets or affairs, or



(d) which, has been, or, consistent with the Credit and Collection Policy would be, written
off a Canadian Loan Party’s books as uncollectible.



“Deposit Account” means a demand, time, savings, passbook or similar account maintained with a
bank (or, if such defined term is used with respect to or otherwise applicable to a U.S. Loan
Party, has the meaning given to such term in the UCC).



“Dilution” means, at any given time in respect of all Accounts of the Canadian Loan Parties,
100 times a quotient, (a) the numerator of which is the sum (for the most recent twelve months) of
any net credits, rebates, markdowns, freight charges, cash discounts, volume, early payment and
other discounts, cooperative advertising expenses, warranties, warehouse and other allowances,
disputes, chargebacks, defective returns, other returned or repossessed goods, reductions in
balance in respect of billing errors or adjustments to estimated billing settlements for defective
products or other reasons, allowances for early payments and other similar allowances that are made
or coordinated with the usual practices of the Canadian Loan Party owning such Account and (b) the
denominator of which is the sum (for the most recent twelve months) of the gross amount of any
sales made on account (including, without limitation, the original balances of such Accounts).



“Dilution Reserve” means, effective as of three (3) Business Days following the date of
written notice of any determination thereof to the Borrower by the Administrative Agent (except
that no such advance notice shall be required with respect to any amounts established on or prior
to the Closing Date, which amounts shall be in effect as of the Closing Date), such amounts as the
Administrative Agent may from time to time establish against the gross amounts of Eligible
Receivables, calculated as an aggregate amount equal to the product of (x) the gross amount of
Eligible Receivables times (y) the percentage (but not below 0%) equal to that percentage of
Dilution reported in the most recent Borrowing Base Certificate delivered to the Administrative
Agent that is in excess of 5% of Dilution.



“Document” means a “document of title” as defined in the PPSA (or, if such defined term is
used with respect to or otherwise applicable to a U.S. Loan Party, has the meaning specified in
Article 9 of the UCC).



“Documentary Letter of Credit Inventory Conditions” means, with respect to any Inventory
covered by a Documentary Letter of Credit, that such Inventory (a) is subject to a negotiable
Document showing the Collateral Agent (or, with the consent of the Administrative Agent, the
applicable Loan Party) as consignee, which Document is in the possession of the Collateral Agent or
such other Person as the Administrative Agent shall approve; (b) is insured in a manner reasonably
satisfactory to the Administrative Agent; (c) is owned by the applicable Loan Party (that is, title
has passed to such Loan Party); (d) is not sold by a vendor that has a right to reclaim, divert
shipment of,
repossess, stop delivery, claim any reservation of title or otherwise assert Lien rights
against the Inventory; (e) is not subject to any import restrictions or requirements that the
applicable Loan Party, in the Administrative Agent’s good faith judgment, is unable to comply with;
(f) is shipped by a common carrier that is not controlled by the vendor; and (g) is subject to a
valid and perfected first priority Lien in favor of the Collateral Agent under the PPSA.


 


13









 





“Documentary Letter of Credit” means any Letter of Credit Issued by an Issuer pursuant to
Section 2.4 for the account of the Borrower, which is drawable upon presentation of documents
evidencing the sale or shipment of goods purchased by a Canadian Loan Party in the ordinary course
of its business.



“Documented Non-Letter of Credit Inventory” means Inventory of a Canadian Loan Party (i) that
is not covered by a Documentary Letter of Credit, (ii) that is in transit from a vendor from
outside Canada, (iii) that is subject to a valid and perfected first priority Lien in favor of the
Collateral Agent under the PPSA and (iv) as to which such other conditions (including, without
limitation, receipt of documentation) as the Administrative Agent shall request, in its sole
discretion exercised reasonably, have been satisfied.



“Dollars” and the sign “$” each mean the lawful money of Canada.



“Domestic Lending Office” means, with respect to any Lender, the office of such Lender
specified as its “Domestic Lending Office” opposite its name on Schedule II (Domestic Lending
Offices and Addresses for Notices) or on the Assignment and Acceptance by which it became a Lender
or such other office of such Lender as such Lender may from time to time specify to the Borrower
and the Administrative Agent.



“Domestic Subsidiary” means any Subsidiary of Group organized under the laws of any state of
the United States of America or the District of Columbia.



“Earnout Obligations” means earn-outs and deferred compensation incurred in connection with
any Permitted Acquisition or Investment permitted under Section 8.3(l) consummated after the
Closing Date under non-compete agreements, consulting agreements, earn-out agreements and similar
deferred compensation arrangements (including such as may be contained in the purchase agreement or
related documents for such Permitted Acquisition). The unpaid amount of Earnout Obligations to be
determined at any time with respect to any such Permitted Acquisition shall be calculated on the
basis of the maximum determinable amount payable with respect to such Permitted Acquisition, or
such lesser amount thereof agreed to by the Administrative Agent in its sole discretion.



“EBITDA” means, with respect to any Person for any period, an amount equal to (a) Consolidated
Net Income of such Person for such period plus (b) the sum of, in each case to the extent included
in the calculation of such Consolidated Net Income but without duplication, (i) any provision for
income taxes, (ii) Interest Expense, (iii) loss from extraordinary items, (iv) loss from the sale,
exchange or other disposition of capital assets, (v) depreciation, depletion and amortization of
intangibles or financing or acquisition costs, (vi) all other non-cash charges and non-cash losses
for such period, including non-cash charges relating to any change in the methodology of estimating
reserves against Receivables and Inventory and non-cash charges for employee stock compensation,
and (vii) any restructuring charges not to exceed U.S.$20,000,000 in the aggregate in any Fiscal
Year minus (c) the sum of, in each case to the extent included in the calculation of such
Consolidated Net Income but without duplication, (i) any credit for income tax, (ii) interest
income, (iii) gains from extraordinary items for such period, (iv) any aggregate net gain from the
sale, exchange or other
disposition of capital assets by such Person, (v) any other non-cash gains which have been
added in determining Consolidated Net Income and (vi) cash payments for charges that have been
reserved. 


 


14









 





“Eligibility Reserve” means, effective as of three (3) Business Days after the date of written
notice of any determination thereof to the Borrower by the Administrative Agent (except that no
such advance notice shall be required with respect to amounts established on or prior to the
Closing Date, which amounts shall be in effect as of the Closing Date), such amounts as the
Administrative Agent, in its sole discretion exercised reasonably, may from time to time establish
against the gross amounts of Eligible Receivables or Eligible Inventory, to reflect (a) risks or
contingencies which may affect any one or class of such items and which have not already been taken
into account in the calculation of the Borrowing Base, (b) Cash Management Obligations owing to any
of the Facility Agents that constitute Secured Obligations, (c) (i) at any time that Available
Credit is less than U.S.$50,000,000 or during an Event of Default, upon the written request of any
Lender that is (or whose Affiliate is) party to a Hedging Contract, the aggregate obligations of
the Borrower or any other Canadian Loan Party under such Hedging Contract calculated on a mark to
market basis or (ii) at any time that any such Hedging Contract has been terminated, the amount due
and owing pursuant to such Hedging Contract and (d) the unpaid or unremitted Canadian Priority
Payables by any of the Canadian Loan Parties which would give rise to a Lien with priority under
applicable laws over the Lien of the Collateral Agent under any of the Loan Documents.



“Eligible Assignee” means (a) a Lender or an Affiliate or Approved Fund of any Lender or
Agent, (b) a commercial bank having total assets whose U.S. Dollar Equivalent exceeds
U.S.$5,000,000,000, (c) a finance company or insurance company, in each case reasonably acceptable
to the Administrative Agent, and regularly engaged in making, purchasing or investing in loans and
having a net worth, determined in accordance with GAAP, whose U.S. Dollar Equivalent exceeds
U.S.$500,000,000 (or, to the extent net worth is less than such amount, a finance company or
insurance company, reasonably acceptable to the Administrative Agent), (d) a savings and loan
association or savings bank organized under the laws of Canada or any province or territory thereof
having a net worth, determined in accordance with GAAP, whose U.S. Dollar Equivalent exceeds
U.S.$500,000,000 or (e) any other financial institution or Fund, in each case reasonably acceptable
to the Administrative Agent and each Issuer, and regularly engaged in making, purchasing or
investing in loans and having a net worth, determined in accordance with GAAP, whose U.S. Dollar
Equivalent exceeds U.S.$500,000,000 (or, to the extent net worth is less than such amount, any
other financial institution or Fund, reasonably acceptable to the Administrative Agent and each
Issuer), in each case under clauses (a) through (e), that is dealing at arms’ length from the
Borrower within the meaning of the Income Tax Act (Canada) and that is either a resident of Canada
or is an “authorized foreign bank” as defined in section 2 of the Bank Act (Canada) or is a lender
whose activities are not regulated by the Bank Act (Canada).



“Eligible Foreign Account Debtor” means an Account Debtor (i) who is organized under the laws
of a country other than Canada or any province or territory thereof, (ii) whose Receivables are
denominated and payable only in Dollars or U.S. Dollars in Canada, and (iii) the obligations of
which are supported by a letter of credit which letter of credit names the Collateral Agent as
beneficiary for the benefit of the Secured Parties or in respect of which the issuer has consented
to the assignment to the Collateral Agent of the proceeds thereof.



 


15









 





“Eligible Inventory” means the Inventory of a Canadian Loan Party (other than any
Inventory which has been consigned by such Canadian Loan Party) consisting of finished goods:



(a) which is owned solely by such Canadian Loan Party,



(b) with respect to which the Collateral Agent has a valid and perfected first priority Lien,



(c) with respect to which no representation or warranty contained in any of the Loan Documents
has been breached,



(d) which is not, in the Administrative Agent’s sole discretion exercised reasonably, obsolete
or unmerchantable,



(e) with respect to which (in respect of any Inventory labeled with a brand name or trademark
and sold by such Canadian Loan Party pursuant to a trademark owned by a Loan Party or a license
granted to a Loan Party) the Collateral Agent would have rights pursuant to this Agreement or any
other agreement satisfactory to the Administrative Agent to sell such Inventory in connection with
a liquidation thereof, and



(f) which the Administrative Agent has not deemed to be ineligible based on such credit and
collateral considerations relating thereto as the Administrative Agent may, in its sole discretion
exercised reasonably, deem appropriate and as to which the Administrative Agent provides the
Borrower three (3) Business Days prior notice.



No Inventory of a Canadian Loan Party shall be Eligible Inventory if such Inventory consists of (i)
goods returned or rejected by customers other than goods that are undamaged or are resalable in the
normal course of business, (ii) goods to be returned to suppliers, (iii) goods in transit (other
than goods in transit from one location of a Canadian Loan Party to another location of a Canadian
Loan Party and Documented Non-Letter of Credit Inventory) or goods located outside of Canada (other
than Documented Non-Letter of Credit Inventory) or (iv) goods located, stored, used or held at the
premises of a third party unless (A) the Collateral Agent shall have received a Landlord Waiver or
Bailee’s Letter or (B) in the case of Inventory located at a leased premises, an Eligibility
Reserve in an amount equal to the aggregate of three months gross lease payments or otherwise
satisfactory to the Administrative Agent shall have been established with respect thereto.
Notwithstanding the foregoing, Eligible Inventory shall at any time be deemed to include Eligible
Inventory of a Canadian Loan Party covered by Documentary Letters of Credit in an amount equal to
the aggregate undrawn amount of such Documentary Letters of Credit at such time; provided, however,
that if the Available Credit shall be less than 25% of the Aggregate Borrowing Limit for 5
consecutive Business Days and until Available Credit shall thereafter be at least 25% of the
Aggregate Borrowing Limit for 45 consecutive days, the Administrative Agent may, in its sole
discretion and upon not less than 3 Business Days prior written notice to the Borrower, exclude
from the calculation of the Borrowing Base any such Inventory which does not satisfy the
Documentary Letter of Credit Inventory Conditions.



“Eligible Receivable” means, at any time, any Receivable:



(a) in respect of which the Account Debtor (i) (A) is organized under the laws of Canada or
any province or territory thereof and has its principal place of business located in Canada or (B)
is an Eligible Foreign Account Debtor and (ii) is not an Affiliate of Group or any of its
Subsidiaries,



(b) that does not have a stated maturity which is more than 90 days after the original invoice
date of such Receivable unless such Receivable is an Extended Term Receivable, in which case it
does not have a stated maturity which is more than 180 days after the original invoice date of such
Receivable,


 


16









 





(c) that arises under a duly authorized Sales Contract for the sale and delivery of goods and
services in the ordinary course of any Canadian Loan Party’s business,



(d) that is a legal, valid and binding obligation of the related Account Debtor, enforceable
against such Account Debtor in accordance with its terms,



(e) that conforms in all material respects with all Requirements of Law,



(f) that is not the subject of any dispute, offset, holdback, defense, Lien (other than a
Customary Permitted Lien) or other claim other than such adjustments in the ordinary course of the
applicable Canadian Loan Party’s business as such Canadian Loan Party’s business is conducted on
the date hereof (such Receivable to be ineligible to the extent of such dispute, offset, holdback,
defense, Lien or claim),



(g) that satisfies all applicable requirements of the applicable Credit and Collection Policy,



(h) that has not been modified, waived or restructured since its creation,



(i) in which a Canadian Loan Party owns good and marketable title, free and clear of any Lien
(other than a Customary Permitted Lien and Liens created by the Loan Documents), and that is freely
assignable by the Canadian Loan Party (including without any consent of the related Account
Debtor),



(j) for which the Collateral Agent, for the benefit of the Secured Parties, has a valid and
enforceable perfected security interest therein and in the Related Security and Collections with
respect thereto, in each case free and clear of any Lien (other than a Customary Permitted Lien and
Liens created by the Loan Documents),



(k) that constitutes an account as defined in the PPSA, and that is not evidenced by
Instruments or Chattel Paper,



(l) that is not a Defaulted Receivable,



(m) [Intentionally Omitted],



(n) for which the aggregate of the Defaulted Receivables owed by the related Account Debtor
and any of its Affiliated Account Debtors does not exceed 50% of the outstanding balance of all
Receivables owed by such Account Debtor,



(o) which is denominated and payable only in Dollars or U.S. Dollars in Canada,



(p) that represents amounts earned and payable by the Account Debtor that are not subject to
the performance of additional services by any Canadian Loan Party,



(q) that has not been rewritten, canceled or rebilled or is not a Receivable that has resulted
from a rewritten, canceled or rebilled Receivable,


 


17









 





(r) that, when taken together with all other Eligible Receivables owed by such Account Debtor
to the Canadian Loan Parties, does not exceed 20% of the Eligible Receivables of the Canadian Loan
Parties at such time (it being understood that only the excess of such Eligible
Receivables over such 20% threshold shall be deemed ineligible pursuant to this clause, unless
such Eligible Receivable is covered by credit insurance acceptable to the Administrative Agent, in
which case that portion of such Eligible Receivable in excess of the deductible for such credit
insurance shall not be deemed ineligible pursuant to this clause), and



(s) that is not owed by the government of the United States of America, Canada or any other
foreign country or sovereign state, or of any state, province, territory, municipality or other
political subdivision thereof, or of any department, agency, public corporation, or other
instrumentality thereof;



provided, however, that in no event shall any Chargeback qualify as an Eligible Receivable.



“Environmental Action” means any action, suit, demand, demand letter, claim, notice of
non-compliance or violation, notice of liability or potential liability, investigation, proceeding,
consent order or consent agreement relating in any way to any Environmental Law, any Environmental
Permit or Contaminant or arising from alleged injury or threat to health, safety or the
environment, including, without limitation, (a) by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any
governmental or regulatory authority or third party for damages, contribution, indemnification,
cost recovery, compensation or injunctive relief.



“Environmental Laws” means all applicable Requirements of Law, now or hereafter in effect and
as amended or supplemented from time to time, relating to pollution or the regulation and
protection of human health, safety, the environment or natural resources, including the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. § 9601 et seq.); the Hazardous Material Transportation Act, as amended (49 U.S.C. § 5101 et
seq.); the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C. § 136 et
seq.); the Resource Conservation and Recovery Act, as amended (42 U.S.C. § 6901 et seq.); the Toxic
Substance Control Act, as amended (15 U.S.C. § 2601 et seq.); the Clean Air Act, as amended (42
U.S.C. § 7401 et seq.); the Federal Water Pollution Control Act, as amended (33 U.S.C. § 1251 et
seq.); the Occupational Safety and Health Act, as amended (29 U.S.C. § 651 et seq.); the Safe
Drinking Water Act, as amended (42 U.S.C. § 300f et seq.); the Environmental Protection Act
(Canada); and each of their state, provincial, territorial, municipal and local counterparts or
equivalents and any transfer of ownership notification or approval statute, including the
Industrial Site Recovery Act (N.J. Stat. Ann. § 13:1K-6 et seq.).



“Environmental Liabilities and Costs” means, with respect to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive damages, consequential
damages, treble damages, costs and expenses (including all fees, disbursements and expenses of
counsel, experts and consultants and costs of investigation and feasibility studies), fines,
penalties, sanctions and interest incurred as a result of any claim or demand by any other Person,
whether based in contract, tort, implied or express warranty, strict liability, criminal or civil
statute and whether arising under any Environmental Law, Permit, order or agreement with any
Governmental Authority or other Person, in each case relating to any environmental, health or
safety condition or to any Release or threatened Release and resulting from the past, present or
future operations of, or ownership of property by, such Person or any of its Subsidiaries.


 


18









 





“Environmental Lien” means any Lien in favor of any Governmental Authority for Environmental
Liabilities and Costs.



“Environmental Permit” means any permit, approval, identification number, license or other
authorization required under any Environmental Law.



“ERISA” means the Employee Retirement Income Security Act of 1974 (or any successor
legislation thereto), as amended from time to time.



“ERISA Affiliate” means any trade or business (whether or not incorporated) under common
control or treated as a single employer with Group or any of its Subsidiaries within the meaning of
Section 414 (b), (c), (m) or (o) of the Code.



“ERISA Event” means (a) a reportable event described in Section 4043(b) or 4043(c)(1), (2),
(3), (5), (6), (8) or (9) of ERISA with respect to a Title IV Plan or a Multiemployer Plan; (b) the
withdrawal of the U.S. Borrower, any of its Subsidiaries or any ERISA Affiliate from a Title IV
Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA; (c) the complete or partial withdrawal of the U.S.
Borrower, any of its Subsidiaries or any ERISA Affiliate from any Multiemployer Plan; (d) notice of
reorganization or insolvency of a Multiemployer Plan; (e) the filing of a notice of intent to
terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041
of ERISA; (f) the institution of proceedings to terminate a Title IV Plan or Multiemployer Plan by
the PBGC; (g) the failure to make any required contribution to a Title IV Plan or Multiemployer
Plan; (h) the imposition of a lien under Section 412 of the Code or Section 302 of ERISA on Group
or any of its Subsidiaries or any ERISA Affiliate; or (i) any other event or condition which might
reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Title IV Plan or Multiemployer Plan or the
imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not
delinquent under Section 4007 of ERISA.



“Event of Default” has the meaning specified in Section 9.1.



“Existing Credit Agreement” means that certain Amended and Restated Credit Agreement, dated as
of January 31, 2006, among the U.S. Borrower, Group, the financial institutions from time to time
party thereto as lenders, the financial institutions from time to time party thereto as letter of
credit issuers, Citicorp North America, Inc., as administrative agent and collateral agent,
JPMorgan Chase Bank, N.A., as syndication agent, and BofA, The CIT Group/Commercial Services, Inc.,
and Wachovia Capital Finance Corporation (Central) f/k/a Congress Financial Corporation (Central),
as co-documentation agents, as amended, supplemented or otherwise modified from time to time prior
to the date hereof.



“Extended Term Receivable” means a Receivable that has an original stated maturity that is
greater than 90 days after the original invoice date of such Receivable and less than or equal to
180 days after the original invoice date of such Receivable.



“Facility Agents” means, collectively, the Administrative Agent and the Collateral Agent.


 


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“Fair Market Value” means (a) with respect to any asset or group of assets (other than a
marketable Security) at any date, the value of the consideration obtainable in a sale of such asset
at such date assuming a sale by a willing seller to a willing purchaser dealing at arm’s length and
arranged in an orderly manner over a reasonable period of time having regard to the nature and
characteristics of such asset (provided that in the case of assets with a net book value in excess
of the U.S. Dollar Equivalent of U.S.$5,000,000, the “Fair Market Value” thereof shall be as
reasonably
determined pursuant to the foregoing criteria by the Board of Directors of Group) or, if such
asset shall have been the subject of a relatively contemporaneous appraisal by an independent third
party appraiser, the basic assumptions underlying which have not materially changed since its date,
the value set forth in such appraisal, and (b) with respect to any marketable Security at any date,
the closing sale price of such Security on the Business Day next preceding such date, as appearing
in any published list of any national securities exchange or the NASDAQ Stock Market or, if there
is no such closing sale price of such Security, the final price for the purchase of such Security
at face value quoted on such Business Day by a financial institution of recognized standing
regularly dealing in Securities of such type and selected by the Administrative Agent.



“Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or any
successor thereto.



“Financial Covenant Debt” of any Person means Indebtedness of the type specified in clauses
(a), (b), (d), (e), (f) and (h) of the definition of “Indebtedness,” non-contingent obligations of
the type specified in clause (c) of such definition and Guaranty Obligations of any of the
foregoing.



“Financial Statements” means the financial statements of Group and its Subsidiaries delivered
in accordance with Section 4.4 and Section 6.1.



“Fiscal Quarter” means each of the three-month fiscal periods ending on or about March 31,
June 30, September 30 and December 31.



“Fiscal Year” means the twelve-month fiscal period ending on or about December 31.



“Fixed Charge Coverage Ratio” means, with respect to any Person for any period, the ratio of
(a) EBITDA of such Person for such period minus (x) Capital Expenditures of such Person for such
period and (y) cash consideration paid during such period by such Person or any of its Subsidiaries
in respect of a Permitted Acquisition for such period (but only to the extent such cash
consideration is funded from proceeds of Loans, as defined herein or in the U.S. Facility) minus
the total income tax liability actually payable by such Person and its Subsidiaries in respect of
such period to (b) the Fixed Charges of such Person for such period.



“Fixed Charges” means, with respect to any Person for any period, the sum, determined on a
consolidated basis in accordance with Agreement Accounting Principles, of (a) the Cash Interest
Expense of such Person and its Subsidiaries for such period and (b) the principal amount of
Financial Covenant Debt of such Person and its Subsidiaries on a consolidated basis having a
scheduled due date during such period.



“Foreign Plan” means an employee benefit plan (other than a Canadian Plan) to which any
Warnaco Entity or any ERISA Affiliate has any obligation or liability (contingent or otherwise)
with respect to employees who are not employed in the United States.



“Foreign Subsidiary” means a Subsidiary of Group incorporated under the laws of a jurisdiction
that is not within the United States of America.



“FSCO” means the Financial Services Commission of Ontario and any Person succeeding to the
functions thereof and includes the Superintendent under such statute and any other Governmental
Authority empowered or created by the Supplemental Pensions Act (Québec) or the Pension Benefits
Act (Ontario) or any Governmental Authority of any other Canadian jurisdiction
exercising similar functions in respect of any Canadian Plan of the Borrower or any other
Canadian Loan Party and any Governmental Authority succeeding to the functions thereof.


 


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“Fund” means any Person (other than a natural Person) that is or will be engaged in making,
purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in
the ordinary course of its business.



“GAAP” means generally accepted accounting principles in the United States of America as in
effect from time to time set forth in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board, or in such other statements by such
other entity as may be in general use by significant segments of the accounting profession, which
are applicable to the circumstances as of the date of determination.



“General Intangible” means an “intangible” as defined in the PPSA (or, if such defined term is
used with respect to or otherwise applicable to a U.S. Loan Party, has the meaning specified in the
U.S. Pledge and Security Agreement).



“Global Material Adverse Change” means a material adverse change in any of (a) the business,
condition (financial or otherwise), operations, performance or properties of the Loan Parties,
taken as a whole, or Group and its Subsidiaries, taken as a whole, (b) the ability of the Loan
Parties to perform their respective obligations under the Loan Documents or (c) the ability of the
Administrative Agent, the Collateral Agent or the Lenders to enforce the Loan Documents.



“Global Material Adverse Effect” means an effect that results in or causes, or could
reasonably be expected to result in or cause, a Global Material Adverse Change.



“Governmental Authority” means any nation, sovereign or government, any state, province,
territory, municipality or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government.



“Group” has the meaning specified in the preamble to this Agreement.



“Guarantor” means Group, each Domestic Subsidiary of Group and each Canadian Subsidiary
Guarantor.



“Guaranty” means the guarantee, in form and substance reasonably satisfactory to the
Administrative Agent, executed by the Canadian Subsidiary Guarantors, as the same may be amended,
restated, supplemented or otherwise modified from time to time.



“Guaranty Obligation” means, as applied to any Person, any direct or indirect liability,
contingent or otherwise, of such Person with respect to any Indebtedness of another Person, if the
purpose or intent of such Person in incurring the Guaranty Obligation is to provide assurance to
the obligee of such Indebtedness that such Indebtedness will be paid or discharged, that any
agreement relating thereto will be complied with, or that any holder of such Indebtedness will be
protected (in whole or in part) against loss in respect thereof, including (a) the direct or
indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such Person of
Indebtedness of another Person and (b) any liability of such Person for Indebtedness of another
Person through any agreement (contingent or otherwise) (i) to purchase, repurchase or otherwise
acquire such Indebtedness or any security therefor or to provide funds for the payment or discharge
of such Indebtedness (whether in the form of
a loan, advance, stock purchase, capital contribution or otherwise), (ii) to maintain the
solvency or any balance sheet item, level of income or financial condition of another Person, (iii)
to make take-or-pay or similar payments, if required, regardless of non-performance by any other
party or parties to an agreement, (iv) to purchase, sell or lease (as lessor or lessee) property,
or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against loss or (v) to supply
funds to, or in any other manner invest in, such other Person (including to pay for property or
services irrespective of whether such property is received or such services are rendered), if in
the case of any agreement described under clause (b)(i), (ii), (iii), (iv) or (v) above the primary
purpose or intent thereof is to provide assurance that Indebtedness of another Person will be paid
or discharged, that any agreement relating thereto will be complied with or that any holder of such
Indebtedness will be protected (in whole or in part) against loss in respect thereof. The amount
of any Guaranty Obligation shall be equal to the amount of the Indebtedness so guaranteed or
otherwise supported.


 


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“Hedging Contracts” means all Interest Rate Contracts, foreign exchange contracts, currency
swap or option agreements, forward contracts, commodity swap, purchase or option agreements, other
commodity price hedging arrangements, and all other similar agreements or arrangements designed to
alter the risks of any Person arising from fluctuations in interest rates, currency values or
commodity prices.



“IFRS” means the International Financial Reporting Standards set by the International
Accounting Standards Board as in effect from time to time.



“Indebtedness” of any Person means without duplication (a) all indebtedness of such Person for
borrowed money, (b) all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments or which bear interest, (c) all reimbursement and other obligations with respect to
letters of credit, bankers’ acceptances, surety bonds and performance bonds, whether or not
matured, (d) all indebtedness for the deferred purchase price of property or services, other than
trade payables incurred in the ordinary course of business, (e) all indebtedness of such Person
created or arising under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession or sale of such property), (f)
all Capital Lease Obligations of such Person, (g) all Guaranty Obligations of such Person, (h) all
obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any
Stock or Stock Equivalents of such Person, valued, in the case of redeemable preferred stock, at
the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid
dividends, (i) all payments that such Person would have to make in the event of an early
termination on the date Indebtedness of such Person is being determined in respect of Hedging
Contracts of such Person and (j) all Indebtedness of the type referred to above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including Accounts and General Intangibles) owned by such Person,
even though such Person has not assumed or become liable for the payment of such Indebtedness.



“Indemnitees” has the meaning specified in Section 11.4.



“Instrument” has the meaning specified in the Canadian Security Agreement (or, if such defined
term is used with respect to or otherwise applicable to a U.S. Loan Party, specified in the U.S.
Pledge and Security Agreement).


 


22









 





“Insurance Assets” means sums payable to the insured under an insurance policy, including, any
gross unearned premiums and any payment on account of loss which results in a reduction of unearned
premium with respect to the underlying policy.



“Intellectual Property” has the meaning specified in the Canadian Security Agreement (or, if
such defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified
in the U.S. Pledge and Security Agreement).



“Interest Expense” means, for any Person for any period, (a) total interest expense of such
Person and its Subsidiaries for such period determined on a consolidated basis in conformity with
Agreement Accounting Principles and including, in any event, interest capitalized during
construction for such period and net costs under Interest Rate Contracts for such period minus (b)
the sum of (i) net gains of such Person and its Subsidiaries under Interest Rate Contracts for such
period determined on a consolidated basis in conformity with Agreement Accounting Principles plus
(ii) any interest income of such Person and its Subsidiaries for such period determined on a
consolidated basis in conformity with Agreement Accounting Principles.



“Interest Period” means, in the case of any BA Rate Loan, (a) initially, the period commencing
on the date such BA Rate Loan is made or on the date of conversion of a Prime Rate Loan to such BA
Rate Loan and ending one, two, three or six months thereafter, as selected by the Borrower in its
Notice of Borrowing or Notice of Conversion or Continuation given to the Administrative Agent
pursuant to Section 2.2 or Section 2.11, and (b) thereafter, if such Loan is continued, in whole or
in part, as a BA Rate Loan pursuant to Section 2.11, a period commencing on the last day of the
immediately preceding Interest Period therefor and ending one, two, three or six months thereafter,
as selected by the Borrower in its Notice of Conversion or Continuation given to the Administrative
Agent pursuant to Section 2.11; provided, however, that all of the foregoing provisions relating to
Interest Periods in respect of BA Rate Loans are subject to the following:




(i) if any Interest Period would otherwise end on a day which is not a Business Day,
such Interest Period shall be extended to the next succeeding Business Day, unless the
result of such extension would be to extend such Interest Period into another calendar
month, in which event such Interest Period shall end on the immediately preceding Business
Day;




(ii) any Interest Period that begins on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the calendar month at the
end of such Interest Period) shall end on the last Business Day of a calendar month;




(iii) the Borrower may not select any Interest Period that ends after the Revolving
Loan Maturity Date;




(iv) the Borrower may not select any Interest Period in respect of Loans having an
aggregate principal amount of less than $3,000,000; and




(v) there shall be outstanding at any one time no more than five (5) Interest Periods
in the aggregate for all Loans.



“Interest Rate Contracts” means all interest rate swap agreements, interest rate cap
agreements, interest rate collar agreements and interest rate insurance.


 


23









 





“Inventory” has the meaning specified in the Canadian Security Agreement (or, if such defined
term is used with respect to or otherwise applicable to a U.S. Loan Party, specified in the U.S.
Pledge and Security Agreement).



“Investment” means, with respect to any Person, (a) any purchase or other acquisition by that
Person of (i) any Security issued by, (ii) a beneficial interest in any Security issued by, or
(iii) any other equity ownership interest in, any other Person, (b) any purchase by that Person of
assets constituting a business conducted by another Person, (c) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts
receivable and similar items made or incurred in the ordinary course of business as presently
conducted) or capital contribution by that Person to any other Person, including all Indebtedness
of any other Person to that Person arising from a sale of property by that Person other than in the
ordinary course of its business and (d) any Guaranty Obligation incurred by that Person in respect
of Indebtedness of any other Person.



“Investment Grade Debt Securities” means any bond, debenture, note or other evidence of
indebtedness which is rated at least BBB- (stable) by Standard & Poor’s Rating Services and Baa3
(stable) by Moody’s Investors Services, Inc.



“IRS” means the Internal Revenue Service of the United States or any successor thereto.



“Issue” means, with respect to any Letter of Credit, to issue, extend the expiry of, renew or
increase the maximum face amount (including by deleting or reducing any scheduled decrease in such
maximum face amount) of, such Letter of Credit. The terms “Issued” and “Issuance” shall have a
corresponding meaning.



“Issuer” means each Agent, Lender or Affiliate of such Agent or Lender that (a) is listed on
the signature pages hereof as an “Issuer” or (b) hereafter becomes an Issuer with the approval of
the Administrative Agent and the Borrower by agreeing pursuant to an agreement with and in form and
substance satisfactory to the Administrative Agent and the Borrower to be bound by the terms hereof
applicable to Issuers.



“Italian Debt Facility” means the Italian Debt Facility (as defined in Schedule 8.1 (Existing
Indebtedness)).



“Landlord Waiver” means a letter in form and substance reasonably acceptable to the
Administrative Agent and executed by a landlord in respect of Inventory of a Loan Party located at
any leased premises of a Loan Party pursuant to which such landlord, among other things, waives or
subordinates on terms and conditions reasonably acceptable to the Administrative Agent any Lien
such landlord may have in respect of such Inventory.



“Leases” means, with respect to any Person, all of those leasehold estates in real property of
such Person, as lessee, as such may be amended, supplemented or otherwise modified from time to
time.



“Lender” means the Swing Loan Lender and each other financial institution or other entity that
(a) is listed on the signature pages hereof as a “Lender” or (b) from time to time becomes a party
hereto by execution of an Assignment and Acceptance.



“Letter of Credit” means any letter of credit Issued pursuant to Section 2.4(d).


 


24









 





“Letter of Credit Obligations” means, at any time, the U.S. Dollar Equivalent of the aggregate
of all liabilities at such time of the Borrower to all Issuers with respect to Letters of Credit,
whether or not any such liability is contingent, and includes the sum of (a) the Reimbursement
Obligations at such time and (b) the Letter of Credit Undrawn Amounts at such time; in each case,
the U.S. Dollar Equivalent of Letter of Credit Obligations denominated in an Alternative Currency
(other than U.S. Dollars) shall be determined on each day on which a Borrowing Base Certificate is
delivered pursuant to Section 6.12.



“Letter of Credit Reimbursement Agreement” has the meaning specified in Section 2.4(e).



“Letter of Credit Request” has the meaning specified in Section 2.4(c).



“Letter of Credit Sub-Limit” means, at any time, U.S.$20,000,000.



“Letter of Credit Undrawn Amounts” means, at any time, the aggregate undrawn amount of all
Letters of Credit outstanding at such time.



“Leverage Ratio” means, with respect to any Person as of any date, the ratio of (a)
consolidated Financial Covenant Debt of such Person and its Subsidiaries outstanding as of such
date minus the aggregate amount of cash and Cash Equivalents held by such Person and its
Subsidiaries to the extent that such cash and Cash Equivalents are held in a Deposit Account or a
Securities Account over which the Collateral Agent has a perfected Lien for the benefit of the
Secured Parties to (b) EBITDA for such Person for the last four Fiscal Quarter period ending on or
before such date.



“Lien” means any mortgage, deed of trust, pledge, hypothecation, assignment, charge, deposit
arrangement, encumbrance, prior claim, lien (statutory or other), security interest or preference,
priority or other security agreement or preferential arrangement of any kind or nature whatsoever
intended to assure payment of any Indebtedness or other obligation, including any conditional sale
or other title retention agreement, the interest of a lessor under a Capital Lease, any financing
lease having substantially the same economic effect as any of the foregoing, and the filing of any
financing statement that has been authorized by the applicable debtor under the UCC or the PPSA or
comparable law of any jurisdiction naming the owner of the asset to which such Lien relates as
debtor.



“Loan” means any loan made by any Lender pursuant to this Agreement.



“Loan Documents” means, collectively, this Agreement, the Guaranty, the U.S. Loan Party
Canadian Facility Guaranty, each Letter of Credit Reimbursement Agreement, the Collateral Documents
and each certificate, agreement or document executed by a Loan Party and delivered to any Facility
Agent or any Lender in connection with or pursuant to any of the foregoing (it being understood and
agreed that as a matter of clarification the U.S. Facility is not a Loan Document).



“Loan Party” means the Borrower, Group, each Subsidiary Guarantor and each other Domestic
Subsidiary or Canadian Subsidiary of Group that executes and delivers a Loan Document.



“Material Adverse Change” means a material adverse change in any of (a) the business,
condition (financial or otherwise), operations, performance or properties of the Canadian Loan
Parties, taken as a whole, or the Loan Parties, taken as a whole, or Group and its Subsidiaries,
taken as a whole, (b) the ability of the Loan Parties to perform their respective obligations under
the
Loan Documents or (c) the ability of the Administrative Agent, the Collateral Agent or the
Lenders to enforce the Loan Documents.


 


25









 





“Material Adverse Effect” means an effect that results in or causes, or could reasonably be
expected to result in or cause, a Material Adverse Change.



“Material Leased Property” means all real estate leasehold properties of any Warnaco Entity
other than those with respect to which the aggregate rental payments under the term of the lease in
any year are less than U.S.$2,000,000.



“Material License” means the license agreements relating to the Calvin Klein trademark with
respect to jeans (expiring at the end of its renewal term on December 31, 2044 or December 31,
2046) and underwear, and the license agreements relating to the Speedo trademark, granted to the
Warnaco Entities in perpetuity.



“Material Owned Real Property” means all fee-owned real property of any Loan Party having a
fair market value in excess of U.S.$2,000,000 as of the Closing Date, or if later, the date of
acquisition thereof.



“Maximum Credit” means, at any time, (a) the lesser of (i) the Revolving Credit Commitments in
effect at such time and (ii) the Borrowing Base at such time, minus (b) the U.S. Dollar Equivalent
of the aggregate amount of any Availability Reserve in effect at such time.



“Mortgagee’s Title Insurance Policy” has the meaning specified in the definition of Mortgage
Supporting Documents.



“Mortgage Supporting Documents” means, with respect to a Mortgage for a parcel of Material
Owned Real Property, each of the following:




(a) (i) a mortgagee’s title policy (or policies) or marked-up unconditional binder (or
binders) for such insurance (or other evidence reasonably acceptable to the Administrative
Agent proving ownership thereof) (“Mortgagee’s Title Insurance Policy”), dated a date
reasonably satisfactory to the Administrative Agent, and shall (A) be in an amount not less
than the appraised value (determined by references to the applicable Appraisals or, if no
such Appraisals are available, by other means reasonably acceptable to the Administrative
Agent) of such parcel of Real Property, (B) be issued at ordinary rates, (C) insure that the
Lien granted pursuant to the Mortgage insured thereby creates a valid perfected Lien on such
parcel of Real Property having at least the priorities described in Section 4.20 of this
Agreement and the Collateral Documents, free and clear of all defects and encumbrances,
except for Customary Permitted Liens and for such defects and encumbrances as may be
approved by the Administrative Agent, (D) name the Collateral Agent for the benefit of the
Secured Parties as the insured thereunder, (E) be in the form of ALTA Loan Policy — 2006 (or
such local equivalent thereof as is reasonably satisfactory to the Administrative Agent),
(F) contain a comprehensive lender’s endorsement (including, but not limited to, a revolving
credit endorsement and a floating rate endorsement), (G) be issued by Chicago Title
Insurance Company, First American Title Insurance Company, Lawyers Title Insurance
Corporation, Stewart Title Company or any other title company reasonably satisfactory to the
Administrative Agent (including any such title companies acting as co-insurers or
reinsurers) and (H) be otherwise in form and substance reasonably satisfactory to the
Administrative Agent and (ii) a copy of all documents referred to, or listed as exceptions
to title, in such title
policy (or policies) in each case in form and substance reasonably satisfactory to the
Administrative Agent;


 


26









 






(b) maps or plats of a current as-built survey of such parcel of Real Property
certified to and received by (in a manner reasonably satisfactory to each of them) the
Administrative Agent and the title insurance company issuing the Mortgagee’s Title Insurance
Policy for such Mortgage, dated a date reasonably satisfactory to the Administrative Agent
and such title insurance company, by an independent professional licensed land surveyor
reasonably satisfactory to the Administrative Agent and such title insurance company, which
maps or plats and the surveys on which they are based shall be made in form and substance
reasonably satisfactory to the Administrative Agent;




(c) an opinion of counsel in each state or province in which any such Mortgage is to be
recorded in form and substance and from counsel reasonably satisfactory to the
Administrative Agent; and




(d) such other agreements, documents and instruments in form and substance reasonably
satisfactory to the Administrative Agent as the Administrative Agent deems necessary or
appropriate to create, register or otherwise perfect, maintain, evidence the existence,
substance, form or validity of, or enforce a valid and enforceable Lien on such parcel of
Real Property in favor of the Collateral Agent for the benefit of the Secured Parties (or in
favor of such other trustee as may be required or desired under local law) having the
priorities described in Section 4.20 of this Agreement and the Collateral Documents and
subject only to (A) Liens permitted under Section 8.2 and (B) such other Liens as the
Administrative Agent may reasonably approve.



“Mortgages” means the mortgages, deeds of hypothec, deeds of trust or other real estate
security documents made or required herein to be made by a Loan Party, each in form and substance
reasonably satisfactory to the Administrative Agent.



“Multiemployer Plan” means a multiemployer plan, as defined in Section 4001(a)(3) of ERISA, to
which Group, any of its Subsidiaries or any ERISA Affiliate has any obligation or liability,
contingent or otherwise.



“Net Cash Proceeds” means proceeds received by any Canadian Loan Party after the Closing Date
in cash or Cash Equivalents from any (a) Asset Sale (other than an Asset Sale permitted under
clauses (a), (c) and (h) of Section 8.4) of Receivables or Inventory net of (i) the reasonable cash
costs of sale, assignment or other disposition, (ii) taxes paid or payable as a result thereof and
(iii) any amount required to be paid or prepaid on Indebtedness (other than the Obligations)
secured by a perfected Lien on the assets subject to such Asset Sale; provided, however, that the
evidence of each of (i), (ii) and (iii) are provided to the Administrative Agent in form and
substance satisfactory to it and, if such Asset Sale includes assets in addition to Receivables and
Inventory, only such portion of the amounts in clauses (i), (ii) and (iii) reasonably allocable to
Receivables and Inventory sold may be deducted under such clauses (i), (ii) and (iii); or (b)
Property Loss Event with respect to Inventory.



“Non-Cash Interest Expense” means, with respect to any Person for any period, the sum of the
following amounts to the extent included in the definition of Interest Expense: (a) the amount of
debt discount and debt issuance costs amortized, (b) charges relating to write-ups or write-downs
in the book or carrying value of existing Financial Covenant Debt, (c) interest payable in
evidences of Indebtedness or by addition to the principal of the related Indebtedness and (d) other
non-cash interest.


 


27









 





“Non-Funding Lender” has the meaning specified in Section 2.2(d).



“Notice of Borrowing” has the meaning specified in Section 2.2(a).



“Notice of Conversion or Continuation” has the meaning specified in Section 2.11(b).



“NPL” means the National Priorities List under CERCLA.



“Obligations” means the Loans, the Letter of Credit Obligations and all other amounts and
obligations owing by the Borrower to any Facility Agent, any Lender, any Issuer, an Affiliate of
any of them or any Indemnitee, of every type and description (whether by reason of an extension of
credit, opening or amendment of a letter of credit or payment of any draft drawn or other payment
thereunder, loan, guaranty, indemnification, foreign exchange or currency swap transaction,
interest rate hedging transaction or otherwise), present or future, arising under this Agreement or
any other Loan Document, whether direct or indirect (including those acquired by assignment),
absolute or contingent, due or to become due, now existing or hereafter arising and however
acquired and whether or not evidenced by any note, guaranty or other instrument or for the payment
of money, and includes all letter of credit, cash management and other fees, interest, charges,
expenses, fees, attorneys’ fees and disbursements and other sums chargeable to the Borrower under
this Agreement or any other Loan Document, and all obligations of the Borrower to cash
collateralize Letter of Credit Obligations.



“Orderly Liquidation Value Rate” means (i) with respect to Eligible Inventory (other than
Documented Non-Letter of Credit Inventory and Inventory covered by Documentary Letters of Credit),
the U.S. Dollar Equivalent of the orderly liquidation value (net of costs and expenses incurred in
connection with liquidation) of such Eligible Inventory, divided by the U.S. Dollar Equivalent of
the aggregate value of such Eligible Inventory, in each case, determined by reference to the most
recent Appraisal received by the Administrative Agent and (ii) with respect to Eligible Inventory
consisting of Documented Non-Letter of Credit Inventory or Inventory covered by Documentary Letters
of Credit, the U.S. Dollar Equivalent of the orderly liquidation value (net of costs and expenses
incurred in connection with liquidation) of such Eligible Inventory, divided by the U.S. Dollar
Equivalent of the aggregate value of such Eligible Inventory, in each case, determined by reference
to the most recent Appraisal received by the Administrative Agent. The Orderly Liquidation Value
Rate with respect to Eligible Inventory (other than Documented Non-Letter of Credit Inventory and
Inventory covered by Documentary Letters of Credit) shall initially be 83.5% and the Orderly
Liquidation Value Rate with respect to Eligible Inventory consisting of Documented Non-Letter of
Credit Inventory or Inventory covered by Documentary Letters of Credit shall initially be 61.0%.



“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56, 115 Stat. 272 (2001).



“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.



“Permit” means any permit, approval, authorization, license, variance or permission required
from a Governmental Authority under an applicable Requirement of Law.



 


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“Permitted Acquisition” means any Proposed Acquisition subject to the satisfaction of each of
the following conditions:



(i) the Administrative Agent shall receive at least 10 Business Days’ prior written
notice of such Proposed Acquisition, which notice shall include, without limitation, a
reasonably detailed description of such Proposed Acquisition;




(ii) such Proposed Acquisition shall have been approved by the applicable board of
directors of the Person constituting or owning the Proposed Acquisition Target;




(iii) no additional Indebtedness or other liabilities shall be incurred, assumed or
otherwise be reflected on a consolidated balance sheet of Group and the Proposed Acquisition
Target after giving effect to such Proposed Acquisition, except (i) loans made under the
U.S. Facility, (ii) ordinary course trade payables, contingent obligations and accrued
expenses and (iii) Indebtedness of the Proposed Acquisition Target (or any such Indebtedness
assumed by a Warnaco Entity in connection with such Proposed Acquisition) permitted under
Section 8.1;




(iv) both (x) after giving pro forma effect to such Proposed Acquisition and to any
Facility Increase (as defined in the U.S. Facility) to be effective on the date of the
consummation of such Proposed Acquisition Available Credit is at least 20% of the Aggregate
Borrowing Limit at such time and (y) prior to the consummation of such Proposed Acquisition,
Group has delivered to the Administrative Agent a certificate executed by a Responsible
Officer of Group certifying the satisfaction of such requirement with respect to such
Proposed Acquisition and setting forth in reasonable detail the calculation of such
Available Credit;




(v) at or prior to the closing of such Proposed Acquisition, the Warnaco Entity making
such Proposed Acquisition and the Proposed Acquisition Target shall have executed such
documents and taken such actions as may be required under Section 7.11 and Section 7.13;




(vi) the Borrower shall (i) have delivered to the Administrative Agent, upon the
request of the Administrative Agent, promptly upon its becoming available, the acquisition
agreement (including all schedules), all financial information, financial analysis,
projections and similar documentation relating to the proposed acquisition, and (ii) use its
reasonable commercial efforts to provide such additional documentation or other information
relating to such Proposed Acquisition that the Administrative Agent shall reasonably
request, including, without limitation, financial projections on a Pro Forma Basis after
giving effect to the Proposed Acquisition;




(vii) on or prior to the date of such Proposed Acquisition, the Administrative Agent
shall have received copies of the acquisition agreement authorizing assignment of the rights
and obligations thereunder of any Warnaco Entity that is a Loan Party to the Collateral
Agent as security for the Secured Obligations, related Contractual Obligations and
instruments and all opinions, certificates, lien search results and other documents
reasonably requested by the Administrative Agent;




(viii) at the time of such Proposed Acquisition and after giving effect thereto, (i) no
Default or Event of Default shall have occurred and be continuing and (ii) all
representations and warranties contained in Article IV and in the other Loan Documents shall
be true and correct in all material respects (and immediately prior to the consummation of
such Proposed Acquisition, Group has delivered to the Administrative Agent a certificate
executed by a Responsible Officer of Group certifying the satisfaction of the
requirements under this clause (viii) with respect to such Proposed Acquisition); and


 


29









 






(ix) with respect to any Proposed Acquisition by any Foreign Subsidiary (whether by
acquisition of assets or Stock or the merger of any Proposed Acquisition Target with or into
a Foreign Subsidiary or otherwise), at the time of such Proposed Acquisition and after
giving effect thereto, the Fixed Charge Coverage Ratio for Group shall be at least 1.1 to
1.0 for the most recent four Fiscal Quarter period for which Financial Statements have been
delivered pursuant to Section 6.1 on a Pro Forma Basis (and prior to the consummation of
such Proposed Acquisition, Group has delivered to the Administrative Agent a certificate
executed by a Responsible Officer of Group certifying the satisfaction of the requirements
under this clause (ix) with respect to such Proposed Acquisition and setting forth in
reasonable detail the calculation of such Fixed Charge Coverage Ratio).



“Permitted Cash Equivalents” means time deposits of, or certificates of deposit issued by,
BofA or BofA Canada Branch that, in each instance, are acceptable to the Administrative Agent.



“Person” means an individual, partnership, corporation (including a business trust), joint
stock company, estate, trust, limited liability company, unincorporated association, joint venture
or other entity or a Governmental Authority.



“Pledged Debt Instruments” has the meaning specified in the Canadian Security Agreement (or,
if such defined term is used with respect to or otherwise applicable to a U.S. Loan Party,
specified in the U.S. Pledge and Security Agreement).



“Pledged Stock” has the meaning specified in the Canadian Security Agreement (or, if such
defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified in the
U.S. Pledge and Security Agreement).



“PPSA” means the Personal Property Security Act (Ontario) (or any successor statute) or
similar legislation of any other jurisdiction (including, without limitation, the Civil Code of
Quebec), the laws of which are required by such legislation to be applied in connection with the
issue, perfection, effect of perfection, enforcement, enforceability, opposability, validity or
effect of security interests or other applicable Liens on any assets of a Canadian Loan Party.



“Prime Rate” means the rate of interest publicly announced from time to time by BofA Canada
Branch as its reference rate of interest for loans made in Dollars and designated as its “prime”
rate. The Prime Rate is a rate set by BofA Canada Branch based upon various factors, including
BofA Canada Branch’s costs and desired return, general economic conditions and other factors and is
used as a reference point for pricing some loans. Any change in the prime rate announced by BofA
Canada Branch shall take effect at the opening of business on the day specified in the public
announcement of such change. Each interest rate based on the Prime Rate hereunder shall be
adjusted simultaneously with any change in the Prime Rate. In the event that BofA Canada Branch
(including any successor or assignor) does not at any time publicly announce a prime rate, the
“Prime Rate” shall mean the “prime rate” publicly announced by a Schedule 1 chartered bank in
Canada selected by BofA Canada Branch.



“Prime Rate Loan” means any Loan during any period in which it bears interest based on the
Prime Rate.


 


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“Pro Forma Basis” means, with respect to any determination for any period, that such
determination shall be made giving pro forma effect to each acquisition consummated during such
period, together with all transactions relating thereto consummated during such period (including
any incurrence, assumption, refinancing or repayment of Indebtedness), as if such acquisition and
related transactions had been consummated on the first day of such period, in each case based on
historical results accounted for in accordance with Agreement Accounting Principles and, to the
extent applicable, reasonable assumptions that are specified in the relevant Compliance
Certificate, Financial Statement or other document provided to the Administrative Agent or any
Lender in connection herewith in accordance with Regulation S-X of the Securities Act of 1933.



“Projections” means those financial projections dated August 2008 covering the fiscal years
ending in 2008 through 2013 inclusive, delivered to the Lenders by Group prior to the Closing Date.



“Property Loss Event” means any loss of or damage to property of any Canadian Loan Party that
results in the receipt by such Person of proceeds of insurance in excess of U.S.$2,000,000 or any
taking of property of Group or any Subsidiary thereof that results in the receipt by such Person of
a compensation payment in respect thereof in excess of U.S.$2,000,000.



“Proposed Acquisition” means the proposed acquisition by the U.S. Borrower or any of its
Subsidiaries of all or substantially all of the assets or Stock of any Proposed Acquisition Target,
or the merger or amalgamation of any Proposed Acquisition Target with or into the U.S. Borrower or
any Subsidiary of the U.S. Borrower (and, in the case of a merger or amalgamation with the
Borrower, with the Borrower being the surviving and continuing corporation).



“Proposed Acquisition Target” means any Person, any trademark (including any trademark license
in respect of which the licensee makes an up-front payment not credited against future royalties),
or any assets constituting a business, division, branch or other unit of operation of any Person,
in each case, subject to a Proposed Acquisition.



“Protective Advances” means all expenses, disbursements and advances incurred by the
Administrative Agent pursuant to the Loan Documents after the occurrence and during the continuance
of an Event of Default that the Administrative Agent, in its sole discretion, exercised reasonably,
deems necessary or desirable to preserve or protect the Collateral or any portion thereof or to
enhance the likelihood, or maximize the amount, of repayment of the Obligations.



“Ratable Portion” or (other than in the expression “equally and ratably”) “ratably” means,
with respect to any Lender, the percentage obtained by dividing (i) the Revolving Credit Commitment
of such Lender by (ii) the aggregate Revolving Credit Commitments of all Lenders (or, at any time
after the Revolving Credit Termination Date, the percentage obtained by dividing the U.S. Dollar
Equivalent of the aggregate outstanding principal balance of the Revolving Credit Outstandings
owing to such Lender by the U.S. Dollar Equivalent of the aggregate outstanding principal balance
of the Revolving Credit Outstandings owing to all Lenders).



“Real Property” means all of those plots, pieces or parcels of land now owned or leased or
hereafter acquired or leased by Group or any of its Subsidiaries (the “Land”), together with the
right, title and interest of any Warnaco Entity, if any, in and to the streets, the land lying in
the bed of any streets, roads or avenues, opened or proposed, in front of, the air space and
development rights pertaining to the Land and the right to use such air space and development
rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances
belonging or in any way appertaining thereto, all fixtures, all easements now or hereafter
benefiting the Land and all royalties and rights
appertaining to the use and enjoyment of the Land, including all alley, vault, drainage,
mineral, water, oil and gas rights, together with all of the buildings and other improvements now
or hereafter erected on the Land, and any fixtures appurtenant thereto.


 


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“Receivable” means any indebtedness and other obligations owed to any Loan Party from or on
behalf of, or any right of any Loan Party to payment from or on behalf of, an Account Debtor,
whether constituting an Account, Chattel Paper, Instrument or General Intangible, arising in
connection with the sale of goods or the rendering of services by any Loan Party or any Subsidiary
thereof, and includes the obligation to pay any finance charges, fees and other charges with
respect thereto.



“Register” has the meaning specified in Section 11.2(c).



“Reimbursement Obligations” means all matured reimbursement or repayment obligations of the
Borrower to any Issuer with respect to amounts drawn under Letters of Credit.



“Reinvestment Deferred Amount” means, with respect to any Net Cash Proceeds of any
Reinvestment Event, the portion of such Net Cash Proceeds subject to a Reinvestment Notice.



“Reinvestment Event” means any Asset Sale or Property Loss Event in respect of which the
Borrower has delivered a Reinvestment Notice.



“Reinvestment Notice” means a written notice executed by a Responsible Officer of the Borrower
stating that no Event of Default has occurred and is continuing and that the Borrower (directly or
indirectly through one of the other Canadian Loan Parties) intends and expects to use all or a
specified portion of the Net Cash Proceeds of an Asset Sale or Property Loss Event to consummate a
Permitted Acquisition (in the case of an Asset Sale only) or to acquire replacement or fixed assets
useful in its or one of the other Canadian Loan Parties’ businesses or, in the case of a Property
Loss Event, to effect repairs or replacements.



“Reinvestment Prepayment Amount” means, with respect to any Net Cash Proceeds of any
Reinvestment Event, the Reinvestment Deferred Amount for such Net Cash Proceeds less any amount
expended or required to be expended pursuant to a Contractual Obligation entered into prior to the
relevant Reinvestment Prepayment Date for such Net Cash Proceeds to consummate, to the extent
otherwise permitted hereunder, a Permitted Acquisition (in the case of an Asset Sale only) or to
acquire, to the extent otherwise permitted hereunder, replacement or fixed assets useful in the
business of the Borrower or any of the other Canadian Loan Parties or, in the case of a Property
Loss Event, to effect repairs or replacements.



“Reinvestment Prepayment Date” means, with respect to any Net Cash Proceeds of any
Reinvestment Event, the earlier of (a) the date occurring 180 days after such Reinvestment Event
and (b) the date that is five Business Days after the date on which the Borrower shall have
notified the Administrative Agent of the Borrower’s determination not to consummate a Permitted
Acquisition (in the case of an Asset Sale only) or to acquire replacement or fixed assets useful in
the Borrower’s or another Canadian Loan Party’s business (or, in the case of a Property Loss Event,
not to effect repairs or replacements) with all or any portion of the relevant Reinvestment
Deferred Amount for such Net Cash Proceeds.



 


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“Related Security” means, with respect to any Receivable:



(a) all of each Canadian Loan Party’s interest in any goods (including returned goods),
and documentation of title evidencing the shipment or storage of any goods (including
returned goods), relating to any sale giving rise to such Receivable,



(b) all Instruments and Chattel Paper that may evidence such Receivable,




(c) all other Liens and property subject thereto from time to time purporting to secure
payment of such Receivable, whether pursuant to the Sales Contract related to such
Receivable or otherwise, together with all UCC and PPSA financing statements or similar
filings relating thereto, and




(d) all of each Canadian Loan Party’s rights, interests and claims under the Sales
Contracts and all guaranties, indemnities and other agreements (including the related Sales
Contract) or arrangements of whatever character from time to time supporting or securing
payment of such Receivable or otherwise relating to such Receivable, whether pursuant to the
Sales Contract related to such Receivable or otherwise.



“Release” means, with respect to any Person, any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration, in each case, of any
Contaminant into the indoor or outdoor environment or into or out of any property owned or leased
by such Person, including the movement of Contaminants through or in the air, soil, surface water,
ground water or property.



“Remedial Action” means all actions required to (a) clean up, remove, treat or in any other
way address any Contaminant in the indoor or outdoor environment, (b) prevent the Release or threat
of Release or minimize the further Release so that a Contaminant does not migrate or endanger or
threaten to endanger public health or welfare or the indoor or outdoor environment or (c) perform
pre-remedial studies and investigations and post-remedial monitoring and care.



“Requirement of Law” means, with respect to any Person, the common and civil law and all
federal, state, provincial, territorial, local, municipal and foreign laws, rules and regulations,
orders, judgments, decrees and other legal requirements or determinations of any Governmental
Authority or arbitrator, applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.



“Requisite Lenders” means, collectively, (a) on and prior to the Revolving Credit Termination
Date, Lenders having more than fifty percent (50%) of the aggregate outstanding amount of the
Revolving Credit Commitments and (b) after the Revolving Credit Termination Date, Lenders having
more than fifty percent (50%) of the U.S. Dollar Equivalent of the aggregate Revolving Credit
Outstandings. A Non-Funding Lender shall not be included in the calculation of “Requisite
Lenders”.



“Responsible Officer” means, with respect to any Person, any of the principal executive
officers, managing members or general partners of such Person, but in any event, with respect to
financial matters, the chief financial officer, treasurer or controller of such Person.



“Restricted Account” has the meaning specified in the Canadian Security Agreement (or, if such
defined term is used with respect to or otherwise applicable to a U.S. Loan Party, specified in the
U.S. Pledge and Security Agreement).


 


33









 





“Restricted Account Letter” has the meaning specified in the Canadian Security Agreement (or,
if such defined term is used with respect to or otherwise applicable to a U.S. Loan Party,
specified in the U.S. Pledge and Security Agreement).



“Restricted Payment” means (a) any dividend, distribution or any other payment whether direct
or indirect, on account of any Stock or Stock Equivalent of Group or any of its Subsidiaries now or
hereafter outstanding and (b) any redemption, retirement, sinking fund or similar payment, purchase
or other acquisition for value, direct or indirect, of any Stock or Stock Equivalent of Group or
any of its Subsidiaries now or hereafter outstanding.



“Revolving Credit Borrowing” means a borrowing consisting of Revolving Loans made on the same
day by the Lenders ratably according to their respective Revolving Credit Commitments.



“Revolving Credit Commitment” means, with respect to each Lender, the commitment of such
Lender to make Revolving Loans and to acquire interests in other Revolving Credit Outstandings in
the aggregate principal amount outstanding not to exceed the amount set forth opposite such
Lender’s name on Schedule I (Commitments) under the caption “Revolving Credit Commitment,” as
amended to reflect each Assignment and Acceptance executed by such Lender and as such amount may be
adjusted pursuant to this Agreement.



“Revolving Credit Facility” means the Revolving Credit Commitments and the provisions herein
related to the Revolving Loans, Swing Loans and Letters of Credit.



“Revolving Credit Facility Register” has the meaning specified in Section 11.2(c).



“Revolving Credit Outstandings” means, at any particular time, the sum of (a) the principal
amount of the Revolving Loans outstanding at such time, (b) the Letter of Credit Obligations
outstanding at such time and (c) the principal amount of the Swing Loans outstanding at such time.



“Revolving Credit Termination Date” shall mean the earliest of (a) the Revolving Loan Maturity
Date, (b) the date of termination of the Commitments pursuant to Section 2.5 and (c) the date on
which any of the Obligations become due and payable pursuant to Section 9.2.



“Revolving Loan” has the meaning specified in Section 2.1.



“Revolving Loan Maturity Date” means the fifth anniversary of the Closing Date.



“Sale and Leaseback Transaction” means, with respect to any Person, any direct or indirect
arrangement pursuant to which assets of such Person are sold or transferred by such Person or a
Subsidiary of such Person and are thereafter leased back from the purchaser thereof by such Person
or one of its Subsidiaries; provided, however, any sale and leaseback of assets that were purchased
in connection with a proposed lease financing transaction by such Person within 45 days of such
sale and leaseback transaction shall not constitute a “Sale and Leaseback Transaction”.



“Sales Contract” means, with respect to any Receivable, any and all sales contracts, purchase
orders, instruments, agreements, leases, invoices, notes or other writings pursuant to which such
Receivable arises or that evidence such Receivable or under which an Account Debtor becomes or is
obligated to make payment in respect of such Receivable.


 


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“Secured Obligations” means, (a) in the case of the Borrower, the Obligations, (b) in the case
of each Guarantor, the obligations of such Loan Party under the Guaranty, the U.S. Loan Party
Canadian Facility Guaranty and the other Loan Documents to which it is a party, and (c) in the case
of each Canadian Loan Party, (i) the obligations of such Canadian Loan Party under any Hedging
Contract entered into with any Agent, Lender or any Affiliate of any thereof, and (ii) any Cash
Management Obligations owing by such Canadian Loan Party to any Agent, Lender or any Affiliate of
any thereof.



“Secured Parties” means the Lenders (including the Swing Loan Lender), the Issuers, the
Administrative Agent, the Collateral Agent, each of their respective successors and assigns, and
any other holder of any Secured Obligation, including the beneficiaries of each indemnification
obligation undertaken by any of the Loan Parties and the Facility Agents.



“Securities Account” has the meaning given to such term in the PPSA (or, if such defined term
is used with respect to or otherwise applicable to a U.S. Loan Party, the UCC).



“Security” means any Stock, Stock Equivalent, voting trust certificate, bond, debenture, note
or other evidence of Indebtedness, whether secured, unsecured, convertible or subordinated, or any
certificate of interest, share or participation in, or any temporary or interim certificate for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire, any of the
foregoing, but shall not include any evidence of the Obligations.



“Senior Note Documents” means, collectively, the Senior Note Indenture, the Senior Notes and
each certificate, agreement or document executed by a Warnaco Entity and delivered to the Senior
Note Indenture Trustee or any Senior Noteholder in connection with or pursuant to any of the
foregoing.



“Senior Note Indenture” means the indenture, dated as of June 12, 2003, among the U.S.
Borrower, as issuer, Group and each Domestic Subsidiary thereof (other than the U.S. Borrower), as
guarantors, and the Senior Note Indenture Trustee.



“Senior Note Indenture Trustee” means Wells Fargo Bank Minnesota, National Association, in its
capacity as indenture trustee for the Senior Noteholders and each successor thereto.



“Senior Noteholders” means each holder of a Senior Note.



“Senior Notes” means the 8-7/8% senior notes due 2013 issued by the U.S. Borrower pursuant to
the Senior Note Indenture.



“Solvent” means, with respect to any Person as of any date of determination, that, as of such
date, (a) the value of the assets of such Person (both at fair value and present fair saleable
value) is greater than the total amount of liabilities (including contingent and unliquidated
liabilities) of such Person, (b) such Person is able to pay all liabilities of such Person as such
liabilities mature and (c) such Person does not have unreasonably small capital. In computing the
amount of contingent or unliquidated liabilities at any time, such liabilities shall be computed at
the amount that, in light of all the facts and circumstances existing at such time, represents the
amount that can reasonably be expected to become an actual or matured liability.



“Special Cash Collateral Account” means an account maintained with BofA or an affiliate or
branch thereof for the purpose of providing cash collateral as part of the Borrowing Base, which
account shall be subject to a control agreement in form and substance reasonably satisfactory to
the Facility Agents and shall be a segregated account holding only cash of the Borrower
deposited into such account in accordance with Section 2.19, investments of such cash in Permitted
Cash Equivalents and investment income derived from such investments.


 


35









 





“Special Purpose Vehicle” means any special purpose funding vehicle identified in writing as
such by any Lender to the Administrative Agent.



“Standby Letter of Credit” means any letter of credit Issued pursuant to Section 2.4 which is
not a Documentary Letter of Credit.



“Stock” means shares of capital stock (whether denominated as common stock or preferred
stock), beneficial, partnership or membership interests, participations or other equivalents
(regardless of how designated) of or in a corporation, partnership, limited liability company,
unlimited liability company or equivalent entity, whether voting or non-voting.



“Stock Equivalents” means all securities convertible into or exchangeable for Stock and all
warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently
convertible, exchangeable or exercisable.



“Subordinated Indebtedness” means Indebtedness of a U.S. Loan Party that satisfies all of the
following requirements: (i) interest on such Indebtedness is not payable in cash prior to the date
that is six months after the Revolving Loan Maturity Date, (ii) such Indebtedness does not mature
and does not require any scheduled or mandatory prepayments prior to the date that is six months
after the Revolving Loan Maturity Date, (iii) such Indebtedness is not secured and is not
guaranteed by any Warnaco Entity that is not guaranteeing the Obligations and (iv) such
Indebtedness (and any guarantee thereof) is subordinated to the Secured Obligations (as defined in
the U.S. Facility) on terms reasonably satisfactory to the Administrative Agent.



“Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, trust or estate or other business entity of which an aggregate of more than 50%
of (a) the outstanding Voting Stock, (b) the interest in the capital or profits of such
partnership, joint venture or limited liability company or (c) the beneficial interest in such
trust or estate, is in any case, at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s
other Subsidiaries.



“Subsidiary Guarantor” means each Canadian Subsidiary Guarantor and each U.S. Subsidiary
Guarantor.



“Super-Majority Lenders” means, collectively, the Lenders having more than sixty-six and
two-thirds percent (66 2/3%) of the aggregate outstanding amount of the Revolving Credit
Commitments. A Non-Funding Lender that is a Lender shall not be included in the calculation of
"Super-Majority Lenders.”



“Swing Loan” has the meaning specified in Section 2.3.



“Swing Loan Availability” means the Dollar Equivalent of an aggregate principal amount at any
time outstanding of Swing Loans not to exceed U.S.$3,000,000.



“Swing Loan Lender” means BofA Canada Branch or any other Person who becomes the
Administrative Agent (or who is an affiliate or branch thereof) or who agrees with the approval of
the Administrative Agent and the Borrower to act as the Swing Loan Lender hereunder.


 


36









 





“Swing Loan Request” has the meaning specified in Section 2.3(b).



“Syndication Agent” has the meaning specified in the preamble to this Agreement.



“Tax Affiliate” means, with respect to any Person, (a) any Subsidiary of such Person, and (b)
any Affiliate of such Person with which such Person files or is eligible to file consolidated,
combined or unitary United States tax returns.



“Tax Return” has the meaning specified in Section 4.8(a).



“Taxes” has the meaning specified in Section 2.16(a).



“Test Period” means, if a Trigger Event shall occur, each period of four consecutive Fiscal
Quarters (taken as one accounting period) ending on each of (x) the last day of the Fiscal Quarter
most recently ended prior to the occurrence of such Trigger Event for which Financial Statements
for Group and its Subsidiaries have been delivered to the Administrative Agent pursuant to Section
6.1(b) or Section 6.1(c) and (y) the last day of each Fiscal Quarter after the Fiscal Quarter
referred to in clause (x) ending prior to or during the Trigger Event Compliance Period for such
Trigger Event.



“Title IV Plan” means a pension plan, other than a Multiemployer Plan, which is covered by
Title IV of ERISA to which Group, any of its Subsidiaries or any ERISA Affiliate has any obligation
or liability (contingent or otherwise).



“Trigger Amount” means, at any time, (i) prior to the first Anniversary Date, the greater of
(x) 10% of the Aggregate Borrowing Base at such time and (y) U.S.$30,000,000, (ii) on or after the
first Anniversary Date and prior to the second Anniversary Date, the greater of (x) 12.5% of the
Aggregate Borrowing Base at such time and (y) U.S.$35,000,000 and (iii) on or after the second
Anniversary Date, the greater of (x) 15% of the Aggregate Borrowing Base at such time and (y)
U.S.$40,000,000.



“Trigger Event” means for any reason Available Credit is less than the Trigger Amount at any
time.



“Trigger Event Compliance Period” means the period commencing on the occurrence of a Trigger
Event and continuing until such time as Available Credit is greater than the Trigger Amount for
forty-five (45) consecutive calendar days.



“UCC” has the meaning specified in the U.S. Pledge and Security Agreement.



“Unfunded Pension Liability” means, with respect to Group at any time, the sum of (a) the
amount, if any, by which the present value of all accrued benefits under each Title IV Plan (other
than any Title IV Plan subject to Section 4063 of ERISA) exceeds the fair market value of all
assets of such Title IV Plan allocable to such benefits in accordance with Title IV of ERISA, as
determined as of the most recent valuation date for such Title IV Plan using the actuarial
assumptions in effect under such Title IV Plan, and (b) the aggregate amount of withdrawal
liability that could be assessed under Section 4063 with respect to each Title IV Plan subject to
such Section, separately calculated for each such Title IV Plan as of its most recent valuation
date, (c) for a period of five years following a transaction reasonably likely to be covered by
Section 4069 of ERISA, the liabilities (whether or not accrued) that could be avoided by Group, any
of its Subsidiaries or any ERISA Affiliate as a result of such transaction and (d) with respect to
each Foreign Plan, the amount, if any,
by which the present value of all benefit obligations under such plan exceed the fair market
value of assets attributable to such plan (determined for the most recent valuation date for such
plan using the actuarial assumptions in effect for such plan set forth in the actuarial valuation
report).


 


37









 





“Unused Commitment Fee” has the meaning specified in Section 2.12(a).



“U.S. Borrower” means Warnaco Inc., a Delaware corporation.



“U.S. Dollar Equivalent” of any amount means, at the time of determination thereof, (a) if
such amount is expressed in U.S. Dollars, such amount, (b) if such amount is expressed in Dollars
or an Alternative Currency (other than U.S. Dollars), the equivalent of such amount in U.S. Dollars
determined by using the mid-range rate of exchange quoted by the Wall Street Journal for Dollars or
such Alternative Currency, as applicable, under its “Exchange Rates” column on the Business Day
preceding the date of determination and (c) if such amount is denominated in any other currency,
the equivalent of such amount in U.S. Dollars as determined by the Administrative Agent using any
method of determination it reasonably deems appropriate; provided, however, if such amount is
expressed in an Alternative Currency (other than U.S. Dollars) and such amount relates to the
Issuance of a Letter of Credit by any Issuer, the “U.S. Dollar Equivalent” shall mean the
equivalent of such amount in U.S. Dollars as determined by such Issuer using any customary method
of determination it reasonably deems appropriate.



“U.S. Dollars” and the sign “U.S.$” each mean the lawful money of the United States of
America.



“U.S. Facility” means the Credit Agreement, dated as of the date hereof, among the U.S.
Borrower, Group, the lenders and letter of credit issuers party thereto from time to time, BofA, as
administrative agent and as collateral agent, and the other agents party thereto, as the same may
be amended, restated, supplemented or otherwise modified from time to time.



“U.S. Loan Party” means Group, the U.S. Borrower and each other U.S. Subsidiary Guarantor.



“U.S. Loan Party Canadian Facility Guaranty” means the U.S. Loan Party Canadian Facility
Guaranty, dated as of the date hereof, by the U.S. Loan Parties with respect to the guarantee of
the payment of the Secured Obligations, as the same may be amended, restated, supplemented or
otherwise modified from time to time.



“U.S. Pledge and Security Agreement” means the Pledge and Security Agreement (as defined in
the U.S. Facility).



“U.S. Secured Obligations” means the Secured Obligations (as defined in the U.S. Facility).



“U.S. Subsidiary Guarantor” means the U.S. Borrower and each other Domestic Subsidiary of
Group party to or that becomes party to the U.S. Loan Party Canadian Facility Guaranty.



“Voting Stock” means Stock of any Person having ordinary power to vote in the election of
members of the board of directors, managers, trustees or other controlling Persons of such Person
(irrespective of whether, at the time, Stock of any other class or classes of such entity shall
have or might have voting power by reason of the happening of any contingency).


 


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“Warnaco Entity” means Group or any Subsidiary thereof.



“Wholly Owned Subsidiary” means any Subsidiary of Group, all of the Stock of which (other than
director’s qualifying shares or such other de minimus portion thereof to the extent required by
law) is owned by Group, either directly or indirectly through one or more Wholly Owned
Subsidiaries.



“Withdrawal Liability” means, with respect to the U.S. Borrower at any time, the aggregate
liability incurred (whether or not assessed) with respect to all Multiemployer Plans pursuant to
Section 4201 of ERISA or for increases in contributions required to be made pursuant to Section
4243 of ERISA.



Section 1.2 Computation of Time Periods. In this Agreement, in the computation of periods of time
from a specified date to a later specified date, the word “from” means “from and including” and the
words “to” and “until” each mean “to but excluding” and the word “through” means “to and
including.”



Section 1.3 Accounting Terms and Principles.



(a) Except as set forth below, all accounting terms not specifically defined herein shall be
construed in conformity with Agreement Accounting Principles and all accounting determinations
required to be made pursuant hereto shall, unless expressly otherwise provided herein, be made in
conformity with Agreement Accounting Principles.



(b) If any change in the accounting principles used in the preparation of the most recent
Financial Statements referred to in Section 6.1 is hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants (or the International Accounting Standards
Board, in the case of the IFRS) (or any successors thereto) and such change is adopted by the U.S.
Borrower or Group with the agreement of its independent public accountants and results in a change
in any of the calculations required by Article V, Article VI or Article VIII or in the definition
of “Applicable Margin” or “Permitted Acquisition”, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to equitably reflect such change with the
desired result that the criteria for evaluating compliance with such covenants by Group and the
Borrower or the determination of the “Applicable Margin” or the calculation of the Fixed Charge
Coverage Ratio in the definition of “Permitted Acquisition” shall be the same after such change as
if such change had not been made; provided, however, that no change in Agreement Accounting
Principles that would affect a calculation that measures compliance with any covenant contained in
Article V, Article VI or Article VIII or in the definition of “Applicable Margin” or “Permitted
Acquisition” shall be given effect until such provisions are amended to reflect such changes in
Agreement Accounting Principles.



(c) For purposes of making all financial calculations to determine compliance with Article V,
all components of such calculations shall be adjusted to include or exclude, as the case may be,
without duplication, such components of such calculations attributable to any business or assets
that have been acquired or disposed of by any Warnaco Entity after the first day of the applicable
period of determination and prior to the end of such period, as determined in good faith by Group
on a Pro Forma Basis.


 


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Section 1.4 Conversion of Foreign Currencies.



(a) Financial Covenant Debt. Financial Covenant Debt denominated in any currency other than
U.S. Dollars shall be calculated using the U.S. Dollar Equivalent thereof as of the date of the
Financial Statements on which such Financial Covenant Debt is reflected.



(b) U.S. Dollar Equivalents. The Administrative Agent shall determine the U.S. Dollar
Equivalent of any amount as required hereby, and a determination thereof by the Administrative
Agent shall be conclusive absent manifest error. The Administrative Agent may, but shall not be
obligated to, rely on any determination made by any Loan Party in any document delivered to the
Administrative Agent. The Administrative Agent may determine or redetermine the U.S. Dollar
Equivalent of any amount on any date either in its own discretion or upon the request of any
applicable Lender or Issuer.



(c) Rounding-Off. The Administrative Agent may set up appropriate rounding off mechanisms or
otherwise round-off amounts hereunder to the nearest higher or lower amount in whole Dollar or U.S.
Dollar, as applicable, or cent to ensure amounts owing by any party hereunder or that otherwise
need to be calculated or converted hereunder are expressed in whole Dollars or U.S. Dollars, as
applicable, or in whole cents, as may be necessary or appropriate.



(d) Judgment Currency. If for the purpose of obtaining judgment in any court it is necessary
to convert an amount due hereunder in the currency in which it is due (the “Original Currency”)
into another currency (the “Second Currency”), the rate of exchange applied shall be that at which,
in accordance with normal banking procedures, the Administrative Agent could purchase in the New
York foreign exchange market, the Original Currency with the Second Currency on the date two (2)
Business Days preceding that on which judgment is given. Each of Group and the Borrower agrees that
its obligation in respect of any Original Currency due from it hereunder shall, notwithstanding any
judgment or payment in such other currency, be discharged only to the extent that, on the Business
Day following the date the Administrative Agent receives payment of any sum so adjudged to be due
hereunder in the Second Currency, the Administrative Agent may, in accordance with normal banking
procedures, purchase, in the New York foreign exchange market, the Original Currency with the
amount of the Second Currency so paid; and if the amount of the Original Currency so purchased or
could have been so purchased is less than the amount originally due in the Original Currency, each
of Group and the Borrower agrees as a separate obligation and notwithstanding any such payment or
judgment to indemnify the Administrative Agent and the applicable Secured Parties against such
loss. The term “rate of exchange” in this Section 1.4(d) means the spot rate at which the
Administrative Agent, in accordance with normal practices, is able on the relevant date to purchase
the Original Currency with the Second Currency, and includes any premium and costs of exchange
payable in connection with such purchase.



Section 1.5 Certain Terms.




(a) The words “herein,” “hereof” and “hereunder” and similar words refer to this Agreement as
a whole, and not to any particular Article, Section, subsection or clause in this Agreement.



(b) References in this Agreement to an Exhibit, Schedule, Article, Section, subsection or
clause refer to the appropriate Exhibit or Schedule to, or Article, Section, subsection or clause
in this Agreement.


 


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(c) Each agreement defined in this Article I shall include all appendices, exhibits and
schedules thereto. If the prior written consent of the Requisite Lenders is required hereunder for
an amendment, restatement, supplement or other modification to any such agreement and such consent
is obtained, references in this Agreement to such agreement shall be to such agreement as so
amended, restated, supplemented or modified.



(d) References in this Agreement to any statute shall be to such statute as amended or
modified and in effect at the time any such reference is operative.



(e) The term “including” when used in any Loan Document means “including without limitation”,
except when used in the computation of time periods.



(f) The terms “Lender,” “Issuer” and “Agent” include their respective successors.



(g) Upon the appointment of any successor Facility Agent pursuant to Section 10.6, references
to BofA or BofA Canada Branch in Section 10.3 to the extent applicable to such Facility Agent and
to BofA or BofA Canada Branch in the definitions of Prime Rate, BA Rate, U.S. Dollar Equivalent,
Permitted Cash Equivalents and Special Cash Collateral Account to the extent applicable to such
Facility Agent shall be deemed to refer to the financial institution then acting as such Facility
Agent or one of its Affiliates or branches if it so designates.



(h) Terms not otherwise defined herein and defined in the PPSA (the UCC if such term is used
with respect to or otherwise applicable to a U.S. Loan Party) are used herein with the meanings
specified in the PPSA (or the UCC as aforesaid).



(i) For purposes of any Collateral located in the Province of Quebec or charged by any deed of
hypothec (or any other Loan Document) and for all other purposes pursuant to which the
interpretation or construction of a Loan Document may be subject to the laws of the Province of
Quebec or a court or tribunal exercising jurisdiction in the Province of Quebec, (i) “personal
property” shall be deemed to include “movable property”, (ii) “real property” shall be deemed to
include “immovable property” and an “easement” shall be deemed to include a “servitude”, (iii)
“tangible property” shall be deemed to include “corporeal property”, (iv) “intangible property”
shall be deemed to include “incorporeal property”, (v) “security interest” and “mortgage” shall be
deemed to include a “hypothec”, (vi) all references to filing, registering or recording under the
PPSA or UCC shall be deemed to include publication under the Civil Code of Quebec, and all
references to releasing any Lien shall be deemed to include a release, discharge and mainlevee of a
hypothec, (vii) all references to “perfection” of or “perfected” Liens shall be deemed to include a
reference to the “opposability” of such Liens to third parties, (viii) any “right of offset”,
“right of setoff” or similar expression shall be deemed to include a “right of compensation”, (ix)
“goods” shall be deemed to include “corporeal movable property” other than chattel paper, documents
of title, instruments, money and securities, and (x) an “agent” shall be deemed to include a
“mandatary”.


 


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ARTICLE II




THE REVOLVING CREDIT FACILITY




Section 2.1 The Commitments. On the terms and subject to the conditions contained in this
Agreement, each Lender severally agrees to make loans in Dollars (each a “Revolving Loan”) to the
Borrower from time to time on any Business Day during the period from the Closing Date until the
Revolving Credit Termination Date in an aggregate principal amount not to exceed at any time
outstanding for all such loans by such Lender such Lender’s Commitment;
provided, however, that at no time shall any Lender be obligated to make a Revolving Loan (i) in
excess of such Lender’s Ratable Portion of the Available Canadian Credit or (ii) to the extent that
the aggregate Revolving Credit Outstandings, after giving effect to such Revolving Loan, would
exceed the Maximum Credit in effect at such time. Within the limits of the Revolving Credit
Commitment of each Lender, amounts of Revolving Loans repaid may be reborrowed under this Section
2.1.



Section 2.2 Borrowing Procedures.



(a) Each Borrowing shall be made on notice given by the Borrower to the Administrative Agent
not later than 11:00 a.m. (New York City time) (i) one Business Day, in the case of a Borrowing of
Prime Rate Loans and (ii) three (3) Business Days, in the case of a Borrowing of BA Rate Loans,
prior to the date of the proposed Borrowing. Each such notice shall be in writing in substantially
the form of Exhibit B (a “Notice of Borrowing”), specifying (A) the date of such proposed
Borrowing, (B) the aggregate amount of such proposed Borrowing, (C) whether any portion of such
Borrowing will be of Prime Rate Loans or BA Rate Loans, (D) the initial Interest Period or Periods
for any such BA Rate Loans, and (E) the Available Canadian Credit (after giving effect to the
proposed Borrowing). Revolving Loans shall be made as Prime Rate Loans unless (subject to Section
2.14) the Notice of Borrowing specifies that all or a portion thereof shall be BA Rate Loans. Each
Revolving Credit Borrowing shall be in an aggregate amount of not less than $1,000,000 or an
integral multiple of $250,000 in excess thereof.



(b) The Administrative Agent shall give to each Lender prompt notice of the Administrative
Agent’s receipt of a Notice of Borrowing and, if BA Rate Loans are properly requested in such
Notice of Borrowing, the applicable interest rate determined pursuant to Section 2.14(a). Each
Lender shall, before 11:00 a.m. (New York City time) on the date of the proposed Borrowing, make
available to the Administrative Agent at its address referred to in Section 11.8 in immediately
available funds, such Lender’s Ratable Portion of such proposed Borrowing. After the
Administrative Agent’s receipt of such funds and (i) on the Closing Date, upon fulfillment of the
applicable conditions set forth in Section 3.1 and (ii) at any time (including the Closing Date),
upon fulfillment of the applicable conditions set forth Section 3.2, the Administrative Agent will
make such funds available to the Borrower.



(c) Unless the Administrative Agent shall have received notice from any Lender prior to the
date of any proposed Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s Ratable Portion of such Borrowing, the Administrative Agent may assume that such
Lender has made such Ratable Portion available to the Administrative Agent on the date of such
Borrowing in accordance with this Section 2.2 and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made such Ratable Portion available to the Administrative
Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith
on demand such corresponding amount together with interest thereon, for each day from the date such
amount is made available to the Borrower until the date such amount is repaid to the Administrative
Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to the Loans
comprising such Borrowing and (ii) in the case of such Lender, the Prime Rate for the first
Business Day and thereafter at the interest rate applicable at the time to the Loans comprising
such Borrowing. If such Lender shall repay to the Administrative Agent such corresponding amount,
such corresponding amount so repaid shall constitute such Lender’s Loan as part of such Borrowing
for purposes of this Agreement. If the Borrower shall repay to the Administrative Agent such
corresponding amount, such payment shall not relieve such Lender of any obligation it may have
hereunder to the Borrower.


 


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(d) The failure of any Lender to make the Loans or any payment required by it on the date
specified (a “Non-Funding Lender”), including any payment in respect of its participation in Swing
Loans and Letter of Credit Obligations, shall not relieve any other Lender of its obligations to
make such Loan or payment on such date but no such other Lender shall be responsible for the
failure of any Non-Funding Lender to make a Loan or payment required under this Agreement.



Section 2.3 Swing Loans.



(a) On the terms and subject to the conditions contained in this Agreement, the Swing Loan
Lender may in its sole discretion make loans in Dollars (each a “Swing Loan”) otherwise available
to the Borrower under the Revolving Credit Facility from time to time on any Business Day during
the period from the Closing Date until the Revolving Credit Termination Date in an aggregate amount
at any time outstanding at any time not to exceed the Swing Loan Availability; provided, however,
that the Swing Loan Lender shall not make any Swing Loan to the extent that, after giving effect to
such Swing Loan, the aggregate Revolving Credit Outstandings would exceed the Maximum Credit. The
Swing Loan Lender shall be entitled to rely on the most recent Borrowing Base Certificate delivered
to the Administrative Agent. Each Swing Loan shall be a Prime Rate Loan and must be repaid in full
within one Business Day of any demand by the Swing Loan Lender therefor and shall in any event
mature and become due and payable on the Revolving Credit Termination Date. Within the limits set
forth in the first sentence of this Section 2.3(a), amounts of Swing Loans prepaid or repaid may be
reborrowed under this Section 2.3(a).



(b) In order to request a Swing Loan, the Borrower shall telecopy (or forward by electronic
mail or similar means) to the Administrative Agent a duly completed request, in substantially the
form of Exhibit C, setting forth the date, the requested amount and date of the Swing Loan (a
“Swing Loan Request”), to be received by the Administrative Agent not later than 1:00 p.m. (New
York City time) on the day of the proposed borrowing. The Administrative Agent shall promptly
notify the Swing Loan Lender of the details of the requested Swing Loan. Subject to the terms of
this Agreement, the Swing Loan Lender shall make a Swing Loan available to the Administrative Agent
which will make such amounts available to the Borrower on the date of the relevant Swing Loan
Request. The Swing Loan Lender shall not make any Swing Loan in the period commencing on the first
Business Day after it receives written notice from the Administrative Agent or any Lender that one
or more of the conditions precedent contained in Section 3.2 shall not on such date be satisfied,
and ending when such conditions are satisfied. The Swing Loan Lender shall not otherwise be
required to determine that, or take notice whether, the conditions precedent set forth in Section
3.2 hereof have been satisfied in connection with the making of any Swing Loan.



(c) The Swing Loan Lender shall notify the Administrative Agent in writing (which may be by
telecopy or electronic mail) weekly, by no later than 10:00 a.m. (New York City time) on the first
Business Day of each week, of the aggregate principal amount of its Swing Loans then outstanding.



(d) The Swing Loan Lender may demand at any time that each Lender pay to the Administrative
Agent, for the account of the Swing Loan Lender, in the manner provided in clause (e) below, such
Lender’s Ratable Portion of all or a portion of the outstanding Swing Loans, which demand shall be
made through the Administrative Agent, shall be in writing and shall specify the outstanding
principal amount of Swing Loans demanded to be paid.


 


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(e) The Administrative Agent shall forward each notice referred to in clause (c) above and
each demand referred to in clause (d) above to each Lender on the day such notice or such demand is
received by the Administrative Agent (except that any such notice or demand received by
the Administrative Agent after 2:00 p.m. (New York City time) on any Business Day or any such
demand received on a day that is not a Business Day shall not be required to be forwarded to the
Lenders by the Administrative Agent until the next succeeding Business Day), together with a
statement prepared by the Administrative Agent specifying the amount of each Lender’s Ratable
Portion of the aggregate principal amount of the Swing Loans stated to be outstanding in such
notice or demanded to be paid pursuant to such demand, and, notwithstanding whether or not the
conditions precedent set forth in Section 3.2 shall have been satisfied (which conditions precedent
the Lenders hereby irrevocably waive), each Lender shall, before 11:00 a.m. (New York City time) on
the Business Day next succeeding the date of such Lender’s receipt of such written statement, make
available to the Administrative Agent, in immediately available funds, for the account of the Swing
Loan Lender, the amount specified in such statement. Upon such payment by a Lender, such Lender
shall, except as provided in clause (g) below, be deemed to have made a Revolving Loan to the
Borrower. The Administrative Agent shall use such funds to repay the Swing Loans to the Swing Loan
Lender. To the extent that any Lender fails to make such payment available to the Administrative
Agent for the account of the Swing Loan Lender, the Borrower shall repay such Swing Loan on demand.



(f) Upon the occurrence of a Default under Section 9.1(e), each Lender shall acquire, without
recourse or warranty, an undivided participation in each Swing Loan otherwise required to be repaid
by such Lender pursuant to clause (e) above, which participation shall be in a principal amount
equal to such Lender’s Ratable Portion of such Swing Loan, by paying to the Swing Loan Lender on
the date on which such Lender would otherwise have been required to make a payment in respect of
such Swing Loan pursuant to clause (e) above, in immediately available funds, an amount equal to
such Lender’s Ratable Portion of such Swing Loan. If all or part of such amount is not in fact
made available by such Lender to the Swing Loan Lender on such date, the Swing Loan Lender shall be
entitled to recover any such unpaid amount on demand from such Lender together with interest
accrued from such date at the Prime Rate for the first Business Day after such payment was due and
thereafter at the rate of interest then applicable to Prime Rate Loans.



(g) From and after the date on which any Lender (i) is deemed to have made a Revolving Loan
pursuant to clause (e) above with respect to any Swing Loan or (ii) purchases an undivided
participation interest in a Swing Loan pursuant to clause (f) above, the Swing Loan Lender shall
promptly distribute to such Lender such Lender’s Ratable Portion of all payments of principal of
and interest received by the Swing Loan Lender on account of such Swing Loan other than those
received from a Lender pursuant to clause (e) or (f) above.



Section 2.4 Letters of Credit.



(a) On the terms and subject to the conditions contained in this Agreement, each Issuer agrees
to Issue one or more Letters of Credit at the request of the Borrower for the account of the
Borrower from time to time during the period commencing on the Closing Date and ending on the
earlier of the Revolving Credit Termination Date and 30 days prior to the Revolving Loan Maturity
Date; provided, however, that no Issuer shall be under any obligation to Issue any Letter of Credit
if:




(i) any order, judgment or decree of any Governmental Authority or arbitrator shall
purport by its terms to enjoin or restrain such Issuer from issuing such Letter of Credit or
any Requirement of Law applicable to such Issuer or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction over such Issuer
shall prohibit, or request that such Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon such Issuer with
respect to such Letter of Credit any restriction or reserve or capital requirement (for
which
such Issuer is not otherwise compensated) not in effect on the date of this Agreement
or result in any unreimbursed loss, cost or expense which was not applicable, in effect or
known to such Issuer as of the date of this Agreement and which such Issuer in good faith
deems material to it;


 


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(ii) such Issuer shall have received written notice from the Administrative Agent, any
Lender or the Borrower, on or prior to the requested date of issuance of such Letter of
Credit, that one or more of the applicable conditions contained in Section 3.1 and Section
3.2 is not then satisfied;




(iii) after giving effect to the issuance of such Letter of Credit, the aggregate
Revolving Credit Outstandings would exceed the Maximum Credit at such time;




(iv) after giving effect to the issuance of such Letter of Credit, the aggregate amount
of Letter of Credit Obligations then outstanding would exceed the Letter of Credit Sublimit;




(v) any fees due and payable in connection with a requested issuance have not been
paid; or




(vi) such Letter of Credit is not denominated in Dollars or in an Alternative Currency.



None of the Lenders (other than the Issuers in their capacity as such) shall have any obligation to
Issue any Letter of Credit.



(b) In no event shall the expiration date of any Letter of Credit (i) be more than one year
after the date of issuance thereof, or (ii) be less than five days prior to the Revolving Loan
Maturity Date.



(c) In connection with the issuance of each Letter of Credit, the Borrower shall give the
relevant Issuer and the Administrative Agent at least two Business Days’ (or such shorter period as
may be agreed by such Issuer) prior written notice, in substantially the form of Exhibit D (or in
such other written or electronic form as is acceptable to the Issuer), of the requested issuance of
such Letter of Credit (a “Letter of Credit Request”). Such notice shall be irrevocable and shall
(i) specify (A) the Issuer of such Letter of Credit, the stated amount of the Letter of Credit
requested, which stated amount (or, if such Letter of Credit is to be denominated in Dollars or an
Alternative Currency (other than U.S. Dollars), the U.S. Dollar Equivalent of such stated amount)
shall not be less than U.S.$5,000 (or such lesser amount as may be agreed to by such Issuer), (B)
the date of issuance of such requested Letter of Credit (which day shall be a Business Day), (C)
the date on which such Letter of Credit is to expire (which date shall be a Business Day), and (D)
the Person for whose benefit the requested Letter of Credit is to be Issued and (ii) certify that,
after issuance of the requested Letter of Credit, (A) the aggregate amount of the Letter of Credit
Obligations then outstanding will not exceed the Letter of Credit Sub-Limit and (B) the sum of the
aggregate principal or undrawn amount of the then-outstanding (I) Letter of Credit Obligations,
(II) Revolving Loans and (III) Swing Loans, will not exceed the Maximum Credit then in effect.
Such notice, to be effective, must be received by the relevant Issuer and the Administrative Agent
not later than 11:00 a.m. (New York City time) on the second (2nd) Business Day (or such
shorter period as agreed by the relevant Issuer) prior to the requested issuance of such Letter of
Credit.


 


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(d) Subject to the satisfaction of the conditions set forth in this Section 2.4, the relevant
Issuer shall, on the requested date, Issue a Letter of Credit on behalf of the Borrower in
accordance with such Issuer’s usual and customary business practices. No Issuer shall Issue any
Letter of Credit in the period commencing on the first Business Day after it receives written
notice from the Administrative Agent or any Lender that one or more of the conditions precedent
contained in Section 3.2 shall not on such date be satisfied, and ending when such conditions are
satisfied. The relevant Issuer shall not otherwise be required to determine that, or take notice
whether, the conditions precedent set forth in Section 3.2 have been satisfied in connection with
the issuance of any Letter of Credit.



(e) If requested by the relevant Issuer, prior to the issuance of each Letter of Credit by
such Issuer, and as a condition of such issuance, the Borrower shall have delivered to such Issuer
a letter of credit reimbursement agreement, in such form as the Issuer may employ in its ordinary
course of business for its own account (a “Letter of Credit Reimbursement Agreement”), signed by
the Borrower, and such other documents or items as may be required pursuant to the terms thereof.
In the event of any conflict between the terms of any Letter of Credit Reimbursement Agreement and
this Agreement, the terms of this Agreement shall govern.



(f) Each Issuer shall:




(i) give the Administrative Agent written notice (or telephonic notice confirmed
promptly thereafter in writing, which may be by telecopier) of the issuance or renewal of a
Letter of Credit Issued by it, of all drawings under a Letter of Credit Issued by it and the
payment (or the failure to pay when due) by the Borrower of any Reimbursement Obligation
when due (which notice the Administrative Agent shall promptly transmit by telecopy,
electronic mail or similar transmission to each Lender);




(ii) upon the request of any Lender, furnish to such Lender copies of any Letter of
Credit Reimbursement Agreement to which such Issuer is a party and such other documentation
as may reasonably be requested by such Lender; and




(iii) no later than 10 Business Days following the last day of each calendar month,
provide to the Administrative Agent (and the Administrative Agent shall provide a copy to
each Lender requesting the same) and the Borrower separate schedules for Documentary and
Standby Letters of Credit Issued by it, in form reasonably satisfactory to the
Administrative Agent, setting forth the aggregate Letter of Credit Obligations outstanding
at the end of each month and any information requested by the Borrower or the Administrative
Agent relating thereto.



(g) Immediately upon the issuance by an Issuer of a Letter of Credit in accordance with the
terms and conditions of this Agreement, such Issuer shall be deemed to have sold and transferred to
each Lender, and each Lender shall be deemed irrevocably and unconditionally to have purchased and
received from such Issuer, without recourse or warranty, an undivided interest and participation,
to the extent of such Lender’s Ratable Portion of the Revolving Credit Commitments, in such Letter
of Credit and the obligations of the Borrower with respect thereto (including all Letter of Credit
Obligations with respect thereto) and any security therefor and guaranty pertaining thereto.


 


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(h) The Borrower agrees to pay to the Issuer of a Letter of Credit the amount of all
Reimbursement Obligations owing to such Issuer under a Letter of Credit when such amounts are due
and payable, irrespective of any claim, set-off, defense or other right that the Borrower may have
at any time against such Issuer or any other Person. In the event that any Issuer makes any
payment
under any Letter of Credit and the Borrower shall not have repaid such amount to such Issuer
pursuant to this clause (h) or such payment is rescinded or set aside for any reason, such
Reimbursement Obligation shall bear interest computed from the date on which such Reimbursement
Obligation arose to the date of repayment in full at the rate of interest applicable to Revolving
Loans bearing interest at a rate based on the Prime Rate during such period, and such Issuer shall
promptly notify the Administrative Agent, which shall promptly notify each Lender of the failure to
repay such Reimbursement Obligation, and each Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of such Issuer the amount of such Lender’s Ratable Portion of
such payment in Dollars (or, if such payment was made in an Alternative Currency, an amount in
Dollars equal to the Dollar equivalent thereof as determined by the Administrative Agent in
accordance with its normal banking procedures) and in immediately available funds. If the
Administrative Agent so notifies such Lender prior to 11:00 a.m. (New York City time) on any
Business Day, such Lender shall make available to the Administrative Agent for the account of such
Issuer its Ratable Portion of the amount of such payment on such Business Day in immediately
available funds. Upon such payment by a Lender, such Lender shall notwithstanding whether or not
the conditions precedent set forth in Section 3.2 shall have been satisfied (which conditions
precedent the Lenders hereby irrevocably waive) be deemed to have made a Revolving Loan to the
Borrower in the principal amount of such payment. Whenever any Issuer receives from the Borrower a
payment of a Reimbursement Obligation as to which the Administrative Agent has received for the
account of such Issuer any payment from a Lender pursuant to this clause (h), such Issuer shall pay
to the Administrative Agent and the Administrative Agent shall promptly pay to each Lender, in
immediately available funds, an amount equal to such Lender’s Ratable Portion of the amount of such
payment adjusted, if necessary, to reflect the respective amounts the Lenders have paid in respect
of such Reimbursement Obligation.



(i) If and to the extent such Lender shall not have so made its Ratable Portion of the amount
of the payment required by clause (h) above available to the Administrative Agent for the account
of such Issuer, such Lender agrees to pay to the Administrative Agent for the account of such
Issuer forthwith on demand any such unpaid amount together with interest thereon, for the first
Business Day after payment was first due at the Prime Rate and, thereafter, until such amount is
repaid to the Administrative Agent for the account of such Issuer, at a rate per annum equal to the
rate applicable to Prime Rate Loans under the Revolving Credit Facility. The failure of any Lender
to make available to the Administrative Agent for the account of such Issuer its Ratable Portion of
any such payment shall not relieve any other Lender of its obligation hereunder to make available
to the Administrative Agent for the account of such Issuer its Ratable Portion of any payment on
the date such payment is to be made, but no Lender shall be responsible for the failure of any
other Lender to make available to the Administrative Agent for the account of the Issuer such other
Lender’s Ratable Portion of any such payment.



(j) The Borrower’s obligation to pay each Reimbursement Obligation and the obligations of the
Lenders to make payments to the Administrative Agent for the account of the Issuers with respect to
Letters of Credit shall be absolute, unconditional and irrevocable, and shall be performed strictly
in accordance with the terms of this Agreement, under any and all circumstances whatsoever,
including the occurrence of any Default or Event of Default, and irrespective of:




(i) any lack of validity or enforceability of any Letter of Credit or any Loan
Document, or any term or provision therein;




(ii) any amendment or waiver of or any consent to departure from all or any of the
provisions of any Letter of Credit or any Loan Document;


 


47









 






(iii) the existence of any claim, set off, defense or other right that the Borrower,
any other party guaranteeing, or otherwise obligated with, the Borrower, any Subsidiary or
other Affiliate thereof or any other Person may at any time have against the beneficiary
under any Letter of Credit, the Issuer, the Administrative Agent or any Lender or any other
Person, whether in connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;




(iv) any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;




(v) payment by the Issuer under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit; and




(vi) any other act or omission to act or delay of any kind of the Issuer, the Lenders,
the Administrative Agent or any other Person or any other event or circumstance whatsoever,
whether or not similar to any of the foregoing, that might, but for the provisions of this
Section, constitute a legal or equitable discharge of the Borrower’s obligations hereunder.



Any action taken or omitted to be taken by the relevant Issuer under or in connection with any
Letter of Credit, if taken or omitted in the absence of gross negligence or willful misconduct,
shall not put such Issuer under any resulting liability to the Borrower or any Lender. In
determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof, the Issuer may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (x) the Issuer may rely exclusively on the
documents presented to it under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of Credit, whether or not
the amount due to the beneficiary thereunder equals the amount of such draft and whether or not any
document presented pursuant to such Letter of Credit proves to be insufficient in any respect, if
such document on its face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever and (y) any
noncompliance in any immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, be deemed not to constitute willful misconduct or gross
negligence of the Issuer.



(k) Letters of Credit may be Issued in favor of a beneficiary that is a creditor of a
Subsidiary of Group provided that the account party with respect to such Letter of Credit is the
Borrower.



(l) The amount of Revolving Credit Commitments utilized by Letters of Credit denominated in an
Alternative Currency (other than U.S. Dollars) shall be measured by a determination by the
applicable Issuer of the U.S. Dollar Equivalent of such Letters of Credit on each day on which a
Borrowing Base Certificate is delivered. The applicable Issuers shall notify the Administrative
Agent and the Borrower of the aggregate U.S. Dollar Equivalent of such utilization in respect of
the Letters of Credit Issued by it.



Section 2.5 Reduction and Termination of the Commitments. The Borrower may, upon at least five
Business Days’ prior notice to the Administrative Agent, terminate in whole or reduce in part
ratably the unused portions of the respective Revolving Credit Commitments of the
Lenders; provided, however, that each partial reduction shall be in the aggregate amount of not
less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof and, in the case of
any reduction of the Revolving Credit Commitments, the requirements of Section 2.9(e) shall have
been satisfied. The Borrower acknowledges and agrees that the Revolving Credit Commitments shall
terminate in their entirety concurrently with the termination in their entirety of the Revolving
Credit Commitments under and as defined in the U.S. Facility.


 


48









 





Section 2.6 Repayment of Loans. The Borrower promises to repay the entire unpaid principal amount
of the Revolving Loans and the Swing Loans and all accrued but unpaid interest thereon on the
Revolving Credit Termination Date or earlier, if otherwise required by the terms hereof.



Section 2.7 Evidence of Debt.



(a) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing Indebtedness of the Borrower to such Lender resulting from each Loan of such Lender from
time to time, including the amounts of principal and interest payable and paid to such Lender from
time to time under this Agreement.



(b) The Administrative Agent shall establish and maintain a Register pursuant to Section
11.2(c) and accounts therein in accordance with its usual practice in which it will record (i) the
amount of each applicable Loan made and, if a BA Rate Loan, the Interest Period applicable thereto,
(ii) the amount of any principal or interest due and payable by the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the
Borrower and each Lender’s share thereof, if applicable.



(c) The entries made in the accounts maintained pursuant to clauses (a) and (b) of this
Section 2.7 shall, to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations recorded therein; provided, however, that the failure of
any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in
any manner affect the obligations of the Borrower to repay the Loans in accordance with their
terms.



Section 2.8 Optional Prepayments. The Borrower may prepay the outstanding principal amount of the
Revolving Loans and Swing Loans in whole or in part at any time; provided, however, that if any
prepayment of any BA Rate Loan is made by the Borrower other than on the last day of an Interest
Period for such Loan, the Borrower shall also pay any amount owing pursuant to Section 2.14(e).



Section 2.9 Mandatory Prepayments.




(a) [Intentionally Omitted].



(b) Subject to clause (c) below, upon receipt by any Canadian Loan Party of Net Cash Proceeds
(but only if at the time of such receipt the Available Credit is less than 25% of the Aggregate
Borrowing Limit at such time), the Borrower shall within one Business Day after such receipt prepay
the Loans (or provide cash collateral in respect of Letters of Credit as set forth in clause (d)
below) in an amount equal to 100% of such Net Cash Proceeds as set forth in clause (d) below.


 


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(c) Notwithstanding clause (b) above, as long as no Event of Default shall have occurred or be
continuing on the date Net Cash Proceeds are received by any Canadian Loan Party, the Borrower
shall not be required to so apply an amount equal to Net Cash Proceeds arising from a
Reinvestment Event to the extent that all Net Cash Proceeds from all Reinvestment Events do
not exceed $5,000,000 (in the aggregate since the Closing Date) and are actually used (or have been
contractually committed to be used) to consummate a Permitted Acquisition or to purchase
replacement or fixed assets (in the case of an Asset Sale) or repair or replace (in the case of a
Property Loss Event) the sold, damaged or taken property within 180 days of the receipt of such Net
Cash Proceeds by a Canadian Loan Party and, pending application of such proceeds, the Borrower has
either (i) paid an amount equal to such Net Cash Proceeds to the Administrative Agent to be held by
the Administrative Agent in a Cash Collateral Account designated by the Administrative Agent or
(ii) applied an amount equal to such Net Cash Proceeds in repayment of the Revolving Loans and the
Administrative Agent shall have established an Availability Reserve in the amount of such
repayment, which reserve shall abate on the Reinvestment Prepayment Date applicable to such Net
Cash Proceeds or earlier to the extent that Revolving Loans up to the amount of such Net Cash
Proceeds are used as set forth in the Reinvestment Notice with respect thereto; provided, however,
that to the extent any asset subject to such Asset Sale or Property Loss Event constituted
Collateral, any replacement, fixed or alternative assets acquired with Net Cash Proceeds shall,
upon acquisition thereof by a Canadian Loan Party, be subject to a perfected Lien in favor of the
Collateral Agent, for the benefit of the Secured Parties, in each case, having the priority
described in Section 4.20 of this Agreement and the Collateral Documents (but, in the case of a
Permitted Acquisition, only to the extent required by clause (v) of the definition thereof);
provided further, however, in the event an Event of Default has occurred and is continuing after
the provisions in this clause (c) become operative, the Administrative Agent may, or shall at the
direction of the Requisite Lenders, apply all amounts in the Cash Collateral Account referred to
above to the Obligations.



(d) Subject to the provisions of clause (c) above and Section 2.13(h) (Payments and
Computations), any prepayments made by the Borrower required to be applied in accordance with this
clause (d) shall be applied, first, to repay the outstanding principal balance of the Swing Loans
until the Swing Loans shall have been repaid in full; second, to repay the outstanding principal
balance of the Revolving Loans until the Revolving Loans shall have been repaid in full; and third,
to provide cash collateral for any Letter of Credit Obligations in the manner set forth in Section
9.3 until all the Letter of Credit Obligations have been fully cash collateralized in the manner
set forth therein.



(e) If at any time the aggregate principal amount of Revolving Credit Outstandings exceed the
Maximum Credit at such time (other than as a result of fluctuations in currency exchange rates of
the Dollar against the U.S. Dollar to the extent the last two sentences of this Section 2.9(e)
shall be applicable), the Borrower shall, as soon as possible, but in any event within one Business
Day, prepay first the Swing Loans and then the Revolving Loans then outstanding in an amount equal
to such excess. If any such excess remains after repayment in full of the aggregate outstanding
Swing Loans and the Revolving Loans, the Borrower shall provide cash collateral for the Letter of
Credit Obligations in the manner set forth in Section 9.3 to the extent required to eliminate such
excess. If at any time following one or more fluctuations in the exchange rate of the Dollar
against the U.S. Dollar, (a) the U.S. Dollar Equivalent of the aggregate principal amount of
Revolving Credit Outstandings exceeds the Revolving Credit Commitments, (b) the U.S. Dollar
Equivalent of the aggregate principal amount of Swing Loans exceeds the Swing Loan Availability,
(c) the U.S. Dollar Equivalent of the Letter of Credit Obligations outstanding exceed the Letter of
Credit Sub-Limit, (d) the U.S. Dollar Equivalent of any component of the Borrowing Base exceeds any
limit based on U.S. Dollars or (e) the U.S. Dollar Equivalent of any other Obligations exceeds any
other limit based on U.S. Dollars set forth herein for such Obligations, the Borrower shall, as
soon as possible, but in any event within seven Business Days, prepay first the Swing Loans and
then the Revolving Loans then outstanding in an amount equal to such excess. If any such excess
remains after repayment in full of the aggregate outstanding Swing Loans and the Revolving Loans,
the Borrower shall provide cash
collateral for the Letter of Credit Obligations in the manner set forth in Section 9.3 to the
extent required to eliminate such excess.


 


50









 





(f) Except in the case where Section 2.13(h) shall be applicable, all available funds in each
Cash Collateral Account (other than an amount equal to any proceeds arising from a Reinvestment
Event that are held in the Cash Collateral Account pending application of such proceeds as
specified in a Reinvestment Notice) shall be applied on a daily basis: first, to repay the
outstanding principal amount of the Swing Loans until the Swing Loans have been repaid in full;
second, to repay the outstanding principal amount of the Revolving Loans until the Revolving Loans
have been repaid in full; third, to any other Obligation in respect of the Revolving Credit
Facility then due and payable and then, to cash collateralize all outstanding Letter of Credit
Obligations in the manner set forth in Section 9.3. The Facility Agents agree so to apply such
funds and the Borrower consents to such application. Notwithstanding the first sentence in this
clause (f), at any time there is no Event of Default that is continuing, there are no Loans
outstanding and no other Obligations in respect of the Revolving Credit Facility are then due and
payable each Facility Agent shall cause any funds in any Cash Collateral Account maintained by it
to be paid at the written direction of the Borrower for any other purpose.



Section 2.10 Interest.



(a) Rate of Interest. All Loans and the outstanding amount of all other Obligations shall
bear interest, in the case of Loans, on the unpaid principal amount thereof from the date such
Loans are made and, in the case of such other Obligations, from the date such other Obligations are
due and payable until, in all cases, paid in full, except as otherwise provided in Section 2.10(c),
as follows:




(i) if a Prime Rate Loan or such other Obligation, at a rate per annum equal to the sum
of (A) the Prime Rate as in effect from time to time and (B) the Applicable Margin for such
Loans; and




(ii) if a BA Rate Loan, at a rate per annum equal to the sum of (A) the BA Rate
determined for the applicable Interest Period and (B) the Applicable Margin in effect from
time to time during such Interest Period.



(b) Interest Payments. Interest accrued:




(i) on each Prime Rate Loan shall be payable in arrears (A) on the first Business Day
of each calendar quarter, commencing on the first such day following the making of such
Prime Rate Loan and (B) if not previously paid in full, at maturity (whether by acceleration
or otherwise) of such Prime Rate Loan;




(ii) on each Swing Loan shall be payable in arrears (A) on the first Business Day of
each calendar quarter, commencing on the first such day following the making of such Swing
Loan and (B) if not previously paid in full, at maturity (whether by acceleration or
otherwise) of such Swing Loan;




(iii) on each BA Rate Loan shall be payable in arrears (A) on the last day of each
Interest Period applicable to such Loan and if such Interest Period has a duration of more
than three months, on each day during such Interest Period which occurs every three months
from the first day of such Interest Period, (B) upon the payment or prepayment thereof
in full or in part, and (C) if not previously paid in full, at maturity (whether by
acceleration or otherwise) of such BA Rate Loan; and


 


51









 






(iv) on the amount of all other Obligations shall be payable on demand after the time
such Obligation becomes due and payable (whether by acceleration or otherwise).



(c) Default Interest. Notwithstanding the rates of interest specified in Section 2.10(a) or
elsewhere herein, effective immediately upon the occurrence of an Event of Default, and for as long
thereafter as such Event of Default shall be continuing, the principal balance of all Loans and the
amount of all other Obligations shall bear interest at a rate which is two percent per annum in
excess of the rate of interest applicable to such Loans or such other Obligations from time to
time. Default interest under this clause (c) shall be payable on demand by the Administrative
Agent or the Requisite Lenders.



(d) Interest Act (Canada). As regards the Borrower and any other Canadian Loan Party, for the
purposes of the Interest Act (Canada), (i) whenever any interest or fees under this Agreement or
any other Loan Document is calculated using a rate based on a year of 360 days, the rate determined
pursuant to such calculation, when expressed as an annual rate, is equivalent to (x) the applicable
rate, (y) multiplied by the actual number of days in the calendar year in which the period for
which such interest is payable (or compounded) ends, and (z) divided by 360, (ii) the principle of
deemed reinvestment of interest does not apply to any interest calculation under this Agreement,
and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and
not effective rates or yields.



Section 2.11 Conversion/Continuation Option.



(a) The Borrower may elect (i) on any Business Day to convert Prime Rate Loans (other than
Swing Loans) or any portion thereof to BA Rate Loans, or (ii) at the end of any applicable Interest
Period, to convert BA Rate Loans or any portion thereof into Prime Rate Loans or to continue such
BA Rate Loans or any portion thereof for an additional Interest Period; provided, however, that the
aggregate amount of the BA Rate Loans for each Interest Period must be in the amount of $3,000,000
or an integral multiple of $1,000,000 in excess thereof. Each conversion or continuation shall be
allocated among the Loans of each Lender in accordance with such Lender’s Ratable Portion.



(b) Each such election shall be in substantially the form of Exhibit F hereto (a “Notice of
Conversion or Continuation”) and shall be made by giving the Administrative Agent at least three
(3) Business Days’ prior written notice specifying (i) the amount and type of Loan being converted
or continued, (ii) in the case of a conversion to or a continuation of BA Rate Loans, the
applicable Interest Period, and (iii) in the case of a conversion, the date of conversion (which
date shall be a Business Day and, if a conversion from BA Rate Loans, shall also be the last day of
the applicable Interest Period). The Administrative Agent shall promptly notify each Lender of its
receipt of a Notice of Conversion or Continuation and of the options selected therein.



(c) Notwithstanding the foregoing, no conversion in whole or in part of Prime Rate Loans to BA
Rate Loans, and no continuation in whole or in part of BA Rate Loans upon the expiration of any
applicable Interest Period, shall be permitted at any time at which (A) a Default or an Event of
Default shall have occurred and be continuing or (B) the continuation of, or conversion into, would
violate any of the provisions of Section 2.14.




 


52











 




(d) If, within the time period required under the terms of this Section 2.11, the
Administrative Agent does not receive a Notice of Conversion or Continuation from the Borrower
containing a permitted election to continue any Loan that is a BA Rate Loan for an additional
Interest Period or to convert any such Loan, then, upon the expiration of the applicable Interest
Period, such Loan will be automatically converted to a Prime Rate Loan.



(e) Each Notice of Conversion or Continuation shall be irrevocable.



Section 2.12 Fees.



(a) Unused Commitment Fee. The Borrower agrees to pay to each Lender a commitment fee (the
“Unused Commitment Fee”) on the average amount by which the Revolving Credit Commitment of such
Lender exceeds such Lender’s Ratable Portion of the U.S. Dollar Equivalent of the Revolving Credit
Outstandings (excluding the U.S. Dollar Equivalent of the amount of any outstanding Swing Loans)
from the Closing Date until the Revolving Credit Termination Date at the Applicable Unused
Commitment Fee Rate, payable in arrears on the first Business Day of each calendar quarter,
commencing on the first such day following the Closing Date, and on the Revolving Credit
Termination Date.



(b) Letter of Credit Fees. The Borrower agrees to pay the following amounts with respect to
Letters of Credit Issued by any Issuer:




(i) to each Issuer of a Letter of Credit, with respect to each Letter of Credit Issued
by such Issuer, an issuance fee (the “Issuing Fee”) equal to 0.125% per annum of the maximum
amount available from time to time to be drawn under such Letter of Credit, payable in
arrears (A) on the first Business Day of each calendar quarter, commencing on the first such
day following the issuance of such Letter of Credit, and (B) on the Revolving Credit
Termination Date;




(ii) to the Administrative Agent for the ratable benefit of the Lenders, with respect
to each Letter of Credit, a fee accruing at a rate per annum equal to the Applicable Margin
for Revolving Loans that are BA Rate Loans of the maximum amount available from time to time
to be drawn under such Letter of Credit, payable in arrears (A) on the first Business Day of
each calendar quarter, commencing on the first such day following the issuance of such
Letter of Credit, and (B) on the Revolving Credit Termination Date; provided, however, that
during the continuance of an Event of Default, such fee shall be increased by two percent
per annum and shall be payable on demand; and




(iii) to the Issuer of any Letter of Credit, with respect to the issuance, extension,
amendment, transfer or other action of or with respect to each Letter of Credit and each
drawing made thereunder, documentary and processing charges in accordance with such Issuer’s
standard schedule for such charges in effect at the time of issuance, extension, amendment,
transfer, other action or drawing, as the case may be.



Section 2.13 Payments and Computations.



(a) The Borrower shall make each payment hereunder (including fees and expenses) not later
than 11:00 a.m. (New York City time) on the day when due, in Dollars, to the Administrative Agent
at its address referred to in Section 11.8 in immediately available funds without set-off or
counterclaim. The Administrative Agent will promptly thereafter cause to be distributed
immediately available funds relating to the payment of principal or interest or fees (to the extent
payable to the Lenders) to the Lenders, in accordance with the application of payments set
forth in clauses (g) and (h) of this Section 2.13, as applicable, for the account of their
respective Domestic Lending Offices; provided, however, that amounts payable pursuant to Section
2.14(c), Section 2.14(e), Section 2.15 or Section 2.16 shall be paid only to the affected Lender or
Lenders and amounts payable with respect to Swing Loans shall be paid only to the Swing Loan
Lender. Payments received by the Administrative Agent after 11:00 a.m. (New York City time) shall
be deemed to be received on the next succeeding Business Day.


 


53









 





(b) All computations of interest and of fees shall be made by the Administrative Agent on the
basis of a year of 365/366 days (360 days in the case of fees), in each case for the actual number
of days (including the first day but excluding the last day) occurring in the period for which such
interest and fees are payable. Each determination by the Administrative Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest error.




(c) [Intentionally Omitted].



(d) Each payment by the Borrower of any Loan, Reimbursement Obligation (including interest or
fees in respect thereof) and each reimbursement of various costs, expenses or other Obligation
shall be made in the currency in which such Loan was made, such Letter of Credit Issued or such
cost, expense or other Obligation was incurred; provided, however, that (i) the Letter of Credit
Reimbursement Agreement for a Letter of Credit may specify another currency for the Reimbursement
Obligation in respect of such Letter of Credit and (ii) other than for payments in respect of a
Loan or Reimbursement Obligation, Loan Documents duly executed by the Administrative Agent or any
Hedging Contract may specify other currencies of payment for Obligations created by or directly
related to such Loan Document or Hedging Contract.



(e) Whenever any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of payment of interest or fees, as the case may
be; provided, however, that if such extension would cause payment of interest on or principal of
any BA Rate Loan to be made in the next calendar month, such payment shall be made on the
immediately preceding Business Day. All repayments of any Revolving Loans shall be applied first
to repay such Loans outstanding as Prime Rate Loans and then to repay such Loans outstanding as BA
Rate Loans with those BA Rate Loans which have earlier expiring Interest Periods being repaid prior
to those which have later expiring Interest Periods.



(f) Unless the Administrative Agent shall have received notice from the Borrower prior to the
date on which any payment is due hereunder that the Borrower will not make such payment in full,
the Administrative Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date and the Administrative Agent may, in reliance upon such
assumption, cause to be distributed to each relevant Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower shall not have made such payment in
full to the Administrative Agent, each relevant Lender shall repay to the Administrative Agent
forthwith on demand such amount distributed to such Lender together with interest thereon at the
Prime Rate, for the first Business Day, and, thereafter, at the rate applicable to Prime Rate
Loans, for each day from the date such amount is distributed to such Lender until the date such
Lender repays such amount to the Administrative Agent.


 


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(g) Subject to the provisions of clause (h) of this Section 2.13 (and except as otherwise
provided in Section 2.9 or elsewhere in this Agreement), all payments and any other amounts
received by the Administrative Agent from or for the benefit of the Borrower or any other
Loan Party shall be applied first, to pay principal of and interest on any portion of the
Loans which the Administrative Agent may have advanced pursuant to the express provisions of this
Agreement on behalf of any Lender, for which the Administrative Agent has not then been reimbursed
by such Lender or the Borrower; second, to pay all other Obligations then due and payable; and
then, as the Borrower so designates. Payments in respect of Swing Loans received by the
Administrative Agent shall be distributed to the Swing Loan Lender; payments in respect of
Revolving Loans received by the Administrative Agent shall be distributed to each Lender in
accordance with such Lender’s Ratable Portion; and, unless provided otherwise herein, all payments
of fees and all other payments in respect of any other Obligation shall be allocated among such of
the Lenders and the Issuers as are entitled thereto, and, if to the Lenders, in proportion to their
respective Ratable Portions.



(h) The Borrower hereby irrevocably waives the right to direct the application of any and all
payments in respect of the Secured Obligations and any proceeds of Collateral after the occurrence
and during the continuance of an Event of Default, and agrees that upon the termination of the
Commitments or the acceleration of any of the Obligations pursuant to Section 9.2, the Facility
Agents shall apply all payments made to or received by any Facility Agent, any Lender or any Issuer
constituting proceeds of Collateral (including all funds on deposit in the Special Cash Collateral
Account or any Cash Collateral Account (including all proceeds arising from a Reinvestment Event
that are held in the Cash Collateral Account pending application of such proceeds as specified in a
Reinvestment Notice)) and all other payments made to or received by any Facility Agent, any Lender
or any Issuer with respect to any Secured Obligations in the following order:




first, to pay interest on and then principal of any portion of the Revolving Loans
which the Administrative Agent may have advanced on behalf of any Lender for which the
Administrative Agent has not then been reimbursed by such Lender or the Borrower;




second, to pay interest on and then principal of any Swing Loan;




third, to pay Secured Obligations in respect of any expense reimbursements (including
indemnities) or Cash Management Obligations then due to the Facility Agents;




fourth, to pay Secured Obligations in respect of any expense reimbursements (including
indemnities) then due to the Lenders and the Issuers;




fifth, to pay Secured Obligations in respect of any fees then due to the Facility
Agents, the Lenders and the Issuers;




sixth, to pay interest then due and payable in respect of the Loans and Reimbursement
Obligations;




seventh, to pay or prepay principal payments on the Loans and Reimbursement
Obligations and to provide cash collateral for outstanding Letter of Credit Undrawn Amounts
in the manner described in Section 9.3;




eighth, to pay or prepay principal amounts on Secured Obligations in respect of
Hedging Contracts and Cash Management Obligations, ratably (based on the proportional
amounts thereof) to the aggregate principal amount of such Hedging Contracts and Cash
Management Obligations;


 


55









 






ninth, to the ratable (based on the proportional amounts thereof) payment of all other
Secured Obligations; and

tenth, as directed by the Borrower;


provided, however, that if sufficient funds are not available to fund all payments to be made in
respect of any of the Obligations described in any of the foregoing clauses first through ninth,
the available funds being applied with respect to any such Obligation (unless otherwise specified
in such clause) shall be allocated to the payment of such Obligations ratably, based on the
proportion of the applicable Agent’s and each applicable Lender’s or Issuer’s interest in the
aggregate outstanding Obligations described in such clause; and provided, however, that payments
that would otherwise be allocated to the Lenders shall be allocated first to repay Protective
Advances and Swing Loans pro rata and then to the Lenders. The order of priority set forth in
clauses first through ninth of this Section 2.13(h) may at any time and from time to time be
changed by the agreement of the Requisite Lenders and each adversely affected Lender without
necessity of notice to or consent of or approval by the Borrower, any Secured Party that is not a
Lender or an Issuer, or any other Person. The order of priority set forth in clauses first through
fifth of this Section 2.13(h) may be changed only with the prior written consent of the
Administrative Agent in addition to the Requisite Lenders.




(i) At the option of the Administrative Agent, principal on the Swing Loans, Reimbursement
Obligations, interest, fees, expenses and other sums due and payable in respect of the Revolving
Loans and Protective Advances may be paid from the proceeds of Swing Loans or Revolving Loans. The
Borrower hereby authorizes the Swing Loan Lender to make such Swing Loans pursuant to Section
2.3(a) and the Lenders to make Revolving Loans pursuant to Section 2.2(a) from time to time in the
amounts of any and all principal payable with respect to the Swing Loans, Reimbursement
Obligations, interest, fees, expenses and other sums payable in respect of the Revolving Loans and
Protective Advances, and further authorizes the Administrative Agent to give the Lenders notice of
any Borrowing with respect to such Swing Loans and Revolving Loans and to distribute the proceeds
of such Swing Loans and Revolving Loans to pay such amounts. The Borrower agrees that all such
Swing Loans and Revolving Loans so made shall be deemed to have been requested by it (irrespective
of the satisfaction of the conditions in Section 3.2 which conditions the Lenders irrevocably
waive) and directs that all proceeds thereof shall be used to pay such amounts.



Section 2.14 Special Provisions Governing BA Rate Loans.



(a) Determination of Interest Rate. The BA Rate for each Interest Period for BA Rate Loans
shall be determined by the Administrative Agent as set forth in the definition of “BA Rate.”



(b) Interest Rate Unascertainable, Inadequate or Unfair. In the event that: (i) the
Administrative Agent determines that adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the BA Rate then being determined is to be fixed;
or (ii) the Requisite Lenders notify the Administrative Agent that the BA Rate for any Loans for
any Interest Period will not adequately reflect the cost to the Lenders of making or maintaining
such Loans for such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Lenders, whereupon each BA Rate Loan will automatically, on the last day of the
current Interest Period for such Loan, convert into a Prime Rate Loan and the obligations of the
Lenders to make BA Rate Loans or to convert Prime Rate Loans into BA Rate Loans shall be suspended
until the Administrative Agent shall notify the Borrower that the Administrative Agent (in the case
of clause (i) above) or the Requisite Lenders (in the case of clause (ii) above) has or have
determined that the circumstances causing such suspension no longer exist.


 


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(c) Increased Costs. If at any time any Lender shall determine that due to the introduction
of or any change in or in the interpretation of any law, treaty or governmental rule,
regulation or order (other than any change by way of imposition or increase of reserve
requirements included in determining the BA Rate or with respect to taxes (payment with respect to
which shall be governed by Section 2.16)) or the compliance by such Lender with any guideline,
request or directive from any central bank or other Governmental Authority (whether or not having
the force of law), there shall be any increase in the cost to such Lender of agreeing to make or
making, funding or maintaining any BA Rate Loans, then the Borrower shall from time to time, upon
demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the
Administrative Agent for the account of such Lender additional amounts sufficient to compensate
such Lender for such increased cost. A certificate as to the amount of such increased cost,
submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and
binding for all purposes, absent manifest error.



(d) Illegality. Notwithstanding any other provision of this Agreement, if any Lender
determines that the introduction of or any change in or in the interpretation of any law, treaty or
governmental rule, regulation or order after the date of this Agreement shall make it unlawful, or
any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender
to make BA Rate Loans or to continue to fund or maintain BA Rate Loans, then, on notice thereof and
demand therefor by such Lender to the Borrower through the Administrative Agent, (i) the obligation
of such Lender to make or to continue BA Rate Loans and to convert Prime Rate Loans into BA Rate
Loans shall be suspended, and each such Lender shall make a Prime Rate Loan as part of any
requested Borrowing of BA Rate Loans and (ii) if the affected BA Rate Loans are then outstanding,
the Borrower shall immediately convert each such Loan into a Prime Rate Loan. If at any time after
a Lender gives notice under this Section 2.14(d) such Lender determines that it may lawfully make
BA Rate Loans, such Lender shall promptly give notice of that determination to the Borrower and the
Administrative Agent, and the Administrative Agent shall promptly transmit the notice to each other
Lender. The Borrower’s right to request, and such Lender’s obligation, if any, to make BA Rate
Loans shall thereupon be restored.



(e) Breakage Costs. In addition to all amounts required to be paid by the Borrower pursuant
to Section 2.10, the Borrower shall compensate each Lender, upon demand (with a copy of such demand
to the Administrative Agent), for all losses, expenses and liabilities (including any loss or
expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to fund or maintain such Lender’s BA Rate Loans to the Borrower but excluding any
loss of the Applicable Margin on the relevant Loans) which such Lender may sustain (i) if for any
reason a proposed Borrowing, conversion into or continuation of BA Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice of Conversion or Continuation given by
the Borrower or in a telephonic request by it for borrowing or conversion or continuation or a
successive Interest Period does not commence after notice therefor is given pursuant to Section
2.11, (ii) if for any reason any BA Rate Loan is prepaid (including mandatorily pursuant to Section
2.9) on a date which is not the last day of the applicable Interest Period, (iii) as a consequence
of a required conversion of a BA Rate Loan to a Prime Rate Loan as a result of any of the events
indicated in Section 2.14(d), or (iv) as a consequence of any failure by the Borrower to repay BA
Rate Loans when required by the terms hereof. The Lender making demand for such compensation shall
deliver to the Borrower and the Administrative Agent concurrently with such demand a written
statement as to such losses, expenses and liabilities, and this statement shall be conclusive as to
the amount of compensation due to that Lender, absent manifest error.


 


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Section 2.15 Capital Adequacy. If at any time any Lender determines that (a) the adoption of or
any change in or in the interpretation of any law, treaty or governmental rule, regulation or order
after the date of this Agreement regarding capital adequacy, (b) compliance with any such law,
treaty, rule, regulation, or order, or (c) compliance with any guideline or request or directive
from any central bank or other Governmental Authority regarding capital adequacy (whether or not
having
the force of law) shall have the effect of reducing the rate of return on such Lender’s (or any
corporation or other Person controlling such Lender’s) capital as a consequence of its obligations
hereunder or under or in respect of any Letter of Credit to a level below that which such Lender or
such corporation or other Person could have achieved but for such adoption, change, compliance or
interpretation, then, upon demand from time to time by such Lender (with a copy of such demand to
the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of
such Lender, from time to time as specified by such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to such amounts submitted to the
Borrower and the Administrative Agent by such Lender shall be conclusive and binding for all
purposes, absent manifest error.



Section 2.16 Taxes.



(a) Except as otherwise provided in this Section 2.16, any and all payments by any Loan Party
under each Loan Document shall be made free and clear of and without deduction for any and all
present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) in the case of each Lender, each Issuer and each Agent (A)
taxes imposed on or measured by its net income or net profits and franchise taxes imposed on such
Person by an applicable Governmental Authority, and similar taxes imposed by the jurisdiction (or
any political subdivision thereof) under the laws of which such Lender, such Issuer or such Agent
(as the case may be) is organized, in which its principal office is located, or in which it is
otherwise doing business, or, in the case of any Lender, in which its Domestic Lending Office is
located, (B) any branch profits taxes imposed by an applicable Governmental Authority or any
similar tax imposed by any jurisdiction in which any Loan Party is located, (C) any withholding
taxes payable with respect to payments under the Loan Documents under laws (including any statute,
treaty or regulation) in effect on the Closing Date (or, in the case of (w) an Eligible Assignee
which became a party to this Agreement after the Closing Date, the date of the Assignment and
Acceptance pursuant to which such Eligible Assignee became a party to this Agreement, (x) a
successor Agent, the date of the appointment of such Agent, (y) a successor Issuer, the date such
Issuer becomes an Issuer and (z) the designation of a new Domestic Lending Office) applicable to
such Lender, such Issuer or such Agent, as the case may be, but not excluding any withholding taxes
payable as a result of any change in such laws occurring after the Closing Date (or the date of
such Assignment and Acceptance or the date of such appointment of such Agent or the date such
Issuer becomes an Issuer, as appropriate) and (D) all liabilities, penalties and interest with
respect to any of the foregoing, (ii) in the case of each Agent, each Lender and each Issuer, taxes
imposed on or measured by its net income or net profits, franchise and similar taxes imposed on it
as a result of a present or former connection between such Agent, such Lender or such Issuer (as
the case may be) and the jurisdiction of the Governmental Authority imposing such tax or taxing
authority thereof or therein and (iii) in the case of each Agent, each Lender and each Issuer,
taxes imposed as a result of the gross negligence or willful misconduct of such Agent, such Lender
or such Issuer (as the case may be) (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as “Taxes”). Except as
otherwise provided in this Section 2.16, if any Taxes shall be required by law to be deducted from
or in respect of any sum payable under any Loan Document to any Lender, any Issuer or any Agent (i)
the sum payable shall be increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section 2.16) such Lender,
such Issuer or such Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the applicable Loan Party shall make such
deductions, (iii) the Loan Parties shall pay the full amount deducted to the relevant taxing
authority or other authority in accordance with applicable law, and (iv) within 30 days after
payment, the Loan Parties shall deliver to the Administrative Agent evidence of such payment.


 


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(b) In addition, the Borrower agrees to pay any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies imposed by any Governmental
Authority (but not taxes the payment of which is governed by clause (a) above), and all liabilities
with respect thereto, which arise from any payment made under any Loan Document or from the
execution, delivery or registration of, or otherwise with respect to, any Loan Document
(collectively, “Other Taxes”).



(c) Each Loan Party will, jointly and severally, indemnify each Lender, each Issuer and each
Agent for the full amount of Taxes and Other Taxes (including any Taxes and Other Taxes imposed by
any jurisdiction on amounts payable under this Section 2.16) paid by such Lender, such Issuer or
such Agent (as the case may be) and any liability (including for penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly
or legally asserted. This indemnification shall be made within 30 days from the date such Lender,
such Issuer or such Agent (as the case may be) makes written demand therefor setting forth in
reasonable detail the basis and calculations of such amounts.



(d) Within 30 days after the date of any payment of Taxes or Other Taxes, the Borrower will
furnish to the Administrative Agent, at its address referred to in Section 11.8, the original or a
certified copy of a receipt evidencing payment thereof.



(e) Without prejudice to the survival of any other agreement of any Loan Party hereunder or
under the Guaranty, the agreements and obligations of the Loan Parties contained in this Section
2.16 shall survive the payment in full of the Secured Obligations.




(f) [Intentionally Omitted].




(g) [Intentionally Omitted].



(h) Any Lender or Issuer claiming any additional amounts payable pursuant to this Section 2.16
shall use its reasonable efforts (consistent with its internal policy and legal and regulatory
restrictions) to change the jurisdiction of its Domestic Lending Office if the making of such a
change would avoid the need for, or reduce the amount of, any such additional amounts which would
be payable or may thereafter accrue and would not, in the sole determination of such Lender or
Issuer, be otherwise disadvantageous to such Lender or Issuer.



(i) If any Lender or any Issuer changes its residence, place of business or Domestic Lending
Office or takes any other similar action, and the effect of such change or action, as of the date
thereof, would be to increase the additional amounts that the Loan Parties are obligated to pay
under this Section 2.16, the Loan Parties shall not be obligated to pay the amount of such
increase.



(j) If any Agent or Lender determines in its sole discretion that it has actually received any
refund of tax in connection with any deduction or withholding or payment of any additional amount
by the Loan Parties pursuant to this Section 2.16, such Person shall reimburse the Borrower in an
amount equal to such refund, after tax, and net of all expenses incurred by such Person in
connection with such refund. The Borrower shall return such amount to the applicable Person in the
event that such Person is required to repay such refund of tax. Nothing contained in this
paragraph shall interfere with the right of each of the Agents and the Lenders to arrange its tax
affairs in whatever manner it thinks fit, nor to disclose any information or any computations
relating to its tax affairs or to do anything that would prejudice its ability to benefit from
other credits, relief, remissions or repayments to which it may be entitled.


 


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Section 2.17 Substitution of Lenders. In the event that (a) (i) any Lender makes a claim under
Section 2.14(c) or Section 2.15, or (ii) it becomes illegal for any Lender to continue to fund or
make any BA Rate Loan and such Lender notifies the Borrower pursuant to Section 2.14(d), or (iii)
the Borrower is required to make any payment pursuant to Section 2.16 that is attributable to any
Lender, or (iv) any Lender is a Non-Funding Lender, (b) in the case of clause (a)(i) above, as a
consequence of increased costs in respect of which such claim is made, the effective rate of
interest payable to such Lender under this Agreement with respect to its Loans materially exceeds
the effective average annual rate of interest payable to the Requisite Lenders under this Agreement
and (c) except with respect to clause (a)(iii) above, Lenders holding at least 75% of the sum of
the Revolving Credit Commitments are not subject to such increased costs or illegality, payment or
proceedings (any such Lender, an “Affected Lender”), the Borrower may, at its sole cost and
expense, substitute another financial institution for such Affected Lender hereunder, upon
reasonable prior written notice (which written notice must be given within 90 days following the
occurrence of any of the events described in clauses (a)(i), (ii), (iii) or (iv)) by the Borrower
to the Administrative Agent and the Affected Lender that the Borrower intends to make such
substitution, which substitute financial institution must be an Eligible Assignee and, if not a
Lender, reasonably acceptable to the Administrative Agent; provided, however, that if more than one
Lender claims increased costs, illegality or right to payment arising from the same act or
condition and such claims are received by the Borrower within 30 days of each other then the
Borrower may substitute all, but not (except to the extent the Borrower has already substituted one
of such Affected Lenders before the Borrower’s receipt of the other Affected Lenders’ claims) less
than all, Lenders making such claims. In the event that the proposed substitute financial
institution or other entity is reasonably acceptable to the Administrative Agent and the written
notice was properly issued under this Section 2.17, the Affected Lender shall sell and the
substitute financial institution or other entity shall purchase, pursuant to an Assignment and
Acceptance, all rights and claims of such Affected Lender under the Loan Documents (for a purchase
price equal to the principal balance of all Loans held by such Affected Lender and all accrued and
unpaid interest with respect thereto through the date of sale) and the substitute financial
institution or other entity shall assume and the Affected Lender shall be relieved of its
Commitments and all other prior unperformed obligations of the Affected Lender under the Loan
Documents (other than in respect of any damages (other than exemplary or punitive damages, to the
extent permitted by applicable law) in respect of any such unperformed obligations) and such sale
and purchase shall be recorded in the Register maintained by the Administrative Agent. Upon the
effectiveness of such sale, purchase and assumption (which, in any event shall be conditioned upon
the payment in full by the Borrower to the Affected Lender in cash of all fees, unreimbursed costs
and expenses and indemnities accrued and unpaid through such effective date), the substitute
financial institution or other entity shall become a “Lender” hereunder for all purposes of this
Agreement having a Commitment in the amount of such Affected Lender’s Commitment assumed by it and
such Commitments of the Affected Lender shall be terminated, provided that all indemnities under
the Loan Documents shall continue in favor of such Affected Lender. Notwithstanding the above, the
Borrower may not exercise the substitution right under this Section 2.17 during the continuance of
an Event of Default.


 


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Section 2.18 [Intentionally Omitted].



Section 2.19 Special Cash Collateral Account. The Borrower may from time to time deposit into the
Special Cash Collateral Account cash of the Borrower to be included in the calculation of the
Borrowing Base; provided that (i) such deposit shall be made upon not less than 2 Business Days’
prior written notice to the Facility Agents and (ii) such deposit shall be made on the same day (or
within one Business Day thereafter) as the day of the delivery of the Borrowing Base Certificate
required by Section 6.12(a) (Borrowing Base Determination) (but in any event no more frequently
than once per week). The Borrower may not make any such deposit if a Default or an Event of
Default shall have occurred and is continuing unless the making of such deposit shall cure
such Default or Event of Default. Funds on deposit in the Special 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 Borrower to make or cause to be made
such investments in Permitted Cash Equivalents as requested by the Borrower; 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. The Borrower may request the Collateral Agent to
withdraw monies from the Special Cash Collateral Account and deliver such withdrawn amounts to the
Borrower by written notice to the Facility Agents delivered together with (but no more frequently
than once per week) the delivery of the Borrowing Base Certificate required by Section 6.12(a)
(Borrowing Base Determination); provided, that no withdrawal shall be permitted at the request of
the Borrower if a Default or an Event of Default shall have occurred and is continuing (other than
a withdrawal of monies by the Collateral Agent, at the request of the Borrower, to be applied
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 the Borrower) or,
after giving effect to such withdrawal, the aggregate principal amount of the Revolving Credit
Outstandings will exceed the Maximum Credit. The parties hereto acknowledge and agree that the
Special Cash Collateral Account is not a Cash Collateral Account and that all funds and Permitted
Cash Equivalents in the Special Cash Collateral Account are collateral security for the payment of
the Secured Obligations. The Administrative Agent may, in its sole discretion, from time to time
apply funds and Permitted Cash Equivalents then held in the Special Cash Collateral Account to the
payment of Secured Obligations which are past due.



ARTICLE III




CONDITIONS TO LOANS AND LETTERS OF CREDIT




Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit. The obligation of each
Lender to make the initial Loans requested to be made by it on or after the Closing Date and the
obligation of each Issuer to Issue the initial Letters of Credit on or after the Closing Date is
subject to the satisfaction of all of the following conditions precedent:



(a) Certain Documents. The Administrative Agent shall have received on the Closing Date each
of the following, each dated the Closing Date unless otherwise indicated or agreed to by the
Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent and
each Lender and each of their respective counsel, in sufficient copies for each Lender:




(i) this Agreement, duly executed and delivered by the Borrower and Group;




(ii) the U.S. Loan Party Canadian Facility Guaranty, duly executed and delivered by
each U.S. Loan Party;




(iii) [Intentionally Omitted];




(iv) the Guaranty, duly executed by each Canadian Subsidiary Guarantor;




 


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(v) the Canadian Security Agreement, the Deed of Hypothec, the Canadian Pledge
Agreement and the U.S. Pledge and Security Agreement, duly executed by the Loan Parties
intended to be parties thereto, together with each of the following:



(A) evidence reasonably satisfactory to the Administrative Agent that, upon the
filing and recording of instruments delivered on the Closing Date, the Collateral
Agent (for the benefit of the Secured Parties) shall have a valid and perfected
security interest in the Collateral having the priority described in Section 4.20 of
this Agreement and the Collateral Documents, including (x) such documents duly
executed by each Loan Party as the Administrative Agent may request with respect to
the perfection of the Collateral Agent’s security interests in the Collateral
(including financing statements under the UCC and PPSA, patent, trademark and
copyright security agreements suitable for filing with the United States Patent and
Trademark Office, the United States Copyright Office or the Canadian Intellectual
Property Office, as the case may be, and other applicable documents under the laws
of any jurisdiction with respect to the perfection of Liens created by the above
Collateral Documents), (y) copies of UCC and PPSA search reports as of a recent date
listing all effective financing statements that name any Loan Party as debtor,
together with copies of such financing statements, none of which shall cover the
Collateral, except for those that shall be terminated on the Closing Date or are
otherwise permitted hereunder, and (z) copies of United States Patent and Trademark
Office, United States Copyright Office and Canadian Intellectual Property Office
searches as of a recent date with respect to any intellectual property of any Loan
Party registered with any such office or for which an application for registration
has been submitted to any such office, which searches shall not indicate any Liens
on any such intellectual property, except for those that shall be terminated on the
Closing Date or are otherwise permitted hereunder;




(B) all certificates, instruments and other documents representing all Pledged
Stock being pledged pursuant to any of the Canadian Security Agreement, the Deed of
Hypothec, the Canadian Pledge Agreement or the U.S. Pledge and Security Agreement
and undated stock powers for such certificates, instruments and other documents
executed in blank;




(C) all instruments representing Pledged Debt Instruments being pledged
pursuant to any of the Canadian Security Agreement, the Deed of Hypothec, the
Canadian Pledge Agreement or the U.S. Pledge and Security Agreement duly endorsed in
favor of the Collateral Agent or in blank; and




(D) evidence reasonably satisfactory to the Administrative Agent of payment or
arrangements for payment by the Borrower or the U.S. Borrower, as the case may be,
of all applicable recording taxes, fees, charges, costs and expenses required for
the recording of the Collateral Documents necessary to perfect the Liens created by
each of the Canadian Security Agreement, the Deed of Hypothec, the Canadian Pledge
Agreement and the U.S. Pledge and Security Agreement;




(vi) [Intentionally Omitted]; 




(vii) a Borrowing Base Certificate dated on or about the Closing Date;




(viii) favorable opinions of Skadden, Arps, Slate, Meagher & Flom, LLP, counsel to the
U.S. Loan Parties, and Robinson Sheppard Shapiro LLP, counsel to the Canadian Loan Parties
(and their respective local counsels), and addressing such matters as any Lender through the
Administrative Agent may reasonably request, including opinions as to the enforceability of
the Loan Documents, compliance with all laws and regulations, the
perfection of all Liens purported to be granted pursuant to the Collateral Documents
and no conflicts with material agreements;


 


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(ix) (i) (A) a copy of the articles or certificate of incorporation (or equivalent
Constituent Document) of each Loan Party, certified as of a recent date by the applicable
Governmental Authority of its jurisdiction of organization and (B) a certificate of the
Secretary or an Assistant Secretary of each Loan Party certifying (1) the by-laws (or
equivalent Constituent Document) of such Loan Party as in effect on the date of such
certification, (2) the resolutions of such Loan Party’s Board of Directors (or equivalent
governing body) approving and authorizing the execution, delivery and performance of this
Agreement and the other Loan Documents to which such Loan Party is a party and (3) that
there have been no changes in the articles or certificate of incorporation (or equivalent
Constituent Document) of such Loan Party from the articles or certificate of incorporation
(or equivalent Constituent Document) of such Loan Party delivered pursuant to clause (A)
above;




(ii) a certificate of the Secretary or an Assistant Secretary of each Loan Party
certifying the names and true signatures of each officer of such Loan Party who has been
authorized to execute and deliver this Agreement and any Loan Document or other document
required hereunder to be executed and delivered by or on behalf of such Loan Party; and




(iii) a good standing certificate from the applicable Governmental Authority of (A)
each Loan Party’s jurisdiction of incorporation, organization or formation and (B) each
jurisdiction in which it is qualified as a foreign corporation or other entity to do
business and which, if it were not so qualified in such jurisdiction, could reasonably be
expected to have a Global Material Adverse Effect, each dated a recent date prior to the
Closing Date;




(x) a certificate of the chief financial officer of Group stating that the Borrower is
Solvent and that the Borrower and the Subsidiary Guarantors (taken as a whole), are Solvent,
in each case, after giving effect to the initial Loans and Letters of Credit, the
application of the proceeds thereof in accordance with Section 7.9, the payment of all
estimated legal, accounting and other fees related hereto and thereto and the consummation
of the other transactions contemplated hereby;




(xi) a certificate of a Responsible Officer of Group to the effect that the conditions
set forth in Section 3.1(g) and Section 3.2 have been satisfied;




(xii) evidence satisfactory to the Administrative Agent that the insurance policies
required by Section 7.5 and any Collateral Document are in full force and effect, together
with, unless otherwise agreed by the Administrative Agent, endorsements naming the
Collateral Agent, on behalf of the Secured Parties, as an additional insured or loss payee
under all insurance policies to be maintained with respect to the properties of each Loan
Party;




(xiii) all other Collateral Documents and other Loan Documents and related
certificates, instruments, documents and agreements required, pursuant to any of the
Canadian Security Agreement, the Deed of Hypothec, the Canadian Pledge Agreement, the U.S.
Pledge and Security Agreement or this Agreement, to be delivered on the Closing Date
(including, without limitation, Blocked Account Letters, Restricted Account Letters, Control
Account Agreements, Landlord Waivers and Bailee Letters), duly executed by the parties
thereto; and


 


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(xiv) such other certificates, documents, agreements and information respecting any
Loan Party or the Collateral as the Administrative Agent or any Lender, through the
Administrative Agent, may reasonably request.



(b) Termination of Existing Credit Agreement. Group and its Subsidiaries shall have (i)
repaid in full all Indebtedness and other obligations under or with respect to the Existing Credit
Agreement and any related documents (or in the case of any such Indebtedness that is a guaranty,
terminated such guaranty), (ii) terminated any commitments to lend or make other extensions of
credit thereunder, (iii) delivered to the Administrative Agent a payoff letter with respect to the
Existing Credit Agreement and all documents or instruments necessary to release all Liens securing
the Indebtedness and other obligations of Group and its Subsidiaries under or with respect to the
Existing Credit Agreement or any related documents (such payoff letter, documents and instruments
to be in form and substance satisfactory to the Administrative Agent), and (iv) made arrangements
reasonably satisfactory to the Administrative Agent with respect to the cancellation of any letters
of credit outstanding under the Existing Credit Agreement (other than the Existing Rollover Letters
of Credit, as defined in the U.S. Facility) or the issuance of Letters of Credit (as defined in the
U.S. Facility) to support the obligations of the U.S. Borrower with respect thereto.



(c) Financial Statements. The Lenders shall have received and be satisfied with (i) unaudited
consolidated and consolidating (by business unit) income statement and balance sheet and audited
consolidated financial statements of Group and its Subsidiaries for each fiscal quarter ending on
or after January 1, 2008 for which such financial statements are available in final form (but in
any event the financial statements of Group and its Subsidiaries for each such fiscal quarter
through and including the fiscal quarter ending July 5, 2008) and (ii) Group’s projections which
shall include a financial forecast on a monthly basis for the first twelve months after the Closing
Date and on an quarterly basis thereafter through the year of the Revolving Loan Maturity Date
prepared by Group’s management.



(d) Availability. As of the Closing Date, Available Credit shall be not less than
U.S.$50,000,000 (after giving effect to the Borrowings, issuances of Letters of Credit and
financial accommodations under the U.S. Facility, in each instance, requested or deemed requested
to be made on the Closing Date).



(e) Consents, Etc. Each Warnaco Entity shall have received all material consents and
authorizations required pursuant to any material Contractual Obligation with any other Person and
shall have obtained all Permits of, and effected all notices to and filings with, any Governmental
Authority, in each case, as may be necessary to allow each of the Warnaco Entities lawfully (i) to
execute, deliver and perform, in all material respects, their respective obligations hereunder and
under the other Loan Documents to which each of them, respectively, is, or shall be, a party and
each other agreement or instrument to be executed and delivered by each of them, respectively,
pursuant thereto or in connection therewith and (ii) to create and perfect the Liens on the
Collateral owned by each of them in the manner and for the purpose contemplated by the Loan
Documents or the transactions contemplated thereby (other than certain non-discretionary consents,
authorizations, filings, registrations and other similar actions or approvals which by their nature
may only be made after the Closing Date and which will be made as soon as practical after the
Closing Date).



(f) Fees and Expenses Paid. There shall have been paid all fees and expenses (including
reasonable fees and expenses of counsel) due and payable on or before the Closing Date.


 


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(g) No Global Material Adverse Effect. There shall have been no event, circumstance or change
since December 29, 2007 that has had, either individually or in the aggregate,
a Global Material Adverse Effect. There shall be no actions, suits, investigations, litigation
or proceedings pending or threatened in any court or before any arbitrator or Governmental
Authority and no judgments, orders, injunctions or other restraints that (i) could reasonably be
expected to have a Global Material Adverse Effect or (ii) can reasonably be expected to materially
and adversely affect the Revolving Credit Facility or the transactions contemplated thereby.



(h) Audit and Other Due Diligence. The Administrative Agent shall have conducted a field
examination and ordered an appraisal of each Loan Party’s Inventory and the Administrative Agent
and the Lenders shall have had an opportunity, if they so choose, to examine the books of account
and other records and files of the Loan Parties and to make copies thereof, and to conduct a
pre-closing audit, which shall include, without limitation, verification of Receivables and the
Borrowing Base of the Borrower and each other Canadian Loan Party, and to conduct such other due
diligence with respect to the Loan Parties and the Collateral as the Administrative Agent and the
Lenders require, and the results of such field examination, appraisal, examination, audit and other
due diligence shall have been reasonably satisfactory to the Administrative Agent and the Lenders
in all respects.



(i) U.S. Facility. The U.S. Facility shall have closed pursuant to documentation reasonably
satisfactory to the Administrative Agent and the Borrower and all conditions precedent to the
making of any financial accommodations thereunder (other than the closing of the Revolving Credit
Facility) shall have been satisfied.



Section 3.2 Conditions Precedent to Each Loan and Letter of Credit. The obligation of each Lender
on any date (including the Closing Date) to make any Loan and of each Issuer on any date (including
the Closing Date) to Issue any Letter of Credit is subject to the satisfaction of all of the
following conditions precedent:



(a) Request for Borrowing or Issuance of Letter of Credit. With respect to (i) any Revolving
Loan, the Administrative Agent shall have received a duly executed Notice of Borrowing, (ii) any
Swing Loan, the Administrative Agent shall have received a duly executed Swing Loan Request and
(iii) any Letter of Credit, the Administrative Agent and the Issuer shall have received a duly
executed Letter of Credit Request, in each case, dated on or before such date.



(b) Representations and Warranties; No Defaults. The following statements shall be true on
the date of such Loan or issuance of such Letter of Credit, both before and after giving effect
thereto and, in the case of any Loan, to the application of the proceeds therefrom:




(i) the representations and warranties set forth in Article IV and in the other Loan
Documents shall be true and correct on and as of the Closing Date and shall be true and
correct in all material respects on and as of any such date after the Closing Date with the
same effect as though made on and as of such date, except to the extent such representations
and warranties expressly relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects as of such earlier
date; and




(ii) no Default or Event of Default has occurred and is continuing.



(c) Borrowing Base. The Borrower shall have delivered the Borrowing Base Certificate required
to be delivered by Section 6.12. After giving effect to the Loans or the Letters of Credit
requested to be made or Issued on any such date and the use of proceeds thereof, the Revolving
Credit Outstandings shall not exceed the Maximum Credit at such time.


 


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(d) No Legal Impediments. The making of the Loans or the issuance of such Letter of Credit on
such date does not violate any Requirement of Law on the date of or immediately following such Loan
or issuance of such Letter of Credit and is not enjoined, temporarily, preliminarily or
permanently.



Each submission by the Borrower to the Administrative Agent of a Notice of Borrowing or a Swing
Loan Request and the acceptance by the Borrower of the proceeds of each Loan requested therein, and
each submission by the Borrower to an Issuer of a Letter of Credit Request and the issuance of each
Letter of Credit requested therein, shall be deemed to constitute a representation and warranty by
the Borrower as to the matters specified in Section 3.2(b) on the date of the making of such Loan
or the issuance of such Letter of Credit.



Section 3.3 Determinations of Initial Borrowing Conditions. For purposes of determining compliance
with the conditions specified in Section 3.1, each Lender shall be deemed to have consented to,
approved, accepted or be satisfied with, each document or other matter required thereunder to be
consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the
Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the initial Borrowing, borrowing of Swing Loans or
Issuance or deemed Issuance hereunder specifying its objection thereto and such Lender shall not
have made available to the Administrative Agent such Lender’s Ratable Portion of such Borrowing or
Swing Loans.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




To induce the Lenders, the Issuers, the Administrative Agent and the Collateral Agent to enter
into this Agreement, Group represents and warrants as to each Warnaco Entity, and the Borrower
represents and warrants as to itself and as to each of its Subsidiaries, to the Lenders, the
Issuers, the Administrative Agent and the Collateral Agent that, on and as of the Closing Date,
after giving effect to the making of the Loans and other financial accommodations on the Closing
Date and on and as of each date as required by Section 3.2(b)(i):



Section 4.1 Corporate Existence; Compliance with Law. Each Warnaco Entity (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its organization; (b)
is duly qualified as a foreign entity and in good standing under the laws of each jurisdiction
where such qualification is necessary, except where the failure to be so qualified or in good
standing would not, in the aggregate, have a Global Material Adverse Effect; (c) has all requisite
power and authority and the legal right to own, pledge, mortgage and operate its properties, to
lease the property it operates under lease and to conduct its business as now or currently proposed
to be conducted; (d) is in compliance with its Constituent Documents; (e) is in compliance with all
applicable Requirements of Law, except where the failure to be in compliance would not, in the
aggregate, have a Material Adverse Effect; and (f) has all necessary licenses, permits, consents or
approvals from or by, has made all necessary filings with, and has given all necessary notices to,
each Governmental Authority having jurisdiction, to the extent required for such ownership,
operation and conduct, except for licenses, permits, consents, approvals or filings which can be
obtained or made by the taking of ministerial action to secure the grant or transfer thereof or the
failure to obtain or make would not, in the aggregate, have a Global Material Adverse Effect.


 


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Section 4.2 Corporate Power; Authorization; Enforceable Obligations.



(a) The execution, delivery and performance by each Warnaco Entity of the Loan Documents to
which it is a party and the consummation of the transactions contemplated thereby, including the
obtaining of the Loans and the creation and perfection of the Liens on the Collateral as security
therefor:




(i) are within such Warnaco Entity’s corporate, limited liability company, partnership
or other powers;




(ii) have been or, at the time of delivery thereof pursuant to Article III will have
been, duly authorized by all necessary corporate, limited liability company, unlimited
liability company or partnership, as the case may be, action, including the consent of
shareholders, partners and members where required;




(iii) do not and will not (A) contravene such Warnaco Entity’s or any of its
Subsidiaries’ respective Constituent Documents, (B) violate any other Requirement of Law
applicable to such Warnaco Entity (including Regulations T, U and X of the Federal Reserve
Board), or any order or decree of any Governmental Authority or arbitrator applicable to
such Warnaco Entity, (C) conflict with or result in the breach of, or constitute a default
under, or result in or permit the termination or acceleration of, any Contractual Obligation
of such Warnaco Entity or any of its Subsidiaries, or (D) result in the creation or
imposition of any Lien upon any of the property of such Warnaco Entity or any of its
Subsidiaries, other than those in favor of the Secured Parties pursuant to the Loan
Documents; and




(iv) do not require the consent of, authorization by, approval of, notice to, or filing
or registration with, any Governmental Authority or any other Person, other than those
listed on Schedule 4.2 (Consents) and which have been or will be, prior to the Closing Date,
obtained or made (without the imposition of any conditions that are not reasonably
acceptable to the Agents), copies of which have been or will be delivered to the
Administrative Agent pursuant to Section 3.1, and each of which on the Closing Date will be
in full force and effect and, with respect to the Collateral, filings required to perfect
the Liens created by the Collateral Documents.



(b) This Agreement has been, and each of the other Loan Documents will have been upon delivery
thereof hereunder, duly executed and delivered by each Warnaco Entity party thereto.



(c) This Agreement is, and the other Loan Documents will be, when delivered hereunder, the
legal, valid and binding obligation of each Warnaco Entity party thereto, enforceable against such
Warnaco Entity in accordance with its terms.


 


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(d) For so long as the Senior Note Indenture is in effect or any Senior Notes are outstanding,
each Borrowing, Issuance of a Letter of Credit and financial accommodation made under the U.S.
Facility and each delivery by the Borrower of a Borrowing Base Certificate constitutes a
representation and warranty by each of Group and the Borrower that, as of the date of such
Borrowing, Issuance, financial accommodation or delivery, as the case maybe (both before and after
giving effect to such Borrowing, Issuance or financial accommodation, if applicable), the financial
accommodations provided to the Borrower hereunder, both by themselves and together with the
financial accommodations provided to the U.S. Borrower under the U.S. Facility and the guaranty by
the U.S. Loan Parties under the U.S. Loan Party Canadian Facility Guaranty, do not violate the debt
incurrence
restrictions set forth in the Senior Note Indenture or any other Senior Note Document.
Without limitation of the foregoing, each of Group and the Borrower represents and warrants that
(i) each Borrowing, the Obligations with respect to each Letter of Credit and the guaranty by the
U.S. Loan Parties of the Secured Obligations pursuant to the U.S. Loan Party Canadian Facility
Guaranty is Permitted Debt (as defined in the Senior Note Indenture) and is permitted under Section
4.09 of the Senior Note Indenture, (ii) as of the Closing Date there are in existence no Credit
Facilities (as defined in the Senior Note Indenture) other than this Agreement, the U.S. Facility
and the Italian Debt Facility and (iii) as of the Closing Date each Credit Facility (as defined in
the Senior Note Indenture) other than this Agreement and the U.S. Facility is permitted under
Section 4.09 of the Senior Note Indenture (other than under clause (b) thereof).



Section 4.3 Ownership of Group, Borrower; Subsidiaries.



(a) As of the Closing Date, the authorized capital stock of the Borrower consists of
100,000,000 common shares and 100,000,000 non-cumulative redeemable preferred shares, both without
nominal or par value, of which 101 common shares and 1960 preferred shares are issued and
outstanding. All of the outstanding capital stock of the Borrower has been validly issued, is
fully paid and non-assessable and, as of the Closing Date, is owned beneficially and of record by
Warnaco Netherlands B.V., free and clear of all Liens. No Stock of the Borrower is subject to any
option, warrant, right of conversion or purchase or any similar right. There are no agreements or
understandings to which the Borrower is a party with respect to the voting, sale or transfer of any
shares of Stock of the Borrower or any agreement restricting the transfer or hypothecation of any
such shares.



(b) Set forth on Schedule 4.3 (Ownership of Warnaco Entities) is a complete and accurate list
of all Subsidiaries of Group on the Closing Date, showing (as to each such Subsidiary) the
jurisdiction of its incorporation or organization, the number of shares of each class of its Stock
or Stock Equivalents authorized, and the number outstanding, on the Closing Date and the percentage
of each such class of its Stock or Stock Equivalents owned (directly or indirectly) by such Loan
Party and the number of shares covered by all outstanding options, warrants, rights of conversion
or purchase and similar rights at the Closing Date. All of the outstanding Stock or Stock
Equivalents in each Subsidiary of Group has been validly issued, is fully paid and non-assessable
and is owned by a Warnaco Entity (except as described on Schedule 4.3 (Ownership of Warnaco
Entities)) free and clear of all Liens, except those created under the Loan Documents. No Stock of
any Warnaco Entity is subject to any outstanding option, warrant, right of conversion or purchase
or any similar right. No Warnaco Entity is a party to, or has knowledge of, any agreement
restricting the transfer or hypothecation of any Stock of any such Subsidiary, other than the Loan
Documents. Group does not own or hold, directly or indirectly, any Stock of any Person other than
the Subsidiaries set forth on Schedule 4.3 (Ownership of Warnaco Entities) and the Investments
permitted by Section 8.3.



Section 4.4 Financial Statements.



(a) (x) The consolidated balance sheet of Group and its Subsidiaries as at December 29, 2007,
and the related consolidated statements of income, retained earnings and cash flows of Group and
its Subsidiaries for the fiscal year then ended, certified by Deloitte & Touche LLP, (y) the
unaudited consolidating balance sheets of Group and its Subsidiaries as at December 29, 2007, and
the related consolidated statements of income, retained earnings and cash flows of Group and its
Subsidiaries for the Fiscal Year then ended, and (z) the unaudited consolidated and consolidating
balance sheets of Group and its Subsidiaries as at July 5, 2008, and the related consolidated
statements of income, retained earnings and cash flows of Group and its Subsidiaries for the Fiscal
Quarter then ended and for the period commencing at the end of the previous Fiscal Year and ending
with the end
of such Fiscal Quarter, copies of all of which have been furnished to each Lender, fairly
present, subject, in the case of said interim financial statements under clause (z), to the absence
of footnote disclosure and normal recurring year-end audit adjustments, the consolidated and
consolidating, as the case may be, financial condition of Group and its Subsidiaries as at such
dates and the consolidated and consolidating, as the case may be, results of the operations of
Group and its Subsidiaries for the period ended on such dates, all in conformity with Agreement
Accounting Principles.


 


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(b) Neither Group nor any of its Subsidiaries has any material obligation, contingent
liability or liability for taxes, long-term leases or unusual forward or long-term commitment which
is not reflected in the Financial Statements referred to in clause(a) above, in the notes thereto
or permitted by this Agreement.



(c) The Projections have been prepared by Group in light of the past operations of its
business, and reflect projections for the fiscal periods covered thereby. The Projections are
based upon estimates and assumptions stated therein, all of which Group believes to be reasonable
and fair in light of current conditions and current facts known to Group and, as of the Closing
Date, reflect Group’s good faith and reasonable estimates of the future financial performance of
Group and its Subsidiaries and of the other information projected therein for the periods set forth
therein.



Section 4.5 Global Material Adverse Change. Since December 29, 2007, there has been no Global
Material Adverse Change and there have been no events or developments that in the aggregate have
had a Global Material Adverse Effect.



Section 4.6 Solvency. Both before and after giving effect to (a) the Loans and Letter of Credit
Obligations to be made or extended on the Closing Date or such other date as Loans and Letter of
Credit Obligations requested hereunder are made or extended, (b) the disbursement of the proceeds
of such Loans pursuant to the instructions of the Borrower, and (c) the payment and accrual of all
transaction costs in connection with the foregoing, the Borrower is Solvent and the Borrower and
the Subsidiary Guarantors, taken as a whole, are Solvent.



Section 4.7 Litigation. There are no pending or, to the knowledge of Group or the Borrower,
threatened actions, suits, investigations, litigation or proceedings pending or threatened in any
court or before any arbitrator or Governmental Authority that in the aggregate could reasonably be
expected to have a Global Material Adverse Effect. The performance of any action by any Loan Party
required or contemplated by any of the Loan Documents is not and could not reasonably be expected
to be restrained or enjoined (either temporarily, preliminarily or permanently).



Section 4.8 Taxes.



(a) All federal, provincial and material state, local, municipal and foreign income, franchise
and other tax returns, reports and statements (collectively, the “Tax Returns”) required to be
filed by Group or any of its Tax Affiliates have been filed with the appropriate Governmental
Authorities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax
Returns are true and correct in all material respects, and all taxes, charges and other impositions
reflected therein or which are material and otherwise due and payable have been paid prior to the
date on which any fine, penalty, interest, late charge or loss may be added thereto for non-payment
thereof except where contested in good faith and by appropriate proceedings if adequate reserves
therefor have been established on the books of Group or such Tax Affiliate in conformity with
Agreement Accounting Principles. Proper and accurate amounts have been withheld by Group and each
of its Tax Affiliates from their respective employees for all periods in full and complete
compliance with the tax, social
security and unemployment withholding provisions of applicable Requirements of Law and such
withholdings have been timely paid to the respective Governmental Authorities.


 


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(b) None of Group or any of its Tax Affiliates has (i) executed or filed with the IRS, the
Canada Revenue Agency or any other Governmental Authority any agreement or other document
extending, or having the effect of extending, the period for the filing of any Tax Return or the
assessment or collection of any material taxes or other charges relating thereto; (ii) any
obligation under any tax sharing agreement or arrangement other than that to which the
Administrative Agent has a copy prior to the date hereof; or (iii) been a member of an affiliated,
combined or unitary group other than the group of which Group (or its Tax Affiliate) is the common
parent other than, prior to the acquisition by Group thereof, Warnaco Swimwear, Inc. and its
Subsidiaries and Designer Holdings Limited and its Subsidiaries.



(c) Each Foreign Subsidiary owned directly or indirectly by Group is either a “controlled
foreign corporation”, as defined under Section 957 of the Code, or owned, directly or indirectly,
by one or more “controlled foreign corporations”.



Section 4.9 Full Disclosure. The written information prepared or furnished by or on behalf of any
Warnaco Entity in connection with this Agreement or the consummation of the financing, taken as a
whole, does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained therein or herein not misleading. All facts known to
Group or the Borrower which are material to an understanding of the financial condition, business,
properties or prospects of Group and its Subsidiaries taken as one enterprise have been disclosed
to the Lenders.



Section 4.10 Margin Regulations. No Warnaco Entity is engaged in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U of the
Federal Reserve Board), and no proceeds of any Borrowing will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or carrying any margin
stock in contravention of Regulation T, U or X of the Federal Reserve Board.



Section 4.11 No Burdensome Restrictions; No Defaults.



(a) No Warnaco Entity (i) is a party to any Contractual Obligation the compliance with which
would have a Global Material Adverse Effect or the performance of which by any thereof, either
unconditionally or upon the happening of an event, would result in the creation of a Lien (other
than a Lien permitted under Section 8.2) on the property or assets of any thereof or (ii) is
subject to any charter or corporate or other similar restriction that would have a Global Material
Adverse Effect.



(b) No Warnaco Entity is in default under or with respect to any Contractual Obligation owed
by it and, to the knowledge of Group and the Borrower, no other party is in default under or with
respect to any Contractual Obligation owed to any Warnaco Entity, other than, in either case, those
defaults which in the aggregate would not have a Global Material Adverse Effect. No Canadian Loan
Party is in default under or with respect to any Contractual Obligation owed by it and, to the
knowledge of Group and the Borrower, no other party is in default under or with respect to any
Contractual Obligation owed to any Canadian Loan Party, other than, in either case, those defaults
which in the aggregate would not have a Material Adverse Effect.



(c) No Default or Event of Default has occurred and is continuing.


 


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(d) To the best knowledge of Group and the Borrower, there is no Requirement of Law applicable
to any Warnaco Entity the compliance with which by such Warnaco Entity would have a Global Material
Adverse Effect. To the best knowledge of Group and the Borrower, there is no Requirement of Law
applicable to any Canadian Loan Party the compliance with which by such Canadian Loan Party would
have a Material Adverse Effect.



Section 4.12 Investment Company Act. No Warnaco Entity is an “investment company” or an
“affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as amended.



Section 4.13 Use of Proceeds. The proceeds of the Revolving Loans are being used by the Borrower
solely as follows: (i) to provide working capital from time to time for the Canadian Loan Parties
and (ii) for other general and corporate purposes of the Canadian Loan Parties permitted hereunder.
The Letters of Credit are being used by the Borrower solely for general and corporate purposes of
the Warnaco Entities permitted hereunder.



Section 4.14 Insurance. All policies of insurance of any kind or nature of any Warnaco Entity,
including policies of life, fire, theft, product liability, public liability, property damage,
other casualty, employee fidelity, workers’ compensation and employee health and welfare insurance,
are in full force and effect and are of a nature and provide such coverage as is sufficient and as
is customarily carried by businesses of the size and character of such Person. No Warnaco Entity
has been refused insurance for any material coverage which it had applied or, prior to the date
hereof, had any policy of insurance terminated (other than at its request). Each insurance policy
maintained by each Loan Party includes endorsements naming the Collateral Agent, on behalf of the
Secured Parties, as an additional insured or loss payee thereunder.



Section 4.15 Labor Matters.



(a) There are no strikes, work stoppages, slowdowns or lockouts pending or threatened against
or involving any Warnaco Entity, other than those which in the aggregate would not have a Global
Material Adverse Effect.



(b) There are no unfair labor practices, grievances or complaints pending, or, to Group’s
knowledge, threatened against or involving any Warnaco Entity, nor are there any arbitrations or
grievances threatened involving any Warnaco Entity, other than those which, in the aggregate, if
resolved adversely to such Warnaco Entity, would not have a Global Material Adverse Effect.



(c) Except as set forth on Schedule 4.15 (Labor Matters), as of the Closing Date, there is no
collective bargaining agreement covering any employee of any Warnaco Entity.



(d) Schedule 4.15 (Labor Matters) sets forth, as of the Closing Date, all material consulting
agreements, executive employment agreements, executive compensation plans, deferred compensation
agreements, employee stock purchase and stock option plans and severance plans of any Warnaco
Entity.



Section 4.16 ERISA.



(a) Schedule 4.16 (ERISA Matters) separately identifies as of the date hereof all Title IV
Plans, all Multiemployer Plans and all of the employee benefit plans within the meaning of Section
3(3) of ERISA to which any Warnaco Entity has any obligation or liability, contingent or otherwise.


 


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(b) Each employee benefit plan of each Warnaco Entity which is intended to qualify under
Section 401 of the Code does so qualify, and any trust created thereunder is exempt from tax under
the provisions of Section 501 of the Code, except where such failures in the aggregate would not
have a Global Material Adverse Effect.



(c) Each Title IV Plan is in compliance with applicable provisions of ERISA, the Code and
other Requirements of Law except for non-compliances that in the aggregate would not have a Global
Material Adverse Effect.



(d) There has not been, nor is there reasonably expected to occur, any ERISA Event which would
have a Global Material Adverse Effect.



(e) Other than as set forth on Schedule 4.16 (ERISA Matters), there are no Unfunded Pension
Liabilities.



(f) Other than as set forth on Schedule 4.16 (ERISA Matters), no Warnaco Entity or any ERISA
Affiliate thereof would have any Withdrawal Liability as a result of a complete withdrawal as of
the date hereof from any Multiemployer Plan.




(g) With respect to the Canadian Plans:




(i) Neither the Borrower nor any other Canadian Loan Party has any Canadian Plan other
than those listed on Schedule 4.16 (ERISA Matters).




(ii) No Canadian Plan has been terminated or partially terminated or is insolvent or in
reorganization, nor have any proceedings been instituted to terminate, in whole or in part,
or reorganize any Canadian Plan.




(iii) Neither the Borrower nor any other Canadian Loan Party has ceased to participate
(in whole or in part) as a participating employer in any Canadian Plan which is a pension
plan or has withdrawn from any Canadian Plan which is a pension plan in a complete or
partial withdrawal, nor has a condition occurred which if continued would result in a
complete or partial withdrawal.




(iv) Neither the Borrower nor any other Canadian Loan Party has any unfunded liability
on windup or withdrawal liability, including contingent withdrawal or windup liability, to
any Canadian Plan or any solvency deficiency in respect of any Canadian Plan.




(v) Neither the Borrower nor any other Canadian Loan Party has any unfunded liability
on windup or any liability in respect of any Canadian Plan (including to the FSCO) other
than for required insurance premiums or contributions or remittances which have been paid,
contributed and remitted when due.




(vi) The Borrower and each other Canadian Loan Party has made all contributions to its
Canadian Plans required by law or the terms thereof to be made by it when due, and it is not
in arrears in the payment of any contribution, payment, remittance or assessment or in
default in filing any reports, returns, statements, and similar documents in respect of the
Canadian Plans required to be made or paid by it pursuant to any Canadian Plan, any law,
act, regulation, directive or order or any employment, union, pension, deferred profit
sharing, benefit, bonus or other similar agreement or arrangement.


 


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(vii) Neither the Borrower nor any other Canadian Loan Party is liable or, to the best
of its knowledge, alleged to be liable, to any employee or former employee, director or
former director, officer or former officer or other Person resulting from any violation or
alleged violation of any Canadian Plan, any fiduciary duty, any law or agreement in relation
to any Canadian Plan or has any unfunded pension or like obligations or solvency deficiency
(including any past service or experience deficiency funding liabilities), other than
accrued obligations not yet due, for which it has made full provision in its books and
records.




(viii) All vacation pay, bonuses, salaries and wages, to the extent accruing due, are
properly reflected in the Borrower’s, each other Canadian Loan Parties and their respective
Subsidiaries’ books and records.




(ix) Without limiting the foregoing, all of the Borrower’s and the other Canadian Loan
Parties’ Canadian Plans are duly registered where required by, and are in compliance and
good standing in all material respects under, all applicable laws, acts, statutes,
regulations, orders, directives and agreements, including, without limitation, the Income
Tax Act (Canada), the Supplemental Pensions Act (Quebec) and the Pension Benefits Act
(Ontario), any successor legislation thereto, and other applicable pension laws of any
jurisdiction.




(x) Neither the Borrower nor any other Canadian Loan Party has made any application for
a funding waiver or extension of any amortization period in respect of any Canadian Plan.




(xi) There has been no prohibited transaction or violation of any fiduciary
responsibilities with respect to any Canadian Plan.




(xii) There are no outstanding or pending or threatened investigations, claims, suits
or proceedings in respect of any Canadian Plans (including to assert rights or claims to
benefits) that could give rise to a Material Adverse Effect.



Section 4.17 Environmental Matters.



(a) The operations and properties of each Warnaco Entity comply, except to the extent
non-compliance would not have a Global Material Adverse Effect, with all applicable Environmental
Laws and Environmental Permits, all material past non-compliance with such Environmental Laws and
Environmental Permits has been resolved without ongoing material obligations or costs, and no
circumstances exist that would be reasonably likely to (A) form the basis of an Environmental
Action against any Warnaco Entity or any of their properties that could be reasonably expected to
have a Global Material Adverse Effect or (B) cause any such property to be subject to any material
restrictions on ownership, occupancy, use or transferability under any Environmental Law.



(b) None of the properties currently or formerly owned or operated by any Warnaco Entity is,
to the knowledge of Group or the Borrower with respect to formerly owned or operated properties,
listed or proposed for listing on the NPL or on the CERCLIS or any analogous foreign, state or
local list or is adjacent to any such property, except where such listing would not reasonably be
expected to have a Global Material Adverse Effect; there are no and never have been any underground
or aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps or lagoons in
which Contaminants are being or have been treated, stored or disposed on any property currently
owned or operated by any Warnaco Entity or, to the best of its knowledge, on any property
formerly owned or operated by any Warnaco Entity that in any case could reasonably be expected
to have a Global Material Adverse Effect; there is no asbestos or asbestos-containing material on
any property currently owned or operated by any Warnaco Entity that in any case could reasonably be
expected to have a Global Material Adverse Effect; and Contaminants have not been released,
discharged or disposed of on any property currently or, to the best knowledge of Group and the
Borrower, formerly owned or operated by any Warnaco Entity that in any case could reasonably be
expected to have a Global Material Adverse Effect.


 


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(c) No Warnaco Entity is undertaking, and has not completed, either individually or together
with other potentially responsible parties, any investigation or assessment or remedial or response
action relating to any actual or threatened release, discharge or disposal of Contaminants at any
site, location or operation, either voluntarily or pursuant to the order of any governmental or
regulatory authority or the requirements of any Environmental Law that in any case could reasonably
be expected to have a Global Material Adverse Effect; and all Contaminants generated, used,
treated, handled or stored at, or transported to or from, any property currently or formerly owned
or operated by any Warnaco Entity have been disposed of in a manner not reasonably expected to
result in material liability to any Warnaco Entity.



Section 4.18 Intellectual Property; Material License.



(a) The Warnaco Entities own or license or otherwise have the right to use all Intellectual
Property and other intellectual property rights that are necessary for the operations of their
respective businesses, without, to the best of Group’s knowledge, infringing upon or conflict with
the rights of any other Person with respect thereto, including all trade names associated with any
private label brands of any Warnaco Entity. To Group’s knowledge, no Intellectual Property now
employed by any Warnaco Entity infringes upon or conflicts with any rights owned by any other
Person, and no claims or litigation regarding any of the foregoing are pending or threatened, where
such infringements, conflicts, claims or litigation would have, in the aggregate, a Global Material
Adverse Effect.




(b) Each Material License is in full force and effect as of the Closing Date.



Section 4.19 Title; Real Property.



(a) Each Warnaco Entity has good and marketable title to all Material Owned Real Property and
good title to all personal property purported to be owned by it, including those reflected on the
most recent Financial Statements delivered by Group, and none of such properties and assets is
subject to any Lien, except Liens permitted under Section 8.2. Each Warnaco Entity has received
all deeds, assignments, waivers, consents, non-disturbance and recognition or similar agreements,
bills of sale and other documents, and have duly effected all recordings, filings and other actions
necessary to establish, protect and perfect such Warnaco Entity’s right, title and interest in and
to all such Material Owned Real Property.



(b) Set forth on Schedule 4.19 (Real Property) hereto is a complete and accurate list of all
Material Owned Real Property and all Material Leased Property, showing as of the Closing Date, the
street address, county or other relevant jurisdiction, state or province, and record owner.



(c) As of the Closing Date, no portion of any Material Owned Real Property or any Material
Leased Property has suffered any material damage by fire or other casualty loss which has not
heretofore been completely repaired and restored. No portion of any Real Property owned or
leased by any Warnaco Entity is located in a special flood hazard area as designated by any
federal Governmental Authority (unless flood insurance has been obtained).


 


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(d) All Permits required to have been issued or appropriate to enable all real property owned
or leased by any Warnaco Entity to be lawfully occupied and used for all of the purposes for which
they are currently occupied and used have been lawfully issued and are in full force and effect,
other than those which, in the aggregate, would not have a Global Material Adverse Effect.



(e) No Warnaco Entity has received any notice, or has any knowledge, of any pending,
threatened or contemplated condemnation proceeding affecting any Real Property owned or leased by
any Warnaco Entity or any part thereof, except those which, in the aggregate, would not have a
Global Material Adverse Effect.



Section 4.20 Perfection of Security Interests in the Collateral. The Collateral Documents create
valid Liens on the Collateral purported to be covered thereby, which Liens are perfected Liens and
prior to all other Liens (other than Customary Permitted Liens having priority over such Liens).



ARTICLE V




FINANCIAL COVENANTS




As long as any of the Obligations or the Commitments remain outstanding, unless the Requisite
Lenders otherwise consent in writing, Group and the Borrower agree with the Lenders and the
Facility Agents that:



Section 5.1 Minimum Fixed Charge Coverage Ratio. If a Trigger Event shall occur, Group shall
maintain a Fixed Charge Coverage Ratio, for each Test Period with respect thereto, of at least 1.1
to 1.0.



ARTICLE VI




REPORTING COVENANTS




As long as any of the Obligations or Commitments remain outstanding, unless the Requisite
Lenders otherwise consent in writing, Group and the Borrower agree with the Lenders and the
Facility Agents that:



Section 6.1 Financial Statements. Group shall furnish to the Administrative Agent (with a copy for
each Lender requesting same) the following:



(a) Monthly Reports. As soon as available and in any event within 40 days after the end of
each of the first two months in each Fiscal Quarter, consolidated balance sheets of Group and its
Subsidiaries as of the end of such month and consolidated statements of income and cash flow
statements of Group and its Subsidiaries for the period commencing at the end of the previous month
and ending with the end of such month, setting forth in each case in comparative form the
corresponding figures for the corresponding period of the preceding Fiscal Year and the
corresponding figures for the corresponding period set forth in the Projections and duly certified
(subject to year-end audit adjustments) by a Responsible Officer of Group as having been prepared
in accordance with Agreement Accounting Principles;


 


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(b) Quarterly Reports. As soon as available and in any event within 50 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year, consolidated and consolidating balance
sheets of Group and its Subsidiaries as of the end of such Fiscal Quarter and consolidated and
consolidating statements of income and consolidated statements of cash flows of Group and its
Subsidiaries for the period commencing at the end of the previous Fiscal Year and ending with the
end of such Fiscal Quarter, and also setting forth a variance analysis of monthly results during
such Fiscal Quarter as compared to monthly budgeted amounts specified in the forecast for such
Fiscal Quarter previously delivered pursuant to clause (e) below, duly certified (subject to
year-end audit adjustments) by a Responsible Officer of Group as having been prepared in accordance
with Agreement Accounting Principles and certifying compliance with the terms of this Agreement and
setting forth in reasonable detail the calculations necessary to demonstrate compliance with
Article V (it being understood and agreed that if such certification is delivered with respect to a
Fiscal Quarter for which Section 5.1 is not being tested for a fiscal period ending on the last day
of such Fiscal Quarter due to no Trigger Event having occurred, such certification shall still
provide the calculations for such Section 5.1 as if a Trigger Event had occurred and such Fiscal
Quarter were the last Fiscal Quarter of a Test Period, but the certification shall not then be
required to indicate whether or not Group was in compliance with such Section 5.1 as at the end of
such Fiscal Quarter);



(c) Annual Consolidated Reports. As soon as available and in any event within 95 days after
the end of each Fiscal Year of Group, (i) a copy of the annual audit report for such year for Group
and its Subsidiaries, containing the consolidated balance sheet of Group and its Subsidiaries as of
the end of such Fiscal Year and consolidated statements of income and cash flows of Group and its
Subsidiaries for such Fiscal Year, in each case accompanied by an opinion (without qualification as
to the scope of the audit) of Deloitte & Touche LLP or by other independent public accountants
reasonably acceptable to the Administrative Agent stating that (x) such financial statements fairly
present the consolidated financial position of Group and its Subsidiaries as at the dates indicated
and the results of their operations and cash flows for the periods indicated in conformity with
Agreement Accounting Principles applied on a basis consistent with prior years (except for changes
with which such independent certified public accountants shall concur and which shall have been
disclosed in the notes to the financial statements) and (y) to the extent permitted by accounting
rules and guidelines, the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted auditing standards, and a
certificate of a Responsible Officer of Group as to compliance with the terms of this Agreement and
setting forth in reasonable detail the calculations necessary to demonstrate compliance with
Article V (it being understood and agreed that if such certificate is delivered with respect to a
Fiscal Year for which Section 5.1 is not being tested for a fiscal period ending on the last day of
such Fiscal Year due to no Trigger Event having occurred, such certificate shall still provide the
calculations for such Section 5.1 as if a Trigger Event had occurred and such Fiscal Year were a
Test Period, but the certificate shall not then be required to indicate whether or not Group was in
compliance with such Section 5.1 as at the end of such Fiscal Year) and (ii) financial information
regarding Group and its Subsidiaries consisting of consolidating balance sheets of Group and its
Subsidiaries as of the end of such Fiscal Year and related consolidating statements of income and
consolidated cash flows of Group and its Subsidiaries for such Fiscal Year, all prepared in
conformity with Agreement Accounting Principles and certified by a Responsible Officer of Group as
fairly presenting the financial position of Group and its Subsidiaries as at the end of such Fiscal
Year and the results of their operations and cash flows for such Fiscal Year;


 


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(d) Compliance Certificate. Together with each delivery of any financial statement pursuant
to clauses (b) and (c) of this Section 6.1, a certificate of a Responsible Officer of Group
substantially in the form of Exhibit H hereto (each, a “Compliance Certificate”) (i) showing in
reasonable detail the calculations used in demonstrating compliance with each of the financial
covenants contained in Article V which is tested on a quarterly basis (it being understood and
agreed that if such certificate is delivered with respect to a Fiscal Quarter or Fiscal Year for
which Section 5.1 is not being tested for a fiscal period ending on the last day of such Fiscal
Quarter or Fiscal Year due to no Trigger Event having occurred, such certificate shall still
provide the calculations for such Section 5.1 as if a Trigger Event had occurred and such Fiscal
Quarter were the last Fiscal Quarter of a Test Period or such Fiscal Year were a Test Period, as
the case may be, but the certificate shall not then be required to indicate whether or not Group
was in compliance with such Section 5.1 as at the end of such Fiscal Quarter or Fiscal Year), (ii)
showing in reasonable detail the calculations necessary to determine the Applicable Margin, (iii)
stating that no Default or Event of Default has occurred and is continuing and no Default or Event
of Default (as defined in the U.S. Facility) has occurred and is continuing or, if a Default or an
Event of Default has occurred and is continuing, stating the nature thereof and the action which
Group proposes to take with respect thereto and (iv) stating that the amount of the Available
Credit at any time during the period covered by such certificate did not fall to an amount which
would give rise to an Accelerated Borrowing Base Certificate Delivery Date and that the amount of
the Available Credit at any time during the period covered by such certificate did not fall to an
amount which would give rise to a Trigger Event, or, if the Available Credit fell to any such
amount, the first date on which each such event occurred;



(e) Business Plan. Not later than 45 days after the end of each Fiscal Year (beginning with
the end of Fiscal Year 2008), and containing substantially the types of financial information
contained in the Projections, (i) the annual business plan of Group for the next succeeding Fiscal
Year approved by the Board of Directors of Group with updates thereof provided to the Lenders prior
to each July 31, (ii) schedules of all letters of credit, (iii) forecasts (including availability
forecasts) prepared by management of Group for each fiscal month in each of the succeeding Fiscal
Years through the Fiscal Year in which the Revolving Loan Maturity Date is scheduled to occur, and
(iv) forecasts prepared by management of Group for each of the succeeding Fiscal Years through the
Fiscal Year in which the Revolving Loan Maturity Date is scheduled to occur, including, in each
instance described in clause (ii) and clause (iii) above, (A) a projected year-end consolidated
balance sheet, income statement and statement of cash flows and (B) a statement of all of the
material assumptions on which such forecasts are based and in each case prepared by management of
Group and satisfactory in form to the Administrative Agent;



(f) Intercompany Loan Balances. Together with each delivery of any financial statement
pursuant to clause (b) and clause (c) of this Section 6.1, a summary of the outstanding balance of
all intercompany Indebtedness of any Subsidiary to any Loan Party as of the last day of the Fiscal
Quarter or Fiscal Year covered by such financial statement, certified by a Responsible Officer of
Group; provided that such balances between U.S. Loan Parties or between Canadian Loan Parties shall
only be required to be delivered annually, as early as practicable;



(g) Corporate Chart. Together with each delivery of any Financial Statement pursuant to
clause (c) above, a certificate of a Responsible Officer of Group certifying that the Corporate
Chart attached thereto or the last Corporate Chart delivered pursuant to this clause (g) is true,
correct, complete and current as of the date of such Financial Statement; and



(h) Trigger Event and Accelerated Borrowing Base Certificate Delivery Date. Promptly after
the occurrence of a Trigger Event and/or Accelerated Borrowing Base Certificate Delivery Date, a
written notice of a Responsible Officer of Group stating that a Trigger Event and/or Accelerated
Borrowing Base Certificate Delivery Date has occurred and describing in reasonable detail such
occurrence, including the date of such occurrence.


 


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Section 6.2 Default Notices. As soon as practicable, and in any event within two Business Days
after a Responsible Officer of any Loan Party has actual knowledge of the existence of any Default,
Event of Default or any other event which has had a Material Adverse Effect or of the existence of
any Default or Event of Default under and as defined in the U.S. Facility, Group shall give the
Administrative Agent notice specifying the nature of such Default or Event of Default or other
event, including the anticipated effect thereof, which notice, if given by telephone, shall be
promptly confirmed in writing on the next Business Day.



Section 6.3 Litigation. Promptly after the commencement thereof, Group shall give the
Administrative Agent written notice of the commencement of all actions, suits and proceedings
before any domestic or foreign Governmental Authority or arbitrator, affecting any Warnaco Entity,
which in the reasonable judgment of Group, if adversely determined, would be reasonable likely to
have a Material Adverse Effect.



Section 6.4 Asset Sales. No later than 10 days prior to any Asset Sale anticipated to generate in
excess of U.S.$15,000,000 (or its U.S. Dollar Equivalent) in net cash proceeds to the U.S. Loan
Parties (or in excess of the U.S. Dollar Equivalent of U.S.$5,000,000 in net cash proceeds to the
Canadian Loan Parties), Group shall send the Administrative Agent a notice (a) describing such
Asset Sale or the nature and material terms and conditions of such transaction and (b) stating the
estimated net cash proceeds anticipated to be received by Group or any of its Subsidiaries.



Section 6.5 Notices under Senior Note Documents. Promptly after the sending or filing thereof,
Group shall send the Administrative Agent copies of all material notices, certificates or reports
delivered pursuant to, or in connection with, any Senior Note Document.



Section 6.6 Securities Exchange Filings; Press Releases. Promptly after the sending or filing
thereof, Group shall send the Administrative Agent copies of (a) all reports which any Warnaco
Entity sends to its security holders generally, (b) all reports and registration statements which
any Warnaco Entity files with the U.S. Securities and Exchange Commission or any United States or
Canadian securities exchange, (c) all press releases, (d) all other statements concerning material
changes or developments in the business of any Warnaco Entity made available by any Warnaco Entity
to the public and (e) all notices of investigation or proceedings received from the U.S. Securities
and Exchange Commission or any United States or Canadian securities exchange.



Section 6.7 Labor Relations. Promptly after becoming aware of the same, Group shall give the
Administrative Agent written notice of (a) any material labor dispute to which any Warnaco Entity
is or may become a party, including any strikes, lockouts or other disputes relating to any of such
Person’s plants and other facilities, and (b) any Worker Adjustment and Retraining Notification Act
or related liability or any liability under applicable Canadian law incurred with respect to the
closing of any plant or other facility of any such Person.



Section 6.8 Tax Returns. Upon the request of the Administrative Agent or any Lender, through the
Administrative Agent, Group will provide copies of all U.S. and Canadian federal, state,
provincial, territorial, municipal and local tax returns and reports filed by any Warnaco Entity in
respect of taxes measured by income or revenue (excluding, other than in the case of the Canadian
Loan Parties, sales, use, goods and services and like taxes).


 


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Section 6.9 Insurance. As soon as is practicable and in any event within 90 days after the end of
each Fiscal Year, Group will furnish the Administrative Agent (in sufficient copies for each of the
Lenders and the Collateral Agent) with (a) a report in form and substance satisfactory to the
Administrative Agent and the Lenders outlining all material insurance coverage maintained as of
the date of such report by the Warnaco Entities and the duration of such coverage and (b) an
insurance broker’s statement that all premiums then due and payable with respect to such coverage
have been paid and that all such insurance names the Collateral Agent on behalf of the Secured
Parties as additional insured or loss payee, as appropriate, and provides that no cancellation,
material addition in amount or material change in coverage shall be effective until after 30 days’
written notice thereof to the Facility Agents.



Section 6.10 ERISA Matters. Group shall furnish the Administrative Agent (with a copy for each
Lender requesting same):



(a) promptly and in any event within 30 days after any Warnaco Entity or any ERISA Affiliate
knows or has reason to know that any ERISA Event or similar event in respect of any Canadian Plan
has occurred, written notice describing such event;



(b) promptly and in any event within 10 days after any Warnaco Entity or any ERISA Affiliate
knows or has reason to know that a request for a minimum funding waiver under Section 412 of the
Code has been filed with respect to any Title IV Plan or Multiemployer Plan or any similar event in
respect of any Canadian Plan, a written statement of a Responsible Officer of Group describing such
ERISA Event or waiver request and the action, if any, which such Warnaco Entity and the ERISA
Affiliates propose to take with respect thereto and a copy of any notice filed with the PBGC or the
IRS pertaining thereto; and



(c) simultaneously with the date that any Warnaco Entity or any ERISA Affiliate files a notice
of intent to terminate any Title IV Plan, if such termination would require material additional
contributions in order to be considered a standard termination within the meaning of Section
4041(b) of ERISA, or any similar notice in respect of any similar circumstance in respect of any
Canadian Plan, a copy of each notice.



Section 6.11 Environmental Matters. Group shall provide promptly after the assertion or occurrence
thereof, notice of any Environmental Action against or of any noncompliance by any Warnaco Entity
with any Environmental Law or Environmental Permit that would reasonably be expected to (i) have a
Global Material Adverse Effect or (ii) cause any Material Real Property or Material Leased Property
to be subject to any material restrictions on ownership, occupancy, use or transferability under
any Environmental Law.



Section 6.12 Borrowing Base Determination. Until the Revolving Credit Termination Date:



(a) The Borrower shall deliver to the Administrative Agent as soon as available, but in any
event within 15 days after the end of each calendar month, as of the end of such calendar month,
and at such other times as may be reasonably requested by the Administrative Agent (but not more
than one per week), a Borrowing Base Certificate executed by a Responsible Officer of Group;
provided, that during each Accelerated Borrowing Base Certificate Delivery Period or during the
existence of an Event of Default, the Borrower shall deliver to the Administrative Agent a
Borrowing Base Certificate not less than once each week, as of the Business Day immediately prior
to the day of delivery and executed by a Responsible Officer of Group. Concurrently with the
delivery of any Borrowing Base Certificate to the Administrative Agent, the Borrower shall deliver,
or cause to be delivered, to the Administrative Agent a certification in reasonable detail setting
forth the Available Credit as of the date of such Borrowing Base Certificate.


 


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(b) Group and the Borrower agree (i) that the Administrative Agent, on behalf of the Lenders,
may appoint an independent or an internal third party appraiser to conduct and conclude two field
audits in each calendar year (and additional field audits (not to exceed, in the case of clause (B)
below, two additional field audits in such calendar year) if (A) an Event of Default has occurred
and is continuing at the time of the appointment of the appraiser or (B) Available Credit has been
less than 15% of the aggregate of the Revolving Credit Commitments and Revolving Credit Commitments
(as defined in the U.S. Facility) for 5 or more consecutive Business Days at the time of the
appointment of the appraiser) with respect to Inventory owned by any Canadian Loan Party and (ii)
Group shall conduct, or shall cause to be conducted, and upon request of the Administrative Agent,
and present to the Administrative Agent for approval, such appraisals and reviews as the
Administrative Agent shall reasonably request, all upon notice and at such times during normal
business hours and as often as may be reasonably requested, in each case at the expense of Group
and for the purpose of determining the Borrowing Base. Group and the Borrower shall furnish to the
Administrative Agent any information which the Administrative Agent may reasonably request
regarding the determination and calculation of the Borrowing Base including correct and complete
copies of any invoices, underlying agreements, instruments or other documents and the identity of
all Account Debtors in respect of Accounts referred to therein. Group and the Borrower further
agree to use their reasonable best efforts to assist each appraiser appointed by the Administrative
Agent to conduct and conclude such field audits.



(c) The Administrative Agent may, at the sole cost and expense of Group and the Borrower, make
test verifications of the Accounts in any manner and through any medium that the Administrative
Agent considers advisable, and Group and the Borrower shall furnish all such assistance and
information as the Administrative Agent may reasonably require in connection therewith.



(d) Each of Group and the Borrower shall, and shall cause each of its respective Subsidiaries
to, use its reasonable best efforts to assist an independent third party appraiser appointed by the
Administrative Agent to conduct and conclude (i) field audits with respect to Inventory owned by
any Canadian Loan Party not more frequently than two times in any calendar year (and such
additional times in any calendar year (not to exceed, in the case of clause (B) below, two
additional field audits in such calendar year) if (A) an Event of Default has occurred and is
continuing at the time of the appointment of the appraiser or (B) Available Credit has been less
than 15% of the aggregate of the Revolving Credit Commitments and Revolving Credit Commitments (as
defined in the U.S. Facility) for 5 or more consecutive Business Days at the time of the
appointment of the appraiser) and (ii) Appraisals, as reasonably requested by the Administrative
Agent (which, in the case of Inventory and Receivables, shall be conducted not less frequently than
twice during each calendar year and may in any event be conducted if an Event of Default has
occurred and is continuing at the time of the appointment of the appraiser or if Available Credit
is less than 15% of the aggregate of the Revolving Credit Commitments and Revolving Credit
Commitments (as defined in the U.S. Facility) in effect at the time of the appointment of the
appraiser), in each case at the sole expense of the Group and the Borrower.



(e) Not less than once each month, the Borrower shall deliver to the Administrative Agent a
certificate, as of the day immediately prior to the day of delivery and executed by a Responsible
Officer of Group, that sets forth the aggregate amount of Cash Management Obligations owing to the
Agents or Lenders or any Affiliates of any Agent or Lender (or such other Persons as the
Administrative Agent may reasonably consent to) that constitute Secured Obligations as of such
date;


 


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(f) In connection with the consummation of a Permitted Acquisition, no Eligible Receivables or
Eligible Inventory of any Proposed Acquisition Target acquired in connection with such Permitted
Acquisition may be included in the Borrowing Base to the extent provided for in this Agreement
unless and until the Administrative Agent shall have received the results of the appraisals, field
audits, test verifications and other evaluations of such Collateral as it may reasonably request of
the type specified in clauses (b), (c) and (d) above, at the sole cost and expense of Group and the
Borrower.



Section 6.13 Material Licenses. Promptly after any Loan Party becoming aware of the same, the
Borrower shall give the Administrative Agent written notice of any cancellation, termination or
loss of any Material License.



Section 6.14 Communications and Amendments with respect to U.S. Facility. Group and the Borrower
shall cause the U.S. Borrower to provide the Administrative Agent with copies of (i) all
certificates (including, without limitation, borrowing base certificates), statements, notices and
other communications provided by it or any of its Affiliates under or with respect to the U.S.
Facility concurrently with the sending thereof to any other Person party to the U.S. Facility and
(ii) all amendments, waivers and consents to or with respect to the U.S. Facility or any related
documents promptly upon the U.S. Borrower’s receipt thereof.



Section 6.15 Other Information. Group and the Borrower shall provide the Administrative Agent or
any Lender with such other information respecting the business, properties, condition, financial or
otherwise, or operations of any Warnaco Entity as the Administrative Agent or any Lender, through
the Administrative Agent, may from time to time reasonably request.



ARTICLE VII




AFFIRMATIVE COVENANTS




As long as any of the Obligations or Commitments remain outstanding, unless the Requisite
Lenders otherwise consent in writing, each of Group and the Borrower agree with the Lenders and the
Facility Agents that:



Section 7.1 Preservation of Corporate Existence, Etc. Each of Group and the Borrower shall, and
shall cause each of its respective Subsidiaries to, preserve and maintain its legal existence,
rights (charter and statutory) and franchises, except as permitted by Section 8.3, Section 8.4 and
Section 8.7; provided, however, no Warnaco Entity shall be required to preserve any right, permit,
license, approval, privilege or franchise if the Board of Directors (or equivalent governing body)
of such Warnaco Entity shall determine that the preservation thereof is no longer desirable in the
conduct of the business of such Warnaco Entity and that the loss thereof is not disadvantageous in
any material respect to the Warnaco Entities (taken as whole) or the Secured Parties.



Section 7.2 Compliance with Laws, Etc. Each of Group and the Borrower shall, and shall cause each
of its respective Subsidiaries to, comply with all applicable Requirements of Law, Contractual
Obligations and Permits, except where the failure so to comply would not, in the aggregate, have a
Global Material Adverse Effect. The Borrower shall, and shall cause each of its Subsidiaries and
each other Canadian Loan Party to, comply with all applicable Requirements of Law, Contractual
Obligations and Permits, except where the failure so to comply would not, in the aggregate, have a
Material Adverse Effect.


 


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Section 7.3 Conduct of Business. Each of Group and the Borrower shall, and shall cause each of its
respective Subsidiaries to, (a) conduct its business in the ordinary course and (b) use its
reasonable efforts, in the ordinary course and consistent with past practice, to preserve its
business and the goodwill and business of the customers, advertisers, suppliers and others having
business relations with any Warnaco Entity, except in each case where the failure to comply with
the covenants in each of clauses (a) and (b) above would not, in the aggregate, have a Global
Material Adverse Effect. The Borrower shall, and shall cause each of its Subsidiaries and each
other Canadian Loan Party to, (a) conduct its business in the ordinary course and (b) use its
reasonable efforts, in the ordinary course and consistent with past practice, to preserve its
business and the goodwill and business of the customers, advertisers, suppliers and others having
business relations with the Borrower, any of its Subsidiaries or any other Canadian Loan Party,
except in each case where the failure to comply with the covenants in each of clauses (a) and (b)
above would not, in the aggregate, have a Material Adverse Effect.



Section 7.4 Payment of Taxes, Etc. Each of Group and the Borrower shall, and shall cause each of
its respective Subsidiaries to, pay, remit and discharge before the same shall become delinquent,
all lawful governmental claims, U.S. and Canadian federal, provincial (in the case of provincial,
if the amount thereof exceeds $5,000) and material state, municipal, local and non-U.S. and
Canadian taxes, assessments, charges and levies, except where contested in good faith, by proper
proceedings and adequate reserves therefor have been established on the books of the appropriate
Warnaco Entity in conformity with Agreement Accounting Principles, unless and until any Liens
resulting from such contested items attach to its property and become enforceable against its other
creditors.



Section 7.5 Maintenance of Insurance. Each of Group and the Borrower shall (i) maintain, and cause
to be maintained for each of its respective Subsidiaries, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such risks as is usually carried
by companies engaged in similar businesses and owning similar properties in the same general areas
in which such Warnaco Entity operates, and such other insurance as may be reasonably requested by
the Requisite Lenders, and, in any event, all insurance required by any Loan Document, and (ii)
cause all such insurance to name the Collateral Agent on behalf of the Secured Parties as
additional insured or loss payee, as appropriate, and to provide that no cancellation, material
addition in amount or material change in coverage shall be effective until after 30 days’ written
notice thereof to the Facility Agents.



Section 7.6 Access. Each of Group and the Borrower shall, and shall cause each of its respective
Subsidiaries to, from time to time permit each Facility Agent and the Lenders, or any agents or
representatives thereof, within two Business Days after written notification of the same to the
Borrower (except that during the continuance of an Event of Default, no such notice shall be
required) to (a) examine and make copies of and abstracts from the records and books of account of
any Warnaco Entity, (b) visit the properties of any Warnaco Entity, (c) discuss the affairs,
finances and accounts of any Warnaco Entity with any of their respective officers or directors, and
(d) communicate directly with any Warnaco Entity’s independent certified public accountants (or its
equivalent in foreign jurisdictions) (with Group having the right to have a representative present
at all such communications). Each of Group and the Borrower shall, and shall cause each of its
respective Subsidiaries to, authorize its independent certified public accountants (or its
equivalent in foreign jurisdictions) to disclose to any Facility Agent or any Lender any and all
financial statements and other information of any kind, as such Facility Agent or Lender reasonably
requests from any Warnaco Entity and which such accountants may have with respect to the business,
financial condition, results of operations or other affairs of such Warnaco Entity or any of its
Subsidiaries.


 


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Section 7.7 Keeping of Books. Each of Group and the Borrower shall, and shall cause each of its
respective Subsidiaries to, keep proper books of record and account, in which full and correct
entries shall be made in conformity with Agreement Accounting Principles of all financial
transactions and the assets and business of such Warnaco Entity.



Section 7.8 Maintenance of Properties, Etc. Each of Group and the Borrower shall, and shall cause
each of its respective Subsidiaries to, maintain and preserve (a) all of its properties which are
necessary in the conduct of its business in good working order and condition, (b) all rights,
permits, licenses, approvals and privileges (including all Permits) which are used or useful or
necessary in the conduct of its business, and (c) all Intellectual Property with respect to the
business of the Warnaco Entities; except where the failure to so maintain and preserve would not in
the aggregate have a Global Material Adverse Effect.



Section 7.9 Application of Proceeds. The Borrower shall use the proceeds of the Loans as provided
in Section 4.13.



Section 7.10 Environmental.



(a) Each of Group and Borrower shall comply, and shall cause each of its respective
Subsidiaries and all lessees and other Persons operating or occupying its properties to comply, in
all material respects, with all applicable Environmental Laws and Environmental Permits; obtain and
renew and cause each of its Subsidiaries to obtain and renew all material Environmental Permits
necessary for its operations and properties; and conduct, and cause each of its Subsidiaries to
conduct, any investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Contaminants from any of its
properties, in accordance with and to the extent required by all applicable Environmental Laws, to
the extent the failure to do any of the foregoing would have a Global Material Adverse Effect;
provided, however, that no Warnaco Entity shall be required to undertake any such cleanup, removal,
remedial or other action to the extent that its obligation to do so is being contested in good
faith and by proper proceedings and appropriate reserves are being maintained with respect to such
circumstances.



(b) At the request of the Administrative Agent after receipt of a notice of the type specified
in Section 6.11, Group will provide to the Administrative Agent and each Lender within 60 days
after such request, at the expense of Group and the Borrower, an environmental assessment report
for the applicable property described in such notice, prepared by an environmental consulting firm
reasonably acceptable to the Administrative Agent, indicating the presence of Contaminants that
could reasonably be expected to give rise to a material liability and the estimated cost of any
compliance, removal or remedial action in connection with any Contaminants that could reasonably be
expected to give rise to a material liability on such properties; without limiting the generality
of the foregoing, if the Administrative Agent determines at any time that a material risk exists
that any such report will not be provided within the time referred to above, the Administrative
Agent may retain an environmental consulting firm to prepare such report at the expense of Group
and the Borrower, and Group and the Borrower each hereby grants and agrees to cause any other
Warnaco Entity that owns any property described in such request to grant at the time of such
request to the Administrative Agent, such firm and any agents or representatives thereof an
irrevocable non-exclusive license, subject to the rights of tenants, to enter onto their respective
properties to undertake such an assessment, and to, or to cause its respective Subsidiaries to,
cooperate in all reasonable respects with the preparation of such assessment.


 


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Section 7.11 Additional Personal Property Collateral and Guaranties. To the extent not delivered
to the applicable Facility Agents on or before the Closing Date (including in
respect of after-acquired property and Persons that become Subsidiaries of any Loan Party after the
Closing Date), each of Group and the Borrower agrees promptly to do, or cause each of its
respective Subsidiaries to do, each of the following, unless otherwise agreed by the Administrative
Agent:



(a) deliver to the Facility Agents such duly-executed supplements and amendments to the
Guaranty (in the case of a Canadian Subsidiary) or the U.S. Loan Party Canadian Facility Guaranty
(in the case of a Domestic Subsidiary), in each case in form and substance reasonably satisfactory
to the Administrative Agent and as the Administrative Agent deems necessary or advisable, in order
to ensure that each Domestic Subsidiary of Group and each Canadian Subsidiary of Group (other than
the Borrower) guaranties, as primary obligor and not as surety, the full and punctual payment when
due of the Obligations; provided, however that a U.S. Loan Party acquired or formed after the
Closing Date shall not be required to guarantee the obligations of the Borrower under the U.S. Loan
Party Canadian Facility Guaranty if such U.S. Loan Party is not required to guarantee the
obligations of the U.S. Borrower under the Guaranty (as defined in the U.S. Facility);



(b) deliver to the Facility Agents such duly-executed joinder and amendments to the Canadian
Security Agreement, the Deed of Hypothec, the Canadian Pledge Agreement and the U.S. Pledge and
Security Agreement and, if applicable, other Collateral Documents, in each case in form and
substance reasonably satisfactory to the Administrative Agent and as the Administrative Agent deems
necessary or advisable, in order to effectively grant to the Collateral Agent, for the benefit of
the Secured Parties, a valid, perfected and enforceable security interest having the priority
described in Section 4.20 of this Agreement and the Collateral Documents in all personal property
interests and other assets (including the Stock and Stock Equivalents and other debt Securities,
but, in the case of Real Property, limited to Material Owned Real Property) of each Loan Party;
provided, however, that in no event shall any U.S. Loan Party be required to pledge in excess of
65% of the outstanding Voting Stock of any Foreign Subsidiary that is a direct Subsidiary of such
U.S. Loan Party, unless (x) the U.S. Borrower and the Administrative Agent otherwise agree; (y)
such Voting Stock has been granted as security in respect of other Indebtedness of a Warnaco Entity
having substantially similar tax consequences to the U.S. Loan Parties under Section 956 of the
Code or (z) such pledge or grant can be made without resulting in any material adverse tax
consequences for the Warnaco Entities, taken as a whole (including any Person that becomes a Loan
Party as a result of such pledge or grant);



(c) to take such other actions necessary or advisable to ensure the validity or continuing
validity of the guaranties required to be given pursuant to clause (a) above or to create, maintain
or perfect the security interest required to be granted pursuant to clause (b) above, including the
filing of UCC, PPSA or equivalent financing statements in such jurisdictions as may be required by
the Collateral Documents or by law or as may be reasonably requested by the Administrative Agent;
and



(d) if requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Administrative Agent.



 


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Section 7.12 Canadian Plans. Each of Group and the Borrower shall cause each of the Canadian Plans
to be duly qualified and administered in all material respects in compliance with, as applicable,
the Supplemental Pensions Act (Québec) and the Pension Benefits Act (Ontario) and all other
applicable laws (including regulations, orders and directives), and the terms of the Canadian Plans
and any agreements relating thereto. Each of Group and the Borrower shall ensure that:



(a) the Canadian Loan Parties have no unfunded, solvency, or deficiency on windup liability
and no accumulated funding deficiency (whether or not waived), or any amount of unfunded benefit
liabilities in respect of any Canadian Plan, including any Canadian Plan to be established and
administered by it or them;



(b) all amounts required to be paid by it or them with respect to any Canadian Plan are paid
when due;



(c) no liability upon the Borrower or any other Canadian Loan Party or Lien on any of its or
their property arises or exists in respect of any Canadian Plan;



(d) the Borrower and the other Canadian Loan Parties make all required contributions to any
Canadian Plan when due;



(e) the Borrower and the other Canadian Loan Parties not engage in a prohibited transaction or
violation of the fiduciary responsibility rules with respect to any Canadian Plan that could
reasonably be expected to result in liability; and



(f) the Borrower and the other Canadian Loan Parties have no Lien on any of its or their
property that arises or exists in respect of any Canadian Plan.



Section 7.13 Real Property.



(a) Each of Group and the Borrower shall, and shall cause each of its respective Subsidiaries
to, (i) provide the Administrative Agent with a copy of each notice of default under any Lease
with respect to any Material Leased Property received by any Warnaco Entity immediately upon
receipt thereof and deliver to the Administrative Agent a copy of each notice of default sent by
any Warnaco Entity under any Lease with respect to any Material Leased Property simultaneously with
its delivery of such notice under such Lease and (ii) notify the Administrative Agent at least 14
days prior to the date any Warnaco Entity takes possession of, or becomes liable under, any new
Lease with respect to any Material Leased Property, whichever is earlier.



(b) At least 15 Business Days prior to acquiring any Material Owned Real Property, each of
Group and the Borrower shall, and shall cause each of its respective Subsidiaries to, provide the
Administrative Agent written notice thereof and, upon written request of the Administrative Agent,
each of Group and the Borrower shall, and shall cause each of its respective Subsidiaries to,
provide Phase I environmental reports on such Material Owned Real Property showing no condition
that could give rise to material Environmental Liabilities and Costs.



(c) To the extent not previously delivered to the Collateral Agent or the Administrative
Agent, upon written request of the Administrative Agent, each of Group and the Borrower shall, and
shall cause each other Loan Party to, execute and deliver to the Collateral Agent and the
Administrative Agent, promptly and in any event not later than 45 days after receipt of such
request (or such later date agreed to by the Administrative Agent in its sole discretion), a
Mortgage in favor of the Collateral Agent, for the benefit of the Secured Parties, on the Material
Owned Real Property of such Loan Party, together with (i) if requested by the Administrative Agent
and such Material Owned Real Property is located in the United States, all Mortgage Supporting
Documents relating thereto or (ii) otherwise, documents similar to Mortgage Supporting Documents
deemed by the Administrative Agent to be appropriate in the applicable jurisdiction to obtain the
equivalent in such jurisdiction of a first-priority mortgage on such Material Owned Real Property;
provided, however, that in no event shall any Warnaco Entity that is not a Loan Party be required
to enter into a
Mortgage in respect of Material Owned Real Property, unless (x) the U.S. Borrower and the
Administrative Agent otherwise agree, (y) such Mortgage has been provided as security in respect
of other Indebtedness of a Warnaco Entity having substantially similar tax consequences under
Section 956 of the Code or (z) such pledge or grant can be made without resulting in any material
adverse tax consequences for the Warnaco Entities, taken as a whole (including any Person that
becomes a Loan Party as a result of providing such Mortgage).


 


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Section 7.14 Senior Notes. Group shall cause the U.S. Borrower, on or before the date 45 days
prior to the scheduled maturity of the Senior Notes, to repurchase (in accordance with Section
8.6(b)) or refinance (in accordance with Section 8.1(f)) all of the Senior Notes or cause the Legal
Defeasance (as defined in the Senior Note Indenture) of all of the Senior Notes (in accordance with
Article 8 of the Senior Note Indenture, including satisfaction of the conditions therefor under
Section 8.04 thereof).



Section 7.15 Post Closing Matters. Each of Group and the Borrower shall, and shall cause each of
their respective Subsidiaries to, satisfy the requirements set forth on Schedule 7.15 on or before
the date set forth opposite such requirement or such later date as consented to by the
Administrative Agent.



ARTICLE VIII




NEGATIVE COVENANTS




As long as any of the Obligations or Commitments remain outstanding, without the written
consent of the Requisite Lenders, each of Group and the Borrower agrees with the Lenders and the
Facility Agents that:



Section 8.1 Indebtedness. Each of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, directly or indirectly create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to any Indebtedness, except:



(a) the Secured Obligations (other than in respect of Hedging Contracts) and the U.S. Secured
Obligations (other than in respect of Hedging Contracts);



(b) the Senior Notes in an aggregate outstanding principal amount not to exceed
U.S.$160,890,000;



(c) Indebtedness existing on the Closing Date and disclosed on Schedule 8.1 (Existing
Indebtedness);



(d) (i) Guaranty Obligations incurred by a U.S. Loan Party in respect of Indebtedness of
another U.S. Loan Party otherwise permitted by this Section 8.1, (ii) Guaranty Obligations incurred
by any Foreign Subsidiary (other than a Canadian Loan Party) in respect of the Indebtedness of a
Foreign Subsidiary otherwise permitted by this Section 8.1, (iii) unsecured Guaranty Obligations
incurred by a U.S. Loan Party in respect of the Indebtedness of a Foreign Subsidiary permitted by
clause (g) of this Section 8.1 and (iv) unsecured Guaranty Obligations incurred by a Canadian Loan
Party in respect of Indebtedness of another Canadian Loan Party otherwise permitted by this Section
8.1;


 


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(e) Capital Lease Obligations and purchase money Indebtedness incurred by a Warnaco Entity to
finance the acquisition or construction of fixed assets in an aggregate outstanding principal
amount not to exceed the U.S. Dollar Equivalent of U.S.$40,000,000 at any time;



(f) Renewals, extensions, refinancings and refundings of Indebtedness permitted by clauses
(b), (c) and (e) of this Section 8.1; provided, however, that (A) any such renewal, extension,
refinancing or refunding is in an aggregate principal amount not greater than the principal amount
of, and is on terms not materially less favorable to the Warnaco Entity obligated thereunder
(subject to market rates), including as to weighted average maturity and final maturity, than, the
Indebtedness being renewed, extended, refinanced or refunded and (B) additionally with respect to
any renewal, extension, refinancing or refunding of the Senior Notes, such renewal, extension,
refinancing or refunding (i) is unsecured and not guaranteed by any Warnaco Entity that is not
guaranteeing the Obligations, and (ii) has no payments of principal scheduled to be due and payable
prior to three years after the Revolving Loan Maturity Date;



(g) Indebtedness of the Foreign Subsidiaries of Group (other than the Canadian Loan Parties)
not otherwise permitted under this Section 8.1; provided, however, that the U.S. Dollar Equivalent
of the aggregate outstanding principal amount of all such Indebtedness shall not exceed
U.S.$100,000,000 at any time (with such dollar limitation not to be applicable with respect to the
incurrence of such Indebtedness if (x) at the time of incurrence of such Indebtedness the Leverage
Ratio for Group is less than 3.5 to 1.0 for the most recent four Fiscal Quarter period for which
Financial Statements have been delivered pursuant to Section 6.1 on a pro forma basis after giving
effect to such incurrence and the application of the proceeds thereof and (y) prior to the
incurrence of such Indebtedness, Group has delivered to the Administrative Agent a certificate
executed by a Responsible Officer of Group certifying the satisfaction of the requirements under
this parenthetical with respect to such incurrence and setting forth in reasonable detail the
calculation of such Leverage Ratio);



(h) a Sale and Leaseback Transaction permitted pursuant to Section 8.16, to the extent such
transaction would constitute Indebtedness;



(i) Indebtedness arising from intercompany loans from any Warnaco Entity to any other Warnaco
Entity, provided, that such Investment is permitted to be made by such Warnaco Entity under Section
8.3(a);



(j) Indebtedness incurred for the sole purpose of financing the payment of insurance premiums
in the ordinary course of business, in an aggregate amount not to exceed the U.S. Dollar Equivalent
of U.S.$15,000,000 at any one time outstanding;



(k) Indebtedness arising under any performance or surety bond entered into in the ordinary
course of business;




(l) Obligations under Hedging Contracts permitted under Section 8.17;




(m) unsecured Earnout Obligations and Subordinated Indebtedness; and



(n) other Indebtedness the aggregate U.S. Dollar Equivalent of the principal amount of which
shall not exceed U.S.$50,000,000 (U.S.$20,000,000 in the aggregate for the Canadian Loan Parties)
at any time (of which not greater than the aggregate U.S. Dollar Equivalent of U.S.$20,000,000
(U.S.$10,000,000 in the aggregate for the Canadian Loan Parties) may be secured by Liens permitted
by Section 8.2 at any time).


 


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Section 8.2 Liens, Etc. Each of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, create or suffer to exist, any Lien upon or with respect to any of its
properties or assets, whether now owned or hereafter acquired, or assign any right to receive
income, except for:



(a) Liens created pursuant to the Loan Documents and the U.S. Facility;



(b) Liens granted by a Foreign Subsidiary of Group (other than a Canadian Loan Party) securing
the Indebtedness permitted under Section 8.1(g);



(c) Liens existing on the Closing Date and disclosed on Schedule 8.2 (Existing Liens);



(d) Customary Permitted Liens;



(e) purchase money Liens granted by a Warnaco Entity (including the interest of a lessor under
a Capital Lease and purchase money Liens to which any property is subject at the time of such
Warnaco Entity’s acquisition thereof or promptly thereafter) securing Indebtedness permitted under
Section 8.1(e) and limited in each case to the property purchased with the proceeds of such
purchase money Indebtedness or subject to such Capital Lease;



(f) any Lien securing the renewal, extension, refinancing or refunding of any Indebtedness
secured by any Lien permitted by clause (c) or (e) of this Section 8.2 as long as such Lien does
not cover any assets not subject to the Lien securing the Indebtedness being renewed, extended,
refinanced or refunded;



(g) Liens in favor of lessors securing operating leases or, to the extent such transactions
create a Lien thereunder, sale and leaseback transactions, in each case to the extent such
operating leases or sale and leaseback transactions are permitted hereunder;



(h) Liens not otherwise permitted under this Section 8.2, other than in favor of the PBGC,
arising out of judgments or awards in respect of which the applicable Warnaco Entity shall in good
faith be prosecuting an appeal or proceedings for review and in respect of which it shall have
secured a subsisting stay of execution pending such appeal or proceedings for review; provided it
shall have set aside on its books adequate reserves, in accordance with Agreement Accounting
Principles, with respect to such judgment or award and; provided, further, that any such judgment
shall not give rise to an Event of Default;



(i) Liens on any bills of lading, airway bills, receipts and other applicable documents of
title (and inventory and goods covered thereby) delivered with respect to letters of credit issued
for the benefit of suppliers of inventory pursuant to facilities provided to a Foreign Subsidiary
(other than a Canadian Loan Party) and in respect of which all inventory and goods are located
outside the United States;



(j) Liens securing Indebtedness incurred under Section 8.1(j); provided that such Liens shall
only encumber Insurance Assets that relate directly to the Indebtedness such assets secure and that
have an aggregate value not in excess of the U.S. Dollar Equivalent of U.S.$15,000,000; and



(k) other Liens (not covering any Inventory, Accounts or other Receivables of any Loan Party
or proceeds of any of the foregoing) not otherwise permitted under this Section 8.2, securing
obligations in an amount not to exceed the U.S. Dollar Equivalent of U.S.$20,000,000 in an
aggregate (U.S.$10,000,000 in the aggregate for the Canadian Loan Parties) amount outstanding
at any time.


 


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Section 8.3 Investments. Each of Group and the Borrower will not, and will not permit any of its
respective Subsidiaries to, directly or indirectly make or maintain any Investment except:



(a) (i) Investments by any Warnaco Entity in any other Warnaco Entity in an amount not
exceeding the amount outstanding on the Closing Date and as set forth on Schedule 8.3, and (ii)
additional Investments by (A) any Warnaco Entity (other than a Canadian Loan Party) in a U.S. Loan
Party or a Canadian Loan Party and by the Canadian Loan Parties in other Warnaco Entities which are
not Canadian Loan Parties in the maximum aggregate amount of U.S.$10,000,000, (B) any Warnaco
Entity that is not a U.S. Loan Party (other than a Canadian Loan Party) in any other Warnaco Entity
and by any Canadian Loan Party in another Canadian Loan Party, and (C) any U.S. Loan Party in a
Warnaco Entity that is not a U.S. Loan Party (1) to the extent required by applicable law to
fulfill statutory capital requirements in a maximum aggregate amount up to U.S.$10,000,000, and (2)
solely for the purposes of funding (x) the operations of such Foreign Subsidiary (including Standby
Letters of Credit Issued for the benefit of such Foreign Subsidiaries), not to exceed in the
aggregate U.S.$25,000,000 at any time outstanding under this subclause (a)(ii)(C)(2)(x), and (y)
the repayment of Indebtedness owed by such Warnaco Entity to any U.S. Loan Party and (3) to the
extent necessary for such entity to pay taxes that are due and payable; provided, that in each case
(other than investments made as capital contributions pursuant to subclause (ii)(C)(1)) such
Investment shall be evidenced by a promissory note in form and substance satisfactory to the
Administrative Agent, the Collateral Agent shall have a perfected security interest in such
promissory note and no Event of Default shall have occurred and be continuing at the time such
Investment is made or would result therefrom; provided, further, that in the case of investments
made as capital contributions pursuant to subclause (ii)(C)(1) such Investment shall be permitted
only to the extent that substantially concurrently with such Investment Group and the Borrower
shall have complied with the requirements of Section 7.11(b) (Additional Personal Property
Collateral and Guaranties);



(b) Investments in (i) cash and Cash Equivalents; provided that such cash and Cash Equivalents
held by a Loan Party are held in a Blocked Account, a Restricted Account, a Control Account or
otherwise in compliance with Section 3.8 of the Canadian Security Agreement (in the case of a
Canadian Loan Party) or Section 4.7 of the U.S. Pledge and Security Agreement (in the case of a
U.S. Loan Party), and (ii) Investment Grade Debt Securities; provided that Investment Grade Debt
Securities held by a Loan Party are held in a Securities Account or otherwise in compliance with
Section 3.5 of the Canadian Security Agreement (in the case of a Canadian Loan Party) or Section
4.4 of the U.S. Pledge and Security Agreement (in the case of a U.S. Loan Party);



(c) Investments existing on the Closing Date and described on Schedule 8.3 (Existing
Investments);



(d) Investments in payment intangibles, chattel paper (each as defined in the PPSA or, in the
case of the U.S. Loan Parties, the UCC) and Accounts, notes receivable (including but not limited
to those notes receivable held by the U.S. Borrower or its Subsidiaries pursuant to clause (b) of
Section 8.4) and similar items arising or acquired in the ordinary course of business consistent
with the past practice of the U.S. Borrower and its Subsidiaries;



(e) Investments consisting of Stock or Stock Equivalents, obligations, securities or other
property received in a bankruptcy proceeding or in settlement of claims arising in the ordinary
course of business;


 


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(f) (i) advances or loans to directors or employees of the Warnaco Entities that do not exceed
U.S.$2,000,000 in the aggregate at any one time outstanding (other than any loans or advances to
any director or executive officer (or equivalent thereof) that would be in violation of applicable
law, including, without limitation, Section 402 of the United States Sarbanes-Oxley Act of 2002),
and (ii) advances for employee travel, relocation and other similar and customary expenses incurred
in the ordinary course of business that do not exceed U.S.$3,000,000 in the aggregate at any one
time outstanding;



(g) Investments consisting of promissory notes received in connection with an Asset Sale
permitted pursuant to Section 8.4(b); provided that such promissory notes are pledged to the
Collateral Agent within three (3) Business Days’ of the receipt thereof by any Loan Party as
additional Collateral pursuant to, as applicable, the Canadian Security Agreement, the Deed of
Hypothec or the U.S. Pledge and Security Agreement;




(h) Guaranty Obligations permitted by Section 8.1;




(i) Investments by the U.S. Borrower or any Subsidiary in Permitted Acquisitions;




(j) [Intentionally Omitted];



(k) other Investments in an aggregate amount invested not to exceed the U.S. Dollar Equivalent
of U.S.$5,000,000 at any time; and



(l) other Investments so long as (i) no Default or Event of Default shall have occurred and be
continuing at the time such Investment is made or after giving effect thereto, (ii) the Fixed
Charge Coverage Ratio for Group shall be at least 1.1 to 1.0 for the most recent four Fiscal
Quarter period for which Financial Statements have been delivered pursuant to Section 6.1 on a pro
forma basis after giving effect to the making of such Investment (as if such Investment had been
made on the first day of such period), (iii) after giving pro forma effect to such Investment
Available Credit is at least 25% of the Aggregate Borrowing Limit at such time and additionally, if
any such Investment is made by a Canadian Loan Party, Available Canadian Credit is at least 10% of
the lesser of (x) the Revolving Credit Commitments in effect at such time and (y) the Borrowing
Base at such time and (iv) prior to the making of such Investment, Group has delivered to the
Administrative Agent a certificate executed by a Responsible Officer of Group certifying the
satisfaction of the requirements under this clause (l) with respect to such Investment and setting
forth in reasonable detail the calculation of such Fixed Charge Coverage Ratio, Available Credit
and, if applicable, Available Canadian Credit.



Section 8.4 Sale of Assets. Each of Group and the Borrower will not, and will not permit any of
its respective Subsidiaries to, sell, convey, transfer, lease or otherwise dispose of, any of its
assets or any interest therein (including the sale or factoring at maturity or collection of any
Accounts) to any Person, or permit or suffer any other Person to acquire any interest in any of its
assets or, in the case of any Subsidiary of Group, issue or sell any shares of such Subsidiary’s
Stock or Stock Equivalent (any such disposition being an “Asset Sale”), except:




(a) the sale or disposition of inventory in the ordinary course of business;


 


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(b) the sale of any asset or assets (including, without limitation, a Subsidiary’s Stock, but
excluding the Stock of the Borrower) by a Warnaco Entity as long as (i) the purchase price paid to
such Warnaco Entity for such asset shall be no less than the Fair Market Value of such asset at
the time of such sale, (ii) no less than 75% of the purchase price for such asset shall be
paid in cash and the remaining amount paid in notes receivable (provided that in the case of an
Asset Sale consummated when no Loan or Loans or unreimbursed amounts in respect of drawn Letters of
Credit are outstanding (Loan, Loans and Letters of Credit being used in this proviso as defined in
each of this Agreement and the U.S. Facility), 50% of the purchase price for such asset may be paid
in cash and the remaining amount paid in notes receivable) (which notes receivable shall be in form
and substance reasonably satisfactory to the Administrative Agent), (iii) neither the seller of
such assets nor any of its Affiliates shall have any subsequent payment obligations in respect of
such sale, other than customary and standard indemnity obligations and as set forth in subclause
(ii) above, (iv) no Default or Event of Default has occurred and is continuing at the time of such
sale or would result from such sale, (v) in the case of a sale of assets by a U.S. Loan Party,
Section 8.4(b)(v) of the U.S. Facility shall have been complied with and (vi) if the net cash
proceeds received for all assets sold by the Canadian Loan Parties during any calendar year
pursuant to this clause (b) shall exceed the U.S. Dollar Equivalent of U.S.$5,000,000 in the
aggregate, then (1) the Borrower shall prepay the Loans (first the Swing Loans until paid in full
and then the Revolving Loans) promptly upon receipt of such net cash proceeds in the amount of all
net cash proceeds received from time to time (including in respect of any note receivable) with
respect to the sale that resulted in such excess occurring and all subsequent sales of assets by
any Canadian Loan Party pursuant to this clause (b) during such calendar year and (2) with respect
to the sale that resulted in such excess occurring and each subsequent sale of assets by any
Canadian Loan Party pursuant to this clause (b) during such calendar year which results in net cash
proceeds in excess of the U.S. Dollar Equivalent of U.S.$500,000, the Borrower shall deliver to the
Administrative Agent, no later than the date of such sale, a Borrowing Base Certificate as of the
Business Day immediately preceding the date of such sale executed by a Responsible Officer of Group
giving pro forma effect to such sale, which Borrowing Base Certificate shall show that the
aggregate principal amount of Revolving Credit Outstandings does not exceed the Maximum Credit at
such time(for purposes of this clause (vi), net cash proceeds of an asset sale means proceeds of
such asset sale received from time to time (including a payment on a note receivable) in cash or
Cash Equivalents net of (x) the reasonable cash costs of sale, (y) taxes paid or payable as a
result thereof and (z) any amount required to be paid or prepaid on Indebtedness (other than the
Obligations) secured by a perfected Lien on the assets subject to such asset sale);



(c) transfers of assets from (i) any U.S. Loan Party to any other U.S. Loan Party, (ii) any
U.S. Loan Party to any Warnaco Entity that is not a U.S. Loan Party, provided that the aggregate
Fair Market Value of assets sold, leased, transferred or otherwise disposed of pursuant to this
subclause (ii) (other than pursuant to the next proviso of this subclause (ii)) shall not exceed
U.S.$20,000,000 in the aggregate plus the Fair Market Value of any equipment and inventory owned on
the Closing Date by a U.S. Loan Party in connection with its domestic manufacturing operations that
are subsequently transferred to a Foreign Subsidiary, and provided further that the U.S. Loan
Parties may transfer the Calvin Klein Underwear trademark and/or rights to use such trademark to
one or more Warnaco Entities that are not U.S. Loan Parties so long as (A) each such transfer shall
be on arm’s-length terms and the price paid to the transferring U.S. Loan Parties shall be no less
than the Fair Market Value of such trademark at the time of such transfer, (B) each such transfer
is for cash, Cash Equivalents and/or a note (such note to be on arm’s-length terms at a market
interest rate and otherwise reasonably acceptable to the Administrative Agent and pledged to the
Collateral Agent for the benefit of the Secured Parties), (C) no Default or Event of Default has
occurred and is continuing at the time of such transfer or would result from such transfer and (D)
the transferee of such trademark shall have entered into an agreement on terms reasonably
satisfactory to the Administrative Agent pursuant to which such transferee agrees that the
Collateral Agent may dispose of Inventory utilizing such trademark without restriction or royalty
payment to the transferee, (iii) any Warnaco Entity that is not a Loan Party to any other Warnaco
Entity and (iv) any Canadian Loan Party to any other Canadian Loan Party;


 


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(d) the licensing or sublicensing of trademarks and trade names by any Warnaco Entity;
provided that (i) if the licensing or sublicensing is by a U.S. Loan Party, if the applicable
trademark or trade name has generated sales in excess of U.S.$20,000,000 in the prior fiscal year,
such license or sublicense (x) shall not have an initial term in excess of 7 years and (y) shall
not have aggregate up-front payments and minimum guaranteed royalties in excess of U.S.$7,500,000
or, together with the aggregate up-front payments and minimum guaranteed royalties for all other
such licenses and sublicenses, in an aggregate amount in excess of U.S$25,000,000 and (ii) any such
licensing or sublicensing to a Person other than a U.S. Loan Party shall take place on an
arm’s-length basis;



(e) the rental by the Warnaco Entities, as lessors or sub-lessors, in the ordinary course of
their respective businesses, on an arm’s-length basis, of real property and personal property, in
each case under leases (other than Capital Leases);



(f) the sale or disposition of machinery and equipment no longer used or useful in the
business of the Warnaco Entities;



(g) any sale of fixed assets not in connection with a Sale and Leaseback Transaction that were
purchased in connection with a proposed lease financing transaction within 45 days of such Asset
Sale, which assets are subsequently leased back by the U.S. Borrower or one of its Subsidiaries;




(h) any Asset Sale permitted by Section 8.7;



(i) any Asset Sale in connection with a Sale and Leaseback Transaction permitted pursuant to
Section 8.16(b); and




(j) the sale of any asset listed on Schedule 8.4.



Section 8.5 Restricted Payments. Each of Group and the Borrower will not, and will not permit any
of its respective Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Payment except for the following:



(a) Restricted Payments by any Subsidiary of the U.S. Borrower to the U.S. Borrower or any
Subsidiary of the U.S. Borrower that owns Stock of such Subsidiary, provided that the Borrower
shall not be permitted to make a Restricted Payment if an Event of Default or Default shall have
occurred and be continuing at the date of declaration or payment thereof or would result therefrom;



(b) dividends and distributions declared and paid on the common Stock of Group and payable
only in common Stock of Group;



(c) cash dividends on the Stock of the U.S. Borrower to Group paid and declared in any Fiscal
Year solely for the purpose of funding the following:




(i) ordinary operating expenses of Group to cover, inter alia, fees and expenses of
directors, directors’ and officers’ insurance, and costs associated with regulatory
compliance, not in excess of U.S.$5,500,000 in the aggregate in any Fiscal Year; and




(ii) payments by Group in respect of foreign, federal, state or local taxes owing by
Group in respect of the Warnaco Entities, but not greater than the amount that would
be payable by the U.S. Borrower, on a consolidated basis, if the U.S. Borrower were the
taxpayer; and


 


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(d) other dividends and distributions on the Stock of Group and the U.S. Borrower and other
redemptions, repurchases or other acquisitions of the Stock of Group and the U.S. Borrower, in each
instance under this clause (d), so long as (i) the Fixed Charge Coverage Ratio for Group shall be
at least 1.1 to 1.0 for the most recent four Fiscal Quarter period for which Financial Statements
have been delivered pursuant to Section 6.1 on a pro forma basis after giving effect to the making
of such Restricted Payment (as if such Restricted Payment had been made on the first day of such
period), (ii) at the time such Restricted Payment is made and after giving effect thereto Available
Credit is at least 25% of the Aggregate Borrowing Limit at such time and (iii) prior to the making
of such Restricted Payment, Group has delivered to the Administrative Agent a certificate executed
by a Responsible Officer of Group certifying the satisfaction of the requirements under this clause
(d) with respect to such Restricted Payment and setting forth in reasonable detail the calculation
of such Fixed Charge Coverage Ratio and Available Credit;



provided, however, that the Restricted Payments described in subclause (c)(i) and clause (d) shall
not be permitted if either (A) an Event of Default or Default shall have occurred and be continuing
at the date of declaration or payment thereof or would result therefrom or (B) such Restricted
Payment is prohibited under the terms of any Indebtedness (other than the Obligations) of any
Warnaco Entity (as in effect on the Closing Date).



Section 8.6 Prepayment and Cancellation of Indebtedness.



(a) Neither Group nor the Borrower shall, nor shall they permit any of their respective
Subsidiaries to, cancel any claim or Indebtedness owed to any of them except in the ordinary course
of business consistent with past practice; provided that this Section 8.6(a) shall not apply to
intercompany Indebtedness disclosed on Schedule 8.1 (Existing Indebtedness) (other than
intercompany Indebtedness owing by WF Overseas Fashion C.V. to the Borrower).



(b) Neither Group nor the Borrower shall, nor shall they permit any of their respective
Subsidiaries to, prepay, redeem, purchase, defease or otherwise satisfy prior to the scheduled
maturity thereof in any manner, or make any payment in violation of any subordination terms of, any
Indebtedness; provided, however, that any Warnaco Entity may: (i) prepay the Obligations in
accordance with the terms of this Agreement and prepay the U.S. Secured Obligations in accordance
with the terms of the U.S. Facility, (ii) make regularly scheduled or otherwise required repayments
or redemptions of Indebtedness, (iii) make permitted repayments of any Indebtedness permitted by
Section 8.1 hereof solely to the extent that such Indebtedness is “revolving”, (iv) prepay any
intercompany Indebtedness payable to the U.S. Borrower or any of its Subsidiaries by the U.S.
Borrower or any of its Subsidiaries, (v) repurchase the Senior Notes in the open market using then
available Cash On Hand in an aggregate amount not to exceed U.S.$10,000,000, (vi) renew, extend,
refinance and refund Indebtedness, as long as such renewal, extension, refinancing or refunding is
permitted under Section 8.1(f), and defease all of the Senior Notes on the terms set forth in
Section 7.14 and (vii) prepay, redeem, purchase, defease or otherwise satisfy prior to the
scheduled maturity thereof any Indebtedness of any Warnaco Entity so long as (A) no Default or
Event of Default shall have occurred and be continuing at the time of any such prepayment,
redemption, purchase, defeasance or satisfaction or after giving effect thereto, (B) the Fixed
Charge Coverage Ratio for Group shall be at least 1.1 to 1.0 for the most recent four Fiscal
Quarter period for which Financial Statements have been delivered pursuant to Section 6.1 on a pro
forma basis after giving effect to such prepayment, redemption, purchase, defeasance or
satisfaction (as if such prepayment, redemption, purchase, defeasance or satisfaction had been made
on the first day of such period), (C) at the time of
such prepayment, redemption, purchase, defeasance or satisfaction and after giving effect
thereto Available Credit is at least 25% of the Aggregate Borrowing Limit at such time and
additionally, if a Canadian Loan Party is making such prepayment, redemption, purchase, defeasance
or satisfaction, Available Canadian Credit is at least 10% of the lesser of (x) the Revolving
Credit Commitments in effect at such time and (y) the Borrowing Base at such time and (D) prior to
such prepayment, redemption, purchase, defeasance or satisfaction, Group has delivered to the
Administrative Agent a certificate executed by a Responsible Officer of Group certifying the
satisfaction of the requirements under this clause (vii) with respect to such prepayment,
redemption, purchase, defeasance or satisfaction and setting forth in reasonable detail the
calculation of such Fixed Charge Coverage Ratio, Available Credit and, if applicable, Available
Canadian Credit.


 


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Section 8.7 Restriction on Fundamental Changes. Each of Group and the Borrower will not, and will
not permit any of its respective Subsidiaries to, merge with any Person, consolidate with any
Person, dissolve, acquire all or substantially all of the Stock or Stock Equivalents of any Person,
acquire all or substantially all of the assets constituting a business, division, branch or other
unit of operation or trademark of any Person, enter into any joint venture or partnership with any
Person, or acquire or create any Subsidiary, except that:



(a) any Warnaco Entity (other than any Canadian Loan Party) may merge into or consolidate with
any U.S. Loan Party; provided, however, that, in the case of any such merger or consolidation, the
Person formed or continued by such merger or consolidation shall be a U.S. Loan Party and, if the
U.S. Borrower is a party to any such merger or consolidation, the U.S. Borrower is the surviving
entity of such merger or consolidation;



(b) any Warnaco Entity that is not a U.S. Loan Party may merge into or consolidate or
amalgamate with any other Warnaco Entity that is not a U.S. Loan Party; provided, however, that, in
the case of any such merger, consolidation or amalgamation, the Person formed or continued by such
merger, consolidation or amalgamation shall be a Wholly Owned Subsidiary of Group and, if the
Borrower is a party to any such merger, consolidation or amalgamation, the Borrower is the
surviving entity of such merger, consolidation or amalgamation and any Canadian Loan Party (if not
the Borrower) may only be merged, consolidated or amalgamated with the Borrower or a Canadian
Subsidiary of the Borrower wholly-owned, directly or indirectly, by the Borrower;



(c) any Warnaco Entity may form a new Wholly Owned Subsidiary; provided, however, if a
Domestic Subsidiary or a Canadian Subsidiary is formed, such Domestic Subsidiary or Canadian
Subsidiary shall become a Loan Party;



(d) any Warnaco Entity which is inactive or dormant (meaning that on the date of determination
and on a consolidated basis with its Subsidiaries, it has assets with an aggregate Fair Market
Value of less than the U.S. Dollar Equivalent of U.S.$100,000) may be dissolved, provided that if
such Warnaco Entity is a Loan Party, all assets distributed upon dissolution shall be distributed
to another Loan Party; and



(e) any Warnaco Entity may consummate any Investment permitted under Section 8.3, including
any Permitted Acquisition;



provided, however, that in each case under this Section 8.7 both before and immediately after
giving effect thereto, no Default or Event of Default shall have occurred and be continuing or
would result therefrom.


 


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Section 8.8 Change in Nature of Business.



(a) Each of Group and the Borrower will not, and will not permit any of its respective
Subsidiaries to, engage as its primary business in any material line of business substantially
different from those lines of business conducted by Group and its Subsidiaries on the date hereof
or any business reasonably related or ancillary thereto.



(b) Group shall not engage in any business or activity other than (i) holding shares in the
Stock of the U.S. Borrower, (ii) paying taxes, (iii) preparing reports to Governmental Authorities,
national securities exchanges and its shareholders and debt holders, (iv) maintaining its legal
existence, holding directors and shareholders meetings, preparing corporate records and other
corporate activities required to maintain its separate corporate structure, including the ability
to incur fees, costs and expenses relating to such maintenance, (v) issuing Stock, (vi) performing
its obligations and activities incidental thereto under the Loan Documents and under the Loan
Documents (as defined in the U.S. Facility), (vii) making Restricted Payments and Investments to
the extent permitted by this Agreement, (viii) entering into unsecured guaranties of Indebtedness
and other obligations of its Subsidiaries to the extent permitted by Section 8.1(d) and (ix)
activities incidental to the foregoing.



Section 8.9 Transactions with Affiliates. Each of Group and the Borrower will not, and will not
permit any of its respective Subsidiaries to, except as otherwise expressly permitted herein, do
any of the following: (a) make any Investment in an Affiliate of Group which is not a Warnaco
Entity; (b) transfer, sell, lease, assign or otherwise dispose of any asset to any Affiliate of
Group which is not a Warnaco Entity; (c) merge into or consolidate with or purchase or acquire
assets from any Affiliate of Group which is not a Warnaco Entity; (d) repay any Indebtedness to any
Affiliate of Group which is not a Warnaco Entity; or (e) enter into any other transaction directly
or indirectly with or for the benefit of any Affiliate of Group which is not a Warnaco Entity
(including guaranties and assumptions of obligations of any such Affiliate), except for (i)
transactions in the ordinary course of business on a basis no less favorable to such Warnaco Entity
as would be obtained in a comparable arm’s length transaction with a Person not an Affiliate and
(ii) salaries and other employee compensation to officers or directors of any Warnaco Entity.



Section 8.10 Restrictions on Subsidiary Distributions; No New Negative Pledge. Other than (x)
pursuant to the Loan Documents, the Senior Note Documents, the U.S. Facility, the documents
governing any Indebtedness permitted under Section 8.1(g), any agreements governing any purchase
money Indebtedness or Capital Lease Obligations permitted by Section 8.1(e) or any renewal,
extension, refinancing or refunding of any such Indebtedness or Capital Lease Obligations permitted
under Section 8.1(f) (in which case, any prohibition or limitation shall only be effective against
the assets financed thereby) or any agreement governing any renewal, extension, refinancing or
refunding of the Senior Notes permitted under Section 8.1(f) (in which case, any prohibition or
limitation shall not be materially more restrictive than the corresponding prohibition or
limitation in the Senior Note Indenture as in effect on the date hereof), (y) any restrictions
consisting of customary non-assignment provisions that are entered into in the ordinary course of
business consistent with prior practice to the extent that such provisions restrict the transfer or
assignment of such contract or (z) with respect to any asset that is subject to a contract of sale
permitted by Section 8.4 or which contract acknowledges that a waiver under Section 8.4 is
necessary, each of Group and the Borrower will not, and will not permit any of its respective
Subsidiaries to:



(a) agree to enter into or suffer to exist or become effective any consensual encumbrance or
restriction of any kind on the ability of such Subsidiary to pay dividends or make any
other distribution or transfer of funds or assets or make loans or advances to or other
Investments in, or pay any Indebtedness owed to, any other Warnaco Entity, or


 


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(b) enter into or suffer to exist or become effective any agreement which prohibits or limits
the ability of any Warnaco Entity to create, incur, assume or suffer to exist any Lien upon any of
its property, assets or revenues, whether now owned or hereafter acquired, to secure the Secured
Obligations, including any agreement which requires other Indebtedness or Contractual Obligation to
be equally and ratably secured with the Secured Obligations.



Section 8.11 Modification of Constituent Documents. Each of Group and the Borrower will not, and
will not permit any of its respective Subsidiaries to, change its capital structure (including in
the terms of its outstanding Stock) or otherwise amend its Constituent Documents, except for
changes and amendments which do not materially and adversely affect the rights and privileges of
any Warnaco Entity, or the interests of the Facility Agents or the Secured Parties under the Loan
Documents or in the Collateral.



Section 8.12 Modification of Certain Documents and Certain Debt. Neither Group nor the Borrower
shall, nor shall they permit any of their respective Subsidiaries to, alter, rescind, terminate,
amend, supplement, waive or otherwise modify any provision of any document governing Indebtedness
permitted pursuant to Section 8.1(b) or Section 8.1(g), except for modifications to the terms of
such Indebtedness (or any indenture or agreement in connection therewith) permitted under Section
8.13 (Modification of Debt Agreements) and modifications that do not materially adversely affect
the interests of the Secured Parties under the Loan Documents or in the Collateral. Group shall
not, and shall not permit the U.S. Borrower to, amend, supplement, waive or otherwise modify (or
consent to any amendment, supplement, waiver or modification of) the U.S. Facility so as to (i)
eliminate or modify any requirement contained in the U.S. Facility as in effect on the date hereof
for the consent of the Administrative Agent (including, without limitation, any requirement in
Section 2.13(h) or Section 11.1 thereof) or (ii) increase any borrowing base advance rate
percentage thereunder above the maximum borrowing base advance rate percentage therefor as in
effect on the date of execution of the U.S. Facility.



Section 8.13 Modification of Debt Agreements. Neither Group nor the Borrower shall, nor shall they
permit any of their respective Subsidiaries to, change or amend the terms of the Senior Note
Documents (or any indenture, agreement or other material document entered into in connection
therewith) if the effect of such amendment is to (a) increase the interest rate payable in cash on
such Indebtedness, (b) change the dates upon which payments of principal or interest are due on
such Indebtedness other than to extend such dates, (c) change any default or event of default other
than to delete or make less restrictive any default provision therein, or add any covenant with
respect to such Indebtedness unless a corresponding covenant is added hereunder, (d) change the
subordination provisions, if any, of such Indebtedness, (e) change the redemption or prepayment
provisions of such Indebtedness other than to extend the dates therefor or to reduce the premiums
payable in connection therewith or (f) change or amend any term (including any covenant) if such
change or amendment would increase the obligations of the obligor or confer additional rights to
the holder of such Indebtedness or Security in a manner materially adverse to any Warnaco Entity,
the Facility Agents or any Lender.



Section 8.14 Accounting Changes; Fiscal Year. Each of Group and the Borrower will not, and will
not permit any of its respective Subsidiaries to, change its (a) accounting treatment and reporting
practices, except as required by Agreement Accounting Principles, the Financial Accounting
Standards Board or any Requirement of Law and disclosed to the Lenders and the Administrative Agent
or (b) Fiscal Year.


 


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Section 8.15 Margin Regulations. Neither Group nor the Borrower shall, nor shall they permit any
of their respective Subsidiaries to, use all or any portion of the proceeds of any credit extended
hereunder to purchase or carry margin stock (within the meaning of Regulation U of the Federal
Reserve Board) in contravention of Regulation U of the Federal Reserve Board.



Section 8.16 Sale and Leasebacks Transactions.




(a) [Intentionally Omitted].



(b) Each of Group and the Borrower will not, and will not permit any of its respective
Subsidiaries to, enter into any Sale and Leaseback Transaction if, after giving effect to such Sale
and Leaseback Transaction, the U.S. Dollar Equivalent of the aggregate Fair Market Value of all
properties covered by Sale and Leaseback Transactions would exceed U.S.$10,000,000.



Section 8.17 No Speculative Transactions. Each of Group and the Borrower will not, and will not
permit any of its respective Subsidiaries to, engage in any speculative transaction or in any
transaction involving Hedging Contracts except for the sole purpose of hedging in the normal course
of business and consistent with industry practices.



Section 8.18 Compliance with ERISA. Each of Group and the Borrower will not, and will not permit
any of its respective Subsidiaries to, or cause or permit any ERISA Affiliate to, cause or permit
to occur (a) an event which could result in the imposition of a Lien under Section 412 of the IRC
or Section 302 or 4068 of ERISA or (b) an ERISA Event that would have a Global Material Adverse
Effect.



Section 8.19 Environmental. Each of Group and the Borrower will not, and will not permit any of
its respective Subsidiaries to, allow a Release of any Contaminant in violation of any
Environmental Law; provided, however, that no Warnaco Entity shall be deemed in violation of this
Section 8.19 if, as the consequence of all such Releases, the Warnaco Entities would not incur
Environmental Liabilities and Costs in excess of the U.S. Dollar Equivalent of U.S.$5,000,000 in
the aggregate.



ARTICLE IX




EVENTS OF DEFAULT




Section 9.1 Events of Default. Each of the following events shall be an Event of Default:



(a) The Borrower shall (i) fail to pay any principal of any Loan or any Reimbursement
Obligation under any Loan Document when the same becomes due and payable or (ii) fail to pay
interest or fees under any Loan Document when due and such payment default shall continue for three
(3) Business Days; or



(b) any representation or warranty made or deemed made by any Loan Party in any Loan Document
or by any Loan Party (or any of its officers) in connection with any Loan Document shall prove to
have been incorrect in any material respect when made or deemed made; or


 


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(c) any Loan Party shall fail to perform or observe (i) any term, covenant or agreement
contained in Article V, Section 6.1, Section 6.2, Section 6.12, Section 7.1, Section 7.6, Section
7.9, Section 7.11, Section 7.14, or Article VIII, or Section 3.8 of the Canadian Security
Agreement or Section 4.7 of the U.S. Pledge and Security Agreement, or (ii) any other term,
covenant or agreement contained in this Agreement or in any other Loan Document if such failure
under this clause (ii) shall remain unremedied for 30 days after the earlier of the date on which
(A) a Responsible Officer of Group or the Borrower becomes aware of such failure and (B) written
notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender; or



(d) (i) any Warnaco Entity shall fail to make any payment on any Indebtedness (other than the
Obligations) of any Warnaco Entity (or any Guaranty Obligation in respect of Indebtedness of any
other Person) having a U.S. Dollar Equivalent principal amount of U.S.$25,000,000 or more, when the
same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise); or (ii) any other event shall occur or condition shall exist under any
agreement or instrument relating to any such Indebtedness, if the effect of such event or condition
is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness; or (iii) any
such Indebtedness shall become or be declared to be due and payable, or required to be prepaid or
repurchased (other than by a regularly scheduled required prepayment or, in connection with the
Senior Notes, a provision requiring a prepayment or repurchase in the event of the receipt by a
Warnaco Entity of proceeds of a debt issuance, equity issuance or an Asset Sale), prior to the
stated maturity thereof; or



(e) (i) any Warnaco Entity shall generally not pay its debts as such debts become due, shall
admit in writing its inability to pay its debts generally or shall make a general assignment for
the benefit of creditors, (ii) any proceeding shall be instituted by or against any Warnaco Entity
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it or its debts,
under any Requirement of Law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a custodian, receiver,
interim receiver, receiver-manager, trustee, monitor or other similar official for it or for any
substantial part of its property; provided, however, that, in the case of any such proceedings
instituted against a Warnaco Entity (but not instituted by a Warnaco Entity), either such
proceedings shall remain undismissed or unstayed for a period of 30 days or more or any action
sought in such proceedings shall occur or (iii) any Warnaco Entity shall take any corporate action
to authorize any action set forth in clauses (i) and (ii) above; or



(f) any provision of any Loan Document after delivery thereof shall for any reason fail or
cease to be valid and binding on, or enforceable against, any Loan Party thereto, or any Loan Party
shall so state in writing; or



(g) any Collateral Document shall for any reason fail or cease to create a valid and
enforceable Lien on any Collateral purported to be covered thereby or, except as permitted by the
Loan Documents, such Lien shall fail or cease to be a perfected Lien having the priority described
in Section 4.20 of this Agreement and the Collateral Documents, or any Loan Party shall so state in
writing; or



(h) one or more judgments or orders (or other similar process) involving, in any single case
or in the aggregate, an amount in excess of the U.S. Dollar Equivalent of U.S.$20,000,000 in the
case of a money judgment, to the extent not covered by insurance, shall be rendered against one or
more Warnaco Entity and shall remain unpaid and either (i) enforcement proceedings shall have been
commenced by any creditor upon such judgment or order or (ii) there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect; or


 


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(i) an ERISA Event shall occur and the amount of all liabilities and deficiencies resulting
therefrom, whether or not assessed, exceeds U.S.$20,000,000 in the aggregate; or




(j) there shall occur a Change of Control; or



(k) a Warnaco Entity shall have entered into one or more consent or settlement decrees or
agreements or similar arrangements with a Governmental Authority or one or more judgments, orders,
decrees or similar actions shall have been entered against a Warnaco Entity based on or arising
from the violation of or pursuant to any Environmental Law, or the generation, storage,
transportation, treatment, disposal or Release of any Contaminant and, in connection with all the
foregoing, the Warnaco Entities are likely to incur Environmental Liabilities and Costs in excess
of the U.S. Dollar Equivalent of U.S.$15,000,000 in the aggregate; or



(l) any one or more events or conditions shall occur or exist with respect to any Canadian
Plans that could, in the Administrative Agent’s good faith judgment, subject the Borrower or any
other Canadian Loan Party to any tax, penalty or other liabilities under the Supplemental Pensions
Act (Québec), the Pension Benefits Act (Ontario) or any other applicable laws and which could
reasonably be expected to give rise to a Material Adverse Effect, or if the Borrower or any other
Canadian Loan Party is in default with respect to required payments to a Canadian Plan or any Lien
arises (save for contribution amounts not yet due) in connection with any Canadian Plan; or



(m) an “Event of Default” shall occur and be continuing under the U.S. Facility.



Section 9.2 Remedies. During the continuance of any Event of Default,




(i) the Administrative Agent may, and at the request of the Requisite Lenders, shall,
by notice to the Borrower, declare that all or any portion of the Commitments be terminated,
whereupon the obligation of each Lender to make any Revolving Loan and each Issuer to Issue
any Letter of Credit shall immediately terminate; and




(ii) the Administrative Agent shall at the request, or may with the consent, of the
Requisite Lenders, by notice to the Borrower, declare the Revolving Loans, all interest
thereon and all other amounts and Obligations payable under this Agreement to be forthwith
due and payable, whereupon all such Loans, all such interest and all such amounts and
Obligations shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived by the
Borrower;



provided, however, that upon the occurrence of any of the Events of Default specified in Section
9.1(e) with respect to any Loan Party, (x) the Commitments of each Lender to make Loans and the
commitments of each Issuer to Issue Letters of Credit shall each automatically be terminated and
(y) the Loans, all such interest and all such amounts and Obligations shall automatically become
and be due and payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower; and provided, further, that in addition to the
remedies set forth above, the Facility Agents and the Lenders shall be entitled to exercise all of
their respective rights and remedies under the Loan Documents, including, without limitation, in
the case of the Collateral Agent, all rights and remedies with respect to the Collateral provided
under the Collateral Documents and in the case of all Agents, any other remedies provided by
applicable law.


 


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Section 9.3 Actions in Respect of Letters of Credit. Upon the Revolving Credit Termination Date,
or as required by Section 2.9, the Borrower shall pay to the Administrative Agent in
immediately available funds at the Administrative Agent’s office referred to in Section 11.8, for
deposit in a Cash Collateral Account, the amount required to ensure that, after such payment, the
aggregate funds on deposit in the Cash Collateral Accounts equals or exceeds 105% of the sum of all
outstanding Letter of Credit Obligations. The Administrative Agent may, from time to time after
funds are deposited in any Cash Collateral Account, apply funds then held in such Cash Collateral
Account to the payment of any amounts, in accordance with Section 2.13(h), as shall have become or
shall become due and payable by the Borrower to the Issuers or the Lenders in respect of the
Obligations. The Administrative Agent shall promptly give written notice of any such application;
provided, however, that the failure to give such written notice shall not invalidate any such
application.



ARTICLE X




THE FACILITY AGENTS




Section 10.1 Authorization and Action.



(a) (i) Each Lender and each Issuer hereby appoints BofA as the Administrative Agent
hereunder and under the other Loan Documents and each Lender and each Issuer authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise such powers under
this Agreement and the other Loan Documents as are delegated to the Administrative Agent under such
agreements and to exercise such powers as are reasonably incidental thereto. Without limiting the
foregoing, each Lender and each Issuer hereby authorizes the Administrative Agent to execute and
deliver, and to perform its obligations under, each of the Loan Documents to which the
Administrative Agent is a party and to exercise all rights, powers and remedies that the
Administrative Agent may have under such Loan Documents.




(ii) The Administrative Agent, each Lender and each Issuer hereby appoints BofA as the
Collateral Agent hereunder and under the other Loan Documents and the Administrative Agent,
each Lender and each Issuer authorizes the Collateral Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other Loan Documents as
are delegated to the Collateral Agent under such agreements and to exercise such powers as
are reasonably incidental thereto. Without limiting the foregoing, the Administrative
Agent, each Lender and each Issuer hereby authorizes the Collateral Agent to execute and
deliver, and to perform its obligations under, each of the Loan Documents to which the
Collateral Agent is a party, to exercise all rights, powers and remedies that the Collateral
Agent may have under such Loan Documents and, in the case of the Collateral Documents, to
act as agent for the Administrative Agent, the Lenders, each Issuer and the other Secured
Parties under such Collateral Documents.




(iii) For the purposes of creating a solidarité active in accordance with Article 1541
of the Civil Code of Quebec between each Lender, each Issuer and each other Secured Party,
taken individually, on the one hand, and each Facility Agent, on the other hand, each Loan
Party and each such Lender, Issuer and other Secured Party acknowledges and agrees with each
Facility Agent that such Lender, Issuer, other Secured Party and Facility Agent are hereby
conferred the legal status of solidary creditors of each such Loan Party in respect of all
Secured Obligations owed by each such Loan Party to each Facility Agent and each Lender,
Issuer and other Secured Party hereunder and under the other Loan Documents (collectively,
the “Solidary Claim”) and that, accordingly, but subject (for the avoidance of doubt) to
Article 1542 of the Civil Code of Quebec, each such Loan Party is irrevocably bound towards
each Facility Agent and each Lender, Issuer and other Secured Party in respect of the entire
Solidary Claim of each Facility Agent and such. As a result of the foregoing, the
parties hereto acknowledge that each Facility Agent and each Lender, Issuer and other
Secured Party shall at all times have a valid and effective right of action for the entire
Solidary Claim of each Facility Agent and such Lender, Issuer and other Secured Party and
the right to give full acquittance for it. Accordingly, and without limiting the generality
of the foregoing, each Facility Agent, as solidary creditor with each Lender, Issuer and
other Secured Party, shall at all times have a valid and effective right of action in
respect of the Solidary Claim and the right to give a full acquittance for same. By its
execution of the Loan Documents to which it is a party, each such Loan Party not a party
hereto shall also be deemed to have accepted the stipulations hereinabove provided. The
parties further agree and acknowledge that such Liens (hypothecs) under the Collateral
Documents and the other Loan Documents shall be granted to the Collateral Agent, for its own
benefit and for the benefit of the Lenders, Issuers and other Secured Parties, as solidary
creditor as hereinabove set forth.


 


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(b) As to any matters not expressly provided for by this Agreement and the other Loan
Documents (including enforcement or collection), no Facility Agent shall be required to exercise
any discretion or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the instructions of the
Requisite Lenders, and such instructions shall be binding upon all Lenders and each Issuer;
provided, however, that no Facility Agent shall be required to take any action which (i) such
Facility Agent in good faith believes exposes it to personal liability unless such Facility Agent
receives an indemnification satisfactory to it from the Lenders and the Issuers with respect to
such action or (ii) is contrary to this Agreement, any other Loan Document or applicable
Requirements of Law. Each Facility Agent agrees to give to each other Facility Agent, each Lender
and each Issuer, to the extent required hereunder, prompt notice of each notice given to it by any
Loan Party pursuant to the terms of this Agreement or the other Loan Documents.



(c) In performing its functions and duties hereunder and under the other Loan Documents, (i)
the Administrative Agent is acting solely on behalf of the Lenders and the Issuers and (ii) the
Collateral Agent is acting solely on behalf of the Administrative Agent, the Lenders and the
Issuers, except, in the case of the Administrative Agent, to the limited extent provided in Section
2.7(b) and Section 11.2(c), and each of their respective duties are entirely administrative in
nature. No Facility Agent assumes, and shall not be deemed to have assumed, any obligation other
than as expressly set forth herein and in the other Loan Documents or any other relationship as
agent, fiduciary or trustee of or for any other Agent, Lender, Issuer or holder of any other
Obligation. Any Facility Agent may perform any of its duties under any of the Loan Documents by or
through its agents or employees.



Section 10.2 Agent’s Reliance, Etc. None of the Facility Agents, any of their respective
Affiliates, or any of their respective directors, officers, agents or employees shall be liable for
any action taken or omitted to be taken by it, him, her or them under or in connection with this
Agreement or any of the other Loan Documents, except for its, his, her or their own gross
negligence or willful misconduct. Without limiting the foregoing, the Administrative Agent and the
Collateral Agent: (a) may rely on the Register to the extent set forth in Section 11.2(c); (b) may
consult with legal counsel (including counsel to the Borrower or any other Loan Party), independent
public accountants and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants
or experts; (c) makes no warranty or representation to any other Agent, any Lender or any Issuer
and shall not be responsible to any other Agent, any Lender or any Issuer for any statements,
warranties or representations made by or on behalf of Group or any of its Subsidiaries in or in
connection with this Agreement or any of the other Loan Documents; (d) shall not have any duty to
ascertain or to inquire either as to the performance or observance of any of the terms, covenants
or conditions of this
Agreement or any of the other Loan Documents or the financial condition of any Loan Party, or the
existence or possible existence of any Default or Event of Default; (e) shall not be responsible to
any other Agent, any Lender or any Issuer for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the attachment, perfection or priority of
any Lien created or purported to be created under or in connection with, this Agreement, any of the
other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and
(f) shall incur no liability under or in respect of this Agreement or any of the other Loan
Documents by acting upon any notice, consent, certificate or other instrument or writing (which may
be by telecopy or electronic mail) or any telephone message believed by it to be genuine and signed
or sent by the proper party or parties.


 


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Section 10.3 The Agents Individually. With respect to its Ratable Portion, BofA Canada Branch
shall have and may exercise the same rights and powers hereunder and is subject to the same
obligations and liabilities as and to the extent set forth herein for any other Lender. The terms
"Lenders” or “Requisite Lenders” or any similar terms shall, unless the context clearly otherwise
indicates, include each Facility Agent in its individual capacity as a Lender or as one of the
Requisite Lenders, as the case may be. BofA and its Affiliates may accept deposits from, lend
money to, and generally engage in any kind of banking, trust or other business with any Loan Party
as if it were not acting as a Facility Agent hereunder or under the other Loan Documents.



Section 10.4 Lender Credit Decision. Each Lender and each Issuer acknowledges that it shall,
independently and without reliance upon any Facility Agent or any other Lender or Issuer, conduct
its own independent investigation of the financial condition and affairs of the Borrower and each
other Loan Party in connection with the making and continuance of the Loans and with the issuance
of the Letters of Credit. Each Lender and each Issuer also acknowledges that it will,
independently and without reliance upon any Facility Agent or any other Lender or Issuer and based
on such documents and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and other Loan Documents.



Section 10.5 Indemnification. Each Lender agrees to indemnify each of the Facility Agents and each
of its respective Affiliates and each of their respective directors, officers, employees, agents
and advisors (to the extent not reimbursed by a Loan Party and without limiting its obligations to
do so) from and against such Lender’s aggregate Ratable Portion of any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and
disbursements (including reasonable fees and disbursements of legal counsel) of any kind or nature
whatsoever which may be imposed on, incurred by, or asserted against, any Facility Agent or any of
its Affiliates, directors, officers, employees, agents or advisors in any way relating to or
arising out of this Agreement, any of the other Loan Documents or any action taken or omitted by
any Facility Agent under this Agreement or any of the other Loan Documents; provided, however, that
no Lender shall be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Facility
Agent’s or such Affiliate’s gross negligence or willful misconduct. Without limiting the
foregoing, each Lender agrees to reimburse each Facility Agent promptly upon demand for its ratable
share of any out-of-pocket expenses (including reasonable fees and disbursements of legal counsel)
incurred by such Facility Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of its rights or responsibilities under,
this Agreement or any of the other Loan Documents, to the extent that such Facility Agent is not
reimbursed for such expenses by a Loan Party.


 


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Section 10.6 Successor Agents.



(a) Administrative Agent. The Administrative Agent may resign at any time by giving written
notice thereof to the other Facility Agents, the Lenders, the Issuers and the Borrower and shall,
immediately upon giving such notice, be discharged from its duties and obligations under this
Agreement and the other Loan Documents. Upon any such resignation by the Administrative Agent, the
Requisite Lenders shall have the right to appoint a successor Administrative Agent. If no
successor Administrative Agent shall have been so appointed by the Requisite Lenders and shall have
accepted such appointment, within 30 days after the retiring Administrative Agent’s giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of the Lenders and the
Issuers, appoint a successor Administrative Agent, selected from among the Lenders. Such
appointment shall be subject to the prior written approval of the Borrower (which approval may not
be unreasonably withheld or delayed and shall not be required upon the occurrence and during the
continuance of an Event of Default). Upon the acceptance of any appointment as Administrative
Agent by a successor Administrative Agent, such successor Administrative Agent shall succeed to,
and become vested with, all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and
obligations under this Agreement and the other Loan Documents. Prior to any retiring
Administrative Agent’s resignation hereunder as Administrative Agent, the retiring Administrative
Agent shall take such action as may be reasonably necessary to assign to the successor
Administrative Agent its rights as Administrative Agent under the Loan Documents. At any time
after the discharge of a retiring Administrative Agent from its duties and obligations under this
Agreement and prior to any Person accepting its appointment as a successor Administrative Agent,
the Requisite Lenders shall assume and perform all of the duties of such retiring Administrative
Agent hereunder until such time, if any, as a successor Administrative Agent shall become the
Administrative Agent hereunder. After its resignation, the retiring Administrative Agent shall
continue to have the benefit of this Article X as to any actions taken or omitted to be taken by it
while it was Administrative Agent under this Agreement or any of the other Loan Documents.



(b) Collateral Agent. The Collateral Agent may resign at any time by giving written notice
thereof to the Administrative Agent, the Lenders, the Issuers and the Borrower. Upon any such
resignation, the Administrative Agent shall have the right to appoint a successor Collateral Agent.
If no successor Collateral Agent shall have been so appointed by the Administrative Agent and
shall have accepted such appointment, within 30 days after the retiring Collateral Agent’s giving
of notice of resignation, then the retiring Collateral Agent may, on behalf of the Secured Parties,
appoint a successor Collateral Agent. Such appointment shall be subject to the prior written
approval of the Borrower (which approval may not be unreasonably withheld or delayed and shall not
be required upon the occurrence and during the continuance of an Event of Default). Upon the
acceptance of any appointment as the Collateral Agent by a successor Collateral Agent, such
successor Collateral Agent shall succeed to, and become vested with, all the rights, powers,
privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from its duties and obligations under this Agreement and the other Loan Documents.
Promptly after any retiring Collateral Agent’s resignation hereunder as Collateral Agent, the
retiring Collateral Agent shall take such action as may be reasonably necessary to assign to the
successor Collateral Agent its rights as Collateral Agent under the Loan Documents and to protect
and maintain the Liens held by the Collateral Agent for the benefit of the Secured Parties
(including delivery of any Collateral in its possession to the successor Collateral Agent). If no
Person has accepted appointment as a successor Collateral Agent within 30 days after the retiring
Collateral Agent’s giving of notice of resignation, the retiring Collateral Agent’s resignation
shall nevertheless thereupon become effective, and the Administrative Agent shall assume and
perform all of the duties of the retiring Collateral Agent hereunder until such time, if any, as
the Administrative Agent shall appoint a successor Collateral Agent as provided for above. After
its resignation, the retiring Collateral Agent shall continue to have the benefit of this Article X
as to any
actions taken or omitted to be taken by it while it was Collateral Agent under this Agreement
or any of the other Loan Documents.


 


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Section 10.7 Concerning the Collateral and the Collateral Documents.



(a) (i) Each Lender and each Issuer agrees that any action taken by the Administrative Agent
or the Requisite Lenders (or, where required by the express terms of this Agreement, a greater
proportion of the Lenders) in accordance with the provisions of this Agreement or of the other Loan
Documents, and the exercise by the Administrative Agent or the Requisite Lenders (or, where so
required, such greater proportion) of the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be authorized and binding upon all of the
Lenders, the Issuers and the other applicable Secured Parties. Without limiting the generality of
the foregoing, the Administrative Agent shall have the sole and exclusive right and authority to
act as the disbursing and collecting agent for the Lenders and the Issuers with respect to all
payments and collections arising in connection with the Revolving Credit Facility; provided,
however, that notwithstanding anything to the contrary herein, the Administrative Agent shall have
the right to manage, supervise and otherwise deal with the Collateral included in the Borrowing
Base, including the right to make Protective Advances in an aggregate amount not to exceed 10% of
the Available Canadian Credit.




(ii) The Administrative Agent, each Lender and each Issuer agrees that any action taken
by the Collateral Agent or the Requisite Lenders (or, where required by the express terms of
this Agreement, a greater proportion of the Lenders) in accordance with the provisions of
this Agreement or of the other Loan Documents, and the exercise by the Collateral Agent or
the Requisite Lenders (or, where so required, such greater proportion) of the powers set
forth herein or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Administrative Agent, the Lenders,
the Issuers and the other Secured Parties. Without limiting the generality of the
foregoing, the Collateral Agent shall have the sole and exclusive right and authority to (i)
act as the disbursing and collecting agent for the Lenders and the Issuers with respect to
all payments and collections arising in connection with the Collateral Documents; provided,
that the Collateral Agent shall pay such amounts to the Administrative Agent for application
in accordance with the provisions of this Agreement and the other Loan Documents, (ii)
execute and deliver each Collateral Document and accept delivery of each such agreement
delivered by Group or any of its Subsidiaries, (iii) act as collateral agent for the
Administrative Agent, the Lenders, the Issuers and the other Secured Parties for purposes of
the perfection of all security interests and Liens created by such agreements and all other
purposes stated therein; provided, however, that the Collateral Agent hereby appoints,
authorizes and directs the Administrative Agent and each Lender and Issuer to act as
collateral sub-agent for the Collateral Agent, the Administrative Agent, the Lenders and the
Issuers for purposes of the perfection of all security interests and Liens with respect to
the Collateral, including any Deposit Account maintained by a Loan Party with, and cash and
Cash Equivalents held by, the Administrative Agent, such Lender or such Issuer, (iv) manage,
supervise and otherwise deal with the Collateral, (v) take such action as is necessary or
desirable to maintain the perfection and priority of the security interests and Liens
created or purported to be created by the Collateral Documents and (vi) except as may be
otherwise specifically restricted by the terms hereof or of any other Loan Document,
exercise all remedies given to the Collateral Agent, the Lenders, the Issuers and the other
Secured Parties with respect to the Collateral under the Loan Documents relating thereto,
applicable Requirements of Law or otherwise.


 


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(b) At the request of the Borrower (but subject to clause (d) below), the Collateral Agent
shall, and each of the Administrative Agent, the Lenders and the Issuers hereby authorizes and
directs the Collateral Agent (without any further notice to or consent of any such Person) to,
promptly release (or, in the case of clause (ii) below, release or subordinate as required by the
holders of any Lien specified thereunder) any Lien held by the Collateral Agent for the benefit of
the Secured Parties (in each instance with respect to any Lien granted by a U.S. Loan Party, only
to the extent that such Lien secures Secured Obligations) against any of the following:




(i) all of the Collateral and all Loan Parties, upon receipt of a written notice from
the Administrative Agent that the Commitments have been terminated and all Loans, all
Reimbursement Obligations and all other Secured Obligations that the Administrative Agent
has been notified in writing are then due and payable have been paid in full (and, in
respect of contingent Letter of Credit Obligations, with respect to which cash collateral
has been deposited or a back-up letter of credit has been issued, in either case in the
appropriate currency and on terms satisfactory to the Administrative Agent and the
applicable Issuers);




(ii) any part of the Collateral that is subject to a Lien permitted by Sections 8.2(c),
(e) or (f); and




(iii) any part of the Collateral (A) sold or disposed of by a Loan Party if such sale
or disposition is permitted by this Agreement (or permitted pursuant to a waiver or consent
of a transaction otherwise prohibited by this Agreement) (other than an Asset Sale to a Loan
Party) or (B) that constitutes Stock of a Subsidiary Guarantor if such Subsidiary Guarantor
has been dissolved pursuant to Section 8.7(d).



(c) Each of the Administrative Agent, the Lenders and the Issuers hereby authorizes and
directs the Collateral Agent to execute and deliver or file such termination and partial release
statements and do such other things as are necessary to release (or subordinate) Liens to be
released (or subordinated) pursuant to this Section 10.7 promptly upon the effectiveness of any
such release (or subordination). Unless expressly permitted by a Loan Document (or permitted
pursuant to a waiver of or consent to a transaction otherwise prohibited by this Agreement), the
Collateral Agent shall not release any Lien or any Subsidiary Guarantor from its obligations under
the Guaranty or the U.S. Loan Party Canadian Facility Guaranty.



(d) Notwithstanding anything herein or in any other Loan Document to the contrary, (i) the
release or subordination of any Lien held by the Collateral Agent in any Collateral granted by a
U.S. Loan Party to secure any Secured Obligations shall be governed by the U.S. Facility, except
that, in addition to any such release or subordination of any Lien in such Collateral, the
Collateral Agent may, with the prior written consent of the Requisite Lenders or of all the Lenders
(as applicable), agree that the Lien of the Collateral Agent in any Collateral granted by a U.S.
Loan Party shall no longer secure Secured Obligations and (ii) the Collateral Agent shall have no
authority or obligation to release or subordinate any Lien in any Collateral granted by a U.S. Loan
Party to the extent such Collateral secures U.S. Secured Obligations (other than under the U.S.
Loan Party Canadian Facility Guaranty) (such release or subordination to be governed by the U.S.
Facility and not this Agreement).


 


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Section 10.8 Collateral Matters Relating to Related Obligations. The provisions of this Agreement
and the other Loan Documents relating to the Collateral shall extend to and be available in respect
of any Secured Obligation arising under any Hedging Contract or Cash Management Obligation or that
is otherwise owed to Persons other than the Facility Agents, the
Lenders and the Issuers (collectively, “Related Obligations”) solely on the condition and
understanding, as among the Facility Agents and all Secured Parties, that (a) the Related
Obligations shall be entitled to the benefit of the Collateral to the extent expressly set forth in
this Agreement and the other Loan Documents and to such extent the Facility Agents shall hold, and
have the right and power to act with respect to, the Guaranty, the U.S. Loan Party Canadian
Facility Guaranty and the Collateral on behalf of and as agent for the holders of the Related
Obligations, but each Facility Agent is otherwise acting solely as agent for the Lenders and the
Issuers and shall have no fiduciary duty, duty of loyalty, duty of care, duty of disclosure or
other obligation whatsoever to any holder of Related Obligations, (b) all matters, acts and
omissions relating in any manner to the Guaranty, the U.S. Loan Party Canadian Facility Guaranty,
the Collateral, or the omission, creation, perfection, priority, abandonment or release of any
Lien, shall be governed solely by the provisions of this Agreement and the other Loan Documents and
no separate Lien, right, power or remedy shall arise or exist in favor of any Secured Party under
any separate instrument or agreement or in respect of any Related Obligation, (c) each Secured
Party shall be bound by all actions taken or omitted, in accordance with the provisions of this
Agreement and the other Loan Documents, by any of the Facility Agents and the Requisite Lenders,
each of whom shall be entitled to act at its sole discretion and exclusively in its own interest
given its own Commitments and its own interest in the Loans, Letter of Credit Obligations and other
Obligations to it arising under this Agreement or the other Loan Documents, without any duty or
liability to any other Secured Party or as to any Related Obligation and without regard to whether
any Related Obligation remains outstanding or is deprived of the benefit of the Collateral or
becomes unsecured or is otherwise affected or put in jeopardy thereby, (d) no holder of Related
Obligations and no other Secured Party (except the Facility Agents, the Lenders and the Issuers, to
the extent set forth in this Agreement) shall have any right to be notified of, or to direct,
require or be heard with respect to, any action taken or omitted in respect of the Collateral or
under this Agreement or the other Loan Documents and (e) no holder of any Related Obligation shall
exercise any right of setoff, banker’s lien or similar right except to the extent provided in
Section 11.6 and then only to the extent such right is provided for under the documents governing
such Related Obligation and exercised in compliance with Section 11.7.



Section 10.9 Posting of Approved Electronic Communications.



(a) Each of the Agents, the Lenders, the Issuers and Group and the Borrower agree, and Group
shall cause each other Loan Party to agree, that the Administrative Agent and the Collateral Agent
may, but shall not be obligated to, make the Approved Electronic Communications available to the
Lenders and Issuers by posting such Approved Electronic Communications on IntraLinksTM or a
substantially similar electronic platform chosen by the Facility Agents to be their electronic
transmission system (the “Approved Electronic Platform”).



(b) Although the Approved Electronic Platform and its primary web portal are secured with
generally-applicable security procedures and policies implemented or modified by the Facility
Agents from time to time (including, as of the Closing Date, a dual firewall and a User ID/Password
Authorization System) and the Approved Electronic Platform is secured through a
single-user-per-deal authorization method whereby each user may access the Approved Electronic
Platform only on a deal-by-deal basis, each of the Lenders, the Issuers, Group and the Borrower
acknowledges and agrees, and Group shall cause each other Loan Party to acknowledge and agree, that
the distribution of material through an electronic medium is not necessarily secure and that there
are confidentiality and other risks associated with such distribution. In consideration for the
convenience and other benefits afforded by such distribution and for the other consideration
provided hereunder, the receipt and sufficiency of which is hereby acknowledged, each of the
Facility Agents, the Lenders, the Issuers, Group and the Borrower hereby approves, and Group shall
cause each other Loan Party to approve, distribution of the Approved Electronic Communications
through the Approved Electronic
Platform and understands and assumes, and Group shall cause each other Loan Party to
understand and assume, the risks of such distribution.


 


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(c) THE APPROVED ELECTRONIC PLATFORM AND THE APPROVED ELECTRONIC COMMUNICATIONS ARE PROVIDED
“AS IS” AND “AS AVAILABLE”. NONE OF THE FACILITY AGENTS OR ANY OF THEIR AFFILIATES OR ANY OF THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (THE “AGENT
AFFILIATES”) WARRANT THE ACCURACY, ADEQUACY OR COMPLETENESS OF THE APPROVED ELECTRONIC
COMMUNICATIONS OR THE APPROVED ELECTRONIC PLATFORM AND EACH EXPRESSLY DISCLAIMS LIABILITY FOR
ERRORS OR OMISSIONS IN THE APPROVED ELECTRONIC PLATFORM AND THE APPROVED ELECTRONIC COMMUNICATIONS.
NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING, WITHOUT LIMITATION, ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY
RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY OF THE AGENT AFFILIATES IN
CONNECTION WITH THE APPROVED ELECTRONIC PLATFORM OR THE APPROVED ELECTRONIC COMMUNICATIONS.



(d) Each of the Lenders, the Issuers, Group and the Borrower agrees, and Group shall cause
each other Loan Party to agree, that each Facility Agent may, but (except as may be required by
applicable law) shall not be obligated to, store the Approved Electronic Communications on the
Approved Electronic Platform in accordance with such Agent’s generally-applicable document
retention procedures and policies.



Section 10.10 Syndication Agent; Arrangers. Neither the Syndication Agent nor the Arrangers shall
have any obligations or duties whatsoever in such capacity under this Agreement or any other Loan
Document and shall incur no liability hereunder or thereunder in such capacity. Without limiting
the foregoing, none of the Syndication Agent nor the Arrangers shall have or be deemed to have any
fiduciary relationship with any Lender or Issuer. Each Lender and Issuer acknowledges and agrees
that it has not relied, and will not rely, on any of the Arrangers, the Syndication Agent or any of
the other Lenders or Issuers in deciding whether to enter into this Agreement or in taking or not
taking action hereunder.



ARTICLE XI




MISCELLANEOUS




Section 11.1 Amendments, Waivers, Etc.



(a) No amendment or waiver of any provision of this Agreement or any other Loan Document nor
consent to any departure by any Loan Party therefrom (other than any amendment or waiver of any
provision of any Collateral Document (as defined in the U.S. Facility) or any consent to any
departure by any U.S. Loan Party therefrom, which amendment, waiver or consent shall be governed by
the U.S. Facility) shall in any event be effective unless the same shall be in writing and (x) in
the case of any such waiver or consent, signed by the Requisite Lenders (or by the Administrative
Agent with the consent of the Requisite Lenders) and (y) in the case of any other amendment, by the
Requisite Lenders (or by the Administrative Agent with the consent of the Requisite Lenders) and
the Borrower, and then any such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given; provided, however, that:



(i) no amendment, waiver or consent with respect to the provisions contained in Section
2.13(h) shall be effective, unless in writing and signed by each Agent or Lender required
under the terms of such section to have consented thereto;



 


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(ii) no amendment, waiver or consent under this Agreement shall be effective to add any
category of Collateral to the Borrowing Base unless in writing and signed by the
Administrative Agent and the Super-Majority Lenders;




(iii) no amendment, waiver or consent shall be effective to increase any Advance Rate
above the applicable maximum set forth in the definition thereof, unless in writing and
signed by each Lender;




(iv) no amendment, waiver or consent with respect to the terms and conditions of the
Collateral Documents shall be effective, unless in writing and signed by the Collateral
Agent;




(v) except to the extent any such amendment, waiver or consent would result in an
increase of the aggregate Revolving Credit Commitments, no amendment, waiver or consent
shall be effective with respect to the terms and provisions under Article II and any other
provisions related solely to Revolving Credit Borrowings (including any conditions to such
Borrowings and increases to interest rates and fees) and payment procedures under the
Revolving Credit Facility, unless in writing and signed by the Administrative Agent and the
Requisite Lenders;




(vi) [Intentionally Omitted]; and




(vii) no amendment, waiver or consent shall, unless in writing and signed by each
Lender affected thereby, in addition to the Requisite Lenders, do any of the following:



(A) waive any of the conditions specified in Section 3.1 (subject to Section 3.3) or Section
3.2 except with respect to a condition based upon another provision hereof, the waiver of which
requires only the concurrence of the Requisite Lenders;



(B) increase the Commitment of such Lender or subject such Lender to any additional
obligation;



(C) extend the scheduled final maturity of any Loan owing to such Lender, or waive, reduce, or
postpone any scheduled date fixed for, the payment of principal, interest or fees owing to such
Lender (it being understood that Section 2.9 does not provide for scheduled dates fixed for
payment) or for the reduction of such Lender’s Commitment;



(D) reduce the principal amount of any Loan or Reimbursement Obligation (other than by the
payment or prepayment thereof) owing to such Lender;



(E) reduce the rate of interest on any Loan or Reimbursement Obligations owing to such Lender
or any fee payable hereunder to such Lender or waive any such obligation (other than with respect
to default interest);



(F) change the aggregate Ratable Portions of the Lenders which shall be required for the
Lenders or any of them to take any action hereunder;


 


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(G) release all or substantially all of the Collateral or release any Guarantor from its
obligations under the Guaranty or the U.S. Loan Party Canadian Facility Guaranty except as provided
in Section 10.7 or as expressly provided under the Guaranty or the U.S. Loan Party Canadian
Facility Guaranty; or



(H) amend Section 11.7 or this Section 11.1 or the definition of the terms “Requisite
Lenders", “Ratable Portion” or “Super-Majority Lenders”; and



provided, further, that:




(i) any modification of the application of payments to the Loans pursuant to Section
2.9 or the reduction of the Revolving Credit Commitments pursuant to Section 2.5 shall
require the consent of the Requisite Lenders;




(ii) no amendment, waiver or consent shall, unless in writing and signed by any Special
Purpose Vehicle that has been granted an option pursuant to Section 11.2(f), affect the
grant or nature of such option or the right or duties of such Special Purpose Vehicle
hereunder;




(iii) no amendment, waiver or consent shall, unless in writing and signed by the
applicable Facility Agent in addition to the Lenders required above to take such action,
affect the rights or duties of such Facility Agent under this Agreement or any of the other
Loan Documents; and




(iv) no amendment, waiver or consent shall, unless in writing and signed by the Swing
Loan Lender in addition to the Lenders required above to take such action, affect the rights
or duties of the Swing Loan Lender under this Agreement or any of the other Loan Documents;
and



provided, further, that (i) the Administrative Agent may, with the consent of the Borrower, amend,
modify or supplement this Agreement or any other Loan Document to cure any ambiguity, omission,
defect or inconsistency, so long as such amendment, modification or supplement does not adversely
affect the rights of any Lender or any Issuer, (ii) Schedule I (Commitments) may be amended from
time to time by the Administrative Agent alone to reflect assignments of Commitments in accordance
herewith and any increase in the Commitment of any Lender or any new Commitment of any Lender made
in accordance herewith (including, without limitation, in accordance with clause (B) above) (with
the Administrative Agent agreeing to remit to the Borrower a copy of any such amended Schedule I;
provided, however, that the failure of the Administrative Agent to so remit such copy shall not
affect any such assignment or any such increase in or new Commitment and shall not create any
liability against the Administrative Agent), (iii) any Loan Documents may be amended from time to
time by the Administrative Agent, the Collateral Agent and the relevant Loan Party alone (i.e.
without any Lender consent or approval) to add a Subsidiary of Group as a Subsidiary Guarantor or
as a grantor under a Collateral Document or to subject to the Lien of any applicable Loan Document
assets or property not then subject to the Lien of such Loan Document and (iv) in the event that
the U.S. Facility is amended, or a waiver is granted thereunder, and such amendment or waiver
concerns one or more of the provisions contained in the U.S. Facility analogous to Sections 6.1,
6.11, 6.13, 7.1, 7.2, 7.3, 7.13, 7.14, or 8.8 - 8.19 hereof or any of the definitions contained
therein, then such Section(s) of this Agreement or definitions (but only as to such Sections), as
applicable, shall be amended or waived to conform to such amendment or waiver of the U.S. Facility,
mutatis mutandis, (but only to the extent applicable to a Warnaco Entity other than a Canadian Loan
Party) without any vote required from the Lenders or any Agent (and each Lender hereby authorizes
the Administrative Agent to execute any
and all documents to evidence any such amendment or waiver under this Agreement without the consent
of such Lender).


 


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(b) The Administrative Agent may, but shall have no obligation to, with the written
concurrence of any applicable Lender, execute amendments, modifications, waivers or consents on
behalf of such Lender. Any waiver or consent shall be effective only in the specific instance and
for the specific purpose for which it was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further notice or demand in similar or other
circumstances.



(c) In connection with any proposed amendment, modification, waiver or termination (a
“Proposed Change”) requiring the consent of all affected Lenders or of the Super-Majority Lenders,
if the consent of Requisite Lenders is obtained, but the consent of other applicable Lenders whose
consent is required is not obtained (any such Lender whose consent is not obtained as described in
this Section 11.1 being referred to as a “Non-Consenting Lender”), then, as long as the Lender that
is acting as the Administrative Agent is not a Non-Consenting Lender and there is no continuing
Event of Default, at the Borrower’s request (and at the Borrower’s sole cost and expense), the
Administrative Agent or an Eligible Assignee that is acceptable to the Administrative Agent shall
have the right with the Administrative Agent’s consent and in the Administrative Agent’s sole
discretion (but shall have no obligation) to purchase from such Non-Consenting Lender, and such
Non-Consenting Lender agrees that it shall, upon the Administrative Agent’s request, sell and
assign to the Lender that is acting as the Administrative Agent or such Eligible Assignee all of
the Revolving Credit Commitments and Revolving Credit Outstandings of such Non-Consenting Lender
for an amount equal to the principal balance of all Loans held by the Non-Consenting Lender and all
accrued and unpaid interest and fees with respect thereto through the date of sale; provided,
however, that such purchase and sale shall be recorded in the Register maintained by the
Administrative Agent and not be effective until (x) the Administrative Agent shall have received
from such Eligible Assignee an agreement in form and substance satisfactory to the Administrative
Agent and the Borrower whereby such Eligible Assignee shall agree to be bound by the terms hereof
and (y) such Non-Consenting Lender shall have received payments of all Loans held by it and all
accrued and unpaid interest and fees with respect thereto through the date of the sale. Each
Lender agrees that, if it becomes a Non-Consenting Lender, it shall execute and deliver to the
Administrative Agent an Assignment and Acceptance to evidence such sale and purchase; provided,
however, that the failure of any Non-Consenting Lender to execute an Assignment and Acceptance
shall not render such sale and purchase (and the corresponding assignment) invalid and such
assignment shall be recorded in the Register.



Section 11.2 Assignments and Participations.



(a) Each Lender may sell, transfer, negotiate or assign to one or more Eligible Assignees all
or a portion of its rights and obligations hereunder (including all of its rights and obligations
with respect to the Revolving Loans, the Swing Loans and the Letters of Credit); provided, however,
that:




(i) if any such assignment shall be of the assigning Lender’s Revolving Credit
Outstandings and Revolving Credit Commitment, such assignment shall cover the same
percentage of such Lender’s Revolving Credit Outstandings and Revolving Credit Commitment;




(ii) the aggregate amount being assigned pursuant to each such assignment (determined
as of the date of the Assignment and Acceptance with respect to such assignment) shall in no
event (if less than the Assignor’s entire interest) be less than
U.S.$3,000,000 or an integral multiple of U.S.$1,000,000 in excess thereof, except (I)
with the consent of the Borrower and the Administrative Agent or (II) if such assignment is
being made to a Lender or an Affiliate or Approved Fund of such Lender; and


 


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(iii) if such Eligible Assignee is not, prior to the date of such assignment, a Lender
or an Affiliate or Approved Fund of a Lender, such assignment shall be subject to the prior
consent of the Administrative Agent, each Issuer and the Borrower (which consents shall not
be unreasonably withheld or delayed);



and provided, further, that, notwithstanding any other provision of this Section 11.2, the consent
of the Borrower shall not be required for any assignment occurring when any Event of Default shall
have occurred and be continuing.



(b) The parties to each assignment shall execute and deliver to the Administrative Agent, for
its acceptance and recording in the Register (as defined in clause (c) below), an Assignment and
Acceptance. Upon such execution, delivery, acceptance and recording in the Register and the
receipt by the Administrative Agent from the assignee of an assignment fee in the amount of
U.S.$3,500 (other than in the case of an assignment by a Lender to an Affiliate of such Lender or
by any Agent or their respective Affiliates) from and after the effective date specified in such
Assignment and Acceptance, (i) the assignee thereunder shall become a party hereto and, to the
extent that rights and obligations under the Loan Documents have been assigned to such assignee
pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender, and if
such Lender were an Issuer, of such Issuer hereunder and thereunder, and (ii) the assignor
thereunder shall, to the extent that rights and obligations under this Agreement have been assigned
by it pursuant to such Assignment and Acceptance, relinquish its rights (except those which survive
the payment in full of the Obligations) and be released from its obligations under the Loan
Documents, other than those relating to events or circumstances occurring prior to such assignment
(and, in the case of an Assignment and Acceptance covering all or the remaining portion of an
assigning Lender’s rights and obligations under the Loan Documents, such Lender shall cease to be a
party hereto).



(c) The Administrative Agent shall maintain at its address referred to in Section 11.8 a copy
of each Assignment and Acceptance delivered to and accepted by it and a register for the recording
of the names and addresses of the Lenders and the Issuers, the Revolving Credit Commitments of and
principal amount of the Revolving Loans, Swing Loans and Letter of Credit Obligations (specifying
the Reimbursement Obligations) owing to each Lender and each Issuer from time to time (the
“Revolving Credit Facility Register” or the “Register”). The entries in the Revolving Credit
Facility Register shall be conclusive and binding for all purposes, absent manifest error, and the
Loan Parties, the Administrative Agent, the Lenders and the Issuers shall treat each Person whose
name is recorded in the Revolving Credit Facility Register as a Lender or as an Issuer, as the case
may be, for all purposes of this Agreement. The Revolving Credit Facility Register shall be
available for inspection by the Borrower and the Facility Agents at any reasonable time and from
time to time upon reasonable prior notice. No Revolving Loan, Swing Loan, Letter of Credit
Obligation, Reimbursement Obligation, nor any Assignment and Acceptance, shall be effective unless
it is entered in the Register in due course.



(d) Notwithstanding anything to the contrary contained in clause (b) above, the Loans and
drawn Letters of Credit are registered obligations and the right, title, and interest of the
Lenders and Issuers, as the case may be, and their assignees in and to such Loans or drawn Letters
of Credit, as the case may be, shall be transferable only upon notation of such transfer in the
Register. Solely for purposes of this Section 11.2 and (to the extent applicable) for tax purposes
only, the
Administrative Agent shall act as the Borrower’s agent for purposes of maintaining the
Register and such notations of transfer in the Register.


 


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(e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an
assignee, the Administrative Agent shall, if such Assignment and Acceptance has been completed, (i)
accept such Assignment and Acceptance, (ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the Borrower.



(f) In addition to the other assignment rights provided in this Section 11.2, each Lender may
do each of the following:




(i) grant to a Special Purpose Vehicle the option to make all or any part of any Loan
that such Lender would otherwise be required to make hereunder and the exercise of such
option by any such Special Purpose Vehicle and the making of Loans pursuant thereto shall
satisfy (once and to the extent that such Loans are made) the obligation of such Lender to
make such Loans thereunder, provided, however, that (x) nothing herein shall constitute a
commitment or an offer to commit by such a Special Purpose Vehicle to make Loans hereunder
and no such Special Purpose Vehicle shall be liable for any indemnity or other Obligation
(other than the making of Loans for which such Special Purpose Vehicle shall have exercised
an option, and then only in accordance with the relevant option agreement) and (y) such
Lender’s obligations under the Loan Documents shall remain unchanged, such Lender shall
remain responsible to the other parties for the performance of its obligations under the
terms of this Agreement and shall remain the holder of the Obligations for all purposes
hereunder; and




(ii) assign, as collateral or otherwise, any of its rights under this Agreement,
whether now owned or hereafter acquired (including rights to payments of principal or
interest on the Loans), to (A) without notice to or consent of the Administrative Agent, any
Issuer or the Borrower, any Federal Reserve Bank (pursuant to Regulation A of the Federal
Reserve Board) and (B) without consent of the Administrative Agent, any Issuer or the
Borrower, (1) any holder of, or trustee for the benefit of, the holders of such Lender’s
Securities and (2) any Special Purpose Vehicle to which such Lender has granted an option
pursuant to clause (i) above;



provided, however, that no such assignment or grant shall release such Lender from any of its
obligations hereunder except as expressly provided in clause (i) above and except, in the case of a
subsequent foreclosure pursuant to an assignment as collateral, if such foreclosure is made in
compliance with the other provisions of this Section 11.2 other than this clause (f) or clause (g)
below. Each party hereto acknowledges and agrees that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other senior debt of any such
Special Purpose Vehicle, such party shall not institute against, or join any other Person in
instituting against, any Special Purpose Vehicle that has been granted an option pursuant to this
clause (f) any bankruptcy, reorganization, insolvency or liquidation proceeding (such agreement
shall survive the payment in full of the Obligations). The terms of the designation of, or
assignment to, such Special Purpose Vehicle shall not restrict such Lender’s ability to, or grant
such Special Purpose Vehicle the right to, consent to any amendment or waiver to this Agreement or
any other Loan Document or to the departure by the Borrower from any provision of this Agreement or
any other Loan Document without the consent of such Special Purpose Vehicle except, as long as the
Administrative Agent and the Lenders, Issuers and other Secured Parties shall continue to, and
shall be entitled to continue to, deal solely and directly with such Lender in connection with such
Lender’s obligations under this Agreement, to the extent any such consent would reduce the
principal amount of, or the rate of interest on, any Obligations,
amend this clause (f) or postpone any scheduled date of payment of such principal or interest.
Each Special Purpose Vehicle shall be entitled to the benefits of Section 2.14(d), Section 2.15,
and Section 2.16 as if it were such Lender; provided, however, that anything herein to the contrary
notwithstanding, the Borrower shall not, at any time, be obligated to make under Section 2.14(d),
Section 2.15, or Section 2.16 to any such Special Purpose Vehicle and any such Lender any payment
in excess of the amount the Borrower would have been obligated to pay to such Lender in respect of
such interest if such Special Purpose Vehicle had not been assigned the rights of such Lender
hereunder. In addition, each Lender granting a Special Purpose Vehicle the option to make all or
any part of any Loan that such Lender would otherwise be required to make pursuant to clause (i)
above shall keep a register of each Special Purpose Vehicle which has funded all or any part of any
Loans that such Lender would otherwise be obligated to make pursuant to this Agreement, specifying
such Special Purpose Vehicle’s entitlement to payments of principal and interest with respect to
such Loans.


 


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(g) Each Lender may sell participations to one or more Persons in or to all or a portion of
its rights and obligations under the Loan Documents (including all its rights and obligations with
respect to the Revolving Loans and Letters of Credit). The terms of such participation shall not,
in any event, require the participant’s consent to any amendments, waivers or other modifications
of any provision of any Loan Documents, the consent to any departure by any Loan Party therefrom,
or to the exercising or refraining from exercising any powers or rights such Lender may have under
or in respect of the Loan Documents (including the right to enforce the obligations of the Loan
Parties), except if any such amendment, waiver or other modification or consent would (i) reduce
the amount, or postpone any date fixed for, any amount (whether of principal, interest or fees)
payable to such participant under the Loan Documents, to which such participant would otherwise be
entitled under such participation or (ii) result in the release of all or substantially all of the
Collateral other than in accordance with Section 10.7(b). In the event of the sale of any
participation by any Lender, (w) such Lender’s obligations under the Loan Documents shall remain
unchanged, (x) such Lender shall remain solely responsible to the other parties for the performance
of such obligations, (y) such Lender shall remain the holder of such Obligations for all purposes
of this Agreement and (z) the Borrower, the Agents, the Issuers and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Each participant shall be entitled to the benefits of Sections
2.14(d), Section 2.15 and Section 2.16 as if it were a Lender; provided, however, that anything
herein to the contrary notwithstanding, the Borrower shall not, at any time, be obligated to make
any payment under Sections 2.14(d), Section 2.15 and Section 2.16 to the participants in the
rights and obligations of any Lender (together with such Lender) in excess of the amount the
Borrower would have been obligated to pay to such Lender in respect of such interest had such
participation not been sold; and provided, further, that such participant in the rights and
obligations of such Lender shall have no direct right to enforce any of the terms of this Agreement
against the Borrower, any Agent or the other Lenders.



(h) Any Issuer may at any time assign its rights and obligations hereunder to any other Lender
by an instrument in form and substance satisfactory to the Borrower, the Administrative Agent, such
Issuer and such Lender, subject to the provisions under this Section 11.2 relating to notations of
transfer in the Register.



(i) For purposes of this Section 11.2, with respect to each Letter of Credit, if an Issuer
transfers its rights with respect to the Borrower’s Reimbursement Obligation with respect to a
Letter of Credit such Issuer shall give notice of such transfer to the Administrative Agent for
notation in the Revolving Credit Facility Register. If any Issuer ceases to be a Lender hereunder
by virtue of any assignment made pursuant to this Section 11.2, then, as of the effective date of
such cessation, such Issuer’s obligations to Issue Letters of Credit pursuant to Section 2.4 shall
terminate and such
Issuer shall be an Issuer hereunder only with respect to outstanding Letters of Credit Issued
prior to such date.


 


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Section 11.3 Costs and Expenses.



(a) The Borrower agrees upon demand to pay, or reimburse each Facility Agent and BAS for, all
of such Facility Agent’s and BAS’s reasonable internal and external audit, legal, appraisal,
valuation, filing, document duplication and reproduction and investigation expenses and for all
other reasonable out-of-pocket costs and expenses of every type and nature (including the
reasonable fees, expenses and disbursements of the Facility Agents’ counsel, each of Kaye Scholer
LLP and Ogilvy Renault LLP, local legal counsel, auditors, accountants, appraisers, printers,
insurance advisers, and other consultants and agents) incurred by such Facility Agent or BAS in
connection with (i) such Facility Agent’s or BAS’s audit and investigation of any of the Warnaco
Entities in connection with the preparation, negotiation and execution of the Loan Documents and
the Administrative Agent’s periodic audits of any of the Warnaco Entities, as the case may be; (ii)
the preparation, negotiation, execution and interpretation of this Agreement (including, without
limitation, the satisfaction or attempted satisfaction of any of the conditions set forth in
Article III), the other Loan Documents and any proposal letter or commitment letter issued in
connection therewith and the making of the Loans hereunder; (iii) the creation, perfection or
protection of the Liens under the Loan Documents (including, without limitation, any reasonable
fees and expenses for local counsel in various jurisdictions); (iv) the ongoing administration of
this Agreement and the Loans, including consultation with attorneys in connection therewith and
with respect to the rights and responsibilities of each Facility Agent hereunder and under the
other Loan Documents; (v) the protection, collection or enforcement of any of the Secured
Obligations or the enforcement of any of the Loan Documents; (vi) the commencement, defense or
intervention in any court proceeding relating in any way to any of the Secured Obligations, any
Warnaco Entity, this Agreement or any of the other Loan Documents; (vii) the response to, and
preparation for, any subpoena or request for document production with which any Facility Agent or
BAS is served or deposition or other proceeding in which any Facility Agent or BAS is called to
testify, in each case, relating in any way to any of the Obligations, any Warnaco Entity, this
Agreement or any of the other Loan Documents; and (viii) any amendments, consents, waivers,
assignments, restatements, or supplements to any of the Loan Documents and the preparation,
negotiation, and execution of the same.



(b) The Borrower further agrees to pay or reimburse each Arranger, each Agent and each of the
Lenders and Issuers upon demand for all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys’ fees (including allocated costs of internal counsel and costs of
settlement), incurred by such Arranger, such Agent, such Lender or such Issuer (i) in enforcing any
Loan Document, any Secured Obligation or any security therefor or exercising or enforcing any other
right or remedy available by reason of an Event of Default; (ii) in connection with any refinancing
or restructuring of the credit arrangements provided hereunder in the nature of a “work-out” or in
any insolvency or bankruptcy proceeding; (iii) in commencing, defending or intervening in any
litigation or in filing a petition, complaint, answer, motion or other pleadings in any legal
proceeding relating to any of the Secured Obligations, any Warnaco Entity and related to or arising
out of any of the transactions contemplated hereby or by any of the other Loan Documents; and (iv)
in taking any other action in or with respect to any suit or proceeding (bankruptcy or otherwise)
described in any of clauses (i) through (iii) above.


 


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Section 11.4 Indemnities.



(a) The Borrower agrees to indemnify and hold harmless each Arranger, each Agent, each Lender
and each Issuer and each of their respective Affiliates, and each of the directors,
officers, employees, agents, representative, attorneys, consultants and advisors of or to any
of the foregoing (including those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article III) (each such Person being an
“Indemnitee”) from and against any and all claims, damages, liabilities, obligations, losses,
penalties, actions, judgments, suits, costs, disbursements and expenses of any kind or nature
(including reasonable fees and disbursements of counsel to any such Indemnitee) which may be
imposed on, incurred by or asserted against any such Indemnitee in connection with or arising out
of any investigation, litigation or proceeding, whether or not any such Indemnitee is a party
thereto, whether direct, indirect, or consequential and whether based on any federal, state or
local law or other statutory regulation, securities or commercial law or regulation, or under
common law or in equity, or on contract, tort or otherwise, in any manner relating to or arising
out of this Agreement, any other Loan Document, any Secured Obligation, any Letter of Credit or any
act, event or transaction related or attendant to any thereof, or the use or intended use of the
proceeds of any of the Loans or Letters of Credit or in connection with any investigation of any
potential matter covered hereby (collectively, the “Indemnified Matters”); provided, however, that
the Borrower shall not have any obligation under this Section 11.4 (i) to an Indemnitee with
respect to any Indemnified Matter caused by or resulting from the gross negligence or willful
misconduct of that Indemnitee, as determined by a court of competent jurisdiction in a final
non-appealable judgment or order, (ii) with respect to taxes (and amounts relating thereto), the
indemnification for which shall be governed solely and exclusively by Section 2.16, and (iii) to an
Indemnitee with respect to any Indemnified Matter that does not involve an act or omission of any
Warnaco Entity or affiliate thereof and is brought by one Indemnitee against another Indemnitee.
Without limiting the foregoing, Indemnified Matters include (i) all Environmental Liabilities and
Costs arising from or connected with the past, present or future operations of any Warnaco Entity
involving any property subject to a Collateral Document, or damage to real or personal property or
natural resources or harm or injury alleged to have resulted from any Release of Contaminants on,
upon or into such property or any contiguous real estate; (ii) any costs or liabilities incurred in
connection with any Remedial Action concerning any Warnaco Entity; (iii) any costs or liabilities
incurred in connection with any Environmental Lien; (iv) any costs or liabilities incurred in
connection with any other matter under any Environmental Law, including CERCLA and applicable
property transfer laws, whether, with respect to any of such matters, such Indemnitee is a
mortgagee pursuant to any leasehold mortgage, a mortgagee in possession, the successor in interest
to any Warnaco Entity, or the owner, lessee or operator of any property of any Warnaco Entity by
virtue of foreclosure, except, with respect to those matters referred to in clauses (i), (ii),
(iii) and (iv) above, to the extent incurred following (A) foreclosure by any Facility Agent, any
Lender or any Issuer, or any Facility Agent, any Lender or any Issuer having become the successor
in interest to any Warnaco Entity, and (B) attributable solely to acts of the Arrangers, the
Facility Agents, such Lender or such Issuer or any agent on behalf of the Facility Agents or such
Lender.



(b) The Borrower shall indemnify each Agent, each Arranger, each Lender and each Issuer for,
and hold each Agent, each Arranger, each Lender and each Issuer harmless from and against, any and
all claims for brokerage commissions, fees and other compensation made against any Agent, Arranger,
Lender or any Issuer for any broker, finder or consultant with respect to any agreement,
arrangement or understanding made by or on behalf of any Warnaco Entity in connection with the
transactions contemplated by this Agreement.



(c) The Borrower agrees that any indemnification or other protection provided to any
Indemnitee pursuant to this Agreement (including pursuant to this Section 11.4) or any other Loan
Document shall (i) survive payment in full of the Secured Obligations and (ii) inure to the benefit
of any Person who was at any time an Indemnitee under this Agreement or any other Loan Document.


 


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Section 11.5 Limitation of Liability.



(a) Group and the Borrower agree, jointly and severally, that no Indemnitee shall have any
liability (whether direct or indirect, in contract, tort or otherwise) to any Warnaco Entity or any
equity holders or creditors of any Warnaco Entity for or in connection with the transactions
contemplated hereby and in the other Loan Documents, except to the extent such liability is found
in a final judgment by a court of competent jurisdiction to have resulted from such Indemnitee’s
gross negligence or willful misconduct. In no event, however, shall any Indemnitee be liable on
any theory of liability for any special, indirect, consequential or punitive damages and each of
Group and the Borrower hereby waives, releases and agrees (for itself and on behalf of its
Subsidiaries) not to sue upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.



(b) IN NO EVENT SHALL ANY AGENT AFFILIATE HAVE ANY LIABILITY TO ANY LOAN PARTY, LENDER, ISSUER
OR ANY OTHER PERSON FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT OR CONTRACT OR OTHERWISE) ARISING OUT OF
ANY LOAN PARTY OR ANY AGENT AFFILIATE’S TRANSMISSION OF APPROVED ELECTRONIC COMMUNICATIONS THROUGH
THE INTERNET OR ANY USE OF THE APPROVED ELECTRONIC PLATFORM, EXCEPT TO THE EXTENT SUCH LIABILITY OF
ANY AGENT AFFILIATE IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT
JURISDICTION TO HAVE RESULTED PRIMARILY FORM SUCH AGENT AFFILIATE’S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.



Section 11.6 Right of Set-off. Upon the occurrence and during the continuance of any Event of
Default, each Lender and each Affiliate of a Lender is hereby authorized at any time and from time
to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other Indebtedness at any
time owing by such Lender or its Affiliates to or for the credit or the account of a Loan Party
against any and all of the Secured Obligations now or hereafter existing whether or not such Lender
shall have made any demand under this Agreement or any other Loan Document and although such
Secured Obligations may be unmatured. Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender or its Affiliates; provided, however, that the
failure to give such notice shall not affect the validity of such set-off and application. The
rights of each Lender under this Section 11.6 are in addition to the other rights and remedies
(including other rights of set-off) which such Lender may have.



Section 11.7 Sharing of Payments, Etc.



(a) If any Lender (directly or through an Affiliate thereof) shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of set-off or otherwise) on account of
the Loans owing to it (including any interest or fees in respect thereof or amounts due pursuant to
Section 11.3 or Section 11.4) or derived from Collateral (in each case, other than pursuant to
Section 2.14, Section 2.15 or Section 2.16) in excess of its Ratable Portion of payments obtained
by all the Lenders on account of such Obligations, such Lender (each, a “Purchasing Lender”) shall
forthwith purchase from the other Lenders (each, a “Selling Lender”) such participations in their
Loans or other Obligations as shall be necessary to cause such Purchasing Lender to share the
excess payment ratably with each of them.


 


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(b) If any Lender shall, after the sharing of payments as set forth in clause (a) above, hold
payments in excess of its Loans, such Lender shall pay such amounts to the Administrative Agent for
application pursuant to Section 2.13(h).



(c) If all or any portion of any payment received by a Purchasing Lender is thereafter
recovered from such Lender, such purchase from each applicable Selling Lender shall be rescinded
and such Lender shall repay to such Purchasing Lender the purchase price to the extent of such
recovery together with an amount equal to such Selling Lender’s ratable share (according to the
proportion of (i) the amount of such Selling Lender’s required repayment to (ii) the total amount
so recovered from such Purchasing Lender) of any interest or other amount paid or payable by such
Purchasing Lender in respect of the total amount so recovered.



(d) The Borrower agrees that any Purchasing Lender so purchasing a participation from a
Selling Lender pursuant to this Section 11.7 may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of the Borrower in the amount of such
participation.



Section 11.8 Notices, Etc.



(a) Notices. All notices, demands, requests and other communications provided for in this
Agreement shall be given in writing, or by any telecommunication device capable of creating a
written record, and addressed to the party to be notified as follows:




	 	(i)	 	if to Group or the Borrower:

	 
	 	 	 	c/o The Warnaco Group Inc.

501 7th Avenue

New York, NY 10018

Attention: Chief Financial Officer

Telecopy No: (212) 287-8546

	 
	 	 	 	with a copy to the Assistant General Counsel of Group

Email: ealford@warnaco.com







(ii) if to any Lender, at its Domestic Lending Office specified opposite its name on
Schedule II (Domestic Lending Offices and Addresses for Notices) or on the signature page of
any applicable Assignment and Acceptance;




(iii) if to any Issuer, at the address set forth under its name on Schedule II
(Domestic Lending Offices and Addresses for Notices);




	 	(iv)	 	if to the Administrative Agent:

	 
	 	 	 	Bank of America, N.A.

335 Madison Avenue

New York, New York 10017
Attention: Business Capital-

Account Executive

Email: kevin.w.corcoran@bankofamerica.com

Telecopy No.: (212) 503-7350




 


117









 





	 	with a copy to:
	 
	 	 	 	Bank of America, N.A.

335 Madison Avenue

New York, New York 10017

Attention: Legal Department

Email: girolamo.m.saccone@bankofamerica.com

Telecopy No.: (212) 503-7350

	 
	 	and
	 
	 	(v)	 	if to the Collateral Agent:

	 
	 	 	 	Bank of America, N.A.

335 Madison Avenue

New York, New York 10017
Attention: Business Capital-

Account Executive

Email: kevin.w.corcoran@bankofamerica.com

Telecopy No.: (212) 503-7350

	 
	 	with a copy to:
	 
	 	 	 	Bank of America, N.A.

335 Madison Avenue

New York, New York 10017

Attention: Legal Department

Email: girolamo.m.saccone@bankofamerica.com

Telecopy No.: (212) 503-7350






or at such other address as shall be notified in writing (i) in the case of Group, the Borrower and
the Facility Agents, to the other parties and (ii) in the case of all other parties, to the
Borrower and the Facility Agents. All such notices and communications shall be effective upon (1)
personal delivery (if delivered by hand, including any overnight courier service), (2) when
deposited in the mails (if sent by mail), (3) if delivered by posting to an Approved Electronic
Platform, an internet website or a similar telecommunication device requiring a user prior access
to such Approved Electronic Platform, website or other device, when such notice, demand, request,
consent and other communication shall have been made generally available on such Approved
Electronic Platform, Internet website or similar device to the class of Person being notified
(regardless of whether any such Person must accomplish, and whether or not any such Person shall
have accomplished, any action prior to obtaining access to such items, including registration,
disclosure of contact information, compliance with a standard user agreement or undertaking a duty
of confidentiality) and (4) if delivered by electronic mail or any other telecommunications device,
when transmitted to an electronic mail address (or by another means of electronic delivery) as
provided above; provided, however, that notices and communications to the Administrative Agent
pursuant to Article II or Article X shall not be effective until received by the Administrative
Agent.



(b) Use of Electronic Platform. Notwithstanding clause (a) above (unless the Administrative
Agent requests that the provisions of clause (a) above be followed) and any other provision in this
Agreement or any other Loan Document providing for the delivery of any Approved Electronic
Communication by any other means, the Loan Parties shall deliver all Approved Electronic
Communications to the Facility Agents by transmitting such Approved Electronic Communications
electronically (in a format acceptable to the applicable Facility Agent) to
kevin.w.corcoran@bankofamerica.com or such other electronic mail address (or similar means of
electronic delivery) as such Facility Agent may notify the Borrower. Nothing in this clause (b)
shall prejudice the right of any Facility Agent or any Lender or Issuer to deliver any Approved
Electronic Communication to any Loan Party in any manner prescribed in this Agreement.


 


118









 





Section 11.9 No Waiver; Remedies. No failure on the part of any Lender, Issuer or any Facility
Agent to exercise, and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.



Section 11.10 Binding Effect. This Agreement shall become effective when it shall have been
executed by Group, the Borrower and the Facility Agents and when the Administrative Agent shall
have been notified by each Lender that such Lender has executed it and thereafter shall be binding
upon and inure to the benefit of Group, the Borrower, the Facility Agents and each Lender and their
respective successors and assigns, except that neither Group nor the Borrower shall have the right
to assign its rights hereunder or any interest herein without the prior written consent of the
Lenders.



Section 11.11 Governing Law. This Agreement and the rights and obligations of the parties hereto
shall be governed by, and construed and interpreted in accordance with, the internal law of the
Province of Ontario, Canada.



Section 11.12 Submission to Jurisdiction; Service of Process.



(a) Any legal action or proceeding with respect to (i) this Agreement or any other Loan
Document governed by laws other than the laws of the United States of America or any state thereof
may be brought in the courts located in the city of Toronto, Ontario, Canada and (ii) any Loan
Document governed by the laws of the United States of America or any state thereof may be brought
in the courts of the State of New York or of the United States of America for the Southern District
of New York, and, by execution and delivery of this Agreement, Group and the Borrower hereby each
accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction
of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including any
objection to the laying of venue or based on the grounds of forum non conveniens, that any of them
may now or hereafter have to the bringing of any such action or proceeding in such respective
jurisdictions.



(b) Each of Group and the Borrower hereby irrevocably consents to the service of any and all
legal process, summons, notices and documents in any suit, action or proceeding arising out of or
in connection with this Agreement or any of the other Loan Documents by the mailing (by registered
or certified mail, postage prepaid) or delivering of a copy of such process to Group and the
Borrower at its address specified in Section 11.8. Each of Group and the Borrower 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 11.12 shall affect the right of any Facility Agent or
any Lender to serve process in any other manner permitted by law or commence legal proceedings or
otherwise proceed against the Borrower or any other Loan Party in any other jurisdiction.


 


119









 





Section 11.13 Waiver of Jury Trial. Each Facility Agent, each of the Lenders, the Issuers, Group
and the Borrower irrevocably waives trial by jury in any action or proceeding with respect to this
Agreement or any other Loan Document.



Section 11.14 Marshaling; Payments Set Aside. None of the Facility Agents, any Lender or any
Issuer shall be under any obligation to marshal any assets in favor of any Loan Party or any other
party or against or in payment of any or all of the Obligations. To the extent that any Loan Party
makes a payment or payments to any Facility Agent, the Lenders or the Issuers or any of such
Persons receives payment from the proceeds of the Collateral or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be
repaid to a trustee, receiver or any other party, then to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied, and all Liens, right and remedies
therefore, shall be revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.



Section 11.15 Section Titles. The section titles contained in this Agreement are and shall be
without substantive meaning or content of any kind whatsoever and are not a part of the agreement
between the parties hereto.



Section 11.16 [Intentionally Omitted].



Section 11.17 [Intentionally Omitted].



Section 11.18 Entire Agreement. This Agreement may be executed in any number of counterparts and
by different parties in separate counterparts, each of which when so executed shall be deemed to be
an original and all of which taken together shall constitute one and the same agreement. Signature
pages may be detached from multiple separate counterparts and attached to a single counterpart so
that all signature pages are attached to the same document. Delivery of an executed signature page
of this Agreement by facsimile transmission, electronic mail or by posting on the Approved
Electronic Platform shall be as effective as delivery of a manually executed counterpart hereof. A
set of the copies of this Agreement signed by all parties shall be lodged with the Borrower and the
Administrative Agent. In the event of any conflict between the terms of this Agreement and any
other Loan Document, the terms of this Agreement shall govern.



Section 11.19 Confidentiality.



(a) No Agent or any Lender may disclose to any Person any confidential, proprietary or
non-public information of the Warnaco Entities furnished to the Agents or the Lenders by Group or
the Borrower (such information being referred to collectively herein as the “Borrower
Information”), except that each of the Agents and each of the Lenders may disclose Borrower
Information (i) to its and its Affiliates’ employees, officers, directors, agents and advisors (it
being understood that the Persons to whom such disclosure is made will be informed of the
confidential nature of such Borrower Information and instructed to keep such Borrower Information
confidential on substantially the same terms as provided herein), (ii) to the extent requested by
any regulatory authority, (iii) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (iv) to any other party to this Agreement, (v) if reasonably
necessary in connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing
provisions substantially the same as those of this Section 11.19, to any assignee of or participant
in, or any prospective assignee of or
participant in, any of its rights or obligations under this Agreement, (vii) to the extent
such Borrower Information (A) is or becomes generally available to the public on a non-confidential
basis other than as a result of a breach of this Section 11.19 by such Agent or such Lender, or (B)
is or becomes available to such Agent or such Lender on a nonconfidential basis from a source other
than a Warnaco Entity and (viii) with the prior written consent of Group or the U.S. Borrower.


 


120









 





(b) Neither Group nor the Borrower may disclose to any Person the amount or terms of any fees
payable to any Agent, any Arranger or any Lender (such information being collectively referred to
herein as the “Facility Information”), except that Group or the Borrower may disclose the Facility
Information (i) to its and its respective Affiliates’ employees, officers, directors, agents and
advisors who have a need to know the Facility Information in connection with this Agreement and the
transactions contemplated hereby or (ii) to the extent required by applicable laws or regulations
or by any subpoena or similar legal process.



Section 11.20 Patriot Act Notice. The Agents, the Issuers and the Lenders hereby notify Group and
the Borrower that, pursuant to the requirements of the Patriot Act, the Agents, the Issuers and the
Lenders are required to obtain, verify and record information that identifies each of Group, the
Borrower and the other Loan Parties, including its legal name, address, tax ID number and other
information that will allow the Agents, the Issuers and the Lenders to identify it in accordance
with the Patriot Act. The Agents, the Issuers and the Lenders may require information regarding
Group’s, the Borrower’s and other Loan Parties’ management and owners, such as legal name, social
security number and date of birth.



Section 11.21 Language. The parties have requested that this Agreement and the other documents
contemplated hereby or relating hereto be drawn up in the English language. Les parties ont requis
que cette convention ainsi que tous les documents qui y sont envisagés ou qui s’y rapportent soient
rédigés en langue anglaise.


 


121









 





IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above written.



	 	 	 	 	 
	 	Warnaco Of Canada Company, as Borrower

 	 
	 	By:  	/s/ Lawrence R. Rutkowski
 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Vice President 	 
	 
	 	The Warnaco Group, Inc., as Group

 	 
	 	By:  	/s/ Lawrence R. Rutkowski
 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Executive Vice President and CFO 	 
	 
	 	Bank of America, N.A., as Administrative

Agent and Collateral Agent

 	 
	 	By:  	/s/ Kevin W. Corcoran
 	 
	 	 	Name:  	Kevin W. Corcoran 	 
	 	 	Title:  	Vice President 	 



SIGNATURE PAGE TO CANADIAN CREDIT AGREEMENT




 


 









 





	 	 	 	 	 
	 	Issuers



Bank of America, N.A. (acting through its

Canada branch)

 	 
	 	By:  	/s/ Medina Sales de Andrade
 	 
	 	 	Name:  	Medina Sales de Andrade 	 
	 	 	Title:  	Vice President 	 
	 
	 	The Bank of Nova Scotia

 	 
	 	By:  	/s/ Rose Porter
 	 
	 	 	Name:  	Rose Porter 	 
	 	 	Title:  	Director 	 



SIGNATURE PAGE TO CANADIAN CREDIT AGREEMENT




 


 









 





	 	 	 	 	 
	 	Lenders



Bank of America, N.A. (acting through its

Canada branch)

 	 
	 	By:  	/s/ Medina Sales de Andrade
 	 
	 	 	Name:  	Medina Sales de Andrade 	 
	 	 	Title:  	Vice President 	 
	 
	 	DEUTSCHE BANK AG, CANADA BRANCH

 	 
	 	By:  	/s/ Robert A. Johnston
 	 
	 	 	Name:  	Robert A. Johnston 	 
	 	 	Title:  	Director 	 
	 	 	 
	 	By:  	                  /s/ Renate Engel
 	 
	 	 	Name:  	Renate Engel 	 
	 	 	Title:  	Assistant Vice President 	 



SIGNATURE PAGE TO CANADIAN CREDIT AGREEMENT




 


 









 





	 	 	 	 	 
	 	The Bank of Nova Scotia

 	 
	 	By:  	/s/ Rose Porter
 	 
	 	 	Name:  	Rose Porter 	 
	 	 	Title:  	Director 	 



SIGNATURE PAGE TO CANADIAN CREDIT AGREEMENT





 


 











 




TABLE OF CONTENTS






	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I DEFINITIONS, INTERPRETATION AND ACCOUNTING TERMS
	 	 	1	 
	Section 1.1 Defined Terms
	 	 	1	 
	Section 1.2 Computation of Time Periods
	 	 	39	 
	Section 1.3 Accounting Terms and Principles
	 	 	39	 
	Section 1.4 Conversion of Foreign Currencies
	 	 	40	 
	Section 1.5 Certain Terms
	 	 	40	 
	ARTICLE II THE REVOLVING CREDIT FACILITY
	 	 	41	 
	Section 2.1 The Commitments
	 	 	41	 
	Section 2.2 Borrowing Procedures
	 	 	42	 
	Section 2.3 Swing Loans
	 	 	43	 
	Section 2.4 Letters of Credit
	 	 	44	 
	Section 2.5 Reduction and Termination of the Commitments
	 	 	48	 
	Section 2.6 Repayment of Loans
	 	 	49	 
	Section 2.7 Evidence of Debt
	 	 	49	 
	Section 2.8 Optional Prepayments
	 	 	49	 
	Section 2.9 Mandatory Prepayments
	 	 	49	 
	Section 2.10 Interest
	 	 	51	 
	Section 2.11 Conversion/Continuation Option
	 	 	52	 
	Section 2.12 Fees
	 	 	53	 
	Section 2.13 Payments and Computations
	 	 	53	 
	Section 2.14 Special Provisions Governing BA Rate Loans
	 	 	56	 
	Section 2.15 Capital Adequacy
	 	 	58	 
	Section 2.16 Taxes
	 	 	58	 
	Section 2.17 Substitution of Lenders
	 	 	60	 
	Section 2.18 [Intentionally Omitted]
	 	 	61	 
	Section 2.19 Special Cash Collateral Account
	 	 	61	 
	ARTICLE III CONDITIONS TO LOANS AND LETTERS OF CREDIT
	 	 	61	 
	Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit
	 	 	61	 
	Section 3.2 Conditions Precedent to Each Loan and Letter of Credit
	 	 	65	 
	Section 3.3 Determinations of Initial Borrowing Conditions
	 	 	66	 





 


i









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	66	 
	Section 4.1 Corporate Existence; Compliance with Law
	 	 	66	 
	Section 4.2 Corporate Power; Authorization; Enforceable Obligations
	 	 	67	 
	Section 4.3 Ownership of Group, Borrower; Subsidiaries
	 	 	68	 
	Section 4.4 Financial Statements
	 	 	68	 
	Section 4.5 Material Adverse Change
	 	 	69	 
	Section 4.6 Solvency
	 	 	69	 
	Section 4.7 Litigation
	 	 	69	 
	Section 4.8 Taxes
	 	 	69	 
	Section 4.9 Full Disclosure
	 	 	70	 
	Section 4.10 Margin Regulations
	 	 	70	 
	Section 4.11 No Burdensome Restrictions; No Defaults
	 	 	70	 
	Section 4.12 Investment Company Act
	 	 	71	 
	Section 4.13 Use of Proceeds
	 	 	71	 
	Section 4.14 Insurance
	 	 	71	 
	Section 4.15 Labor Matters
	 	 	71	 
	Section 4.16 ERISA
	 	 	71	 
	Section 4.17 Environmental Matters
	 	 	73	 
	Section 4.18 Intellectual Property; Material License
	 	 	74	 
	Section 4.19 Title; Real Property
	 	 	74	 
	Section 4.20 Perfection of Security Interests in the Collateral
	 	 	75	 
	ARTICLE V FINANCIAL COVENANTS
	 	 	75	 
	Section 5.1 Minimum Fixed Charge Coverage Ratio
	 	 	75	 
	ARTICLE VI REPORTING COVENANTS
	 	 	75	 
	Section 6.1 Financial Statements
	 	 	75	 
	Section 6.2 Default Notices
	 	 	78	 
	Section 6.3 Litigation
	 	 	78	 
	Section 6.4 Asset Sales
	 	 	78	 
	Section 6.5 Notices under Senior Note Documents
	 	 	78	 
	Section 6.6 Securities Exchange Filings; Press Releases
	 	 	78	 
	Section 6.7 Labor Relations
	 	 	78	 





 


ii









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	Section 6.8 Tax Returns
	 	 	78	 
	Section 6.9 Insurance
	 	 	79	 
	Section 6.10 ERISA Matters
	 	 	79	 
	Section 6.11 Environmental Matters
	 	 	79	 
	Section 6.12 Borrowing Base Determination
	 	 	79	 
	Section 6.13 Material Licenses
	 	 	81	 
	Section 6.14 Communications and Amendments with respect to U.S. Facility
	 	 	81	 
	Section 6.15 Other Information
	 	 	81	 
	ARTICLE VII AFFIRMATIVE COVENANTS
	 	 	81	 
	Section 7.1 Preservation of Corporate Existence, Etc.
	 	 	81	 
	Section 7.2 Compliance with Laws, Etc.
	 	 	81	 
	Section 7.3 Conduct of Business
	 	 	82	 
	Section 7.4 Payment of Taxes, Etc.
	 	 	82	 
	Section 7.5 Maintenance of Insurance
	 	 	82	 
	Section 7.6 Access
	 	 	82	 
	Section 7.7 Keeping of Books
	 	 	83	 
	Section 7.8 Maintenance of Properties, Etc.
	 	 	83	 
	Section 7.9 Application of Proceeds
	 	 	83	 
	Section 7.10 Environmental
	 	 	83	 
	Section 7.11 Additional Personal Property Collateral and Guaranties
	 	 	84	 
	Section 7.12 Canadian Plans
	 	 	85	 
	Section 7.13 Real Property
	 	 	85	 
	Section 7.14 Senior Notes
	 	 	86	 
	Section 7.15 Post Closing Matters
	 	 	86	 
	ARTICLE VIII NEGATIVE COVENANTS
	 	 	86	 
	Section 8.1 Indebtedness
	 	 	86	 
	Section 8.2 Liens, Etc.
	 	 	88	 
	Section 8.3 Investments
	 	 	89	 
	Section 8.4 Sale of Assets
	 	 	90	 
	Section 8.5 Restricted Payments
	 	 	92	 
	Section 8.6 Prepayment and Cancellation of Indebtedness
	 	 	93	 





 


iii









 




TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 8.7 Restriction on Fundamental Changes
	 	 	94	 
	Section 8.8 Change in Nature of Business
	 	 	95	 
	Section 8.9 Transactions with Affiliates
	 	 	95	 
	Section 8.10 Restrictions on Subsidiary Distributions; No New Negative Pledge
	 	 	95	 
	Section 8.11 Modification of Constituent Documents
	 	 	96	 
	Section 8.12 Modification of Certain Documents and Certain Debt
	 	 	96	 
	Section 8.13 Modification of Debt Agreements
	 	 	96	 
	Section 8.14 Accounting Changes; Fiscal Year
	 	 	96	 
	Section 8.15 Margin Regulations
	 	 	97	 
	Section 8.16 Sale and Leasebacks Transactions
	 	 	97	 
	Section 8.17 No Speculative Transactions
	 	 	97	 
	Section 8.18 Compliance with ERISA
	 	 	97	 
	Section 8.19 Environmental
	 	 	97	 
	ARTICLE IX EVENTS OF DEFAULT
	 	 	97	 
	Section 9.1 Events of Default
	 	 	97	 
	Section 9.2 Remedies
	 	 	99	 
	Section 9.3 Actions in Respect of Letters of Credit
	 	 	100	 
	ARTICLE X THE FACILITY AGENTS
	 	 	100	 
	Section 10.1 Authorization and Action
	 	 	100	 
	Section 10.2 Agent’s Reliance, Etc.
	 	 	101	 
	Section 10.3 The Agents Individually
	 	 	102	 
	Section 10.4 Lender Credit Decision
	 	 	102	 
	Section 10.5 Indemnification
	 	 	102	 
	Section 10.6 Successor Agents
	 	 	103	 
	Section 10.7 Concerning the Collateral and the Collateral Documents
	 	 	104	 
	Section 10.8 Collateral Matters Relating to Related Obligations
	 	 	106	 
	Section 10.9 Posting of Approved Electronic Communications
	 	 	106	 
	Section 10.10 Syndication Agent; Arrangers
	 	 	107	 
	ARTICLE XI MISCELLANEOUS
	 	 	107	 
	Section 11.1 Amendments, Waivers, Etc.
	 	 	107	 
	Section 11.2 Assignments and Participations
	 	 	110	 





 


iv









 





TABLE OF CONTENTS

(continued)




	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	Section 11.3 Costs and Expenses
	 	 	114	 
	Section 11.4 Indemnities
	 	 	115	 
	Section 11.5 Limitation of Liability
	 	 	116	 
	Section 11.6 Right of Set-off
	 	 	116	 
	Section 11.7 Sharing of Payments, Etc.
	 	 	116	 
	Section 11.8 Notices, Etc.
	 	 	117	 
	Section 11.9 No Waiver; Remedies
	 	 	119	 
	Section 11.10 Binding Effect
	 	 	119	 
	Section 11.11 Governing Law
	 	 	119	 
	Section 11.12 Submission to Jurisdiction; Service of Process
	 	 	119	 
	Section 11.13 Waiver of Jury Trial
	 	 	120	 
	Section 11.14 Marshaling; Payments Set Aside
	 	 	120	 
	Section 11.15 Section Titles
	 	 	120	 
	Section 11.16 [Intentionally Omitted]
	 	 	120	 
	Section 11.17 [Intentionally Omitted]
	 	 	120	 
	Section 11.18 Entire Agreement
	 	 	120	 
	Section 11.19 Confidentiality
	 	 	120	 
	Section 11.20 Patriot Act Notice
	 	 	121	 
	Section 11.21 Language
	 	 	121	 





 


v









 






	 	 	 	 	 
	Schedules
	 	 	 	 
	 
	 	 	 	 
	Schedule I

	 	-
	 	Commitments
	Schedule II

	 	-
	 	Domestic Lending Offices and Addresses for Notices
	Schedule 4.2

	 	-
	 	Consents
	Schedule 4.3

	 	-
	 	Ownership of Warnaco Entities
	Schedule 4.15

	 	-
	 	Labor Matters
	Schedule 4.16

	 	-
	 	ERISA Matters
	Schedule 4.19

	 	-
	 	Real Property
	Schedule 7.15

	 	-
	 	Post Closing Matters
	Schedule 8.1

	 	-
	 	Existing Indebtedness
	Schedule 8.2

	 	-
	 	Existing Liens
	Schedule 8.3

	 	-
	 	Existing Investments
	Schedule 8.4

	 	-
	 	Specified Asset Sales
	 
	 	 	 	 
	Exhibits
	 	 	 	 
	 
	 	 	 	 
	Exhibit A

	 	-
	 	Form of Assignment and Acceptance
	Exhibit B

	 	-
	 	Form of Notice of Borrowing
	Exhibit C

	 	-
	 	Form of Swing Loan Request
	Exhibit D

	 	-
	 	Form of Letter of Credit Request
	Exhibit E

	 	-
	 	Form of Borrowing Base Certificate
	Exhibit F

	 	-
	 	Form of Notice of Conversion or Continuation
	Exhibit G

	 	-
	 	[Intentionally Omitted]
	Exhibit H

	 	-
	 	Form of Compliance Certificate





 


vi









 





SCHEDULE I




COMMITMENTS




	 	 	 	 	 
	 	 	Revolving Credit	 
	Lender	 	Commitment	 
	Bank of America, N.A. (acting through its Canada branch)
	 	U.S. $ 	16,000,000.00	 
	Deutsche Bank AG, Canada Branch
	 	U.S. $ 	9,000,000.00	 
	The Bank of Nova Scotia
	 	U.S. $ 	5,000,000.00	 
	 	 	 	 
	Total
	 	U.S. $ 	30,000,000.00	 
	 	 	 	 





 


 









 





SCHEDULE II




APPLICABLE LENDING OFFICES AND ADDRESSES FOR NOTICES




On File with Administrative Agent.



 


 









 







SCHEDULE 4.2




CONSENTS




None.


 


 









 





SCHEDULE 4.3




OWNERSHIP OF WARNACO ENTITIES




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Jurisdiction of	 	 	 	Number of	 	Percentage of	 
	 	 	 	 	Incorporation/	 	Number of Shares	 	Shares	 	each Class of	 
	Parent	 	Subsidiary	 	Organization	 	Authorized	 	Outstanding	 	Shares Owned	 
	4278941 Canada Inc.
	 	WBR Industria e Comercio de Vestuario S.A.	 	Brazil	 	400,000	 	196,000 common, 4,000 preferred	 	51	%	 
	Calvin Klein Jeanswear Company
	 	CKJ Holdings, Inc.	 	Delaware	 	1,000 shares Common Stock, par value $0.01	 	1,000	 	100	%	 
	CKJ UK Limited
	 	Jeanswear Services, Ltd.	 	United Kingdom	 	N/A	 	100	 	100	%	 
	CK Jeanswear Asia Ltd.
	 	CKJ Fashion (Shanghai) Ltd.	 	People’s Republic of China	 	1,050,000	 	157,500	 	100	%	 
	
	 	Gold Lightening Limited	 	Hong Kong	 	N/A	 	65,000	 	100	%	 
	Designer Holdings Ltd.
	 	Calvin Klein Jeanswear Company	 	Delaware	 	1,000 shares Common Stock, par value $0.01	 	1,000	 	100	%	 
	The Warnaco Group, Inc.
	 	Warnaco Inc.	 	Delaware	 	100,000 shares Common Stock, par value $1.00	 	100,000	 	100	%	 
	Warnaco B.V.
	 	A.E.S. Advanced Euro Service S.r.l	 	Italy	 	90,000	 	90,000	 	100	%	 
	 
	 	CKJ UK Ltd.	 	United Kingdom	 	1,098,000 shares, par value £1.00	 	980,000	 	100	%	 
	 
	 	CK Jeanswear Australia Pty Limited	 	Australia	 	4,467,737	 	4,467,737	 	100	%	 
	 
	 	CK Jeanswear Europe S.r.l.	 	Italy	 	N/A	 	3,500,000	 	100	%	 
	 
	 	CK Jeanswear Korea Co. Limited	 	Korea	 	N/A	 	381,045	 	100	%	 
	 
	 	CK Jeanswear NZ Ltd.	 	New Zealand	 	100	 	100	 	100	%	 
	 
	 	Euro Retail S.r.l.	 	Italy	 	100,000	 	100,000	 	100	%	 






	 	 	 
	**	 	Certain shares are held as Directors’ qualifying shares, but in each case, solely to the extent
required by local law.





 


 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Jurisdiction of	 	 	 	Number of	 	Percentage of	 
	 	 	 	 	Incorporation/	 	Number of Shares	 	Shares	 	each Class of	 
	Parent	 	Subsidiary	 	Organization	 	Authorized	 	Outstanding	 	Shares Owned	 
	 
	 	Warnaco Argentina SRL	 	Argentina	 	12,000 quotas	 	1,080	 	95	%	 
	 
	 	Warnaco Denmark A/S	 	Denmark	 	5000	 	5000	 	100	%	 
	 
	 	Warnaco France S.A.R.L.	 	France	 	500, par value FF 100	 	500	 	100	%	 
	 
	 	Warnaco Germany GmbH	 	Germany	 	€25,000	 	25,000	 	100	%	 
	 
	 	Warnaco Netherlands B.V.	 	The Netherlands	 	2,500 shares	 	561 shares	 	100	%	 
	 
	 	Warnaco Poland Sp.zo.o.	 	Poland	 	20,000 shares, par value 50 zlotys	 	1,000	 	100	%	 
	 
	 	Warnaco Portugal Vesutario e Acessorios Sociedade Unipessoal, Lda.	 	Portugal	 	€5,000	 	5,000	 	100	%	 
	 
	 	Warner’s Company (Belgium) SPRL	 	Belgium	 	25,000 shares, par value 1,000 FF	 	25,000	 	100	%	 
	 
	 	Warner’s (EIRE) Teoranta	 	Ireland	 	1,000 shares, par value IR£1.00	 	101	 	100	%**	 
	 
	 	WAS Logistics B.V.	 	The Netherlands	 	€18,200	 	18,200	 	100	%	 
	Warnaco France S.A.R.L.
	 	FA France S.A.R.L.	 	France	 	7,623	 	7,623	 	100	%	 
	 
	 	Warner’s Aiglon, S.A.	 	France	 	215,000, par value FRF 100	 	215,000	 	100	%**	 
	Warnaco (H.K.), Ltd.
	 	CK Jeanswear Asia Ltd.	 	Hong Kong	 	100	 	100	 	100	%	 
	 
	 	Warnaco International Trading (Shanghai) Co. Ltd.	 	People’s Republic of China	 	1,655,420	 	1,655,420	 	100	%	 
	 
	 	Warnaco Shanghai Co. Ltd.	 	People’s Republic of China	 	810,000	 	610,000	 	100	%	 
	 
	 	Warnaco Singapore Private Ltd.	 	Singapore	 	100,000 shares, par value $1.00	 	2	 	100	%	 






	 	 	 
	**	 	Certain shares are held as Directors’ qualifying shares, but in each case, solely to the extent
required by local law.





 


 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Jurisdiction of	 	 	 	Number of	 	Percentage of	 
	 	 	 	 	Incorporation/	 	Number of Shares	 	Shares	 	each Class of	 
	Parent	 	Subsidiary	 	Organization	 	Authorized	 	Outstanding	 	Shares Owned	 
	Warnaco Inc.
	 	CKU.com Inc.	 	Delaware	 	1,000 shares Common Stock, par value $0.01	 	1,000	 	100	%	 
	 
	 	Designer Holdings Ltd.	 	Delaware	 	1,000 shares Common Stock, par value $0.01	 	1,000	 	100	%	 
	 
	 	Ocean Pacific Apparel Corp.	 	Delaware	 	5,589	 	5,589	 	100	%	 
	 
	 	Linda Vista de Veracruz S.A. de C.V.	 	Mexico	 	500 shares Serie B Subserie I; 225 shares Serie B Subserie II,  par value 100 Mexican Pesos	 	500 Serie B Subserie I	 	69	%**	 
	 
	 	Warnaco Intimo S.A.	 	Spain	 	11,000, par value 1,000 pesetas each	 	11,000	 	100	%	 
	 
	 	Warnaco Puerto Rico, Inc.	 	Delaware	 	1,000 shares of Common Stock, par value $0.01	 	1,000	 	100	%	 
	 
	 	Warnaco Swimwear Inc.	 	Delaware	 	1,000 shares of Common Stock, par value $0.01	 	1,000	 	100	%	 
	 
	 	Warnaco U.S., Inc.	 	Delaware	 	1,000 shares Common Stock, par value $0.01	 	1,000	 	100	%	 
	 
	 	Warner’s de Mexico S.A. de C.V.	 	Mexico	 	50,000 Series A shares, par value $0.10 Mexican Pesos; 60,545,220 Series B shares, par value $0.10 Mexican Pesos	 	50,000 Series A shares; 60,545,220 Series B shares	 	 	Type A - 100 

Type B - 100	%**
%	 
	 
	 	WF Overseas Fashion C.V.	 	The Netherlands	 	100% partnership interests	 	Warnaco Inc. holds 99% interest (as limited partner); Warnaco U.S., Inc. holds 1% interest (as general partner)	 	99	%	 






	 	 	 
	**	 	Certain shares are held as Directors’ qualifying shares, but in each case, solely to the extent
required by local law.





 


 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Jurisdiction of	 	 	 	Number of	 	Percentage of	 
	 	 	 	 	Incorporation/	 	Number of Shares	 	Shares	 	each Class of	 
	Parent	 	Subsidiary	 	Organization	 	Authorized	 	Outstanding	 	Shares Owned	 
	Warnaco Netherlands B.V.
	 	Eretex GmbH	 	Germany	 	DM 50,000	 	DM 50,000	 	100	%	 
	 
	 	Lenitex-Warnaco Handelsgesellschaft m.b.H.	 	Austria	 	500,000 Austrian schillings	 	500,000	 	100	%	 
	 
	 	Lintex-Warnaco S.a.r.l.	 	Switzerland	 	50 shares	 	50	 	100	%	 
	 
	 	Warnaco Argentina SRL	 	Argentina	 	12,000 quotas	 	120	 	5	%	 
	 
	 	Warnaco of Canada Company	 	Province of Nova Scotia	 	1,000,000 Common Shares, without par value	 	1,000,000	 	100	%	 
	 
	 	Warner’s (United Kingdom) Limited	 	United Kingdom	 	5,520,000 shares at £1 each	 	5,520,000	 	100	%	 
	Warnaco of Canada Company
	 	4278941 Canada Inc.	 	Canada	 	Unlimited number of Classes A-F	 	2,000 Class A	 	100	%	 
	 
	 	Linda Vista de Veracruz S.A. de C.V.	 	Mexico	 	500 shares Serie B Subserie I; 225 shares Serie B Subserie II,  par value 100 Mexican Pesos	 	225 Serie B Subserie II	 	31	%**	 
	Warnaco Swimwear Inc.
	 	Warnaco Swimwear Products Inc.	 	Delaware	 	10,000 shares of Common Stock, par value $0.01	 	100	 	100	%	 
	Warnaco Swimwear Products Inc.
	 	Authentic Fitness On-Line, Inc.	 	Nevada	 	100 shares of Common Stock, par value $0.01	 	100	 	100	%	 
	 
	 	CCC Acquisition Corp.	 	Delaware	 	1,000 shares Common Stock, par value $0.01	 	100	 	100	%	 
	 
	 	Vista de Yucatan S.A. de C.V.	 	Mexico	 	500 shares, par value 100 Mexican Pesos	 	500	 	100	%**	 
	 
	 	Warnaco Retail Inc.	 	Delaware	 	100 shares of Common Stock, par value $0.01	 	100	 	100	%	 






	 	 	 
	**	 	Certain shares are held as Directors’ qualifying shares, but in each case, solely to the extent
required by local law.





 


 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Jurisdiction of	 	 	 	Number of	 	Percentage of	 
	 	 	 	 	Incorporation/	 	Number of Shares	 	Shares	 	each Class of	 
	Parent	 	Subsidiary	 	Organization	 	Authorized	 	Outstanding	 	Shares Owned	 
	Warnaco U.S., Inc.
	 	Warnaco (Macao) Company Limited	 	Macao	 	Uncertificated	 	Uncertificated	 	100	%**	 
	 
	 	WF Overseas Fashion C.V.	 	The Netherlands	 	100% partnership interests	 	Warnaco Inc. holds 99% interest (as limited partner); Warnaco U.S., Inc. holds 1% interest (as general partner)	 	1	%	 
	Warner’s (United Kingdom) Ltd.
	 	Mullion International Limited	 	British Virgin Islands	 	50,000 shares	 	10	 	100	%	 
	WF Overseas Fashion C.V.
	 	Designer Holdings Overseas Limited	 	Hong Kong	 	10,000 shares, par value HK$1.00	 	10,000	 	100	%**	 
	 
	 	Warnaco B.V.	 	The Netherlands	 	200,000 NLG	 	40,000	 	100	%	 
	 
	 	Warnaco (H.K.) Limited	 	Barbados	 	1,000 common shares, no par value	 	1,000	 	100	%	 
	 
	 	Warnaco Taiwan Co. Ltd.	 	Taiwan	 	1,500,000	 	1,500,000	 	100	%	 








	 	 	 
	**	 	Certain shares are held as Directors’ qualifying shares, but in each case, solely to the extent
required by local law.





Number of Shares Covered by All Outstanding Options, Warrants, 

Rights of Conversion or Purchase and Similar Rights




None.


 


 









 





SCHEDULE 4.15




LABOR MATTERS




Collective Bargaining Agreements




Local 1701 of the Union of Needle Trades Industrial and Textile Employees




AFL-CIO, CLC and Warnaco Inc.

Duncansville, PA

Expires March 1, 2009




Indigo Blue S.A. and Lintex-Warnaco S.a.r.l.

Collective Bargaining Agreement for employees of Foxtown Center,

Mendrisio, Switzerland

Expires December 31, 2011




Consulting Agreements




None.



Executive Employment Agreements





	1	 	Joseph Gromek, President and Chief Executive Officer

	 
	2	 	Lawrence R. Rutkowski, Executive Vice President and Chief Financial Officer

	 
	3	 	Helen McCluskey, President Intimate Apparel Group

	 
	4	 	Frank Tworecke, President Sportswear Group

	 
	5	 	Dwight Meyer, President Global Sourcing

	 
	6	 	Stanley Silverstein, Executive Vice president – International Strategy and Business
Development

	 
	7	 	Elizabeth Wood, Senior Vice President, Human Resources






Executive Compensation Plans




None.



Deferred Compensation Agreements

The Warnaco Group, Inc. Non-Employee Directors Deferred Compensation Plan

The Warnaco Group, Inc. Deferred Compensation Plan




Employee Stock Purchase and Stock Option Plans




The Warnaco Group, Inc. 2003 Stock Incentive Plan, as amended

The Warnaco Group, Inc. 2005 Stock Incentive Plan, as amended




Severance Plans




None.


 


 









 





SCHEDULE 4.16




ERISA MATTERS




	 	 	 	 	 
	PLAN NAME	 	EMPLOYER ID NO.	 	PLAN NO.
	Retirement Plans

	Employees Retirement Plan of Warnaco Inc.
	 	22-1897478	 	001
	The Warnaco Group, Inc. Employee Savings Plan
	 	95-4032739	 	020
	Health and Welfare Plans

	Warnaco Flexible Benefits Plan
	 	22-1897478	 	501






Unfunded Pension Liability




The Plan is under funded, however under the terms of Warnaco Inc.’s Amended and Restated Plan
of Reorganization provided that the Warnaco Inc. will continue its Employee Retirement Plan,
including meeting the minimum funding standards under ERISA and the Code. In connection with the
Employee Retirement Plan, on an actuarial basis the amount by which the present value of all
accrued benefits under the Employee Retirement Plan exceeds the fair market value of all assets of
such Plan allocable to such benefits in accordance with Title IV of ERISA is approximately $8.95
million, as reported in Group’s 10-K for fiscal year 2007.



Withdrawal Liability




None.



 


 









 







SCHEDULE 4.19




MATERIAL REAL PROPERTY




	 	 	 
	Address of Property	 	Record Owner
	 
	 	 
	Material Owned Real Property:
	 	 
	 
	 	 
	None.
	 	 
	 
	 	 
	Material Leased Real Property:
	 	 
	 
	 	 
	The Warnaco Group, Inc.
	 	501 Seventh Ave. Associates L.L.C
	501 7th Avenue
	 	c/o Insigna/ESG Inc.
	New York, NY 10018
	 	200 Park Ave.
	New York County
	 	New York, NY  10016
	 
	 	Leased by: The Warnaco Group, Inc.
	 
	 	 
	Distribution Facility
	 	Huntingdon Storage & Distribution
	(Former) Fleming Building
	 	5506 Sixth Ave. Com Rear
	RD # 4 Industrial Park
	 	Altoona, PA  16602
	Huntingdon, PA 16652
	 	Attention: John Radionoff/Lenorad Fiore
	Huntingdon County
	 	Leased by Warnaco Inc.
	 
	 	 
	Distribution Facility
	 	Realty Associated Fund VIP
	5305 Rivergrade Road
	 	Realty Associated Fund V Irwindale
	Irwindale, CA 91076
	 	Distribution Center
	Los Angeles County
	 	PO Box 51921 Unit 1
	 
	 	Los Angeles, CA  90051-6210
	 
	 	Leased by Authentic Fitness Products
	 
	 	Inc. (N/K/A: Warnaco Swimwear Products Inc.)
	 
	 	 
	Office Facility
	 	Corporate Campus/Joint Venture
	470 Wheelers Farms Road
	 	c/o Lend Lease Real Estate Investments Inc.
	Milford, CT 06040
	 	787 Seventh Ave.
	Hartford County
	 	New York, NY  10019
	 
	 	Leased by Warnaco Inc.





 


 









 





SCHEDULE 7.15




POST CLOSING MATTERS




To the extent not delivered on or prior to the Closing Date, within the periods set forth below
(or such later date as may be agreed by the Administrative Agent), the Borrower shall deliver, or
cause to be delivered, to the Administrative Agent the following documents, in each case, in form
and substance reasonably satisfactory to the Administrative Agent:




	1.	 	On or prior to the tenth (10th) Business Day following the Closing Date,
delivery of the Blocked Account Letter with respect to the Deposit Accounts of the Borrower
as required by the Canadian Security Agreement of the Borrower, duly executed by the
Borrower and The Bank of Nova Scotia.

	 
	2.	 	On or prior to the thirtieth (30th) Business Day following the Closing Date:







	 	(a)	 	new certificates to evidence the following pledged interests:






	 	 	 	 	 	 	 	 	 	 	 	 	 
	Canadian Loan	 	 	 	 	 	 	 	 	 
	Party	 	Stock Issuer	 	 	Class of Stock	 	 	Number of Shares	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Warnaco of Canada Company
	 	Linda Vista de Vera Cruz S.A. de C.V.	 	Series B, Sub-series II	 	225 Serie B, Sub-Serie II shares
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	4278941 Canada Inc.
	 	WBR Industria e Comercio de Vestuario S.A.	 	Common Stock	 	196,000	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	4278941 Canada Inc.
	 	WBR Industria e Comercio de Vestuario S.A.	 	Preferred Stock	 	4,000	 







	 	 	 	to be delivered in pledge to the Collateral Agent in accordance with each Canadian Loan
Party’s Canadian Pledge Agreement; and

	 
	 	(b)	 	4278941 Canada Inc., concurrently with its delivery and pledge of the Stock
referred to above, shall execute and deliver a Canadian Pledge Agreement, and otherwise
comply with Section 3.1(a)(v)(B).







	3.	 	On or prior to the fifth (5th) Business Day following the Closing Date,
evidence reasonably satisfactory to the Administrative Agent that all filings and recordings
of the deeds of hypothec of the Borrower and 4278941 Canada Inc. in the Province of Quebec,
shall have been made such that the Collateral Agent (for the benefit of the Secured Parties)
shall have a valid and perfected hypothec on, the Collateral having the priority described
in Section 4.20 of this Agreement and the Collateral Documents, including copies of Register
of Personal and Movable Real Rights (Québec) search reports as of a recent date listing all
effective financing and registration statements that name the Canadian Loan Parties as
aforesaid as grantor, together with copies of such financing statements or like
registrations, none of which shall cover the Collateral, except for those that shall be
terminated on the Closing Date or are otherwise permitted under this Agreement, and
favourable opinions of Robinson Sheppard Shapiro LLP, counsel to the Canadian Loan Parties
(and their respective local counsel in the Provinces of British Columbia, Ontario and Nova
Scotia) addressing such matters as are set out in Section 3.1(a)(viii) of this Agreement.




 


18









 











	4.	 	On or prior to the fifth (5th) Business Day following the resumption of
operations of the Alberta Personal Property Registry, evidence reasonably satisfactory to
the Administrative Agent that all filings and recordings of the Canadian Security Agreement
of the Borrower in the Province of Alberta shall have been made such that the Collateral
Agent (for the benefit of the Secured Parties) shall have a valid and perfected security
interest in the Collateral having the priority described in Section 4.20 of this Agreement
and the Collateral Documents, including copies of PPSA search reports as of a recent date
listing all effective financing and registration statements that name the Canadian Loan
Parties as aforesaid as grantor, together with copies of such financing statements or like
registrations, none of which shall cover the Collateral, except for those that shall be
terminated on the Closing Date or are otherwise permitted under this Agreement, and a
favourable opinion of local counsel to the Canadian Loan Parties in the Province of Alberta
addressing such matters as are set out in Section 3.1(a)(viii) of this Agreement.







	5.	 	On or prior to the thirtieth (30th) Business Day following the Closing Date,
estoppel letters, in form and substance reasonably satisfactory to the Administrative Agent,
executed by the following Secured Parties in respect of the following security interests
registered under the Ontario PPSA, or evidence reasonably satisfactory to the Administrative
Agent of the discharge of such financing statements:






	 	 	 	 	 	 	 	 	 
	 	 	Secured	 	 	 	Collateral	 	Reference File No. &
	 	 	Party(ies)	 	Debtor(s)	 	Classification	 	Registration Number(s)
	1.
	 	Jaguar Credit	 	Warnaco of	 	Equipment, Other and	 	642614445
	 
	 	Canada Leasing, A	 	Canada Company	 	Motor Vehicle Included	 	20080208 1954 1531
	 
	 	Div/ Canadian	 	 	 	 	 	7083
	 
	 	Road Leasing Co	 	 	 	No Fixed Maturity Date	 	(3 years)
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	2008 Jaguar Vanden	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Plas	 	 
	2.
	 	CBSC Capital	 	Warnaco of	 	Equipment and Other	 	632484171
	 
	 	 	 	Canada Company	 	 	 	20070130 1938 1531
	 
	 	 	 	 	 	No Fixed Maturity Date	 	0376
	 
	 	 	 	 	 	 	 	(3 years)
	3.
	 	Stuart Budd &	 	Warnaco of	 	Equipment, Other and	 	610307172
	 
	 	Sons Ltd.	 	Canada Co	 	Motor Vehicle Included	 	20041103 1039 1616
	 
	 	 	 	 	 	 	 	0722
	 
	 	 	 	 	 	Amount: $95,308
 	 	(4 years)
	 
	 	 	 	 	 	Date of Maturity:	 	 
	 
	 	 	 	 	 	February 1, 2008
 	 	 
	 
	 	 	 	 	 	2005 Jaguar Vanden	 	 
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	Plas	 	 





 


 









 





	 	 	 	 	 	 	 	 	 
	 	 	Secured	 	 	 	Collateral	 	Reference File No. &
	 	 	Party(ies)	 	Debtor(s)	 	Classification	 	Registration Number(s)
	4.
	 	Xerox Canada Ltd.	 	Warnaco of	 	Equipment and Other	 	602126694
	 
	 	 	 	Canada Company	 	 	 	20031230 1021 1715
	 
	 	 	 	 	 	 	 	3205
	 
	 	 	 	 	 	 	 	(5 years)
	5.
	 	PHH Vehicle	 	Warnaco of	 	Equipment, Other and	 	082454544
	 
	 	Management	 	Canada Limited	 	Motor Vehicle Included	 	19920924 2118 1513
	 
	 	Services Inc.	 	Warnaco of	 	 	 	2585
	 
	 	 	 	Canada Company	 	 	 	(17 years)
	 
	 	 	 	Compagnie	 	 	 	 
	 
	 	 	 	Warnaco Du Canada	 	 	 	As amended by:
	 
	 	 	 	Warnaco of	 	 	 	•         19960731 1929 1529 2742
	 
	 	 	 	Canada Company	 	 	 	•        19990806 1821 1531 7758
	 
	 	 	 	/ Compagnie	 	 	 	•        20010614 1814 1531 6865
	 
	 	 	 	Warnaco Du	 	 	 	•        20010619 1800 1531 2624
	 
	 	 	 	Canada	 	 	 	•         20030721 1055 1529 5434
	 
	 	 	 	Compagnie	 	 	 	•         20030819 1537 1530 2225
	 
	 	 	 	Warnaco Du	 	 	 	•        20040811 1934 1531 1642
	 
	 	 	 	Canada / Warnaco of	 	 	 	 
	 
	 	 	 	Canada	 	 	 	
	 
	 	 	 	Company	 	 	 	
	 
	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	






 


 









 





CONFIDENTIAL TREATMENT




SCHEDULE 8.1




EXISTING INDEBTEDNESS




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Debt Balance (as of	 	 	 	 	 
	Debtor	 	Creditor	 	August 19, 2008)	 	 	Maturity	 	Type of Debt
	Warnaco of Canada Company
	 	SBI Holdings Ltd. & Anahar Holdings Ltd.	 	 	***	 	 	12/31/06	 	Capital Lease
	Calvin Klein Jeanswear Europe
	 	Banca Nazionale del Lavoro SpA	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Banca Populare di Verona	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Banca Toscana	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Banca Cr Firenze	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Fortis Bank	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Intessa SanPaolo	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Unicredit Banca d’Impresa	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	Calvin Klein Jeanswear Europe
	 	Monte Dei Paschi Di Siena	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit
	WBR Industria e Comercio de Vestuano S.A. Brazil
	 	Banco do Brasil-Giro; Banco do Braso-Fat; Banco Real ABN-Giro; Banco HSBC-Garantida	 	 	***	 	 	Continuous, as agreed by the parties	 	Local Revolving Credit






The above local revolving credit facilities under which Calvin Klein Jeanswear Europe is the debtor
are collectively referred to as the “Italian Debt Facility”.



INTERCOMPANY DEBT



See the Intercompany Notes referenced in Schedule 8.3 hereto.


 


 









 





SCHEDULE 8.2




EXISTING LIENS




Part I: U.S. Liens



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Tax Liens/	 	UCC File	 	 	 	 
	Entity	 	Jurisdiction	 	Judgments	 	Number	 	Secured Party	 	Type of Collateral	 
	Denim Holdings Inc., a subsidiary of Calvin Klein
Jeanswear Inc.
	 	New York County, NY	 	Supreme Court Case: 603702/99	 	G8612815	 	Union Transport Corp.	 	$	77,810.11	 






Part II: Canadian Liens




See attached.






 


 











 








SUMMARY OF SEARCH RESULTS




	 	 	 
	Client Name:
	 	Warnaco of Canada Company

	Matter Name:
	 	Refinancing of US and Canadian facilities

	File Number:
	 	084167







COMPAGNIE WARNACO DU CANADA




PERSONAL PROPERTY SECURITY ACT




	 	 	 
	Party Searched:
	 	Compagnie Warnaco du Canada

	Jurisdiction Searched:
	 	Province of Ontario

	Office Searched:
	 	Ministry of Government Services, Companies and
Personal Property Security Branch

	Statute Searched:
	 	Personal Property Security Act (Ontario)

	File Currency:
	 	August 10, 2008







A certified PPSA enquiry response was obtained from this Office in respect of “Compagnie Wamaco du
Canada” indicating the following registrations:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	WARNACO OF CANADA LIMITED

	 	PHH CANADA INC.
	 	 	082454544	 	 	19920924 2118

1513 2585
	 	19960731 1929

1529 2742
	 	 	4	 	 	 	 	 	 	X
	 	 	 	X
	 	X
	 	 
	 

	 	 	 	 	 	 	 	 	 	B-RENEWAL

(3 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	19990806 1821

1531 7758	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	B-RENEWAL

(5 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 


 









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	 

	 	 	 	 	 	 	 	20010614 1814

1531 6865
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1999 OLDSMOBILE INTRIGUE

VIN: 1G3WX52K1XF301921
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	A-AMENDMENT

(ADDING

COLLATERAL

DESCRIPTION

TO

REGISTRATION)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ALL PRESENT AND FUTURE MOTOR VEHICLES AND AUTOMOTIVE EQUIPMENT AND
MATERIALS-HANDLING
EQUIPMENT LEASED FROM TIME
TO TIME BY THE SECURED PARTY
TO THE DEBTOR, TOGETHER
WITH ALL PRESENT AND FUTURE
ATTACHMENTS, ACCESSIONS,
APPURTENANCES, ACCESSORIES
AND REPLACEMENT PARTS, AND
ALL PROCEEDS OF OR RELATING
TO ANY OF THE FOREGOING.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20010619 1800

1531 2624
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ADDITIONAL DEBTORS
INCLUDE :
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	WARNACO OF CANADA
COMPANY;
	 

	 	 	 	 	 	 	 	A-AMENDMENT

(TO INCLUDE ADDITIONAL
DEBTORS)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	COMPAGNIE WARNACO DU
CANADA/; 
WARNACO COMPANY OF
CANADA,

COMPANY/COMPAGNIE
WARNACO DU CANADA,; AND
COMPAGNIE WARNACO DU
CANADA/WARNACO OF
CANADA COMPANY
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20030721 1055

1529 5434
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	SECURED PARTY AMENDED

TO PHH VEHICLE
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	A-AMENDMEMT

(AMEND

SECURED


PARTY)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	MANAGEMENT SERVICES INC. 

2233 ARGENTIA RD., SUITE 

400, MISSISSAUGA, ON 


L5N 2X7







 


2











 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	 

	 	 	 	 	 	 	 	20030819 1537

1530 2225
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1999 OLDSMOBILE INTRIGUE

VIN: 1G3WX53K1XF301921
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	F-PART

DISCHARGE	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20040811 1934

1531 1642	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	B-RENEWAL

(5 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 


3









 







WARNACO OF CANADA COMPANY




PERSONAL PROPERTY SECURITY ACT




	 	 	 
	Party Searched:
	 	Warnaco of Canada Company

	Jurisdiction Searched:
	 	Province of Ontario

	Office Searched:
	 	Ministry of Government Services, Companies and
Personal Property Security Branch

	Statute Searched:
	 	Personal Property Security Act (Ontario)

	File Currency:
	 	August 10, 2008







A certified PPSA enquiry response was obtained from this Office in respect of “Warnaco of Canada Company”
indicating the following registrations:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	WARNACO OF 

CANADA 

COMPANY

	 	JAGUAR CREDIT
CANADA LEASING,
A DIV/CANADIAN
ROAD LEASING CO
	 	 	642614445	 	 	20080208 1954

1531 7083
	 	 	 	 	3	 	 	 	 	 	 	X
	 	 	 	X
	 	X
	 	2008 JAGUAR VANDEN PLAS

VIN: SAJXA82B78SH21378
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	CBSC CAPITAL
	 	 	632484171	 	 	20070130 1938

1531 0376
	 	 	 	 	3	 	 	 	 	 	 	X
	 	 	 	X	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	BANK OF AMERICA,

N.A.
	 	 	613611342	 	 	20050324 1214

1862 5725
	 	 	 	 	10	 	 	 	 	X
	 	X
	 	X
	 	X
	 	X	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	BANK OF AMERICA,

NATIONAL

ASSOCIATION
	 	 	613611351	 	 	20050324 1214

1862 5726
	 	 	 	 	10	 	 	 	 	X
	 	X
	 	X
	 	X
	 	X	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	STUART BUDD &

SONS LTD
	 	 	610307172	 	 	20041103 1039

1616 0722
	 	 	 	 	4	 	 	 	 	 	 	X
	 	 	 	X
	 	X
	 	2005 JAGUAR VANDEN PLAS

VIN: SAJXA82C25SG36310
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	XEROX CANADA

LTD
	 	 	602126694	 	 	20031230 1021

1715 3205
	 	 	 	 	5	 	 	 	 	 	 	X
	 	 	 	X	 	 	 	 





 


4









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	 

	 	 	 	PHH CANADA INC.	 	 	 	082454544	 	19920924 2118
1513 2585	 	19960731 1929
1529 2742	 	 	 	4	 	 	 	 	 	 	 	 	 	X	 	 	 	 	 	X	 	X	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	B-RENEWAL

(3 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	19990806 1821

1531 7758	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	B-RENEWAL

(5 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20010614 1814

1531 6865
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1999 OLDSMOBILE INTRIGUE
VIN: 
1G3WX52K1XF301921
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	A-AMENDMENT

(ADDING

COLLATERAL

DESCRIPTION

TO

REGISTRATION)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ALL PRESENT AND FUTURE MOTOR VEHICLES AND
AUTOMOTIVE EQUIPMENT AND
MATERIALS-HANDLING
EQUIPMENT LEASED FROM TIME
TO TIME BY THE SECURED PARTY
TO THE DEBTOR, TOGETHER
WITH ALL PRESENT AND FUTURE
ATTACHMENTS, ACCESSIONS,
APPURTENANCES, ACCESSORIES
AND REPLACEMENT PARTS, AND
ALL PROCEEDS OF OR RELATING
TO ANY OF THE FOREGOING.
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20010619 1800

1531 2624


A-AMENDMENT

(TO INCLUDE

ADDITIONAL

DEBTORS)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ADDITIONAL DEBTORS
INCLUDE:

WARNACO OF CANADA
COMPANY;

COMPAGNIE WARNACO DU
CANADA/;

WARNACO COMPANY OF
CANADA,

COMPANY/COMPAGNIE
WARNACO DU CANADA,; AND
COMPAGNIE WARNACO DU
CANADA/WARNACO OF
CANADA COMPANY





 


5









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	 

	 	 	 	 	 	 	 	20030721 1055

1529 5434


A-AMENDMENT

(AMEND

SECURED

PARTY)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	SECURED PARTY AMENDED
TO PHH VEHICLE

MANAGEMENT SERVICES INC.
2233 ARGENTIA RD., SUITE
400, MISSISSAUGA, ON
L5N 2X7
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20030819 1537

1530 2225
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1999 OLDSMOBILE INTRIGUE

VIN: 1G3WX53K1XF301921
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	F-PART

DISCHARGE	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20040811 1934

1531 1642	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	B-RENEWAL

(5 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 


6









 









WARNACO DU CANADA LIMITED




PERSONAL PROPERTY SECURITY ACT




	 	 	 
	Party Searched:

	 	Warnaco du Canada limited
	Jurisdiction Searched:

	 	Province of Ontario
	Office Searched:

	 	Ministry of Government Services, Companies and Personal Property Security Branch
	Statute Searched:

	 	Personal Property Security Act (Ontario)
	File Currency:

	 	August 10, 2008






A certified PPSA enquiry response was obtained from this Office in respect of “Warnaco du Canada
Limited” indicating the following registrations:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	WARNACO OF 

CANADA LIMITED

	 	PHH CANADA INC.
	 	 	082454544	 	 	19920924 2118

1513 2585
	 	19960731 1929

1529 2742
	 	 	4	 	 	 	 	 	 	X
	 	 	 	X
	 	X	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	B-RENEWAL

(3 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	19990806 1821

1531 7758	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	B-RENEWAL

(5 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	20010614 1814

1531 6865
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1999 OLDSMOBlLE INTRIGUE

VIN: 1G3WX52K1XF301921
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	A-AMENDMENT (ADDING COLLATERAL

DESCRIPTION

TO

REGISTRATION)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ALL PRESENT AND FUTURE MOTOR VEHICLES AND AUTOMOTIVE EQUIPMENT AND MATERIALS-HANDLING
EQUIPMENT LEASED FROM TIME
TO TIME BY THE SECURED PARTY
TO THE DEBTOR, TOGETHER
WITH ALL PRESENT AND FUTURE
ATTACHMENTS, ACCESSIONS,
APPURTENANCES, ACCESSORIES
AND REPLACEMENT PARTS, AND
ALL PROCEEDS OF OR RELATING
TO ANY OF THE FOREGOING.





 


7









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	INITIAL	 	AMENDMENT	 	REG’N	 	COLLATERAL	 	GENERAL COLLATERAL
	 	 	SECURED PARTY	 	REFERENCE	 	REGISTRATION	 	REGISTRATION	 	PERIOD	 	CLASSIFICATIONS	 	DESCRIPTION /
	DEBTOR NAME	 	NAME	 	FILE NO.	 	NO.	 	NO.	 	(in years)	 	CG	 	I	 	E	 	A	 	O	 	MV	 	ADDITIONAL NOTES
	 

	 	 	 	 	 	 	 	20010619 1800

1531 2624


A-AMENDMENT

(TO INCLUDE

ADDITIONAL

DEBTORS)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	ADDITIONAL DEBTORS
INCLUDE:

WARNACO OF CANADA
COMPANY;

COMPAGNIE WARNACO DU
CANADA/;

WARNACO COMPANY OF
CANADA,

COMPANY/COMPAGNIE
WARNACO DU CANADA,; AND
COMPAGNIE WARNACO DU
CANADA/WARNACO OF
CANADA COMPANY
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20030721 1055

1529 5434


A-AMENDMENT

(AMEND

SECURED

PARTY)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	SECURED PARTY AMENDED
TO PHH VEHICLE
MANAGEMENT SERVICES INC.
2233 ARGENTIA RD., SUITE
400, MISSISSAUGA, ON
L5N 2X7
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	20030819 1537

1530 2225
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1999 OLDSMOBILE INTRIGUE

VIN: 1G3WX53K1XF301921
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	F-PART

DISCHARGE


20040811 1934

1531 1642	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	B-RENEWAL

(5 YEARS)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 







 


8











 









Robinson Sheppard Shapiro

S.E.N.C.R.L. • LLP.

Avocats • Barristers & Solicitors




SEARCH REPORT

Register of Personal and Movable Real Rights (Quebec) (“RPMRR”)




	 	 	 	 	 
	Name(s) searched:
	 	 	 	 
	 
	Current name(s)

	 	•
	 	Warnaco of Canada Company
	 
	 	 	 	 
	Previous name(s) (as per Sharon

	 	•
	 	Compagnie Warnaco du Canada
	Druker’s request)

	 	•
	 	Warnaco du Canada Limitee
	 

	 	•
	 	3024368 Nova Scotia Company
	 

	 	•
	 	Authentic Fitness of Canada Inc.
	 

	 	•
	 	Condition Physique Authentique du Canada Inc.
	 
	 	 	 	 
	Trade name(s)

	 	•
	 	Nil.






	 	 	 
	Date of search:

	 	August 5, 2008
	Date and time of certification of the RPMRR:

	 	August 5, 2008 at 1:10 p.m.






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	Nature of Rights &	 	 	 	(Cdn $)&	 	Collateral Affected
	 	 	Registration Details	 	Parties	 	Interest Rate	 	(summary only)
	1.

	 	Rights resulting from a lease

# 06-0194340-0017

Date: April 12, 2006 at 2:52 p.m.

Expiry: April 5, 2012
	 	Lessor: 

Xerox Canada Ltd.

Lessee: 

Warnaco of Canada Company Inc. (sic)
	 	n/a
	 	Equipment, other 

All present and future office equipment and
software supplied or financed from time to time by
the secured party (whether by lease, conditional sale
or otherwise), whether or not manufactured by the secured party or any affiliate thereof.







IMPORTANT DISCLAIMERS:



A) The information set forth in this search results summary does not constitute (and should not be
construed as) a legal opinion of Robinson Sheppard Shapiro llp. For more information in
connection with each registration summarized herein, please refer to the underlying computer
printouts from the RPMRR corresponding to such registration.



B) We draw to your attention that the RPMRR is a computer data base which may suffer from sporadic
glitches and manual transcription errors of the registrar which can give rise to uncertainties.
Although rare, there have been instances where a proper search of the RPMRR has failed to disclose
all entries.





 


Page 1 of 6









 












	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	Nature of Rights &	 	 	 	(Cdn $)&	 	Collateral Affected
	 	 	Registration Details	 	Parties	 	Interest Rate	 	(summary only)
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 

	 	•   Nil.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	2.

	 	Rights resulting from a lease

# 06-0194340-0007

Date: April 12, 2006 at 2:52 p.m.

Expiry: April 3, 2012
	 	Lessor:

Xerox Canada Ltd.

Lessee:

Warnaco of Canada Company Inc. (sic)
	 	n/a
	 	Equipment, other

All present and future office equipment and
software supplied or financed from time to time by the secured party (whether by lease, conditional sale
or otherwise), whether or not manufactured by the secured party or any affiliate thereof.

	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 

	 	•   Nil.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	3.

	 	Rights resulting from a lease and
assignment thereof

# 06-0118596-0062

Date: March 9, 2006 at 2:57 p.m.

Expiry: May 16, 2009
	 	Lessor:

Des Sources Dodge Chrysler Ltee 

Assignee:

Services Financiers DaimlerChrysler
Canada Inc., acting under its business
name: Services Financiers Chrysler

Lessee:

Warnaco of Canada Company
	 	n/a
	 	Dodge Grand Caravan SXT, 2006

S.N.: 2D4GP44L76R653741

	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 	 	•     The assignment grants all rights;

	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of rights in Leases registered on April 27, 2007 under number 07-0226452-0001, DaimlerChrysler Financial Services Canada Inc.,
Services Financiers DaimlerChrysler Canada Inc. and DaimlerChrysler Canada Inc. assigned to Computershare Trust Company of Cnada (sic) acting
as Trustee for King Street Funding Trust, all right, title and interest of DCCI and DCFSC in the Designated Eligible Leases, as more fully described in
the registration (this registration was modified by a rectification of an inscription dated June 21, 2007 under number 07-0357060-0001);


	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of the universality of claims and rights registered on May 12, 2008 under number 08-0269491-0001, King Street Funding Trust
assigned to Computershare Trust Company of Canada, acting as Trustee for DaimlerChrysler Financial Services Canada Inc., Chrysler Canada Inc.
and Services Financiers DaimlerChrysler Canada Inc., all of the remaining rights of King Street Funding Trust in and to a) the universality of claims
and b) the rights resulting from the leases registered at the RPMRR listed in the registration (as more fully described in the registration);


	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of rights registered on May 12, 2008 under number 08-0269497-0001, Chrysler Canada Inc. and DaimlerChrysler Financial
Services Canada Inc. assigned to Chrysler Lease Receivables Partnership, all of the right, title and interest of each Assignor in and to all Québec
Leases (other than Excluded Québec Leases) and all Related Lease Rights and the rights of the Assignors under the rights resulting from the leases
registered at the RPMRR listed in the registration (this registration was modified by a rectification of an inscription dated May 30, 2008 under number 08-0315817-0001);







 


Page 2 of 6









 










	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	Nature of Rights &	 	 	 	(Cdn $)&	 	Collateral Affected
	 	 	Registration Details	 	Parties	 	Interest Rate	 	(summary only)
	 	 	•     By an assignment of rights registered on May 12, 2008 under number 08-0269500-0001, Chrysler Lease Receivables Partnership assigned to Computershare Trust Company of Canada, acting as Trustee for Chrysler Lease Trust, all right, title and interest of the Partnership in an to all Designated Eligible Leases, including the Related
lease Rights and the rights of the Partnership under the rights resulting from the leases registered at the RPMRR listed in the registration (this registration was modified by a rectification of an inscription dated May 30, 2008 under number 08-0315817-0004).


	 
	 	 	 	 	 	 	 	 
	4.

	 	Conventional hypothec without delivery

# 05-0176608-0003

Date: April 1, 2005 at 9:00 a.m.

Expiry: April 1, 2015
	 	Holder:

Bank of America, National Association

Grantor:

Warnaco of Canada Company 

Warnaco of Canada Company, acting
under its business name: Warnaco du Canada
	 	$25,000,000



25% per annum
	 	The universality of all of the Grantor’s movable property, present and future, corporeal and incorporeal, of whatever nature and kind and wheresoever situated (hereinafter collectively called the “Collateral”), including, without limitation, all tools and equipment pertaining to the enterprises of the Grantor, all claims and customer accounts, all securities, all patents, trademarks and other intellectual property rights and all corporeal movables included in
 the assets of any of the Grantor’s enterprises kept for sale, lease or processing in the manufacture or transformation
of property intended for sale, for lease or for use in providing a service.

	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 

	 	•   Nil.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	5.

	 	Conventional hypothec without delivery
 # 05-0176608-0002

Date: April 1, 2005 at 9:00 a.m.

Expiry: April 1, 2015
	 	Holder: 

Bank of America, National
Association

Grantor:

Warnaco of Canada Company 

Warnaco of Canada Company, acting under
its business name: Warnaco du Canada
	 	$25,000,000

25% per annum
	 	The universality of all of the Grantor’s movable property, present and future, corporeal and incorporeal, of whatever nature and kind and wheresoever situated (hereinafter collectively called the “Collateral”), including, without limitation, all tools and equipment pertaining to the enterprises of the Grantor, all claims and customer accounts, all securities, all patents, trademarks and other intellectual property rights and all corporeal movables included in
 the assets of any of the Grantor’s enterprises kept for sale, lease or processing in the manufacture or transformation of
property intended for sale, for lease or for use in providing a service.






 


Page 3 of 6









 










	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	Nature of Rights &	 	 	 	(Cdn $)&	 	Collateral Affected
	 	 	Registration Details	 	Parties	 	Interest Rate	 	(summary only)
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 

	 	•   Nil.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	6.

	 	Rights resulting from a lease

# 04-0526417-0011

Date: September 9, 2004 at 2:58 p.m.

Expiry: September 8, 2010

	 	Lessor:

Xerox Canada Ltd

Lessee:

Warnaco of Canada Company
	 	n/a
	 	Equipment, other


All present and future office equipment and software supplied or financed from time to time by the secured party (wheather (sic) by lease, conditional sale or otherwise), whether or not manufactured by the secured party or any affiliate thereof.

	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 

	 	•   Nil.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	7.

	 	Rights of ownership of the Lessor under a leasing contract or crédit-bail

# 03-0632560-0001

Date: November 26, 2003 at 10:18 a.m.

Expiry: October 30, 2008
	 	Lessor (crédit-bailleur): Équipements G.N. Johnston Ltée 

Lessee (crédit-preneur): Warnaco du Canada (sic)
	 	n/a
	 	Chariots Raymond Model: EASI-OPC30TT S.N.: EASI-03-AL33171, EASI-03-AL33172, EASI-03-AL33173, EASI-03-AL33174 Batteries Oldham model: 12-125-13 

S.N.: D28333, D28334, D28335, D28336
	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 

	 	•   Nil.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	8.

	 	Change of name

# 01-0301961-0003

Date: August 21, 2001 at 1:49 p.m.

Expiry: n/a
	 	Old Dame:

Warnaco of Canada Limited

Warnaco du Canada Limitée

New name:

Warnaco of Canada Company / Compagnie
Warnaco du Canada
Warnaco of Canada Company 

Compagnie Warnaco du Canada
	 	n/a
	 	n/a
	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 	 	•     This change of name affects a Rights of ownership of the Lessor under a leasing contract or crédit-bail (refer to #9 for references).







 


Page 4 of 6









 










	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	Nature of Rights &	 	 	 	(Cdn $)&	 	Collateral Affected
	 	 	Registration Details	 	Parties	 	Interest Rate	 	(summary only)
	9.

	 	Rights of ownership of the Lessor under a leasing contract or crédit-bail

(Global registration (art. 2961.1 C.c.Q.))

# 00-0207115-0008 

Date: July 25, 2000 at 9:00 a.m. 

Expiry: July 24, 2010
	 	Lessor (crédit-bailleur):

PHH Vehicle Management Services
Inc.

Lessee (crédit-preneur):

Warnaco of Canada Limited

Warnaco du Canada Limitee
	 	n/a
	 	All present and future motor vehicles (including, without limitation, passenger automobiles, trucks, truck tractors, truck trailers, truck chassis, or truck bodies),
automotive equipment (including, without limitation, trailers, boxes
and refrigeration units), and materials-handling equipment leased from time to time by the Lessor to the Lessee, together with all present and future attachments, accessions, appurtenances, accessories and replacement parts, and all proceeds of or relating to any of the foregoing.

	 
	 	 	 	 	 	 	 	 
	 	 	Ancillary Registrations & Comments:
	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of rights registered on September 14, 2000 under number 00-0274576-0001, PHH Vehicle Management Services Inc. and PHH
Services de Gestion de Vehicules Inc. assigned to TD Trust Company, acting as Trustee for Leaf Trust, all of the Assignor’s rights which have been
registered at the RPMRR and listed in the registration;


	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of rights registered on September 14, 2000 under number 00-0274576-0002, PHH Vehicle Management Services Inc. and PHH
Services de Gestion de Vehicules Inc. assigned to TD Trust Company, acting as Trustee for Leaf Trust, all of the Assignor’s rights which have been
registered at the RPMRR and listed in the registration;


	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of rights registered on September 14, 2000 under number 00-0274576-0003, PHH Vehicle Management Services Inc. and PHH
Services de Gestion de Vehicules Inc. assigned to TD Trust Company, acting as Trustee for Leaf Trust, all of the Assignor’s rights which have been
registered at the RPMRR and listed in the registration;


	 
	 	 	 	 	 	 	 	 
	 	 	•     By an assignment of rights registered on September 14, 2000 under number 00-0274576-0004, PHH Vehicle Management Services Inc. and PHH
Services de Gestion de Vehicules Inc. assigned to TD Trust Company, acting as Trustee for Leaf Trust, all of the Assignor’s rights which have been
registered at the RPMRR and listed in the registration;
Change of name (refer to #8 for references);


	 
	 	 	 	 	 	 	 	 
	 	 	•     Change of name (refer to #8 for references);


	 
	 	 	 	 	 	 	 	 
	 	 	•     By a modification a of published right registered on September 5, 2003 under number 03-0465017-0009, the address of PHH Vehicle Management
Services Inc. was changed.









 


Page 5 of 6











 









	 	 	 	 	 
	Name(s) searched:
	 	 	 	 
	 
	Current name(s)

	 	•
	 	4278941 Canada Inc.
	 
	 	 	 	 
	Previous name(s) (as disclosed per corporate search)

	 	•
	 	Nil.
	 
	 	 	 	 
	Trade name(s)

	 	•
	 	Nil.






	 	 	 
	Date of search:

	 	August 5, 2008
	Date and time of certification of the RPMRR: 

	 	August 5, 2008 at 1:10 p.m.






	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Amount	 	 
	 	 	 	 	 	 	(Cdn $) &	 	 
	 	 	Nature of Rights &	 	 	 	Interest	 	Collateral Affected
	 	 	Registration Details	 	Parties	 	Rate	 	(summary only)
	1.

	 	Clear	 	 	 	 	 	 
	 
	 	 	Ancillary Registrations & Comments:	 	 
	 
	 

	 	•     Nil.	 	 	 	 	 	 





 


Page 6 of 6









 





SCHEDULE “A”

Searches and Inquiries




We have conducted searches in the Province of Nova Scotia with respect to Warnaco of Canada
Company and the following predecessor names:




	•	 	Compagnie Warnaco du Canada







	•	 	Warnaco of Canada Limited







	•	 	Warnaco du Canada Limitée







	•	 	3024368 Nova Scotia Company







	•	 	Authentic Fitness of Canada Inc.







	•	 	Condition Physique Authentique du Canada Inc.







	•	 	171173 Canada Inc.







	•	 	4278941 Canada Inc.






The results of our searches are as follows:



Corporate




Warnaco of Canada Company was formed by the amalgamation under the laws of Nova Scotia of
Authentic Fitness of Canada Inc. and Warnaco of Canada Company/Compagnie Warnaco du Canada
effective January 4, 2004. The company is up to date with respect to the filing of its annual
returns.



Personal Property Security Act (includes any outstanding executions)

(current to August 22, 2008 for Warnaco of Canada Company and
August 11, 2008 for all other names)



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 was discharged by discharge statement no. 14337869 entered 2008-08-25 but
remains searchable for a period of thirty days from the date of discharge.



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 was discharged by discharge statement no. 14338024 entered 2008-08-25 but
remains searchable for a period of thirty days from the date of discharge.






 


 









 










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.



Bank Act (Canada)




We have received certificates from the Canadian Securities Registration Systems each dated August
11, 2008, confirming that there are no outstanding registrations under the Bank Act (Canada) at the
Halifax Office of the Bank of Canada with respect to Warnaco of Canada Company or any of the
predecessor names.



Bankruptcy and Insolvency Act (Canada)




We have obtained certificates from the Office of the Superintendent of Bankruptcy, Industry Canada
each dated August 14, 2008, indicating that a name search has been made of the public record kept
by the Superintendent for all of the Districts and divisions in Canada under the Bankruptcy and
Insolvency Act (Canada) and that the public record was found to contain no facts nor any reference
to Warnaco of Canada Company or any of the predecessor names from 1978 to 2008/08/11.


 


-2-









 





CONFIDENTIAL TREATMENT




SCHEDULE 8.3




EXISTING INVESTMENTS




STOCK




None.



NOTES RECEIVABLE




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Status (as of EOM
	Customer	 	Original Amount	 	Commencement Date	 	Remaining Balance	 	12/2007)
	***
	 	***	 	May-03	 	***	 	In Collections
	***
	 	***	 	Dec-03	 	***	 	In Collections
	***
	 	***	 	Dec-03	 	***	 	Current






INTERCOMPANY DEBT




	 	 	 	 	 
	Creditor	 	Debtor	 	Amount (USD)
	Warnaco B.V.

	 	Eratex GmbH
	 	***
	Eratex GmbH

	 	Warnaco B.V.
	 	***
	Lintex-Warnaco S.a.r.l.

	 	Warnaco B.V.
	 	***
	Lintex-Warnaco S.a.r.l.

	 	Warnaco B.V.
	 	***
	Lenitex-Warnaco Handelsgesellschaft

	 	Warnaco B.V.
	 	***
	Warnaco B.V.

	 	Aiglon
	 	***
	Warnaco Netherlands B.V.

	 	Eratex GmbH
	 	***
	Mullion International Limited

	 	Warnaco B.V.
	 	***
	WF Overseas Fashion C.V.

	 	Warnaco B.V.
	 	***
	WF Overseas Fashion C.V.

	 	(Warnaco B.V.
	 	***
	Warnaco B.V.

	 	Warnaco Poland Sp.zo.o
	 	***
	Warnaco Inc.

	 	CKJ UK Ltd.
	 	***
	Warnaco B.V.

	 	Warnaco Germany GmbH
	 	***
	Warnaco Inc.

	 	CK Jeanswear Asia Ltd.
	 	***
	Warnaco B.V.

	 	Warner’s (United Kingdom) Limited
	 	***
	Warnaco (H.K.), Ltd.

	 	Warnaco Taiwan Co. Ltd.
	 	***
	WF Overseas Fashion C.V.

	 	Warnaco France S.A.R.L.
	 	***
	WF Overseas Fashion C.V.

	 	CK Jeanswear Europe S.r.l.
	 	***
	WF Overseas Fashion C.V.

	 	CKJ UK Ltd.
	 	***
	WF Overseas Fashion C.V.

	 	CK Jeanswear Australia Pty Limited
	 	***
	Euro Retail S.r.l.

	 	WF Overseas Fashion C.V.
	 	***
	Warnaco of Canada Company

	 	WF Overseas Fashion C.V.
	 	***
	Mullion International Limited

	 	WF Overseas Fashion C.V.
	 	***
	Designer Holdings Ltd.

	 	Calvin Klein Jeanswear Company
	 	***
	Warnaco Inc.

	 	Ocean Pacific Apparel Corp.
	 	***







 


 











 




SCHEDULE 8.4




ASSET SALES




None.



 


 









 







EXHIBIT A

TO

CREDIT AGREEMENT




FORM OF ASSIGNMENT AND ACCEPTANCE




ASSIGNMENT AND ACCEPTANCE dated as of                                         
 _____, 20
 _____ 
between [NAME OF ASSIGNOR] (the
“Assignor”) and [NAME OF ASSIGNEE] (the “Assignee”).



Reference is made to the 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 Warnaco of Canada Company, as borrower (the “Borrower”), The Warnaco Group, Inc., as a
guarantor, the Lenders and Issuers party thereto, Bank of America, N.A., as administrative agent
for the Revolving Credit Facility (in such capacity, the “Administrative Agent”) and as Collateral
Agent for the Lenders and the Issuers (together with the Administrative Agent, the “Facility
Agents”), and the other Persons party thereto. Capitalized terms used herein and not otherwise
defined herein are used herein as defined in the Credit Agreement.




The Assignor and the Assignee hereby agree as follows:




	1.	 	As of the Effective Date (as defined below), the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, all of the
Assignor’s rights and obligations under the Credit Agreement to the extent related to the
amounts and percentages specified on Section 1 of Schedule I hereto.







	2.	 	The Assignor (a) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and clear of any
adverse claim, (b) makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document or any other instrument or document furnished
pursuant thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement or any other Loan Document or any other
instrument or document furnished pursuant thereto and (c) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any Warnaco Entity or
the performance or observance by any Loan Party of any of its obligations under the Credit
Agreement or any other Loan Document or any other instrument or document furnished pursuant
thereto.






 


 









 






	3.	 	The Assignee (a) agrees that it will, independently and without reliance upon the Facility
Agents, the Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in taking or not
taking action under the Credit Agreement, (b) appoints and authorizes each Facility Agent to
take such action as agent on its behalf and to exercise such powers under the Credit Agreement
and the other Loan Documents as are delegated to each such Facility Agent by the terms
thereof, together with such powers as are reasonably
incidental thereto, and confirms that, in accordance with Section 10.1(a)(iii) for purposes
of creating a solidarité active in accordance with Article 1541 of the Civil Code of Quebec,
it has been conferred the status of solidary creditor with each Facility Agent and each
other Lender, Issuer and Secured Party, (c) agrees that it will perform in accordance with
their terms all of the obligations that, by the terms of the Credit Agreement, are required
to be performed by it as a Lender, (d) represents and warrants that it is an Eligible
Assignee, (e) confirms it has received such documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Assignment and
Acceptance, and (f) specifies as its Domestic Lending Office (and address for notices) the
office set forth beneath its name on the signature pages hereof.










	4.	 	Following the execution of this Assignment and Acceptance by the Assignor and the Assignee,
it will be delivered to the Administrative Agent (together with an assignment fee in the
amount of U.S.$3,500 payable by the Assignee to the Administrative Agent pursuant to Section
11.2(b)(Assignments and Participations)) for acceptance and recording in the Register by the
Administrative Agent. The effective date of this Assignment and Acceptance shall be the
effective date specified in Section 2 of Schedule I hereto (the “Effective Date”).







	5.	 	Upon such acceptance and recording in the Register by the Administrative Agent, then, as of
the Effective Date, (a) the Assignee shall be a party to the Credit Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and obligations under the
Credit Agreement of a Lender and, if such Lender were an Issuer, of such Issuer and (b) the
Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights (except those surviving the payment in full of the Obligations) and be released from
its obligations under the Loan Documents other than those relating to events or circumstances
occurring prior to the Effective Date.







	6.	 	Upon such acceptance and recording in the Register by the Administrative Agent, from and
after the Effective Date, the Administrative Agent shall make all payments under the Loan
Documents in respect of the interest assigned hereby (a) to the Assignee, in the case of
amounts accrued with respect to any period on or after the Effective Date, and (b) to the
Assignor, in the case of amounts accrued with respect to any period prior to the Effective
Date.







	7.	 	This Assignment and Acceptance shall be governed by, and be construed and interpreted in
accordance with, the internal law of the Province of Ontario.




 


 









 







	8.	 	This Assignment and Acceptance may be executed in any number of counterparts and by different
parties on separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute but one and the same agreement.
Delivery of an executed counterpart of this Assignment and Acceptance by telecopier or
electronic transmission (in pdf format) shall be effective as delivery of a manually executed
counterpart of this Assignment and Acceptance.






[SIGNATURE PAGES FOLLOW]



 


 









 





IN WITNESS WHEREOF, the parties hereto have caused this Assignment and Acceptance to be
executed by their respective officers thereunto duly authorized, as of the date first above
written.





	 	 	 	 	 
	 	[NAME OF ASSIGNOR], as Assignor

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	[NAME OF ASSIGNEE], as Assignee

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 







Domestic Lending Office (and address for notices):




[Insert Address (including contact name, fax number and e-mail address)]



 


 









 





ACCEPTED AND AGREED

this
 _____ 
day of
 _____ 
20_____:



BANK OF AMERICA, N.A.,

as Administrative Agent



	 	 	 	 
	By:	 	 	 
	 	 	Name:	 
	 	 	Title:	 







1[CONSENTED TO:



WARNACO OF CANADA COMPANY




	 	 	 	 
	By:	 	 	 
	 	 	Name:	 
	 	 	Title:]	 





 






	 	 	 
	1	 	If consent is required under Credit Agreement




 


 









 









SCHEDULE I

TO

ASSIGNMENT AND ACCEPTANCE




	 	 	 	 	 
	SECTION 1.
	 	 	 	 
	 
	 	 	 	 
	Ratable Portion assigned to Assignee:
	 	 	 	%
	 
	 	 	 	 
	Revolving Credit Commitment assigned to Assignee:
	 	$	 	 
	 
	 	 	 	 
	Aggregate Outstanding Principal Amount of Revolving
Loans Assigned to Assignee:
	 	$	 	 
	 
	 	 	 	 
	SECTION 2.
	 	 	 	 
	 
	 	 	 	 
	Effective Date:
	 	 	            __, 20__	 






 


 









 







EXHIBIT B

TO

CREDIT AGREEMENT




FORM OF NOTICE OF BORROWING




BANK OF AMERICA, N.A.,

as Administrative Agent under the

Credit Agreement referred to below

335 Madison Avenue

New York, New York 10017




                     ___, 20__





			
	Attention:	 	               
                      
   


Re: Warnaco of Canada Company (the “Borrower”)






Reference is made to the 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 the Borrower, The Warnaco Group, Inc., as a guarantor, the Lenders and Issuers party thereto,
Bank of America, N.A., as administrative agent for the Revolving Credit Facility (in such capacity,
the “Administrative Agent”) and as Collateral Agent for the Lenders and the Issuers, and certain
other Persons. Capitalized terms used herein and not otherwise defined herein are used herein as
defined in the Credit Agreement.



The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.2 (Borrowing
Procedures) of the Credit Agreement that the undersigned hereby requests a Borrowing of Revolving
Loans under the Credit Agreement and, in that connection, sets forth below the information relating
to such Borrowing (the “Proposed Borrowing”) as required by Section 2.2 (Borrowing Procedures) of
the Credit Agreement:




	 	(a)	 	The date of the Proposed Borrowing is
               ____, 20_____ 
(the
“Funding Date”).

	 
	 	(b)	 	The aggregate amount of the Proposed Borrowing is $_____,
of which amount [$_____ 
consists of Prime Rate Loans] [and $_____ 

consists of BA Rate Loans having an initial Interest Period of [one] [two]
[three] [six] month[s]].

	 
	 	(c)	 	The Available Canadian Credit (after giving effect to the
Proposed Borrowing) is $_______.






 


 









 





The undersigned hereby certifies that the following statements are true on the date hereof and
shall be true on the Funding Date both before and after giving effect to the Proposed Borrowing and
to the application of the proceeds therefrom:




	 	(a)	 	the representations and warranties set forth in Article IV
(Representations and Warranties) of the Credit Agreement and in the other Loan
Documents are true and correct [in all material respects]2 on and as
of the Funding Date with the same effect as though made on and as of such date,
except to the extent any such representation or warranty expressly relates to
an earlier date, in which case such representation or warranty shall have been
true and correct as of such earlier date; and

	 
	 	(b)	 	no Default or Event of Default has occurred and is continuing
on the Funding Date.






[The undersigned hereby irrevocably authorizes and directs the Administrative Agent to
disburse the proceeds of the Proposed Borrowing in accordance with the instructions set forth on
Schedule 1 hereto.]3




	 	 	 	 	 
	 	WARNACO OF CANADA COPMANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 






 





	 	 	 
	2	 	Insert for any Proposed Borrowing after the Closing
Date.

	 
	3	 	Insert only for Proposed Borrowing on the Closing Date.



 


 









 









[Schedule 1 to Notice of Borrowing]4




Disbursement Instructions





 






	 	 	 
	4	 	Insert only for Proposed Borrowing on the Closing Date.



 


 









 









EXHIBIT C

TO

CREDIT AGREEMENT




FORM OF SWING LOAN REQUEST




BANK OF AMERICA, N.A.,

as Administrative Agent under the

Credit Agreement referred to below

335 Madison Avenue

New York, New York 10017




                     ___, 20__




Attention: __________________




Re:
Warnaco of Canada Company (the “Borrower”)



Reference is made to the 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 the Borrower, The Warnaco Group, Inc., as a guarantor, the Lenders and Issuers party thereto,
Bank of America, N.A., as administrative agent for the Revolving Credit Facility (in such capacity,
the “Administrative Agent”) and as Collateral Agent for the Lenders and the Issuers, and certain
other Persons. Capitalized terms used herein and not otherwise defined herein are used herein as
defined in the Credit Agreement.



The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.3(b) (Swing Loans) of
the Credit Agreement that the undersigned hereby requests a Swing Loan under the Credit Agreement
and, in that connection, sets forth below the information relating to such Swing Loan (the
“Proposed Swing Loan”) as required by Section 2.3(b) (Swing Loans) of the Credit Agreement:




	 	(c)	 	The date of the Proposed Swing Loan is
 _____, 20_____ 
(the
“Funding Date”).







	 	(d)	 	The amount of the Proposed Swing Loan is $_____.







	 	(e)	 	The Available Canadian Credit (after giving effect to the
Proposed Swing Loan) is $_____.







 


 









 





The undersigned hereby certifies that the following statements are true on the date hereof and
shall be true on the Funding Date both before and after giving effect to the Proposed Swing Loan
and to the application of the proceeds therefrom:




	 	(a)	 	the representations and warranties set forth in Article IV
(Representations and Warranties) of the Credit Agreement and in the other Loan
Documents are true and correct [in all material respects]5 on and
as of the Funding Date with the same effect as though made on and as of such
date, except to the extent any such representation or warranty expressly
relates to an earlier date, in which case such representation or warranty
shall have been true and correct as of such earlier date; and





	 
	 	(b)	 	no Default or Event of Default has occurred and is continuing
on the Funding Date.






[The undersigned hereby irrevocably authorizes and directs the Administrative Agent to
disburse the proceeds of the Proposed Swing Loan in accordance with the instructions set forth on
Schedule 1 hereto.]6




	 	 	 	 	 
	 	WARNACO OF CANADA COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





 




	 	 	 
	5	 	Insert for any Proposed Borrowing after the Closing
Date.

	 
	6	 	Insert only for Proposed Borrowing on the Closing Date.



 


 









 









[Schedule 1 to Swing Loan Request]7




Disbursement Instructions





 






	 	 	 
	7	 	Insert only for Proposed Borrowing on the Closing Date.



 


 









 









EXHIBIT D

TO

CREDIT AGREEMENT




FORM OF LETTER OF CREDIT REQUEST




BANK OF AMERICA, N.A.,

as Administrative Agent under the

Credit Agreement referred to below

335 Madison Avenue

New York, New York 10017




                     ___, 20__




Attention:                                         




Re:
Warnaco of Canada Company (the “Borrower”)



Reference is made to the 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 the Borrower, The Warnaco Group, Inc., as a guarantor, the Lenders and Issuers party thereto,
Bank of America, N.A., as administrative agent for the Revolving Credit Facility (in such capacity,
the “Administrative Agent”) and as Collateral Agent for the Lenders and the Issuers, and certain
other Persons. Capitalized terms used herein and not otherwise defined herein are used herein as
defined in the Credit Agreement.



The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.4(c) (Letters of
Credit) of the Credit Agreement that the undersigned requests the issuance of a Letter of Credit by
[Name of Issuer] in the form of a [standby] [documentary] letter of credit for the benefit of [Name
of Beneficiary], in the amount of [$_____] [Amount in Alternative Currency] (the U.S. Dollar
Equivalent of which is
 _____ 
as of the date hereof), to be issued on
 _____,
 _____ 
(the
“Issue Date”) and having an expiration date of
 _____,
 _____.




The form of the requested Letter of Credit is attached hereto.



The undersigned hereby certifies that the following statements are true on the date hereof
(with respect to clauses (d) and (e) only) and shall be true on the Issue Date both before and
after giving effect to the issuance of the Letter of Credit requested hereby:




(c) the aggregate amount of the Letter of Credit Obligations then outstanding will not
exceed the Letter of Credit Sub-Limit;


 


 









 






(d) the sum of the aggregate amount of the Letter of Credit Obligations then
outstanding and the aggregate amount of the Loans then outstanding will not exceed the
Maximum Credit in effect;




(e) the representations and warranties set forth in Article IV (Representations and
Warranties) of the Credit Agreement and in the other Loan Documents are true and correct [in
all material respects]8 with the same effect as though made on and as of the date
hereof, or the Issue Date, as the case may be, except to the extent any such representation
or warranty expressly relates to an earlier date, in which case such representation or
warranty shall have been true and correct as of such earlier date; and




(f) no Default or Event of Default has occurred and is continuing on the date hereof or
the Issue Date.



	 	 	 	 	 
	 	WARNACO OF CANADA COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





 






	 	 	 
	8	 	Insert for any Proposed Issuance after the Closing
Date.



 


 









 









EXHIBIT E

TO

CREDIT AGREEMENT




FORM OF BORROWING BASE CERTIFICATE




See attached.



 


 









 





CONFIDENTIAL
TREATMENT


Warnaco of Canada Company

An Indirect Wholly-Owned Subsidiary of Warnaco Inc.

Borrowing Base

August 22, 2008

In thousands of $’s




Canadian Dollars




	 	 	 	 	 	 	 	 	 
	Gross Accounts Receivable
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Ineligible A/R:
	 	 	 	 	 	 	 	 
	Over *** Days
	 	 	 	 	 	 	***	 
	Aged Credits
	 	 	 	 	 	 	***	 
	Cross-Aged
	 	 	 	 	 	 	***	 
	Dr Memo / Chargebacks
	 	 	 	 	 	 	***	 
	Samples Invoiced
	 	 	 	 	 	 	***	 
	Consigned good (The Bay)
	 	 	 	 	 	 	***	 
	Government
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Total Ineligible A/R
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Net Eligible A/R
	 	 	 	 	 	 	***	 
	Advance Rate
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Eligible A/R @ Adv %
	 	 	 	 	 	 	***	 
	Less: Dilution Reserve ***
	 	 	***	 	 	 	***	 
	Less: Other Reserve
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Eligible A/R @ Adv %, net of Reserves
	 	 	 	 	 	 	***	 
	Sub Limit
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	A/R Availability
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Gross Inventory
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Ineligible Inventory:
	 	 	 	 	 	 	***	 
	In transit inventory
	 	 	 	 	 	 	***	 
	Discontinued Operations
	 	 	 	 	 	 	***	 
	Reserve For Shrink/FG Adjustment
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Total Ineligible Inventory
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Net Eligible Inventory
	 	 	 	 	 	 	***	 
	Advance Rates 
	 	 	***	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Eligible Inventory @ Adv %
	 	 	 	 	 	 	***	 
	Less: Rents and Fees on Leased Inv. Locations
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Eligible Inventory @ Adv %, net of Reserves
	 	 	 	 	 	 	***	 
	Sub Limit
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Inventory Availability
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Priority Payables
	 	 	 	 	 	 	***	 
	Royalties
	 	 	 	 	 	 	***	 
	Cash Collateral 
	 	 	Capped at ***	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Total Other Availability/Credit Products Reserve
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Gross Availability $’s Canadian
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Exchange Rate@ 8/22/08
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Borrowing Base $’s United States
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Line Amount
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	ADJUSTED GROSS AVAILABILITY ($’s US)
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	Loan Exposures
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	NET AVAILABILITY / (SHORTFALL) in US $
	 	 	 	 	 	 	***	 
	 
	 	 	 	 	 	 	 





 


 









 






Warnaco of Canada Company (the “Company”), by its duly authorized officer signing below, hereby
certifies that (a) the information set forth in this certificate is true and correct as of the
date(s) indicated herein and (b) the Company is in compliance with all terms and provisions
contained in (I) the loan or other agreement between the Company and Bank of America pursuant to
which this certificate is delivered (the “Agreement”) and (ii) any and all documents, instruments
and agreements evidencing, governing or securing the Agreement or otherwise executed in connection
therewith.



Authorized Signature: (1) Wallis H. Brooks

Vice President and Treasurer — Warnaco Inc.



	 	 	 
	(1)	 	If this document is being transmitted electronically, the Borrower acknowledges that by
entering the name of its duly authorized officer on the Certificate, that officer has reviewed the
Certificate and affirmed the representations, warranties and certifications referenced above.






 


 









 







EXHIBIT F

TO

CREDIT AGREEMENT




FORM OF NOTICE OF CONVERSION OR CONTINUATION




BANK OF AMERICA, N.A.,

as Administrative Agent under the

Credit Agreement referred to below

335 Madison Avenue

New York, New York 10017




                     ___, 20__




Attention:                                         




Re:
Warnaco of Canada Company (the “Borrower”)



Reference is made to the 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 the Borrower, The Warnaco Group, Inc., as a guarantor, the Lenders and Issuers party thereto,
Bank of America, N.A., as administrative agent for the Revolving Credit Facility (in such capacity,
the “Administrative Agent”) and as Collateral Agent for the Lenders and the Issuers, and certain
other Persons. Capitalized terms used herein and not otherwise defined herein are used herein as
defined in the Credit Agreement.



The Borrower hereby gives you notice, irrevocably, pursuant to Section 2.11
(Conversion/Continuation Option) of the Credit Agreement that the undersigned hereby requests a
[conversion] [continuation] on
 _____,
 _____ 
of $                     in principal amount of presently
outstanding Revolving Loans that are [Prime Rate Loans] [BA Rate Loans having an Interest Period
ending on
 _____,
 _____ 
][to] [as] [Prime Rate][BA Rate] Loans. [The Interest Period for such
amount requested to be converted to or continued as BA Rate Loans is [[one] [two] [three] [six]
month[s]].


 


 









 





In connection herewith, the undersigned hereby certifies that no Default or Event of Default
has occurred and is continuing on the date hereof.



	 	 	 	 	 
	 	WARNACO OF CANADA COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 





 


 









 







EXHIBIT G

TO

CREDIT AGREEMENT




Intentionally omitted.



 


 









 







EXHIBIT H

TO

CREDIT AGREEMENT




FORM OF COMPLIANCE CERTIFICATE




Reference is made to the 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 Warnaco of Canada Company, a Nova Scotia unlimited liability company, as borrower (the
“Borrower”), The Warnaco Group, Inc., as a guarantor (“Group”), the Lenders and Issuers party
thereto, Bank of America, N.A., as administrative agent for the Revolving Credit Facility and as
Collateral Agent for the Lenders and the Issuers, and certain other Persons. Capitalized terms used
herein without definition have the meanings ascribed to them in the Credit Agreement. This
Compliance Certificate is submitted concurrently with the [quarterly][annual] financial statements
of Group for the period ended                     
 _____, 20_____ 
[(the “Fiscal Period End Date”)]9.
Pursuant to Section 6.1(d) of the Credit Agreement, the undersigned hereby certifies that he/she is
a Responsible Officer of Group and further certifies on behalf of Group as follows:



1. The calculations attached hereto as Annex A with respect to the covenant set forth in
Section 5.1 of the Credit Agreement [(as if a Trigger Event had occurred and the Fiscal Period End
Date were the last day of a Test Period)]10 and the Applicable Margin are true, accurate
and complete, and are made in accordance with the terms and provisions of the Credit Agreement.



2. [No Default or Event of Default has occurred and is continuing and no Default or Event of
Default (as defined in the U.S. Facility) has occurred and is continuing.] [A Default or Event of
Default or a Default or Event of Default (as defined in the U.S. Facility) has occurred and is
continuing. The nature thereof and the action which Group proposes to take with respect thereto is
as follows:                     ].



3. [The amount of the Available Credit at any time during the period covered by this
Compliance Certificate did not fall to an amount which gave rise to an Accelerated Borrowing Base
Certificate Delivery Date or a Trigger Event.] [During the period covered by this Compliance
Certificate, the Available Credit fell to an amount which gave rise to an Accelerated Borrowing
Base Certificate Delivery Date and/or a Trigger Event.] [Describe which occurred and date when
first occurred]].




 





	 	 	 
	9	 	Bracketed text to be used only if no Trigger Event has
occurred and therefore Section 5.1 financial covenant not currently being
tested.

	 
	10	 	Bracketed text to be used only if no Trigger Event has
occurred and therefore Section 5.1 financial covenant not currently being
tested.



 


 









 









IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand on this
 _____ 
day of
                    ,
 _____ 




	 	 	 	 	 
	 	THE WARNACO GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title: