Document:

EX-10.2

Execution Copy

          Guaranty, dated as of August 26, 2008 (this “Guaranty”), by The Warnaco Group,
Inc., a Delaware corporation (“Group”), and each of the other entities listed on
the signature pages hereof or that becomes a party hereto pursuant to Section 25 (Additional
Guarantors) hereof (each a “Subsidiary Guarantor” and, together with Group, collectively, the
“Guarantors” and individually a “Guarantor”), in favor of the Administrative Agent, the Collateral
Agent, each Lender, each Issuer and each other holder of an Obligation (as each such term is
defined in the Credit Agreement referred to below) (each, a “Guarantied Party” and, collectively,
the “Guarantied Parties”).

W i t n e s s e t h:

          Whereas, Warnaco Inc., a Delaware corporation (the “Borrower”),
Group, the Lenders and Issuers party thereto from time to time, Bank of America, N.A. (“BofA”), as
administrative agent (in such capacity, the “Administrative Agent”) and as Collateral Agent for the
Lenders and the Issuers (together with the Administrative Agent, the “Facility Agents”), Banc of
America Securities LLC and Deutsche Bank Securities Inc., as joint lead arrangers, Banc of America
Securities LLC, Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc., as joint
bookrunners, Deutsche Bank Securities Inc., as sole syndication agent, and HSBC Business Credit
(USA) Inc., JPMorgan Chase Bank, N.A. and RBS Business Capital, a division of RBS Asset Finance
Inc., as co-documentation agents, have entered into the Credit Agreement, dated as of August 26,
2008 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”;
capitalized terms used herein but not defined herein are used with the meanings given to them in
the Credit Agreement);

          Whereas, it is condition precedent to the effectiveness of the Credit Agreement that
the Guarantors shall have executed and delivered this Guaranty to the Collateral Agent for the
benefit of the Guarantied Parties;

          Whereas, Group is the sole shareholder of the Borrower and each Subsidiary Guarantor
is a direct or indirect Subsidiary of the Borrower; and

          Whereas, each Guarantor will receive substantial direct and indirect benefits from
the making of the Loans, the issuance of the Letters of Credit and the granting of the other
financial accommodations to the Borrower under the Credit Agreement;

          Now, Therefore, in consideration of the premises set forth above, the terms and
conditions contained herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

          Section 1 Guaranty

          (a) To induce the Lenders to make the Loans and the Issuers to issue Letters of Credit, each
Guarantor hereby absolutely, unconditionally and irrevocably guarantees, jointly with the other
Guarantors and severally, as primary obligor and not merely as surety, the full and punctual
payment when due and in the currency due, whether at stated maturity or earlier, by reason of
acceleration, mandatory prepayment or otherwise in accordance herewith or any other Loan Document,
of all the Obligations, whether or not from time to time reduced or extinguished or hereafter
increased or incurred, whether or not recovery may be or hereafter may become
barred by any statute of limitations, whether or not enforceable as against the Borrower,
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now or hereafter existing, and whether due or to become due, including principal, interest
(including interest at the contract rate applicable upon default accrued or accruing after the
commencement of any proceeding under the Bankruptcy Code, or any applicable provisions of
comparable state or foreign law, whether or not such interest is an allowed claim in such
proceeding), fees and costs of collection. This Guaranty constitutes a guaranty of payment and not
of collection. Notwithstanding the foregoing, Calvin Klein Jeanswear Company shall not be required
to make any payment hereunder until the 30th day after written demand therefor has been given by
the Collateral Agent in accordance with the terms of the Credit Agreement.

          (b) Each Guarantor further agrees that, if (i) any payment made by Borrower or any other
Person and applied to the Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or
repaid, or (ii) any proceeds of Collateral are required to be returned by any Guarantied Party to
the Borrower, its estate, trustee, receiver or any other party, including any Guarantor, under any
bankruptcy law, equitable cause or any other Requirement of Law, then, to the extent of such
payment or repayment, any such Guarantor’s liability hereunder (and any Lien or other Collateral
securing such liability) shall be and remain in full force and effect, as fully as if such payment
had never been made. If, prior to any of the foregoing, this Guaranty shall have been cancelled or
surrendered (and if any Lien or other Collateral securing such Guarantor’s liability hereunder
shall have been released or terminated by virtue of such cancellation or surrender), this Guaranty
(and such Lien or other Collateral) shall be reinstated in full force and effect, and such prior
cancellation or surrender shall not diminish, release, discharge, impair or otherwise affect the
obligations of any such Guarantor in respect of the amount of such payment (or any Lien or other
Collateral securing such obligation).

          Section 2 Limitation of Guaranty

          Any term or provision of this Guaranty or any other Loan Document to the contrary
notwithstanding, the maximum aggregate amount of the Obligations for which any Subsidiary Guarantor
shall be liable shall not exceed the maximum amount for which such Subsidiary Guarantor can be
liable without rendering this Guaranty or any other Loan Document, as it relates to such Subsidiary
Guarantor, subject to avoidance under applicable law relating to fraudulent conveyance or
fraudulent transfer (including Section 548 of the Bankruptcy Code or any applicable provisions of
comparable state law) (collectively, “Fraudulent Transfer Laws”), in each case after giving effect
(a) to all other liabilities of such Subsidiary Guarantor, contingent or otherwise, that are
relevant under such Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
such Subsidiary Guarantor in respect of intercompany Indebtedness to the Borrower to the extent
that such Indebtedness would be discharged in an amount equal to the amount paid by such Subsidiary
Guarantor hereunder) and (b) to the value as assets of such Subsidiary Guarantor (as determined
under the applicable provisions of such Fraudulent Transfer Laws) of any rights to subrogation,
contribution, reimbursement, indemnity or similar rights held by such Subsidiary Guarantor pursuant
to (i) applicable Requirements of Law, (ii) Section 3 (Contribution) of this Guaranty or (iii) any
other Contractual Obligations providing for an equitable allocation among such Subsidiary Guarantor
and other Subsidiaries or Affiliates of the Borrower of obligations arising under this Guaranty or
other guaranties of the Obligations by such parties.

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          Section 3 Contribution

          To the extent that any Subsidiary Guarantor shall be required hereunder to pay a portion of
the Obligations exceeding the greater of (a) the amount of the economic benefit actually received
by such Subsidiary Guarantor from the Loans and the other financial accommodations provided to the
Borrower under the Loan Documents and (b) the amount such Subsidiary Guarantor would otherwise have
paid if such Subsidiary Guarantor had paid the aggregate amount of the Obligations (excluding the
amount thereof repaid by the Borrower and Group) in the same proportion as such Subsidiary
Guarantor’s net worth at the date enforcement is sought hereunder bears to the aggregate net worth
of all the Subsidiary Guarantors at the date enforcement is sought hereunder, then such Guarantor
shall be reimbursed by such other Subsidiary Guarantors for the amount of such excess, pro rata,
based on the respective net worths of such other Subsidiary Guarantors at the date enforcement
hereunder is sought.

          Section 4 Authorization; Other Agreements

          The Guarantied Parties are hereby authorized, without notice to, or demand upon, any
Guarantor, which notice and demand requirements each are expressly waived hereby, and without
discharging or otherwise affecting the obligations of such Guarantor hereunder (which obligations
shall remain absolute and unconditional notwithstanding any such action or omission to act), from
time to time, to do each of the following:

          (a) supplement, renew, extend, accelerate or otherwise change the time for payment of, or
other terms relating to, the Obligations, or any part of them, or otherwise modify, amend or change
the terms of any promissory note or other agreement, document or instrument (including any of the
other Loan Documents) now or hereafter executed by the Borrower and delivered to the Guarantied
Parties or any of them, including any increase or decrease of principal or the rate of interest
thereon;

          (b) waive or otherwise consent to noncompliance with any provision of any instrument
evidencing the Obligations, or any part thereof, or any other instrument or agreement in respect of
any of the Obligations (including any of the other Loan Documents) now or hereafter executed by the
Borrower and delivered to the Guarantied Parties or any of them;

          (c) accept partial payments on any of the Obligations;

          (d) receive, take and hold additional security or collateral for the payment of the
Obligations or any part of them and exchange, enforce, waive, substitute, liquidate, terminate,
abandon, fail to perfect, subordinate, transfer, otherwise alter and release any such additional
security or collateral;

          (e) settle, release, compromise, collect or otherwise liquidate any of the Obligations or
accept, substitute, release, exchange or otherwise alter, affect or impair any security or
collateral for the Obligations or any part of them or any other guaranty therefor, in any manner;

          (f) add, release or substitute any one or more other guarantors, makers or endorsers of the
Obligations or any part of them and otherwise deal with the Borrower or any other guarantor, maker
or endorser;

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          (g) apply to the Obligations any payment or recovery (x) from the Borrower, from any other
guarantor, maker or endorser of the Obligations or any part of them or (y) from any Guarantor in
such order as provided herein, in each case whether such Obligations are secured or unsecured or
guaranteed or not guaranteed by others;

          (h) apply to the Obligations any payment or recovery from any Guarantor of any of the
Obligations or any sum realized from security furnished by such Guarantor upon its indebtedness or
obligations to the Guarantied Parties or any of them, in each case whether or not such indebtedness
or obligations relate to the Obligations; and

          (i) refund at any time any payment received by any Guarantied Party in respect of any
Obligation, and payment to such Guarantied Party of the amount so refunded shall be fully
guaranteed hereby even though prior thereto this Guaranty shall have been cancelled or surrendered
(or any release or termination of any Collateral by virtue thereof), and such prior cancellation or
surrender shall not diminish, release, discharge, impair or otherwise affect the obligations of any
Guarantor hereunder in respect of the amount so refunded (and any Collateral so released or
terminated shall be reinstated with respect to such obligations); even if any right of
reimbursement or subrogation or other right or remedy of any Guarantor is extinguished, affected or
impaired by any of the foregoing (including any election of remedies by reason of any judicial,
non-judicial or other proceeding in respect of any of the Obligations that impairs any subrogation,
reimbursement or other right of such Guarantor).

          Section 5 Guaranty Absolute and Unconditional

          To the fullest extent permitted by applicable law, each Guarantor hereby waives any defense of
a surety or guarantor or any other obligor on any obligations arising in connection with or in
respect of any of the following and hereby agrees that its obligations under this Guaranty are
absolute and unconditional and shall not be discharged or otherwise affected as a result of any of
the following:

          (a) the invalidity or unenforceability of any of the Borrower’s obligations under the Credit
Agreement or any other Loan Document or any other agreement or instrument relating thereto, or any
security for, or other guaranty of the Obligations or any part of them, or the lack of perfection
or continuing perfection or failure of priority of any security for the Obligations or any part of
them;

          (b) the absence of any attempt to collect the Obligations or any part of them from the
Borrower or other action to enforce the same;

          (c) failure by any Guarantied Party to take any steps to perfect and maintain any Lien on, or
to preserve any rights to, any Collateral;

          (d) any Guarantied Party’s election, in any proceeding instituted under chapter 11 of the
Bankruptcy Code, of the application of Section 1111(b)(2) of the Bankruptcy Code or any applicable
provisions of comparable state or foreign law;

          (e) any borrowing or grant of a Lien by the Borrower, as debtor-in-possession, or extension of
credit, under Section 364 of the Bankruptcy Code or any applicable provisions of comparable state
or foreign law;

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          (f) the disallowance, under Section 502 of the Bankruptcy Code, of all or any portion of any
Guarantied Party’s claim (or claims) for repayment of the Obligations ;

          (g) any use of cash collateral under Section 363 of the Bankruptcy Code;

          (h) any agreement or stipulation as to the provision of adequate protection in any bankruptcy
proceeding;

          (i) the avoidance of any Lien in favor of the Guarantied Parties or any of them for any
reason;

          (j) any bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, liquidation
or dissolution proceeding commenced by or against the Borrower, any Guarantor or any of the
Borrower’s other Subsidiaries, including any discharge of, or bar or stay against collecting, any
Obligation (or any part of them or interest thereon) in or as a result of any such proceeding;

          (k) failure by any Guarantied Party to file or enforce a claim against the Borrower or its
estate in any bankruptcy or insolvency case or proceeding;

          (l) any action taken by any Guarantied Party if such action is authorized hereby;

          (m) any election following the occurrence of an Event of Default by any Guarantied Party to
proceed separately against the personal property Collateral in accordance with such Guarantied
Party’s rights under the UCC or, if the Collateral consists of both personal and real property, to
proceed against such personal and real property in accordance with such Guarantied Party’s rights
with respect to such real property; or

          (n) any other circumstance that might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor or any other obligor on any obligations, other than the
indefeasible payment in full of the Obligations.

          Section 6 Waivers

          To the fullest extent permitted by applicable law, each Guarantor hereby waives diligence,
promptness, presentment, demand for payment or performance and protest and notice of protest,
notice of acceptance and any other notice in respect of the Obligations or any part of them, and
any defense arising by reason of any disability or other defense of the Borrower. Each Guarantor
shall not, until the Obligations are irrevocably paid in full and the Commitments have been
terminated, assert any claim or counterclaim it may have against the Borrower or set off any of its
obligations to the Borrower against any obligations of the Borrower to it. In connection with the
foregoing, each Guarantor covenants that its obligations hereunder shall not be discharged, except
by complete performance.

          Section 7 Reliance

          Each Guarantor hereby assumes responsibility for keeping itself informed of the financial
condition of the Borrower and any endorser and other guarantor of all or any part of the
Obligations, and of all other circumstances bearing upon the risk of nonpayment of the

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Obligations, or any part thereof, that diligent inquiry would reveal, and each Guarantor
hereby agrees that no Guarantied Party shall have any duty to advise any Guarantor of information
known to it regarding such condition or any such circumstances. In the event any Guarantied Party,
in its sole discretion, undertakes at any time or from time to time to provide any such information
to any Guarantor, such Guarantied Party shall be under no obligation (a) to undertake any
investigation not a part of its regular business routine, (b) to disclose any information that such
Guarantied Party, pursuant to accepted or reasonable commercial finance or banking practices,
wishes to maintain confidential or (c) to make any other or future disclosures of such information
or any other information to any Guarantor.

          Section 8 Waiver of Subrogation and Contribution Rights

          Until the Obligations have been irrevocably paid in full and the Commitments have been
terminated, the Guarantors shall not enforce or otherwise exercise any right of subrogation to any
of the rights of the Guarantied Parties or any part of them against the Borrower or any right of
reimbursement or contribution or similar right against the Borrower by reason of this Guaranty or
by any payment made by any Guarantor in respect of the Obligations.

          Section 9 Subordination

          Each Guarantor hereby agrees that any Indebtedness of the Borrower now or hereafter owing to
any Guarantor, whether heretofore, now or hereafter created (the “Guarantor Subordinated Debt”), is
hereby subordinated to all of the Obligations and that, except as permitted under Section 8.6
(Prepayment and Cancellation of Indebtedness) of the Credit Agreement, the Guarantor Subordinated
Debt shall not be paid in whole or in part until the Obligations have been paid in full and this
Guaranty is terminated and of no further force or effect. No Guarantor shall accept any payment of
or on account of any Guarantor Subordinated Debt at any time in contravention of the foregoing.
Upon the occurrence and during the continuance of an Event of Default, the Borrower shall pay to
the Collateral Agent any payment of all or any part of the Guarantor Subordinated Debt and any
amount so paid to the Collateral Agent shall be applied to payment of the Obligations as provided
in the Credit Agreement. Each payment on the Guarantor Subordinated Debt received in violation of
any of the provisions hereof shall be deemed to have been received by such Guarantor as trustee for
the Guarantied Parties and shall be paid over to the Collateral Agent immediately on account of the
Obligations, but without otherwise affecting in any manner such Guarantor’s liability hereof. Each
Guarantor agrees to file all claims against the Borrower in any bankruptcy or other proceeding in
which the filing of claims is required by law in respect of any Guarantor Subordinated Debt, and
the Collateral Agent shall be entitled to all of such Guarantor’s rights thereunder. If for any
reason a Guarantor fails to file such claim at least ten Business Days prior to the last date on
which such claim should be filed, such Guarantor hereby irrevocably appoints the Collateral Agent
as its true and lawful attorney-in-fact and is hereby authorized to act as attorney-in-fact in such
Guarantor’s name to file such claim or, in the Collateral Agent’s discretion, to assign such claim
to and cause proof of claim to be filed in the name of the Collateral Agent or its nominee. In all
such cases, whether in administration, bankruptcy or otherwise, the person or persons authorized to
pay such claim shall pay to the Collateral Agent the full amount payable on the claim in the
proceeding, and, to the full extent necessary for that purpose, each Guarantor hereby assigns to
the Collateral Agent all of such Guarantor’s rights to any such payments or distributions to which
such Guarantor otherwise would be entitled. If the amount so paid is greater than such Guarantor’s
liability hereunder, the Collateral Agent shall pay the excess amount to the party entitled
thereto. In addition, each

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Guarantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact to exercise
all of such Guarantor’s voting rights in connection with any bankruptcy proceeding or any plan for
the reorganization of the Borrower.

          Section 10 Default; Remedies

          The obligations of each Guarantor hereunder are independent of and separate from the
Obligations. If any Obligation is not paid when due, or upon any Event of Default or upon any
default by the Borrower as provided in any other instrument or document evidencing all or any part
of the Obligations, the Collateral Agent may, at its sole election, proceed directly and at once,
without notice, against any Guarantor to collect and recover the full amount or any portion of the
Obligations then due, without first proceeding against the Borrower or any other guarantor of any
of the Obligations, or against any Collateral under the Loan Documents or joining the Borrower or
any other guarantor in any proceeding against any Guarantor. At any time after maturity of any of
the Obligations, the Collateral Agent may (unless the Obligations have been irrevocably paid in
full), without notice to any Guarantor and regardless of the acceptance of any Collateral for the
payment hereof, appropriate and apply toward the payment of the Obligations (a) any indebtedness
due or to become due from any Guarantied Party to such Guarantor and (b) any moneys, credits or
other property belonging to such Guarantor at any time held by or coming into the possession of any
Guarantied Party or any of its respective Affiliates.

          Section 11 Irrevocability

          This Guaranty shall be irrevocable as to the Obligations (or any part thereof) until the
Commitments have been terminated and all monetary Obligations then outstanding have been
irrevocably repaid in cash, at which time this Guaranty shall automatically be cancelled. Upon
such cancellation and at the written request of any Guarantor or its successors or assigns, and at
the cost and expense of such Guarantor or its successors or assigns, the Collateral Agent shall
execute in a timely manner and deliver to the Guarantors a satisfaction of this Guaranty and such
instruments, documents or agreements as are necessary or desirable to evidence the termination of
this Guaranty.

          Section 12 Setoff

          Upon the occurrence and during the continuance of an Event of Default, each Guarantied Party
and each Affiliate of a Guarantied Party may, without notice to any Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and apply toward the
payment of all or any part of the Obligations (a) any indebtedness due or to become due from such
Guarantied Party or Affiliate to such Guarantor and (b) any moneys, credits or other property
belonging to such Guarantor, at any time held by, or coming into, the possession of such Guarantied
Party or Affiliate.

          Section 13 No Marshalling

          Each Guarantor consents and agrees that no Guarantied Party or Person acting for or on behalf
of any Guarantied Party shall be under any obligation to marshal any assets in favor of any
Guarantor or against or in payment of any or all of the Obligations.

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          Section 14 Enforcement; Amendments; Waivers

          No delay on the part of any Guarantied Party in the exercise of any right or remedy arising
under this Guaranty, the Credit Agreement, any other Loan Document or otherwise with respect to all
or any part of the Obligations, the Collateral or any other guaranty of or security for all or any
part of the Obligations shall operate as a waiver thereof, and no single or partial exercise by any
such Person of any such right or remedy shall preclude any further exercise thereof. No
modification or waiver of any provision of this Guaranty shall be binding upon any Guarantied
Party, except as expressly set forth in a writing duly signed and delivered by the Facility Agents
(in accordance with Section 11.1 (Amendments, Waivers, Etc.) of the Credit Agreement). Failure by
any Guarantied Party at any time or times hereafter to require strict performance by the Borrower,
any Guarantor, any other guarantor of all or any part of the Obligations or any other Person of any
provision, warranty, term or condition contained in any Loan Document now or at any time hereafter
executed by any such Persons and delivered to any Guarantied Party shall not waive, affect or
diminish any right of any Guarantied Party at any time or times hereafter to demand strict
performance thereof and such right shall not be deemed to have been waived by any act or knowledge
of any Guarantied Party, or its respective agents, officers or employees, unless such waiver is
contained in an instrument in writing, directed and delivered to the Borrower or such Guarantor, as
applicable, specifying such waiver, and is signed by the party or parties necessary to give such
waiver under the Credit Agreement. No waiver of any Event of Default by any Guarantied Party shall
operate as a waiver of any other Event of Default or the same Event of Default on a future
occasion, and no action by any Guarantied Party permitted hereunder shall in any way affect or
impair any Guarantied Party’s rights and remedies or the obligations of any Guarantor under this
Guaranty. Any determination by a court of competent jurisdiction of the amount of any principal or
interest owing by the Borrower to a Guarantied Party shall be conclusive and binding on each
Guarantor irrespective of whether such Guarantor was a party to the suit or action in which such
determination was made.

          Section 15 [Intentionally Omitted]

          Section 16 Successors and Assigns

          This Guaranty shall be binding upon each Guarantor and upon the successors and assigns of such
Guarantors and shall inure to the benefit of the Guarantied Parties and their respective successors
and assigns; all references herein to the Borrower and to the Guarantors shall be deemed to include
their respective successors and assigns. The successors and assigns of the Guarantors and the
Borrower shall include, without limitation, their respective receivers, trustees and
debtors-in-possession. All references to the singular shall be deemed to include the plural where
the context so requires.

          Section 17 Representations and Warranties; Covenants

          Each Guarantor hereby (a) represents and warrants that the representations and warranties as
to it made by the Borrower in Article IV (Representations and Warranties) of the Credit Agreement
are true and correct on each date as required by Section 3.2(b)(i) (Conditions Precedent to Each
Loan and Letter of Credit) of the Credit Agreement and (b) agrees to take, or refrain from taking,
as the case may be, each action necessary to be taken or not taken, as the case

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may be, so that no Default or Event of Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor.

          Section 18 Governing Law

          This Guaranty 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 State of New York.

          Section 19 Submission to Jurisdiction; Service of Process

          (a) Any legal action or proceeding with respect to this Guaranty, and any other Loan Document,
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 Guaranty, each Guarantor
hereby 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 Guarantor hereby irrevocably consents to the service of any and all legal process,
summons, notices and documents in any suit, action or proceeding brought in the United States of
America arising out of or in connection with this Guaranty or any other Loan Document by the
mailing (by registered or certified mail, postage prepaid) or delivering of a copy of such process
to such Guarantor in the care of the Borrower at the Borrower’s address specified in Section 11.8
(Notices, Etc.) of the Credit Agreement. Each Guarantor 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 19 (Submission to Jurisdiction; Service of Process)
shall affect the right of the Collateral Agent or any other Guarantied Party to serve process in
any other manner permitted by law or commence legal proceedings or otherwise proceed against a
Guarantor in any other jurisdiction.

          (d) If for the purposes of obtaining judgment in any court it is necessary to convert a sum
due hereunder in Dollars into another currency, the parties hereto agree, to the fullest extent
they may effectively do so, that the rate of exchange used shall be that at which in accordance
with normal banking procedures the Collateral Agent could purchase Dollars with such other currency
at the spot rate of exchange quoted by the Collateral Agent at 11:00 a.m. (New York time) on the
Business Day preceding that on which final judgment is given, for the purchase of Dollars, for
delivery two Business Days thereafter.

          Section 20 Waiver of Judicial Bond

          To the fullest extent permitted by applicable law, each Guarantor waives the requirement to
post any bond that otherwise may be required of any Guarantied Party in connection with any
judicial proceeding to enforce such Guarantied Party’s rights to payment hereunder, security
interest in or other rights to any of the Collateral or in connection with any other legal or
equitable action or proceeding arising out of, in connection with, or related to this Guaranty or
any Loan Documents to which it is a party.

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          Section 21 Certain Terms

          The following rules of interpretation shall apply to this Guaranty: (a) the terms “herein,”
"hereof,” “hereto” and “hereunder” and similar terms refer to this Guaranty as a whole and not to
any particular Article, Section, subsection or clause in this Guaranty, (b) unless otherwise
indicated, references herein to an Exhibit, Article, Section, subsection or clause refer to the
appropriate Exhibit to, or Article, Section, subsection or clause in this Guaranty and (c) the term
"including” means “including without limitation” except when used in the computation of time
periods.

          Section 22 Waiver of Jury Trial

          Each of the Collateral Agent, the other Guarantied Parties and each Guarantor irrevocably
waives trial by jury in any action or proceeding with respect to this Guaranty or any other Loan
Document.

          Section 23 Notices

          Any notice or other communication herein required or permitted shall be given as provided in
Section 11.8 (Notices, Etc.) of the Credit Agreement and, in the case of any Guarantor, to such
Guarantor in care of the Borrower.

          Section 24 Severability

          Wherever possible, each provision of this Guaranty shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective to the extent of such
prohibition or invalidity without invalidating the remainder of such provision or the remaining
provisions of this Guaranty.

          Section 25 Additional Guarantors

          Each of the Guarantors agrees that, if, pursuant to Section 7.11(a) (Additional Personal
Property Collateral and Guaranties) of the Credit Agreement, Group or the Borrower shall be
required to cause any Subsidiary thereof that is not a Guarantor to become a Guarantor hereunder,
or if for any reason Group or the Borrower desires any such Subsidiary to become a Guarantor
hereunder, such Subsidiary shall execute and deliver to the Collateral Agent a Guaranty Supplement
in substantially the form of Exhibit A (Guaranty Supplement) attached hereto and shall thereafter
for all purposes be a party hereto and have the same rights, benefits and obligations as a
Guarantor party hereto on the Closing Date.

          Section 26 Collateral

          Each Guarantor hereby acknowledges and agrees that its obligations under this Guaranty are
secured pursuant to the terms and provisions of the Collateral Documents executed by it in favor of
the Collateral Agent, for the benefit of the Secured Parties, and covenants that it shall not grant
any Lien with respect to its property in favor, or for the benefit, of any Person other than the
Collateral Agent, for the benefit of the Secured Parties except as otherwise permitted by Section
8.2 (Liens, Etc.) of the Credit Agreement.

10

 

Guaranty

Warnaco Inc.

          Section 27 Costs and Expenses

          In accordance with the provisions of Section 11.3 (Costs and Expenses) of the Credit
Agreement, each Guarantor agrees to pay or reimburse the Collateral Agent and each of the other
Guarantied Parties upon demand for all out-of-pocket costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel and costs of settlement), incurred
by the Collateral Agent and such other Guarantied Parties in enforcing this Guaranty against such
Guarantor or any security therefor or exercising or enforcing any other right or remedy available
in connection herewith or therewith.

          Section 28 Waiver of Consequential Damages

          Each Guarantor hereby irrevocably and unconditionally waives, to the maximum extent not
prohibited by law, any right it may have to claim or recover any special, exemplary, punitive or
consequential damage in any legal action or proceeding in respect of this Guaranty or any other
Loan Document.

          Section 29 Entire Agreement

          This Guaranty, taken together with all of the other Loan Documents executed and delivered by
the Guarantors, represents the entire agreement and understanding of the parties hereto and
supersedes all prior understandings, written and oral, relating to the subject matter hereof.

          Section 30 Counterparts

          (a) This Guaranty may be executed in any number of separate 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 counterparts and attached to a single counterpart so that all signature
pages are attached to the same document. Delivery of an executed counterpart by facsimile
transmission or electronic mail shall be effective as delivery of a manually executed counterpart

[Signature Pages Follow]

11

 

          In witness whereof, this Guaranty has been duly executed by the Guarantors as of the
day and year first set forth above.

	 	 	 	 	 
	 	The Warnaco Group, Inc.,

as Guarantor

 	 
	 	By:  	/s/ Lawrence R. Rutkowski
 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Executive Vice President and CFO 	 
	 
	 	Authentic Fitness On-Line, Inc.

Calvin Klein Jeanswear Company

CCC Acquisition Corp.

CKJ Holdings, Inc.

Designer Holdings Ltd.

Ocean Pacific Apparel Corp.

Warnaco Puerto Rico, Inc.

Warnaco Retail Inc.

Warnaco Swimwear Inc.

Warnaco Swimwear Products Inc.

CKU.com Inc.

Warnaco U.S., Inc.,

as Guarantors

 	 
	 	By:  	/s/ Lawrence R. Rutkowski
 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Guaranty]

 

 

Acknowledged and Agreed

as of the date first above written: 

BANK OF AMERICA, N.A.,

as Collateral Agent

	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Kevin W. Corcoran
 

Name: Kevin W. Corcoran
	 	 
	 

	 	 	 	Title: Vice President	 	 

[Signature Page to Guaranty]EX-10.3

Execution Copy

PLEDGE AND SECURITY AGREEMENT

Dated as of August 26, 2008

among

Warnaco Inc.,

as a Grantor

and

Each Other Grantor

From Time to Time Party Hereto

and

Bank of America, N.A.

as Collateral Agent

Kaye Scholer LLP

425 Park Avenue

New York, New York 10022

 

 

          This Pledge and Security Agreement (this “Agreement”), dated as of August 26, 2008,
by Warnaco Inc., a Delaware corporation (the “Borrower”), and each of the other entities
listed on the signature pages hereof or that becomes a party hereto pursuant to Section 7.11
(Additional Grantors) (each a “Grantor” and, collectively, the “Grantors”), in favor of Bank of
America, N.A. (“BofA”), as collateral agent for the Secured Parties (as defined below) (in
such capacity, the “Collateral Agent”).

W i t n e s s e t h:

          Whereas, the Borrower, The Warnaco Group, Inc. (“Group”), the lenders and issuers
party thereto from time to time, BofA, as administrative agent for the Lenders and the Issuers (in
such capacity, the “Administrative Agent”) and as Collateral Agent (together with the
Administrative Agent, the “Agents”), Banc of America Securities LLC and Deutsche Bank Securities
Inc., as joint lead arrangers, Banc of America Securities LLC, Deutsche Bank Securities Inc. and
J.P. Morgan Securities Inc., as joint bookrunners, Deutsche Bank Securities Inc., as sole
syndication agent, and HSBC Business Credit (USA) Inc., JPMorgan Chase Bank, N.A. and RBS Business
Capital, a division of RBS Asset Finance Inc., as co-documentation agents, have entered into a
certain Credit Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”);

          Whereas, the Grantors other than the Borrower are party to the Guaranty pursuant to
which they have guaranteed the Obligations of the Borrower under the Credit Agreement;

          Whereas, Warnaco of Canada Company, a Canadian corporation (the “Canadian Borrower”),
the lenders and issuers party thereto from time to time, BofA, as administrative agent and as
collateral agent, and certain other persons have entered into or will enter into a certain Credit
Agreement (as amended, supplemented or otherwise modified from time to time, the “Canadian
Facility”);

          Whereas, in connection with the Canadian Facility, the Grantors will enter into the
Loan Party Canadian Facility Guaranty pursuant to which they will guarantee the Canadian Secured
Obligations of the Canadian Borrower under the Canadian Facility;

          Whereas, it is a condition precedent to the effectiveness of the Credit Agreement and
of the Canadian Facility that the Grantors shall have executed and delivered this Agreement to the
Collateral Agent;

          Whereas, each Grantor will receive substantial direct and indirect benefits from the
making of the Loans, the issuance of the Letters of Credit and the granting of the other financial
accommodations to the Borrower under the Credit Agreement and from the granting of the financial
accommodations to the Canadian Borrower under the Canadian Facility;

 

 

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

ARTICLE I. Defined Terms

     Section 1.1 Definitions

          (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein
have the meanings given to them in the Credit Agreement.

          (b) Terms used herein without definition that are defined in the UCC have the meanings given
to them in the UCC, including the following terms (which are capitalized herein):

“Account”

“Account Debtor”

“Certificated Security”

“Chattel Paper”

“Commercial Tort Claim”

“Commodity Account”

“Control Account”

“Deposit Account”

“Documents”

“Entitlement Holder”

“Entitlement Order”

“Equipment”

“Financial Asset”

“General Intangibles”

“Goods”

“Instruments”

“Inventory”

“Investment Property”

“Letter-of-Credit Right”

“Proceeds”

“Securities Account”

“Securities Intermediary”

“Security”

“Security Entitlement”

“Supporting Obligation”

          (c) The following terms shall have the following meanings:

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          “Additional Pledged Collateral” means any Pledged Collateral acquired by any Grantor after the
date hereof and in which a security interest is granted pursuant to Section 2.2 (Grants of Security
Interests in Collateral), including, to the extent a security interest is granted therein pursuant
to Section 2.2 (Grants of Security Interests in Collateral), (i) all Stock and Stock Equivalents of
any Person that are acquired by any Grantor after the date hereof, together with all certificates,
instruments or other documents representing any of the foregoing and all Security Entitlements of
any Grantor in respect of any of the foregoing, (ii) all additional Indebtedness from time to time
owed to any Grantor by any obligor on the Pledged Debt Instruments and the Instruments evidencing
such Indebtedness and (iii) all interest, cash, Instruments and other property or Proceeds from
time to time received, receivable or otherwise distributed in respect of or in exchange for any of
the foregoing. “Additional Pledged Collateral” may be General Intangibles (including Intellectual
Property), Instruments or Investment Property.

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

          “Agreement” means this Pledge and Security Agreement (as the same may be amended, restated,
supplemented or otherwise modified from time to time).

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

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

          “Blocked Account Letter” means a letter agreement, substantially in the form of Annex I-A
(Form of Blocked Account Letter) to this Agreement (with such changes thereto as may be agreed to
by the Administrative Agent), executed by the relevant Grantor and the Collateral Agent and
acknowledged and agreed to by the relevant Blocked Account Bank.

          “Cash Collateral Account” means any Deposit Account or Securities Account that is
(a) established by the Collateral Agent from time to time in its sole discretion to receive cash
and Cash Equivalents (or purchase cash or Cash Equivalents with funds received) from any one or
more of the Grantors or their Subsidiaries or Affiliates or Persons acting on their behalf pursuant
to the Loan Documents, (b) with such depositaries and securities intermediaries as the Collateral
Agent may determine in its sole discretion, (c) in the name of the Collateral Agent (although such
account may also have words referring to the Borrower and the account’s purpose), (d) under the
control of the Collateral Agent and (e) in the case of a Securities Account, with respect to which
the Collateral Agent shall be the Entitlement Holder and the only Person authorized to give
Entitlement Orders with respect thereto, except as otherwise provided

3

 

in Section 2.3. Notwithstanding the foregoing, the Special Cash Collateral Account shall not
constitute a Cash Collateral Account.

          “Collateral” has the meaning specified in Section 2.1 (Collateral).

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

          “Control Account” means a securities account maintained by any Grantor with the relevant
Approved Securities Intermediary (as defined in Annex 2 (Form of Control Account Agreement)) which
account is the subject of an effective Control Account Agreement, and includes all monies and other
assets on deposit or otherwise held therein.

          “Control Account Agreement” means a letter agreement, substantially in the form of Annex 2
(Form of Control Account Agreement) (with such changes as may be agreed to by the Administrative
Agent), executed by the relevant Grantor, the Collateral Agent and the relevant Approved Securities
Intermediary (as defined in Annex 2 (Form of Control Account Agreement) hereto).

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

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

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

4

 

          “Excluded Equity” means, collectively, any Voting Stock of any direct Foreign Subsidiary of
any Grantor in excess of 65% of the total outstanding Voting Stock of such Subsidiary. For the
purposes of this definition, “Voting Stock” means, as to any issuer, the issued and outstanding
shares of each class of capital stock or other ownership interests of such issuer entitled to vote
(within the meaning of Treasury Regulations § 1.956-2(c)(2)).

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

          “Foreign Person” means any Person not organized under the laws of any state of the United
States of America or the District of Columbia.

          “Grantor” has the meaning specified in the recitals to this Agreement.

          “Hedging Obligations” means all obligations of any Person under any Hedging Contract.

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

          “LLC” means each limited liability company in which a Grantor has an equity interest,
including those set forth on Schedule 2 (Pledged Collateral).

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

5

 

          “Material Intellectual Property” means Intellectual Property owned by or licensed to a Grantor
and material to any Grantor’s business.

          “Partnership” means each partnership in which a Grantor has an equity interest, including
those set forth on Schedule 2 (Pledged Collateral).

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

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

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

          “Pledged Certificated Stock” means all Certificated Securities and any other Stock and Stock
Equivalent of a Person evidenced by a certificate, Instrument or other equivalent document, in each
case owned by any Grantor, including all Stock listed on Schedule 2 (Pledged Collateral), but
excluding Excluded Equity.

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

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

          “Pledged Stock” means all Pledged Certificated Stock and all Pledged Uncertificated Stock.

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

6

 

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

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

          “Restricted Account Letter” means a letter agreement, substantially in the form of Annex I-B
(Form of Restricted Account Letter) or as otherwise acceptable to the Administrative Agent,
executed by the relevant Grantor.

          “Securities Act” means the Securities Act of 1933, as amended.

          “Secured Parties” has the meaning specified in the Credit Agreement.

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

          “Trademark License” means any agreement, whether written or oral, providing for the grant by
or to any Grantor of any right under any Trademark.

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

          “UCC” means the Uniform Commercial Code as from time to time in effect in the State of New
York; provided, however, that, in the event that, by reason of mandatory provisions of law, any of
the perfection or priority of the Collateral Agent’s (for the benefit of the Secured Parties)
security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” (as it applies to such security
interest) shall mean the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such perfection or priority and for purposes of
definitions related to such provisions.

          “Vehicles” means all vehicles covered by a certificate of title law of any state of the United
States of America or the District of Columbia.

7

 

          Certain Other Terms

          (a) 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.”

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

          (c) References herein to an Annex, Schedule, Article, Section, subsection or clause refer to
the appropriate Annex or Schedule to, or Article, Section, subsection or clause in, this Agreement.

          (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

          (e) Where the context requires, provisions relating to any Collateral, when used in relation
to a Grantor, shall refer to such Grantor’s Collateral or any relevant part thereof.

          (f) Any reference in this Agreement to a Loan Document shall include all appendices, exhibits
and schedules thereto, and, unless specifically stated otherwise, all amendments, restatements,
supplements or other modifications thereto, and as the same may be in effect at any time such
reference becomes operative.

          (g) The term “including” means “including without limitation” except when used in the
computation of time periods.

          (h) The terms “Lender,” “Issuer,” “Administrative Agent,” “Collateral Agent” and “Secured
Party” include their respective successors.

          (i) References in this Agreement to any statute shall be to such statute as amended or
modified and in effect from time to time.

ARTICLE II.  Grant of Security Interest

     Section 2.1 Collateral

          For the purposes of this Agreement, all of the following property now owned or at any time
hereafter acquired by a Grantor or in which a Grantor now has or at any time in the future may
acquire any right, title or interests (other than, in each case, Excluded Property) is collectively
referred to as the “Collateral”:

          (i) all Accounts;

          (ii) all Chattel Paper;

8

 

          (iii) all Deposit Accounts;

          (iv) all Documents;

          (v) all Equipment;

          (vi) all General Intangibles;

          (vii) all Instruments;

          (viii) all Inventory;

          (ix) all Investment Property;

          (x) all Letter-of-Credit Rights;

          (xi) all Vehicles;

          (xii) the Commercial Tort Claims described on Schedule 6 (Commercial Tort Claims) and on any
supplement thereto received by the Collateral Agent pursuant to Section 4.10 (Notice of Commercial
Tort Claims);

          (xiii) all Intellectual Property and goodwill associated therewith;

          (xiv) all books and records pertaining to any or all of the other property described in this
Section 2.1;

          (xv) all other goods and personal property of such Grantor, whether tangible or intangible and
wherever located; and

          (xvi) to the extent not otherwise included, all Proceeds of any or all of the foregoing.

     Section 2.2 Grants of Security Interests in Collateral

          Each Grantor, as collateral security for the full, prompt and complete payment and performance
when due (whether at stated maturity, by acceleration or otherwise) of the Secured Obligations of
such Grantor, hereby mortgages, pledges and hypothecates to the Collateral Agent for the benefit of
the Secured Parties, and grants to the Collateral Agent for the benefit of the Secured Parties a
lien on and security interest in, all of its right, title and interest in, to and under the
Collateral of such Grantor; provided, however, that the foregoing grant of security interest shall
not include a security interest in any Excluded Property; and provided, further, that, if and when
any property shall cease to be Excluded Property, the Collateral Agent for the benefit of the
Secured Parties shall have, and at all times from and after the date hereof be deemed to have had,
a security interest in such property.

9

 

     Section 2.3 Cash Collateral Accounts

          The Collateral Agent may establish one or more Cash Collateral Accounts with such depositaries
and Securities Intermediaries as it in its sole discretion shall determine. Each Grantor agrees
that each such Cash Collateral Account shall be under the control of the Collateral Agent and that
the Collateral Agent shall be the Entitlement Holder with respect to each such Cash Collateral
Account that is a Securities Account and the only Person authorized to give Entitlement Orders with
respect to each such Securities Account. Without limiting the foregoing, funds on deposit in any
Cash Collateral Account may be invested in Permitted Cash Equivalents at the direction of the
Collateral Agent and, except during the continuance of an Event of Default (unless otherwise agreed
to by the Administrative Agent in its sole discretion), the Collateral Agent agrees with each
Grantor to issue Entitlement Orders for 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. Neither any
Warnaco Entity nor any other Person claiming on behalf of or through any Warnaco Entity shall have
any right to demand payment of any funds held in any Cash Collateral Account at any time prior to
Discharge of Lender Claims, except (i) as provided in Section 2.9(f) of the Credit Agreement and
(ii) that the Borrower may request that the Collateral Agent apply funds in any Cash Collateral
Account directly to the immediate payment of the Loans and if paid in full then to the cash
collateralization of Letter of Credit Obligations (and not to be delivered to any Warnaco Entity).
The Collateral Agent shall apply all funds on deposit in a Cash Collateral Account as provided in
Section 2.9(f) of the Credit Agreement.

ARTICLE III.  Representations and Warranties

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

     Section 3.1 Title; No Other Liens

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

10

 

     Section 3.2 Perfection and Priority

          The security interests granted pursuant to this Agreement shall constitute valid and
continuing perfected security interests in favor of the Collateral Agent in the Collateral for
which perfection is governed by the UCC or filing with the United States Copyright Office or with
the United States Patent and Trademark Office upon (i) in the case of all Collateral in which a
security interest may be perfected by filing a financing statement under the UCC, the completion of
the filings and other actions specified on Schedule 3 (Filings) (which, in the case of all filings
and other documents referred to on such schedule, have been delivered to the Collateral Agent in
completed and duly executed form), (ii) the delivery to the Collateral Agent of all Collateral
consisting of Instruments and Certificated Securities, in each case properly endorsed for transfer
to the Collateral Agent or in blank, (iii) the execution of Control Account Agreements with respect
to Investment Property not in certificated form, (iv) the execution of a Blocked Account Letter
with respect to all Deposit Accounts of a Grantor as specified in Section 4.7(a)(i) hereto, (v) all
appropriate filings having been made with the United States Copyright Office and (vi) the receipt
by the Collateral Agent of the consent of the issuer or nominated person with respect to each
Letter-of-Credit Right that is not a Supporting Obligation. Such security interests shall be prior
to all other Liens on the Collateral except for Customary Permitted Liens having priority over the
Collateral Agent’s Liens by operation of law or otherwise as permitted hereunder or under the
Credit Agreement.

     Section 3.3 Jurisdiction of Organization; Chief Executive Office

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

     Section 3.4 Inventory and Equipment

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

     Section 3.5 Pledged Collateral

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

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

          (c) All Pledged Collateral and, if applicable, any Additional Pledged Collateral, consisting
of Certificated Securities or Instruments has been delivered to the Collateral Agent in accordance
with Section 4.4(a) (Pledged Collateral) and Section 7.11 of the Credit Agreement.

          (d) Subject to Section 4.7, all Pledged Collateral held by a Securities Intermediary in a
Securities Account is subject to a Control Account Agreement.

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

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

     Section 3.6 Deposit Accounts; Securities Accounts

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

     Section 3.7 Accounts

          No amount payable to such Grantor under or in connection with any Account is evidenced by any
Instrument or Chattel Paper that has not been delivered to the Collateral Agent, properly endorsed
for transfer, to the extent delivery is required by Section 4.5 (Delivery of Instruments and
Chattel Paper).

     Section 3.8 Intellectual Property

          (a) Schedule 5 (Intellectual Property) (i) sets forth a true and complete list of all
Intellectual Property of such Grantor on the date hereof (other than licenses to commercial
off-the-shelf software), separately identifying that owned by such Grantor and that licensed by or
to such Grantor and (ii) sets forth a true and complete list of all

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

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

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

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

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

          (f) No Grantor is in material breach of any Copyright License, Patent License or Trademark
License and no Grantor in breach of any Material License. The consummation of the transactions
contemplated by this Agreement shall not impair any of such Grantor’s right in, cause a breach of,
or impair the validity or enforceability of, any Material Intellectual Property.

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     Section 3.9 Commercial Tort Claims

          The only Commercial Tort Claims (with a reasonable expectation of recovery of at least
$1,000,000) of any Grantor existing on the Closing Date (regardless of whether the amount,
defendant or other material facts can be determined and regardless of whether such Commercial Tort
Claim has been asserted, threatened or has otherwise been made known to the obligee thereof or
whether litigation has been commenced for such claims) are those listed on Schedule 6 (Commercial
Tort Claims), which sets forth such information separately for each Grantor.

ARTICLE IV.  Covenants

          Each Grantor agrees with the Collateral Agent to the following, as long as any Secured
Obligation, Canadian Secured Obligation, Commitment or Commitment (as defined in the Canadian
Facility) remains outstanding and, in each case, unless the Requisite Lenders otherwise consent in
writing:

     Section 4.1 Generally

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

     Section 4.2 Maintenance of Perfected Security Interest; Further Documentation

          (a) Such Grantor shall maintain the security interests created by this Agreement as perfected
security interests having at least the priority described in Section 3.2 (Perfection and Priority)
and shall defend such security interests and such priority against the claims and demands of all
Persons.

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

          (c) At any time and from time to time, upon the written request of the Collateral Agent, and
at the sole expense of such Grantor, such Grantor shall promptly

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

     Section 4.3 Changes in Locations, Name, Etc.

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

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

     (ii) change its jurisdiction of organization from that referred to in Section 3.3
(Jurisdiction of Organization; Chief Executive Office); or

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

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

     Section 4.4 Pledged Collateral

          (a) Such Grantor shall (i) deliver to the Collateral Agent for the benefit of the Secured
Parties, all certificates and Instruments representing or evidencing any Pledged Collateral
(including Additional Pledged Collateral), whether now existing or hereafter acquired, in suitable
form for transfer by delivery or, as applicable, accompanied by such Grantor’s endorsement, where
necessary, or duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent, together, in respect of any Additional Pledged
Collateral, with a Pledge Amendment, duly executed by the Grantor, in substantially the form of
Annex 3

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(Form of Pledge Amendment), an acknowledgment and agreement to a Joinder Agreement duly
executed by any new Grantor, in substantially the form in the form of Annex 4 (Form of Joinder
Agreement), or such other documentation acceptable to the Collateral Agent and (ii) maintain all
other Pledged Collateral constituting Investment Property in a Securities Account subject to a
Control Account Agreement. Such Grantor authorizes the Collateral Agent to attach each Pledge
Amendment to this Agreement. The Collateral Agent shall have the right, following an Event of
Default and without notice to the Grantor, to transfer to or to register in its name or in the name
of its nominees any Pledged Collateral. The Collateral Agent shall have the right at any time to
exchange any certificate or instrument representing or evidencing any Pledged Collateral for
certificates or instruments of smaller or larger denominations.

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

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

          (d) Such Grantor shall not grant “control” (within the meaning of such term under Article
9-106 of the UCC) over any Investment Property to any Person other than the Collateral Agent.

          (e) In the case of each Grantor that is an issuer of Pledged Collateral, such Grantor agrees
to be bound by the terms of this Agreement relating to the Pledged

16

 

Collateral issued by it and shall comply with such terms insofar as such terms are applicable
to it. In the case of any Grantor that is a holder of any Stock or Stock Equivalent in any Person
that is an issuer of Pledged Collateral, such Grantor consents to (i) the exercise of the rights
granted to the Collateral Agent hereunder (including those described in Section 5.3 (Pledged
Collateral)), and (ii) the pledge by each other Grantor, pursuant to the terms hereof, of the
Pledged Stock in such Person and to the transfer of such Pledged Stock to the Collateral Agent or
its nominee and to the substitution of the Collateral Agent or its nominee as a holder of such
Pledged Stock with all the rights, powers and duties of other holders of Pledged Stock of the same
class and, if the Grantor having pledged such Pledged Stock hereunder had any right, power or duty
at the time of such pledge or at the time of such substitution beyond that of such other holders,
with all such additional rights, powers and duties. Such Grantor agrees to execute and deliver to
the Collateral Agent such certificates, agreements and other documents as may be necessary to
evidence, formalize or otherwise give effect to the consents given in this clause (e).

          (f) Such Grantor shall not, and shall not permit any of its Subsidiaries (to the extent the
Stock of such Subsidiary constitutes Collateral), without the consent of the Collateral Agent,
agree to any amendment of any Constituent Document that in any way adversely affects the perfection
of the security interest of the Collateral Agent in the Pledged Collateral pledged by such Grantor
hereunder, including any amendment electing to treat any membership interest or partnership
interest that is part of the Pledged Collateral as a “security” under Section 8-103 of the UCC, or
any election to turn any previously uncertificated Stock that is part of the Pledged Collateral
into certificated Stock.

     Section 4.5 Delivery of Instruments and Chattel Paper

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

     Section 4.6 Intellectual Property

          (a) Such Grantor (either itself or through licensees) shall (and shall cause all licensees or
sublicensees thereof to) (i) continue to use each Trademark that is Material Intellectual Property
in order to maintain such Trademark in full force and effect with respect to each class of goods
for which such Trademark is currently used, free from any claim of abandonment for non-use,
(ii) maintain as in the past the quality of products and services offered under such Trademark,
(iii) use such Trademark with the appropriate notice of registration and all other notices and
legends required by applicable

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Requirements of Law, (iv) execute and file all documents necessary to perfect a security
interest pursuant to this Agreement in favor of the Collateral Agent promptly upon adopting or
using any mark that is confusingly similar or a colorable imitation of such Trademark and (v) not
do any act or knowingly omit to do any act (and not permit or direct by express act or omission any
licensee or sublicensee thereof to do any act) whereby such Trademark (or any goodwill associated
therewith) may become destroyed, invalidated, impaired or harmed in any way; provided, however,
that (i)-(iii) and (v) above shall be subject to the good faith exercise by such Grantor of its
reasonable business judgment consistent with past practices.

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

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

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

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

          (f) Such Grantor shall notify the Collateral Agent immediately if it knows, or has reason to
know, that any application for registration or recording, registration or recording relating to any
Material Intellectual Property may become forfeited, abandoned or dedicated to the public, or of
any adverse determination or development (including the institution of, or any such determination
or development in, any proceeding in the United States Patent and Trademark Office, the United
States Copyright Office or any court or tribunal in any country) regarding such Grantor’s ownership
of, right to use, interest in, or the validity or enforceability of, any Material Intellectual
Property or such Grantor’s right to register the same or to own and maintain the same.

          (g) As set forth below, whenever such Grantor, either by itself or through its counsel or any
agent or designee, shall file an application for the registration or recording of any Intellectual
Property with the United States Patent and Trademark

18

 

Office, the United States Copyright Office or any similar office or agency within or outside
the United States or register any Internet domain name, such Grantor shall report such filing to
the Collateral Agent within five Business Days after the last day of the fiscal quarter in which
such filing occurs. Upon request of the Collateral Agent, such Grantor shall execute and deliver,
and have recorded, all agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Collateral Agent’s security interest in any such Copyright, Patent,
Trademark or Internet domain name and the goodwill and general intangibles of such Grantor relating
thereto or represented thereby.

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

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

          (j) Unless otherwise agreed to by the Collateral Agent such Grantor shall execute and deliver
to the Collateral Agent for filing in (i) the United States Copyright Office a short-form copyright
security agreement in the form attached hereto as Annex 5 (Form of Short Form Copyright Security
Agreement) for all Copyrights of such Grantor, (ii) in the United States Patent and Trademark
Office a short-form patent security agreement in the form attached hereto as Annex 6 (Form of Short
Form Patent Security Agreement ) for all Patents of such Grantor, (iii) the United States Patent
and Trademark Office and with the appropriate department or division of all appropriate States of
the United States a short-form trademark security agreement in form attached hereto as Annex 7
(Form of Short Form Trademark Security Agreement) for all Trademarks of such Grantor and (iv) with
the appropriate Internet domain name registrar, a duly executed form of assignment of all Internet
domain names of such Grantor to the Collateral Agent (together with appropriate supporting
documentation as may be requested by the Collateral Agent) in form and substance reasonably
acceptable to the Collateral Agent. In the case of clause (iv) above, such Grantor hereby
authorizes the

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Collateral Agent to file such assignment in such Grantor’s name and to otherwise perform in
the name of such Grantor all other necessary actions to complete such assignment, and each Grantor
agrees to perform all appropriate actions deemed necessary by the Collateral Agent for the
Collateral Agent to ensure such Internet domain name is registered in the name of the Collateral
Agent.

     Section 4.7 Cash Management; Deposit Accounts

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

          (b) Each Grantor shall (i) deposit in a Blocked Account or Restricted Account all cash and all
Proceeds received by such Grantor and (ii) not establish or maintain any Deposit Account with any
financial or other institution other than a Blocked Account Bank, a Restricted Account Bank, the
Collateral Agent or the Administrative Agent; provided, however, that the Warnaco Entities may at
any time maintain the following accounts not subject to this Section 4.7(b) (i) Deposit Accounts
or Securities Accounts (or their foreign equivalents) located outside of the United States with
cash or Cash Equivalents not in excess of an aggregate amount of $30,000,000, (ii) Deposit
Accounts or Securities Accounts located in the United States with cash or Cash Equivalents not in
excess of an aggregate amount of $10,000,000 and (iii) payroll, withholding tax and other fiduciary
accounts as required for operations in the ordinary course of business.

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

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

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payments to such other Blocked Account Bank or Restricted Account Bank, as specified by the
Collateral Agent.

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

     Section 4.8 Vehicles

          Upon the request of the Collateral Agent, within 30 days after the date of such request and,
with respect to any Vehicle acquired by such Grantor subsequent to the date of any such request,
within 30 days after the date of acquisition thereof, such Grantor shall file all applications for
certificates of title or ownership indicating the Collateral Agent’s first priority security
interest in the Vehicle covered by such certificate and any other necessary documentation, in each
office in each jurisdiction that the Collateral Agent shall deem advisable to perfect its security
interests in the Vehicles; provided, however, that the aggregate value of all Vehicles excepted
from the application of this Section 4.8 shall not exceed $1,000,000.

     Section 4.9 Payment of Obligations

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

     Section 4.10 Notice of Commercial Tort Claims

          Such Grantor agrees that, if it shall acquire any interest in any Commercial Tort Claim with a
reasonable expectation of recovery of at least $1,000,000 (whether from another Person or because
such Commercial Tort Claim shall have come into existence), (i) such Grantor shall, immediately
upon such acquisition, deliver to the Collateral Agent, in each case in form and substance
satisfactory to the Collateral Agent, a notice of the existence and nature of such Commercial Tort
Claim and deliver a supplement to Schedule 6 (Commercial Tort Claims) containing a specific
description of such Commercial Tort Claim, (ii) the provision of Section 2.1 (Collateral) shall
apply to such Commercial Tort Claim and (iii) such Grantor shall execute and deliver to the
Collateral Agent, in each case in form and substance satisfactory to the Collateral Agent, any
certificate, agreement and other document, and take all other action, deemed by the

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Collateral Agent to be reasonably necessary or appropriate for the Collateral Agent to obtain,
on behalf of the Secured Parties, a first-priority, perfected security interest in all such
Commercial Tort Claims. Any supplement to Schedule 6 (Commercial Tort Claims) delivered pursuant
to this Section 4.10 (Notice of Commercial Tort Claims) shall, after the receipt thereof by the
Collateral Agent, become part of Schedule 6 (Commercial Tort Claims) for all purposes hereunder
other than in respect of representations and warranties made prior to the date of such receipt.

ARTICLE V.  Remedial Provisions

     Section 5.1 Code and Other Remedies

          During the continuance of an Event of Default, the Collateral Agent may exercise, in addition
to all other rights and remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to any of the Secured Obligations, all rights and
remedies of a secured party under the UCC or any other applicable law. Without limiting the
generality of the foregoing, the Collateral Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice required by law
referred to below) to or upon any Grantor or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in such circumstances forthwith
collect, receive, appropriate and realize upon any Collateral, and may forthwith sell, lease,
assign, give option or options to purchase, or otherwise dispose of and deliver any Collateral (or
contract to do any of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker’s board or office of the Collateral Agent or any Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk. The Collateral Agent and
any other Secured Party shall have the right upon any such public sale or sales, and, to the extent
permitted by the UCC and other applicable law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of redemption of any
Grantor, which right or equity is hereby waived and released. Each Grantor further agrees, at the
Collateral Agent’s request, to assemble the Collateral and make it available to the Collateral
Agent at places that the Collateral Agent shall reasonably select, whether at such Grantor’s
premises or elsewhere. The Collateral Agent shall apply the net proceeds of any action taken by it
pursuant to this Section 5.1, after deducting all reasonable costs and expenses of every kind
incurred in connection therewith or incidental to the care or safekeeping of any Collateral or in
any way relating to the Collateral or the rights of the Collateral Agent and any other Secured
Party hereunder, including reasonable attorneys’ fees and disbursements, to the payment in whole or
in part of the Secured Obligations, in such order as the Credit Agreement shall prescribe, and only
after such application and after the payment by the Collateral Agent of any other amount required
by any provision of law, need the Collateral Agent, as the case may be, account for the surplus, if
any, to any Grantor. To the extent permitted by applicable law, each Grantor waives all claims,
damages and demands it may acquire against the Collateral Agent or any other Secured Party arising
out of the exercise by any of them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice

22

 

shall be deemed reasonable and proper if given at least 10 days before such sale or other
disposition.

     Section 5.2 Accounts and Payments in Respect of General Intangibles

          (a) In addition to, and not in substitution for, any similar requirement in the Credit
Agreement, if required by the Collateral Agent at any time during the continuance of an Event of
Default, any payment of Accounts or payment in respect of General Intangibles, when collected by
any Grantor, shall be forthwith (and, in any event, within two Business Days) deposited by such
Grantor in the exact form received, duly indorsed by such Grantor to the Collateral Agent, in a
Blocked Account or a Cash Collateral Account, subject to withdrawal by the Collateral Agent as
provided in Section 5.4 (Proceeds to be Turned Over To Collateral Agent). Until so turned over,
such payment shall be held by such Grantor in trust for the Collateral Agent, segregated from other
funds of such Grantor. Each such deposit of Proceeds of Accounts and payments in respect of
General Intangibles shall be accompanied by a report identifying in reasonable detail the nature
and source of the payments included in the deposit.

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

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

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

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

          (f) Anything herein to the contrary notwithstanding, each Grantor shall remain liable under
each of the Accounts and payments in respect of General Intangibles to observe and perform all the
conditions and obligations to be observed and performed by it thereunder, all in accordance with
the terms of any agreement giving rise

23

 

thereto. Neither the Collateral Agent nor any other Secured Party shall have any obligation
or liability under any agreement giving rise to an Account or a payment in respect of a General
Intangible by reason of or arising out of this Agreement or the receipt by the Collateral Agent or
any other Secured Party of any payment relating thereto, nor shall the Collateral Agent nor any
other Secured Party be obligated in any manner to perform any obligation of any Grantor under or
pursuant to any agreement giving rise to an Account or a payment in respect of a General
Intangible, to make any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party thereunder, to
present or file any claim, to take any action to enforce any performance or to collect the payment
of any amounts that may have been assigned to it or to which it may be entitled at any time or
times.

     Section 5.3 Pledged Collateral

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

          (b) In order to permit the Collateral Agent to exercise the voting and other consensual rights
that it may be entitled to exercise pursuant hereto and to receive all dividends and other
distributions that it may be entitled to receive hereunder, (i) each Grantor shall promptly execute
and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies,
dividend payment orders and other instruments as the Collateral Agent may from time to time
reasonably request and (ii) without limiting the effect of clause (i) above, such Grantor hereby
grants to the Collateral Agent an irrevocable proxy to vote all or any part of the Pledged
Collateral and to exercise all other rights, powers, privileges and remedies to which a holder of
the Pledged Collateral would be entitled (including giving or withholding written consents of
shareholders, partners or members, as the case may be, calling special meetings of shareholders,
partners or members, as the case may be, and voting at such meetings), which proxy shall be
effective, automatically and without the necessity of any action (including any transfer of

24

 

any Pledged Collateral on the record books of the issuer thereof) by any other person
(including the issuer of such Pledged Collateral or any officer or agent thereof) during the
continuance of an Event of Default and which proxy shall only terminate upon Discharge of Lender
Claims.

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

     Section 5.4 Proceeds to be Turned Over To Collateral Agent

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

     Section 5.5 Registration Rights

          (a) During the continuance of an Event of Default, if the Collateral Agent shall determine to
exercise its right to sell any of the Pledged Collateral pursuant to Section 5.1 (Code and Other
Remedies), and if in the opinion of the Collateral Agent it is necessary or advisable to have the
Pledged Collateral, or any portion thereof, registered under the provisions of the Securities Act,
the relevant Grantor shall use its reasonable efforts to cause the issuer thereof to (i) execute
and deliver, and cause the directors and officers of such issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as may be, in the opinion
of the Collateral Agent, necessary or advisable to register the Pledged Collateral, or that portion
thereof to be sold, under the provisions of the Securities Act, (ii) use its reasonable efforts to
cause the registration statement relating thereto to become effective and to remain effective for a
period of one year from the date of the first public offering of the Pledged Collateral, or that
portion thereof to be sold and (iii) make all amendments thereto or to the related prospectus that,
in the opinion of the Collateral Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the Securities and Exchange
Commission applicable thereto. Each Grantor agrees to cause such issuer to comply with the
provisions of the securities or “Blue Sky” laws of any jurisdiction that the Collateral Agent shall
designate and to make available to its

25

 

security holders, as soon as practicable, an earnings statement (which need not be audited)
satisfying the provisions of Section 11(a) of the Securities Act.

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

          (c) During the continuance of an Event of Default, each Grantor agrees to use its best efforts
to do or cause to be done all such other acts as may be necessary to make such sale or sales of all
or any portion of the Pledged Collateral pursuant to this Section 5.5 valid and binding and in
compliance with all other applicable Requirements of Law. Each Grantor further agrees that a
breach of any covenant contained in this Section 5.5 will cause irreparable injury to the
Collateral Agent and the other Secured Parties, that the Collateral Agent and the other Secured
Parties have no adequate remedy at law in respect of such breach and, as a consequence, that each
and every covenant contained in this Section 5.5 shall be specifically enforceable against such
Grantor, and such Grantor hereby waives and agrees not to assert any defense against an action for
specific performance of such covenants except for a defense that no Event of Default has occurred
under the Credit Agreement.

     Section 5.6 Deficiency

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

ARTICLE VI.  The Collateral Agent

     Section 6.1 Collateral Agent’s Appointment as Attorney-in-Fact

          (a) Each Grantor hereby irrevocably constitutes and appoints the Collateral Agent and any
officer or agent thereof, with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name, for the purpose

26

 

of carrying out the terms of this Agreement, to take any appropriate action and to execute any
document or instrument that may be necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the foregoing, each Grantor hereby gives the
Collateral Agent the power and right, on behalf of such Grantor, without notice to or assent by
such Grantor, to do any of the following:

     (i) in the name of such Grantor or its own name, or otherwise, take possession of and
indorse and collect any check, draft, note, acceptance or other instrument for the payment
of moneys due under any Account or General Intangible or with respect to any other
Collateral and file any claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Collateral Agent for the purpose of
collecting any such moneys due under any Account or General Intangible or with respect to
any other Collateral whenever payable;

     (ii) in the case of any Intellectual Property, execute and deliver, and have recorded,
any agreement, instrument, document or paper as the Collateral Agent may request to
evidence the Collateral Agent’s security interests in such Intellectual Property and the
goodwill and General Intangibles of such Grantor relating thereto or represented thereby;

     (iii) pay or discharge taxes and Liens levied or placed on or threatened against any
of the Collateral, effect any repair or pay any insurance called for by the terms of this
Agreement (including all or any part of the premiums therefor and the costs thereof);

     (iv) execute, in connection with any sale provided for in Section 5.1 (Code and Other
Remedies) or Section 5.5 (Registration Rights), any endorsement, assignment or other
instrument of conveyance or transfer with respect to any of the Collateral; or

     (v) (A) direct any party liable for any payment under any Collateral to make payment
of any moneys due or to become due thereunder directly to the Collateral Agent or as the
Collateral Agent shall direct, (B) ask or demand for, collect, and receive payment of and
receipt for, any moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral, (C) sign and indorse any invoice, freight or
express bill, bill of lading, storage or warehouse receipt, draft against debtors,
assignment, verification, notice and other document in connection with any Collateral,
(D) commence and prosecute any suit, action or proceeding at law or in equity in any court
of competent jurisdiction to collect any Collateral and to enforce any other right in
respect of any Collateral, (E) defend any suit, action or proceeding brought against such
Grantor with respect to any Collateral, (F) settle, compromise or adjust any such suit,
action or proceeding and, in connection therewith, give such discharges or releases as the
Collateral Agent may deem appropriate, (G) assign any Copyright, Patent or Trademark (along
with the goodwill of the business to which any such Trademark pertains) throughout the
world for such term or terms,

27

 

on such conditions, and in such manner as the Collateral Agent shall in its sole
discretion determine, including the execution and filing of any document necessary to
effectuate or record such assignment and (H) generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any Collateral as fully and completely as
though the Collateral Agent were the absolute owner thereof for all purposes, and do, at
the Collateral Agent’s option and such Grantor’s expense, at any time, or from time to
time, all acts and things that the Collateral Agent deems necessary to protect, preserve or
realize upon any or all of the Collateral and the Collateral Agent’s and the other Secured
Parties’ security interests therein and to effect the intent of this Agreement, all as
fully and effectively as such Grantor might do.

Anything in this clause (a) to the contrary notwithstanding, the Collateral Agent agrees that it
shall not exercise any right under the power of attorney provided for in this clause (a) unless an
Event of Default shall be continuing.

          (b) If any Grantor fails to perform or comply with any of its agreements contained herein, the
Collateral Agent, at its option, but without any obligation so to do, may perform or comply, or
otherwise cause performance or compliance, with such agreement.

          (c) The expenses of the Collateral Agent incurred in connection with actions undertaken as
provided in this Section 6.1, together with interest thereon at a rate per annum equal to the rate
per annum at which interest would then be payable on past due Revolving Loans that are Base Rate
Loans under the Credit Agreement, from the date of payment by the Collateral Agent to the date
reimbursed by the relevant Grantor, shall be payable by such Grantor to the Collateral Agent on
demand.

          (d) Each Grantor hereby ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof. All powers, authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is terminated and the security interests
created hereby are released.

     Section 6.2 Duty of Collateral Agent

          The Collateral Agent’s sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession shall be to deal with it in the same manner as the
Collateral Agent deals with similar property for its own account. Neither the Collateral Agent,
any other Secured Party nor any of their respective officers, directors, employees or agents shall
be liable for failure to demand, collect or realize upon any Collateral or for any delay in doing
so or shall be under any obligation to sell or otherwise dispose of any Collateral upon the request
of any Grantor or any other Person or to take any other action whatsoever with regard to any
Collateral. The powers conferred on the Collateral Agent hereunder are solely to protect the
Collateral Agent’s and the Secured Parties’ respective interests in the Collateral and shall not
impose any duty upon the Collateral Agent or any other Secured Party to exercise any such powers.
The Collateral Agent and the other Secured Parties shall be accountable only for amounts

28

 

that they actually receive as a result of the exercise of such powers, and neither they nor
any of their respective officers, directors, employees or agents shall be responsible to any
Grantor for any act or failure to act hereunder, except for their own gross negligence or willful
misconduct.

     Section 6.3 Authorization of Financing Statements

          Each Grantor authorizes the Collateral Agent and each of its Affiliates, counsel and other
representatives, at any time and from time to time until Discharge of Lender Claims, to file or
record financing statements, amendments to financing statements, and other filing or recording
documents or instruments with respect to the Collateral without the signature of such Grantor in
such form and in such offices as the Collateral Agent reasonably determines appropriate to perfect
the security interests of the Collateral Agent under this Agreement, and such financing statements
and amendments may described the Collateral covered thereby as “all assets of the debtor”, “all
personal property of the debtor”, in each case, “in which the debtor now has or at any time in the
future may acquire any right, title or interest” or words of similar effect. Each Grantor hereby
also authorizes the Collateral Agent and each of its Affiliates, counsel and other representatives,
at any time and from time to time, to file continuation statements with respect to previously filed
financing statements. A photographic or other reproduction of this Agreement shall be sufficient
as a financing statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.

     Section 6.4 Authority of Collateral Agent

          (a) Each Grantor acknowledges that the rights and responsibilities of the Collateral Agent
under this Agreement with respect to any action taken by the Collateral Agent or the exercise or
non-exercise by the Collateral Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Agreement shall, as between the
Collateral Agent and the other Secured Parties, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and the Grantors, the Collateral Agent shall be conclusively presumed to be
acting as agent for the Collateral Agent and the other Secured Parties, with full and valid
authority so to act or refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.

          (b) Each Grantor and the Collateral Agent hereby agrees and acknowledges that, to the extent
that the Collateral Agent has a security interest in or possession of any Collateral, the
Collateral Agent is holding, and shall hold, such Collateral (and the security interest therein)
for the benefit of and on behalf of each Secured Party (including the Collateral Agent) in
accordance with Section 8-301(a)(2), 9-313(a) and 9-313(c) of the UCC, if applicable.

29

 

ARTICLE VII.  Miscellaneous

     Section 7.1 Amendments in Writing

          None of the terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except in accordance with Section 11.1 (Amendments, Waivers, Etc.) of the Credit
Agreement; provided, however, that annexes to this Agreement may be supplemented (but no existing
provisions may be modified and no Collateral may be released) through Pledge Amendments and Joinder
Agreements, in substantially the form of Annex 3 (Form of Pledge Amendment) and Annex 4 (Form of
Joinder Agreement) respectively, in each case duly executed by the Collateral Agent and each
Grantor directly affected thereby.

     Section 7.2 Notices

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

     Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies

          Neither the Collateral Agent nor any other Secured Party shall by any act (except by a written
instrument pursuant to Section 7.1 (Amendments in Writing)), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default. No failure to exercise, nor any delay in exercising, on the part of
the Collateral Agent or any other Secured Party, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Collateral Agent or any other Secured Party of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy that
the Collateral Agent or such other Secured Party would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any other rights or remedies provided by law.

     Section 7.4 Effectiveness

          This Agreement shall not become effective until the Closing Date.

     Section 7.5 Successors and Assigns

          This Agreement shall be binding upon the successors and assigns of each Grantor and shall
inure to the benefit of the Collateral Agent and each other Secured Party and their successors and
assigns; provided, however, that no Grantor may assign,

30

 

transfer or delegate any of its rights or obligations under this Agreement without the prior
written consent of the Collateral Agent.

     Section 7.6 Counterparts

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

     Section 7.7 Severability

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

     Section 7.8 Section Headings

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

     Section 7.9 Entire Agreement

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

     Section 7.10 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 State of New York.

     Section 7.11 Additional Grantors

          If, pursuant to Section 7.11 (Additional Personal Property Collateral and Guaranties) of the
Credit Agreement, the Borrower shall be required to cause any Subsidiary that is not a Grantor to
become a Grantor hereunder, such Subsidiary shall execute and deliver to the Collateral Agent a
Joinder Agreement substantially in the form of Annex 4 (Form of Joinder Agreement) and shall
thereafter for all purposes be a party

31

 

hereto and have the same rights, benefits and obligations as a Grantor party hereto on the
Closing Date.

     Section 7.12 Release of Collateral

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

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

          (c) At the request and sole expense of the Grantors, a Grantor shall be released from its
obligations hereunder in the event that all the capital stock of such Grantor shall be so sold or
disposed (but only so long as such sale or other disposition is permitted under the Credit
Agreement and such sale or other disposition is not to another Grantor); provided, however, that
the Borrower shall have delivered to the Collateral Agent, at least ten Business Days prior to the
date of the proposed release, a written request for release identifying the relevant Grantor and
the terms of the sale or other disposition in reasonable detail, including the price thereof and
any expenses in connection therewith, together with a certification by the Borrower in form and
substance satisfactory to the Collateral Agent stating that such transaction is in compliance with
the Loan Documents.

     Section 7.13 Reinstatement

          Each Grantor further agrees that, if any payment made by any Loan Party or other Person and
applied to any of the Secured Obligations is at any time annulled, avoided, set aside, rescinded,
invalidated, declared to be fraudulent or preferential or otherwise required to be refunded or
repaid, or the proceeds of Collateral are required to be returned by any Secured Party to such Loan
Party or other Person, its estate, trustee, receiver or any other party, including any Grantor,
under any bankruptcy law, state or

32

 

federal law, common law or equitable cause, then, to the extent of such payment or repayment,
any Lien or other Collateral securing such liability shall be and remain in full force and effect,
as fully as if such payment had never been made or, if prior thereto the Lien granted hereby or
other Collateral securing such liability hereunder shall have been released or terminated, such
Lien or other Collateral shall be reinstated in full force and effect, and such prior release or
termination shall not diminish, release, discharge, impair or otherwise affect any Lien or other
Collateral securing the obligations of any Grantor in respect of the amount of such payment.

     Section 7.14 Submission to Jurisdiction; Service of Process

          (a) Any legal action or proceeding with respect to this Agreement may be brought in the courts
of the 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, each Grantor hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts.
Each Grantor hereby irrevocably waives 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 Grantor hereby irrevocably consents to the service of any and all legal process,
summons, notices and documents in any suit, action or proceeding brought in the United States of
America arising out of or in connection with this Agreement by the mailing (by registered or
certified mail, postage prepaid) or delivering of a copy of such process to such Grantor at the
address specified in Section 7.2 (Notices, Etc.). Each of the Grantors 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 7.14 shall affect the right of the Collateral Agent or
any other Secured Party to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against any Grantor in any other jurisdiction.

[Signature Pages Follow]

33

 

          In witness whereof, each of the undersigned has caused this Pledge and Security
Agreement to be duly executed and delivered as of the date first above written.

	 	 	 	 	 
	 	Warnaco Inc.,

as Grantor

 	 
	 	By:  	/s/
Lawrence R. Rutkowski
 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Executive Vice President and CFO 	 
	 

	 	 	 	 	 
	 	The Warnaco Group, Inc.,

as Grantor

 	 
	 	By:  	/s/
Lawrence R. Rutkowski
 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Executive Vice President and CFO 	 
	 

[Signature Page to Pledge and Security Agreement]

 

 

	 	 	 	 	 
	 	Authentic Fitness On-Line, Inc.
Calvin Klein Jeanswear Company
CCC Acquisition Corp.
CKJ Holdings, Inc.
Designer Holdings Ltd.
Ocean Pacific Apparel Corp.

Warnaco Puerto Rico, Inc.
Warnaco Retail Inc.
Warnaco Swimwear Inc.
Warnaco Swimwear Products Inc.
CKU.com Inc.
Warnaco U.S., Inc.,
as Grantors

 	 
	 	By:  	
/s/ Lawrence R. Rutkowski 	 
	 	 	Name:  	Lawrence R. Rutkowski 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Pledge and Security Agreement]

 

 

Accepted and Agreed

as of the date first above written:

Bank of America, N.A.,

as Collateral Agent for the Secured Parties,

By:
/s/ Kevin W. Corcoran

      Name: Kevin W. Corcoran

      Title:   Vice President

[Signature Page to Pledge and Security Agreement]

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	ARTICLE I. Defined Terms
	 	 	2	 
	Section 1.1 Definitions
	 	 	2	 
	 
	 	 	 	 
	ARTICLE II. Grant of Security Interest
	 	 	8	 
	Section 2.1 Collateral
	 	 	8	 
	Section 2.2 Grants of Security Interests in Collateral
	 	 	9	 
	Section 2.3 Cash Collateral Accounts
	 	 	10	 
	 
	 	 	 	 
	ARTICLE III. Representations and Warranties
	 	 	10	 
	Section 3.1 Title; No Other Liens
	 	 	10	 
	Section 3.2 Perfection and Priority
	 	 	11	 
	Section 3.3 Jurisdiction of Organization; Chief Executive Office
	 	 	11	 
	Section 3.4 Inventory and Equipment
	 	 	11	 
	Section 3.5 Pledged Collateral
	 	 	11	 
	Section 3.6 Deposit Accounts; Securities Accounts
	 	 	12	 
	Section 3.7 Accounts
	 	 	12	 
	Section 3.8 Intellectual Property
	 	 	12	 
	Section 3.9 Commercial Tort Claims
	 	 	14	 
	 
	 	 	 	 
	ARTICLE IV. Covenants
	 	 	14	 
	Section 4.1 Generally
	 	 	14	 
	Section 4.2 Maintenance of Perfected Security Interest; Further Documentation
	 	 	14	 
	Section 4.3 Changes in Locations, Name, Etc.
	 	 	15	 
	Section 4.4 Pledged Collateral
	 	 	15	 
	Section 4.5 Delivery of Instruments and Chattel Paper
	 	 	17	 
	Section 4.6 Intellectual Property
	 	 	17	 
	Section 4.7 Cash Management; Deposit Accounts
	 	 	20	 
	Section 4.8 Vehicles
	 	 	21	 
	Section 4.9 Payment of Obligations
	 	 	21	 
	Section 4.10 Notice of Commercial Tort Claims
	 	 	21	 
	 
	 	 	 	 
	ARTICLE V. Remedial Provisions
	 	 	22	 
	Section 5.1 Code and Other Remedies
	 	 	22	 
	Section 5.2 Accounts and Payments in Respect of General Intangibles
	 	 	23	 
	Section 5.3 Pledged Collateral
	 	 	24	 
	Section 5.4 Proceeds to be Turned Over To Collateral Agent
	 	 	25	 
	Section 5.5 Registration Rights
	 	 	25	 
	Section 5.6 Deficiency
	 	 	26	 
	 
	 	 	 	 
	ARTICLE VI. The Collateral Agent
	 	 	26	 
	Section 6.1 Collateral Agent’s Appointment as Attorney-in-Fact
	 	 	26	 
	Section 6.2 Duty of Collateral Agent
	 	 	28	 
	Section 6.3 Authorization of Financing Statements
	 	 	29	 
	Section 6.4 Authority of Collateral Agent
	 	 	29	 

i

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page
	ARTICLE VII. Miscellaneous
	 	 	30	 
	Section 7.1 Amendments in Writing
	 	 	30	 
	Section 7.2 Notices
	 	 	30	 
	Section 7.3 No Waiver by Course of Conduct; Cumulative Remedies
	 	 	30	 
	Section 7.4 Effectiveness
	 	 	30	 
	Section 7.5 Successors and Assigns
	 	 	30	 
	Section 7.6 Counterparts
	 	 	31	 
	Section 7.7 Severability
	 	 	31	 
	Section 7.8 Section Headings
	 	 	31	 
	Section 7.9 Entire Agreement
	 	 	31	 
	Section 7.10 Governing Law
	 	 	31	 
	Section 7.11 Additional Grantors
	 	 	31	 
	Section 7.12 Release of Collateral
	 	 	32	 
	Section 7.13 Reinstatement
	 	 	32	 

 ii

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