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 ”).
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:
(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, whether
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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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;
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