Exhibit 4.2
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PREFERRED SECURITIES GUARANTEE AGREEMENT
The Warnaco Group, Inc.
Dated as of March 31, 1998
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.1. Definitions and Interpretation . . . . . . . . . . . 2
ARTICLE II
TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.1. Trust Indenture Act; Application . . . . . . . . . . 5
SECTION 2.2. List of Holders of Securities . . . . . . . . . . . 6
SECTION 2.3. Reports by the Preferred Guarantee Trustee . . . . 6
SECTION 2.4. Periodic Reports to the Preferred Guarantee Trustee 6
SECTION 2.5. Event of Default; Notice . . . . . . . . . . . . . . 7
SECTION 2.6. Evidence of Compliance with Conditions Precedent . . 7
SECTION 2.7. Event of Default; Waiver . . . . . . . . . . . . . . 7
SECTION 2.8. Conflicting Interests . . . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE . . . . . . 7
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee 8
SECTION 3.2. Certain Rights of the Preferred Guarantee Trustee . 9
SECTION 3.3. Not Responsible for Recitals or Issuance of
Guarantee . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.1. Preferred Guarantee Trustee; Eligibility . . . . . . 12
SECTION 4.2. Appointment, Removal and Resignation of Preferred
Guarantee Trustees . . . . . . . . . . . . . . . . . 13
ARTICLE V
GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.1. Guarantee . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.2. [Reserved] . . . . . . . . . . . . . . . . . . . . . 14
SECTION 5.3. Waiver of Notice and Demand . . . . . . . . . . . . 14
SECTION 5.4. Obligations Not Affected . . . . . . . . . . . . . . 14
SECTION 5.5. Rights of Holders . . . . . . . . . . . . . . . . . 15
SECTION 5.6. Guarantee of Payment . . . . . . . . . . . . . . . . 16
SECTION 5.7. Subrogation . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.8. Independent Obligations . . . . . . . . . . . . . . 16
SECTION 5.9. Conversion . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.10. Expenses . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING . . . . . . . . . . . . . . . . . . . 16
SECTION 6.1. Limitation of Transactions . . . . . . . . . . . . . 16
SECTION 6.2. Ranking . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 7.1. Termination . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.1. Exculpation . . . . . . . . . . . . . . . . . . . . 18
SECTION 8.2. Indemnification . . . . . . . . . . . . . . . . . . 18
ARTICLE IX
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.1. Successors and Assigns . . . . . . . . . . . . . . . 19
SECTION 9.2. Amendments . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.4. Benefit . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 9.5. Governing Law . . . . . . . . . . . . . . . . . . . 20
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (the "Preferred
Securities Guarantee"), dated as of March 31, 1998, is executed and delivered
by The Warnaco Group, Inc., a Delaware corporation (the "Guarantor"), and IBJ
▇▇▇▇▇▇▇▇ Bank & Trust Company, a New York banking corporation, as trustee
(the "Preferred Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Preferred Securities (as defined
herein) of Designer Finance Trust, a Delaware statutory business trust (the
"Trust");
WHEREAS, pursuant to an Amended and Restated Declaration of Trust
(the "Declaration"), dated as of November 6, 1996, among the trustees of the
Trust named therein, Designer Holdings Ltd., a Delaware corporation
("Designer Holdings"), as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust issued
on November 6, 1996, 2,760,000 preferred securities, having an aggregate
liquidation amount of $138,000,000, designated the 6% Convertible Trust
Originated Preferred SecuritiesSM (the "Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, Designer Holdings entered into a Preferred Securities Guarantee
Agreement dated as of November 6, 1996, pursuant to which it irrevocably and
unconditionally agreed, to the extent set forth therein, to guarantee the
obligations of the Trust to the Holders of the Preferred Securities on the
terms and conditions set forth therein;
WHEREAS, pursuant to an Agreement and Plan of Merger dated as of
September 25, 1997 among the Guarantor, a wholly owned subsidiary of the
Guarantor and Designer Holdings, Designer Holdings became a wholly owned
subsidiary of the Guarantor;
WHEREAS, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Preferred Securities Guarantee, to
guarantee, on a joint and several basis with Designer Holdings, the
obligations of the Trust to the Holders of the Preferred Securities and
certain other persons on the terms and conditions set forth herein;
NOW, THEREFORE, for good and valid consideration, the receipt and
sufficiency of which are hereby acknowledged, the Guarantor executes and
delivers this Preferred Securities Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation.
In this Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) terms defined in the Declaration as at the date hereof have
the same meaning when used in this Preferred Securities
Guarantee unless otherwise defined in this Preferred
Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred
Securities Guarantee as modified, supplemented or amended from
time to time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Preferred Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless
otherwise defined in this Preferred Securities Guarantee or
unless the context otherwise requires;
(g) a reference to the singular includes the plural and vice
versa;
(h) a reference to any Person shall include its successors and
assigns;
(i) a reference to any agreement or instrument shall mean such
agreement or instrument, as supplemented, modified, amended,
or amended and restated, and in effect from time to time; and
(j) a reference to any statute, law, rule or regulation, shall
include any amendments thereto applicable to the relevant
Person, and any successor statute, law, rule or regulation.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person.
"Business Day" means any day other than a day on which banking
institutions in New York, New York or in Wilmington, Delaware are authorized
or required by any applicable law or executive order to close.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Trust.
"Corporate Trust Office" means the office of the Preferred
Guarantee Trustee at which the corporate trust business of the Preferred
Guarantee Trustee shall, at any particular time, be principally administered,
which office at the date of execution of this Agreement is located at ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Trust & Agency Department.
"Covered Person" means any Holder or beneficial owner of Preferred
Securities.
"Debentures" means the 6% Convertible Subordinated Debentures due
December 31, 2016 of Designer Holdings held by the Property Trustee (as
defined in the Declaration).
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent
not paid or made by the Trust: (i) any accrued and unpaid Distributions (as
defined in the Declaration) that are required to be paid on the Preferred
Securities to the extent the Trust has funds available therefor, (ii) the
redemption price, with respect to any Preferred Securities called for
redemption by the Trust (the "Redemption Price"), to the extent the Trust has
funds available therefor, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust (other than in connection
with the distribution of Convertible Subordinated Debentures to the Holders
of Preferred Securities or the redemption of all the Preferred Securities (as
provided in the Declaration)), the lesser of (a) the aggregate of the
liquidation amount and all accrued and unpaid Distributions on the Preferred
Securities to the date of payment to the extent the Trust has funds available
therefor and (b) the amount of assets of the Trust remaining available for
distribution to Holders of Preferred Securities upon the liquidation of the
Trust (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and
records of the Trust of any Preferred Securities; provided, however, that in
determining whether the holders of the requisite percentage of Preferred
Securities have given or been given, as the case may be, any request, notice,
consent or waiver hereunder, "Holder" shall not include the Guarantor or any
Affiliate of the Guarantor.
"Indemnified Person" means the Preferred Guarantee Trustee, any
Affiliate of the Preferred Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Preferred Guarantee Trustee.
"Indenture" means the Indenture dated as of November 6, 1996, among
Designer Holdings (the "Convertible Debenture Issuer") and IBJ ▇▇▇▇▇▇▇▇ Bank
& Trust Company, a New York banking corporation, as trustee, as amended by
the First Supplemental Indenture dated as of March 31, 1998 among the
Guarantor, Designer Holdings and the Indenture Trustee, pursuant to which the
Debentures were issued to the Property Trustee of the Trust.
"Indenture Trustee" means the Person acting as trustee under the
Indenture, initially IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company.
"Majority in liquidation amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, a vote by Holder(s) of
Preferred Securities, voting separately as a class, of more than 50% of the
liquidation amount of all Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the
definition relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary
to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Preferred Guarantee Trustee" means IBJ ▇▇▇▇▇▇▇▇ Bank & Trust
Company, until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment pursuant to the terms of this Preferred
Securities Guarantee and thereafter means each such Successor Preferred
Guarantee Trustee.
"Responsible Officer" means, with respect to the Preferred
Guarantee Trustee, any officer within the Corporate Trust Office of the
Preferred Guarantee Trustee, including any vice president, any assistant vice
president, any assistant secretary, the treasurer, any assistant treasurer or
other officer of the Corporate Trust Office of the Preferred Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Preferred Guarantee Trustee" means a successor Preferred
Guarantee Trustee possessing the qualifications to act as Preferred Guarantee
Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be
governed by such provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed
by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control.
SECTION 2.2. List of Holders of Securities.
The Guarantor shall provide the Preferred Guarantee Trustee with a
list, in such form as the Preferred Guarantee Trustee may reasonably require,
of the names and addresses of the Holders of the Preferred Securities ("List
of Holders") as of such date, (i) within one Business Day after January 1 and
June 30 of each year, and (ii) at any other time within 30 days of receipt by
the Guarantor of a written request for a List of Holders as of a date no more
than 14 days before such List of Holders is given to the Preferred Guarantee
Trustee, provided that the Guarantor shall not be obligated to provide such
List of Holders at any time (x) the List of Holders does not differ from the
most recent List of Holders given to the Preferred Guarantee Trustee by the
Guarantor or (y) the Preferred Securities are represented by one or more
Global Securities (as defined in the Indenture). The Preferred Guarantee
Trustee may destroy any List of Holders previously given to it on receipt of
a new List of Holders.
The Preferred Guarantee Trustee shall comply with its obligations
under Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Preferred Guarantee Trustee .
Within 60 days after May 15 of each year, the Preferred Guarantee
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by Section 313 of the Trust Indenture Act, if any, in the
form and in the manner provided by Section 313 of the Trust Indenture Act.
The Preferred Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.
SECTION 2.4. Periodic Reports to the Preferred Guarantee Trustee.
The Guarantor shall provide to the Preferred Guarantee Trustee such
documents, reports and information as required by Section 314, if any, and
the compliance certificate required by Section 314 of the Trust Indenture Act
in the form, in the manner and at the times required by Section 314 of the
Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Preferred Guarantee Trustee such
evidence of compliance with any conditions precedent, if any, provided for in
this Preferred Securities Guarantee that relate to any of the matters set
forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers' Certificate.
SECTION 2.6. Event of Default; Waiver.
The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Preferred Securities Guarantee, but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
SECTION 2.7. Event of Default; Notice.
The Preferred Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred Securities, notices of all Events of
Default actually known to a Responsible Officer of the Preferred Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice; provided that the Preferred Guarantee Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the
Preferred Guarantee Trustee in good faith determines that the withholding of
such notice is in the interests of the Holders of the Preferred Securities.
The Preferred Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Preferred Guarantee Trustee
shall have received written notice, or of which a Responsible Officer of the
Preferred Guarantee Trustee charged with the administration of the
Declaration shall have obtained actual knowledge.
SECTION 2.8. Conflicting Interests.
The Declaration shall be deemed to be specifically described in
this Preferred Securities Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE PREFERRED GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Preferred Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the
Preferred Guarantee Trustee for the benefit of the Holders of the Preferred
Securities, and the Preferred Guarantee Trustee shall not transfer this
Preferred Securities Guarantee to any Person except a Holder exercising his
or her rights pursuant to Section 5.5(b) or to a Successor Preferred
Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee
of its appointment to act as Successor Preferred Guarantee Trustee. The
right, title and interest of the Preferred Guarantee Trustee shall
automatically vest in any Successor Preferred Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of
such Successor Preferred Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Preferred Guarantee Trustee has occurred and is continuing, the
Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee
for the benefit of the Holders of the Preferred Securities.
(c) The Preferred Guarantee Trustee, before the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Preferred Securities Guarantee, and no implied covenants shall
be read into this Preferred Securities Guarantee against the Preferred
Guarantee Trustee. In case an Event of Default has occurred (that has not
been cured or waived pursuant to Section 2.6) and is actually known to a
Responsible Officer of the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee shall exercise such of the rights and powers vested in it
by this Preferred Securities Guarantee, and use the same degree of care and
skill in its exercise thereof, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(d) No provision of this Preferred Securities Guarantee shall be
construed to relieve the Preferred Guarantee Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of
Default and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Preferred Guarantee Trustee shall be determined solely by
the express provisions of this Preferred Securities
Guarantee, and the Preferred Guarantee Trustee shall not be
liable except for the performance of such duties and
obligations as are specifically set forth in this Preferred
Securities Guarantee, and no implied covenants or
obligations shall be read into this Preferred Securities
Guarantee against the Preferred Guarantee Trustee; and
(B) in the absence of bad faith on the
part of the Preferred Guarantee Trustee, the Preferred
Guarantee Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Preferred Guarantee Trustee and conforming to the
requirements of this Preferred Securities Guarantee; but in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished
to the Preferred Guarantee Trustee, the Preferred Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of
this Preferred Securities Guarantee;
(ii) the Preferred Guarantee Trustee shall not
be liable for any error of judgment made in good faith by a
Responsible Officer of the Preferred Guarantee Trustee, unless it
shall be proved that the Preferred Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Preferred Guarantee Trustee shall not
be liable with respect to any action taken or omitted to be taken by
it in good faith in accordance with the direction of the Holders of
not less than a Majority in liquidation amount of the Preferred
Securities relating to the time, method and place of conducting any
proceeding for any remedy available to the Preferred Guarantee
Trustee, or exercising any trust or power conferred upon the
Preferred Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities
Guarantee shall require the Preferred Guarantee Trustee to expend or
risk its own funds or otherwise incur personal financial liability in
the performance of any of its duties or in the exercise of any of its
rights or powers, if the Preferred Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Preferred Securities Guarantee or indemnity, reasonably satisfactory
to the Preferred Guarantee Trustee, against such risk or liability is
not reasonably assured to it.
SECTION 3.2. Certain Rights of the Preferred Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Preferred Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or refraining from
acting upon, any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor
contemplated by this Preferred Securities Guarantee shall be
sufficiently evidenced by an Officers' Certificate.
(iii) Whenever, in the administration of this
Preferred Securities Guarantee, the Preferred Guarantee Trustee shall
deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Preferred
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt
of such request, shall be promptly delivered by the Guarantor.
(iv) The Preferred Guarantee Trustee shall have
no duty to see to any recording, filing or registration of any
instrument (or any rerecording, refiling or registration thereof).
(v) The Preferred Guarantee Trustee may consult
with counsel of its selection, and the written advice or opinion of
such counsel with respect to legal matters shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion. Such counsel may be counsel to the Guarantor or
any of its Affiliates and may include any of its employees. The
Preferred Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Preferred
Securities Guarantee from any court of competent jurisdiction.
(vi) The Preferred Guarantee Trustee shall be
under no obligation to exercise any of the rights or powers vested in
it by this Preferred Securities Guarantee at the request or direction
of any Holder, unless such Holder shall have provided to the
Preferred Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Preferred Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by
the Preferred Guarantee Trustee; provided that nothing contained in
this Section 3.2(a)(vi) shall be taken to relieve the Preferred
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Preferred Securities Guarantee.
(vii) The Preferred Guarantee Trustee shall not
be bound to make any investigation into the facts or matters stated
in any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but
the Preferred Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit.
(viii) The Preferred Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or
attorneys, and the Preferred Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it hereunder.
(ix) Any action taken by the Preferred Guarantee
Trustee or its agents hereunder shall bind the Holders of the
Preferred Securities, and the signature of the Preferred Guarantee
Trustee or its agents alone shall be sufficient and effective to
perform any such action. No third party shall be required to inquire
as to the authority of the Preferred Guarantee Trustee to so act or
as to its compliance with any of the terms and provisions of this
Preferred Securities Guarantee, both of which shall be conclusively
evidenced by the Preferred Guarantee Trustee's or its agent's taking
such action.
(x) Whenever in the administration of this
Preferred Securities Guarantee the Preferred Guarantee Trustee shall
deem it desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Preferred Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Preferred
Securities, (ii) may refrain from enforcing such remedy or right or
taking such other action until such instructions are received and
(iii) shall be protected in conclusively relying on or acting in
accordance with such instructions.
(xi) The Preferred Guarantee Trustee shall not
be liable for any action taken, suffered, or omitted to be taken by
it in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Preferred Securities Guarantee.
(b) No provision of this Preferred Securities
Guarantee shall be deemed to impose any duty or obligation on the Preferred
Guarantee Trustee to perform any act or acts or exercise any right, power,
duty or obligation conferred or imposed on it in any jurisdiction in which it
shall be illegal, or in which the Preferred Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Preferred Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3. Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Preferred Securities
Guarantee shall be taken as the statements of the Guarantor, and the
Preferred Guarantee Trustee does not assume any responsibility for their
correctness. The Preferred Guarantee Trustee makes no representation as to
the validity or sufficiency of this Preferred Securities Guarantee.
ARTICLE IV
PREFERRED GUARANTEE TRUSTEE
SECTION 4.1. Preferred Guarantee Trustee; Eligibility.
(a) There shall at all times be a Preferred Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing
business under the laws of the United States of America or any State
or Territory thereof or of the District of Columbia, or a corporation
or Person permitted by the Securities and Exchange Commission to act
as an institutional trustee under the Trust Indenture Act, authorized
under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Preferred Guarantee Trustee shall
cease to be eligible to so act under Section 4.1(a), the Preferred Guarantee
Trustee shall immediately resign in the manner and with the effect set out in
Section 4.2(c).
(c) If the Preferred Guarantee Trustee has or shall acquire
any "conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
SECTION 4.2. Appointment, Removal and Resignation of Preferred Guarantee
Trustees.
(a) Subject to Section 4.2(b), the Preferred Guarantee
Trustee may be appointed or removed without cause at any time by the
Guarantor.
(b) The Preferred Guarantee Trustee shall not be removed in
accordance with Section 4.2(a) until a Successor Preferred Guarantee Trustee
has been appointed and has accepted such appointment by written instrument
executed by such Successor Preferred Guarantee Trustee and delivered to the
Guarantor.
(c) The Preferred Guarantee Trustee appointed to office
shall hold office until a Successor Preferred Guarantee Trustee shall have
been appointed or until its removal or resignation. The Preferred Guarantee
Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Preferred Guarantee
Trustee and delivered to the Guarantor, which resignation shall not take
effect until a Successor Preferred Guarantee Trustee has been appointed and
has accepted such appointment by instrument in writing executed by such
Successor Preferred Guarantee Trustee and delivered to the Guarantor and the
resigning Preferred Guarantee Trustee.
(d) If no Successor Preferred Guarantee Trustee shall have
been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of removal or
resignation, the resigning or removed Preferred Guarantee Trustee may
petition any court of competent jurisdiction for appointment of a Successor
Preferred Guarantee Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Preferred
Guarantee Trustee.
(e) No Preferred Guarantee Trustee shall be liable for the
acts or omissions to act of any Successor Preferred Guarantee Trustee.
(f) Upon termination of this Preferred Securities Guarantee
or removal or resignation of the Preferred Guarantee Trustee pursuant to this
Section 4.2, the Guarantor shall pay to the Preferred Guarantee Trustee all
amounts accrued to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders (except to the extent paid by the Trust or by Designer
Holdings), as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust or Designer Holdings may have or assert, the
Guarantee Payments, without duplication. The Guarantor's obligation to make
a Guarantee Payment may be satisfied by direct payment of the required
amounts by the Guarantor to the Holders or by causing the Trust to pay such
amounts to the Holders.
SECTION 5.2. [Reserved.]
SECTION 5.3. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of this
Preferred Securities Guarantee and of any liability to which it applies or
may apply, presentment, demand for payment, any right to require a proceeding
first against the Trust, Designer Holdings or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
SECTION 5.4. Obligations Not Affected.
The obligations, covenants, agreements and duties of the
Guarantor under this Preferred Securities Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of
the following:
(a) the release or waiver, by operation of law or
otherwise, of the performance or observance by the Trust or Designer Holdings
of any express or implied agreement, covenant, term or condition relating to
the Preferred Securities to be performed or observed by the Trust or Designer
Holdings;
(b) the extension of time for the payment by the Trust of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities (other than an extension of time for payment of Distributions,
Redemption Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on the Debentures or any
extension of the maturity date of the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on
the part of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Preferred Securities, or any action on the part of the Trust or Designer
Holdings granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation
guaranteed hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.4 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders or any other
Persons to give notice to, or obtain consent of, the Guarantor with respect
to the happening of any of the foregoing.
SECTION 5.5. Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Preferred
Guarantee Trustee in respect of this Preferred Securities Guarantee or to
direct the exercise of any trust or power conferred upon the Preferred
Guarantee Trustee under this Preferred Securities Guarantee.
(b) Any Holder may directly institute a legal proceeding
against the Guarantor to enforce the obligations of the Guarantor under this
Preferred Securities Guarantee without first instituting a legal proceeding
against the Trust, Designer Holdings, the Preferred Guarantee Trustee or any
other Person.
(c) If an Event of Default with respect to the Debentures
(an "Indenture Event of Default"), constituting the failure to pay interest
or principal on the Debentures on the date such interest or principal is
otherwise payable has occurred and is continuing, then a Holder of Preferred
Securities may directly, at any time, institute a proceeding for enforcement
of payment to such Holder of the principal of or interest on the Debentures
having a principal amount equal to the aggregate liquidation amount of the
Preferred Securities of such Holder on or after the respective due date
specified in the Debentures. The Holders of Preferred Securities will not be
able to exercise directly any other remedy available to the holders of the
Debentures unless the Property Trustee (as defined in the Indenture) fails to
do so.
SECTION 5.6. Guarantee of Payment.
This Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.7. Subrogation.
The Guarantor shall be subrogated to all, if any, rights of
the Holders against the Trust in respect of any amounts paid to such Holders
by the Guarantor under this Preferred Securities Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any right
that it may acquire by way of subrogation or any indemnity, reimbursement or
other agreement, in all cases as a result of payment under this Preferred
Securities Guarantee, if, at the time of any such payment, any amounts are
due and unpaid under this Preferred Securities Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 5.8. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder
are independent of the obligations of the Trust and Designer Holdings with
respect to the Preferred Securities, and that the Guarantor shall be liable
as principal and as debtor hereunder to make Guarantee Payments pursuant to
the terms of this Preferred Securities Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g) inclusive,
of Section 5.4 hereof.
SECTION 5.9. Conversion.
The Guarantor acknowledges its obligation to issue and
deliver common stock of the Guarantor upon the conversion of the Preferred
Securities.
SECTION 5.10. Expenses.
The Guarantor shall be liable for all debts and obligations
of the Trust (other than with respect to the Preferred Securities) to the
extent not satisfied out of the Trust's Assets or paid by Designer Holdings
as holder of the Common Securities pursuant to Section 9.1(b) of the
Declaration.
ARTICLE VI
LIMITATION OF TRANSACTIONS; RANKING
SECTION 6.1. Limitation of Transactions.
So long as any Preferred Securities remain outstanding, if
there shall have occurred any event of default under this Preferred
Securities Guarantee or any event that, with the giving of notice or the
lapse of time or both, would constitute an Event of Default under the
Indenture, then the Guarantor has agreed not to declare or pay dividends on,
or make a distribution with respect to, or redeem, purchase, acquire or make
a liquidation payment with respect to, any of its capital stock (other than
(i) purchases or acquisitions of shares of common stock in connection with
the satisfaction by the Guarantor of its obligations under any employee
benefit plans or the satisfaction by the Guarantor of its obligations
pursuant to any contract or security requiring the Guarantor to purchase
shares of common stock, (ii) as a result of a reclassification of the
Guarantor's capital stock or the exchange or conversion of one class or
series of the Guarantor's capital stock for another class or series of the
Guarantor's capital stock or (iii) the purchase of fractional interests in
shares of the Guarantor's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged (or make any guarantee payments with respect to the foregoing).
SECTION 6.2. Ranking.
(a) This Preferred Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and
junior to all other liabilities of the Guarantor except any liabilities that
may be pari passu expressly by their terms, (ii) pari passu with the most
senior preferred stock issued from time to time by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock or preferred securities of any Affiliate of the
Guarantor, and (iii) senior to the Guarantor's common stock.
(b) The holders of any obligations of the Guarantor that
are senior in priority to the obligations under this Preferred Securities
Guarantee will be entitled to all of the rights inuring to the holders of
"Senior Indebtedness" under Article 12 of the Indenture, and the Holders of
the Preferred Securities will be subject to all of the terms and conditions
of such Article 12 with respect to any claims or rights hereunder with the
same effect as though fully set forth herein.
ARTICLE VII
TERMINATION
SECTION 7.1. Termination.
This Preferred Securities Guarantee will terminate as to
each Holder upon (i) full payment of the Redemption Price of all Preferred
Securities; or (ii) distribution of the Debentures held by the Trust to the
Holders; or (iii) liquidation of the Trust, or (iv) upon the distribution of
Guarantor's common stock to such Holder in respect of conversion of such
Holder's Preferred Securities into common stock of the Guarantor. The
Guarantee also will terminate completely upon full payment of the amounts
payable in accordance with the Declaration of the Trust. This Preferred
Securities Guarantee will continue to be effective or will be reinstated, as
the case may be, if at any time any Holder must restore payment of any sums
paid under such Preferred Securities or under this Preferred Securities
Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person
for any loss, damage or claim incurred by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance
with this Preferred Securities Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Preferred Securities
Guarantee or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in
relying in good faith upon the records of the Guarantor and upon such
information, opinions, reports or statements presented to the Guarantor by
any Person as to matters the Indemnified Person reasonably believes are
within such other Person's professional or expert competence and who has been
selected with reasonable care by or on behalf of the Guarantor, including
information, opinions, reports or statements as to the value and amount of
the assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which Distributions to Holders of
Preferred Securities might properly be paid.
SECTION 8.2. Indemnification.
The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any loss,
liability or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of
this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. Successors and Assigns.
All guarantees and agreements contained in this Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Preferred Securities then outstanding. Except in connection
with any permitted merger or consolidation of the Guarantor with or into
another entity or any permitted sale, transfer or lease of the Guarantor's
assets to another entity as described in the Indenture, the Guarantor may not
assign its rights or delegate its obligations under this Preferred Securities
Guarantee without the prior approval of the Holders of at least a Majority of
the aggregate stated liquidation amount of the Preferred Securities then
outstanding.
SECTION 9.2. Amendments.
Except with respect to any changes that do not materially
adversely affect the rights of Holders (in which case no vote will be
required), this Preferred Securities Guarantee may be amended only with the
prior approval of the Holders of at least a Majority in liquidation amount of
all the outstanding Preferred Securities. The provisions of Section 11.2 of
the Declaration with respect to meetings of Holders of the Preferred
Securities apply to the giving of such approval.
SECTION 9.3. Notices.
All notices provided for in this Preferred Securities
Guarantee shall be in writing, duly signed by the party giving such notice,
and shall be delivered, sent by facsimile or mailed by registered or
certified mail, as follows:
(a) If given to the Preferred Guarantee Trustee, at the
Preferred Guarantee Trustee's mailing address set forth below (or such other
address as the Preferred Guarantee Trustee may give notice of to the Holders
of the Preferred Securities):
IBJ ▇▇▇▇▇▇▇▇ Bank & Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust & Agency Department
(b) If given to the Guarantor, at the Guarantor's mailing
address set forth below (or such other address as the Guarantor may give
notice of to the Holders of the Preferred Securities):
The Warnaco Group, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
(c) If given to any Holder at the address set forth
on the books and records of the Trust.
All such notices shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
SECTION 9.4. Benefit.
Except for Section 5.10, which is for the benefit of persons
to whom the obligations referred to therein are validly owed, this Preferred
Securities Guarantee is solely for the benefit of the Holders of the
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Preferred Securities.
SECTION 9.5. Governing Law.
THIS PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH LAWS WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS.
THIS PREFERRED SECURITIES GUARANTEE is executed as of the
day and year first above written.
THE WARNACO GROUP, INC., as Guarantor
By:_____/s/ ▇▇▇▇▇▇▇ ▇. Silverstein__________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President, General Counsel and Secretary
IBJ ▇▇▇▇▇▇▇▇ BANK & TRUST COMPANY,
as Preferred Guarantee Trustee
By:_____/s/ ▇▇▇▇▇▇ Radich__________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President