XXXXXXX & MARSAL, INC.
000 XXXXXXXXX XXXXXX - XXXXX 0000
XXX XXXX, XXX XXXX 00000
(000) 000-0000
FAX: (000) 000-0000
April 30, 2001
Mrs. Xxxxx Xxxxxxx
Chairman and
Chief Executive Officer
The Warnaco Group, Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Xxx. Xxxxxxx:
The purpose of this letter agreement (the 'Agreement') is to set forth the terms
of the engagement between Xxxxxxx & Marsal, Inc. ('A&M') and The Warnaco
Group, Inc. (together with its divisions, subsidiaries and affiliates, the
'Company'), including the scope of the services to be performed and the basis of
compensation for those services. Upon your execution and the effectiveness
hereof pursuant to paragraph 9, this letter will constitute an agreement between
the Company and A&M.
1. Description of Services and Duties
(a) A&M will provide the services described below. A&M shall assign
Xxxxxxx Xxxxxxx to this engagement, and Xx. Xxxxxxx shall have primary
responsibility for providing and coordinating A&M's efforts hereunder.
A&M shall report directly to the Chief Executive Officer of the
Company (the 'CEO') and the Board of Directors of the Company (the
'Board'). The services to be provided are
(i) Oversee, with the approval of the CEO and the Board, all
restructuring. and refinancing related efforts of the Company,
including
i. the activities of all professionals retained to assist in
the marketing and sale of assets, the recapitalization of
the
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Company or otherwise retained as part of the restructuring.
efforts;
ii. the preparation and presentation of reports and other
general communications with the Company's creditors and
shareholders; and
iii. at the Board's request, the development of a restructuring
plan for the Company
(ii) Assist the CEO and other senior management in the preparation of
an operating plan and cash flow forecast;
(iii) Assist the CEO and other senior management in the identification
of cost reduction opportunities and working capital
opportunities;
(iv) Assist the CEO and other senior management with other
operational, issues as requested;
(v) Assist the CEO and other senior management in the identification
and recruitment of financial personnel; and
(vi) Engage in such other activities as are approved by the Board or
the CEO.
(b) Xx. Xxxxxxx will devote substantially all of his time to providing,
and supervising other people assisting him in providing, the services
described above, and in any event, shall devote not less than 85% of
his time. In rendering services to the Company, Xx. Xxxxxxx may,
subject to the approval of the CEO or the Board, use additional A&M
personnel to assist him. In the event the Company and A&M determine
that the services described above can best be provided by Xx. Xxxxxxx
in the capacity of chief restructuring officer, A&M agrees that it
will permit Xx. Xxxxxxx to accept that position. The Company agrees
that in such event, the compensation paid to Xx. Xxxxxxx would be as
set forth herein.
(c) You understand that the services to be rendered by A&M may include the
preparation of projections and other forward-looking statements and
numerous factors can affect the actual results of the Company's
operations, which may materially and adversely differ from those
projections and other forward looking statements. A&M will be relying
on information provided by members of the Company's management in the
preparation of those projections and other forward-looking statements.
A&M makes no representation or guarantee that an appropriate
restructuring proposal can be formulated for the Company, that any
restructuring proposal presented to the Board will be more successful
than all other possible restructuring proposals, that restructuring is
the best course of action for the Company or, if
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formulated, that any proposed restructuring plan will be accepted by
the Company's creditors, shareholders and other constituents. Further,
A&M assumes no responsibility for the selection of any restructuring
proposal that it assists in formulating and presenting to the Board,
and A&M shall be responsible for implementation only of the
restructuring proposal approved by the Board and only to the extent
and in the manner authorized and directed by the Board.
2. Compensation
(a) A&M will receive a fee for the services of Xx. Xxxxxxx (prorated as
necessary) at a rate of $175,000 per month, payable monthly in
advance. In the event Xx. Xxxxxxx should become unable to fulfill his
duties due to illness or incapacity for a period of 30 days or more,
the parties agree to negotiate in good faith a reduced monthly fee for
such period. Services rendered by other A&M personnel shall be
compensated at their customary hourly rates, payable monthly. As of
the date of this letter, those rates are:
Managing Directors $400 - $525
Directors $350 - $400
Associates $275 - $340
Analysts $145 - $220
No later than 90 days following the commencement of the engagement,
A&M and the Company will negotiate a monthly flat fee rate covering
those A&M personnel who are expected to be devoted to the engagement
on a substantially full time basis.
In the event the engagement is terminated by the Company without Cause
or by A&M with Good Reason, A&M shall receive a severance payment
equal to $175,000 times the lesser of 12 or the number of months
(including fractions thereof) remaining in the Term (the 'Severance
Payment').
(b) A&M shall be entitled to incentive compensation (the 'Incentive
Compensation') equal to 90% of the cash value of the annual bonus,
including any incentive based bonus, discretionary bonus (not based
principally on asset sales or a restructuring), and supplemental
incentive plan bonus, paid to the highest paid senior officer
(adjusted pro rata for the number of months A&M has performed services
under this Agreement), payable on the same terms and at the same time
as to such officer, but in any event not less than 120 days after the
Company's fiscal year end.
(c) Upon the occurrence of a Trigger Event (this term and other defined
terms used in this subparagraph are defined below), A&M shall be
entitled to a restructuring fee (the 'Restructuring Fee') equal to
five percent (5%) of the Improvement in Value; provided, however, that
in no event shall the Restructuring Fee be less than $3 million; and
provided further, that any
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amounts payable as Incentive Compensation under subparagraph 2(b)
shall be credited against the amounts that become payable under this
paragraph.
In the event a Restructuring Fee becomes payable because of the
occurrence of the events described in clause (i) or (ii) of the
definition of Trigger Event, the Restructuring Fee shall be paid to
A&M immediately upon the occurrence of the Trigger Event. That
component of the Restructuring Fee based on Aggregate Consideration
that is contingent upon the realization of future financial
performance (e.g., an earnout or similar provision) shall be paid by
the Company to A&M promptly upon the receipt of such Aggregate
Consideration by the Company or its shareholders (including holders of
options, warrants, stock appreciation rights, convertible securities
and similar securities of the Company). That component of the
Restructuring Fee that is based on Aggregate Consideration that is
deferred (including without limitation any Aggregate Consideration
held in escrow) shall be valued at the total stated amount of such
consideration without applying a discount thereto and shall be paid by
the Company to A&M promptly upon the occurrence of the Trigger Event;
provided that the portion of the Restructuring Fee payable on account
of amounts held in escrow shall not become payable until released from
escrow to (or for the benefit of) the Company.
In the event a Restructuring Fee becomes payable because of the
occurrence of the events described in clause (iii) or (iv) of the
definition of Trigger Event, 80% of the Restructuring Fee shall be
paid to A&M immediately upon the occurrence of the Trigger Date. The
remaining 20% of the Restructuring Fee shall be paid to A&M 225 days
following the Trigger Date (the 'Final Payment Date'). During the 225
day period prior to the Final Payment Date, A&M and the Company shall,
acting ins good faith, recalculate the Restructuring Fee based on the
actual Operating EBITDA achieved during the six-month period
following the Trigger Date and the amount due A&M on the Final Payment
Date shall be adjusted accordingly; provided, however, that in no
event shall any downward adjustment of the Restructuring Fee due A&M
be greater than the 20% holdback described above. In the event the
Company and A&M shall be unable to agree on the recalculation of the
Restructuring Fee, each of the parties agrees to submit the issue to
binding arbitration under the Commercial Arbitration Rules of the
American Arbitration Association in the State of New York, except that
each party shall bear its own expenses.
For the purposes of this subparagraph 2(c), the following terms shall
have the following meanings:
'Trigger Event' shall mean the earliest to occur of (i) the
consummation of (or, if earlier, the execution of definitive
documentation for) a sale, lease, transfer or other disposition of all
or substantially all the assets of the Company in one or more
transactions (a 'Sale of Assets'); (ii) the merger or consolidation of
the Company with or into any other entity or any combination,
including by way of joint venture, of all or substantially all the
Company's assets, in each case in one or more transactions (or, if
earlier, the
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execution of definitive documentation for any such transactions);
(iii) a substantial restructuring of (or, if earlier, the execution of
definitive documentation for the substantial restructuring of) the
Company's debt, either through a restructuring or refinancing of the
existing bank debt, new investments, sales of assets combined with a
material modification of debt documents, or a combination of any or
all of the foregoing, in one or more transactions the effect of which
is to provide the Company with an amount of liquidity and flexibility
which is anticipated to be sufficient to allow it to operate without
default under tire Company's operating plan to be formulated with
A&M's assistance; and (iv) the expiration of the engagement upon the
conclusion of the Term (as defined in paragraph 3 below) or its
termination by the Company without Cause or by A&M with Good Reason.
In the event the Trigger Event occurs under clause (i), (ii) or (iii)
upon the execution of definitive documentation for the transaction(s)
giving rise to the Trigger, then notwithstanding anything herein to
the contrary, the Restructuring Fee earned upon such Trigger Event
shall become payable upon consummation of the transactions
contemplated by the definitive documentation (regardless of whether
this engagement shall have been terminated prior to such
consummation), not upon execution of such documentation.
'Improvement in Value' shall mean either (a) in the event Improvement
in Value is being calculated because of events described in clause (i)
or (ii) of the definition of Trigger Event, (x) the Aggregate
Consideration plus, in the event the transaction(s) giving rise to the
Trigger Event involves less than all the assets, to the extent
positive, (y) the sum of (I) Debt Paydowns (net of those cash;
payments reducing debt made with the proceeds of the transaction(s)
giving rise to the Trigger Event); (II) the product of seven (7) times
the Trigger Date EBITDA for those assets not involved in the
transaction(s) giving rise to the Trigger Event; and (III) the
Company's cash and cash equivalents not being transferred as part of
the transaction(s) giving rise to the Trigger Event; minus (z)
$1,100,000,000; or (b) in the event Improvement in Value is being
calculated because of events described in clause (iii) or (iv) of the
definition of Trigger Event, to the extent positive, (i) Debt Paydowns
plus (ii) the product of seven (7) times the Trigger Date EBITDA plus
(iii) the Company's cash and cash equivalents minus (iv)
$1,100,000,000.
'Debt Paydowns' shall mean the sum of cash payments made during the
Service Period under the Company's debt and receivables facilities
that permanently reduce the other parties' commitments under such
facilities plus the estimated net proceeds from the sale, lease,
transfer or other disposition of assets that are the subject of fully
executed sale agreements that have not yet closed plus (or minus) the
improvement or deterioration in the Company's working capital compared
to its working capital as of May 1, 2001, in each case as reflected in
the Company's revolving lines of credit, adjusted for seasonal
considerations in a manner to be agreed upon in good faith by the CEO
and A&M.
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'Aggregate Consideration' shall mean the total amount of all cash,
securities, contractual arrangements (including any lease arrangements
or put or call agreements) and other properties paid or payable,
directly or indirectly in connection with a Trigger Event (including
without limitation, amounts paid to holders of any warrants, stock
purchase rights or convertible securities of the Company and to
holders of any options or stock appreciation rights issued by the
Company, whether or not vested). Aggregate Consideration shall also
include the amount of any debt and liabilities (whether short or long
term) of the Company (including the principal amount of any
indebtedness for borrowed money and capitalized leases and the full
amount of any off-balance sheet financings) (x) repaid or retired in
connection with or anticipation of the Trigger Event or (y) existing
on the Company's balance sheet at the time of the Trigger Event (if
such Trigger Event takes the form of a merger, consolidation or a sale
or issuance of stock or partnership interests) or assumed in
connection with a Trigger Event (if such Trigger Event takes the form
of a Sale of Assets or a joint venture). In the event such Trigger
Event takes the form of a Sale of Assets, Aggregate Consideration
shall include (i) the value of any current assets not purchased, minus
(ii) the value of any current liabilities not assumed. In the event
such Trigger Event takes the form of a recapitalization,
restructuring, spin-off, split-off or similar transaction, Aggregate
Consideration shall include the fair market value of (i) the equity
securities of the Company retained by the Company's security holders
in exchange for or in respect of securities of the Company retained
by the Company's security holders following such Trigger Event and
(ii) any securities received by the Company's security holders in
exchange for or in respect of securities of the Company following such
Trigger Event (all securities received by such security holder being
deemed to have been paid to such security holder on account of such
Trigger Event). The value of securities that are freely tradable in an
established public market will be determined on the basis of the last
market closing price prior to the consummation of the Trigger Event.
The value of securities, lease payments, and other consideration that
are not freely tradable on are established market, or if the
consideration utilized consists of property other than securities, the
value of such property shall be the fair market value thereof as
determined in good faith by A&M and agreed to by the Company;
provided, however, that all debt securities, except zero coupon or
deep discount securities, shall be valued at their stated principal
amount without applying a discount thereto.
'Service Period' shall mean the period from the effective date hereof
until the Trigger Date.
'Trigger Date' shall mean the date upon which the Trigger Event
occurs.
'Trigger Date EBITDA' shall mean actual Operating EBITDA for the
six-month period ending prior to the Trigger Date plus projected
Operating EBITDA for the six-month period following the Trigger Date
(including the month in which the Trigger Date occurs). In the event
Operating EBITDA is being calculated because of the restructuring
described in clause (iii) of the definition of Trigger Event, the
projected Operating EBITDA shall be based
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on the Company's operating plan used in connection with such
restructuring. In the event Operating EBITDA is being calculated
because of the Triggering Event described in clause (iv), the
projected Operating EBITDA shall be based on projections developed by
the Company and A&M acting in good faith.
'Operating EBITDA' with respect to any period shall mean the EBITDA
(earnings before interest, taxes, depreciation and amortization) net
of other income (expense); extraordinary items; gains or losses on the
sale of assets; fees and expenses related to the amendment,
restatement, extraordinary repayment or refinancing of debt; any
deduction for minority interest expense; expenses of litigation of any
kind (including administrative proceedings); all professional fees,
fines, damages and settlement payments; restructuring charges
(including, without limitation, professional fees and expenses,
employee severance and incentive payments, costs of operations
discontinued or identified to be discontinued and cure payments for
assumed contracts or leases as well as any other costs that should not
be assigned to on-going operations) ; plus estimated cost savings
anticipated but not yet realized from cost reduction programs that
have already been implemented; less any contribution to EBITDA of
assets that are the subject of fully executed sale agreements that
have not yet closed; in each case, for such period.
(d) No Incentive Compensation or Restructuring Fee shall be earned after
termination of this engagement by the Company for Cause or by A&M
without Good Reason. A&M shall be entitled to receive and retain any
Incentive Compensation or Restructuring Fee earned prior to the date
of such termination.
(e) The Company shall promptly remit to A&M a retainer in the amount of
$100,000, which shall be credited against any amounts due at the
termination of this engagement and returned upon the satisfaction of
all the Company's obligations hereunder.
(f) A&M employees shall be reimbursed for their reasonable out-of-pocket
expenses incurred in connection with this engagement such as travel,
lodging and telephone charges. In addition, A&M shall be reimbursed
for the reasonable fees and expenses of its counsel incurred in
connection with the preparation, negotiation and approval of the
Agreement. All fees and expenses will be billed and payable on a
monthly basis, or, at A&M's discretion, more frequently.
3. Term
(a) The engagement will commence as of the effective date hereof and
continue for a period of eighteen months, or, if shorter, until 60
days after any filing by the Company of a petition under chapter 11
of Title 11 of the United States Code if the court having competent
jurisdiction over any such
7
Company's chapter 11 case has not authorized the retention of A&M
hereunder by such date (the 'Terms'); provided, however, that the
engagement may be terminated by either the Company without cause by
giving 30 days' written notice to A&M or by A&M by giving 90 days
written notice to the Company. In the event of such termination by
either the Company or A&M, any fees and expenses due to A&M shall be
remitted promptly (including fees and expenses that accrued prior to
but were invoiced subsequent to such termination).
(b) The company may immediately terminate A&M's services hereunder at any
time for Cause by giving written notice to A&M. Upon any such
termination, the Company shell be relieved of all of its payment
obligations under the Agreement, except for the payment of monthly
fees and expenses through the effective date of termination
(including fees and expenses that accrued prior to but were invoiced
subsequent to such termination) and its obligations under paragraph 7.
For purposes of this Agreement, 'Cause' shall mean (x) if A&M breaches
any of its material obligations hereunder and does not cure such
breach within 30 days of the Company having given written notice of
such breach to A&M; (y) if A&M engages in willful misconduct which is
injurious to the Company; or (z) if A&M no longer makes Xx. Xxxxxxx
available to lead this engagement for reasons other than his illness,
incapacity or death.
(c) A&M may terminate its services under the Agreement without Good Reason
at any time by giving written notice to the Company. Such termination
will become effective upon the date specified in such notice;
provided, however, that such date is at least 90 days after the date
of delivery of the notice. Upon any such termination, the Company
shall be relieved of all of its payment obligations under the
Agreement, except for the payment of monthly fees and expenses through
the effective date of termination (including fees and expenses that
accrued prior to but were invoiced subsequent to such termination) and
its obligations under paragraph 7.
(d) A&M shall be entitled to terminate its services hereunder for Good
Reason. For purposes of the Agreement, termination for 'Good Reason'
shall mean (x) if the Company breaches any of its material obligations
under the Agreement and does not cure such breach within 30 days of
A&M having given written notice of such breach to the Company or (y)
if the Company engages in willful misconduct which is injurious to
A&M.
4. Relationship of the Parties
The parties intend that an independent contractor relationship will be
created between A&M and the Company by this engagement letter. Neither A&M
nor any of its personnel or subcontractors is to be considered an employee
or agent of the Company and the personnel and subcontractors of A&M are
not entitled to any of the benefits that the Company provides for the
Company's employees. The Company acknowledges that A&M's engagement shall
not constitute an audit, review or compilation, or any other type of
financial statement reporting engagement
8
that is subject to the rules of the AICPA, SEC, or other state or national
professional or regulatory body.
5. Confidentiality
A&M shall keep as confidential all non-public information received from the
Company it conjunction with this engagement, except: (i) as requested by
the Company or its legal counsel; (ii) as required by legal proceedings or
(iii) as reasonably required in communication with the Company's
shareholders, affiliates and creditors, or their advisors, in the
performance of this engagement. At the conclusion of the engagement, if
requested by the Company, A&M shall return all such information in its
possession to the Company.
6. Non-Solicitation/Certain Conduct
Each of the parties hereto agree not to solicit, recruit or hire any
employees of the other party during this engagement and for a period of
two years subsequent to the termination of this engagement. During and
after this engagement, each of the parties agrees to refrain from making
any statements of a defamatory or disparaging nature regarding the other
party or their officers, directors, personnel, products or services,
except, in each case, in such party's professional capacity or in
connection with the performance of its duties hereunder or in connection
with litigation arising out of or relating to the Agreement.
7. Indemnification
The attached indemnification agreement is incorporated herein by reference
and shall be executed upon the acceptance of the Agreement. The Company
shall also use commercially reasonable efforts (which shall include the
payment of amounts which the Company determines in its good faith are
reasonable) to arrange to add A&M, its officers, directors and employees as
additional insured parties under the Company's existing director and
officer liability insurance policy. The Company shall also use commercially
reasonable efforts (which shall include the payment of amounts which the
Company determines in its good faith are reasonable) to arrange to maintain
any such insurance coverage for a period of two years following termination
of this engagement. Termination of this engagement shall not affect any of
these provisions, which shall remain in full force and effect.
8. Miscellaneous
This engagement letter (together with the attached indemnity provisions);
(a) shall be governed and construed in accordance with the laws of the
State of New York, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws thereof; (b) incorporates the
entire understanding of the parties with respect to the subject matter
hereof; and (c) may not be amended or modified except
9
in writing executed by both parties hereto. Without limiting the
requirement to submit to binding arbitration for certain specified matters
in paragraph 2(c), the Company and A&M agree to waive trial by jury in any
action, proceeding or counterclaim brought by or on behalf of the parties
hereto with respect to any matter relating to or arising out of the
engagement or the performance or non-performance of A&M hereunder.
9. Effectiveness
This engagement letter shall become effective upon its execution by the
parties hereto and approval by the Board.
Please sign the enclosed copy of this proposal to acknowledge your agreement
with its terms.
Very truly yours,
Xxxxxxx & Marsal, Inc.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxxxx Xxxxxxx
Managing Director
ACCEPTED AND AGREED:
The Warnaco Group, Inc.,
For itself and by on behalf of all of its subsidiaries,
By: /s/ Xxxxx Xxxxxxx
-----------------------------------
Its: Chairman/CEO
-----------------------------------
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INDEMNIFICATION AGREEMENT
This indemnity is made part of an agreement, dated April 30, 2001 (which
together with any renewals, modifications or extensions thereof, is herein
referred to as the 'Agreement') by and between Xxxxxxx & Marsal, Inc. ('A&M')
and The Warnaco Group, Inc. (together with all its subsidiaries, the 'Company')
for services to be rendered to the Company by A&M.
A. The Company agrees to indemnify and hold harmless each of A&M, its
partners, employees and subcontractors (each, an 'Indemnified Party' and
collectively, the 'Indemnified Parties') against any and all losses, claims,
damages, liabilities, penalties, obligations and expenses (including the
reasonable costs for counsel as and when incurred in investigating, preparing or
defending any action or claim, whether or not in connection with litigation in
which any Indemnified Party is a party, or enforcing this agreement) caused by,
relating to, based upon or arising out of (directly or indirectly) the
Indemnified Parties' acceptance of or the performance or non-performance of
their obligations under the Agreement, provided, however, such indemnity shall
not apply to any such loss, claim, damage, liability or expense to the extent it
is found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted primarily and directly from such Indemnified
Party's gross negligence or willful misconduct (an 'Excluded Liability'). The
Company also agrees that no Indemnified Party shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company for or in
connection with the engagement of A&M, except to the extent of any such
liability for losses, claims, damages, liabilities or expenses that are found in
a final judgment by a court of competent jurisdiction (not subject to further
appeal) to have resulted primarily and directly from such Indemnified Party's
gross negligence or willful misconduct. The Company further agrees that it
will not, without the prior consent of an Indemnified Party, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such Indemnified Party is an actual party to
such claim, action, suit or proceedings) unless such settlement, compromise or
consent includes an unconditional release of such Indemnified Party from all
liabilities arising out of such claim, action, suit or proceeding. A&M will not
settle, compromise or consent to the entry of any judgment in any proceeding or
threatened claim, suit, action or proceeding in respect of which indemnification
may be sought hereunder without the prior written consent of the Company, which
shall not be unreasonably withheld.
B. These indemnification provisions shall be in addition to any liability which
the Company may otherwise have to the Indemnified Parties.
C. If any action, proceeding or investigation (an 'Action') is commenced to
which any Indemnified Party proposes to demand indemnification hereunder, such
Indemnified Party will notify the Company within 15 days of its receipt of
notice of such Action; provided, however, that any failure by such Indemnified
Party to notify the Company will not relieve the Company from its obligations
hereunder, except to the extent that such failure shall have actually prejudiced
the defense of such action. The Company shall have the option to defend such
Action, including to select counsel reasonably acceptable to the Indemnified
Party, unless such counsel determines there is an actual or potential conflict
of interest between the Company, any of its subsidiaries, officers or directors,
on the one hand, and the Indemnified Party, on the other hand. If the Company
fails to notify the Indemnified Party within 15 days of notice of the Action
from the Indemnified Party, or in the event counsel determines there is an
actual or potential conflict of interest, the Company shall promptly pay
expenses reasonably incurred by any Indemnified Party in defending or settling
any Action in which such Indemnification Party is a party or is threatened to be
made a party by reason of the engagement under the Agreement, in advance of the
final disposition of such Action upon submission of invoices therefor. Each
Indemnified Party hereby undertakes, and the Company hereby accepts its
undertaking, to repay any and all such amounts so advanced if it shall
ultimately be determined that such Indemnified Party is not entitled to be
indemnified therefor. If any such Action in which an Indemnified Party is a
party is also against the Company, the Company may, in lieu of advancing the
expenses of separate counsel for such Indemnified Party provide such Indemnified
Party with legal representation by the same counsel who represents the Company,
provided such counsel is reasonably satisfactory to such Indemnified Party, at
no cost to such Indemnified Party; provided, however, that if such counsel or
counsel to the Indemnified Party shall determine that due to the existence of
actual or potential conflicts of interest between such Indemnified Party and the
Company such counsel is unable to represent both the Indemnified Party and the
Company, then the Indemnified Party shall be entitled to use separate counsel of
its own choice, and the Company shall promptly advance its reasonable expenses
of such separate counsel upon submission of invoices therefor; provided that
the Company shall not be liable for the fees and expenses of more than one such
separate counsel. Nothing herein shall prevent an Indemnified Party from using
separate counsel of its own choice at its own expense. The Company will be
liable for any settlement of any claim against an Indemnified Party made with
the Company's written consent, which consent shall not be unreasonably withheld.
D. In order to provide for just and equitable contribution if a claim for
indemnification pursuant to these indemnification provisions is made but it is
found in a final judgment by a court of competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification: then the
Company, on the one hand,
and the Indemnified Parties, on the other hand, shall contribute to the losses,
claims, damages, liabilities and expenses so that the Indemnified Parties are
responsible in the aggregate for a percentage of losses, claims, damages,
liabilities and expenses in such proportion as is appropriate to reflect the
relative fault of the Company, on the one hand, and the Indemnified Parties, on
the other hand, in connection with the statements, acts or omissions which
resulted in such losses, claims, damages, liabilities and costs; and further
provided that in no event will the Indemnified Parties' aggregate contribution
for all losses, claims, damages, liabilities and expenses with respect to which
contribution is available hereunder exceed the amount of fees actually received
by the Indemnified Parties pursuant to the Agreement, except that this
sublimitation will not be applicable to any losses, claims, damages, liabilities
or expenses that are found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted from the gross
negligence or willful misconduct of the Indemnified Party. No person found
liable for a fraudulent misrepresentation shall be entitled to contribution
hereunder from any person who is not also found liable for such fraudulent
misrepresentation.
F. Neither termination of the Agreement nor termination of A&M's engagement
shall affect these indemnification provisions, which shall hereafter remain
operative and in full force and effect.
G. The rights provided herein shall not be deemed exclusive of any other rights
to which the Indemnified Parties may be entitled under the certificate of
incorporation or bylaws of the Company, any other agreements, any vote of
stockholders or disinterested directors of the Company, any applicable law or
otherwise.
Xxxxxxx & Marsal, Inc. ACCEPTED AND AGREED:
The Warnaco Group, Inc.,
For itself and on behalf of its subsidiaries,
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxxxxx
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Xxxxxxx Xxxxxxx Its: Vice President
Managing Director --------------------------------
