EXHIBIT D
[FORM OF PLEDGE AND SECURITY AGREEMENT]
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") is dated
as of February 1, 2001 and entered into by and among LEVI XXXXXXX & CO., a
Delaware corporation (the "BORROWER"), each of THE UNDERSIGNED DIRECT AND
INDIRECT SUBSIDIARIES of the Borrower (each of such undersigned Subsidiaries
being a "SUBSIDIARY GRANTOR" and collectively "SUBSIDIARY GRANTORS") and each
ADDITIONAL GRANTOR that may become a party hereto after the date hereof in
accordance with Section 21 hereof (each of the Borrower, each Subsidiary
Grantor, and each Additional Grantor being a "GRANTOR" and collectively the
"GRANTORS") and BANK OF AMERICA, N.A. ("BANK OF AMERICA"), as Administrative
Agent for and representative of (in such capacities herein called "SECURED
PARTY") the several financial institutions (the "LENDERS") from time to time
party to the Credit Agreement referred to below and any Hedge Bank (as defined
in the Credit Agreement referred to below).
PRELIMINARY STATEMENTS
A. Pursuant to the Credit Agreement dated as of February 1,
2001 (said Credit Agreement, as it may hereafter be amended, amended and
restated, supplemented or otherwise modified from time to time, being the
"CREDIT AGREEMENT"; the terms defined therein and not otherwise defined herein
being used herein as therein defined), by and among the Borrower, the Lenders,
the financial institutions party thereto as Co-Lead Arrangers and Joint Book
Managers, the financial institution party thereto as Syndication Agent, the
financial institution party thereto as Documentation Agent, and Bank of America,
as Administrative Agent, the Lenders have made certain commitments, subject to
the terms and conditions set forth in the Credit Agreement, to extend certain
credit facilities to the Borrower.
B. The Borrower and Levi Xxxxxxx & Co. Financial Services,
S.A., a Belgium corporation, or any successor thereto ("FINSERV"), may from time
to time enter, or may from time to time have entered, into one or more Hedge
Bank Hedge Agreements in accordance with the terms of the Credit Agreement, and
it is desired that the Obligations of the Borrower and FinServ under the Hedge
Bank Hedge Agreements, including the obligation of the Borrower and FinServ to
make payments thereunder in the event of early termination or close out thereof,
together with all Obligations of the Borrower under the Credit Agreement and the
other Loan Documents, be secured hereunder until the payment in full of all
Obligations under the Credit Agreement and the other Loan Documents (other than
the Hedge Bank Hedge Agreements), the cancellation or expiration of all Letters
of Credit and the termination of the Commitments.
C. Subsidiary Grantors have executed and delivered that
certain Guaranty dated the date hereof (said Guaranty, as it may hereafter be
amended, amended and restated, supplemented or otherwise modified from time to
time, being the "SUBSIDIARY GUARANTY") in favor of Secured Party for the benefit
of the Lenders, Administrative Agent and any Hedge
Banks, pursuant to which each Subsidiary Grantor has guarantied the prompt
payment and performance when due of all Obligations of the Borrower under the
Credit Agreement and all Obligations of the Borrower and FinServ under the Hedge
Bank Hedge Agreements, including the obligation of the Borrower and FinServ to
make payments thereunder in the event of early termination or close out thereof.
D. It is a condition precedent to the initial extensions of
credit by the Lenders under the Credit Agreement that the Grantors listed on the
signature pages hereof shall have granted the security interests and undertaken
the Obligations contemplated by this Agreement.
NOW, THEREFORE, based upon the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and in order to induce the Lenders and Secured Party to enter into
the Credit Agreement and to induce the Hedge Lenders to enter into the Hedge
Bank Hedge Agreements, each Grantor hereby agrees with Secured Party as follows:
SECTION 1. Grant of Security.
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Each Grantor hereby assigns to Secured Party, and hereby
grants to Secured Party a security interest in, all of such Grantor's right,
title and interest in and to the following, in each case whether now or
hereafter existing, whether tangible or intangible, or in which such Grantor now
has or hereafter acquires an interest and wherever the same may be located (the
"COLLATERAL"):
(a) all equipment in all of its forms, all parts thereof and
all accessions thereto (any and all such equipment, parts and accessions being
the "EQUIPMENT");
(b) all inventory in all of its forms, including (i) all goods
held by such Grantor for sale or lease or to be furnished under contracts of
service or so leased or furnished, (ii) all raw materials, work in process,
finished goods, and materials used or consumed in the manufacture, packing,
shipping, advertising, selling, leasing, furnishing or production of such
inventory or otherwise used or consumed in such Grantor's business, (iii) all
goods in which such Grantor has an interest in mass or a joint or other interest
or right of any kind, and (iv) all goods which are returned to or repossessed by
such Grantor and all accessions thereto and products thereof (collectively the
"INVENTORY") and all negotiable and non-negotiable documents of title (including
documents, warehouse receipts, dock receipts and bills of lading) issued by any
Person covering any Inventory (any such negotiable document of title being a
"NEGOTIABLE DOCUMENT OF TITLE");
(c) all accounts, contract rights, chattel paper, documents,
instruments, letter-of-credit rights and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper, documents, instruments,
letter-of-credit rights, or other rights and obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments,
letter-of-credit rights and other rights and obligations being the "ACCOUNTS",
and any and all such security agreements, leases and other contracts being the
"RELATED CONTRACTS");
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(d) all deposit accounts ("DEPOSIT ACCOUNTS"), including the
restricted deposit accounts established and maintained by Secured Party pursuant
to Section 11, together with (i) all amounts on deposit from time to time in
such deposit accounts and (ii) all interest, cash, instruments, securities and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the foregoing, including Deposit
Accounts listed on Schedule 1(d);
(e) the "SECURITIES COLLATERAL", which term means:
(i) all shares of stock, partnership interests,
interests in joint ventures, limited liability company interests and
all other equity interests now or hereafter owned by such Grantor in
any Person that is, or becomes, a direct Subsidiary of such Grantor,
including all securities convertible into, and rights, warrants,
options and other rights to purchase or otherwise acquire, any of the
foregoing now or hereafter owned by such Grantor, including those owned
on the date hereof and described on Schedule 1(e)(i), and the
certificates or other instruments representing any of the foregoing and
any interest of such Grantor in the entries on the books of any
securities intermediary pertaining thereto (the "PLEDGED INTERESTS"),
and all dividends, distributions, returns of capital, cash, warrants,
options, rights, instruments, rights to vote or manage the business of
such Person pursuant to organizational documents governing the rights
and obligations of the stockholders, partners, members or other owners
thereof and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such Pledged Interests; provided, that if the issuer of
any of such Pledged Interests is a controlled foreign corporation (used
hereinafter as such term is defined in Section 957(a) or a successor
provision of the Internal Revenue Code), the Pledged Interests shall
not include any shares of stock of such issuer in excess of the number
of shares of such issuer possessing up to but not exceeding 65% of the
voting power of all classes of capital stock entitled to vote of such
issuer, and all dividends, cash, warrants, rights, instruments and
other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of
such Pledged Interests;
(ii) all indebtedness from time to time owed to such
Grantor by any obligor that is, or becomes, a direct or indirect
Subsidiary of such Grantor, or by any obligor of which Grantor is a
direct or indirect Subsidiary, including, without limitation, the
indebtedness described on Schedule 1(e)(ii) and issued by the obligors
named therein, and the instruments evidencing such indebtedness (the
"PLEDGED DEBT"), and all interest, cash, instruments and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Debt; and
(iii) all other investment property, as that term is
defined in the Uniform Commercial Code (the "UCC") of any relevant
jurisdiction, of such Grantor;
(f) the "INTELLECTUAL PROPERTY COLLATERAL", which term means:
(i) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all trademarks,
service marks, designs, logos, indicia,
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tradenames, trade dress, corporate names, company names, business
names, fictitious business names, trade styles and/or other source
and/or business identifiers and applications pertaining thereto, owned
by such Grantor, or hereafter adopted and used, in its business
(including, without limitation, the trademarks listed in Schedule
1(f)(i), as the same may be amended pursuant hereto from time to time)
(collectively, the "TRADEMARKS"), all registrations that have been or
may hereafter be issued or applied for thereon in the United States and
any state thereof and in foreign countries (including, without
limitation, the registrations and applications specifically identified
in Schedule 1(f)(i), as the same may be amended pursuant hereto from
time to time) (the "TRADEMARK REGISTRATIONS"), all common law and other
rights in and to the Trademarks in the United States and any state
thereof and in foreign countries (the "TRADEMARK RIGHTS"), and all
goodwill of such Grantor's business symbolized by the Trademarks and
associated therewith (the "ASSOCIATED GOODWILL");
(ii) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all patents and
patent applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or
in the future may be, owned or held by such Grantor and all patents and
patent applications and rights, title and interests in patents and
patent applications under any domestic or foreign law that are
presently, or in the future may be, owned by such Grantor in whole or
in part (including, without limitation, the patents and patent
applications listed in Schedule 1(f)(ii), as the same may be amended
pursuant hereto from time to time), all rights (but not obligations)
corresponding thereto (including the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to xxx
for past, present and future infringements in the name of such Grantor
or in the name of Secured Party or the Lenders), and all re-issues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively
referred to as the "PATENTS"); and
(iii) all rights, title and interest (including rights
acquired pursuant to a license or otherwise) under copyright in various
published and unpublished works of authorship including computer
programs, computer data bases, other computer software, layouts, trade
dress, drawings, designs, writings, and formulas owned by such Grantor
(including, without limitation, the works listed on Schedule 1(f)(iii),
as the same may be amended pursuant hereto from time to time)
(collectively, the "COPYRIGHTS"), all copyright registrations issued to
such Grantor and applications for copyright registration that have been
or may hereafter be issued or applied for thereon by such Grantor in
the United States and any state thereof and in foreign countries
(including, without limitation, the registrations listed on Schedule
1(f)(iii), as the same may be amended pursuant hereto from time to
time) (collectively, the "COPYRIGHT REGISTRATIONS"), all common law and
other rights in and to the Copyrights in the United States and any
state thereof and in foreign countries including all copyright licenses
(but with respect to such copyright licenses, only to the extent
permitted by such licensing arrangements) (the "COPYRIGHT Rights"),
including each of the Copyrights, rights, titles and interests in and
to the Copyrights, all derivative works and other works protectable by
copyright, which are presently, or in the future may be, owned, created
(as a work for hire for the benefit of such Grantor), authored (as a
work for hire for the benefit of such Grantor), or acquired
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by such Grantor, in whole or in part, and all Copyright Rights with
respect thereto and all Copyright Registrations therefor, heretofore or
hereafter granted or applied for, and all renewals and extensions
thereof, throughout the world, including the right to renew and extend
such Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to xxx
for past, present and future infringements in the name of such Grantor
or in the name of Secured Party or the Lenders;
(g) all information used or useful or arising from the
business including all goodwill, trade secrets, trade secret rights, know-how,
customer lists, processes of production, ideas, confidential business
information, techniques, processes, formulas, and all other proprietary
information;
(h) to the extent not included in any other paragraph of this
Section 1, all general intangibles, including tax refunds, payment intangibles,
other rights to payment or performance, CHOSES IN ACTION, software and judgments
taken on any rights or claims included in the Collateral;
(i) all plant fixtures, business fixtures and other fixtures
and storage and office facilities, and all accessions thereto and products
thereof;
(j) all books, records, ledger cards, files, correspondence,
computer programs, tapes, disks and related data processing software that at any
time evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(k) all proceeds, products, rents and profits of or from any
and all of the foregoing Collateral and, to the extent not otherwise included,
all payments under insurance (whether or not Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "PROCEEDS" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event
shall the Collateral include, and no Grantor shall be deemed to have granted a
security interest in (i) any of such Grantor's rights or interests in any
license, contract or agreement to which such Grantor is a party or any of its
rights or interests thereunder or any of its rights or interests in other
property to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under, any license, contract or
agreement to which such Grantor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles of equity) or any
agreement permitted by Section 5.02(l) of the Credit Agreement prohibiting or
conditioning the creation or assumption of any Lien upon its property or assets
or such rights or interests; provided, that immediately upon the
ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and such Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect, or (ii) any real property
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leasehold, unless a Grantor has executed a leasehold mortgage or leasehold deed
of trust covering such real property leasehold.
Each item of Collateral listed in this Section 1 that is
defined in Articles 8 or 9 of the UCC shall have the meaning set forth in the
UCC, as it exists on the date of this Agreement or as it may hereafter be
amended, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range
of assets, except for assets expressly excluded as set forth above.
Notwithstanding anything herein to the contrary, neither the
Borrower nor any Grantor shall be deemed to have granted a security interest in
(i) any Principal Property, (ii) any capital stock of any Restricted Subsidiary
or (iii) any Pledged Debt of or issued by any Restricted Subsidiary.
SECTION 2. Security for Obligations.
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This Agreement secures, and the Collateral assigned by each
Grantor is collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise (including, without limitation, the payment of
amounts that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code), of all Secured Obligations of such
Grantor. "SECURED OBLIGATIONS" means:
(a) with respect to the Borrower, all Obligations and
liabilities of every nature of the Borrower now or hereafter existing under or
arising out of or in connection with the Credit Agreement and the other Loan
Documents (other than the Hedge Bank Hedge Agreements) and, until the payment in
full of all Obligations under the Credit Agreement and the other Loan Documents
(other than the Hedge Bank Hedge Agreements), the cancellation or expiration of
all Letters of Credit and the termination of the Commitments, all Obligations
and liabilities of every nature of the Borrower and FinServ, now or hereafter
existing under or arising out of or in connection with any Hedge Bank Hedge
Agreement, and
(b) with respect to each Subsidiary Grantor and Additional
Grantor, all Obligations and liabilities of every nature of such Grantors now or
hereafter existing under or arising out of or in connection with the Subsidiary
Guaranty;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including, without limitation, interest that, but for the
filing of a petition in bankruptcy with respect to the Borrower or any other
Grantor, would accrue on such Obligations, whether or not a claim is allowed
against the Borrower or such Grantor for such interest in the related bankruptcy
proceeding), reimbursement of amounts drawn under Letters of Credit, payments
for early termination or close out of Hedge Bank Hedge Agreements, fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such Obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Lender or Hedge Bank as a
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preference, fraudulent transfer or otherwise, and all Obligations of every
nature of the Grantors now or hereafter existing under this Agreement.
SECTION 3. Grantors Remain Liable.
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Anything contained herein to the contrary notwithstanding, (a)
each Grantor shall remain liable under any contracts and agreements included in
the Collateral, to the extent set forth therein, to perform all of its duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Secured Party of any of its rights hereunder shall
not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) Secured Party shall
not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. Representations and Warranties.
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Each Grantor represents and warrants as follows:
(a) OWNERSHIP OF COLLATERAL. Except as expressly permitted by
the Credit Agreement and for the security interest created by this Agreement,
such Grantor owns the Collateral owned by such Grantor free and clear of any
Lien. Except as expressly permitted by the Credit Agreement and such as may have
been filed in favor of Secured Party relating to this Agreement, no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office.
(b) LOCATIONS OF EQUIPMENT AND INVENTORY. All of the Equipment
and Inventory is, as of the date hereof, or in the case of an Additional
Grantor, the date of the applicable counterpart entered into pursuant to Section
21 hereof (each, a "COUNTERPART") located at the places specified in Schedule
4(b), except for Equipment and Inventory which, in the ordinary course of
business, is in transit either (i) from a supplier or a processor to a Grantor,
(ii) between the locations specified in Schedule 4(b), (iii) from a supplier or
a Grantor to a processor, or (iv) to customers of a Grantor.
(c) OFFICE LOCATIONS; TYPE AND JURISDICTION OF ORGANIZATION.
The chief place of business, the chief executive office and the office where
such Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts are, as of the date hereof, and, except as
set forth on Schedule 4(c), have been for the four month period preceding the
date hereof, or, in the case of an Additional Grantor, the date of the
applicable Counterpart, located at the locations set forth on Schedule 4(c); the
type (i.e. corporation, limited partnership, etc.) and jurisdiction of
organization of such Grantor are listed on Schedule 4(c).
(d) NAMES. No Grantor (or predecessor by merger or otherwise
of such Grantor) has, within the four month period preceding the date hereof,
or, in the case of an Additional Grantor, the date of the applicable
Counterpart, had a different name from the name of such Grantor listed or the
signature pages hereof, except the names listed in Schedule 4(d).
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(e) DELIVERY OF CERTAIN COLLATERAL. Except as permitted by
Section 5.01(l) of the Credit Agreement, all certificates or instruments
(excluding checks) evidencing, comprising or representing the Collateral
(including, without limitation, the Securities Collateral) have been delivered
to Secured Party duly endorsed or accompanied by duly executed instruments of
transfer or assignment in blank.
(f) SECURITIES COLLATERAL. (i) All of the Pledged Interests
described on Schedule 1(e)(i) have been duly authorized and validly issued and
are fully paid and non-assessable; (ii) all of the Pledged Debt described on
Schedule 1(e)(ii) has been duly authorized, authenticated or issued, and
delivered and is the legal, valid and binding obligation of the issuers thereof
and is not in default; (iii) except as set forth in Schedule 1(e)(i), the
Pledged Interests constitute all of the issued and outstanding shares of stock
or other equity interests of each issuer thereof (subject to the proviso to
Section 1(e)(i) hereof with respect to shares of a foreign controlled
corporation), and there are no outstanding warrants, options or other rights to
purchase, or other agreements outstanding with respect to, or property that is
now or hereafter convertible into, or that requires the issuance or sale of, any
Pledged Interests; (iv) the Pledged Debt constitutes all of the issued and
outstanding intercompany indebtedness evidenced by a promissory note of the
respective issuers thereof owing to such Grantor; (v) Schedule 1(e)(i) sets
forth all of the Pledged Interests owned by each Grantor on the date hereof; and
(vi) Schedule 1(e)(ii) sets forth all of the Pledged Debt in existence on the
date hereof.
(g) INTELLECTUAL PROPERTY COLLATERAL.
(i) a true and complete list of all Trademark
Registrations and Trademark applications owned by such Grantor, in
whole or in part, that are material to such Grantor's business is set
forth in Schedule 1(f)(i);
(ii) a true and complete list of all Patents owned by
such Grantor, in whole or in part, that are material to such Grantor's
business is set forth in Schedule 1(f)(ii);
(iii) a true and complete list of all Copyright
Registrations and applications for Copyright Registrations owned by
such Grantor, in whole or in part, that are material to such Grantor's
business is set forth in Schedule 1(f)(iii);
(iv) after reasonable inquiry, such Grantor is not aware
of any pending or threatened claim by any third party that any of the
Intellectual Property Collateral owned, held or used by such Grantor is
invalid or unenforceable that is reasonably likely to have a Material
Adverse Effect; and
(v) after giving effect to the releases delivered on the
Closing Date in respect of the Existing Credit Agreements, no effective
security interest or other Lien covering all or any part of the
Intellectual Property Collateral is on file in the United States Patent
and Trademark Office or the United States Copyright Office.
(h) PERFECTION. The security interests in the Collateral
granted to Secured Party for the ratable benefit of the Lenders and Hedge Banks
hereunder constitute valid Liens on such Collateral, securing the payment of the
Secured Obligations. Upon (i) the filing of XXX
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financing statements naming each Grantor as "debtor", naming Secured Party as
"secured party" and describing the Collateral in the filing offices with respect
to such Grantor set forth on Schedule 4(i), (ii) in the case of the Securities
Collateral consisting of certificated securities or evidenced by instruments,
delivery of the certificates representing such certificated securities and
delivery of such instruments to Secured Party, in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank, and
(iii) in the case of the Intellectual Property Collateral, in addition to the
filing of such UCC financing statements, the filing of a Grant of Trademark
Security Interest, substantially in the form of Exhibit I, and a Grant of Patent
Security Interest, substantially in the form of Exhibit II, with the United
States Patent and Trademark Office and the filing of a Grant of Copyright
Security Interest, substantially in the form of Exhibit III, with the United
States Copyright Office (each such Grant of Trademark Security Interest, Grant
of Patent Security Interest and Grant of Copyright Security Interest being
referred to herein as a "GRANT"), the security interests in the Collateral
granted to Secured Party for the ratable benefit of the Lenders and Hedge Banks
will constitute perfected security interests therein, to the extent such
security interests may be perfected by filing in the United States or by
possession, prior to all other Liens (except for Liens expressly permitted by
the Credit Agreement), and all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly made or taken.
SECTION 5. Further Assurances.
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(a) GENERALLY. Each Grantor agrees that from time to time, at
the expense of the Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that Secured Party may reasonably request, in order
to perfect and protect any security interest granted or purported to be granted
hereby or to enable Secured Party to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) at the reasonable request of
Secured Party, xxxx conspicuously each item of chattel paper included in the
Accounts, each Related Contract and, at the request of Secured Party, each of
its records pertaining to the Collateral, with a legend, in form and substance
satisfactory to Secured Party, indicating that such Collateral is subject to the
security interest granted hereby, (ii) at the reasonable request of Secured
Party, deliver and pledge to Secured Party hereunder all promissory notes and
other instruments (including checks) and all original counterparts of chattel
paper constituting Collateral, duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
Secured Party, (iii) execute and file such financing or continuation statements,
or amendments thereto, agreements establishing that Secured Party has control of
Deposit Accounts and investment property and such other instruments or notices,
as may be necessary or desirable, or as Secured Party may request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby, (iv) furnish to Secured Party from time to time statements and schedules
further identifying and describing the Collateral and such other reports in
connection with the Collateral as Secured Party may reasonably request, all in
reasonable detail, (v) if requested by Administrative Agent, promptly after the
acquisition by such Grantor of any item of Equipment that is covered by a
certificate of title under a statute of any jurisdiction under the law of which
indication of a security interest on such certificate is required as a condition
of perfection thereof, execute and file with the registrar of motor vehicles or
other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the
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security interest created hereunder on such certificate of title, (vi) within 45
days after the end of each fiscal quarter of the Borrower, deliver to Secured
Party copies of all such applications or other documents filed during such
fiscal quarter and copies of all such certificates of title issued during such
fiscal quarter indicating the security interest created hereunder in the items
of Equipment covered thereby, (vii) at any reasonable time, upon request by
Secured Party, exhibit the Collateral to and allow inspection of the Collateral
by Secured Party, or persons designated by Secured Party, and (viii) at Secured
Party's request, appear in and defend any action or proceeding that may affect
such Grantor's title to or Secured Party's security interest in all or any part
of the Collateral. Each Grantor hereby authorizes Secured Party to file one or
more financing or continuation statements, and amendments thereto, relative to
all or any part of the Collateral without the signature of any Grantor. Each
Grantor agrees that a carbon, photographic or other reproduction of this
Agreement or of a financing statement signed by such Grantor shall be sufficient
as a financing statement and may be filed as a financing statement in any and
all jurisdictions.
(b) SECURITIES COLLATERAL. Without limiting the generality of
the foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to Secured Party a
Pledge Supplement, duly executed by such Grantor, in substantially the form of
Exhibit IV (a "PLEDGE SUPPLEMENT"), in respect of the additional Pledged
Interests or Pledged Debt to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Supplement to Secured Party, the representations and
warranties contained in clauses (i)-(iv) of Section 4(g) hereof shall be deemed
to have been made by such Grantor as to the Securities Collateral described in
such Pledge Supplement as of the date thereof. Each Grantor hereby authorizes
Secured Party to attach each Pledge Supplement to this Agreement and agrees that
all Pledged Interests or Pledged Debt of such Grantor listed on any Pledge
Supplement shall for all purposes hereunder be considered Collateral of such
Grantor; provided, the failure of any Grantor to execute a Pledge Supplement
with respect to any additional Pledged Interests or Pledged Debt pledged
pursuant to this Agreement shall not impair the security interest of Secured
Party therein or otherwise adversely affect the rights and remedies of Secured
Party hereunder with respect thereto.
(c) INTELLECTUAL PROPERTY COLLATERAL. Without limiting the
generality of the foregoing Section 5(a), if any Grantor shall hereafter obtain
rights to any new Intellectual Property Collateral or become entitled to the
benefit of (i) any patent application or patent or any reissue, division,
continuation, renewal, extension or continuation-in-part of any Patent or any
improvement of any Patent or (ii) any Copyright Registration, application for
Copyright Registration or renewals or extension of any Copyright, then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Each Grantor shall, within 45 days after the end of each fiscal quarter of the
Borrower, notify Secured Party in writing of any of the foregoing rights
acquired by such Grantor after the date hereof or the date of the last such
notice, as the case may be, and of (i) any Trademark Registrations issued or
application for a Trademark Registration or application for a Patent made, and
(ii) any Copyright Registrations issued or applications for Copyright
Registration made, in any such case, after the date hereof. Within 45 days after
the end of each fiscal quarter of the Borrower during which any Grantor files an
application for any (1) Trademark Registration; (2) Patent; and (3) Copyright
Registration, each Grantor shall execute and deliver to Secured Party and record
in all places where a Grant is
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recorded an IP Supplement, substantially in the form of Exhibit V (an "IP
SUPPLEMENT"), pursuant to which such Grantor shall grant to Secured Party a
security interest to the extent of its interest in such Intellectual Property
Collateral; provided, if, in the reasonable judgment of such Grantor, after due
inquiry, granting such interest would result in the grant of a Trademark
Registration or Copyright Registration in the name of Secured Party, such
Grantor shall give written notice to Secured Party on the day on which such
Grantor would otherwise be required to record the IP Supplement and the filing
shall instead be undertaken as soon as practicable but in no case later than
immediately following the grant of the applicable Trademark Registration or
Copyright Registration, as the case may be. Upon delivery to Secured Party of an
IP Supplement, Schedules 1(f)(i), 1(f)(ii), and 1(f)(iii) hereto and Schedule A
to each Grant, as applicable, shall be deemed modified to include reference to
any right, title or interest in any existing Intellectual Property Collateral or
any Intellectual Property Collateral included on Schedule A to such IP
Supplement. Each Grantor hereby authorizes Secured Party to modify this
Agreement without the signature or consent of any Grantor by attaching Schedules
1(f)(i), 1(f)(ii), and 1(f)(iii), as applicable, that have been modified to
include such Intellectual Property Collateral or to delete any reference to any
right, title or interest in any Intellectual Property Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
failure of any Grantor to execute an IP Supplement with respect to any
additional Intellectual Property Collateral pledged pursuant to this Agreement
shall not impair the security interest of Secured Party therein or otherwise
adversely affect the rights and remedies of Secured Party hereunder with respect
thereto. Notwithstanding the foregoing, Grantor shall not be required to record
the security interest of Secured Party in any Intellectual Property Collateral,
if such recordation would result in the grant of a Trademark Registration,
Patent, or Copyright Registration, or any application therefor, in the name of
Secured Party.
SECTION 6. Certain Covenants of the Grantors.
---------------------------------
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or
in violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral,
except where such violation would not have a Material Adverse Effect;
(b) notify Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days of such change;
(c) give Secured Party 30 days' prior written notice of any
change in such Grantor's chief place of business, chief executive office or
residence or the office where such Grantor keeps its records regarding the
Accounts and all originals of all chattel paper that evidence Accounts or a
reincorporation, reorganization or other action that results in a change of the
jurisdiction of organization of such Grantor; and
(d) if Secured Party gives value to enable such Grantor to
acquire rights in or the use of any Collateral, use such value for such
purposes.
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SECTION 7. Special Covenants With Respect to Equipment and Inventory.
----------------------------------------------------------
Each Grantor shall:
(a) If such Grantor is a Subsidiary Grantor, keep the
Equipment and Inventory owned by such Subsidiary Grantor at the places therefor
specified on Schedule 4(b) or, provided that such Subsidiary Grantor gives
Secured Party notice of any transfer of Equipment or Inventory within 60 days
after such transfer, at such other places in jurisdictions where all action that
may be necessary or desirable, or that Secured Party may request, in order to
perfect and protect any security interest granted or purported to be granted
hereby, or to enable Secured Party to exercise and enforce its rights and
remedies hereunder, with respect to such Equipment and Inventory shall have been
taken;
(b) except as otherwise expressly permitted by the Credit
Agreement, cause the Equipment owned by such Grantor to be maintained and
preserved in the same condition, repair and working order as when new, ordinary
wear and tear excepted, and in accordance with such Grantor's past practices,
and shall forthwith make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end. Each Grantor shall promptly furnish to Secured Party a statement respecting
any material loss or damage to any of the Equipment owned by such Grantor, but
only to the extent that such loss or damage is material to the Equipment owned
by Company and its Subsidiaries, taken as a whole;
(c) keep correct and accurate records of Inventory owned by
such Grantor, itemizing and describing the kind, type and quantity of such
Inventory, such Grantor's cost therefor and (where applicable) the current list
prices for such Inventory;
(d) notify all of any of such Grantor's agents or processors
possessing or controlling any Inventory and all public warehouses in which
Inventory is maintained of the Lien of Secured Party in such Inventory;
(e) upon the occurrence of an Event of Default, instruct all
agents or processors of such Grantor possessing or controlling any Inventory and
all public warehouses in which Inventory is maintained to hold all such
Inventory for the account of Secured Party and subject to the instructions of
Secured Party; and
(f) each Grantor shall, at its own expense, maintain insurance
with respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement.
SECTION 8. Special Covenants with respect to Accounts and Related Contracts.
-----------------------------------------------------------------
(a) Each Grantor shall keep its chief place of business and
chief executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the locations therefor set forth on Schedule 4(d), upon 30
days' prior written notice to Secured Party, at such other location in a
jurisdiction where all action that may be necessary or desirable, or that
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable Secured Party to
exercise and enforce its rights and remedies hereunder,
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with respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and each Grantor
agrees to render to Secured Party, at Grantor's cost and expense, such clerical
and other assistance as may be reasonably requested with regard thereto.
Promptly upon the request of Secured Party, each Grantor shall deliver to
Secured Party complete and correct copies of each Related Contract.
(b) Each Grantor shall, for not less than three (3) years from
the date on which each Account of such Grantor arose, maintain (i) complete
records of such Account, including records of all payments received, credits
granted and merchandise returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this subsection (c), each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor under the Accounts and Related Contracts. In
connection with such collections, each Grantor may take (and, upon the
occurrence and during the continuance of an Event of Default at Secured Party's
direction, shall take) such action as such Grantor or Secured Party may deem
necessary or advisable to enforce collection of amounts due or to become due
under the Accounts; provided, however, that Secured Party shall have the right
at any time, upon the occurrence and during the continuation of an Event of
Default and upon written notice to such Grantor of its intention to do so, to
notify the account debtors or obligors under any Accounts of the assignment of
such Accounts to Secured Party and to direct such account debtors or obligors to
make payment of all amounts due or to become due to such Grantor thereunder
directly to Secured Party, to notify each Person maintaining a lockbox or
similar arrangement to which account debtors or obligors under any Accounts have
been directed to make payment to remit all amounts representing collections on
checks and other payment items from time to time sent to or deposited in such
lockbox or other arrangement directly to Secured Party and, upon such
notification and at the expense of the Grantors, to enforce collection of any
such Accounts and to adjust, settle or compromise the amount or payment thereof,
in the same manner and to the same extent as such Grantor might have done. After
receipt by such Grantor of the notice from Secured Party referred to in the
proviso to the preceding sentence, (i) all amounts and proceeds (including
checks and other instruments) received by such Grantor in respect of the
Accounts and the Related Contracts shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 17 hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any Account, or release
wholly or partly any account debtor or obligor thereof, or allow any credit or
discount thereon.
SECTION 9. Special Covenants With Respect to the Securities Collateral.
------------------------------------------------------------
(a) DELIVERY. Each Grantor agrees that all certificates or
instruments representing or evidencing the Securities Collateral shall be
delivered to and held by or on behalf of Secured Party pursuant hereto and shall
be in suitable form for transfer by delivery or, as applicable, shall be
accompanied by such Grantor's endorsement, where necessary, or duly executed
instruments of transfer or assignment in blank, all in form and substance
satisfactory to Secured Party. Secured Party shall have the right at any time to
exchange certificates or
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instruments representing or evidencing Securities Collateral for certificates or
instruments of smaller or larger denominations.
(b) COVENANTS. Each Grantor shall, except as otherwise not
prohibited by the Credit Agreement, (i) not permit any issuer of Pledged
Interests to merge or consolidate unless all the outstanding capital stock or
other equity interests of the surviving or resulting Person is, upon such merger
or consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided, if the surviving or resulting Person upon any such merger
or consolidation involving an issuer of Pledged Interests which is a controlled
foreign corporation is a controlled foreign corporation, then such Grantor shall
only be required to pledge outstanding capital stock of such surviving or
resulting Person possessing up to but not exceeding 65% of the voting power of
all classes of capital stock of such issuer entitled to vote; (ii) cause each
issuer of Pledged Interests not to issue any stock, other equity interests or
other securities in addition to or in substitution for the Pledged Interests
issued by such issuer, except to such Grantor; (iii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all
additional shares of stock, other equity interests or other securities of each
issuer of Pledged Interests; (iv) pledge hereunder, immediately upon its
acquisition (directly or indirectly) thereof, any and all shares of stock or
other equity interests of any Person that, after the date of this Agreement,
becomes, as a result of any occurrence, a direct Subsidiary of such Grantor;
provided, notwithstanding anything contained in this clause (iv) to the
contrary, such Grantor shall only be required to pledge the outstanding capital
stock of a controlled foreign corporation possessing up to but not exceeding 65%
of the voting power of all classes of capital stock of such controlled foreign
corporation entitled to vote and any such Grantor shall not be required to
pledge the capital stock of any Restricted Subsidiary; (v) pledge hereunder,
immediately upon their issuance, any and all instruments or other evidences of
additional indebtedness from time to time owed to such Grantor by any obligor on
the Pledged Debt; provided, notwithstanding anything contained in this
subsection (v) to the contrary, any such Grantor shall not be required to pledge
any such instruments or other evidences of additional indebtedness owed to such
Grantor by any Restricted Subsidiary; (vi) pledge hereunder, immediately upon
their issuance, any and all instruments or other evidences of indebtedness from
time to time owed to such Grantor by any Person that after the date of this
Agreement becomes, as a result of any occurrence, a direct or indirect
Subsidiary of such Grantor; provided, notwithstanding anything contained in this
subsection (vi) to the contrary, any such Grantor shall not be required to
pledge any such instruments or other evidences of indebtedness owed to such
Grantor by any Restricted Subsidiary; (vii) promptly notify Secured Party of any
event of which such Grantor becomes aware causing loss or depreciation in the
value of the Securities Collateral that has a Material Adverse Effect; and
(viii), at the request of Secured Party, promptly execute and deliver to Secured
Party an agreement providing for the control, as that term is defined in the
UCC, by Secured Party of all securities entitlements and securities accounts of
such Grantor.
(c) VOTING AND DISTRIBUTIONS. So long as no Event of Default
shall have occurred and be continuing, (i) each Grantor shall be entitled to
exercise any and all voting and other consensual rights pertaining to the
Securities Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Credit Agreement; provided, no Grantor shall
exercise or refrain from exercising any such right if Secured Party shall have
notified such Grantor that, in Secured Party's reasonable judgment, such action
would have a Material
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Adverse Effect; and provided further, such Grantor shall give Secured Party at
least five Business Days' prior written notice of the manner in which it intends
to exercise, or the reasons for refraining from exercising, any such right (it
being understood, however, that neither (A) the voting by such Grantor of any
Pledged Interests for or such Grantor's consent to the election of directors or
other members of a governing body of an issuer of Pledged Interests at a
regularly scheduled annual or other meeting of stockholders or holders of equity
interests or with respect to incidental matters at any such meeting, nor (B)
such Grantor's consent to or approval of any action otherwise not prohibited
under this Agreement and the Credit Agreement shall be deemed inconsistent with
the terms of this Agreement or the Credit Agreement within the meaning of this
Section, and no notice of any such voting or consent need be given to Secured
Party); (ii) each Grantor shall be entitled to receive and retain, and to
utilize free and clear of the lien of this Agreement, any and all dividends,
other distributions and interest paid in respect of the Securities Collateral;
provided, any and all (A) dividends, distributions and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Securities Collateral, (B) dividends and other distributions paid or payable in
cash in respect of any Securities Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and (C) cash paid, payable or otherwise
distributed in respect of principal or in redemption of or in exchange for any
Securities Collateral, shall be, and shall forthwith be delivered to Secured
Party to hold as, Securities Collateral and shall, if received by such Grantor,
be received in trust for the benefit of Secured Party, be segregated from the
other property or funds of such Grantor and be forthwith delivered to Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to such Grantor all such
proxies, dividend payment orders and other instruments as such Grantor may from
time to time reasonably request for the purpose of enabling such Grantor to
exercise the voting and other consensual rights which it is entitled to exercise
pursuant to clause (i) above and to receive the dividends, distributions,
principal or interest payments which it is authorized to receive and retain
pursuant to clause (ii) above.
Upon the occurrence and during the continuation of an Event of
Default, (x) upon written notice from Secured Party to any Grantor, all rights
of such Grantor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in Secured Party who shall thereupon
have the sole right to exercise such voting and other consensual rights; (y) all
rights of such Grantor to receive the dividends, other distributions and
interest payments which it would otherwise be authorized to receive and retain
pursuant hereto shall cease, and all such rights shall thereupon become vested
in Secured Party who shall thereupon have the sole right to receive and hold as
Securities Collateral such dividends, other distributions and interest payments;
and (z) all dividends, principal, interest payments and other distributions
which are received by such Grantor contrary to the provisions of clause (ii) of
the immediately preceding paragraph or clause (y) above shall be received in
trust for the benefit of Secured Party, shall be segregated from other funds of
such Grantor and shall forthwith be paid over to Secured Party as Securities
Collateral in the same form as so received (with any necessary endorsements).
In order to permit Secured Party to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant hereto and
to receive all dividends and other
D-15
distributions which it may be entitled to receive hereunder, (I) each Grantor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request, and (II) without
limiting the effect of clause (I) above, each Grantor hereby grants to Secured
Party an irrevocable proxy to vote the Pledged Interests and to exercise all
other rights, powers, privileges and remedies to which a holder of the Pledged
Interests would be entitled (including giving or withholding written consents of
shareholders or other holders of equity interests, calling special meetings of
shareholders or other holders of equity interests and voting at such meetings),
which proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Interests on the record books of
the issuer thereof) by any other Person (including the issuer of the Pledged
Interests or any officer or agent thereof), upon the occurrence of an Event of
Default and which proxy shall only terminate upon the payment in full of the
Secured Obligations.
SECTION 10. Special Covenants With Respect to the Intellectual Property
-----------------------------------------------------------
Collateral.
----------
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the
Intellectual Property Collateral and at all times keep at least one
complete set of its records concerning such Collateral at its chief
executive office or principal place of business;
(ii) use commercially reasonable efforts so as not to
permit the inclusion in any contract to which it hereafter becomes a
party of any provision that could or might in any way impair or prevent
the creation of a security interest in, or the assignment of, such
Grantor's rights and interests in any property included within the
definitions of any Intellectual Property Collateral acquired under such
contracts;
(iii) take any and all reasonable steps to protect the
secrecy of all trade secrets relating to the products and services sold
or delivered under or in connection with the Intellectual Property
Collateral, including, without limitation, where appropriate entering
into confidentiality agreements with employees and labeling and
restricting access to secret information and documents;
(iv) use proper statutory notice in connection with its
use of any of the Intellectual Property Collateral, except where the
failure to give such notice would not have a Material Adverse Effect;
(v) use a commercially appropriate standard of quality
(which may be consistent with such Grantor's past practices) in the
manufacture, sale and delivery of products and services sold or
delivered under or in connection with the Trademarks; and
(vi) furnish to Secured Party from time to time at
Secured Party's reasonable request statements and schedules further
identifying and describing any Intellectual Property Collateral and
such other reports in connection with such Collateral, all in
reasonable detail.
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(b) Except as otherwise provided in this Section 10, each
Grantor shall continue to collect, at its own expense, all amounts due or to
become due to such Grantor in respect of the Intellectual Property Collateral or
any portion thereof. In connection with such collections, each Grantor may take
(and, after the occurrence and during the continuance of any Event of Default at
Secured Party's reasonable direction, shall take) such action as such Grantor or
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, Secured Party shall have the right at any time, upon
the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created hereby and to direct such obligors to make payment of all such amounts
directly to Secured Party, and, upon such notification and at the expense of
such Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by any Grantor of the
notice from Secured Party referred to in the proviso to the preceding sentence
and during the continuation of any Event of Default, (i) all amounts and
proceeds (including checks and other instruments) received by each Grantor in
respect of amounts due to such Grantor in respect of the Intellectual Property
Collateral or any portion thereof shall be received in trust for the benefit of
Secured Party hereunder, shall be segregated from other funds of such Grantor
and shall be forthwith paid over or delivered to Secured Party in the same form
as so received (with any necessary endorsement) to be held as cash Collateral
and applied as provided by Section 17 hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.
(c) Each Grantor shall have the duty diligently, through
counsel reasonably acceptable to Secured Party, to prosecute, file and/or make,
unless and until such Grantor, in its commercially reasonable judgment, decides
otherwise, (i) any application relating to any of the Intellectual Property
Collateral owned, held or used by such Grantor and identified on Schedules
1(f)(i), 1(f)(ii) or 1(f)(iii), as applicable, that is pending as of the date of
this Agreement, (ii) any Copyright Registration on any existing or future
unregistered but copyrightable works (except for works of nominal commercial
value or with respect to which such Grantor has determined in the exercise of
its commercially reasonable judgment that it shall not seek registration), (iii)
application on any future patentable but unpatented innovation or invention
comprising Intellectual Property Collateral, and (iv) any Trademark opposition
and cancellation proceedings, renew Trademark Registrations and Copyright
Registrations and do any and all acts which are necessary or desirable to
preserve and maintain all rights in all Intellectual Property Collateral. Any
expenses incurred in connection therewith shall be borne solely by the Grantors.
Subject to the foregoing, each Grantor shall, within 45 days after the end of
each Fiscal Quarter of the Borrower, give Secured Party written notice of any
abandonment of any Intellectual Property Collateral registered with a
Governmental Authority or any pending patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the
right to commence and prosecute in its own name, as real party in interest, for
its own benefit and at its own expense, such suits, proceedings or other actions
for infringement, unfair competition, dilution, misappropriation or other
damage, or reexamination or reissue proceedings as are necessary to protect the
Intellectual Property Collateral. Secured Party shall provide, at such Grantor's
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expense, all reasonable and necessary cooperation in connection with any such
suit, proceeding or action including, without limitation, joining as a necessary
party. Each Grantor shall, within 45 days after the end of each Fiscal Quarter
of the Borrower, notify Secured Party of the institution of, or of any adverse
determination that would be reasonably likely to have a Material Adverse Effect
in, any proceeding (whether in the United States Patent and Trademark Office,
the United States Copyright Office or any federal, state, local or foreign
court) or regarding such Grantor's ownership, right to use, or interest in any
Intellectual Property Collateral. Each Grantor shall provide to Secured Party
any information with respect thereto requested by Secured Party.
(e) In addition to, and not by way of limitation of, the granting of a security
interest in the Collateral pursuant hereto, each Grantor, effective upon the
occurrence and during the continuation of an Event of Default, hereby assigns,
transfers and conveys to Secured Party the nonexclusive right and license to use
all trademarks, tradenames, copyrights, patents or technical processes
(including, without limitation, the Intellectual Property Collateral) owned or
used by such Grantor that relate to the Collateral and any other collateral
granted by such Grantor as security for the Secured Obligations, together with
any goodwill associated therewith, all to the extent necessary to enable Secured
Party to realize on the Collateral in accordance with this Agreement and to
enable any transferee or assignee of the Collateral to enjoy the benefits of the
Collateral; provided, however, the license granted under this Section shall not
be construed to limit such Grantor's ability to take reasonable steps, in
accordance with its then current business practices, to protect and preserve the
Trademarks, the Trademark Registrations, the Trademark Rights and the Associated
Goodwill. This right shall inure to the benefit of all successors, assigns and
transferees of Secured Party and its successors, assigns and transferees,
whether by voluntary conveyance, operation of law, assignment, transfer,
foreclosure, deed in lieu of foreclosure or otherwise. Such right and license
shall be granted free of charge, without requirement that any monetary payment
whatsoever be made to such Grantor. In addition, each Grantor hereby grants to
Secured Party and its employees, representatives and agents the right to visit
such Grantor's and any of its Affiliate's or subcontractor's plants, facilities
and other places of business that are utilized in connection with the
manufacture, production, inspection, storage or sale of products and services
sold or delivered under any of the Intellectual Property Collateral (or which
were so utilized during the prior six month period), and to inspect the quality
control and all other records relating thereto upon reasonable advance written
notice to such Grantor and at reasonable dates and times and as often as may be
reasonably requested. If and to the extent that any Grantor is permitted to
license the Intellectual Property Collateral, Secured Party shall promptly enter
into a non-disturbance agreement or other similar arrangement, at such Grantor's
request and expense, with such Grantor and any licensee of any Intellectual
Property Collateral permitted hereunder in form and substance reasonably
satisfactory to Secured Party pursuant to which (i) Secured Party shall agree
not to disturb or interfere with such licensee's rights under its license
agreement with such Grantor so long as such licensee is not in default
thereunder, and (ii) such licensee shall acknowledge and agree that the
Intellectual Property Collateral licensed to it is subject to the security
interest created in favor of Secured Party and the other terms of this
Agreement.
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SECTION 11. Cash Collateral Accounts.
-------------------------
Secured Party is hereby authorized to establish and maintain
as blocked accounts in the name of the Borrower and under the sole dominion and
control of Secured Party, a restricted deposit account designated as "Levi
Xxxxxxx & Co. Cash Collateral Account" (the "CASH COLLATERAL ACCOUNT") and a
restricted deposit account designated as "Levi Xxxxxxx & Co. L/C Cash Collateral
Account" the "L/C CASH COLLATERAL ACCOUNT"). All amounts at any time held in the
Cash Collateral Account and the L/C Cash Collateral Account shall be
beneficially owned by the Grantors but shall be held in the name of Secured
Party hereunder, for the benefit of the Lenders, as collateral security for the
Secured Obligations upon the terms and conditions set forth herein. The Grantors
shall have no right to withdraw, transfer or, except as expressly set forth
herein, otherwise receive any funds deposited into the Cash Collateral Account
and the L/C Cash Collateral Account. Anything contained herein to the contrary
notwithstanding, the Cash Collateral Account and the L/C Cash Collateral Account
shall be subject to such applicable laws, and such applicable regulations of the
Board of Governors of the Federal Reserve System and of any other appropriate
banking or governmental authority, as may now or hereafter be in effect. All
deposits of funds in the Cash Collateral Account and the L/C Cash Collateral
Account shall be made by wire transfer (or, if applicable, by intra-bank
transfer from another account of a Grantor) of immediately available funds, in
each case addressed in accordance with instructions of Secured Party. Each
Grantor shall, promptly after initiating a transfer of funds to the Cash
Collateral Account, give notice to Secured Party by telefacsimile of the date,
amount and method of delivery of such deposit. Cash held by Secured Party in the
Cash Collateral Account and the L/C Cash Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Cash Collateral Account and the L/C Cash Collateral Account pending
application thereof as elsewhere provided in this Agreement. To the extent
permitted under Regulation Q of the Board of Governors of the Federal Reserve
System, any cash held in the Cash Collateral Account and the L/C Cash Collateral
Account shall bear interest at the standard rate paid by Secured Party to its
customers for deposits of like amounts and terms. Subject to Secured Party's
rights hereunder, any interest earned on deposits of cash in the Cash Collateral
Account and the L/C Cash Collateral Account shall be deposited directly in, and
held in the Cash Collateral Account and the L/C Cash Collateral Account.
SECTION 12. Secured Party Appointed Attorney-in-Fact.
-----------------------------------------
Each Grantor hereby irrevocably appoints Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, Secured Party or otherwise, from time
to time in Secured Party's discretion to take any action and to execute any
instrument that Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation:
(a) upon the occurrence and during the continuance of an Event
of Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Administrative Agent pursuant to the Credit Agreement;
(b) upon the occurrence and during the continuance of an Event
of Default, to ask for, demand, collect, xxx for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
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(c) upon the occurrence and during the continuance of an Event
of Default, to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event
of Default, to file any claims or take any action or institute any proceedings
that Secured Party may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of Secured Party with respect
to any of the Collateral;
(e) except as otherwise permitted by the Credit Agreement, to
pay or discharge taxes or Liens (other than Liens permitted under this Agreement
or the Credit Agreement) levied or placed upon or threatened against the
Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by Secured Party in its sole discretion, any
such payments made by Secured Party to become Obligations of such Grantor to
Secured Party, due and payable immediately without demand;
(f) upon the occurrence and during the continuance of an Event
of Default, to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event
of Default, generally to sell, transfer, pledge, make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and the Grantors' expense, at any time or from
time to time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Collateral and Secured Party's security interest
therein in order to effect the intent of this Agreement, all as fully and
effectively as such Grantor might do.
SECTION 13. Secured Party May Perform.
-------------------------
If any Grantor fails to perform any agreement contained
herein, Secured Party may itself perform, or cause performance of, such
agreement, and the expenses of Secured Party incurred in connection therewith
shall be payable by the Grantors under Section 18(b) hereof.
SECTION 14. Standard of Care.
-----------------
The powers conferred on Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the exercise of reasonable care in the
custody of any Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any
Collateral or as to the taking of any necessary steps to preserve rights against
prior parties or any other rights pertaining to any Collateral. Secured Party
shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property.
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SECTION 15. Remedies.
---------
(a) GENERALLY. If any Event of Default shall have occurred and
be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral), and also
may (i) require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of Secured Party forthwith, assemble all or part of
the Collateral as directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party that is reasonably convenient
to both parties, (ii) enter onto the property where any Collateral is located
and take possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Secured Party deems appropriate, (iv) take possession of any
Grantor's premises or place custodians in exclusive control thereof, remain on
such premises and use the same and any of such Grantor's equipment for the
purpose of completing any work in process, taking any actions described in the
preceding clause (iii) and collecting any Secured Obligation, (v) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of Secured Party's offices or
elsewhere, for cash, on credit or for future delivery, at such time or times and
at such price or prices and upon such other terms as Secured Party may deem
commercially reasonable, (vi) exercise dominion and control over and refuse to
permit further withdrawals from any Deposit Account maintained with Secured
Party or any Lender constituting a part of the Collateral and (vii) without
notice to any Grantor, transfer to or to register in the name of Secured Party
or any of its nominees any or all of the Securities Collateral. Secured Party or
any Lender or Hedge Bank may be the purchaser of any or all of the Collateral at
any such sale and Secured Party, as agent for and representative of the Lenders
and Hedge Banks (but not any Lender or Hedge Bank in its individual capacity
unless Required Lenders shall otherwise agree in writing), shall be entitled,
for the purpose of bidding and making settlement or payment of the purchase
price for all or any portion of the Collateral sold at any such public sale, to
use and apply any of the Secured Obligations as a credit on account of the
purchase price for any Collateral payable by Secured Party at such sale. Each
purchaser at any such sale shall hold the property sold absolutely free from any
claim or right on the part of any Grantor, and each Grantor hereby waives (to
the extent permitted by applicable law) all rights of redemption, stay and/or
appraisal which it now has or may at any time in the future have under any rule
of law or statute now existing or hereafter enacted. Each Grantor agrees that,
to the extent notice of sale shall be required by law, at least ten days' notice
to such Grantor of the time and place of any public sale or the time after which
any private sale is to be made shall constitute reasonable notification. Secured
Party shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. Secured Party may adjourn any public or private sale
from time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it was
so adjourned. Each Grantor hereby waives any claims against Secured Party
arising by reason of the fact that the price at which any Collateral may have
been sold at such a private sale was less than the price which might have been
obtained at a public sale, even if Secured Party accepts the first offer
received and does not offer such Collateral to more than one offeree. If the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay all the Secured Obligations, the Grantors shall be jointly and severally
liable for the deficiency and the fees of any attorneys
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employed by Secured Party to collect such deficiency. Each Grantor further
agrees that a breach of any of the covenants contained in this Section will
cause irreparable injury to Secured Party, that Secured Party has no adequate
remedy at law in respect of such breach and, as a consequence, that each and
every covenant contained in this Section shall be specifically enforceable
against such Grantor, and each Grantor hereby waives and agrees not to assert
any defenses against an action for specific performance of such covenants except
for a defense that no default has occurred giving rise to the Secured
Obligations becoming due and payable prior to their stated maturities.
(b) SECURITIES COLLATERAL.
(i) Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and the
regulations promulgated thereunder (the "SECURITIES ACT") and
applicable state securities laws, Secured Party may be compelled, with
respect to any sale of all or any part of the Securities Collateral
conducted without prior registration or qualification of such
Securities Collateral under the Securities Act and/or such state
securities laws, to limit purchasers to those who will agree, among
other things, to acquire the Securities Collateral for their own
account, for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges that any such private sales
may be at prices and on terms less favorable than those obtainable
through a public sale without such restrictions (including a public
offering made pursuant to a registration statement under the Securities
Act) and, notwithstanding such circumstances and the registration
rights granted to Secured Party by such Grantor pursuant hereto, each
Grantor agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner and that Secured Party shall
have no obligation to engage in public sales and no obligation to delay
the sale of any Securities Collateral for the period of time necessary
to permit the issuer thereof to register it for a form of public sale
requiring registration under the Securities Act or under applicable
state securities laws, even if such issuer would, or should, agree to
so register it. If Secured Party determines to exercise its right to
sell any or all of the Securities Collateral, upon written request,
each Grantor shall and shall cause each issuer of any Pledged Interests
to be sold hereunder from time to time to furnish to Secured Party all
such information as Secured Party may request in order to determine the
number of shares and other instruments included in the Securities
Collateral which may be sold by Secured Party in exempt transactions
under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from
time to time in effect.
(ii) If Secured Party shall determine to exercise its
right to sell all or any of the Securities Collateral pursuant to this
Section, each Grantor agrees that, upon request of Secured Party (which
request may be made by Secured Party in its sole discretion), such
Grantor will, at its own expense (A) execute and deliver, and cause
each issuer of the Securities Collateral contemplated to be sold and
the directors and officers thereof to execute and deliver, all such
instruments and documents, and do or cause to be done all such other
acts and things, as may be necessary or, in the opinion of Secured
Party, advisable to register such Securities Collateral under the
provisions of the Securities Act and to cause the registration
statement relating thereto to become effective
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and to remain effective for such period as prospectuses are required by
law to be furnished, and to make all amendments and supplements thereto
and to the related prospectus which, in the opinion of Secured Party,
are necessary or advisable, all in conformity with the requirements of
the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto; (B) use its best efforts to
qualify the Securities Collateral under all applicable state securities
or "Blue Sky" laws and to obtain all necessary governmental approvals
for the sale of the Securities Collateral, as requested by Secured
Party; (C) cause each such issuer to make available to its security
holders, as soon as practicable, an earnings statement which will
satisfy the provisions of Section 11(a) of the Securities Act; (D) do
or cause to be done all such other acts and things as may be necessary
to make such sale of the Securities Collateral or any part thereof
valid and binding and in compliance with applicable law; and (E) bear
all costs and expenses, including reasonable attorneys' fees, of
carrying out its Obligations under this Section.
(iii) Without limiting the generality of Section 7.05 of
the Credit Agreement, in the event of any public sale described herein,
each Grantor agrees to indemnify and hold harmless (to the maximum
extent permitted under the Securities Act or other applicable law)
Secured Party, and each Lender and each Hedge Bank and each of their
respective directors, officers, employees and agents from and against
any loss, fee, cost, expense, damage, liability or claim, joint or
several, to which any such Persons may become subject or for which any
of them may be liable, under the Securities Act or otherwise, insofar
as such losses, fees, costs, expenses, damages, liabilities or claims
(or any litigation commenced or threatened in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus,
registration statement, prospectus or other such document published or
filed in connection with such public sale, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and
will (to the maximum extent permitted under the Securities Act or other
applicable law) reimburse Secured Party and such other Persons for any
legal or other expenses reasonably incurred by Secured Party and such
other Persons in connection with any litigation, of any nature
whatsoever, commenced or threatened in respect thereof (including any
and all fees, costs and expenses whatsoever reasonably incurred by
Secured Party and such other Persons and counsel for Secured Party and
such other Persons in investigating, preparing for, defending against
or providing evidence, producing documents or taking any other action
in respect of, any such commenced or threatened litigation or any
claims asserted). This indemnity shall be in addition to any liability
which any Grantor may otherwise have and shall extend upon the same
terms and conditions to each Person, if any, that controls Secured
Party or such Persons within the meaning of the Securities Act.
(c) L/C CASH COLLATERAL ACCOUNT. If an Event of Default has
occurred and is continuing and, in accordance with Section 6.02 of the Credit
Agreement, the Borrower is required to pay to Secured Party an amount (the
"AGGREGATE AVAILABLE AMOUNT") equal to the maximum amount that may at any time
be drawn under all Letters of Credit then outstanding under the Credit
Agreement, the Borrower shall deliver funds in such an amount for deposit in
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the L/C Cash Collateral Account. If for any reason the aggregate amount
delivered by the Borrower for deposit in the L/C Cash Collateral Account as
aforesaid is less than the Aggregate Available Amount, the aggregate amount so
delivered by the Borrower shall be apportioned among all outstanding Letters of
Credit for purposes of this Section in accordance with the ratio of the maximum
amount available for drawing under each such Letter of Credit (as to such Letter
of Credit, the "MAXIMUM AVAILABLE AMOUNT") to the Aggregate Available Amount.
Upon any drawing under any outstanding Letter of Credit in respect of which the
Borrower has deposited in the L/C Cash Collateral Account any amounts described
above, Secured Party shall apply such amounts to reimburse the Issuing Lender
for the amount of such drawing. In the event of cancellation or expiration of
any Letter of Credit in respect of which the Borrower has deposited in the L/C
Cash Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, Secured
Party shall apply the amount then on deposit in the L/C Collateral Account in
respect of such Letter of Credit (less, in the case of such a reduction, the
Maximum Available Amount under such Letter of Credit immediately after such
reduction) first, to the payment of any amounts payable to Secured Party
pursuant to Section 17 hereof, second, to the extent of any excess, to the cash
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which the Borrower has failed to pay all or a
portion of the amounts described above (such cash collateralization to be
apportioned among all such Letters of Credit in the manner described above),
third, to the extent of any further excess, to the payment of any other
outstanding Secured Obligations in such order as Secured Party shall elect, and
fourth, to the extent of any further excess, to the payment to whomsoever shall
be lawfully entitled to receive such funds.
(d) CASH COLLATERAL ACCOUNT. If an Event of Default has
occurred and is continuing, the Borrower shall deliver any and all cash
dividends paid or payable to it or any of its Subsidiaries from any of its
Subsidiaries from time to time for deposit in the Cash Collateral Account.
Amounts in the Cash Collateral Account shall be applied in accordance with
Section 17 hereof.
SECTION 16. Additional Remedies for Intellectual Property Collateral.
---------------------------------------------------------
(a) Anything contained herein to the contrary notwithstanding,
upon the occurrence and during the continuation of an Event of Default, (i)
Secured Party shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, Secured Party or otherwise, to enforce any Intellectual
Property Collateral, in which event each Grantor shall, at the request of
Secured Party, do any and all lawful acts and execute any and all documents
required by Secured Party in aid of such enforcement and each Grantor shall
promptly, upon demand, reimburse and indemnify Secured Party as provided in
Section 7.05 of the Credit Agreement and Section 18 hereof, as applicable, in
connection with the exercise of its rights under this Section, and, to the
extent that Secured Party shall elect not to bring suit to enforce any
Intellectual Property Collateral as provided in this Section, each Grantor
agrees to use all reasonable measures, whether by action, suit, proceeding or
otherwise, to prevent the infringement of any of the Intellectual Property
Collateral by others and for that purpose agrees to use its commercially
reasonable judgment in maintaining any action, suit or proceeding against any
Person so infringing reasonably necessary to prevent such infringement; (ii)
upon written demand from Secured Party, each Grantor shall execute and deliver
to Secured Party an
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assignment or assignments of the Intellectual Property Collateral and such other
documents as are necessary or appropriate to carry out the intent and purposes
of this Agreement; (iii) each Grantor agrees that such an assignment and/or
recording shall be applied to reduce the Secured Obligations outstanding only to
the extent that Secured Party (or any Lender) receives cash proceeds in respect
of the sale of, or other realization upon, the Intellectual Property Collateral;
and (iv) within five Business Days after written notice from Secured Party, each
Grantor shall make available to Secured Party, to the extent within such
Grantor's power and authority, such personnel in such Grantor's employ on the
date of such Event of Default as Secured Party may reasonably designate, by
name, title or job responsibility, to permit such Grantor to continue, directly
or indirectly, to produce, advertise and sell the products and services sold or
delivered by such Grantor under or in connection with the Trademarks, Trademark
Registrations and Trademark Rights, such persons to be available to perform
their prior functions on Secured Party's behalf and to be compensated by Secured
Party at such Grantor's expense on a per diem, pro-rata basis consistent with
the salary and benefit structure applicable to each as of the date of such Event
of Default.
(b) If (i) an Event of Default shall have occurred and, by
reason of cure, waiver, modification, amendment or otherwise, no longer be
continuing, (ii) no other Event of Default shall have occurred and be
continuing, (iii) an assignment to Secured Party of any rights, title and
interests in and to the Intellectual Property Collateral shall have been
previously made, and (iv) the Secured Obligations shall not have become
immediately due and payable, upon the written request of any Grantor, Secured
Party shall promptly execute and deliver to such Grantor such assignments as may
be necessary to reassign to such Grantor any such rights, title and interests as
may have been assigned to Secured Party as aforesaid, subject to any disposition
thereof that may have been made by Secured Party; provided, after giving effect
to such reassignment, Secured Party's security interest granted pursuant hereto,
as well as all other rights and remedies of Secured Party granted hereunder,
shall continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of all Liens other
than Liens (if any) encumbering such rights, title and interest at the time of
their assignment to Secured Party and Liens expressly permitted by the Credit
Agreement.
SECTION 17. Application of Proceeds.
-----------------------
Except as expressly provided elsewhere in this Agreement, all
proceeds received by Secured Party in respect of any sale of, collection from,
or other realization upon all or any part of the Collateral shall be applied in
the following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Secured Party and its agents and counsel, and all other expenses,
liabilities and advances made or incurred by Secured Party in
connection therewith, and all amounts for which Secured Party is
entitled to indemnification hereunder and all advances made by Secured
Party hereunder for the account of the Grantors, and to the payment of
all costs and expenses paid or incurred by Secured Party in connection
with the exercise of any right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations (for
the ratable benefit of the holders thereof) and, as to Obligations
arising under the Credit Agreement, as provided in the Credit
Agreement; and
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THIRD: To the payment to or upon the order of the Borrower, or
to whosoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct, of any surplus then remaining
from such proceeds.
SECTION 18. Indemnity and Expenses.
----------------------
(a) The Grantors jointly and severally agree to indemnify
Secured Party, each Lender and each Hedge Bank from and against any and all
claims, losses and liabilities in any way relating to, growing out of or
resulting from this Agreement and the transactions contemplated hereby
(including, without limitation, enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's or Hedge Bank's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) The Grantors jointly and severally agree to pay to Secured
Party upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of Secured Party hereunder, or (iv)
the failure by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of the Grantors in this Section 18 shall
(i) survive the termination of this Agreement and the discharge of the Grantors'
other Obligations under this Agreement, the Hedge Bank Hedge Agreements, the
Credit Agreement and the other Loan Documents and (ii), as to any Grantor that
is a party to a Subsidiary Guaranty, be subject to the provisions of Section
1(b) thereof.
SECTION 19. Continuing Security Interest; Transfer of Loans; Termination
--------------------------------------------------------------
and Release.
-----------
(a) This Agreement shall create a continuing security interest
in the Collateral and shall (i) remain in full force and effect until the
payment in full of the Secured Obligations, the cancellation or termination of
the Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (ii) be binding upon the Grantors and their respective successors and
assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii), (A) but
subject to the provisions of Section 8.07 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Lenders herein or otherwise and (B) any Hedge Bank may
assign or otherwise transfer any Hedge Bank Hedge Agreement to which it is a
party to any other Person in accordance with the terms of such Hedge Bank Hedge
Agreement, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Hedge Banks herein or otherwise.
(b) Upon the payment in full of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest granted
hereby shall terminate and all rights to the Collateral shall
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revert to the applicable the Grantors. Upon any such termination Secured Party
will, at the Grantors' expense, execute and deliver to the Grantors such
documents as the Grantors shall reasonably request to evidence such termination.
(c) In addition, upon the proposed sale, transfer or other
disposition of any Collateral by a Grantor in accordance with the Credit
Agreement for which such Grantor desires to obtain a security interest release
from Secured Party, such Grantor shall deliver an officer's certificate (x)
stating that the Collateral subject to such disposition is being sold,
transferred or otherwise disposed of in compliance with the terms of the Credit
Agreement and (y) specifying the Collateral being sold, transferred or otherwise
disposed of in the proposed transaction. Upon the receipt of such officer's
certificate, Secured Party shall, at such Grantor's expense, so long as Secured
Party has no reason to believe that the officer's certificate delivered by such
Grantor with respect to such sale is not true and correct, execute and deliver
such releases of its security interest in such Collateral which is to be so
sold, transferred or disposed of, as may be reasonably requested by such
Grantor.
SECTION 20. Secured Party as Agent.
----------------------
(a) Secured Party has been appointed to act as Secured Party
hereunder by the Lenders and, by their acceptance of the benefits hereof, Hedge
Banks. Secured Party shall be obligated, and shall have the right hereunder, to
make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including, without
limitation, the release or substitution of Collateral), solely in accordance
with this Agreement and the Credit Agreement; provided that Secured Party shall
exercise, or refrain from exercising, any remedies provided for in Section 15
hereof in accordance with the instructions of Required Lenders. In furtherance
of the foregoing provisions of this Section 20(a), each Hedge Bank, by its
acceptance of the benefits hereof, agrees that it shall have no right
individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Hedge Bank that all rights and remedies hereunder
may be exercised solely by Secured Party for the benefit of the Lenders and
Hedge Banks in accordance with the terms of this Section 20(a).
(b) Secured Party shall at all times be the same Person that
is Administrative Agent under the Credit Agreement. Written notice of
resignation by Administrative Agent pursuant to Section 7.07 of the Credit
Agreement shall also constitute notice of resignation as Secured Party under
this Agreement; and appointment of a successor administrative agent pursuant to
Section 7.07 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Administrative Agent under Section 7.07 of the Credit Agreement
by a successor administrative agent, that successor administrative agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Secured Party under this Agreement, and the retiring
Secured Party under this Agreement shall promptly (i) transfer to such successor
Secured Party all sums, securities and other items of Collateral held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder, whereupon
such retiring Secured Party shall be discharged from its duties and obligations
under this Agreement. After any retiring
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administrative agent's resignation hereunder as Secured Party, the provisions of
this Agreement shall inure to its benefit as to any actions taken or omitted to
be taken by it under this Agreement while it was Secured Party hereunder.
(c) Secured Party shall not be deemed to have any duty
whatsoever with respect to any Hedge Bank until it shall have received written
notice in form and substance satisfactory to Secured Party from a Grantor or the
Hedge Bank as to the existence and terms of the applicable Hedge Bank Hedge
Agreement.
SECTION 21. Additional Grantors.
-------------------
The initial Subsidiary Grantors hereunder shall be such of the
Subsidiaries of the Borrower as are signatories hereto on the date hereof. From
time to time subsequent to the date hereof, additional Material Domestic
Subsidiaries of the Borrower may become parties hereto as additional Grantors
(each an "ADDITIONAL GRANTOR"), by executing a counterpart substantially in the
form of Exhibit VI annexed hereto. Upon delivery of any such counterpart to
Secured Party, notice of which is hereby waived by the Grantors, each such
Additional Grantor shall be a Grantor and shall be as fully a party hereto as if
such Additional Grantor were an original signatory hereto. Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Administrative Agent not to cause any Subsidiary of the Borrower to
become an Additional Grantor hereunder. This Agreement shall be fully effective
as to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.
SECTION 22. Amendments; Etc.
----------------
No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party and, in the case of any such amendment or
modification, by the Grantors; provided this Agreement may be modified by the
execution of a counterpart by an Additional Grantor in accordance with Section
21 hereof and the Grantors hereby waive any requirement of notice of or consent
to any such amendment. Any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was given.
SECTION 23. Notices.
--------
Any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served, telexed or sent by
telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as provided in Section 8.02 of the
Credit Agreement or as set forth under such party's name on the signature pages
hereof or such other address as shall be designated by such party in a written
notice delivered to the other parties hereto.
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SECTION 24. Failure or Indulgence Not Waiver; Remedies Cumulative.
------------------------------------------------------
No failure or delay on the part of Secured Party in the
exercise of any power, right or privilege hereunder shall impair such power,
right or privilege or be construed to be a waiver of any default or acquiescence
therein, nor shall any single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or of any other power,
right or privilege. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
SECTION 25. Severability.
-------------
In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
SECTION 26. Headings.
---------
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
SECTION 27. Governing Law; Terms; Rules of Construction.
--------------------------------------------
This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of New York (including Section
5-1401 of the General Obligations Law of the State of New York) without regard
to conflicts of laws principles that would require application of another law.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined. The rules of construction set forth in Sections
1.02 and 1.04 of the Credit Agreement shall be applicable to this Agreement
MUTATIS MUTANDIS.
SECTION 28. Consent to Jurisdiction and Service of Process.
-----------------------------------------------
(a) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents to which it is a party, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the fullest extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.
D-29
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or Federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 29. Waiver of Jury Trial.
--------------------
Each of the parties hereto irrevocably waives all right to
trial by jury in any action, proceeding or counterclaim (whether based on
contract, tort or otherwise) arising out of or relating to any of the Loan
Documents, the Advances, the Letters of Credit or the actions of any Agent or
any Lender Party in the negotiation, administration, performance or enforcement
thereof.
SECTION 30. Counterparts.
-------------
This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
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D-30
IN WITNESS WHEREOF, the Grantors and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
LEVI XXXXXXX & CO.
By:_____________________________
Name:__________________________
Title:___________________________
EACH OF THE ENTITIES LISTED ON SCHEDULE A ANNEXED
----------
HERETO
By: _________________________________
on behalf of each of the entities listed on
Schedule A annexed hereto
----------
Name:____________________________
Title:____________________________
BANK OF AMERICA, N.A.
As Administrative Agent, as Secured Party
By:______________________________
Name:__________________________
Title:___________________________
