EXHIBIT 99.4
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT, dated as of September 29, 2003,
between Levi Xxxxxxx & Co., a Delaware corporation ("LS&CO."), and Levi Xxxxxxx
Financial Center Corporation, a California corporation ("LSFCC" and, together
with LS&Co., the "BORROWERS"), each of the undersigned direct and indirect
Subsidiaries of LS&Co. (each of such undersigned Subsidiaries being a
"SUBSIDIARY GRANTOR" and collectively the "SUBSIDIARY GRANTORS") and each
additional GRANTOR that may become a party hereto after the date hereof in
accordance with SECTION 32(I) hereof (the Borrowers, each Subsidiary Grantor and
each Additional Grantor being a "GRANTOR" and collectively the "GRANTORS") and
BANK OF AMERICA, N.A., in its capacity as the Agent for the Lenders (the
"AGENT"), the several financial institutions (the "LENDERS") from time to time
party to the Credit Agreement referred to below and the Selected Revolving
Lenders (as defined in the Credit Agreement referred to below).
W I T N E S S E T H:
WHEREAS, the Borrowers have entered into that certain Credit
Agreement dated as of September 29, 2003 among the Borrowers, the Lenders and
the Agent for the Lenders (as such agreement may be amended, restated,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT";
the terms defined therein and not otherwise defined herein being used herein as
therein defined; the rules of construction contained therein shall govern the
interpretation of this Agreement MUTATIS MUTANDIS);
WHEREAS, LS&Co., Levi Xxxxxxx International Group Finance
Coordination Services Comm V.A., a Belgian corporation, or any successor thereto
("LSIFCS") and certain Material Domestic Subsidiaries of LS&Co. may from time to
time enter, or may from time to time have entered, into one or more Selected
Revolving Lender Hedge Agreements in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of LS&Co., LSIFCS and such
Material Domestic Subsidiaries under the Selected Revolving Lender Hedge
Agreements, including the obligation of LS&Co., LSIFCS and such Material
Domestic Subsidiaries to make payments thereunder in the event of early
termination or close out thereof, together with all obligations of the Borrowers
under the Credit Agreement and the other Loan Documents, be secured hereunder in
accordance with the terms hereof;
WHEREAS, LS&Co. and certain of its Subsidiaries may from time to
time enter, or may from time to time have entered, into one or more arrangements
for Selected Revolving Lender Cash Management Services in accordance with the
terms of the Credit Agreement, and it is desired that the obligations of LS&Co.
and such Subsidiaries arising in connection with such Selected Revolving Lender
Cash Management Services, together with all obligations of the Borrowers under
the Credit Agreement and the other Loan Documents, be secured hereunder in
accordance with the terms hereof;
WHEREAS, the Domestic Subsidiaries of LS&Co have entered into
that certain Subsidiary Guaranty dated as of September 29, 2003 (as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time, the "SUBSIDIARY GUARANTY"), in
favor of and for the benefit of the Agent, as agent for and representative of
the Lenders and the Selected Revolving Lenders;
WHEREAS, the Agent and Bank of America, N.A., in its capacity as
administrative agent (in such capacity, the "TERM LOAN AGENT") for the several
financial institutions party from time to time to that certain Credit Agreement
dated as of September 29, 2003 (as such agreement may be amended, restated,
supplemented or otherwise modified from time to time, the "TERM LOAN
AGREEMENT"), have entered into that certain Intercreditor Agreement dated as of
September 29, 2003 (as such agreement may be amended, restated, supplemented or
otherwise modified from time to time, the "INTERCREDITOR AGREEMENT");
WHEREAS, LS&Co., certain of its Subsidiaries and the Term Loan
Agent have entered into that certain Pledge and Security Agreement dated as of
September 29, 2003 (as such agreement may be amended, restated, supplemented or
otherwise modified from time to time, the "TERM LOAN SECURITY AGREEMENT");
WHEREAS, in order to induce the Agent and the Lenders to enter
into the Credit Agreement and the other Loan Documents, to induce the Lenders to
make the Loans and issue Letters of Credit as provided for in the Credit
Agreement, and to induce the Selected Revolving Lenders to enter into the
Selected Revolving Lender Hedge Agreements and to provide the Selected Revolving
Lender Cash Management Services, the Grantors have agreed to grant a continuing
Lien on the Collateral (as hereinafter defined) to secure the Secured
Obligations;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. DEFINED TERMS. THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING RESPECTIVE
MEANINGS:
"ACCOUNTS" means all now owned or hereafter acquired or arising
accounts of any Grantor, as defined in the UCC, including any rights to payment
for the sale of goods, whether or not they have been earned by performance.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or which owns, directly or indirectly, ten percent
(10%) or more of the outstanding equity interest of such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.
"BENEFICIARIES" means the Agent, the Lenders and each Selected
Revolving Lender that has satisfied the requirements of SECTION 32(N)(III)
hereof.
"CHATTEL PAPER" means all now owned or hereafter acquired chattel
paper of any Grantor, as defined in the UCC, including electronic chattel paper.
2
"DEPOSIT ACCOUNTS" means all "deposit accounts" as such term is
defined in the UCC, now or hereafter held in the name of any Grantor.
"DOCUMENTS" means all documents as such term is defined in the
UCC, including bills of lading, warehouse receipts or other documents of title,
now owned or hereafter acquired by any Grantor.
"EQUIPMENT" means all now owned or hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property (except Inventory) of any Grantor, including embedded software, dies,
tools, jigs, molds and office equipment, as well as all of such types of
property leased by any Grantor and all of such Grantor's rights and interests
with respect thereto under such leases (including, without limitation, options
to purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
"GENERAL INTANGIBLES" means all now owned or hereafter acquired
general intangibles, choses in action and causes of action and all other
intangible personal property of any Grantor of every kind and nature (other than
Accounts), including, without limitation, all contract rights, payment
intangibles, IP Collateral, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications, trade
secrets, computer software, customer lists, registrations, licenses, franchises,
tax refund claims, any funds which may become due to such Grantor in connection
with the termination of any Plan or other employee benefit plan or any rights
thereto and any other amounts payable to such Grantor from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and any proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Grantor
is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Grantor; PROVIDED,
HOWEVER, that the General Intangibles shall not include the Intellectual
Property Assets.
"GOODS" means all "goods", as defined in the UCC, now owned or
hereafter acquired by any Grantor, wherever located, including embedded software
to the extent included in "goods" as defined in the UCC.
"INSTRUMENTS" means all instruments as such term is defined in
the UCC, now owned or hereafter acquired by any Grantor.
"INTELLECTUAL PROPERTY ASSETS" has the meaning assigned to that
term in the Intercreditor Agreement.
"INTELLECTUAL PROPERTY COLLATERAL" has the meaning assigned to
that term in the Intercreditor Agreement.
3
"INVENTORY" means all now owned or hereafter acquired inventory,
goods and merchandise of any Grantor, wherever located, to be furnished under
any contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Grantor's business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods and merchandise, and
all documents of title or other Documents representing them.
"INVESTMENT PROPERTY" means all right, title and interest of any
Grantor in and to any and all: (a) securities whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts; (d)
commodity contracts; or (e) commodity accounts.
"IP COLLATERAL" means 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 any 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 the patents and patent applications set forth on
SCHEDULE 1 attached hereto, 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 the Agent 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"), it being
understood that the rights and interests included in the IP Collateral hereby
shall include, without limitation, all rights and interests pursuant to
licensing or other contracts in favor of such Grantor pertaining to Patent
applications and Patents presently or in the future owned or used by third
parties but, in the case of third parties which are not Affiliates of such
Grantor, only to the extent permitted by such licensing or other contracts and,
if not so permitted, only with the consent of such third parties.
"LETTER-OF-CREDIT RIGHTS" means "letter-of-credit rights" as such
term is defined in the UCC, now owned or hereafter acquired by any Grantor,
including rights to payment or performance under a letter of credit, whether or
not any Grantor, as beneficiary, has demanded or is entitled to demand payment
or performance.
"PAYMENT ACCOUNT" means each bank account established pursuant to
this Agreement, to which the proceeds of Accounts and other Collateral are
deposited or credited, and which is maintained in the name of the Agent or any
Grantor, as the Agent may determine, on terms acceptable to the Agent.
"PLEDGED COLLATERAL" means Pledged Debt, Pledged Interests and
all proceeds thereof.
"PLEDGED DEBT" means all indebtedness from time to time owed to
any Grantor by any obligor that is, or becomes, a direct or indirect Subsidiary
of such Grantor, or by any obligor
4
of which such Grantor is a direct or indirect Subsidiary, including the
indebtedness set forth in SCHEDULE 2(B) attached hereto, as SCHEDULE 2(B) may be
updated upon the execution of this Agreement by an Additional Grantor, and
issued by the obligors named therein, and the instruments evidencing such
indebtedness;
"PLEDGED INTERESTS" means all shares of stock, partnership
interests, interests in joint ventures, limited liability company interests and
all other equity interests now or hereafter owned by any Grantor in any Person
that is, or becomes, a direct Domestic Subsidiary or Material Foreign 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 set forth in
SCHEDULE 2(A) attached hereto, as SCHEDULE 2(A) may be updated upon the
execution of this Agreement by an Additional Grantor, 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;
"SOFTWARE" means all "software" as such term is defined in the
UCC, now owned or hereafter acquired by any Grantor, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"SUPPORTING OBLIGATIONS" means all supporting obligations as such
term is defined in the UCC.
"UCC" means the Uniform Commercial Code, as in effect from time
to time, of the State of California or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
"Uniform Commercial Code jurisdiction" means any jurisdiction
that has adopted "Revised Article 9" of the UCC on or after July 1, 2001.
All other capitalized terms used but not otherwise defined herein
have the meanings given to them in the Credit Agreement or in Annex A thereto.
All other undefined terms contained in this Agreement, unless the context
indicates otherwise, have the meanings provided for by the UCC to the extent the
same are used or defined therein.
2. GRANT OF LIEN.
(a) As security for all Secured Obligations, each Grantor hereby grants to
the Agent, for the benefit of the Agent and the Lenders, a continuing security
interest in, lien on, assignment of and right of set-off against, all of the
following property and assets of such Grantor, whether now owned or existing or
hereafter acquired or arising, regardless of where located:
(i) all Accounts;
(ii) all Inventory;
5
(iii) all contract rights;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all Instruments;
(vii) all Supporting Obligations and Letter-of-Credit Rights;
(viii) all General Intangibles (including payment intangibles and
Software);
(ix) all Goods;
(x) all Equipment;
(xi) all Investment Property;
(xii) all IP Collateral;
(xiii) all Pledged Interests and all dividends, distributions,
returns of capital, cash, warrants, options, rights, instruments, rights to vote
or manage the business of any Person that is, or becomes, a direct Domestic
Subsidiary or Material Foreign Subsidiary of such Grantor 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 Material Foreign
Subsidiary, 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;
(xiv) all 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;
(xv) all money, cash, cash equivalents, securities and other
property of any kind of any Grantor held directly or indirectly by the Agent or
any Lender;
(xvi) all Deposit Accounts, credits, and balances with and other
claims against the Agent or any Lender or any of their Affiliates or any other
financial institution with which any Grantor maintains deposits, including any
Payment Accounts;
(xvii) all books, records and other property related to or
referring to any of the foregoing, including books, records, account ledgers,
data processing records, computer software
6
and other property and General Intangibles at any time evidencing or relating to
any of the foregoing; and
(xviii) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with the Real Estate covered by the Mortgage(s),
all equity interests in Subsidiaries pledged to the Agent and all other property
of the Grantors in which the Agent or any Lender may at any time be granted a
Lien as collateral for the Secured Obligations is herein collectively referred
to as the "Collateral."
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 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 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);
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.
Each item of Collateral listed in this SECTION 2 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 and below.
Notwithstanding anything herein to the contrary, neither the
Borrowers 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,
(iii) any Pledged Debt of or issued by any Restricted Subsidiary, (iv) any
Intellectual Property Assets, (v) any shares of stock of any Material Foreign
Subsidiary in excess of the number of shares of such Material Foreign Subsidiary
possessing up to but not exceeding 65% of the voting power of all classes of
capital stock entitled to vote of such issuer, or (vii) Equipment subject to an
Equipment Financing Transaction permitted under the Credit Agreement.
(b) All of the Secured Obligations shall be secured by all of the
Collateral.
3. SECURITY FOR OBLIGATIONS.
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
7
required prepayment, declaration, acceleration, demand or otherwise (including
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 Borrowers, all Obligations and liabilities of every
nature of the Borrowers now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and, except as
set forth below, all obligations and liabilities of every nature now or
hereafter existing (i) of LS&Co., LSIFCS and each Material Subsidiary of LS&Co.,
under or arising out of or in connection with any Selected Revolving Lender
Hedge Agreement and (ii) of LS&Co. and each Subsidiary of LS&Co., arising out of
or in connection with any Selected Revolving Lender Cash Management Services;
and
(b) with respect to each Subsidiary Grantor and Additional Grantor, all
obligations and liabilities of every nature of such Grantor now or hereafter
existing under or arising out of or in connection with the Guaranty and, except
as set forth below, all obligations and liabilities of every nature now or
hereafter existing (i) of LS&Co., LSIFCS and each Material Subsidiary of LS&Co.,
under or arising out of or in connection with any Selected Revolving Lender
Hedge Agreement to the extent provided in SECTION 3.7 of the Credit Agreement
and (ii) of LS&Co. and each Subsidiary of LS&Co., arising out of or in
connection with any Selected Revolving Lender Cash Management Services;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including interest that, but for the filing of a petition
in bankruptcy with respect to the Borrowers or any other Grantor, would accrue
on such obligations, whether or not a claim is allowed against such 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 the Selected Revolving Lender 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 the Agent or
any Lender or Selected Revolving Lender as a preference, fraudulent transfer or
otherwise, and all obligations of every nature of the Grantors now or hereafter
existing under this Agreement.
4. PERFECTION AND PROTECTION OF SECURITY INTEREST.
(a) Each Grantor shall, at its expense, perform all reasonable steps
requested by the Agent at any time to perfect, maintain, protect, and enforce
the Agent's Liens, including: (i) executing, delivering and/or filing and
recording of the Mortgage(s) and executing and filing financing or continuation
statements, and amendments thereof, in form and substance reasonably
satisfactory to the Agent; (ii) whenever an Event of Default has occurred and is
continuing, transferring Inventory to warehouses or other locations designated
by the Agent; (iii) placing notations on such Grantor's books of account to
disclose the Agent's security interest; and (iv) taking such other steps as are
deemed necessary or reasonably desirable by the Agent to
8
maintain and protect the Agent's Liens. Each Grantor agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(b) At the reasonable request of the Agent, each Grantor shall deliver to
the Agent all Collateral consisting of a reasonable sample of negotiable
Documents and all material negotiable Documents, certificated securities
(accompanied by stock papers executed in blank), Chattel Paper and Instruments
evidencing, comprising or representing the Collateral (including the Pledged
Collateral), promptly after such Grantor receives the same, duly endorsed or
accompanied by duly executed instruments of transfer or assignment in blank.
Upon the occurrence and during the continuation of an Event of Default, the
Agent shall have the right, without notice to the Grantors, to transfer to or to
register in the name of the Agent or any of its nominees any or all of the
Pledged Collateral, subject to the revocable rights specified in SECTION 21(A)
hereof. In addition, the Agent shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
(c) Each Grantor shall, in accordance with the terms of the Credit
Agreement, obtain or use its commercially reasonable efforts to obtain waivers
or subordinations of Liens from landlords and mortgagees, and such Grantor shall
in all instances (other than as otherwise agreed between LS&Co. and the Agent)
obtain signed acknowledgements of the Agent's Liens from bailees having
possession of any Collateral that they hold for the benefit of the Agent.
(d) If required by the terms of the Credit Agreement and not waived by the
Agent in writing (which waiver may be revoked), each Grantor shall obtain
authenticated control agreements from each issuer of uncertificated securities,
securities intermediary, or commodities intermediary issuing or holding any
financial assets or commodities to or for such Grantor.
(e) If any Grantor is or becomes the beneficiary of a letter of credit in
respect of an amount exceeding $5,000,000, such Grantor shall promptly notify
the Agent thereof and, upon the request of the Agent, enter into a tri-party
agreement with the Agent and the issuer and/or confirmation bank with respect to
Letter-of-Credit Rights assigning such Letter-of-Credit Rights to the Agent and
directing all payments thereunder to the Payment Account, all in form and
substance reasonably satisfactory to the Agent.
(f) Upon the request of the Agent, each Grantor shall take all reasonable
steps necessary to grant the Agent control of all electronic chattel paper in
accordance with the Code and all "transferable records" as defined in the
Uniform Electronic Transactions Act.
(g) Each Grantor hereby irrevocably authorizes the Agent at any time and
from time to time to file in any filing office in any Uniform Commercial Code
jurisdiction any initial financing statements and amendments thereto that (a)
indicate the Collateral (i) as all assets of such Grantor or words of similar
effect, regardless of whether any particular asset comprised in the Collateral
falls within the scope of Article 9 of the UCC of the State of California or
such jurisdiction, or (ii) as being of an equal or lesser scope or with greater
detail, and (b) contain any other information required by part 5 of Article 9 of
the UCC of the State of
9
California for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether such Grantor is an organization,
the type of organization and any organization identification number issued to
such Grantor, and (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral relates. Each
Grantor agrees to furnish any such information to the Agent promptly upon
request. Each Grantor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing
statements or amendments thereto if filed prior to the date hereof.
(h) Each Grantor shall promptly notify the Agent of any material commercial
tort claim (as defined in the UCC) acquired by it and unless otherwise consented
to by the Agent, such Grantor shall enter into a supplement to this Agreement,
granting to the Agent a Lien in such commercial tort claim.
(i) From time to time, any Grantor shall, upon the Agent's request, execute
and deliver confirmatory written instruments pledging to the Agent, for the
ratable benefit of the Agent, the Lenders and the Selected Revolving Lenders,
the Collateral, but such Grantor's failure to do so shall not affect or limit
any security interest or any other rights of the Agent or any Lender in and to
the Collateral with respect to such Grantor. So long as the Credit Agreement is
in effect and until all Secured Obligations (other than in respect of inchoate
indemnity obligations) have been fully satisfied, the Agent's Liens shall
continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).
(j) NO REINCORPORATION. Except as permitted under the Credit Agreement, no
Grantor shall reincorporate or reorganize itself under the laws of any
jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof or change its type of entity as identified on
SCHEDULE 3 attached hereto unless it provides notice to the Agent of such
reincorporation or reorganization at least thirty (30) days before such
reincorporation or reorganization.
(k) TERMINATIONS, AMENDMENTS NOT AUTHORIZED. Each Grantor acknowledges that
it is not authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written
consent of the Agent and agrees that it will not do so without the prior written
consent of the Agent, subject to such Grantor's rights under Section 9-509(d)(2)
of the UCC of the State of California.
(l) NO RESTRICTION ON PAYMENTS TO THE AGENT. Except as permitted under the
Credit Agreement, the Grantors shall not enter into any Contract that restricts
or prohibits the grant of a security interest in Accounts, Chattel Paper,
Instruments or payment intangibles or the proceeds of the foregoing to the
Agent.
10
5. LOCATION OF COLLATERAL.
(a) Each Grantor represents and warrants to the Agent and the Lenders that:
(i) SCHEDULE 4 attached hereto is a correct and complete list of the location of
such Grantor's chief executive office, the location of its books and records,
the locations of the Collateral (other than (A) in-transit Inventory, (B) any
location at which Inventory excluded from the Eligible Collateral in the most
recent Borrowing Base Certificate delivered to the Agent is located and (C)
locations of Inventory in the form of raw materials, PROVIDED, that the
aggregate amount of all Eligible Inventory in the form of raw materials does not
exceed $10,000,000); and (ii) SCHEDULE 4 correctly identifies (A) any of such
facilities and locations that are not owned by such Grantor and (B) any of such
facilities and locations in which such Grantor is not a tenant and sets forth
the names of the owners, the lessors or the operators of such facilities and
locations. Each Grantor covenants and agrees that it will not (i) maintain any
Collateral (other than (A) in-transit Inventory, (B) Inventory that was excluded
from the Eligible Collateral in the most recent Borrowing Base Certificate
delivered to the Agent and (C) Inventory in the form of raw materials, PROVIDED,
that the aggregate amount of all Eligible Inventory in the form of raw materials
does not exceed $10,000,000) at any location other than those locations listed
for such Grantor on SCHEDULE 4, (ii) otherwise change or add to any of such
locations, or (iii) change the location of its chief executive office from the
location identified in SCHEDULE 4, unless it gives the Agent at least thirty
(30) days' prior written notice thereof and executes any and all financing
statements and other documents that the Agent reasonably requests in connection
therewith. Without limiting the foregoing, each Grantor represents that all of
its Inventory (other than Inventory located at contractors' premises or xxxxx,
in-transit Inventory and xxxx and hold Inventory) is, and covenants that all of
its Inventory (other than Inventory located at contractors' premises or xxxxx,
in-transit Inventory and xxxx and hold Inventory) will be, located either (i) on
premises owned by such Grantor, (ii) on premises leased by such Grantor,
provided that the Agent has received an executed landlord waiver from the
landlord of such premises in form and substance satisfactory to the Agent, or
(iii) in a warehouse or with a bailee, provided that the Agent has received an
executed bailee letter from the applicable Person in form and substance
satisfactory to the Agent; PROVIDED, HOWEVER, that in each case the Agent may in
its sole discretion waive such requirement in writing to such extent and under
such conditions as the Agent may from time to time in its sole discretion
determine.
6. OFFICE LOCATIONS; JURISDICTION OF ORGANIZATION; NAMES.
(a) SCHEDULE 3 attached hereto identifies each Grantor's name as of the
Closing Date as it appears in official filings in the state of its incorporation
or other organization, the type of entity of such Grantor (including
corporation, partnership, limited partnership or limited liability company),
organizational identification number issued by such Grantor's state of
incorporation or organization or a statement that no such number has been issued
and the jurisdiction in which such Grantor is incorporated or organized. Each
Grantor has only one state of incorporation or organization.
(b) No Grantor (or predecessor by merger or otherwise of such Grantor) has,
within the one year period preceding the date hereof, or, in the case of an
Additional Grantor, the date of the applicable Counterpart (as defined in
SECTION 32(I) hereof), had a different name from
11
the name of such Grantor listed on the signature pages hereof, except the names
set forth on SCHEDULE 5 attached hereto, as SCHEDULE 5 may be updated upon the
execution of this Agreement by an Additional Grantor.
7. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor represents
and warrants to the Agent and the Lenders and agrees with the Agent and the
Lenders that: (a) such Grantor has rights in and the power to transfer all of
the Collateral free and clear of all Liens whatsoever, except for Liens
permitted under SECTION 7.16 of the Credit Agreement; (b) the Agent's Liens in
the Collateral will not be subject to any prior Lien except for those Liens
identified in CLAUSES (C), (D) and (E) of the definition of Permitted Liens; and
(c) such Grantor will use, store, and maintain the Collateral with all
reasonable care and will use such Collateral for lawful purposes only.
8. APPRAISALS.
(a) Once every Fiscal Quarter, the Agent shall, at each Grantor's expense,
arrange for appraisals or updates thereof of all of the Inventory constituting
finished goods from an appraiser, and prepared on a basis, satisfactory to the
Agent, such appraisals and updates to include, without limitation, information
required by applicable law and regulation and by the internal policies of the
Lenders.
(b) Whenever a Default or Event of Default exists, the Agent shall, at each
Grantor's expense and at the Agent's discretion, arrange for appraisals or
updates thereof of any or all of the Collateral from an appraiser, and prepared
on a basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulation and by
the internal policies of the Lenders.
9. ACCESS AND EXAMINATION. Not less frequently than three (3) times per year nor
more frequently than four (4) times per year, and upon ten (10) days notice to
the relevant Grantor, or at any time with or without notice whenever a Default
or Event of Default exists and is continuing, the Agent, accompanied by any
Lender which so elects, may at all reasonable times during regular business
hours have access to, examine, audit, make extracts from or copies of and
inspect any or all of each Grantor's records, files, and books of account and
the Collateral, and discuss such Grantor's affairs with such Grantor's officers
and management. Each Grantor will deliver to the Agent any instrument necessary
for the Agent to obtain records from any service bureau maintaining records for
such Grantor. The Agent may, and at the direction of the Majority Lenders shall,
at any time whenever a Default or Event of Default exists, and at such Grantor's
expense, make copies of all of such Grantor's books and records, or require such
Grantor to deliver such copies to the Agent. The Agent may, without expense to
the Agent, use such of such Grantor's respective personnel, supplies, and Real
Estate as may be reasonably necessary for maintaining or enforcing the Agent's
Liens. The Agent shall have the right, at any time, in the Agent's name or in
the name of a nominee of the Agent, to verify the validity, amount or any other
matter relating to the Accounts, Inventory, or other Collateral, by mail,
telephone, or otherwise.
12
10. 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; and
(b) if the Agent gives value to enable such Grantor to acquire rights in or
the use of any Collateral, use such value for such purposes.
11. SPECIAL COVENANTS WITH RESPECT TO THE IP COLLATERAL.
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the IP 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; and
(ii) furnish to the Agent from time to time at the Agent's reasonable
request statements and schedules further identifying and describing any IP
Collateral and such other reports in connection with such Collateral, all
in reasonable detail.
(b) In addition to the filing of UCC financing statements, the filing of a
Grant of Patent Security Interest, substantially in the form of EXHIBIT I
attached hereto, with the United States Patent and Trademark Office (such Grant
of Patent Security Interest being referred to herein as a "GRANT"), the security
interests in the Collateral granted to the Agent for the ratable benefit of the
Lenders and the Selected Revolving Lenders will constitute perfected security
interests therein, to the extent such security interests may be perfected by
filing in the United States, prior to all other Liens (except for Liens
expressly permitted by the Credit Agreement and Liens on software licensed from
a third party), and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly made or taken.
(c) Except as otherwise provided in this SECTION 11, each Grantor shall
continue to collect, at its own expense, all amounts due or to become due to
such Grantor in respect of the IP 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 the Agent's
reasonable direction, shall take) such action as such Grantor or the Agent may
deem reasonably necessary or advisable to enforce collection of such amounts;
PROVIDED, the Agent 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 the Agent,
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
13
the Agent 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 IP Collateral or any portion thereof shall be
received in trust for the benefit of the Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over or delivered
to the Agent in the same form as so received (with any necessary endorsement) to
be held as cash Collateral and applied as provided by SECTION 32(T) 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.
(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 IP Collateral. The Agent shall provide, at such Grantor's
expense, all reasonable and necessary cooperation in connection with any
such suit, proceeding or action including joining as a necessary 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 hereby
grants to the Agent, for use upon the occurrence and during the
continuation of an Event of Default, the irrevocable, nonexclusive right
and license to use all present and future trademarks, trade names, trade
dress, copyrights, patents or technical processes (including the IP
Collateral and 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 the
Agent to realize on, and exercise all rights of the Agent and the Lenders
in relation to, the Collateral in accordance with this Agreement (including
without limitation advertising in all media as the Agent deems appropriate
in connection with marketing and sales of the Collateral) and to enable any
transferee or assignee of the Collateral to enjoy the benefits of the
Collateral, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout thereof;
PROVIDED, however, the license granted under this SECTION 11(E) 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 the Agent 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 the Agent 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 IP 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
14
reasonably requested. If and to the extent that any Grantor is permitted to
license the IP Collateral, the Agent shall promptly enter into a
non-disturbance agreementor other similar arrangement, at such Grantor's
request and expense, with such Grantor and any licensee of any IP
Collateral permitted hereunder in form and substance reasonably
satisfactory to the Agent pursuant to which (i) the Agent 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 IP
Collateral licensed to it is subject to the security interest created in
favor of the Agent and the other terms of this Agreement.
12. SPECIAL COVENANTS WITH RESPECT TO THE PLEDGED COLLATERAL.
Except as otherwise not prohibited by the Credit Agreement, each
Grantor shall:
(a) not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral, (ii) create or suffer to exist any Lien upon or with
respect to any of the Pledged Collateral, except for Permitted Liens, or
(iii) permit any issuer of Pledged Interests to merge or consolidate unless
all the outstanding 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 Person; PROVIDED, if the surviving or
resulting Person upon any such merger or consolidation involving an issuer
of Pledged Interests is a Material Foreign Subsidiary, then such Grantor
shall only be required to pledge outstanding Equity Interests of such
surviving or resulting Person possessing up to but not exceeding 65% of the
voting power of all classes of Equity Interests of such issuer entitled to
vote;
(b) (i) cause each issuer of Pledged Interests not to issue any Equity
Interests in addition to or in substitution for the Pledged Interests
issued by such issuer, except to such Grantor, (ii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and
all additional Equity Interests of each issuer of Pledged Interests, and
(iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all 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 (iii) to the contrary, such Grantor shall only be
required to pledge the outstanding Equity Interests of a direct Material
Foreign Subsidiary possessing up to but not exceeding 65% of the voting
power of all classes of Equity Interests of such Material Foreign
Subsidiary entitled to vote and any such Grantor shall not be required to
pledge Equity Interests of any Restricted Subsidiary;
(c) 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 clause (c) 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;
15
(d) 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 clause (d) 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;
(e) at its expense (i) perform and comply in all material respects
with all terms and provisions of any agreement related to the Pledged
Collateral required to be performed or complied with by it, (ii) maintain
all such agreements in full force and effect, and (iii) enforce all such
agreements in accordance with their terms;
(f) deliver to the Agent, immediately upon their issuance, any and all
Instruments or other evidences of additional Debt from time to time owed to
such Grantor (i) by any obligor on the Pledged Debt, and (ii) 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; and
(g) cause the terms of any partnership or limited liability company
agreement governing Equity Interests included in the Pledged Collateral to
provide that such interests are securities governed by Division 8 of the
UCC.
13. COLLATERAL REPORTING. The Borrowers shall provide the Agent with the
following documents, consolidated for both Borrowers, at the following
times in form satisfactory to the Agent.
(a) On a weekly basis by the second Business Day of each week, or more
frequently at the option of the Borrowers:
(i) a weekly Borrowing Base Certificate for the immediately
preceding week, together with a schedule of the Borrowers' Accounts
created, credits given, cash collected and other adjustments to
Accounts since the date of the last weekly Borrowing Base Certificate,
which Borrowing Base Certificate shall reflect the Inventory set forth
in the most recent monthly Inventory Borrowing Base Certificate or
weekly Borrowing Base Certificate, as the case may be; and
(ii) a weekly aging of the Borrowers' Accounts corresponding to
the ending balance of Accounts reflected on the weekly Borrowing Base
Certificate delivered pursuant to clause (i) above.
(b) Subject to clause (c) below, on a monthly basis by the 19th day
of each month, or more frequently if requested by the Agent:
(i) a monthly Borrowing Base Certificate for the immediately
preceding month, together with a schedule of the Borrowers' Accounts
created, credits given, cash collected and other adjustments to
Accounts since the date of the last monthly Borrowing Base
Certificate;
16
(ii) a monthly aging of the Borrowers' Accounts, together with a
reconciliation to the Borrowers' general ledger;
(iii) a monthly aging of the Borrowers' accounts payable;
(iv) a detailed calculation of Eligible Accounts and Eligible
Inventory as of the end of the immediately preceding month; and
(v) a monthly Inventory report by category and location;
(c) During any week in which either (i) Availability as of any date
during such week is less than the greater of 20% of the Borrowing Base and
$50,000,000 or (ii) Availability is less than 25% of the Borrowing Base for
a period of three or more consecutive Business Days during such week, by
the second Business Day of the immediately following week, a weekly
Inventory report for the immediately preceding week by category and
location corresponding in form and substance agreed upon by LS&Co. and the
Agent to the Borrowers' perpetual records.
(d) Upon the request of the Agent:
(i) copies of invoices in connection with the Borrowers'
Accounts, customer statements, credit memos, remittance advices and
reports, deposit slips, shipping documents in connection with the
Borrowers' Accounts and for Inventory and Equipment acquired by the
Borrowers, purchase orders and invoices;
(ii) a statement of the balance of each of the Intercompany
Accounts; and
(iii) such other reports as to the Collateral of the Borrowers as
the Agent shall reasonably request from time to time.
If any of the Borrowers' records or reports of the Collateral are prepared
by an accounting service or other agent, the Borrowers hereby authorize such
service or agent to deliver such records, reports, and related documents to the
Agent, for distribution to the Lenders.
14. ACCOUNTS.
(a) Each Grantor hereby represents and warrants to the Agent and the
Lenders, with respect to such Grantor's Accounts, that:
(i) each existing Account represents, and each future Account will
represent, a BONA FIDE sale and delivery of goods by such Grantor, in the
ordinary course of such Grantor's business;
(ii) each existing Account is, and each future Account will be, for a
liquidated amount payable by the Account Debtor thereon on the terms set
forth in the invoice therefor or in the schedule thereof delivered to the
Agent, without any offset,
17
deduction, defense, or counterclaim except those known to such Grantor and
disclosed to the Agent and the Lenders pursuant to this Agreement;
(iii) no payment will be received with respect to any Account, and no
credit, discount, or extension, or agreement therefor will be granted on
any Account, except as reported to the Agent and the Lenders in Borrowing
Base Certificates delivered in accordance with this Agreement;
(iv) each copy of an invoice delivered to the Agent by such Grantor
will be a genuine copy of the original invoice sent to the Account Debtor
named therein; and
(v) all goods described in any invoice representing a sale of goods
will have been shipped to the Account Debtor.
(b) No Grantor shall re-date any invoice or sale or make sales on extended
dating beyond that customary in such Grantor's business or extend or modify any
Account. If any Grantor becomes aware of any matter adversely affecting the
collectibility of any Account or the Account Debtor therefor involving an amount
greater than $5,000,000, including information regarding the Account Debtor's
creditworthiness, such Grantor will promptly so advise the Agent and exclude
such Account from Eligible Accounts.
(c) If the Agent consents to the acceptance of any note or other instrument
(except a check, letters of credit as customary to such Grantor's business
practices or other instrument for the immediate payment of money) with respect
to any Account, it shall be considered as evidence of the Account and not
payment thereof and, in respect of any instrument for an amount in excess of
$5,000,000, such Grantor will, upon the request of the Agent, promptly deliver
such instrument to the Agent, endorsed by such Grantor to the Agent in a manner
satisfactory in form and substance to the Agent. Regardless of the form of
presentment, demand, notice of protest with respect thereto, such Grantor shall
remain liable thereon until such instrument is paid in full.
(d) Each Grantor shall notify the Agent promptly of all disputes and claims
in excess of $5,000,000 with any Account Debtor, and agrees to settle, contest,
or adjust such dispute or claim at no expense to the Agent or any Lender. Upon
the occurrence of and during the continuance of an Event of Default, no
discount, credit or allowance shall be granted to any such Account Debtor
without the Agent's prior written consent, except for discounts, credits and
allowances made or given in the ordinary course of such Grantor's business. Upon
the request of the Agent, such Grantor shall send the Agent a copy of each
credit memorandum in excess of $5,000,000 as soon as issued, and such Grantor
shall promptly report that credit on Borrowing Base Certificates submitted by
it. Upon the occurrence of and during the continuance of an Event of Default,
the Agent may settle or adjust disputes and claims directly with Account Debtors
for amounts and upon terms which the Agent or the Majority Lenders, as
applicable, shall consider advisable and, in all cases, the Agent will credit
such Grantor's Loan Account with the net amounts received by the Agent in
payment of any Accounts.
18
(e) If an Account Debtor returns any Inventory to any Grantor when no Event
of Default exists, then such Grantor shall, upon the request of the Agent,
determine the reason for such return and issue a credit memorandum to the
Account Debtor in the appropriate amount. Such Grantor shall deliver a monthly
report to the Agent setting forth all returns involving an amount in excess of
$5,000,000. Each such report shall indicate the reasons for the returns and the
locations and condition of the returned Inventory. In the event any Account
Debtor returns Inventory to any Grantor, upon the occurrence of and during the
continuance of an Event of Default, such Grantor shall, upon the request of the
Agent: (i) hold the returned Inventory in trust for the Agent; (ii) dispose of
the returned Inventory solely according to the Agent's written instructions; and
(iii) not issue any credits or allowances with respect thereto without the
Agent's prior written consent. All returned Inventory shall be subject to the
Agent's Liens thereon. Whenever any Inventory is returned, the related Account
shall be deemed ineligible to the extent of the amount owing by the Account
Debtor with respect to such returned Inventory. Any such returned Inventory
shall not be Eligible Inventory unless such returned Inventory constitutes Genco
Goods.
15. COLLECTION OF ACCOUNTS; PAYMENTS.
(a) Until the Agent notifies the Grantors to the contrary, each Grantor
shall make collection of all Accounts and other Collateral for the Agent, shall
receive all payments as the Agent's trustee, and shall immediately deliver all
payments in their original form duly endorsed in blank into a lock-box service
or Payment Account established for the account of the Grantors at a Clearing
Bank acceptable to the Agent, subject to a blocked account agreement. Within
thirty (30) days after the Closing Date, the Grantors shall establish a lock-box
service for collections of Accounts at a Clearing Bank acceptable to the Agent
and subject to a blocked account agreement and other documentation acceptable to
the Agent. The Grantors shall instruct all Account Debtors to make all payments
directly to the address established for such service. If, notwithstanding such
instructions, any Grantor receives any proceeds of Accounts, it shall receive
such payments as the Agent's trustee, and shall immediately deliver such
payments to the Agent in their original form duly endorsed in blank or deposit
them into a Payment Account, as the Agent may direct. All collections received
in any lock-box service or Payment Account or directly by any Grantor or the
Agent, and all funds in any Payment Account or other account to which such
collections are deposited shall be subject to the Agent's sole control and
withdrawals by the Grantors shall not be permitted. The Agent or the Agent's
designee may, at any time after the occurrence of an Event of Default, notify
Account Debtors that the Accounts have been assigned to the Agent and of the
Agent's security interest therein, and may collect them directly and charge the
collection costs and expenses to the Loan Account as a Revolving Loan. So long
as an Event of Default has occurred and is continuing, each Grantor, at the
Agent's request, shall execute and deliver to the Agent such documents as the
Agent shall require to grant the Agent access to any post office box in which
collections of Accounts are received.
(b) If sales of Inventory are made or services are rendered for cash, each
Grantor shall immediately deliver to the Agent or deposit into a Payment Account
the cash which such Grantor receives.
19
(c) All payments including immediately available funds received by the
Agent at a bank account designated by it, will be the Agent's sole property for
its benefit and the benefit of the Lenders and will be credited to the Loan
Account (conditioned upon final collection).
(d) In the event any Grantor repays all of the Secured Obligations upon the
termination of the Credit Agreement or upon acceleration of the Secured
Obligations, other than through the Agent's receipt of payments on account of
the Accounts or proceeds of the other Collateral, such payment will be credited
(conditioned upon final collection) to the Grantors' Loan Account upon the
Agent's receipt of immediately available funds.
16. INVENTORY; PERPETUAL INVENTORY.
(a) Each Grantor represents and warrants to the Agent and the Lenders and
agrees with the Agent and the Lenders that all of the Inventory owned by such
Grantor is and will be held for sale or use in production, in the ordinary
course of such Grantor's business, and is and will be fit for such purposes.
Each Grantor will keep its Inventory in good and marketable condition, except
for damaged or defective goods arising in the ordinary course of such Grantor's
business. Each Grantor will notify the Agent upon such Grantor's acquisition or
acceptance of any Inventory on consignment or approval. Each Grantor agrees that
all Inventory produced by such Grantor in the United States of America will be
produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations, and orders thereunder. Each Grantor will
conduct a cycle count of the Inventory at least once per Fiscal Year, and after
and during the continuance of an Event of Default, at such other times as the
Agent requests. Each Grantor will maintain a perpetual inventory reporting
system at all times. No Grantor will, without the Agent's written consent not to
be unreasonably withheld, sell any Inventory on a xxxx and hold, guaranteed
sale, sale and return, sale on approval, consignment, or other repurchase or
return basis.
(b) Each Grantor shall, upon the occurrence and during the continuance of
an Event of Default and at the Agent's request, 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 the Agent and subject to the instructions of the Agent.
(c) Each Grantor shall, at its own expense, maintain insurance with respect
to the Inventory in accordance with the terms of the Credit Agreement.
17. EQUIPMENT.
(a) Each Grantor represents and warrants to the Agent and the Lenders and
agrees with the Agent and the Lenders that all of the Equipment owned by such
Grantor is and will be used or held for use in such Grantor's business, and is
and will be fit for such purposes. Each Grantor shall keep and maintain its
Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof other than to the
extent such Equipment is no longer required in such Grantor's business.
20
(b) Each Grantor shall promptly notify the Agent in the event that it
enters into or terminates any material Equipment Financing Transaction.
(c) Each Grantor shall, at its own expense, maintain insurance with respect
to the Equipment in accordance with the terms of the Credit Agreement
18. IP COLLATERAL.
Each Grantor represents and warrants as follows:
(a) a true and complete list of all Patents and Patent applications owned
by such Grantor, in whole or in part, that are material to such Grantor's
business is set forth on SCHEDULE 1 attached hereto;
(b) after reasonable inquiry, such Grantor is not aware of any pending or
threatened claim by any third party that any of the IP Collateral owned, held or
used by such Grantor is invalid or unenforceable that is reasonably likely to
have a Material Adverse Effect; and
(c) after giving effect to the releases delivered on the Closing Date in
respect of the Credit Agreement, no effective security interest or other Lien
covering all or any part of the IP Collateral is on file in the United States
Patent and Trademark Office, other than Liens in favor of the Agent.
19. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and
warrants to the Agent and the Lenders that (a) all Documents, Instruments, and
Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such Documents, Instruments, Letter of
Credit Rights and Chattel Paper are and will be owned by such Grantor, free and
clear of all Liens other than Permitted Liens. If any Grantor retains possession
of any Chattel Paper or Instruments with the Agent's consent, such Chattel Paper
and Instruments shall be marked with the following legend: "This writing and the
obligations evidenced or served hereby are subject to the security interest of
Bank of America, N.A., as the Agent, for the benefit of the Agent and certain
Lenders."
20. REPRESENTATIONS AND WARRANTIES REGARDING THE PLEDGED COLLATERAL.
(a) DUE AUTHORIZATION, ETC. OF PLEDGED COLLATERAL. All of the Pledged
Interests described on SCHEDULE 2(A) attached hereto for each Grantor have been
duly authorized and validly issued and are fully paid and non-assessable. All of
the Pledged Debt described on SCHEDULE 2(B) attached hereto for each Grantor has
been duly authorized, authenticated or issued, and delivered, is the legal,
valid and binding obligation of the issuers thereof and is not in default.
(b) DESCRIPTION OF PLEDGED COLLATERAL. Except as set forth on SCHEDULE
2(A), the Pledged Interests constitute all of the issued and outstanding Equity
Interests of each issuer
21
thereof (subject to the proviso to SECTION 2(A)(XIII) hereof with respect to
Equity Interests of a Material Foreign Subsidiary), 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. The Pledged Debt
constitutes all of the issued and outstanding intercompany indebtedness
evidenced by a promissory note of the respective issuers thereof owing to each
Grantor. SCHEDULE 2(A) for each Grantor sets forth all of the Pledged Interests
owned by such Grantor on the date hereof; and SCHEDULE 2(B) for each Grantor
sets forth all of the Pledged Debt in existence on the date hereof.
(c) OWNERSHIP OF PLEDGED COLLATERAL. Each Grantor is the legal, record and
beneficial owner of the Pledged Collateral and its interests in the Pledged
Collateral are free and clear of any Lien except for Permitted Liens.
(d) GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge by each Grantor of the Pledged
Collateral pursuant to this Agreement and the grant by such Grantor of the
security interest granted hereby, (ii) the execution, delivery or performance of
this Agreement by each Grantor, or (iii) the exercise by the Agent of the voting
or other rights, or the remedies in respect of the Pledged Collateral, provided
for in this Agreement (except as may be required in connection with a
disposition of Pledged Collateral by laws affecting the offering and sale of
securities generally).
(e) PERFECTION. Upon (i) the filing of UCC financing statements naming each
Grantor as "debtor", naming the Agent as "secured party" and describing the
Pledged Collateral in the filing offices listed on SCHEDULE 6 attached hereto,
(ii) in the case of Pledged Collateral consisting of certificated securities or
evidenced by Instruments, in addition to filing such financing statements,
delivery of the certificates representing such certificated securities and
delivery of such Instruments to the Agent, in each case duly endorsed or
accompanied by duly executed instruments of assignment or transfer in blank (and
in the case of Pledged Collateral issued by a foreign issuer, any actions
required under foreign law to perfect a security interest in such Pledged
Collateral) and, (iii) in the case of any Pledged Collateral constituting a
Security Entitlement or a Securities Account (as such terms are defined in the
UCC) and assets held in such account, the execution and delivery to the Agent of
an agreement providing for control by the Agent of such Securities Account, the
security interests in the Pledged Collateral, granted to the Agent for the
ratable benefit of the Beneficiaries, will constitute perfected security
interests therein prior to all other Liens, securing the payment of the Secured
Obligations.
(f) MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant to
this Agreement does not violate Regulation T, U or X of the Board of Governors
of the Federal Reserve System.
(g) OTHER INFORMATION. All information heretofore, herein or hereafter
supplied to the Agent by or on behalf of each Grantor with respect to the
Pledged Collateral is accurate and complete in all respects.
22
21. VOTING RIGHTS; DIVIDENDS.
(a) 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 Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement
or the Credit Agreement; PROVIDED, HOWEVER, that such Grantor shall not
exercise or refrain from exercising any such right if the Agent shall have
notified such Grantor that, in the Agent's judgment, such action would have
a material adverse effect on the value of the Pledged Collateral or any
part thereof; and
(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 Pledged
Collateral; PROVIDED, HOWEVER, that any and all
(A) dividends, other 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 Pledged Collateral,
(B) dividends and other distributions paid or payable in cash in
respect of any Pledged 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 Pledged
Collateral,
shall be, and shall forthwith be delivered to the Agent to hold as, Pledged
Collateral and shall, if received by such Grantor, be received in trust for
the benefit of the Agent, be segregated from the other property or funds of
such Grantor and be forthwith delivered to the Agent as Pledged Collateral
in the same form as so received (with all necessary endorsements).
(b) Upon the occurrence AND during the continuation of an Event of Default:
(i) upon written notice from the Agent to any Grantor, all rights of
such Grantor to exercise the voting and other consensual rights that it
would otherwise be entitled to exercise pursuant to SECTION 21(A)(I) hereof
shall cease, and all such rights shall thereupon become vested in the Agent
who shall thereupon have the sole right to exercise such voting and other
consensual rights;
(ii) except as otherwise provided in the Credit Agreement, all rights
of Grantors to receive the dividends, other distributions and interest
payments that they would otherwise be authorized to receive and retain
pursuant to SECTION 21(A)(II) hereof shall cease, and all such rights shall
thereupon become vested in the Agent who shall
23
thereupon have the sole right to receive and hold as Pledged Collateral
such dividends, other distributions and interest payments; and
(iii) all dividends, principal, interest payments and other
distributions that are received by Grantors contrary to the provisions of
paragraph (ii) of this SECTION 21(B) shall be received in trust for the
benefit of the Agent, shall be segregated from other funds of Grantors and
shall forthwith be paid over to the Agent as Pledged Collateral in the same
form as so received (with any necessary endorsements).
(c) In order to permit the Agent to exercise the voting and other
consensual rights that it may be entitled to exercise pursuant to SECTION
21(B)(I) hereof and to receive all dividends and other distributions which it
may be entitled to receive under SECTION 21(A)(II) hereof or SECTION 21(B)(II)
hereof, (i) each Grantor shall, upon the occurrence of and during the
continuance of an Event of Default, promptly execute and deliver (or cause to be
executed and delivered) to the Agent all such proxies, dividend payment orders
and other instruments as the Agent may from time to time reasonably request and
(ii) without limiting the effect of the immediately preceding clause (i), each
Grantor hereby grants to the Agent 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, without
limitation, giving or withholding written consents of holders of Equity
Interests, calling special meetings of 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 (other than inchoate indemnity obligations).
22. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of any
Grantor hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Secured Obligations, the Collateral or the
Agent's Liens therein, and which such Grantor fails to pay or do, including
payment of any judgment against such Grantor, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord's or bailee's
claim, and any other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this SECTION 22 and all out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Loan Account as a Revolving Loan. Any payment
made or other action taken by the Agent under this SECTION 22 shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
thereafter as herein provided.
23. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the Agent's
designee as such Grantor's attorney, with power:
(a) to endorse such Grantor's name on any checks, notes, acceptances, money
orders, or other forms of payment or security that come into the Agent's or any
Lender's possession and, upon the occurrence and during the continuance of an
Event of Default, to
24
receive, endorse and collect any instruments made payable to such Grantor
representing any dividend, principal or interest payment or other distribution
in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same;
(b) to sign such Grantor's name on any invoice, xxxx of lading, warehouse
receipt or other negotiable or non-negotiable Document constituting Collateral,
on drafts against customers, on assignments of Accounts, on notices of
assignment, financing statements and other public records and to file any such
financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure;
(c) to send requests for verification of Accounts to customers or Account
Debtors in accordance with SECTION 14(D) hereof;
(d) to complete in such Grantor's name or the Agent's name, any order, sale
or transaction, obtain the necessary Documents in connection therewith, and
collect the proceeds thereof;
(e) to clear Inventory through customs in such Grantor's name, the Agent's
name or the name of the Agent's designee, and to sign and deliver to customs
officials powers of attorney in such Grantor's name for such purpose;
(f) to the extent that such Grantor's authorization given in SECTION 4(G)
hereof is not sufficient, to file such financing statements with respect to this
Agreement, with or without such Grantor's signature, or to file a photocopy of
this Agreement in substitution for a financing statement, as the Agent may deem
appropriate and to execute in such Grantor's name such financing statements and
amendments thereto and continuation statements which may require such Grantor's
signature;
(g) 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 the Agent in its sole discretion, any such payments made by
the Agent to become Secured Obligations of such Grantor to the Agent, due and
payable immediately without demand;
(h) upon the occurrence and during the continuance of an Event of Default,
to notify the post office authorities to change the address for delivery of such
Grantor's mail to an address designated by the Agent and to receive, open and
dispose of all mail addressed to such Grantor;
(i) 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 the Agent pursuant to the Credit Agreement;
(j) 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;
25
(k) 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 the
Agent may deem necessary or desirable for the collection of any of the Pledged
Collateral or otherwise to enforce the rights of the Agent with respect to any
of the Collateral;
(l) 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 the
Agent were the absolute owner thereof for all purposes, and to do, at the
Agent's option and such Grantor's expense, at any time or from time to time, all
acts and things that the Agent deems necessary to protect, preserve or realize
upon the Collateral and the Agent's security interest therein in order to effect
the intent of this Agreement, all as fully and effectively as such Grantor might
do; and
(m) to do all things necessary to carry out the Credit Agreement and this
Agreement.
Each Grantor ratifies and approves all acts of such attorney. None of the
Lenders or the Agent nor their attorneys will be liable for any acts or
omissions or for any error of judgment or mistake of fact or law except for
their willful misconduct. This power, being coupled with an interest, is
irrevocable until the Credit Agreement has been terminated and the Obligations
(other than inchoate indemnity obligations) have been fully satisfied.
24. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.
(a) Each Grantor assumes all responsibility and liability arising from or
relating to the use, sale, license or other disposition of the Collateral. The
Secured Obligations shall not be affected by any failure of the Agent or any
Lender to take any steps to perfect the Agent's Liens or to collect or realize
upon the Collateral, nor shall loss of or damage to the Collateral release such
Grantor from any of the Secured Obligations. Following the occurrence and during
the continuation of an Event of Default, the Agent may (but shall not be
required to), and at the direction of the Majority Lenders shall, without notice
to or consent from any Grantor, xxx upon or otherwise collect, extend the time
for payment of, modify or amend the terms of, compromise or settle for cash,
credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action
with respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of such Grantor for the Secured Obligations or
under the Credit Agreement or any other agreement now or hereafter existing
between the Agent and/or any Lender and such Grantor.
(b) It is expressly agreed by each Grantor that, anything herein to the
contrary notwithstanding, such Grantor shall remain liable under each of its
contracts and each of its licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither the Agent nor
any Lender shall have any obligation or liability under any contract or license
by reason of or arising out of this Agreement or the granting herein of a Lien
thereon or the receipt by the Agent or any Lender of any payment relating to any
contract or
26
license pursuant hereto. Neither the Agent nor any Lender shall be required or
obligated in any manner to perform or fulfill any of the obligations of such
Grantor under or pursuant to any contract or license, or to make any payment, or
to make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any contract or
license, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
(c) The Agent may at any time after an Event of Default has occurred and is
continuing (or if any rights of set-off or contra accounts may be asserted with
respect to the following), without prior notice to such Grantor, notify Account
Debtors, and other Persons obligated on the Collateral that the Agent has a
security interest therein, and that payments shall be made directly to the
Agent, for itself and the benefit of the Lenders. Upon the request of the Agent,
such Grantor shall so notify Account Debtors and other Persons obligated on
Collateral. Once any such notice has been given to any Account Debtor or other
Person obligated on the Collateral, such Grantor shall not give any contrary
instructions to such Account Debtor or other Person without the Agent's prior
written consent.
(d) The Agent may at any time in any Grantor's or an assumed name or, after
the occurrence of and during the continuance of an Event of Default in the
Agent's own name, communicate with Account Debtors, parties to Contracts and
obligors in respect of Instruments to verify with such Persons, to the Agent's
satisfaction, the existence, amount and terms of Accounts, payment intangibles,
Instruments or Chattel Paper. If an Event of Default shall have occurred and be
continuing, each Grantor, at its own expense, shall cause the independent
certified public accountants then engaged by such Grantor (or such other
accounting firm as may be reasonably acceptable to the Agent if applicable law,
in the reasonable opinion of such Grantor, prevents such Grantor's independent
accountant from providing such services) to prepare and deliver to the Agent and
each Lender at any time and from time to time promptly upon the Agent's request
the following reports with respect to such Grantor: (i) a reconciliation of all
Accounts; (ii) an aging of all Accounts; (iii) trial balances; and (iv) a test
verification of such Accounts as the Agent may request. Each Grantor, at its own
expense, shall deliver to the Agent the results of each physical verification,
if any, which such Grantor may in its discretion have made, or caused any other
Person to have made on its behalf, of all or any portion of its Inventory.
25. INDEMNIFICATION.
(a) In any suit, proceeding or action brought by the Agent or any Lender
relating to any Collateral for any sum owing with respect thereto or to enforce
any rights or claims with respect thereto, each Grantor will save, indemnify and
keep the Agent, the Lenders and the Selected Revolving Lenders harmless from and
against all expense (including reasonable attorneys' fees and expenses), loss or
damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other Person
obligated on the Collateral, arising out of a breach by such Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to, or in favor of, such obligor or its successors
from such Grantor, except in the case of the Agent,
27
any Lender or any Selected Revolving Lender, to the extent such expense, loss,
or damage is attributable solely to the gross negligence or willful misconduct
of the Agent, such Lender or such Selected Revolving Lender as finally
determined by a court of competent jurisdiction. All such obligations of such
Grantor shall be and remain enforceable against and only against such Grantor
and shall not be enforceable against the Agent, any Lender or any Selected
Revolving Lender.
(b) The Grantors jointly and severally agree to pay to the Agent upon
demand:
(i) prior to an Event of Default, the amount of any and all
reasonable costs and expenses, including the reasonable fees and expenses
of its counsel and of any experts and agents, that the Agent may incur in
connection with (A) the administration of this Agreement, (B) the custody,
preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (C) the exercise or
enforcement of any of the rights of the Agent hereunder, or (D) the failure
by any Grantor to perform or observe any of the provisions hereof; and
(ii) upon the occurrence of and during the continuance of an Event of
Default, the amount of any and all costs and expenses, including the fees
and expenses of its counsel and of any experts and agents, that the Agent
may incur in connection with (A) the administration of this Agreement, (B)
the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (C) the exercise or
enforcement of any of the rights of the Agent hereunder, or (D) the failure
by any Grantor to perform or observe any of the provisions hereof.
(c) The obligations of the Grantors in this SECTION 25 shall (i) survive
the termination of this Agreement and the discharge of the Grantors' other
Secured Obligations (other than inchoate indemnity obligations) under this
Agreement, the Selected Revolving Lender Hedge Agreements, the Selected
Revolving Lender Cash Management Services, the Credit Agreement and the other
Loan Documents and (ii), as to any Grantor that is a party to a Guaranty, be
subject to the provisions of SECTION 1(B) thereof.
26. LIMITATION ON LIENS ON COLLATERAL. The Grantors will defend the Collateral
against, and take such other action as is necessary to remove, any Lien on the
Collateral except Permitted Liens, and will defend the right, title and interest
of the Agent and the Lenders in and to any of the Grantors' rights under the
Collateral against the claims and demands of all Persons whomsoever.
27. NOTICE REGARDING COLLATERAL. Each Grantor will advise the Agent promptly, in
reasonable detail, (i) of any Lien (other than Permitted Liens) or claim made or
asserted against any of the Collateral, and (ii) of the occurrence of any other
event which would have a Material Adverse Effect.
28
28. REMEDIES; RIGHTS UPON DEFAULT.
(a) In addition to all other rights and remedies granted to it under this
Agreement, the Credit Agreement, the other Loan Documents and under any other
instrument or agreement securing, evidencing or relating to any of the Secured
Obligations, if any Event of Default shall have occurred and be continuing, the
Agent may exercise all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, each Grantor expressly agrees
that in any such event the Agent, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon such Grantor or any other Person
(all and each of which demands, advertisements and notices are hereby expressly
waived to the maximum extent permitted by the UCC and other applicable law), may
forthwith enter upon the premises of such Grantor where any Collateral is
located through self-help, without judicial process, without first obtaining a
final judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on the Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof, and
may forthwith sell, lease, license, assign, give an option or options to
purchase, or sell or otherwise dispose of and deliver said Collateral (or
contract to do so), or any part thereof, in one or more parcels at a public or
private sale or sales, at any exchange at such prices as it may deem acceptable,
for cash or on credit or for future delivery without assumption of any credit
risk. The Agent or any Lender or any Selected Revolving Lender shall have the
right upon any such public sale or sales and, to the extent permitted by law,
upon any such private sale or sales, to purchase for the benefit of the Agent,
the Lenders and the Selected Revolving Lenders, the whole or any part of said
Collateral so sold, free of any right or equity of redemption, which equity of
redemption such Grantor hereby releases. Such sales may be adjourned and
continued from time to time with or without notice. The Agent shall have the
right to conduct such sales on such Grantor's premises or elsewhere and shall
have the right to use such Grantor's premises without charge for such time or
times as the Agent deems necessary or advisable.
(b) Each Grantor further agrees, at the Agent's request, to assemble the
Collateral and make it available to the Agent at a place or places designated by
the Agent which are reasonably convenient to the Agent and such Grantor, whether
at such Grantor's premises or elsewhere. Until the Agent is able to effect a
sale, lease, or other disposition of Collateral, the Agent shall have the right
to hold or use Collateral, or any part thereof, to the extent that it deems
appropriate for the purpose of preserving Collateral or its value or for any
other purpose deemed appropriate by the Agent. The Agent shall have no
obligation to such Grantor to maintain or preserve the rights of such Grantor as
against third parties with respect to Collateral while Collateral is in the
possession of the Agent. The Agent may, if it so elects, seek the appointment of
a receiver or keeper to take possession of Collateral and to enforce any of the
Agent's remedies (for the benefit of the Agent and the Lenders), with respect to
such appointment without prior notice or hearing as to such appointment. The
Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Secured Obligations as provided in the
Credit Agreement, and only after so paying over such net proceeds, and after the
payment by the Agent of any other amount required by any provision of law, need
the Agent account for the surplus, if any, to such Grantor. To the maximum
extent permitted by applicable law, such Grantor waives all claims, damages, and
demands against the
29
Agent or any Lender arising out of the repossession, retention or sale of the
Collateral except such as arise solely out of the gross negligence or willful
misconduct of the Agent or such Lender as finally determined by a court of
competent jurisdiction. Such Grantor agrees that ten (10) days prior notice by
the Agent of the time and place of any public sale or of the time after which a
private sale may take place is reasonable notification of such matters. Such
Grantor shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay all Secured Obligations,
including any attorneys' fees or other expenses incurred by the Agent or any
Lender to collect such deficiency.
(c) Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
"SECURITIES ACT"), and applicable state securities laws, the Agent may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged 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 Pledged 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 placement may be
at prices and on terms less favorable than those obtainable through a sale
without such restrictions (including, without limitation, an offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances and the registration rights granted to the
Agent by such Grantor pursuant to SECTION 28(D) hereof, such Grantor agrees that
any such private placement shall not be deemed, in and of itself, to be
commercially unreasonable and that the Agent shall have no obligation to delay
the sale of any Pledged Collateral for the period of time necessary to permit
the issuer thereof to register it for a form of 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 the Agent determines to
exercise its right to sell any or all of the Pledged 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 the Agent all such
information as the Agent may request in order to determine the amount of Pledged
Collateral that may be sold by the Agent 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.
(d) If the Agent shall determine to exercise its right to sell all or any
of the Pledged Collateral, each Grantor agrees that, upon request of the Agent
(which request may be made by the Agent in its sole discretion), such Grantor
will, at its own expense:
(i) execute and deliver, and cause each issuer of the Pledged
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 the Agent, advisable to register such Pledged Collateral under
the provisions of the Securities Act and to cause the registration
statement relating thereto to become effective 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 the Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act
30
and the rules and regulations of the Securities and Exchange Commission
applicable thereto;
(ii) use its best efforts to qualify the Pledged Collateral under all
applicable state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as requested
by the Agent;
(iii) 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;
(iv) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof
valid and binding and in compliance with applicable law; and
(v) bear all costs and expenses, including reasonable attorneys' fees,
of carrying out its obligations under this SECTION 28(D).
(e) Except as otherwise specifically provided herein, each Grantor hereby
waives presentment, demand, protest or any notice (to the maximum extent
permitted by applicable law) of any kind in connection with this Agreement or
any Collateral.
(f) To the extent that applicable law imposes duties on the Agent to
exercise remedies in a commercially reasonable manner, each Grantor acknowledges
and agrees that it is not commercially unreasonable for the Agent (a) to fail to
incur expenses reasonably deemed significant by the Agent to prepare Collateral
for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (b) to fail to obtain
third party consents for access to Collateral to be disposed of, or to obtain
or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (c) to fail to exercise collection remedies against Account Debtors
or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (d) to exercise collection remedies against Account
Debtors and other Persons obligated on Collateral directly or through the use of
collection agencies and other collection specialists, (e) to advertise
dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (f) to contact other
Persons, whether or not in the same business as the such Grantor, for
expressions of interest in acquiring all or any portion of such Collateral, (g)
to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the Collateral is of a specialized nature, (h) to
dispose of Collateral by utilizing internet sites that provide for the auction
of assets of the types included in the Collateral or that have the reasonable
capacity of doing so, or that match buyers and sellers of assets, (i) to dispose
of assets in wholesale rather than retail markets, (j) to disclaim disposition
warranties, such as title, possession or quiet enjoyment, (k) to purchase
insurance or credit enhancements to insure the Agent against risks of loss,
collection or disposition of Collateral or to provide to the Agent a guaranteed
return from the collection or disposition of Collateral, or (l) to the extent
deemed appropriate by the Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the
31
Agent in the collection or disposition of any of the Collateral. Such Grantor
acknowledges that the purpose of this SECTION 28(F) is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially
unreasonable in the Agent's exercise of remedies against the Collateral and that
other actions or omissions by the Agent shall not be deemed commercially
unreasonable solely on account of not being indicated in this SECTION 28(F).
Without limitation upon the foregoing, nothing contained in this SECTION 25(F)
shall be construed to grant any rights to such Grantor or to impose any duties
on the Agent that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this SECTION 25(F).
29. ADDITIONAL REMEDIES FOR IP COLLATERAL.
(a) Anything contained herein to the contrary notwithstanding, upon the
occurrence and during the continuation of an Event of Default, (i) the Agent
shall have the right (but not the obligation) to bring suit, in the name of any
Grantor, the Agent or otherwise, to enforce any IP Collateral, in which event
each Grantor shall, at the request of the Agent, do any and all lawful acts and
execute any and all documents required by the Agent in aid of such enforcement
and each Grantor shall promptly, upon demand, reimburse and indemnify the Agent
as provided in SECTIONS 13.7 and 13.11 of the Credit Agreement and SECTION 25
hereof, as applicable, in connection with the exercise of its rights under this
SECTION 29, and, to the extent that the Agent shall elect not to bring suit to
enforce any IP Collateral as provided in this SECTION 29, each Grantor agrees to
use all reasonable measures, whether by action, suit, proceeding or otherwise,
to prevent the infringement of any of the IP 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 the Agent, each
Grantor shall execute and deliver to the Agent an assignment or assignments of
the IP 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 the Agent (or any Lender)
receives cash proceeds in respect of the sale of, or other realization upon, the
IP Collateral; and (iv) within five Business Days after written notice from the
Agent, each Grantor shall make available to the Agent, 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 the Agent 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 the Agent's behalf and to be compensated by the Agent
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 the Agent of any rights, title and interests in and to the IP
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, the Agent shall promptly execute and deliver to such Grantor such
assignments as may
32
be necessary to reassign to such Grantor any such rights, title and interests as
may have been assigned to the Agent as aforesaid, subject to any disposition
thereof that may have been made by the Agent; PROVIDED, after giving effect to
such reassignment, the Agent's security interest granted pursuant hereto, as
well as all other rights and remedies of the Agent 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 the Agent and Liens expressly permitted by the Credit Agreement.
30. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF COLLATERAL. The powers
conferred on the Agent 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,
the Agent 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. The Agent 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 the
Agent accords its own property.
31. APPOINTMENT AS COLLATERAL AGENT.
(a) The Agent on behalf of the Lenders and each Selected Revolving Lender
with respect to which a written notice has been received pursuant to SECTION
32(N)(III) hereof hereby appoints Bank of America, N.A. to serve as collateral
agent and representative of the Agent (the "COLLATERAL AGENT") and authorizes
the Collateral Agent to act as agent for the Agent for the purposes of executing
and delivering on its behalf the Collateral Documents and, subject to the
provisions of this Agreement, enforcing the Agent's rights in respect of the
Collateral and the obligations of each Loan Party under the Collateral
Documents.
(b) (i) The Collateral Agent shall have each and every right, power,
privilege or duty expressed or intended by this Agreement or any of the other
Loan Documents to be exercised by or vested in or conveyed to the Agent under
the Collateral Documents, which shall be exercisable by and vest in the
Collateral Agent to the extent necessary or desirable to enable the Collateral
Agent to exercise such rights, powers and privileges and to perform such duties
with respect to such Collateral, and every covenant and obligation contained in
the Loan Documents and necessary to the exercise or performance thereof by the
Collateral Agent shall run to and be enforceable by the Collateral Agent, and
(ii) the provisions of SECTION 25 hereof and of SECTION 13.11 of the Credit
Agreement that refer to the Agent shall inure to the benefit of the Collateral
Agent and all references therein to the Agent shall be deemed to be references
to the Agent and/or the Collateral Agent, as the context may require.
32. MISCELLANEOUS.
(a) REINSTATEMENT; INDEMNITY FOR RETURNED PAYMENTS.
33
(i) This Agreement shall remain in full force and effect and continue
to be effective should any petition be filed by or against any Grantor for
liquidation or reorganization, should such Grantor become insolvent or make
an assignment for the benefit of any creditor or creditors or should a
receiver or trustee be appointed for all or any significant part of such
Grantor's assets.
(ii) If after receipt of any payment which is applied to the payment
of all or any part of the Secured Obligations, the Agent, any Lender or any
Selected Revolving Lender is for any reason compelled to surrender such
payment or proceeds to any Person because such payment or application of
proceeds is invalidated, declared fraudulent, set aside, determined to be
void or voidable as a preference, impermissible setoff, or a diversion of
trust funds, or for any other reason, then the Secured Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had
not been received by the Agent, such Lender or such Selected Revolving
Lender and the Grantors shall be liable to pay to the Agent, the Lenders,
and the Selected Revolving Lenders and hereby does indemnify the Agent, the
Lenders and the Selected Revolving Lenders and hold the Agent, the Lenders
and the Selected Revolving Lenders harmless for the amount of such payment
or proceeds surrendered. The provisions of this SECTION 32(A) shall be and
remain effective notwithstanding any contrary action which may have been
taken by the Agent, any Lender or any Selected Revolving Lender in reliance
upon such payment or application of proceeds, and any such contrary action
so taken shall be without prejudice to the Agent's, the Lenders' and the
Selected Revolving Lenders' rights under this Agreement and shall be deemed
to have been conditioned upon such payment or application of proceeds
having become final and irrevocable. The provisions of this SECTION 32(A)
shall survive the termination of this Agreement.
(b) NOTICES. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give and serve upon any
other party any communication with respect to this Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
given in the manner, and deemed received, as provided for in the Credit
Agreement.
(c) SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
This Agreement is to be read, construed and applied together with the Credit
Agreement and the other Loan Documents which, taken together, set forth the
complete understanding and agreement of the Agent, the Lenders and the Grantors
with respect to the matters referred to herein and therein.
(d) LIMITATION OF LIABILITY. No claim may be made by the Grantors, any
Lender or any Selected Revolving Lender for which the Agent has received the
notice required by SECTION 32(N)(III) hereof or other person against the Agent
or any other Beneficiary, or the
34
Affiliates, directors, officers, employees, counsel, representatives, agents or
attorneys-in-fact of any of them for any special, indirect, consequential or
punitive damages in respect of any claim for breach of contract or any other
theory of liability arising out of or related to the transactions contemplated
by this agreement or any other loan document, or any act, omission or event
occurring in connection therewith, and the Grantors, each Lender and each
Selected Revolving Lender for which the Agent has received the notice required
by SECTION 32(N)(III) hereof hereby waive, release and agree not to xxx upon any
claim for such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.
(e) NO WAIVER; CUMULATIVE REMEDIES. No failure by the Agent or any Lender
to exercise any right, remedy, or option under this Agreement or any present or
future supplement thereto, or in any other agreement between or among any
Borrower and the Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will operate as a waiver thereof. No waiver, alteration,
modification or amendment by the Agent or any Lender will be effective unless it
is in writing and duly executed by the Agent and the Grantors, and then only to
the extent specifically stated. No waiver by the Agent or the Lenders on any
occasion shall affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrowers of any provision of
this Agreement. The Agent and the Lenders may proceed directly to collect the
Secured Obligations without any prior recourse to the Collateral. The Agent's
and each Lender's rights under this Agreement will be cumulative and not
exclusive of any other right or remedy which the Agent or any Lender may have.
(f) LIMITATION BY LAW. All rights, remedies and powers provided in this
Agreement may be exercised only to the extent that the exercise thereof does not
violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law that may be controlling and to be limited to the extent necessary so that
they shall not render this Agreement invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the provisions
of any applicable law.
(g) TERMINATION OF THIS AGREEMENT. Upon the payment in full of all Secured
Obligations (other than inchoate indemnity 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 revert to the applicable
Grantors. Upon any such termination the Agent will, at the Grantors' expense,
execute and deliver to the Grantors such documents as the Grantors shall
reasonably request to evidence such termination. In addition, in connection with
the release of the Agent's security interest over any Collateral as contemplated
by SECTION 12.11 of the Credit Agreement, the Agent will, at the reasonable
request of the relevant Grantor and at its expense, execute such documents as
are necessary to release such security interest.
(h) SUCCESSORS AND ASSIGNS. This Agreement and all obligations of the
Grantors hereunder shall be binding upon the successors and assigns of each
Grantor (including any debtor-in-possession on behalf of such Grantor) and
shall, together with the rights and remedies of the Agent, for the benefit of
the Agent, the Lenders and the Selected Revolving Lenders, hereunder, inure to
the benefit of the Agent, the Lenders and the Selected Revolving Lenders, all
future holders of any instrument evidencing any of the Secured Obligations and
their
35
respective successors and assigns. No sales of participations, other sales,
assignments, transfers or other dispositions of any agreement governing or
instrument evidencing the Secured Obligations or any portion thereof or interest
therein shall in any manner affect the Lien granted to the Agent, for the
benefit of the Agent, the Lenders and the Selected Revolving Lenders, hereunder.
The Grantors may not assign, sell, hypothecate or otherwise transfer any
interest in or obligation under this Agreement. Without limiting the generality
of the foregoing, (A) but subject to the provisions of SECTION 11.2 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 Selected Revolving Lender may assign or otherwise transfer any
Selected Revolving Lender Hedge Agreements to which it is a party to any other
Person in accordance with the terms of such Selected Revolving Lender Hedge
Agreement, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to the Selected Revolving Lenders herein or
otherwise.
(i) ADDITIONAL GRANTORS. The initial Subsidiary Grantors hereunder shall be
such of the Subsidiaries of LS&Co. as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Domestic
Subsidiaries (other than Restricted Subsidiaries) of LS&Co. may become parties
hereto as additional Grantors (each an "ADDITIONAL GRANTOR"), by executing a
counterpart substantially in the form of EXHIBIT II attached hereto (the
"COUNTERPART"). Upon delivery of any such counterpart to the Agent, 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 the Agent not to cause
any Subsidiary of LS&Co. 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.
(j) IP SUPPLEMENTS. If any Grantor shall hereafter obtain rights to any new
IP Collateral or become entitled to the benefit of 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, then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Within 45 days after the end of each Fiscal Quarter of LS&Co. during which any
Grantor files an application for any Patent, such Grantor shall execute and
deliver to the Agent an IP Supplement, substantially in the form of EXHIBIT III
attached hereto (an "IP Supplement"), pursuant to which such Grantor shall grant
to the Agent a security interest to the extent of its interest in such IP
Collateral. In addition, such Grantor shall, prior to the end of such 45-day
period, record the IP Supplement with the United States Patent and Trademark
Office. Upon delivery to the Agent of an IP Supplement, SCHEDULE 1 attached
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 IP Collateral
or any IP Collateral set forth on Schedule A to such IP Supplement. Each Grantor
hereby authorizes the Agent to modify this Agreement without the signature or
consent of any Grantor by attaching SCHEDULE 1, as applicable, that have been
modified to include such IP Collateral or to delete any reference to any right,
title or interest in any IP Collateral in which any Grantor no longer has or
claims any right, title or interest;
36
PROVIDED, the failure of any Grantor to execute an IP Supplement with respect to
any additional IP Collateral pledged pursuant to this Agreement shall not impair
the security interest of the Agent therein or otherwise adversely affect the
rights and remedies of the Agent hereunder with respect thereto. Notwithstanding
the foregoing, no Grantor shall be required to record the security interest of
the Agent in any IP Collateral, if such recordation would result in the grant of
a Patent, or any application therefor, in the name of the Agent.
(k) PLEDGE AMENDMENTS. Each Grantor agrees that it will, upon obtaining any
additional Equity Interest or Debt, promptly (and in any event within five
Business Days) deliver to the Agent a Pledge Amendment, duly executed by such
Grantor, in substantially the form of EXHIBIT IV attached hereto (a "PLEDGE
AMENDMENT"), in respect of the additional Pledged Interests or Pledged Debt to
be pledged pursuant to this Agreement. Upon each delivery of a Pledge Amendment
to the Agent, the representations and warranties contained in clauses SECTIONS
20(A) and 20(B) hereof shall be deemed to have been made by such Grantor as to
the Pledged Collateral described in such Pledge Amendment as of the date
thereof. Each Grantor hereby authorizes the Agent to attach each Pledge
Amendment to this Agreement and agrees that all Pledged Interests or Pledged
Debt of such Grantor listed on any Pledge Amendment shall for all purposes
hereunder be considered Pledged Collateral of such Grantor; PROVIDED, the
failure of any Grantor to execute a Pledge Amendment with respect to any
additional Pledged Interests or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of the Agent therein or otherwise
adversely affect the rights and remedies of the Agent hereunder with respect
thereto.
(l) 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 the Agent and, in the case of any such amendment or modification,
by the Grantors; PROVIDED that this Agreement may be modified by the execution
of a counterpart by an Additional Grantor in accordance with SECTION 32(I)
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.
(m) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, each Grantor and the Borrowers in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; 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.
(n) THE AGENT AS AGENT.
(i) The Agent has been appointed to act as Agent hereunder by the
Lenders. The Agent 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, solely in
accordance with this Agreement and the Credit Agreement.
37
(ii) The Agent shall at all times be the same Person that is the
Agent under the Credit Agreement. Written notice of resignation by the
Agent pursuant to SECTION 12.9 of the Credit Agreement shall also
constitute notice of resignation as Agent under this Agreement; and
appointment of a successor agent pursuant to SECTION 12.9 of the Credit
Agreement shall also constitute appointment of a successor Agent under this
Agreement. Upon the acceptance of any appointment as agent under SECTION
12.9 of the Credit Agreement by a successor agent, that successor agent
shall thereupon succeed to become vested with all the rights, powers,
privileges and duties of the retiring Agent under this Agreement, and the
retiring Agent under this Agreement shall promptly (i) transfer to such
successor Agent all sums held hereunder, together with all records and
other documents necessary or appropriate in connection with the performance
of the duties of the successor Agent under this Agreement and (ii) take
such other actions as may be necessary or appropriate in connection with
the assignment to such successor Agent of the rights created hereunder,
whereupon such retiring Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Agreement shall inure to its
benefits as to any actions taken or omitted to be taken by it under this
Agreement while it was the Agent hereunder.
(iii) The Agent shall not be deemed to have any duty whatsoever with
respect to any Selected Revolving Lender until it shall have received
written notice in form and substance satisfactory to the Agent from a
Grantor or the Selected Revolving Lender as to the existence and terms of
the applicable Selected Revolving Lender Hedge Agreement or Selected
Revolving Lender Cash Management Services and unless such Selected
Revolving Lender has satisfied the requirements of the proviso in SECTION
3.7 of the Credit Agreement. Each such Selected Revolving Lender, by its
acceptance of the benefits hereof, hereby appoints the Agent as Agent for
such Selected Revolving Lender for purposes of this Agreement.
(o) GOVERNING LAW.
(i) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND
LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT
PERFECTION ISSUES WITH RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO
APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE
UCC) OF THE STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE OTHER
BENEFICIARIES SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES OF AMERICA LOCATED IN LOS ANGELES
COUNTY, CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH
OF THE
38
GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES CONSENTS, FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN
RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING
THE FOREGOING: (1) THE AGENT AND THE OTHER BENEFICIARIES SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST EACH GRANTOR OR ITS
PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT OR THE OTHER
BENEFICIARIES DEEM NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE THIS
AGREEMENT AND (2) EACH OF THE GRANTORS, THE AGENT AND THE OTHER
BENEFICIARIES ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN
THE IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED
OUTSIDE THOSE JURISDICTIONS.
(iii) EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE
BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO EACH GRANTOR AT
ITS ADDRESS SET FORTH ON THE SIGNATURE PAGES HEREOF AND SERVICE SO MADE
SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE
BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED
HEREIN SHALL AFFECT THE RIGHT OF THE AGENT OR THE OTHER BENEFECIARIES TO
SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(iv) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, ARISING
OUT OF OR RELATING TO THIS AGREEMENT INCLUDING ANY CLAIM BASED ON OR
ARISING FROM AN ALLEGED TORT, SHALL AT THE REQUEST OF ANY PARTY HERETO BE
DETERMINED BY BINDING ARBITRATION. The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under
the Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in determining
any claim. Any controversy concerning whether an issue is arbitrable shall
be determined by the arbitrator(s). Judgment upon the arbitration award may
be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuant to a provisional
or ancillary remedy shall not constitute a waiver of the right of either
party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
39
(v) Notwithstanding the provisions of (iv) above, no controversy or
claim shall be submitted to arbitration without the consent of all parties
if, at the time of the proposed submission, such controversy or claim
arises from or related to an obligation to any Beneficiary which is secured
by real estate property collateral (exclusive of real estate space lease
assignments). If all the parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in SECTION 32(O)(VI) hereof.
(vi) At the request of any party a controversy or claim which is not
submitted to arbitration as provided and limited in SECTIONS 33(O)(IV) and
33(O)(V) hereof shall be determined by judicial reference. If such an
election is made, the parties shall designate to the court a referee or
referees selected under the auspices of the AAA in the same manner as
arbitrators are selected in AAA-sponsored proceedings. The presiding
referee of the panel, or the referee if there is a single referee, shall be
an active attorney or retired judge. Judgment upon the award rendered by
such referee or referees shall be entered in the court in which such
proceeding was commenced.
(vii) No provision of SECTIONS 33(O)(IV) through 33(O)(VII) hereof
shall limit the right of the Agent or the other Beneficiaries to exercise
self-help remedies such as setoff, foreclosure against or sale of any real
or personal property collateral or security, or obtaining provisional or
ancillary remedies from a court of competent jurisdiction before, after, or
during the pendency of any arbitration or other proceeding. The exercise of
a remedy does not waive the right of either party to resort to arbitration
or reference. At the Agent's option, foreclosure under a deed of trust or
mortgage may be accomplished either by exercise of power of sale under the
deed of trust or mortgage or by judicial foreclosure.
(p) WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION 33(O), THE
GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES EACH IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GRANTORS, THE AGENT AND THE
OTHER BENEFICIARIES EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
40
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
(q) SECTION TITLES. The Section titles contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
(r) NO STRICT CONSTRUCTION. The parties hereto have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any provisions of this Agreement.
(s) ADVICE OF COUNSEL. Each of the parties represents to each other party
hereto that it has discussed this Agreement and, specifically, the provisions of
SECTIONS 33(O) and 33(P) hereof, with its counsel.
(t) BENEFIT OF THE LENDERS AND THE SELECTED REVOLVING LENDERS. (i) All
Liens granted or contemplated hereby shall be for the benefit of the Agent, the
Lenders and the Selected Revolving Lenders, and all proceeds or payments
realized from Collateral in accordance herewith shall be applied to the Secured
Obligations in accordance with the terms of the Credit Agreement; and (ii) in
the event that any Lien hereunder is released by the Agent under the Credit
Agreement for any reason, such release shall be effective to release such Lien
with respect to all Obligations (including all obligations of LS&Co., LSIFCS and
each Material Domestic Subsidiary of LS&Co. under the Selected Revolving Lender
Hedge Agreements and any and all obligations of LS&Co. and each of its
Subsidiaries incurred in connection with the Selected Revolving Lender Cash
Management Services).
(u) FIRST PRIORITY LIEN. The Lien created by this Agreement is primary to
the Lien in favor of the Term Loan Agent, created pursuant to the Term Loan
Security Agreement and is subject to the terms of the Intercreditor Agreement.
To the extent there is any conflict between the terms of this Agreement and the
terms of the Intercreditor Agreement, the Intercreditor Agreement shall govern.
41
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered by its duly authorized officer as of the
date first set forth above.
[GRANTOR]
By:___________________________
Name:_________________________
Title:________________________
BANK OF AMERICA, N.A.,
as Agent
By:___________________________
Name:_________________________
Title:________________________
S-1
EXHIBIT I TO
PLEDGE AND SECURITY AGREEMENT
[FORM OF] GRANT OF PATENT SECURITY INTEREST
WHEREAS, [NAME OF GRANTOR], a _____________ corporation
("GRANTOR"), owns and uses in its business, and will in the future adopt and so
use, various intangible assets, including the Patent Collateral (as defined
below); and
WHEREAS, Levi Xxxxxxx & Co., a Delaware corporation ("LS&CO."),
and Levi Xxxxxxx Financial Center Corporation, a California corporation ("LSFCC"
and, together with LS&Co., the "BORROWERS"), have entered into that certain
Credit Agreement dated as of September 29, 2003 among the Borrowers, the several
financial institutions from time to time party thereto (the "LENDERS") and Bank
of America, N.A., as agent (in such capacity, the "AGENT") for the Lenders (as
such agreement may be amended, restated, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"; the terms defined therein and not
otherwise defined herein being used herein as therein defined);
WHEREAS, LS&Co., Levi Xxxxxxx International Group Finance
Coordination Services Comm V.A., a Belgian corporation, or any successor thereto
("LSIFCS") and certain Material Domestic Subsidiaries of LS&Co. may from time to
time enter, or may from time to time have entered, into one or more Selected
Revolving Lender Hedge Agreements in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of LS&Co., LSIFCS and such
Material Domestic Subsidiaries under the Selected Revolving Lender Hedge
Agreements, including the obligation of LS&Co., LSIFCS and such Material
Domestic Subsidiaries to make payments thereunder in the event of early
termination or close out thereof, together with all obligations of the Borrowers
under the Credit Agreement and the other Loan Documents, be secured until the
payment in full of all Obligations under the Credit Agreement and the other Loan
Documents, the cancellation or expiration of all Letters of Credit and the
termination of the Commitments;
WHEREAS, LS&Co. and certain of its Subsidiaries may from time to
time enter, or may from time to time have entered, into one or more arrangements
for Selected Revolving Lender Cash Management Services in accordance with the
terms of the Credit Agreement, and it is desired that the obligations of LS&Co.
and such Subsidiaries arising in connection with such Selected Revolving Lender
Cash Management Services, together with all obligations of the Borrowers under
the Credit Agreement and the other Loan Documents, be secured until the payment
in full of all Obligations (excluding any and all obligations of LS&Co., LSIFCS
and each Material Domestic Subsidiary of LS&Co. under the Selected Revolving
Lender Hedge Agreements and any and all obligations of LS&Co. and each of its
Subsidiaries incurred in connection with the Selected Revolving Lender Cash
Management Services) under the Credit Agreement and the other Loan Documents,
the cancellation or expiration of all Letters of Credit and the termination of
the Commitments;
WHEREAS, Agent and Bank of America, N.A., in its capacity as
administrative agent (in such capacity, the "TERM LOAN AGENT") for the several
financial institutions party from
I-1
time to time to the Credit Agreement dated as of September 29, 2003, (as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time, the "TERM LOAN AGREEMENT"), have entered into that certain
Intercreditor Agreement dated as of September 29, 2003, (as such agreement may
be amended, restated, supplemented or otherwise modified from time to time, the
"INTERCREDITOR AGREEMENT"); and
WHEREAS, pursuant to the terms of that certain Pledge and
Security Agreement dated of even date with the Credit Agreement, entered into in
connection with the Credit Agreement, by the Borrowers, certain direct and
indirect subsidiaries of LS&Co. and the Agent for the Lenders and certain other
financial institutions (together with the Agent, the "SECURITY BENEFICIARIES")
(as such agreement may be amended, restated, supplemented or otherwise modified
from time to time, the "SECURITY AGREEMENT"), Grantor has agreed to create in
favor of the Agent a priority secured and protected interest in, and the Agent
has agreed to become a secured creditor with respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Security Agreement, Grantor hereby grants to the Agent a
priority security interest in all of Grantor's right, title and interest in and
to the following, in each case whether now or hereafter existing or in which
Grantor now has or hereafter acquires an interest and wherever the same may be
located (the "PATENT COLLATERAL"):
(i) 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 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 Grantor in whole or in part (including the patents and patent
applications set forth on Schedule A attached hereto), 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 Grantor or in
the name of the Agent 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"), it being
understood that the rights and interests included in the Patent Collateral
hereby shall include, without limitation, all rights and interests pursuant
to licensing or other contracts in favor of Grantor pertaining to patent
applications and patents presently or in the future owned or used by third
parties but, in the case of third parties which are not Affiliates of
Grantor, only to the extent permitted by such licensing or other contracts
and, if not so permitted, only with the consent of such third parties; and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Patent Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not the Agent 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 Patent Collateral. For purposes of this Grant of Patent Security
Interest, the
I-2
term "proceeds" includes whatever is receivable or received when
Patent Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or
involuntary.
Grantor does hereby further acknowledge and affirm that the
rights and remedies of the Agent with respect to the security interest in the
Patent Collateral granted hereby are more fully set forth in the Security
Agreement, the terms and provisions of which are incorporated by reference
herein as if fully set forth herein.
[SIGNATURE APPEARS ON FOLLOWING PAGE]
I-3
IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security
Interest to be duly executed and delivered by its officer thereunto duly
authorized as of the ___ day of __________, ____.
[NAME OF GRANTOR]
By:___________________________
Name:_________________________
Title:________________________
I-4
STATE OF ______________)
)
COUNTY OF _____________)
On ____________________________, 2003, before me,
________________, a Notary Public in and for said State, personally appeared
________________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to
the within instrument and acknowledged to me that he/she/they executed the same
in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity on behalf of which
the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
Signature_____________________
I-5
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
PATENTS ISSUED:
PATENT NO. ISSUE DATE INVENTION INVENTOR
PATENTS PENDING:
Applicant's Date Application
NAME FILED NUMBER INVENTION INVENTOR
I-6
EXHIBIT II TO
PLEDGE AND SECURITY AGREEMENT
[FORM OF] COUNTERPART
COUNTERPART (this "COUNTERPART"), dated as of _______, is delivered
pursuant to SECTION 32(I) of the Pledge and Security Agreement referred to
below. The undersigned hereby agrees that this Counterpart may be attached to
the Pledge and Security Agreement, dated as of September 29, 2003 (said Pledge
and Security Agreement, as it may hereafter be amended, supplemented, restated
or otherwise modified from time to time, being the "PLEDGE AND SECURITY
AGREEMENT"; the terms defined therein and not otherwise defined herein being
used herein as therein defined), among Levi Xxxxxxx & Co., the other Grantors
named therein and Bank of America, N.A., as Agent. The undersigned by executing
and delivering this Counterpart hereby becomes a Grantor under the Pledge and
Security Agreement in accordance with SECTION 32(I) thereof and agrees to be
bound by all of the terms thereof. Without limiting the generality of the
foregoing, the undersigned hereby:
(i) authorizes the Agent to add the information set forth on the
Schedules to this Agreement to the correlative Schedules attached to the Pledge
and Security Agreement1;
(ii) agrees that all Collateral of the undersigned, including the items of
property set forth on the Schedules hereto, shall become part of the Collateral
and shall secure all Secured Obligations; and
(iii) makes the representations and warranties set forth in the Pledge and
Security Agreement, as amended hereby, to the extent relating to the
undersigned.
[NAME OF ADDITIONAL GRANTOR]
By: ___________________________
Name:
Title:
II-1
EXHIBIT III TO
PLEDGE AND SECURITY AGREEMENT
[FORM OF] IP SUPPLEMENT
This IP SUPPLEMENT, dated as of _______, is delivered pursuant to and
supplements (i) the Pledge and Security Agreement, dated as of September 29,
2003 (said Pledge and Security Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
"PLEDGE AND SECURITY AGREEMENT"), among Levi Xxxxxxx & Co., the other Grantors
named therein and Bank of America, N.A., as Agent, and (ii) the Grant of Patent
Security Interest dated as of September 29, 2003 (said Grant of Patent Security
Interest, as it may hereafter be amended, supplemented, restated or otherwise
modified from time to time, being the "GRANT"; the terms defined therein and not
otherwise defined herein being used herein as therein defined) executed by the
Grantor.
["Grantor"] grants to the Agent a security interest in all of the
Grantor's right, title and interest in and to the Patent Collateral set forth on
Schedule A attached hereto. All such Patent Collateral shall be deemed to be
part of the Patent Collateral and shall be hereafter subject to each of the
terms and conditions of the Pledge and Security Agreement and the Grant.
IN WITNESS WHEREOF, the Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of ______________.
[GRANTOR]
By:_____________________
Name:
Title:
III-1
EXHIBIT IV TO
PLEDGE AND SECURITY AGREEMENT
[FORM OF] PLEDGE AMENDMENT
This Pledge Supplement, dated as of __________________, is delivered
pursuant to the Pledge and Security Agreement, dated as of September 29, 2003
between ____________________, a _______________ ("GRANTOR"), the other Grantors
named therein and Bank of America, N.A., as Agent (said Pledge and Security
Agreement, as it may hereafter be amended, supplemented, restated or otherwise
modified from time to time, being the "PLEDGE AND SECURITY AGREEMENT"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined).
The Grantor hereby agrees that the [Pledged Interests] [Pledged Debt]
set forth on the schedule attached hereto shall be deemed to be part of the
[Pledged Interests] [Pledged Debt] and shall become part of the Pledged
Collateral and shall secure all Secured Obligations.
IN WITNESS WHEREOF, the Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of _______________.
[GRANTOR]
By: ___________________________
Name:
Title:
IV-1
