Exhibit 10.2
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
          SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, dated as of
October 11, 2007 (the “Agreement”), among LEVI STRAUSS & CO., a Delaware
corporation (“LS&Co”), and LEVI STRAUSS 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 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 First Amended
and Restated Credit Agreement dated as of May 18, 2006 among the Borrowers, the
Lenders and the Agent for the Lenders (the “First Amended and Restated Credit
Agreement”);
          WHEREAS, the Lenders, at the request of the Borrowers, agreed to amend
and restate the First Amended and Restated Credit Agreement in its entirety and
the Borrowers have entered into that certain Second Amended and Restated Credit
Agreement dated as of October 11, 2007 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 Strauss 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

 

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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 First Amended and Restated Subsidiary Guaranty dated as of October 11,
2007 (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, in order to induce the Agent and the Lenders to amend and
restate the First Amended and Restated Credit Agreement and to continue to make
the Loans and issue Letters of Credit as provided for in the Credit Agreement,
and to induce the Selected Revolving Lenders to continue to enter into the
Selected Revolving Lender Hedge Agreements and to continue to provide the
Selected Revolving Lender Cash Management Services, the Grantors have agreed to
amend and restate that certain First Amended and Restated Pledge and Security
Agreement dated as of May 18, 2006 and to continue to provide for a continuing
Lien on the Collateral (as hereinafter defined) to secure the Secured
Obligations (as hereinafter defined);
          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.
          “Deposit Accounts” means all “deposit accounts” as such term is
defined in the UCC, now or hereafter held in the name of any Grantor.

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          “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 in the United States.
          “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, Patent 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 IP Facility
Collateral or the Trademark Subfacility Collateral.
          “Goods” means all “goods”, as defined in the UCC, now owned or
hereafter acquired by any Grantor, wherever located in the United States,
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.
          “Inventory” means all now owned or hereafter acquired inventory, goods
and merchandise of any Grantor, wherever located in the United States, 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.

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          “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 Facility Agent” means the agent for the lenders to an IP Facility.
          “IP Facility Security Agreement” means a security agreement executed
in connection with an IP Facility which grants the lenders thereto a first
priority lien on all or a portion of the IP Facility Collateral.
          “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.
          “Patent Collateral” means all rights, title and interest in and to all
patents and patent applications and rights and interests in patents and patent
applications under any law of the United States 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 law of the United States 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 updated from time to
time in accordance with Section 32(j) hereof), 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 sue 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 Patent 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.
          “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 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;

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          “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 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.
          “Trademark Subfacility Collateral” means, collectively, the
“Collateral” as defined in the Trademark Security Agreement.
          “UCC” means the Uniform Commercial Code, as in effect from time to
time, of the State of New York 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
continues to provide to the Agent, for the benefit of the Beneficiaries, a
continuing security interest in and lien on all of the following property and
assets of such Grantor, whether now owned or existing or hereafter acquired or
arising, regardless of where located in the United States:
          (i) all Accounts;
          (ii) all Inventory;
          (iii) all contract rights;
          (iv) all Chattel Paper;

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          (v) all Documents;
          (vi) all Instruments;
          (vii) all Supporting Obligations and Letter-of-Credit Rights;
          (viii) all General Intangibles (including Patent Collateral, payment
intangibles and Software);
          (ix) all Goods;
          (x) all Equipment;
          (xi) all Investment Property;
          (xii) 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 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;
          (xiii) 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;
          (xiv) 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;
          (xv) 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;
          (xvi) 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 and other property and General Intangibles at any
time evidencing or relating to any of the foregoing; and
          (xvii) 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.”

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          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 other 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 IP
Facility Collateral, (v) any Equity Interests of any Foreign Subsidiary,
(vi) Equipment subject to an Equipment Financing Transaction permitted under the
Credit Agreement, or (vii) any Trademark Subfacility Collateral.
          (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 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 Domestic 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

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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 Domestic 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 3.12 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 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

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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 New
York 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 New York 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.

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          (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 Full Payment of all Secured Obligations, 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 Borrowing Base 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 New York.
          (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.
     5. LOCATION OF COLLATERAL. 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 Inventory 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 Inventory 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

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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 mills, in-transit Inventory and
bill and hold Inventory) is, and covenants that all of its Inventory (other than
Inventory located at contractors’ premises or mills, in-transit Inventory and
bill 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 Amendment 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 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) except as expressly permitted by the Credit Agreement,
such Grantor owns its interests in the Collateral free and clear of any Lien;
(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.

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     8. APPRAISALS.
          (a) (i) On or prior to the Trademark Subfacility Payoff Date, (A) if
the Minimum Excess Availability Amount is less than $100,000,000 at any time
during any Fiscal Year, no more than three (3) times during such Fiscal Year,
(B) if the Minimum Excess Availability Amount is equal to or greater than
$100,000,000 at all times during any Fiscal Year but less than $125,000,000 at
any time during any Fiscal Year, no more than two (2) times during such Fiscal
Year, or (C) if the Minimum Excess Availability Amount is equal to or greater
than $125,000,000 at all times during any Fiscal Year, no more than one (1) time
during such Fiscal Year, or (ii) after the Trademark Subfacility Payoff Date,
(A) during any Minimum Excess Availability Period, no more than one (1) time
each Fiscal Year, or (B) during any other period, no more than two (2) times
each Fiscal Year, the Agent may, in its reasonable discretion, 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; provided, however, that subject to
Section 8(b) hereof, after the Trademark Subfacility Payoff Date no more than
two (2) such appraisals or updates may be arranged for in any given Fiscal Year.
          (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.
          (a) (i) On or prior to the Trademark Subfacility Payoff Date, (A) if
the Minimum Excess Availability Amount is less than $100,000,000 at any time
during any Fiscal Year, no more than three (3) times during such Fiscal Year,
(B) if the Minimum Excess Availability Amount is equal to or greater than
$100,000,000 at all times during any Fiscal Year but less than $125,000,000 at
any time during any Fiscal Year, no more than two (2) times during such Fiscal
Year, or (C) if the Minimum Excess Availability Amount is equal to or greater
than $125,000,000 at all times during any Fiscal Year, no more than one (1) time
during such Fiscal Year, or (ii) after the Trademark Subfacility Payoff Date,
(A) during any Minimum Excess Availability Period, no more than one (1) time
each Fiscal Year, or (B) during any other period, no more than three (3) times
each Fiscal Year, the Agent may, in its reasonable discretion and upon ten
(10) days notice to the relevant Grantor, accompanied by any Lender which so
elects, 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; provided,
however, that subject to Section 9(b) hereof, after the Trademark Subfacility
Payoff Date no more than three (3) such examinations and inspections may occur
in any given Fiscal Year. 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

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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.
          (b) Whenever a Default or Event of Default exists, the Agent may, with
or without notice referenced in Section 9(a) hereof, at each Grantor’s expense
and at the Agent’s discretion, arrange for such examinations, inspections,
audits and making of extracts from or copies of any such records, files, and
books of account and the Collateral.
     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 PATENT COLLATERAL.
          (a) Each Grantor shall:
          (i) diligently keep reasonable records respecting the Patent
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 Patent
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.

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          (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 Patent 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 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 Patent 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 Patent
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 Patent Collateral, the Trademark Subfacility
Collateral and the IP Facility 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

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construed to limit such Grantor’s ability to take reasonable steps, in
accordance with its then current business practices, to protect and preserve the
Trademark Subfacility Collateral and the IP Facility Collateral. 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
Patent Collateral (or which were so utilized during the prior six month period),
and to inspect the quality control and all other records relating thereto upon
reasonable advance written notice to such Grantor and at reasonable dates and
times and as often as may be reasonably requested. If and to the extent that any
Grantor is permitted to license the Patent Collateral, the Agent shall promptly
enter into a non-disturbance agreement or other similar arrangement, at such
Grantor’s request and expense, with such Grantor and any licensee of any Patent
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 Patent 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 Foreign Subsidiary,
then such Grantor shall not be required to pledge outstanding Equity Interests
of such surviving or resulting Person;
          (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

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this clause (iii) to the contrary, no Grantor shall be required to pledge the
outstanding Equity Interests of any Foreign Subsidiary or 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;
          (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 monthly basis by the 20th day of each month, or more
frequently if requested by the Agent:
          (i) a 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;
          (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; and

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          (iv) a detailed calculation of Eligible Accounts as of the end of the
immediately preceding month.
          (b) On a monthly basis, by the Wednesday of the fourth Fiscal Week of
each Fiscal Month, or more frequently if requested by the Agent:
          (i) a monthly Inventory report by category and location; and
          (ii) a detailed calculation of Eligible Inventory as of the end of the
immediately preceding month.
          (c) During any period other than a Minimum Excess Availability Period,
on a weekly basis by the second Business Day of each week, or more frequently at
the option of the Borrowers:
          (i) a 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.
          (d) During any period other than a Minimum Excess Availability Period,
on a weekly basis by the second Business Day of each week, an Inventory report,
in form and substance agreed upon by LS&Co and the Agent, for the immediately
preceding week by category and location corresponding to the Borrowers’
perpetual records.
          (e) 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.

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     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, 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

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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.
          (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. In addition, the Grantors shall maintain 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

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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;
          (c) during any period other than a Cash Dominion Period, all payments
received by the Agent in the lock-box service or Payment Account will be
credited to the Operating Account (conditioned upon final collection); during
any Cash Dominion Period, all payments received by the Agent in the lock-box
service or Payment Account 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); and
          (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 bill 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.

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          (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.
          (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. PATENT 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, as updated from time to
time in accordance with Section 32(j) hereof; and
          (b) after reasonable inquiry, such Grantor is not aware of any pending
or threatened claim by any third party that any of the Patent Collateral owned,
held or used by such Grantor is invalid or unenforceable that is reasonably
likely to have a Material Adverse Effect.
     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

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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 thereof, 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,
(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.

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          (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.
     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;

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          (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 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 Full Payment of the Secured 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:

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          (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 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, bill 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;

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          (j) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, sue 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;
          (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 termination of the Credit Agreement and Full Payment of
the Obligations.
     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, sue 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

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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 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

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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, 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 discharge of the Grantors’
other Secured Obligations upon Full Payment thereof 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.

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     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 Beneficiaries), 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 Agent or any Lender

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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

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Securities Act 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 Agent in
the collection or disposition of any of the Collateral. Such Grantor

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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 28(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 28(f).
     29. ADDITIONAL REMEDIES FOR PATENT 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 Patent 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 13.12 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 Patent 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
Patent 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 Patent 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 Patent 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 Patent
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

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assignments as may 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 13.12 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.
          (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

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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 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

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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 sue 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 Full Payment of all Secured
Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, the security
interest granted hereby shall terminate and all rights to the Collateral shall
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 respective successors and assigns. No sales of participations, other
sales, assignments, transfers or other dispositions of any agreement governing
or instrument evidencing the Secured

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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) Patent Supplements. If any Grantor shall hereafter obtain rights
to any new Patent 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 a Patent Supplement, substantially in the form
of Exhibit III attached hereto (a “Patent Supplement”), pursuant to which such
Grantor shall grant to the Agent a security interest to the extent of its
interest in such Patent Collateral. In addition, such Grantor shall, prior to
the end of such 45-day period, record the Patent Supplement with the United
States Patent and Trademark Office. Upon delivery to the Agent of a Patent
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 Patent Collateral or any Patent Collateral set forth on
Schedule A to such Patent 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
Patent Collateral or to delete any reference to any right, title or interest in
any Patent Collateral in which any Grantor no longer has or claims any right,
title or interest; provided, the failure of any Grantor to execute a Patent
Supplement with respect to any additional Patent Collateral pledged pursuant to
this

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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 Patent Collateral, if such
recordation would result in the grant of a Patent, or any application therefor,
in the name of the Agent.
          (k) Pledge Supplements. 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 Supplement, duly
executed by such Grantor, in substantially the form of Exhibit IV attached
hereto (a “Pledge Supplement”), in respect of the additional Pledged Interests
or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to the Agent, the representations and warranties contained
in 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 Supplement as of
the date thereof. Each Grantor hereby authorizes the Agent to attach each Pledge
Supplement to this Agreement and agrees that all Pledged Interests or Pledged
Debt of such Grantor listed on any Pledge Supplement shall for all purposes
hereunder be considered Pledged Collateral of such Grantor; provided, the
failure of any Grantor to execute a Pledge Supplement with respect to any
additional Pledged Interests or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of 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; Effectiveness of Signatures. This Agreement may be
executed in any number of counterparts, and by the Agent and each Grantor 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. This Agreement and notices under this Agreement may be transmitted
and/or signed by telefacsimile. The effectiveness of any such documents and
signatures shall, subject to applicable law, have the same force and effect as
an original copy with manual signatures and shall be binding on all Grantors and
Beneficiaries. The Agent may also require that any such document and signature
be confirmed by a manually-signed copy thereof; provided, however, that the
failure to request or deliver any such manually-signed copy shall not affect the
effectiveness of any facsimile document or signature.
          (n) The Agent as Agent.

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          (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.
          (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 benefit
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 Section 3.12 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 GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT
TO FEDERAL LAWS RELATING TO NATIONAL BANKS).
          (ii) EACH GRANTOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF
ANY FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK CITY,
IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO THIS AGREEMENT, AND AGREES
THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH

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COURT. EACH GRANTOR IRREVOCABLY WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT
IT MAY HAVE REGARDING SUCH COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION,
VENUE OR INCONVENIENT FORUM. Nothing herein shall limit the right of the Agent
or any Beneficiary to bring proceedings against any Grantor in any other court.
Nothing in this Agreement shall be deemed to preclude enforcement by the Agent
of any judgment or order obtained in any forum or jurisdiction.
          (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 SUCH 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.
          (p) Waiver of Jury Trial. 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 32(p) 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 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

39

--------------------------------------------------------------------------------

 

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 32(o) and 32(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 shall be
primary to any Lien in favor of an IP Facility Agent, created pursuant to an IP
Facility Security Agreement and shall be 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.
[signatures follow]

40

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          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.

                  LEVI STRAUSS & CO.    
 
           
 
  By:   /s/ Paul Smith    
 
           
 
  Name:   Paul Smith    
 
  Title:   Vice President, Tax and Treasury    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS FINANCIAL CENTER CORPORATION    
 
           
 
  By:   /s/ Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Treasurer    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  BATTERY STREET ENTERPRISES, INC.    
 
           
 
  By:   /s/ Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

S-1

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                  HARTWELL COMMODITIES GROUP    
 
           
 
  By:   /s/ Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS GLOBAL FULFILLMENT
SERVICES, INC.    
 
           
 
  By:   /s/ Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS INTERNATIONAL    
 
           
 
  By:   /s/ Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

S-2

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                  LEVI STRAUSS INTERNATIONAL, INC.    
 
           
 
  By:   /s/  Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS RECEIVABLES FUNDING, LLC    
 
           
 
  By:   /s/  Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS SECURITIZATION CORP.    
 
           
 
  By:   /s/  Paul Smith    
 
           
 
  Name:   Paul Smith    
 
         
 
  Title:   Vice President    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS SERVICES INC.    
 
           
 
  By:   /s/  Miguel Silva Gonzales    
 
           
 
  Name:   Miguel Silva Gonzales    
 
         
 
  Title:   Treasurer    
 
         

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

S-3

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                  LEVI STRAUSS, U.S.A., LLC    
 
           
 
  By:   /s/ Paul Smith     
 
           
 
  Name:   Paul Smith     
 
           
 
  Title:   Vice President     
 
           

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI STRAUSS-ARGENTINA, LLC    
 
           
 
  By:   /s/ Paul Smith     
 
           
 
  Name:   Paul Smith     
 
           
 
  Title:   Vice President     
 
           

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  LEVI’S ONLY STORES, INC.    
 
           
 
  By:   /s/ Paul Smith     
 
           
 
  Name:   Paul Smith     
 
           
 
  Title:   Vice President     
 
           

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  NF INDUSTRIES, INC.    
 
           
 
  By:   /s/ Paul Smith     
 
           
 
  Name:   Paul Smith     
 
           
 
  Title:   Vice President     
 
           

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

S-4

--------------------------------------------------------------------------------

 

                  LEVI’S ONLY STORES GEORGETOWN, LLC    
 
           
 
  By:        /s/ Paul Smith    
 
           
 
  Name:        Paul Smith    
 
           
 
  Title:          Vice President    
 
           

             
 
  Address:   Levi’s Plaza    
 
      1155 Battery Street    
 
      San Francisco, CA 94111    

                  BANK OF AMERICA, N.A.,
as the Agent    
 
           
 
  By:   /s/ David Knoblauch     
 
           
 
  Name:   David Knoblauch    
 
  Title:   Senior Vice President    

S-5

--------------------------------------------------------------------------------

 

SCHEDULE 1
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Patents
[To Be Provided by Grantors]

1-1

--------------------------------------------------------------------------------

 

SCHEDULE 2(a)
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Pledged Interests
[To Be Provided by Grantors]

2(a)-1

--------------------------------------------------------------------------------

 

SCHEDULE 2(b)
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Pledged Debt
[To Be Provided by Grantors]

2(b)-1

--------------------------------------------------------------------------------

 

SCHEDULE 3
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Office Locations; Jurisdiction of Organization; Names
[To Be Provided by Grantors]

3-1

--------------------------------------------------------------------------------

 

SCHEDULE 4
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Location of Collateral
[To Be Provided by Grantors]

4-1

--------------------------------------------------------------------------------

 

SCHEDULE 5
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Other Names
[To Be Provided by Grantors]

5-1

--------------------------------------------------------------------------------

 

SCHEDULE 6
TO
SECOND AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
Filing Offices
[To Be Provided by Grantors]

6-1

--------------------------------------------------------------------------------

 

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 Strauss & Co., a Delaware corporation (“LS&Co”), and
Levi Strauss Financial Center Corporation, a California corporation (together
with LS&Co, the “Borrowers”), have entered into that certain Second Amended and
Restated Credit Agreement dated as of October 11, 2007 among the Borrowers, the
financial institutions from time to time party thereto (the “Lenders”) and Bank
of America, N.A., as administrative 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, pursuant to the terms of that certain Second Amended and
Restated Pledge and Security Agreement, dated of October 11, 2007, among the
Grantor, other grantors party thereto and the Agent for the Lenders (as such
agreement may be amended, restated, supplemented or otherwise modified from time
to time, the “Second Amended and Restated Pledge and Security Agreement”),
Grantor has agreed to continue to provide in favor of the Agent a first priority
secured and protected interest in, and the Agent has agreed to become a secured
creditor with respect to, the Patent Collateral;
          WHEREAS, LS&Co, Levi Strauss 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 of the Second Amended and Restated Pledge and Security
Agreement;
          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 of the Second Amended and Restated Pledge and Security
Agreement;

I-A-1

--------------------------------------------------------------------------------

 

          WHEREAS, the Domestic Subsidiaries of LS&Co have entered into that
certain First Amended and Restated Subsidiary Guaranty dated as of October 11,
2007, as amended, restated, supplemented or otherwise modified from time to
time, in favor of and for the benefit of the Agent, as agent for and
representative of the Lenders and the Selected Revolving Lenders;
          NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Second Amended and Restated Pledge Security Agreement, Grantor hereby
continues to provide to the Agent, for the benefit of the Beneficiaries, a
continuing security interest in and lien on all of the following property and
assets of such Grantor, whether now owned or existing or hereafter acquired or
arising, regardless of where located (the “Patent Collateral”):
(i) all rights, title and interest in and to all patents and patent applications
and rights and interests in patents and patent applications under any law of the
United States 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 law of the United States 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 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 sue 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 Patent 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;
(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 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 Second Amended and
Restated Pledge and 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-A-2

--------------------------------------------------------------------------------

 

     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-A-3

--------------------------------------------------------------------------------

 

SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
Patents Issued:

              Patent No.   Issue Date   Invention   Inventor(s)
 
           

Patents Pending:

                  Applicant’s   Date   Application         Name   Filed   Number
  Invention   Inventor(s)
 
               

I-A-1

--------------------------------------------------------------------------------

 

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 Second Amended and Restated Pledge
and Security Agreement referred to below. The undersigned hereby agrees that
this Counterpart may be attached to the Second Amended and Restated Pledge and
Security Agreement, dated as of October 11, 2007 (said Second Amended and
Restated Pledge and Security Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
“Second Amended and Restated Pledge and Security Agreement”; the terms defined
therein and not otherwise defined herein being used herein as therein defined),
among Levi Strauss & Co. and Levi Strauss Financial Center Corporation, 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 Second Amended and Restated 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 Second Amended
and Restated 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 Second
Amended and Restated Pledge and Security Agreement, as amended hereby, to the
extent relating to the undersigned.

                  [NAME OF ADDITIONAL GRANTOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

 

1   The Schedules to the Counterpart should include copies of all Schedules that
identify collateral to be granted by the Additional Grantor.

II-1

--------------------------------------------------------------------------------

 

EXHIBIT III TO
PLEDGE AND SECURITY AGREEMENT
[FORM OF] PATENT SUPPLEMENT
          This PATENT SUPPLEMENT, dated as of October 11, 2007 is delivered
pursuant to and supplements (i) the Second Amended and Restated Pledge and
Security Agreement, dated as of October 11, 2007 (said Second Amended and
Restated Pledge and Security Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
“Second Amended and Restated Pledge and Security Agreement”), among Levi Strauss
& Co., Levi Strauss Financial Center Corporation,                     , a
                     corporation (“Grantor”), the other Grantors named therein
and Bank of America, N.A., as Agent, and (ii) the Grant of Patent Security
Interest dated as of                      (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 Second Amended and Restated 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 the date first above
written.

                  [GRANTOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:        

III-1

--------------------------------------------------------------------------------

 

SCHEDULE A
TO
PATENT SUPPLEMENT
Patents Issued:

              Patent No.   Issue Date   Invention   Inventor(s)
 
           

Patents Pending:

                  Applicant’s   Date   Application         Name   Filed   Number
  Invention   Inventor(s)
 
               

III-A-1

--------------------------------------------------------------------------------

 

EXHIBIT IV TO
PLEDGE AND SECURITY AGREEMENT
[FORM OF] PLEDGE SUPPLEMENT
          This Pledge Supplement, dated as of                     , is delivered
pursuant to the Second Amended and Restated Pledge and Security Agreement, dated
as of October 11, 2007, among Levi Strauss & Co., Levi Strauss Financial Center
Corporation,                     , a                      corporation
(“Grantor”), the other Grantors named therein and Bank of America, N.A., as
Agent, as amended, restated, supplemented or otherwise modified from time to
time (the terms defined therein and not otherwise defined herein being used
herein as therein defined).
          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 Pledge Supplement to
be duly executed and delivered by its duly authorized officer as of the date
first above written.

                  [GRANTOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
           
 
  Title:        

IV-1