EXECUTION VERSION
FIRST AMENDED AND RESTATED
PLEDGE AND SECURITY AGREEMENT
          FIRST AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, dated as of
May 18, 2006 (the “Agreement”), between 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 several financial institutions (the
“Lenders”) from time to time party to the Credit Agreement referred to below and
the Selected Revolving Lenders (as defined in the Credit Agreement referred to
below).
W I T N E S S E T H:
          WHEREAS, the Borrowers have entered into that certain Credit Agreement
dated as of September 29, 2003 among the Borrowers, the Lenders and the Agent
for the Lenders as amended by that certain First Amendment to Credit Agreement
dated as of September 30, 2003, that certain Second Amendment to Credit
Agreement dated as of October 14, 2003, that certain Third Amendment to Credit
Agreement and Limited Waiver dated as of March 18, 2004, that certain Fourth
Amendment to Credit Agreement dated as of August 13, 2004 and that certain Fifth
Amendment to Credit Agreement dated as of November 24, 2004 (the “Original
Credit Agreement”);
          WHEREAS, the Lenders, at the request of the Borrowers, agreed to amend
and restate the Original Credit Agreement in its entirety and 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
(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;

 

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          WHEREAS, LS&Co. and certain of its Subsidiaries may from time to time
enter, or may from time to time have entered, into one or more arrangements for
Selected Revolving Lender Cash Management Services in accordance with the terms
of the Credit Agreement, and it is desired that the obligations of LS&Co. and
such Subsidiaries arising in connection with such Selected Revolving Lender Cash
Management Services, together with all obligations of the Borrowers under the
Credit Agreement and the other Loan Documents, be secured hereunder in
accordance with the terms hereof;
          WHEREAS, the Domestic Subsidiaries of LS&Co have entered into that
certain Subsidiary Guaranty dated as of September 29, 2003 (as such agreement
may be amended, restated, supplemented or otherwise modified from time to time,
the “Subsidiary Guaranty”), in favor of and for the benefit of the Agent, as
agent for and representative of the Lenders and the Selected Revolving Lenders;
          WHEREAS, in order to induce the Agent and the Lenders to amend and
restate the Original 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 Pledge and Security Agreement dated as of September 29, 2003 (the
“Original Pledge and Security Agreement”) and to continue to provide for a
continuing Lien on the Collateral (as hereinafter defined) to secure the Secured
Obligations;
          NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
     1. DEFINED TERMS. THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING RESPECTIVE
MEANINGS:
          “Accounts” means all now owned or hereafter acquired or arising
accounts of any Grantor, as defined in the UCC, including any rights to payment
for the sale of goods, whether or not they have been earned by performance.
          “Affiliate” means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or which owns, directly or indirectly, ten percent (10%) or
more of the outstanding equity interest of such Person. A Person shall be deemed
to control another Person if the controlling Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of the other Person, whether through the ownership of voting
securities, by contract, or otherwise.
          “Beneficiaries” means the Agent, the Lenders and each Selected
Revolving Lender that has satisfied the requirements of Section 32(n)(iii)
hereof.
          “Chattel Paper” means all now owned or hereafter acquired chattel
paper of any Grantor, as defined in the UCC, including electronic chattel paper.

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          “Deposit Accounts” means all “deposit accounts” as such term is
defined in the UCC, now or hereafter held in the name of any Grantor.
          “Documents” means all documents as such term is defined in the UCC,
including bills of lading, warehouse receipts or other documents of title, now
owned or hereafter acquired by any Grantor.
          “Equipment” means all now owned or hereafter acquired machinery,
equipment, furniture, furnishings, fixtures, and other tangible personal
property (except Inventory) of any Grantor, including embedded software, dies,
tools, jigs, molds and office equipment, as well as all of such types of
property leased by any Grantor and all of such Grantor’s rights and interests
with respect thereto under such leases (including, without limitation, options
to purchase); together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and supplies used
or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with
respect thereto; wherever any of the foregoing is located.
          “General Intangibles” means all now owned or hereafter acquired
general intangibles, choses in action and causes of action and all other
intangible personal property of any Grantor of every kind and nature (other than
Accounts), including, without limitation, all contract rights, payment
intangibles, IP Collateral, corporate or other business records, inventions,
designs, blueprints, plans, specifications, patents, patent applications, trade
secrets, computer software, customer lists, registrations, licenses, franchises,
tax refund claims, any funds which may become due to such Grantor in connection
with the termination of any Plan or other employee benefit plan or any rights
thereto and any other amounts payable to such Grantor from any Plan or other
employee benefit plan, rights and claims against carriers and shippers, rights
to indemnification, business interruption insurance and any proceeds thereof,
property, casualty or any similar type of insurance and any proceeds thereof,
proceeds of insurance covering the lives of key employees on which such Grantor
is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Grantor; provided,
however, that the General Intangibles shall not include the Intellectual
Property Assets.
          “Goods” means all “goods”, as defined in the UCC, now owned or
hereafter acquired by any Grantor, wherever located, including embedded software
to the extent included in “goods” as defined in the UCC.
          “Instruments” means all instruments as such term is defined in the
UCC, now owned or hereafter acquired by any Grantor.
          “Intellectual Property Assets” has the meaning assigned to that term
in any Intercreditor Agreement.
          “Intellectual Property Collateral” has the meaning assigned to that
term in any Intercreditor Agreement.

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          “Inventory” means all now owned or hereafter acquired inventory, goods
and merchandise of any Grantor, wherever located, to be furnished under any
contract of service or held for sale or lease, all returned goods, raw
materials, work-in-process, finished goods (including embedded software), other
materials and supplies of any kind, nature or description which are used or
consumed in such Grantor’s business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods and merchandise, and
all documents of title or other Documents representing them.
          “Investment Property” means all right, title and interest of any
Grantor in and to any and all: (a) securities whether certificated or
uncertificated; (b) securities entitlements; (c) securities accounts;
(d) commodity contracts; or (e) commodity accounts.
          “IP Collateral” means all rights, title and interest (including rights
acquired pursuant to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent applications under
any domestic or foreign law that are presently, or in the future may be, owned
or held by any Grantor and all patents and patent applications and rights, title
and interests in patents and patent applications under any domestic or foreign
law that are presently, or in the future may be, owned by such Grantor in whole
or in part (including the patents and patent applications set forth on
Schedule 1 attached hereto, as the same may be amended pursuant hereto from time
to time), all rights (but not obligations) corresponding thereto (including the
right, exercisable only upon the occurrence and during the continuation of an
Event of Default, to 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 IP Collateral hereby
shall include, without limitation, all rights and interests pursuant to
licensing or other contracts in favor of such Grantor pertaining to Patent
applications and Patents presently or in the future owned or used by third
parties but, in the case of third parties which are not Affiliates of such
Grantor, only to the extent permitted by such licensing or other contracts and,
if not so permitted, only with the consent of such third parties.
          “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 the Intellectual Property Assets.
          “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.
          “Operating Account” means the bank account maintained by LS&Co and
notified to the Agent from time to time.

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          “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;
          “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.
          “UCC” means the Uniform Commercial Code, as in effect from time to
time, of the State of California or of any other state the laws of which are
required as a result thereof to be applied in connection with the issue of
perfection of security interests.
          “Uniform Commercial Code jurisdiction” means any jurisdiction that has
adopted “Revised Article 9” of the UCC on or after July 1, 2001.
          All other capitalized terms used but not otherwise defined herein have
the meanings given to them in the Credit Agreement or in Annex A thereto. All
other undefined terms contained in this Agreement, unless the context indicates
otherwise, have the meanings provided for by the UCC to the extent the same are
used or defined therein.

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     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 Agent and the Lenders,
a continuing security interest in, lien on, assignment of and right of set-off
against, all of the following property and assets of such Grantor, whether now
owned or existing or hereafter acquired or arising, regardless of where located:
          (i) all Accounts;
          (ii) all Inventory;
          (iii) all contract rights;
          (iv) all Chattel Paper;
          (v) all Documents;
          (vi) all Instruments;
          (vii) all Supporting Obligations and Letter-of-Credit Rights;
          (viii) all General Intangibles (including payment intangibles and
Software);
          (ix) all Goods;
          (x) all Equipment;
          (xi) all Investment Property;
          (xii) all IP Collateral;
          (xiii) all Pledged Interests and all dividends, distributions, returns
of capital, cash, warrants, options, rights, instruments, rights to vote or
manage the business of any Person that is, or becomes, a direct Domestic
Subsidiary 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;
          (xiv) all Pledged Debt and all interest, cash, instruments and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Debt;
          (xv) all money, cash, cash equivalents, securities and other property
of any kind of any Grantor held directly or indirectly by the Agent or any
Lender;

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          (xvi) all Deposit Accounts, credits, and balances with and other
claims against the Agent or any Lender or any of their Affiliates or any other
financial institution with which any Grantor maintains deposits, including any
Payment Accounts;
          (xvii) all books, records and other property related to or referring
to any of the foregoing, including books, records, account ledgers, data
processing records, computer software and other property and General Intangibles
at any time evidencing or relating to any of the foregoing; and
          (xviii) all accessions to, substitutions for and replacements,
products and proceeds of any of the foregoing, including, but not limited to,
proceeds of any insurance policies, claims against third parties, and
condemnation or requisition payments with respect to all or any of the
foregoing.
All of the foregoing, together with the Real Estate covered by the Mortgage(s),
all equity interests in Subsidiaries pledged to the Agent and all other property
of the Grantors in which the Agent or any Lender may at any time be granted a
Lien as collateral for the Secured Obligations is herein collectively referred
to as the “Collateral.”
          Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in any of such Grantor’s rights or interests in any license, contract
or agreement to which such Grantor is a party or any of its rights or interests
thereunder to the extent, but only to the extent, that such a grant would, under
the terms of such license, contract or agreement or otherwise, result in a
breach of the terms of, or constitute a default under, any license, contract or
agreement to which such Grantor is a party (other than to the extent that any
such term would be rendered ineffective pursuant to the UCC or any other
applicable law (including the Bankruptcy Code) or principles of equity);
provided, that immediately upon the ineffectiveness, lapse or termination of any
such provision, the Collateral shall include, and such Grantor shall be deemed
to have granted a security interest in, all such rights and interests as if such
provision had never been in effect.
          Each item of Collateral listed in this Section 2 that is defined in
Articles 8 or 9 of the UCC shall have the meaning set forth in the UCC, as it
exists on the date of this Agreement or as it may hereafter be amended, it being
the intention of the Grantors that the description of the Collateral set forth
above be construed to include the broadest possible range of assets, except for
assets expressly excluded as set forth above and below.
          Notwithstanding anything herein to the contrary, neither the Borrowers
nor any Grantor shall be deemed to have granted a security interest in (i) any
Principal Property, (ii) any capital stock of any Restricted Subsidiary,
(iii) any Pledged Debt of or issued by any Restricted Subsidiary, (iv) any
Intellectual Property Assets, (v) any Equity Interests of any Foreign
Subsidiary, or (vi) Equipment subject to an Equipment Financing Transaction
permitted under the Credit Agreement.
          (b) All of the Secured Obligations shall be secured by all of the
Collateral.

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     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 Subsidiary of
LS&Co., under or arising out of or in connection with any Selected Revolving
Lender Hedge Agreement and (ii) of LS&Co. and each Subsidiary of LS&Co., arising
out of or in connection with any Selected Revolving Lender Cash Management
Services; and
          (b) with respect to each Subsidiary Grantor and Additional Grantor,
all obligations and liabilities of every nature of such Grantor now or hereafter
existing under or arising out of or in connection with the Guaranty and, except
as set forth below, all obligations and liabilities of every nature now or
hereafter existing (i) of LS&Co., LSIFCS and each Material Subsidiary of LS&Co.,
under or arising out of or in connection with any Selected Revolving Lender
Hedge Agreement to the extent provided in Section 3.7 of the Credit Agreement
and (ii) of LS&Co. and each Subsidiary of LS&Co., arising out of or in
connection with any Selected Revolving Lender Cash Management Services;
in each case together with all extensions or renewals thereof, whether for
principal, interest (including interest that, but for the filing of a petition
in bankruptcy with respect to the Borrowers or any other Grantor, would accrue
on such obligations, whether or not a claim is allowed against such Borrower or
such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, payments for early
termination or close out of the Selected Revolving Lender Hedge Agreements,
fees, expenses, indemnities or otherwise, whether voluntary or involuntary,
direct or indirect, absolute or contingent, liquidated or unliquidated, whether
or not jointly owed with others, and whether or not from time to time decreased
or extinguished and later increased, created or incurred, and all or any portion
of such obligations or liabilities that are paid, to the extent all or any part
of such payment is avoided or recovered directly or indirectly from the Agent or
any Lender or Selected Revolving Lender as a preference, fraudulent transfer or
otherwise, and all obligations of every nature of the Grantors now or hereafter
existing under this Agreement.
     4. PERFECTION AND PROTECTION OF SECURITY INTEREST.
          (a) Each Grantor shall, at its expense, perform all reasonable steps
requested by the Agent at any time to perfect, maintain, protect, and enforce
the Agent’s Liens, including: (i) executing, delivering and/or filing and
recording of the Mortgage(s) and executing and filing financing or continuation
statements, and amendments thereof, in form and substance reasonably

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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 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

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assets of such Grantor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9
of the UCC of the State of California or such jurisdiction, or (ii) as being of
an equal or lesser scope or with greater detail, and (b) contain any other
information required by part 5 of Article 9 of the UCC of the State of
California for the sufficiency or filing office acceptance of any financing
statement or amendment, including (i) whether such Grantor is an organization,
the type of organization and any organization identification number issued to
such Grantor, and (ii) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral relates. Each
Grantor agrees to furnish any such information to the Agent promptly upon
request. Each Grantor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing
statements or amendments thereto if filed prior to the date hereof.
          (h) Each Grantor shall promptly notify the Agent of any material
commercial tort claim (as defined in the UCC) acquired by it and unless
otherwise consented to by the Agent, such Grantor shall enter into a supplement
to this Agreement, granting to the Agent a Lien in such commercial tort claim.
          (i) From time to time, any Grantor shall, upon the Agent’s request,
execute and deliver confirmatory written instruments pledging to the Agent, for
the ratable benefit of the Agent, the Lenders and the Selected Revolving
Lenders, the Collateral, but such Grantor’s failure to do so shall not affect or
limit any security interest or any other rights of the Agent or any Lender in
and to the Collateral with respect to such Grantor. So long as the Credit
Agreement is in effect and until all Secured Obligations (other than in respect
of inchoate indemnity obligations) have been fully satisfied, the Agent’s Liens
shall continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Availability or as the basis for any
advance, loan, extension of credit, or other financial accommodation).
          (j) No Reincorporation. Except as permitted under the Credit
Agreement, no Grantor shall reincorporate or reorganize itself under the laws of
any jurisdiction other than the jurisdiction in which it is incorporated or
organized as of the date hereof or change its type of entity as identified on
Schedule 3 attached hereto unless it provides notice to the Agent of such
reincorporation or reorganization at least thirty (30) days before such
reincorporation or reorganization.
          (k) Terminations, Amendments Not Authorized. Each Grantor acknowledges
that it is not authorized to file any financing statement or amendment or
termination statement with respect to any financing statement without the prior
written consent of the Agent and agrees that it will not do so without the prior
written consent of the Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the UCC of the State of California.
          (l) No Restriction on Payments to the Agent. Except as permitted under
the Credit Agreement, the Grantors shall not enter into any Contract that
restricts or prohibits the grant of a security interest in Accounts, Chattel
Paper, Instruments or payment intangibles or the proceeds of the foregoing to
the Agent.

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     5. LOCATION OF COLLATERAL.
          (a) Each Grantor represents and warrants to the Agent and the Lenders
that: (i) Schedule 4 attached hereto is a correct and complete list of the
location of such Grantor’s chief executive office, the location of its books and
records, the locations of the Collateral (other than (A) in-transit Inventory,
(B) any location at which Inventory excluded from the Eligible Collateral in the
most recent Borrowing Base Certificate delivered to the Agent is located and (C)
locations of Inventory in the form of raw materials, provided, that the
aggregate amount of all Eligible Inventory in the form of raw materials does not
exceed $10,000,000); and (ii) Schedule 4 correctly identifies (A) any of such
facilities and locations that are not owned by such Grantor and (B) any of such
facilities and locations in which such Grantor is not a tenant and sets forth
the names of the owners, the lessors or the operators of such facilities and
locations. Each Grantor covenants and agrees that it will not (i) maintain any
Collateral (other than (A) in-transit Inventory, (B) Inventory that was excluded
from the Eligible Collateral in the most recent Borrowing Base Certificate
delivered to the Agent and (C) Inventory in the form of raw materials, provided,
that the aggregate amount of all Eligible Inventory in the form of raw materials
does not exceed $10,000,000) at any location other than those locations listed
for such Grantor on Schedule 4, (ii) otherwise change or add to any of such
locations, or (iii) change the location of its chief executive office from the
location identified in Schedule 4, unless it gives the Agent at least thirty
(30) days’ prior written notice thereof and executes any and all financing
statements and other documents that the Agent reasonably requests in connection
therewith. Without limiting the foregoing, each Grantor represents that all of
its Inventory (other than Inventory located at contractors’ premises or 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

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the name of such Grantor listed on the signature pages hereof, except the names
set forth on Schedule 5 attached hereto, as Schedule 5 may be updated upon the
execution of this Agreement by an Additional Grantor.
     7. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor
represents and warrants to the Agent and the Lenders and agrees with the Agent
and the Lenders that: (a) such Grantor has rights in and the power to transfer
all of the Collateral free and clear of all Liens whatsoever, except for Liens
permitted under Section 7.13 of the Credit Agreement; (b) the Agent’s Liens in
the Collateral will not be subject to any prior Lien except for those Liens
identified in clauses (c), (d) and (e) of the definition of Permitted Liens; and
(c) such Grantor will use, store, and maintain the Collateral with all
reasonable care and will use such Collateral for lawful purposes only.
     8. APPRAISALS.
          (a) Two (2) times each Fiscal Year or, during any Minimum Excess
Availability Period, one (1) time each Fiscal Year, the Agent shall, at each
Grantor’s expense, arrange for appraisals or updates thereof of all of the
Inventory constituting finished goods from an appraiser, and prepared on a
basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulation and by
the internal policies of the Lenders.
          (b) Whenever a Default or Event of Default exists, the Agent shall, at
each Grantor’s expense and at the Agent’s discretion, arrange for appraisals or
updates thereof of any or all of the Collateral from an appraiser, and prepared
on a basis, satisfactory to the Agent, such appraisals and updates to include,
without limitation, information required by applicable law and regulation and by
the internal policies of the Lenders.
     9. ACCESS AND EXAMINATION. No more than three (3) times each Fiscal Year
or, during any Minimum Excess Availability Period, no more than one (1) time
each Fiscal Year, and upon ten (10) days notice to the relevant Grantor, or at
any time with or without notice whenever a Default or Event of Default exists
and is continuing, the Agent, accompanied by any Lender which so elects, may at
all reasonable times during regular business hours have access to, examine,
audit, make extracts from or copies of and inspect any or all of each Grantor’s
records, files, and books of account and the Collateral, and discuss such
Grantor’s affairs with such Grantor’s officers and management. Each Grantor will
deliver to the Agent any instrument necessary for the Agent to obtain records
from any service bureau maintaining records for such Grantor. The Agent may, and
at the direction of the Majority Lenders shall, at any time whenever a Default
or Event of Default exists, and at such Grantor’s expense, make copies of all of
such Grantor’s books and records, or require such Grantor to deliver such copies
to the Agent. The Agent may, without expense to the Agent, use such of such
Grantor’s respective personnel, supplies, and Real Estate as may be reasonably
necessary for maintaining or enforcing the Agent’s Liens. The Agent shall have
the right, at any time, in the Agent’s name or in the name of a nominee of the
Agent, to verify the validity, amount or any other matter relating to the
Accounts, Inventory, or other Collateral, by mail, telephone, or otherwise.

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     10. CERTAIN COVENANTS OF THE GRANTORS.
          Each Grantor shall:
          (a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral,
except where such violation would not have a Material Adverse Effect; and
          (b) if the Agent gives value to enable such Grantor to acquire rights
in or the use of any Collateral, use such value for such purposes.
     11. SPECIAL COVENANTS WITH RESPECT TO THE IP COLLATERAL.
          (a) Each Grantor shall:
          (i) diligently keep reasonable records respecting the IP Collateral
and at all times keep at least one complete set of its records concerning such
Collateral at its chief executive office or principal place of business; and
          (ii) furnish to the Agent from time to time at the Agent’s reasonable
request statements and schedules further identifying and describing any IP
Collateral and such other reports in connection with such Collateral, all in
reasonable detail.
          (b) In addition to the filing of UCC financing statements, the filing
of a Grant of Patent Security Interest, substantially in the form of Exhibit I
attached hereto, with the United States Patent and Trademark Office (such Grant
of Patent Security Interest being referred to herein as a “Grant”), the security
interests in the Collateral granted to the Agent for the ratable benefit of the
Lenders and the Selected Revolving Lenders will constitute perfected security
interests therein, to the extent such security interests may be perfected by
filing in the United States, prior to all other Liens (except for Liens
expressly permitted by the Credit Agreement and Liens on software licensed from
a third party), and all filings and other actions necessary or desirable to
perfect and protect such security interest have been duly made or taken.
          (c) Except as otherwise provided in this Section 11, each Grantor
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor in respect of the IP Collateral or any portion thereof. In
connection with such collections, each Grantor may take (and, after the
occurrence and during the continuance of any Event of Default at the Agent’s
reasonable direction, shall take) such action as such Grantor or the Agent may
deem reasonably necessary or advisable to enforce collection of such amounts;
provided, the Agent shall have the right at any time, upon the occurrence and
during the continuation of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the obligors with respect to any
such amounts of the existence of the security interest created hereby and to
direct such obligors to make payment of all such amounts directly to the Agent,
and, upon such notification and at the expense of such Grantor, to enforce
collection of any such amounts and to adjust, settle or compromise the amount or
payment thereof, in the same manner and to the same extent as such Grantor might
have done. After receipt by any Grantor of the notice from

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the Agent referred to in the proviso to the preceding sentence and during the
continuation of any Event of Default, (i) all amounts and proceeds (including
checks and other instruments) received by each Grantor in respect of amounts due
to such Grantor in respect of the IP Collateral or any portion thereof shall be
received in trust for the benefit of the Agent hereunder, shall be segregated
from other funds of such Grantor and shall be forthwith paid over or delivered
to the Agent in the same form as so received (with any necessary endorsement) to
be held as cash Collateral and applied as provided by Section 32(t) hereof, and
(ii) such Grantor shall not adjust, settle or compromise the amount or payment
of any such amount or release wholly or partly any obligor with respect thereto
or allow any credit or discount thereon.
          (d) Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own
benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the IP
Collateral. The Agent shall provide, at such Grantor’s expense, all reasonable
and necessary cooperation in connection with any such suit, proceeding or action
including joining as a necessary party.
          (e) In addition to, and not by way of limitation of, the granting of a
security interest in the Collateral pursuant hereto, each Grantor hereby grants
to the Agent, for use upon the occurrence and during the continuation of an
Event of Default, the irrevocable, nonexclusive right and license to use all
present and future trademarks, trade names, trade dress, copyrights, patents or
technical processes (including the IP Collateral and the Intellectual Property
Collateral) owned or used by such Grantor that relate to the Collateral and any
other collateral granted by such Grantor as security for the Secured
Obligations, together with any goodwill associated therewith, all to the extent
necessary to enable the Agent to realize on, and exercise all rights of the
Agent and the Lenders in relation to, the Collateral in accordance with this
Agreement (including without limitation advertising in all media as the Agent
deems appropriate in connection with marketing and sales of the Collateral) and
to enable any transferee or assignee of the Collateral to enjoy the benefits of
the Collateral, and including in such license access to all media in which any
of the licensed items may be recorded or stored and to all computer software and
programs used for the compilation or printout thereof; provided, however, the
license granted under this Section 11(e) shall not be construed to limit such
Grantor’s ability to take reasonable steps, in accordance with its then current
business practices, to protect and preserve the Trademarks, the Trademark
Registrations, the Trademark Rights and the Associated Goodwill. This right
shall inure to the benefit of all successors, assigns and transferees of the
Agent and its successors, assigns and transferees, whether by voluntary
conveyance, operation of law, assignment, transfer, foreclosure, deed in lieu of
foreclosure or otherwise. Such right and license shall be granted free of
charge, without requirement that any monetary payment whatsoever be made to such
Grantor. In addition, each Grantor hereby grants to the Agent and its employees,
representatives and agents the right to visit such Grantor’s and any of its
Affiliate’s or subcontractor’s plants, facilities and other places of business
that are utilized in connection with the manufacture, production, inspection,
storage or sale of products and services sold or delivered under any of the IP
Collateral (or which were so utilized during the prior six month period), and to
inspect the quality control and all other records relating thereto upon
reasonable advance written notice to such Grantor and at reasonable dates and
times and as often as may be

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reasonably requested. If and to the extent that any Grantor is permitted to
license the IP Collateral, the Agent shall promptly enter into a non-disturbance
agreement or other similar arrangement, at such Grantor’s request and expense,
with such Grantor and any licensee of any IP Collateral permitted hereunder in
form and substance reasonably satisfactory to the Agent pursuant to which
(i) the Agent shall agree not to disturb or interfere with such licensee’s
rights under its license agreement with such Grantor so long as such licensee is
not in default thereunder, and (ii) such licensee shall acknowledge and agree
that the IP Collateral licensed to it is subject to the security interest
created in favor of the Agent and the other terms of this Agreement.
     12. SPECIAL COVENANTS WITH RESPECT TO THE PLEDGED COLLATERAL.
          Except as otherwise not prohibited by the Credit Agreement, each
Grantor shall:
          (a) not (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Pledged
Collateral, (ii) create or suffer to exist any Lien upon or with respect to any
of the Pledged Collateral, except for Permitted Liens, or (iii) permit any
issuer of Pledged Interests to merge or consolidate unless all the outstanding
Equity Interests of the surviving or resulting Person is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
Person; provided, if the surviving or resulting Person upon any such merger or
consolidation involving an issuer of Pledged Interests is a 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 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

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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
          (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.

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          (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.
     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;

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          (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 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,

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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 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;

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          (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.
          (c) Each Grantor shall, at its own expense, maintain insurance with
respect to the Inventory in accordance with the terms of the Credit Agreement.

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     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. IP COLLATERAL.
          Each Grantor represents and warrants as follows:
          (a) a true and complete list of all Patents and Patent applications
owned by such Grantor, in whole or in part, that are material to such Grantor’s
business is set forth on Schedule 1 attached hereto;
          (b) after reasonable inquiry, such Grantor is not aware of any pending
or threatened claim by any third party that any of the IP Collateral owned, held
or used by such Grantor is invalid or unenforceable that is reasonably likely to
have a Material Adverse Effect; and
          (c) after giving effect to the releases delivered on the Amendment
Date in respect of the Credit Agreement, no effective security interest or other
Lien covering all or any part of the IP Collateral is on file in the United
States Patent and Trademark Office, other than Liens in favor of the Agent.
     19. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and
warrants to the Agent and the Lenders that (a) all Documents, Instruments, and
Chattel Paper describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete, valid, and
genuine, and (b) all goods evidenced by such Documents, Instruments, Letter of
Credit Rights and Chattel Paper are and will be owned by such Grantor, free and
clear of all Liens other than Permitted Liens. If any Grantor retains possession
of any Chattel Paper or Instruments with the Agent’s consent, such Chattel Paper
and Instruments shall be marked with the following legend: “This writing and the
obligations evidenced or served hereby are subject to the security interest of
Bank of America, N.A., as the Agent, for the benefit of the Agent and certain
Lenders.”

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     20. REPRESENTATIONS AND WARRANTIES REGARDING THE PLEDGED COLLATERAL.
          (a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Interests described on Schedule 2(a) attached hereto for each Grantor have been
duly authorized and validly issued and are fully paid and non-assessable. All of
the Pledged Debt described on Schedule 2(b) attached hereto for each Grantor has
been duly authorized, authenticated or issued, and delivered, is the legal,
valid and binding obligation of the issuers thereof and is not in default.
          (b) Description of Pledged Collateral. Except as set forth on
Schedule 2(a), the Pledged Interests constitute all of the issued and
outstanding Equity Interests of each issuer 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
in the case of Pledged Collateral issued by a foreign issuer, any actions
required under foreign law to perfect a security interest in such Pledged
Collateral) and, (iii) in the case of any Pledged Collateral constituting a
Security Entitlement or a Securities Account (as such terms are defined in the
UCC) and assets held in such account, the execution and delivery to the Agent of
an agreement providing for control by the Agent of such Securities Account, the
security interests in the Pledged Collateral, granted to

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the Agent for the ratable benefit of the Beneficiaries, will constitute
perfected security interests therein prior to all other Liens, securing the
payment of the Secured Obligations.
          (f) Margin Regulations. The pledge of the Pledged Collateral pursuant
to this Agreement does not violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System.
          (g) Other Information. All information heretofore, herein or hereafter
supplied to the Agent by or on behalf of each Grantor with respect to the
Pledged Collateral is accurate and complete in all respects.
     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:

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          (i) upon written notice from the Agent to any Grantor, all rights of
such Grantor to exercise the voting and other consensual rights that it would
otherwise be entitled to exercise pursuant to Section 21(a)(i) hereof shall
cease, and all such rights shall thereupon become vested in the Agent who shall
thereupon have the sole right to exercise such voting and other consensual
rights;
          (ii) except as otherwise provided in the Credit Agreement, all rights
of Grantors to receive the dividends, other distributions and interest payments
that they would otherwise be authorized to receive and retain pursuant to
Section 21(a)(ii) hereof shall cease, and all such rights shall thereupon become
vested in the Agent who shall thereupon have the sole right to receive and hold
as Pledged Collateral such dividends, other distributions and interest payments;
and
          (iii) all dividends, principal, interest payments and other
distributions that are received by Grantors contrary to the provisions of
paragraph (ii) of this Section 21(b) shall be received in trust for the benefit
of the Agent, shall be segregated from other funds of Grantors and shall
forthwith be paid over to the Agent as Pledged Collateral in the same form as so
received (with any necessary endorsements).
          (c) In order to permit the Agent to exercise the voting and other
consensual rights that it may be entitled to exercise pursuant to
Section 21(b)(i) hereof and to receive all dividends and other distributions
which it may be entitled to receive under Section 21(a)(ii) hereof or
Section 21(b)(ii) hereof, (i) each Grantor shall, upon the occurrence of and
during the continuance of an Event of Default, promptly execute and deliver (or
cause to be executed and delivered) to the Agent all such proxies, dividend
payment orders and other instruments as the Agent may from time to time
reasonably request and (ii) without limiting the effect of the immediately
preceding clause (i), each Grantor hereby grants to the Agent an irrevocable
proxy to vote the Pledged Interests and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Interests would be
entitled (including, without limitation, giving or withholding written consents
of holders of Equity Interests, calling special meetings of holders of Equity
Interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Interests on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Interests or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations (other than
inchoate indemnity obligations).
     22. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, pay any amount or do any act required of any
Grantor hereunder or under any other Loan Document in order to preserve,
protect, maintain or enforce the Secured Obligations, the Collateral or the
Agent’s Liens therein, and which such Grantor fails to pay or do, including
payment of any judgment against such Grantor, any insurance premium, any
warehouse charge, any finishing or processing charge, any landlord’s or bailee’s
claim, and any other Lien upon or with respect to the Collateral. All payments
that the Agent makes under this Section 22 and all out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Loan Account as a Revolving Loan.

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Any payment made or other action taken by the Agent under this Section 22 shall
be without prejudice to any right to assert an Event of Default hereunder and to
proceed thereafter as herein provided.
     23. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the
Agent’s designee as such Grantor’s attorney, with power:
          (a) to endorse such Grantor’s name on any checks, notes, acceptances,
money orders, or other forms of payment or security that come into the Agent’s
or any Lender’s possession and, upon the occurrence and during the continuance
of an Event of Default, to 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

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address designated by the Agent and to receive, open and dispose of all mail
addressed to such Grantor;
          (i) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to the Agent pursuant to the Credit Agreement;
          (j) upon the occurrence and during the continuance of an Event of
Default, to ask for, demand, collect, 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 Credit Agreement has been terminated and the Obligations
(other than inchoate indemnity obligations) have been fully satisfied.
     24. THE AGENT’S AND LENDERS’ RIGHTS, DUTIES AND LIABILITIES.
          (a) Each Grantor assumes all responsibility and liability arising from
or relating to the use, sale, license or other disposition of the Collateral.
The Secured Obligations shall not be affected by any failure of the Agent or any
Lender to take any steps to perfect the Agent’s Liens or to collect or realize
upon the Collateral, nor shall loss of or damage to the Collateral release such
Grantor from any of the Secured Obligations. Following the occurrence and during
the continuation of an Event of Default, the Agent may (but shall not be
required to), and at the direction of the Majority Lenders shall, without notice
to or consent from any Grantor, 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

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applicable thereto, or any Person liable directly or indirectly in connection
with any of the foregoing, without discharging or otherwise affecting the
liability of such Grantor for the Secured Obligations or under the Credit
Agreement or any other agreement now or hereafter existing between the Agent
and/or any Lender and such Grantor.
          (b) It is expressly agreed by each Grantor that, anything herein to
the contrary notwithstanding, such Grantor shall remain liable under each of its
contracts and each of its licenses to observe and perform all the conditions and
obligations to be observed and performed by it thereunder. Neither the Agent nor
any Lender shall have any obligation or liability under any contract or license
by reason of or arising out of this Agreement or the granting herein of a Lien
thereon or the receipt by the Agent or any Lender of any payment relating to any
contract or 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.

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     25. INDEMNIFICATION.
          (a) In any suit, proceeding or action brought by the Agent or any
Lender relating to any Collateral for any sum owing with respect thereto or to
enforce any rights or claims with respect thereto, each Grantor will save,
indemnify and keep the Agent, the Lenders and the Selected Revolving Lenders
harmless from and against all expense (including reasonable attorneys’ fees and
expenses), loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction of liability whatsoever of the Account
Debtor or other Person obligated on the Collateral, arising out of a breach by
such Grantor of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of, such obligor or
its successors from such Grantor, except in the case of the Agent, any Lender or
any Selected Revolving Lender, to the extent such expense, loss, or damage is
attributable solely to the gross negligence or willful misconduct of the Agent,
such Lender or such Selected Revolving Lender as finally determined by a court
of competent jurisdiction. All such obligations of such Grantor shall be and
remain enforceable against and only against such Grantor and shall not be
enforceable against the Agent, any Lender or any Selected Revolving Lender.
          (b) The Grantors jointly and severally agree to pay to the Agent upon
demand:
          (i) prior to an Event of Default, the amount of any and all reasonable
costs and expenses, including the reasonable fees and expenses of its counsel
and of any experts and agents, that the Agent may incur in connection with
(A) the administration of this Agreement, (B) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any of
the Collateral, (C) the exercise or enforcement of any of the rights of the
Agent hereunder, or (D) the failure by any Grantor to perform or observe any of
the provisions hereof; and
          (ii) upon the occurrence of and during the continuance of an Event of
Default, the amount of any and all costs and expenses, including the fees and
expenses of its counsel and of any experts and agents, that the Agent may incur
in connection with (A) the administration of this Agreement, (B) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (C) the exercise or enforcement of any
of the rights of the Agent hereunder, or (D) the failure by any Grantor to
perform or observe any of the provisions hereof.
          (c) The obligations of the Grantors in this Section 25 shall
(i) survive the termination of this Agreement and the discharge of the Grantors’
other Secured Obligations (other than inchoate indemnity obligations) under this
Agreement, the Selected Revolving Lender Hedge Agreements, the Selected
Revolving Lender Cash Management Services, the Credit Agreement and the other
Loan Documents and (ii), as to any Grantor that is a party to a Guaranty, be
subject to the provisions of Section 1(b) thereof.
     26. LIMITATION ON LIENS ON COLLATERAL. The Grantors will defend the
Collateral against, and take such other action as is necessary to remove, any
Lien on the Collateral except Permitted Liens, and will defend the right, title
and interest of the Agent and

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the Lenders in and to any of the Grantors’ rights under the Collateral against
the claims and demands of all Persons whomsoever.
     27. NOTICE REGARDING COLLATERAL. Each Grantor will advise the Agent
promptly, in reasonable detail, (i) of any Lien (other than Permitted Liens) or
claim made or asserted against any of the Collateral, and (ii) of the occurrence
of any other event which would have a Material Adverse Effect.
     28. 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

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of a receiver or keeper to take possession of Collateral and to enforce any of
the Agent’s remedies (for the benefit of the Agent and the Lenders), with
respect to such appointment without prior notice or hearing as to such
appointment. The Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale to the Secured Obligations
as provided in the Credit Agreement, and only after so paying over such net
proceeds, and after the payment by the Agent of any other amount required by any
provision of law, need the Agent account for the surplus, if any, to such
Grantor. To the maximum extent permitted by applicable law, such Grantor waives
all claims, damages, and demands against the Agent or any Lender arising out of
the repossession, retention or sale of the Collateral except such as arise
solely out of the gross negligence or willful misconduct of the Agent or such
Lender as finally determined by a court of competent jurisdiction. Such Grantor
agrees that ten (10) days prior notice by the Agent of the time and place of any
public sale or of the time after which a private sale may take place is
reasonable notification of such matters. Such Grantor shall remain liable for
any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Secured Obligations, including any attorneys’ fees or
other expenses incurred by the Agent or any Lender to collect such deficiency.
          (c) Each Grantor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as from time to time amended (the
“Securities Act”), and applicable state securities laws, the Agent may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Each Grantor acknowledges that any such private placement may be
at prices and on terms less favorable than those obtainable through a sale
without such restrictions (including, without limitation, an offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances and the registration rights granted to the
Agent by such Grantor pursuant to Section 28(d) hereof, such Grantor agrees that
any such private placement shall not be deemed, in and of itself, to be
commercially unreasonable and that the Agent shall have no obligation to delay
the sale of any Pledged Collateral for the period of time necessary to permit
the issuer thereof to register it for a form of sale requiring registration
under the Securities Act or under applicable state securities laws, even if such
issuer would, or should, agree to so register it. If the Agent determines to
exercise its right to sell any or all of the Pledged Collateral, upon written
request, each Grantor shall and shall cause each issuer of any Pledged Interests
to be sold hereunder from time to time to furnish to the Agent all such
information as the Agent may request in order to determine the amount of Pledged
Collateral that may be sold by the Agent in exempt transactions under the
Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.
          (d) If the Agent shall determine to exercise its right to sell all or
any of the Pledged Collateral, each Grantor agrees that, upon request of the
Agent (which request may be made by the Agent in its sole discretion), such
Grantor will, at its own expense:
          (i) execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and

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deliver, all such instruments and documents, and do or cause to be done all such
other acts and things, as may be necessary or, in the opinion of the Agent,
advisable to register such Pledged Collateral under the provisions of the
Securities Act and to cause the registration statement relating thereto to
become effective and to remain effective for such period as prospectuses are
required by law to be furnished, and to make all amendments and supplements
thereto and to the related prospectus which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act 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

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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 acknowledges
that the purpose of this Section 28(f) is to provide non-exhaustive indications
of what actions or omissions by the Agent would not be commercially unreasonable
in the Agent’s exercise of remedies against the Collateral and that other
actions or omissions by the Agent shall not be deemed commercially unreasonable
solely on account of not being indicated in this Section 28(f). Without
limitation upon the foregoing, nothing contained in this Section 25(f) shall be
construed to grant any rights to such Grantor or to impose any duties on the
Agent that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section 25(f).
     29. ADDITIONAL REMEDIES FOR IP COLLATERAL.
          (a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) the Agent
shall have the right (but not the obligation) to bring suit, in the name of any
Grantor, the Agent or otherwise, to enforce any IP Collateral, in which event
each Grantor shall, at the request of the Agent, do any and all lawful acts and
execute any and all documents required by the Agent in aid of such enforcement
and each Grantor shall promptly, upon demand, reimburse and indemnify the Agent
as provided in Sections 13.7 and 13.11 of the Credit Agreement and Section 25
hereof, as applicable, in connection with the exercise of its rights under this
Section 29, and, to the extent that the Agent shall elect not to bring suit to
enforce any IP Collateral as provided in this Section 29, each Grantor agrees to
use all reasonable measures, whether by action, suit, proceeding or otherwise,
to prevent the infringement of any of the IP Collateral by others and for that
purpose agrees to use its commercially reasonable judgment in maintaining any
action, suit or proceeding against any Person so infringing reasonably necessary
to prevent such infringement; (ii) upon written demand from the Agent, each
Grantor shall execute and deliver to the Agent an assignment or assignments of
the IP Collateral and such other documents as are necessary or appropriate to
carry out the intent and purposes of this Agreement; (iii) each Grantor agrees
that such an assignment and/or recording shall be applied to reduce the Secured
Obligations outstanding only to the extent that the Agent (or any Lender)
receives cash proceeds in respect of the sale of, or other realization upon, the
IP Collateral; and (iv) within five Business Days after written notice from the
Agent, each Grantor shall make available to the Agent, to the extent within such
Grantor’s power and authority, such personnel in such Grantor’s employ on the
date of such Event of Default as the Agent may reasonably designate, by name,
title or job responsibility, to permit such Grantor to continue, directly or
indirectly, to produce, advertise and sell the products and services sold or
delivered by such Grantor under or in connection with the trademarks, trademark
registrations and trademark rights, such persons to be available to perform
their prior functions on the Agent’s behalf and to be compensated by the Agent
at such Grantor’s expense on a per diem, pro-rata basis consistent with the
salary and benefit structure applicable to each as of the date of such Event of
Default.

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          (b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to the Agent of any rights, title and interests in and to the IP
Collateral shall have been previously made, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Agent shall promptly execute and deliver to such Grantor such
assignments as may be necessary to reassign to such Grantor any such rights,
title and interests as may have been assigned to the Agent as aforesaid, subject
to any disposition thereof that may have been made by the Agent; provided, after
giving effect to such reassignment, the Agent’s security interest granted
pursuant hereto, as well as all other rights and remedies of the Agent granted
hereunder, shall continue to be in full force and effect; and provided further,
the rights, title and interests so reassigned shall be free and clear of all
Liens other than Liens (if any) encumbering such rights, title and interest at
the time of their assignment to the Agent and Liens expressly permitted by the
Credit Agreement.
     30. LIMITATION ON AGENT’S AND LENDERS’ DUTY IN RESPECT OF COLLATERAL. The
powers conferred on the Agent hereunder are solely to protect its interest in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Except for the exercise of reasonable care in the custody of any
Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. The Agent shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which the Agent accords its own property.
     31. APPOINTMENT AS COLLATERAL AGENT.
          (a) The Agent on behalf of the Lenders and each Selected Revolving
Lender with respect to which a written notice has been received pursuant to
Section 32(n)(iii) hereof hereby appoints Bank of America, N.A. to serve as
collateral agent and representative of the Agent (the “Collateral Agent”) and
authorizes the Collateral Agent to act as agent for the Agent for the purposes
of executing and delivering on its behalf the Collateral Documents and, subject
to the provisions of this Agreement, enforcing the Agent’s rights in respect of
the Collateral and the obligations of each Loan Party under the Collateral
Documents.
          (b) (i) The Collateral Agent shall have each and every right, power,
privilege or duty expressed or intended by this Agreement or any of the other
Loan Documents to be exercised by or vested in or conveyed to the Agent under
the Collateral Documents, which shall be exercisable by and vest in the
Collateral Agent to the extent necessary or desirable to enable the Collateral
Agent to exercise such rights, powers and privileges and to perform such duties
with respect to such Collateral, and every covenant and obligation contained in
the Loan Documents and necessary to the exercise or performance thereof by the
Collateral Agent shall run to and be enforceable by the Collateral Agent, and
(ii) the provisions of Section 25 hereof and of Section 13.11 of the Credit
Agreement that refer to the Agent shall inure to the benefit of the Collateral
Agent and all references therein to the Agent shall be deemed to be references
to the Agent and/or the Collateral Agent, as the context may require.

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     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 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.

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          (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 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 the payment in full of all
Secured Obligations (other than inchoate indemnity obligations), the
cancellation or termination of the Commitments and the cancellation or
expiration of all outstanding Letters of Credit, the security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantors. Upon any such termination the Agent will, at the Grantors’
expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination. In addition, in
connection with the release of the Agent’s security interest over any Collateral
as contemplated by Section 12.11 of the Credit Agreement, the Agent will, at the
reasonable request of the relevant Grantor and at its expense, execute such
documents as are necessary to release such security interest.
          (h) Successors and Assigns. This Agreement and all obligations of the
Grantors hereunder shall be binding upon the successors and assigns of each
Grantor (including any debtor-in-possession on behalf of such Grantor) and
shall, together with the rights and

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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 Obligations or any portion thereof or interest therein shall in any
manner affect the Lien granted to the Agent, for the benefit of the Agent, the
Lenders and the Selected Revolving Lenders, hereunder. The Grantors may not
assign, sell, hypothecate or otherwise transfer any interest in or obligation
under this Agreement. Without limiting the generality of the foregoing, (A) but
subject to the provisions of Section 11.2 of the Credit Agreement, any Lender
may assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Lenders herein or otherwise and (B) any Selected
Revolving Lender may assign or otherwise transfer any Selected Revolving Lender
Hedge Agreements to which it is a party to any other Person in accordance with
the terms of such Selected Revolving Lender Hedge Agreement, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted to the Selected Revolving Lenders herein or otherwise.
     (i) Additional Grantors. The initial Subsidiary Grantors hereunder shall be
such of the Subsidiaries of LS&Co. as are signatories hereto on the date hereof.
From time to time subsequent to the date hereof, additional Domestic
Subsidiaries (other than Restricted Subsidiaries) of LS&Co. may become parties
hereto as additional Grantors (each an “Additional Grantor”), by executing a
counterpart substantially in the form of Exhibit II attached hereto (the
“Counterpart”). Upon delivery of any such counterpart to the Agent, notice of
which is hereby waived by the Grantors, each such Additional Grantor shall be a
Grantor and shall be as fully a party hereto as if such Additional Grantor were
an original signatory hereto. Each Grantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or release
of any other Grantor hereunder, nor by any election of the Agent not to cause
any Subsidiary of LS&Co. to become an Additional Grantor hereunder. This
Agreement shall be fully effective as to any Grantor that is or becomes a party
hereto regardless of whether any other Person becomes or fails to become or
ceases to be a Grantor hereunder.
     (j) IP Supplements. If any Grantor shall hereafter obtain rights to any new
IP Collateral or become entitled to the benefit of any Patent application or
Patent or any reissue, division, continuation, renewal, extension or
continuation-in-part of any Patent or any improvement of any Patent, then in any
such case, the provisions of this Agreement shall automatically apply thereto.
Within 45 days after the end of each Fiscal Quarter of LS&Co. during which any
Grantor files an application for any Patent, such Grantor shall execute and
deliver to the Agent an IP Supplement, substantially in the form of Exhibit III
attached hereto (an “IP Supplement”), pursuant to which such Grantor shall grant
to the Agent a security interest to the extent of its interest in such IP
Collateral. In addition, such Grantor shall, prior to the end of such 45-day
period, record the IP Supplement with the United States Patent and Trademark
Office. Upon delivery to the Agent of an IP Supplement, Schedule 1 attached
hereto and Schedule A to each Grant, as applicable, shall be deemed modified to
include reference to any right, title or interest in any existing IP Collateral
or any IP Collateral set forth on Schedule A to such IP Supplement. Each Grantor
hereby authorizes the Agent to modify this Agreement

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without the signature or consent of any Grantor by attaching Schedule 1, as
applicable, that have been modified to include such IP Collateral or to delete
any reference to any right, title or interest in any IP Collateral in which any
Grantor no longer has or claims any right, title or interest; provided, the
failure of any Grantor to execute an IP Supplement with respect to any
additional IP Collateral pledged pursuant to this Agreement shall not impair the
security interest of the Agent therein or otherwise adversely affect the rights
and remedies of the Agent hereunder with respect thereto. Notwithstanding the
foregoing, no Grantor shall be required to record the security interest of the
Agent in any IP Collateral, if such recordation would result in the grant of a
Patent, or any application therefor, in the name of the Agent.
          (k) Pledge Amendments. Each Grantor agrees that it will, upon
obtaining any additional Equity Interest or Debt, promptly (and in any event
within five Business Days) deliver to the Agent a Pledge Amendment, duly
executed by such Grantor, in substantially the form of Exhibit IV attached
hereto (a “Pledge Amendment”), in respect of the additional Pledged Interests or
Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of a
Pledge Amendment to the Agent, the representations and warranties contained in
clauses Sections 20(a) and 20(b) hereof shall be deemed to have been made by
such Grantor as to the Pledged Collateral described in such Pledge Amendment as
of the date thereof. Each Grantor hereby authorizes the Agent to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Interests or
Pledged Debt of such Grantor listed on any Pledge Amendment shall for all
purposes hereunder be considered Pledged Collateral of such Grantor; provided,
the failure of any Grantor to execute a Pledge Amendment with respect to any
additional Pledged Interests or Pledged Debt pledged pursuant to this Agreement
shall not impair the security interest of the Agent therein or otherwise
adversely affect the rights and remedies of the Agent hereunder with respect
thereto.
          (l) Amendments, Etc. No amendment, modification, termination or waiver
of any provision of this Agreement, and no consent to any departure by any
Grantor therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Agent and, in the case of any such amendment or
modification, by the Grantors; provided that this Agreement may be modified by
the execution of a counterpart by an Additional Grantor in accordance with
Section 32(i) hereof and the Grantors hereby waive any requirement of notice of
or consent to any such amendment. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.
          (m) Counterparts. This Agreement may be executed in any number of
counterparts, and by the Agent, each Lender, each Grantor and the Borrowers in
separate counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement; signature pages may be
detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
          (n) The Agent as Agent.
          (i) The Agent has been appointed to act as Agent hereunder by the
Lenders. The Agent shall be obligated, and shall have the right hereunder, to
make

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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 benefits
as to any actions taken or omitted to be taken by it under this Agreement while
it was the Agent hereunder.
          (iii) The Agent shall not be deemed to have any duty whatsoever with
respect to any Selected Revolving Lender until it shall have received written
notice in form and substance satisfactory to the Agent from a Grantor or the
Selected Revolving Lender as to the existence and terms of the applicable
Selected Revolving Lender Hedge Agreement or Selected Revolving Lender Cash
Management Services and unless such Selected Revolving Lender has satisfied the
requirements of the proviso in Section 3.7 of the Credit Agreement. Each such
Selected Revolving Lender, by its acceptance of the benefits hereof, hereby
appoints the Agent as Agent for such Selected Revolving Lender for purposes of
this Agreement.
          (o) Governing Law.
          (i) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE STATE OF CALIFORNIA;
PROVIDED THAT THE AGENT AND THE OTHER BENEFICIARIES SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.

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          (ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES OF AMERICA LOCATED IN LOS ANGELES COUNTY, CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE GRANTORS, THE AGENT
AND THE OTHER BENEFICIARIES CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GRANTORS, THE
AGENT AND THE OTHER BENEFICIARIES IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING
ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT
RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT AND THE OTHER
BENEFICIARIES SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST
EACH GRANTOR OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT
OR THE OTHER BENEFICIARIES DEEM NECESSARY OR APPROPRIATE IN ORDER TO ENFORCE
THIS AGREEMENT AND (2) EACH OF THE GRANTORS, THE AGENT AND THE OTHER
BENEFICIARIES ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE
THOSE JURISDICTIONS.
          (iii) EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO EACH GRANTOR AT ITS
ADDRESS SET FORTH ON THE SIGNATURE PAGES HEREOF AND SERVICE SO MADE SHALL BE
DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED
IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT OR THE OTHER BENEFECIARIES TO SERVE LEGAL PROCESS BY ANY
OTHER MANNER PERMITTED BY LAW.
          (iv) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, ARISING OUT OF
OR RELATING TO THIS AGREEMENT INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN
ALLEGED TORT, SHALL AT THE REQUEST OF ANY PARTY HERETO BE DETERMINED BY BINDING
ARBITRATION. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association (“AAA”). The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award

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may be entered in any court having jurisdiction. The institution and maintenance
of an action for judicial relief or pursuant to a provisional or ancillary
remedy shall not constitute a waiver of the right of either party, including the
plaintiff, to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.
          (v) Notwithstanding the provisions of (iv) above, no controversy or
claim shall be submitted to arbitration without the consent of all parties if,
at the time of the proposed submission, such controversy or claim arises from or
related to an obligation to any Beneficiary which is secured by real estate
property collateral (exclusive of real estate space lease assignments). If all
the parties do not consent to submission of such a controversy or claim to
arbitration, the controversy or claim shall be determined as provided in
Section 32(o)(vi) hereof.
          (vi) At the request of any party a controversy or claim which is not
submitted to arbitration as provided and limited in Sections 33(o)(iv) and
33(o)(v) hereof shall be determined by judicial reference. If such an election
is made, the parties shall designate to the court a referee or referees selected
under the auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee if
there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered in
the court in which such proceeding was commenced.
          (vii) No provision of Sections 33(o)(iv) through 33(o)(vii) hereof
shall limit the right of the Agent or the other Beneficiaries to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration or reference. At
the Agent’s option, foreclosure under a deed of trust or mortgage may be
accomplished either by exercise of power of sale under the deed of trust or
mortgage or by judicial foreclosure.
          (p) Waiver of Jury Trial. SUBJECT TO THE PROVISIONS OF SECTION 33(o),
THE GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES EACH IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR
ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GRANTORS, THE AGENT AND THE
OTHER BENEFICIARIES EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES FURTHER AGREE THAT THEIR

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RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
          (q) Section Titles. The Section titles contained in this Agreement are
for convenience of reference only, are without substantive meaning and should
not be construed to modify, enlarge, or restrict any provision.
          (r) No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
          (s) Advice of Counsel. Each of the parties represents to each other
party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 33(o) and 33(p) hereof, with its counsel.
          (t) Benefit of the Lenders and the Selected Revolving Lenders. (i) All
Liens granted or contemplated hereby shall be for the benefit of the Agent, the
Lenders and the Selected Revolving Lenders, and all proceeds or payments
realized from Collateral in accordance herewith shall be applied to the Secured
Obligations in accordance with the terms of the Credit Agreement; and (ii) in
the event that any Lien hereunder is released by the Agent under the Credit
Agreement for any reason, such release shall be effective to release such Lien
with respect to all Obligations (including all obligations of LS&Co., LSIFCS and
each Material Domestic Subsidiary of LS&Co. under the Selected Revolving Lender
Hedge Agreements and any and all obligations of LS&Co. and each of its
Subsidiaries incurred in connection with the Selected Revolving Lender Cash
Management Services).
          (u) First Priority Lien. The Lien created by this Agreement 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 an
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.

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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.

                  [GRANTOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   
 
                BANK OF AMERICA, N.A.,
as Agent    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

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