exv10w2



 





Exhibit 10.2




SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




          SECOND AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT, dated as of October 11, 2007 (the
“Agreement”), among LEVI STRAUSS & CO., a Delaware corporation (“LS&Co”), and LEVI
STRAUSS FINANCIAL CENTER CORPORATION, a California corporation (“LSFCC” and, together with
LS&Co, the “Borrowers”), each of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of LS&Co
(each of such undersigned Subsidiaries being a “Subsidiary Grantor” and collectively the
“Subsidiary Grantors”) and each ADDITIONAL GRANTOR that may become a party hereto after the
date hereof in accordance with Section 32(i) hereof (the Borrowers, each Subsidiary Grantor
and each Additional Grantor being a “Grantor” and collectively the “Grantors”) and
BANK OF AMERICA, N.A., in its capacity as the Agent for the Lenders (the “Agent”), the
financial institutions (the “Lenders”) from time to time party to the Credit Agreement
referred to below and the Selected Revolving Lenders (as defined in the Credit Agreement referred
to below).




W I T N E S S E T H:




          WHEREAS, the Borrowers have entered into that certain First Amended and Restated Credit
Agreement dated as of May 18, 2006 among the Borrowers, the Lenders and the Agent for the Lenders
(the “First Amended and Restated Credit Agreement”);




          WHEREAS, the Lenders, at the request of the Borrowers, agreed to amend and restate the First
Amended and Restated Credit Agreement in its entirety and the Borrowers have entered into that
certain Second Amended and Restated Credit Agreement dated as of October 11, 2007 among the
Borrowers, the Lenders and the Agent for the Lenders (as such agreement may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”; the terms
defined therein and not otherwise defined herein being used herein as therein defined; the rules of
construction contained therein shall govern the interpretation of this Agreement mutatis mutandis);




          WHEREAS, LS&Co, Levi Strauss International Group Finance Coordination Services Comm V.A., a
Belgian corporation, or any successor thereto (“LSIFCS”) and certain Material Domestic
Subsidiaries of LS&Co may from time to time enter, or may from time to time have entered, into one
or more Selected Revolving Lender Hedge Agreements in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of LS&Co, LSIFCS and such Material Domestic
Subsidiaries under the Selected Revolving Lender Hedge Agreements, including the obligation of
LS&Co, LSIFCS and such Material Domestic Subsidiaries to make payments thereunder in the event of
early termination or close out thereof, together with all obligations of the Borrowers under the
Credit Agreement and the other Loan Documents, be secured hereunder in accordance with the terms
hereof;




          WHEREAS, LS&Co and certain of its Subsidiaries may from time to time enter, or may from time
to time have entered, into one or more arrangements for Selected Revolving Lender Cash Management
Services in accordance with the terms of the Credit Agreement, and it is desired that the
obligations of LS&Co and such Subsidiaries arising in connection with such





 









 







Selected Revolving Lender Cash Management Services, together with all obligations of the
Borrowers under the Credit Agreement and the other Loan Documents, be secured hereunder in
accordance with the terms hereof;




          WHEREAS, the Domestic Subsidiaries of LS&Co have entered into that certain First Amended and
Restated Subsidiary Guaranty dated as of October 11, 2007 (as such agreement may be amended,
restated, supplemented or otherwise modified from time to time, the “Subsidiary Guaranty”),
in favor of and for the benefit of the Agent, as agent for and representative of the Lenders and
the Selected Revolving Lenders;




          WHEREAS, in order to induce the Agent and the Lenders to amend and restate the First Amended
and Restated Credit Agreement and to continue to make the Loans and issue Letters of Credit as
provided for in the Credit Agreement, and to induce the Selected Revolving Lenders to continue to
enter into the Selected Revolving Lender Hedge Agreements and to continue to provide the Selected
Revolving Lender Cash Management Services, the Grantors have agreed to amend and restate that
certain First Amended and Restated Pledge and Security Agreement dated as of May 18, 2006 and to
continue to provide for a continuing Lien on the Collateral (as hereinafter defined) to secure the
Secured Obligations (as hereinafter defined);




          NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:




     1. DEFINED TERMS. The following terms shall have the following respective meanings:



          “Accounts” means all now owned or hereafter acquired or arising accounts of any
Grantor, as defined in the UCC, including any rights to payment for the sale of goods, whether or
not they have been earned by performance.




          “Affiliate” means, as to any Person, any other Person which, directly or indirectly,
is in control of, is controlled by, or is under common control with, such Person or which owns,
directly or indirectly, ten percent (10%) or more of the outstanding equity interest of such
Person. A Person shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the management and policies
of the other Person, whether through the ownership of voting securities, by contract, or otherwise.




          “Beneficiaries” means the Agent, the Lenders and each Selected Revolving Lender that
has satisfied the requirements of Section 32(n)(iii) hereof.




          “Chattel Paper” means all now owned or hereafter acquired chattel paper of any
Grantor, as defined in the UCC, including electronic chattel paper.




          “Deposit Accounts” means all “deposit accounts” as such term is defined in the UCC,
now or hereafter held in the name of any Grantor.




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          “Documents” means all documents as such term is defined in the UCC, including bills of
lading, warehouse receipts or other documents of title, now owned or hereafter acquired by any
Grantor.




          “Equipment” means all now owned or hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except Inventory) of any Grantor,
including embedded software, dies, tools, jigs, molds and office equipment, as well as all of such
types of property leased by any Grantor and all of such Grantor’s rights and interests with respect
thereto under such leases (including, without limitation, options to purchase); together with all
present and future additions and accessions thereto, replacements therefor, component and auxiliary
parts and supplies used or to be used in connection therewith, and all substitutes for any of the
foregoing, and all manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located in the United States.




          “General Intangibles” means all now owned or hereafter acquired general intangibles,
choses in action and causes of action and all other intangible personal property of any Grantor of
every kind and nature (other than Accounts), including, without limitation, all contract rights,
payment intangibles, Patent Collateral, corporate or other business records, inventions, designs,
blueprints, plans, specifications, patents, patent applications, trade secrets, computer software,
customer lists, registrations, licenses, franchises, tax refund claims, any funds which may become
due to such Grantor in connection with the termination of any Plan or other employee benefit plan
or any rights thereto and any other amounts payable to such Grantor from any Plan or other employee
benefit plan, rights and claims against carriers and shippers, rights to indemnification, business
interruption insurance and any proceeds thereof, property, casualty or any similar type of
insurance and any proceeds thereof, proceeds of insurance covering the lives of key employees on
which such Grantor is beneficiary, rights to receive dividends, distributions, cash, Instruments
and other property in respect of or in exchange for pledged equity interests or Investment Property
and any letter of credit, guarantee, claim, security interest or other security held by or granted
to such Grantor; provided, however, that the General Intangibles shall not include
the IP Facility Collateral or the Trademark Subfacility Collateral.




          “Goods” means all “goods”, as defined in the UCC, now owned or hereafter acquired by
any Grantor, wherever located in the United States, including embedded software to the extent
included in “goods” as defined in the UCC.




          “Instruments” means all instruments as such term is defined in the UCC, now owned or
hereafter acquired by any Grantor.




          “Inventory” means all now owned or hereafter acquired inventory, goods and merchandise
of any Grantor, wherever located in the United States, to be furnished under any contract of
service or held for sale or lease, all returned goods, raw materials, work-in-process, finished
goods (including embedded software), other materials and supplies of any kind, nature or
description which are used or consumed in such Grantor’s business or used in connection with the
packing, shipping, advertising, selling or finishing of such goods and merchandise, and all
documents of title or other Documents representing them.




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          “Investment Property” means all right, title and interest of any Grantor in and to any
and all: (a) securities whether certificated or uncertificated; (b) securities entitlements; (c)
securities accounts; (d) commodity contracts; or (e) commodity accounts.




          “IP Facility Agent” means the agent for the lenders to an IP Facility.




          “IP Facility Security Agreement” means a security agreement executed in connection
with an IP Facility which grants the lenders thereto a first priority lien on all or a portion of
the IP Facility Collateral.




          “Letter-of-Credit Rights” means “letter-of-credit rights” as such term is defined in
the UCC, now owned or hereafter acquired by any Grantor, including rights to payment or performance
under a letter of credit, whether or not any Grantor, as beneficiary, has demanded or is entitled
to demand payment or performance.




          “Patent Collateral” means all rights, title and interest in and to all patents and
patent applications and rights and interests in patents and patent applications under any law of
the United States that are presently, or in the future may be, owned or held by any Grantor and all
patents and patent applications and rights, title and interests in patents and patent applications
under any law of the United States that are presently, or in the future may be, owned by such
Grantor in whole or in part (including the patents and patent applications set forth on
Schedule 1 attached hereto, as updated from time to time in accordance with Section
32(j) hereof), all rights (but not obligations) corresponding thereto (including the right,
exercisable only upon the occurrence and during the continuation of an Event of Default, to sue for
past, present and future infringements in the name of such Grantor or in the name of the Agent or
the Lenders), and all re-issues, divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively referred to as the
“Patents”), it being understood that the rights and interests included in the Patent
Collateral hereby shall include, without limitation, all rights and interests pursuant to licensing
or other contracts in favor of such Grantor pertaining to Patent applications and Patents presently
or in the future owned or used by third parties but, in the case of third parties which are not
Affiliates of such Grantor, only to the extent permitted by such licensing or other contracts and,
if not so permitted, only with the consent of such third parties.




          “Payment Account” means each bank account established pursuant to this Agreement, to
which the proceeds of Accounts and other Collateral are deposited or credited, and which is
maintained in the name of the Agent or any Grantor, as the Agent may determine, on terms acceptable
to the Agent.




          “Pledged Collateral” means Pledged Debt, Pledged Interests and all proceeds thereof.




          “Pledged Debt” means all indebtedness from time to time owed to any Grantor by any
obligor that is, or becomes, a direct or indirect Subsidiary of such Grantor, or by any obligor of
which such Grantor is a direct or indirect Subsidiary, including the indebtedness set forth in
Schedule 2(b) attached hereto, as Schedule 2(b) may be updated upon the execution
of this Agreement by an Additional Grantor, and issued by the obligors named therein, and the
instruments evidencing such indebtedness;




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          “Pledged Interests” means all shares of stock, partnership interests, interests in
joint ventures, limited liability company interests and all other equity interests now or hereafter
owned by any Grantor in any Person that is, or becomes, a direct Domestic Subsidiary of such
Grantor, including all securities convertible into, and rights, warrants, options and other rights
to purchase or otherwise acquire, any of the foregoing now or hereafter owned by such Grantor,
including those set forth in Schedule 2(a) attached hereto, as Schedule 2(a) may be
updated upon the execution of this Agreement by an Additional Grantor, and the certificates or
other instruments representing any of the foregoing and any interest of such Grantor in the entries
on the books of any securities intermediary pertaining thereto;




          “Software” means all “software” as such term is defined in the UCC, now owned or
hereafter acquired by any Grantor, other than software embedded in any category of Goods, including
all computer programs and all supporting information provided in connection with a transaction
related to any program.




          “Supporting Obligations” means all supporting obligations as such term is defined in
the UCC.




          “Trademark Subfacility Collateral” means, collectively, the “Collateral” as defined in
the Trademark Security Agreement.




          “UCC” means the Uniform Commercial Code, as in effect from time to time, of the State
of New York or of any other state the laws of which are required as a result thereof to be applied
in connection with the issue of perfection of security interests.




          “Uniform Commercial Code jurisdiction” means any jurisdiction that has adopted
“Revised Article 9” of the UCC on or after July 1, 2001.




          All other capitalized terms used but not otherwise defined herein have the meanings given to
them in the Credit Agreement or in Annex A thereto. All other undefined terms contained in this
Agreement, unless the context indicates otherwise, have the meanings provided for by the UCC to the
extent the same are used or defined therein.




     2. GRANT OF LIEN.



          (a) As security for all Secured Obligations, each Grantor hereby continues to provide to the
Agent, for the benefit of the Beneficiaries, a continuing security interest in and lien on all of
the following property and assets of such Grantor, whether now owned or existing or hereafter
acquired or arising, regardless of where located in the United States:




          (i) all Accounts;




          (ii) all Inventory;




          (iii) all contract rights;




          (iv) all Chattel Paper;




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          (v) all Documents;




          (vi) all Instruments;




          (vii) all Supporting Obligations and Letter-of-Credit Rights;




          (viii) all General Intangibles (including Patent Collateral, payment intangibles and
Software);




          (ix) all Goods;




          (x) all Equipment;




          (xi) all Investment Property;




          (xii) all Pledged Interests and all dividends, distributions, returns of capital, cash,
warrants, options, rights, instruments, rights to vote or manage the business of any Person that
is, or becomes, a direct Domestic Subsidiary of such Grantor pursuant to organizational documents
governing the rights and obligations of the stockholders, partners, members or other owners thereof
and other property or proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Pledged Interests;




          (xiii) all Pledged Debt and all interest, cash, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of or in exchange for
any or all of the Pledged Debt;




          (xiv) all money, cash, cash equivalents, securities and other property of any kind of any
Grantor held directly or indirectly by the Agent or any Lender;




          (xv) all Deposit Accounts, credits, and balances with and other claims against the Agent or
any Lender or any of their Affiliates or any other financial institution with which any Grantor
maintains deposits, including any Payment Accounts;




          (xvi) all books, records and other property related to or referring to any of the foregoing,
including books, records, account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any of the foregoing; and




          (xvii) all accessions to, substitutions for and replacements, products and proceeds of any of
the foregoing, including, but not limited to, proceeds of any insurance policies, claims against
third parties, and condemnation or requisition payments with respect to all or any of the
foregoing.



All of the foregoing, together with the Real Estate covered by the Mortgage(s), all equity
interests in Subsidiaries pledged to the Agent and all other property of the Grantors in which the
Agent or any Lender may at any time be granted a Lien as collateral for the Secured Obligations is
herein collectively referred to as the “Collateral.”





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          Notwithstanding anything herein to the contrary, in no event shall the Collateral include, and
no Grantor shall be deemed to have granted a security interest in any of such Grantor’s rights or
interests in any license, contract or agreement to which such Grantor is a party or any of its
rights or interests thereunder to the extent, but only to the extent, that such a grant would,
under the terms of such license, contract or agreement or otherwise, result in a breach of the
terms of, or constitute a default under, any license, contract or agreement to which such Grantor
is a party (other than to the extent that any such term would be rendered ineffective pursuant to
the UCC or any other applicable law (including the Bankruptcy Code) or principles of equity);
provided, that immediately upon the ineffectiveness, lapse or termination of any such provision,
the Collateral shall include, and such Grantor shall be deemed to have granted a security interest
in, all such rights and interests as if such provision had never been in effect.




          Each item of Collateral listed in this Section 2 that is defined in Articles 8 or 9 of
the UCC shall have the meaning set forth in the UCC, as it exists on the date of this Agreement or
as it may hereafter be amended, it being the intention of the Grantors that the description of the
Collateral set forth above be construed to include the broadest possible range of assets, except
for assets expressly excluded as set forth above and below.




          Notwithstanding anything herein to the contrary, neither the Borrowers nor any other Grantor
shall be deemed to have granted a security interest in (i) any Principal Property, (ii) any capital
stock of any Restricted Subsidiary, (iii) any Pledged Debt of or issued by any Restricted
Subsidiary, (iv) any IP Facility Collateral, (v) any Equity Interests of any Foreign Subsidiary,
(vi) Equipment subject to an Equipment Financing Transaction permitted under the Credit Agreement,
or (vii) any Trademark Subfacility Collateral.




          (b) All of the Secured Obligations shall be secured by all of the Collateral.




     3. SECURITY FOR OBLIGATIONS.



          This Agreement secures, and the Collateral assigned by each Grantor is collateral security
for, the prompt payment or performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including the payment of amounts that
would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all Secured Obligations of such Grantor. “Secured Obligations” means:




          (a) with respect to the Borrowers, all Obligations and liabilities of every nature of the
Borrowers now or hereafter existing under or arising out of or in connection with the Credit
Agreement and the other Loan Documents and, except as set forth below, all obligations and
liabilities of every nature now or hereafter existing (i) of LS&Co, LSIFCS and each Material
Domestic Subsidiary of LS&Co, under or arising out of or in connection with any Selected Revolving
Lender Hedge Agreement and (ii) of LS&Co and each Subsidiary of LS&Co, arising out of or in
connection with any Selected Revolving Lender Cash Management Services; and




          (b) with respect to each Subsidiary Grantor and Additional Grantor, all obligations and
liabilities of every nature of such Grantor now or hereafter existing under or





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arising out of or in connection with the Guaranty and, except as set forth below, all
obligations and liabilities of every nature now or hereafter existing (i) of LS&Co, LSIFCS and each
Material Domestic Subsidiary of LS&Co, under or arising out of or in connection with any Selected
Revolving Lender Hedge Agreement to the extent provided in Section 3.12 of the Credit
Agreement and (ii) of LS&Co and each Subsidiary of LS&Co, arising out of or in connection with any
Selected Revolving Lender Cash Management Services;



in each case together with all extensions or renewals thereof, whether for principal, interest
(including interest that, but for the filing of a petition in bankruptcy with respect to the
Borrowers or any other Grantor, would accrue on such obligations, whether or not a claim is allowed
against such Borrower or such Grantor for such interest in the related bankruptcy proceeding),
reimbursement of amounts drawn under Letters of Credit, payments for early termination or close out
of the Selected Revolving Lender Hedge Agreements, fees, expenses, indemnities or otherwise,
whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, whether or not jointly owed with others, and whether or not from time to time
decreased or extinguished and later increased, created or incurred, and all or any portion of such
obligations or liabilities that are paid, to the extent all or any part of such payment is avoided
or recovered directly or indirectly from the Agent or any Lender or Selected Revolving Lender as a
preference, fraudulent transfer or otherwise, and all obligations of every nature of the Grantors
now or hereafter existing under this Agreement.




     4. PERFECTION AND PROTECTION OF SECURITY INTEREST.



          (a) Each Grantor shall, at its expense, perform all reasonable steps requested by the Agent at
any time to perfect, maintain, protect, and enforce the Agent’s Liens, including: (i) executing,
delivering and/or filing and recording of the Mortgage(s) and executing and filing financing or
continuation statements, and amendments thereof, in form and substance reasonably satisfactory to
the Agent; (ii) whenever an Event of Default has occurred and is continuing, transferring Inventory
to warehouses or other locations designated by the Agent; (iii) placing notations on such Grantor’s
books of account to disclose the Agent’s security interest; and (iv) taking such other steps as are
deemed necessary or reasonably desirable by the Agent to maintain and protect the Agent’s Liens.
Each Grantor agrees that a carbon, photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a financing statement.




          (b) At the reasonable request of the Agent, each Grantor shall deliver to the Agent all
Collateral consisting of a reasonable sample of negotiable Documents and all material negotiable
Documents, certificated securities (accompanied by stock papers executed in blank), Chattel Paper
and Instruments evidencing, comprising or representing the Collateral (including the Pledged
Collateral), promptly after such Grantor receives the same, duly endorsed or accompanied by duly
executed instruments of transfer or assignment in blank. Upon the occurrence and during the
continuation of an Event of Default, the Agent shall have the right, without notice to the
Grantors, to transfer to or to register in the name of the Agent or any of its nominees any or all
of the Pledged Collateral, subject to the revocable rights specified in Section 21(a)
hereof. In addition, the Agent shall have the right at any time to exchange certificates or





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instruments representing or evidencing Pledged Collateral for certificates or instruments of
smaller or larger denominations.




          (c) Each Grantor shall, in accordance with the terms of the Credit Agreement, obtain or use
its commercially reasonable efforts to obtain waivers or subordinations of Liens from landlords and
mortgagees, and such Grantor shall in all instances (other than as otherwise agreed between LS&Co
and the Agent) obtain signed acknowledgements of the Agent’s Liens from bailees having possession
of any Collateral that they hold for the benefit of the Agent.




          (d) If required by the terms of the Credit Agreement and not waived by the Agent in writing
(which waiver may be revoked), each Grantor shall obtain authenticated control agreements from each
issuer of uncertificated securities, securities intermediary, or commodities intermediary issuing
or holding any financial assets or commodities to or for such Grantor.




          (e) If any Grantor is or becomes the beneficiary of a letter of credit in respect of an amount
exceeding $5,000,000, such Grantor shall promptly notify the Agent thereof and, upon the request of
the Agent, enter into a tri-party agreement with the Agent and the issuer and/or confirmation bank
with respect to Letter-of-Credit Rights assigning such Letter-of-Credit Rights to the Agent and
directing all payments thereunder to the Payment Account, all in form and substance reasonably
satisfactory to the Agent.




          (f) Upon the request of the Agent, each Grantor shall take all reasonable steps necessary to
grant the Agent control of all electronic chattel paper in accordance with the Code and all
“transferable records” as defined in the Uniform Electronic Transactions Act.




          (g) Each Grantor hereby irrevocably authorizes the Agent at any time and from time to time to
file in any filing office in any Uniform Commercial Code jurisdiction any initial financing
statements and amendments thereto that (a) indicate the Collateral (i) as all assets of such
Grantor or words of similar effect, regardless of whether any particular asset comprised in the
Collateral falls within the scope of Article 9 of the UCC of the State of New York or such
jurisdiction, or (ii) as being of an equal or lesser scope or with greater detail, and (b) contain
any other information required by part 5 of Article 9 of the UCC of the State of New York for the
sufficiency or filing office acceptance of any financing statement or amendment, including (i)
whether such Grantor is an organization, the type of organization and any organization
identification number issued to such Grantor, and (ii) in the case of a financing statement filed
as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates. Each Grantor agrees to
furnish any such information to the Agent promptly upon request. Each Grantor also ratifies its
authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date hereof.




          (h) Each Grantor shall promptly notify the Agent of any material commercial tort claim (as
defined in the UCC) acquired by it and unless otherwise consented to by the Agent, such Grantor
shall enter into a supplement to this Agreement, granting to the Agent a Lien in such commercial
tort claim.




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          (i) From time to time, any Grantor shall, upon the Agent’s request, execute and deliver
confirmatory written instruments pledging to the Agent, for the ratable benefit of the Agent, the
Lenders and the Selected Revolving Lenders, the Collateral, but such Grantor’s failure to do so
shall not affect or limit any security interest or any other rights of the Agent or any Lender in
and to the Collateral with respect to such Grantor. So long as the Credit Agreement is in effect
and until Full Payment of all Secured Obligations, the Agent’s Liens shall continue in full force
and effect in all Collateral (whether or not deemed eligible for the purpose of calculating the
Borrowing Base or as the basis for any advance, loan, extension of credit, or other financial
accommodation).




          (j) No Reincorporation. Except as permitted under the Credit Agreement, no Grantor
shall reincorporate or reorganize itself under the laws of any jurisdiction other than the
jurisdiction in which it is incorporated or organized as of the date hereof or change its type of
entity as identified on Schedule 3 attached hereto unless it provides notice to the Agent
of such reincorporation or reorganization at least thirty (30) days before such reincorporation or
reorganization.




          (k) Terminations, Amendments Not Authorized. Each Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination statement with respect to
any financing statement without the prior written consent of the Agent and agrees that it will not
do so without the prior written consent of the Agent, subject to such Grantor’s rights under
Section 9-509(d)(2) of the UCC of the State of New York.




          (l) No Restriction on Payments to the Agent. Except as permitted under the Credit
Agreement, the Grantors shall not enter into any Contract that restricts or prohibits the grant of
a security interest in Accounts, Chattel Paper, Instruments or payment intangibles or the proceeds
of the foregoing to the Agent.




     5. LOCATION OF COLLATERAL. Each Grantor represents and warrants to the Agent and the
Lenders that: (i) Schedule 4 attached hereto is a correct and complete list of the
location of such Grantor’s chief executive office, the location of its books and records, the
locations of the Collateral (other than (A) in-transit Inventory, (B) any location at which
Inventory excluded from the Eligible Inventory in the most recent Borrowing Base Certificate
delivered to the Agent is located and (C) locations of Inventory in the form of raw materials,
provided, that the aggregate amount of all Eligible Inventory in the form of raw materials
does not exceed $10,000,000); and (ii) Schedule 4 correctly identifies (A) any of such
facilities and locations that are not owned by such Grantor and (B) any of such facilities and
locations in which such Grantor is not a tenant and sets forth the names of the owners, the lessors
or the operators of such facilities and locations. Each Grantor covenants and agrees that it will
not (i) maintain any Collateral (other than (A) in-transit Inventory, (B) Inventory that was
excluded from the Eligible Inventory in the most recent Borrowing Base Certificate delivered to the
Agent and (C) Inventory in the form of raw materials, provided, that the aggregate amount
of all Eligible Inventory in the form of raw materials does not exceed $10,000,000) at any location
other than those locations listed for such Grantor on Schedule 4, (ii) otherwise change or
add to any of such locations, or (iii) change the location of its chief executive office from the
location identified in Schedule 4, unless it gives the Agent at least thirty (30) days’
prior written notice




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thereof and executes any and all financing statements and other documents that the
Agent reasonably requests in connection therewith. Without limiting the foregoing, each Grantor represents that all
of its Inventory (other than Inventory located at contractors’ premises or mills, in-transit Inventory and bill and hold Inventory)
is, and covenants that all of its Inventory (other than Inventory located at contractors’ premises or mills, in-transit Inventory and bill
and hold Inventory) will be, located either (i) on premises owned by such Grantor, (ii) on premises leased by such Grantor, provided that the
Agent has received an executed landlord waiver from the landlord of such premises in form and substance satisfactory to the Agent, or (iii) in a warehouse
or with a bailee, provided that the Agent has received an executed bailee letter from the applicable Person in form and substance satisfactory to the Agent;
provided, however, that in each case the Agent may in its sole discretion waive such requirement in writing to such extent and under such conditions
as the Agent may from time to time in its sole discretion determine.




     6. OFFICE LOCATIONS; JURISDICTION OF ORGANIZATION; NAMES.



          (a) Schedule 3 attached hereto identifies each Grantor’s name as of the Amendment Date
as it appears in official filings in the state of its incorporation or other organization, the type
of entity of such Grantor (including corporation, partnership, limited partnership or limited
liability company), organizational identification number issued by such Grantor’s state of
incorporation or organization or a statement that no such number has been issued and the
jurisdiction in which such Grantor is incorporated or organized. Each Grantor has only one state
of incorporation or organization.




          (b) No Grantor (or predecessor by merger or otherwise of such Grantor) has, within the one
year period preceding the date hereof, or, in the case of an Additional Grantor, the date of the
applicable Counterpart (as defined in Section 32(i) hereof), had a different name from the
name of such Grantor listed on the signature pages hereof, except the names set forth on
Schedule 5 attached hereto, as Schedule 5 may be updated upon the execution of this
Agreement by an Additional Grantor.




     7. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor represents and
warrants to the Agent and the Lenders and agrees with the Agent and the Lenders that: (a) except
as expressly permitted by the Credit Agreement, such Grantor owns its interests in the Collateral
free and clear of any Lien; (b) the Agent’s Liens in the Collateral will not be subject to any
prior Lien except for those Liens identified in clauses (c), (d) and (e) of
the definition of Permitted Liens; and (c) such Grantor will use, store, and maintain the
Collateral with all reasonable care and will use such Collateral for lawful purposes only.



11









 





     8. APPRAISALS.



          (a) (i) On or prior to the Trademark Subfacility Payoff Date, (A) if the Minimum Excess
Availability Amount is less than $100,000,000 at any time during any Fiscal Year, no more than
three (3) times during such Fiscal Year, (B) if the Minimum Excess Availability Amount is equal to
or greater than $100,000,000 at all times during any Fiscal Year but less than $125,000,000 at any
time during any Fiscal Year, no more than two (2) times during such Fiscal Year, or (C) if the
Minimum Excess Availability Amount is equal to or greater than $125,000,000 at all times during any
Fiscal Year, no more than one (1) time during such Fiscal Year, or (ii) after the Trademark
Subfacility Payoff Date, (A) during any Minimum Excess Availability Period, no more than one (1)
time each Fiscal Year, or (B) during any other period, no more than two (2) times each Fiscal Year,
the Agent may, in its reasonable discretion, at each Grantor’s expense, arrange for appraisals or
updates thereof of all of the Inventory constituting finished goods from an appraiser, and prepared
on a basis, satisfactory to the Agent, such appraisals and updates to include, without limitation,
information required by applicable law and regulation and by the internal policies of the Lenders;
provided, however, that subject to Section 8(b) hereof, after the Trademark
Subfacility Payoff Date no more than two (2) such appraisals or updates may be arranged for in any
given Fiscal Year.




          (b) Whenever a Default or Event of Default exists, the Agent shall, at each Grantor’s expense
and at the Agent’s discretion, arrange for appraisals or updates thereof of any or all of the
Collateral from an appraiser, and prepared on a basis, satisfactory to the Agent, such appraisals
and updates to include, without limitation, information required by applicable law and regulation
and by the internal policies of the Lenders.




     9. ACCESS AND EXAMINATION.



          (a) (i) On or prior to the Trademark Subfacility Payoff Date, (A) if the Minimum Excess
Availability Amount is less than $100,000,000 at any time during any Fiscal Year, no more than
three (3) times during such Fiscal Year, (B) if the Minimum Excess Availability Amount is equal to
or greater than $100,000,000 at all times during any Fiscal Year but less than $125,000,000 at any
time during any Fiscal Year, no more than two (2) times during such Fiscal Year, or (C) if the
Minimum Excess Availability Amount is equal to or greater than $125,000,000 at all times during any
Fiscal Year, no more than one (1) time during such Fiscal Year, or (ii) after the Trademark
Subfacility Payoff Date, (A) during any Minimum Excess Availability Period, no more than one (1)
time each Fiscal Year, or (B) during any other period, no more than three (3) times each Fiscal
Year, the Agent may, in its reasonable discretion and upon ten (10) days notice to the relevant
Grantor, accompanied by any Lender which so elects, at all reasonable times during regular business
hours have access to, examine, audit, make extracts from or copies of and inspect any or all of
each Grantor’s records, files, and books of account and the Collateral, and discuss such Grantor’s
affairs with such Grantor’s officers and management; provided, however, that subject to
Section 9(b) hereof, after the Trademark Subfacility Payoff Date no more than three (3)
such examinations and inspections may occur in any given Fiscal Year. Each Grantor will deliver to
the Agent any instrument necessary for the Agent to obtain records from any service bureau
maintaining records for such Grantor. The Agent may, and at the direction of the Majority Lenders
shall, at any time whenever a Default or




12









 







Event of Default exists, and at such Grantor’s expense,
make copies of all of such Grantor’s books and records, or require such Grantor to deliver such
copies to the Agent. The Agent may, without expense to the Agent, use such of such Grantor’s
respective personnel, supplies, and Real Estate as may be reasonably necessary for maintaining or
enforcing the Agent’s Liens. The Agent shall have the right, at any time, in the Agent’s name or
in the name of a nominee of the Agent, to verify the validity, amount or any other matter relating
to the Accounts, Inventory, or other Collateral, by mail, telephone, or otherwise.




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




     10. CERTAIN COVENANTS OF THE GRANTORS.



          Each Grantor shall:




          (a) not use or permit any Collateral to be used unlawfully or in violation of any provision of
this Agreement or any applicable statute, regulation or ordinance or any policy of insurance
covering the Collateral, except where such violation would not have a Material Adverse Effect; and




          (b) if the Agent gives value to enable such Grantor to acquire rights in or the use of any
Collateral, use such value for such purposes.




     11. SPECIAL COVENANTS WITH RESPECT TO THE PATENT COLLATERAL.



          (a) Each Grantor shall:





          (i) diligently keep reasonable records respecting the Patent Collateral and at all
times keep at least one complete set of its records concerning such Collateral at its chief
executive office or principal place of business; and




          (ii) furnish to the Agent from time to time at the Agent’s reasonable request
statements and schedules further identifying and describing any Patent Collateral and such
other reports in connection with such Collateral, all in reasonable detail.



          (b) In addition to the filing of UCC financing statements, the filing of a Grant of Patent
Security Interest, substantially in the form of Exhibit I attached hereto, with the United
States Patent and Trademark Office (such Grant of Patent Security Interest being referred to herein
as a “Grant”), the security interests in the Collateral granted to the Agent for the
ratable benefit of the Lenders and the Selected Revolving Lenders will constitute perfected
security interests therein, to the extent such security interests may be perfected by filing in the
United States, prior to all other Liens (except for Liens expressly permitted by the Credit
Agreement and Liens on software licensed from a third party), and all filings and other actions
necessary or desirable to perfect and protect such security interest have been duly made or taken.





13









 








          (c) Except as otherwise provided in this Section 11, each Grantor shall continue to
collect, at its own expense, all amounts due or to become due to such Grantor in respect of the
Patent Collateral or any portion thereof. In connection with such collections, each Grantor may
take (and, after the occurrence and during the continuance of any Event of Default at the Agent’s
reasonable direction, shall take) such action as such Grantor or the Agent may deem reasonably
necessary or advisable to enforce collection of such amounts; provided, the Agent shall
have the right at any time, upon the occurrence and during the continuation of an Event of Default
and upon written notice to such Grantor of its intention to do so, to notify the obligors with
respect to any such amounts of the existence of the security interest created hereby and to direct
such obligors to make payment of all such amounts directly to the Agent, and, upon such
notification and at the expense of such Grantor, to enforce collection of any such amounts and to
adjust, settle or compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by any Grantor of the notice from the Agent
referred to in the proviso to the preceding sentence and during the continuation of any Event of
Default, (i) all amounts and proceeds (including checks and other instruments) received by each
Grantor in respect of amounts due to such Grantor in respect of the Patent Collateral or any
portion thereof shall be received in trust for the benefit of the Agent hereunder, shall be
segregated from other funds of such Grantor and shall be forthwith paid over or delivered to the
Agent in the same form as so received (with any necessary endorsement) to be held as cash
Collateral and applied as provided by Section 32(t) hereof, and (ii) such Grantor shall not
adjust, settle or compromise the amount or payment of any such amount or release wholly or partly
any obligor with respect thereto or allow any credit or discount thereon.




          (d) Except as provided herein, each Grantor shall have the right to commence and prosecute in
its own name, as real party in interest, for its own benefit and at its own expense, such suits,
proceedings or other actions for infringement, unfair competition, dilution, misappropriation or
other damage, or reexamination or reissue proceedings as are necessary to protect the Patent
Collateral. The Agent shall provide, at such Grantor’s expense, all reasonable and necessary
cooperation in connection with any such suit, proceeding or action including joining as a necessary
party.




          (e) In addition to, and not by way of limitation of, the granting of a security interest in
the Collateral pursuant hereto, each Grantor hereby grants to the Agent, for use upon the
occurrence and during the continuation of an Event of Default, the irrevocable, nonexclusive right
and license to use all present and future trademarks, trade names, trade dress, copyrights, patents
or technical processes (including the Patent Collateral, the Trademark Subfacility Collateral and
the IP Facility Collateral) owned or used by such Grantor that relate to the Collateral and any
other collateral granted by such Grantor as security for the Secured Obligations, together with any
goodwill associated therewith, all to the extent necessary to enable the Agent to realize on, and
exercise all rights of the Agent and the Lenders in relation to, the Collateral in accordance with
this Agreement (including without limitation advertising in all media as the Agent deems
appropriate in connection with marketing and sales of the Collateral) and to enable any transferee
or assignee of the Collateral to enjoy the benefits of the Collateral, and including in such
license access to all media in which any of the licensed items may be recorded or stored and to all
computer software and programs used for the compilation or printout thereof; provided,
however, the license granted under this Section 11(e) shall not be




14









 







construed to limit such
Grantor’s ability to take reasonable steps, in accordance with its then current business practices,
to protect and preserve the Trademark Subfacility Collateral and the IP Facility Collateral. This
right shall inure to the benefit of all successors, assigns and transferees of the Agent and its
successors, assigns and transferees, whether by voluntary conveyance, operation of law, assignment,
transfer, foreclosure, deed in lieu of foreclosure or otherwise. Such right and license shall be
granted free of charge, without requirement that any monetary payment whatsoever be made to such
Grantor. In addition, each Grantor hereby grants to the Agent and its employees, representatives
and agents the right to visit such Grantor’s and any of its Affiliate’s or subcontractor’s plants,
facilities and other places of business that are utilized in connection with the manufacture,
production, inspection, storage or sale of products and services sold or delivered under any of the
Patent Collateral (or which were so utilized during the prior six month period), and to inspect the
quality control and all other records relating thereto upon reasonable advance written notice to
such Grantor and at reasonable dates and times and as often as may be reasonably requested. If and
to the extent that any Grantor is permitted to license the Patent Collateral, the Agent shall
promptly enter into a non-disturbance agreement or other similar arrangement, at such Grantor’s
request and expense, with such Grantor and any licensee of any Patent Collateral permitted
hereunder in form and substance reasonably satisfactory to the Agent pursuant to which (i) the
Agent shall agree not to disturb or interfere with such licensee’s rights under its license
agreement with such Grantor so long as such licensee is not in default thereunder, and (ii) such
licensee shall acknowledge and agree that the Patent Collateral licensed to it is subject to the
security interest created in favor of the Agent and the other terms of this Agreement.




     12. SPECIAL COVENANTS WITH RESPECT TO THE PLEDGED COLLATERAL.



          Except as otherwise not prohibited by the Credit Agreement, each Grantor shall:




          (a) not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant
any option with respect to, any of the Pledged Collateral, (ii) create or suffer to exist any Lien
upon or with respect to any of the Pledged Collateral, except for Permitted Liens, or (iii) permit
any issuer of Pledged Interests to merge or consolidate unless all the outstanding Equity Interests
of the surviving or resulting Person is, upon such merger or consolidation, pledged hereunder and
no cash, securities or other property is distributed in respect of the outstanding shares of any
other constituent Person; provided, if the surviving or resulting Person upon any such
merger or consolidation involving an issuer of Pledged Interests is a Foreign Subsidiary, then such
Grantor shall not be required to pledge outstanding Equity Interests of such surviving or resulting
Person;




          (b) (i) cause each issuer of Pledged Interests not to issue any Equity Interests in addition
to or in substitution for the Pledged Interests issued by such issuer, except to such Grantor,
(ii) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and
all additional Equity Interests of each issuer of Pledged Interests, and (iii) pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any and all Equity Interests of
any Person that, after the date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of such Grantor; provided, notwithstanding anything contained in





15









 







this clause
(iii) to the contrary, no Grantor shall be required to pledge the outstanding Equity Interests of
any Foreign Subsidiary or any Restricted Subsidiary;




          (c) pledge hereunder, immediately upon their issuance, any and all instruments or other
evidences of additional indebtedness from time to time owed to such Grantor by any obligor on the
Pledged Debt; provided, notwithstanding anything contained in this clause (c) to the
contrary, any such Grantor shall not be required to pledge any such instruments or other evidences
of additional indebtedness owed to such Grantor by any Restricted Subsidiary;




          (d) pledge hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to such Grantor by any Person that after the date
of this Agreement becomes, as a result of any occurrence, a direct or indirect Subsidiary of such
Grantor; provided, notwithstanding anything contained in this clause (d) to the contrary,
any such Grantor shall not be required to pledge any such instruments or other evidences of
indebtedness owed to such Grantor by any Restricted Subsidiary;




          (e) at its expense (i) perform and comply in all material respects with all terms and
provisions of any agreement related to the Pledged Collateral required to be performed or complied
with by it, (ii) maintain all such agreements in full force and effect, and (iii) enforce all such
agreements in accordance with their terms;




          (f) deliver to the Agent, immediately upon their issuance, any and all Instruments or other
evidences of additional Debt from time to time owed to such Grantor (i) by any obligor on the
Pledged Debt, and (ii) by any Person that after the date of this Agreement becomes, as a result of
any occurrence, a direct or indirect Subsidiary of such Grantor; and




          (g) cause the terms of any partnership or limited liability company agreement governing Equity
Interests included in the Pledged Collateral to provide that such interests are securities governed
by Division 8 of the UCC.




     13. COLLATERAL REPORTING. The Borrowers shall provide the Agent with the following
documents, consolidated for both Borrowers, at the following times in form satisfactory to the
Agent.



          (a) On a monthly basis by the 20th day of each month, or more frequently if requested by the
Agent:





          (i) a Borrowing Base Certificate for the immediately preceding month, together with a
schedule of the Borrowers’ Accounts created, credits given, cash collected and other
adjustments to Accounts since the date of the last monthly Borrowing Base Certificate;




          (ii) a monthly aging of the Borrowers’ Accounts, together with a reconciliation to the
Borrowers’ general ledger;




          (iii) a monthly aging of the Borrowers’ accounts payable; and



16









 






          (iv) a detailed calculation of Eligible Accounts as of the end of the immediately
preceding month.



          (b) On a monthly basis, by the Wednesday of the fourth Fiscal Week of each Fiscal Month, or
more frequently if requested by the Agent:





          (i) a monthly Inventory report by category and location; and




          (ii) a detailed calculation of Eligible Inventory as of the end of the immediately
preceding month.



          (c) During any period other than a Minimum Excess Availability Period, on a weekly basis by
the second Business Day of each week, or more frequently at the option of the Borrowers:





          (i) a Borrowing Base Certificate for the immediately preceding week, together with a
schedule of the Borrowers’ Accounts created, credits given, cash collected and other
adjustments to Accounts since the date of the last weekly Borrowing Base Certificate, which
Borrowing Base Certificate shall reflect the Inventory set forth in the most recent monthly
Inventory Borrowing Base Certificate or weekly Borrowing Base Certificate, as the case may
be; and




          (ii) a weekly aging of the Borrowers’ Accounts corresponding to the ending balance of
Accounts reflected on the weekly Borrowing Base Certificate delivered pursuant to clause (i)
above.



          (d) During any period other than a Minimum Excess Availability Period, on a weekly basis by
the second Business Day of each week, an Inventory report, in form and substance agreed upon by
LS&Co and the Agent, for the immediately preceding week by category and location corresponding to
the Borrowers’ perpetual records.




          (e) Upon the request of the Agent:





          (i) copies of invoices in connection with the Borrowers’ Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips, shipping documents in
connection with the Borrowers’ Accounts and for Inventory and Equipment acquired by the
Borrowers, purchase orders and invoices;




          (ii) a statement of the balance of each of the intercompany accounts; and




          (iii) such other reports as to the Collateral of the Borrowers as the Agent shall
reasonably request from time to time.


If any of the Borrowers’ records or reports of the Collateral are prepared by an accounting service
or other agent, the Borrowers hereby authorize such service or agent to deliver such records,
reports, and related documents to the Agent, for distribution to the Lenders.






17









 








     14. ACCOUNTS.



          (a) Each Grantor hereby represents and warrants to the Agent and the Lenders, with respect to
such Grantor’s Accounts, that:





          (i) each existing Account represents, and each future Account will represent, a
bona fide sale and delivery of goods by such Grantor, in the ordinary course
of such Grantor’s business;




          (ii) each existing Account is, and each future Account will be, for a liquidated amount
payable by the Account Debtor thereon on the terms set forth in the invoice therefor or in
the schedule thereof delivered to the Agent, without any offset, deduction, defense, or
counterclaim except those known to such Grantor and disclosed to the Agent and the Lenders
pursuant to this Agreement;




          (iii) no payment will be received with respect to any Account, and no credit, discount,
or extension, or agreement therefor will be granted on any Account, except as reported to
the Agent and the Lenders in Borrowing Base Certificates delivered in accordance with this
Agreement;




          (iv) each copy of an invoice delivered to the Agent by such Grantor will be a genuine
copy of the original invoice sent to the Account Debtor named therein; and




          (v) all goods described in any invoice representing a sale of goods will have been
shipped to the Account Debtor.



          (b) No Grantor shall re-date any invoice or sale or make sales on extended dating beyond that
customary in such Grantor’s business or extend or modify any Account. If any Grantor becomes aware
of any matter adversely affecting the collectibility of any Account or the Account Debtor therefor
involving an amount greater than $5,000,000, including information regarding the Account Debtor’s
creditworthiness, such Grantor will promptly so advise the Agent and exclude such Account from
Eligible Accounts.




          (c) If the Agent consents to the acceptance of any note or other instrument (except a check,
letters of credit as customary to such Grantor’s business practices or other instrument for the
immediate payment of money) with respect to any Account, it shall be considered as evidence of the
Account and not payment thereof and, in respect of any instrument for an amount in excess of
$5,000,000, such Grantor will, upon the request of the Agent, promptly deliver such instrument to
the Agent, endorsed by such Grantor to the Agent in a manner satisfactory in form and substance to
the Agent. Regardless of the form of presentment, demand, notice of protest with respect thereto,
such Grantor shall remain liable thereon until such instrument is paid in full.




          (d) Each Grantor shall notify the Agent promptly of all disputes and claims in excess of
$5,000,000 with any Account Debtor, and agrees to settle, contest, or adjust such dispute or claim
at no expense to the Agent or any Lender. Upon the occurrence of and during




18









 




the continuance of an
Event of Default, no discount, credit or allowance shall be granted to any such Account Debtor
without the Agent’s prior written consent, except for discounts, credits and allowances made or
given in the ordinary course of such Grantor’s business. Upon the request of the Agent, such
Grantor shall send the Agent a copy of each credit memorandum in excess of $5,000,000 as soon as
issued, and such Grantor shall promptly report that credit on Borrowing Base Certificates submitted
by it. Upon the occurrence of and during the continuance of an Event of Default, the Agent may
settle or adjust disputes and claims directly with Account Debtors for amounts and upon terms which
the Agent or the Majority Lenders, as applicable, shall consider advisable and, in all cases, the
Agent will credit such Grantor’s Loan Account with the net amounts received by the Agent in payment
of any Accounts.




          (e) If an Account Debtor returns any Inventory to any Grantor when no Event of Default exists,
then such Grantor shall, upon the request of the Agent, determine the reason for such return and
issue a credit memorandum to the Account Debtor in the appropriate amount. Such Grantor shall
deliver a monthly report to the Agent setting forth all returns involving an amount in excess of
$5,000,000. Each such report shall indicate the reasons for the returns and the locations and
condition of the returned Inventory. In the event any Account Debtor returns Inventory to any
Grantor, upon the occurrence of and during the continuance of an Event of Default, such Grantor
shall, upon the request of the Agent: (i) hold the returned Inventory in trust for the Agent; (ii)
dispose of the returned Inventory solely according to the Agent’s written instructions; and (iii)
not issue any credits or allowances with respect thereto without the Agent’s prior written consent.
All returned Inventory shall be subject to the Agent’s Liens thereon. Whenever any Inventory is
returned, the related Account shall be deemed ineligible to the extent of the amount owing by the
Account Debtor with respect to such returned Inventory. Any such returned Inventory shall not be
Eligible Inventory unless such returned Inventory constitutes Genco Goods.




     15. COLLECTION OF ACCOUNTS; PAYMENTS.



          (a) Until the Agent notifies the Grantors to the contrary, each Grantor shall make collection
of all Accounts and other Collateral for the Agent, shall receive all payments as the Agent’s
trustee, and shall immediately deliver all payments in their original form duly endorsed in blank
into a lock-box service or Payment Account established for the account of the Grantors at a
clearing bank acceptable to the Agent, subject to a blocked account agreement. In addition, the
Grantors shall maintain a lock-box service for collections of Accounts at a clearing bank
acceptable to the Agent and subject to a blocked account agreement and other documentation
acceptable to the Agent. The Grantors shall instruct all Account Debtors to make all payments
directly to the address established for such service. If, notwithstanding such instructions, any
Grantor receives any proceeds of Accounts, it shall receive such payments as the Agent’s trustee,
and shall immediately deliver such payments to the Agent in their original form duly endorsed in
blank or deposit them into a Payment Account, as the Agent may direct. All collections received in
any lock-box service or Payment Account or directly by any Grantor or the Agent, and all funds in
any Payment Account or other account to which such collections are deposited shall be subject to
the Agent’s sole control and withdrawals by the Grantors shall not be permitted. The Agent or the
Agent’s designee may, at any time after the occurrence of an Event of Default, notify Account
Debtors that the Accounts have been assigned to the Agent and




19









 







of the Agent’s security interest
therein, and may collect them directly and charge the collection costs and expenses to the Loan
Account as a Revolving Loan. So long as an Event of Default has occurred and is continuing, each
Grantor, at the Agent’s request, shall execute and deliver to the Agent such documents as the Agent
shall require to grant the Agent access to any post office box in which collections of Accounts are
received;




          (b) if sales of Inventory are made or services are rendered for cash, each Grantor shall
immediately deliver to the Agent or deposit into a Payment Account the cash which such Grantor
receives;




          (c) during any period other than a Cash Dominion Period, all payments received by the Agent in
the lock-box service or Payment Account will be credited to the Operating Account (conditioned
upon final collection); during any Cash Dominion Period, all payments received by the Agent in the
lock-box service or Payment Account will be the Agent’s sole property for its benefit and the
benefit of the Lenders and will be credited to the Loan Account (conditioned upon final
collection); and




          (d) in the event any Grantor repays all of the Secured Obligations upon the termination of the
Credit Agreement or upon acceleration of the Secured Obligations, other than through the Agent’s
receipt of payments on account of the Accounts or proceeds of the other Collateral, such payment
will be credited (conditioned upon final collection) to the Grantors’ Loan Account upon the Agent’s
receipt of immediately available funds.




     16. INVENTORY; PERPETUAL INVENTORY.



          (a) Each Grantor represents and warrants to the Agent and the Lenders and agrees with the
Agent and the Lenders that all of the Inventory owned by such Grantor is and will be held for sale
or use in production, in the ordinary course of such Grantor’s business, and is and will be fit for
such purposes. Each Grantor will keep its Inventory in good and marketable condition, except for
damaged or defective goods arising in the ordinary course of such Grantor’s business. Each Grantor
will notify the Agent upon such Grantor’s acquisition or acceptance of any Inventory on consignment
or approval. Each Grantor agrees that all Inventory produced by such Grantor in the United States
of America will be produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations, and orders thereunder. Each Grantor will conduct a cycle
count of the Inventory at least once per Fiscal Year, and after and during the continuance of an
Event of Default, at such other times as the Agent requests. Each Grantor will maintain a
perpetual inventory reporting system at all times. No Grantor will, without the Agent’s written
consent not to be unreasonably withheld, sell any Inventory on a bill and hold, guaranteed sale,
sale and return, sale on approval, consignment, or other repurchase or return basis.




          (b) Each Grantor shall, upon the occurrence and during the continuance of an Event of Default
and at the Agent’s request, instruct all agents or processors of such Grantor possessing or
controlling any Inventory and all public warehouses in which Inventory is maintained to hold all
such Inventory for the account of the Agent and subject to the instructions of the Agent.





20












 





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




     17. EQUIPMENT.



          (a) Each Grantor represents and warrants to the Agent and the Lenders and agrees with the
Agent and the Lenders that all of the Equipment owned by such Grantor is and will be used or held
for use in such Grantor’s business, and is and will be fit for such purposes. Each Grantor shall
keep and maintain its Equipment in good operating condition and repair (ordinary wear and tear
excepted) and shall make all necessary replacements thereof other than to the extent such Equipment
is no longer required in such Grantor’s business.




          (b) Each Grantor shall promptly notify the Agent in the event that it enters into or
terminates any material Equipment Financing Transaction.




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




     18. PATENT COLLATERAL.



          Each Grantor represents and warrants as follows:




          (a) a true and complete list of all Patents and Patent applications owned by such Grantor, in
whole or in part, that are material to such Grantor’s business is set forth on Schedule 1
attached hereto, as updated from time to time in accordance with Section 32(j) hereof; and




          (b) after reasonable inquiry, such Grantor is not aware of any pending or threatened claim by
any third party that any of the Patent Collateral owned, held or used by such Grantor is invalid or
unenforceable that is reasonably likely to have a Material Adverse Effect.




     19. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor represents and warrants to
the Agent and the Lenders that (a) all Documents, Instruments, and Chattel Paper describing,
evidencing, or constituting Collateral, and all signatures and endorsements thereon, are and will
be complete, valid, and genuine, and (b) all goods evidenced by such Documents, Instruments, Letter
of Credit Rights and Chattel Paper are and will be owned by such Grantor, free and clear of all
Liens other than Permitted Liens. If any Grantor retains possession of any Chattel Paper or
Instruments with the Agent’s consent, such Chattel Paper and Instruments shall be marked with the
following legend: “This writing and the obligations evidenced or served hereby are subject to the
security interest of Bank of America, N.A., as the Agent, for the benefit of the Agent and certain
Lenders.”



     20. REPRESENTATIONS AND WARRANTIES REGARDING THE PLEDGED COLLATERAL.



          (a) Due Authorization, etc. of Pledged Collateral. All of the Pledged Interests
described on Schedule 2(a) attached hereto for each Grantor have been duly authorized and




21









 







validly issued and are fully paid and non-assessable. All of the Pledged Debt described on
Schedule 2(b) attached hereto for each Grantor has been duly authorized, authenticated or
issued, and delivered, is the legal, valid and binding obligation of the issuers thereof and is not
in default.




          (b) Description of Pledged Collateral. Except as set forth on Schedule 2(a),
the Pledged Interests constitute all of the issued and outstanding Equity Interests of each issuer
thereof, and there are no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter convertible into, or
that requires the issuance or sale of, any Pledged Interests. The Pledged Debt constitutes all of
the issued and outstanding intercompany indebtedness evidenced by a promissory note of the
respective issuers thereof owing to each Grantor. Schedule 2(a) for each Grantor sets
forth all of the Pledged Interests owned by such Grantor on the date hereof; and Schedule
2(b) for each Grantor sets forth all of the Pledged Debt in existence on the date hereof.




          (c) Ownership of Pledged Collateral. Each Grantor is the legal, record and beneficial
owner of the Pledged Collateral and its interests in the Pledged Collateral are free and clear of
any Lien except for Permitted Liens.




          (d) Governmental Authorizations. No authorization, approval or other action by, and
no notice to or filing with, any governmental authority or regulatory body is required for either
(i) the pledge by each Grantor of the Pledged Collateral pursuant to this Agreement and the grant
by such Grantor of the security interest granted hereby, (ii) the execution, delivery or
performance of this Agreement by each Grantor, or (iii) the exercise by the Agent of the voting or
other rights, or the remedies in respect of the Pledged Collateral, provided for in this Agreement
(except as may be required in connection with a disposition of Pledged Collateral by laws affecting
the offering and sale of securities generally).




          (e) Perfection. Upon (i) the filing of UCC financing statements naming each Grantor
as “debtor”, naming the Agent as “secured party” and describing the Pledged Collateral in the
filing offices listed on Schedule 6 attached hereto, (ii) in the case of Pledged Collateral
consisting of certificated securities or evidenced by Instruments, in addition to filing such
financing statements, delivery of the certificates representing such certificated securities and
delivery of such Instruments to the Agent, in each case duly endorsed or accompanied by duly
executed instruments of assignment or transfer in blank and, (iii) in the case of any Pledged
Collateral constituting a “Security Entitlement” or a “Securities Account” (as such terms are
defined in the UCC) and assets held in such account, the execution and delivery to the Agent of an
agreement providing for control by the Agent of such Securities Account, the security interests in
the Pledged Collateral, granted to the Agent for the ratable benefit of the Beneficiaries, will
constitute perfected security interests therein prior to all other Liens, securing the payment of
the Secured Obligations.




          (f) Margin Regulations. The pledge of the Pledged Collateral pursuant to this
Agreement does not violate Regulation T, U or X of the Board of Governors of the Federal Reserve
System.




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          (g) Other Information. All information heretofore, herein or hereafter supplied to
the Agent by or on behalf of each Grantor with respect to the Pledged Collateral is accurate and
complete in all respects.




     21. VOTING RIGHTS; DIVIDENDS.



          (a) So long as no Event of Default shall have occurred and be continuing:





          (i) each Grantor shall be entitled to exercise any and all voting and other consensual
rights pertaining to the Pledged Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement or the Credit Agreement; provided,
however, that such Grantor shall not exercise or refrain from exercising any such
right if the Agent shall have notified such Grantor that, in the Agent’s judgment, such
action would have a material adverse effect on the value of the Pledged Collateral or any
part thereof; and




          (ii) each Grantor shall be entitled to receive and retain, and to utilize free and
clear of the lien of this Agreement, any and all dividends, other distributions and interest
paid in respect of the Pledged Collateral; provided, however, that any and
all




     (A) dividends, other distributions and interest paid or payable other
than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, any
Pledged Collateral,




     (B) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in-surplus, and




     (C) cash paid, payable or otherwise distributed in respect of principal
or in redemption of or in exchange for any Pledged Collateral,




shall be, and shall forthwith be delivered to the Agent to hold as, Pledged Collateral and
shall, if received by such Grantor, be received in trust for the benefit of the Agent, be
segregated from the other property or funds of such Grantor and be forthwith delivered to
the Agent as Pledged Collateral in the same form as so received (with all necessary
endorsements).



          (b) Upon the occurrence and during the continuation of an Event of Default:





          (i) upon written notice from the Agent to any Grantor, all rights of such Grantor to
exercise the voting and other consensual rights that it would otherwise be entitled to
exercise pursuant to Section 21(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Agent who shall thereupon have the sole right to exercise
such voting and other consensual rights;



23









 






          (ii) except as otherwise provided in the Credit Agreement, all rights of Grantors to
receive the dividends, other distributions and interest payments that they would otherwise
be authorized to receive and retain pursuant to Section 21(a)(ii) hereof shall
cease, and all such rights shall thereupon become vested in the Agent who shall thereupon
have the sole right to receive and hold as Pledged Collateral such dividends, other
distributions and interest payments; and




          (iii) all dividends, principal, interest payments and other distributions that are
received by Grantors contrary to the provisions of paragraph (ii) of this Section
21(b) shall be received in trust for the benefit of the Agent, shall be segregated from
other funds of Grantors and shall forthwith be paid over to the Agent as Pledged Collateral
in the same form as so received (with any necessary endorsements).



          (c) In order to permit the Agent to exercise the voting and other consensual rights that it
may be entitled to exercise pursuant to Section 21(b)(i) hereof and to receive all
dividends and other distributions which it may be entitled to receive under Section
21(a)(ii) hereof or Section 21(b)(ii) hereof, (i) each Grantor shall, upon the
occurrence of and during the continuance of an Event of Default, promptly execute and deliver (or
cause to be executed and delivered) to the Agent all such proxies, dividend payment orders and
other instruments as the Agent may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), each Grantor hereby grants to the Agent an
irrevocable proxy to vote the Pledged Interests and to exercise all other rights, powers,
privileges and remedies to which a holder of the Pledged Interests would be entitled (including,
without limitation, giving or withholding written consents of holders of Equity Interests, calling
special meetings of holders of Equity Interests and voting at such meetings), which proxy shall be
effective, automatically and without the necessity of any action (including any transfer of any
Pledged Interests on the record books of the issuer thereof) by any other Person (including the
issuer of the Pledged Interests or any officer or agent thereof), upon the occurrence of an Event
of Default and which proxy shall only terminate upon Full Payment of the Secured Obligations.




     22. RIGHT TO CURE. The Agent may, in its discretion, and shall, at the direction of
the Majority Lenders, pay any amount or do any act required of any Grantor hereunder or under any
other Loan Document in order to preserve, protect, maintain or enforce the Secured Obligations, the
Collateral or the Agent’s Liens therein, and which such Grantor fails to pay or do, including
payment of any judgment against such Grantor, any insurance premium, any warehouse charge, any
finishing or processing charge, any landlord’s or bailee’s claim, and any other Lien upon or with
respect to the Collateral. All payments that the Agent makes under this Section 22 and all
out-of-pocket costs and expenses that the Agent pays or incurs in connection with any action taken
by it hereunder shall be charged to the Loan Account as a Revolving Loan. Any payment made or
other action taken by the Agent under this Section 22 shall be without prejudice to any
right to assert an Event of Default hereunder and to proceed thereafter as herein provided.



     23. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and the Agent’s designee
as such Grantor’s attorney, with power:



24









 





          (a) to endorse such Grantor’s name on any checks, notes, acceptances, money orders, or other
forms of payment or security that come into the Agent’s or any Lender’s possession and, upon the
occurrence and during the continuance of an Event of Default, to receive, endorse and collect any
instruments made payable to such Grantor representing any dividend, principal or interest payment
or other distribution in respect of the Pledged Collateral or any part thereof and to give full
discharge for the same;




          (b) to sign such Grantor’s name on any invoice, bill of lading, warehouse receipt or other
negotiable or non-negotiable Document constituting Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and other public records
and to file any such financing statements by electronic means with or without a signature as
authorized or required by applicable law or filing procedure;




          (c) to send requests for verification of Accounts to customers or Account Debtors in
accordance with Section 14(d) hereof;




          (d) to complete in such Grantor’s name or the Agent’s name, any order, sale or transaction,
obtain the necessary Documents in connection therewith, and collect the proceeds thereof;




          (e) to clear Inventory through customs in such Grantor’s name, the Agent’s name or the name of
the Agent’s designee, and to sign and deliver to customs officials powers of attorney in such
Grantor’s name for such purpose;




          (f) to the extent that such Grantor’s authorization given in Section 4(g) hereof is
not sufficient, to file such financing statements with respect to this Agreement, with or without
such Grantor’s signature, or to file a photocopy of this Agreement in substitution for a financing
statement, as the Agent may deem appropriate and to execute in such Grantor’s name such financing
statements and amendments thereto and continuation statements which may require such Grantor’s
signature;




          (g) except as otherwise permitted by the Credit Agreement, to pay or discharge taxes or Liens
(other than Liens permitted under this Agreement or the Credit Agreement) levied or placed upon or
threatened against the Collateral, the legality or validity thereof and the amounts necessary to
discharge the same to be determined by the Agent in its sole discretion, any such payments made by
the Agent to become Secured Obligations of such Grantor to the Agent, due and payable immediately
without demand;




          (h) upon the occurrence and during the continuance of an Event of Default, to notify the post
office authorities to change the address for delivery of such Grantor’s mail to an address
designated by the Agent and to receive, open and dispose of all mail addressed to such Grantor;




          (i) upon the occurrence and during the continuance of an Event of Default, to obtain and
adjust insurance required to be maintained by such Grantor or paid to the Agent pursuant to the
Credit Agreement;




25









 








          (j) upon the occurrence and during the continuance of an Event of Default, to ask for, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and
to become due under or in respect of any of the Collateral;




          (k) upon the occurrence and during the continuance of an Event of Default, to file any claims
or take any action or institute any proceedings that the Agent may deem necessary or desirable for
the collection of any of the Pledged Collateral or otherwise to enforce the rights of the Agent
with respect to any of the Collateral;




          (l) upon the occurrence and during the continuance of an Event of Default, generally to sell,
transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Agent were the absolute owner thereof for all purposes, and
to do, at the Agent’s option and such Grantor’s expense, at any time or from time to time, all acts
and things that the Agent deems necessary to protect, preserve or realize upon the Collateral and
the Agent’s security interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do; and




          (m) to do all things necessary to carry out the Credit Agreement and this Agreement.



Each Grantor ratifies and approves all acts of such attorney. None of the Lenders or the Agent nor
their attorneys will be liable for any acts or omissions or for any error of judgment or mistake of
fact or law except for their willful misconduct. This power, being coupled with an interest, is
irrevocable until the termination of the Credit Agreement and Full Payment of the Obligations.




     24. THE AGENT’S AND LENDERS’ RIGHTS, DUTIES AND LIABILITIES.



          (a) Each Grantor assumes all responsibility and liability arising from or relating to the use,
sale, license or other disposition of the Collateral. The Secured Obligations shall not be
affected by any failure of the Agent or any Lender to take any steps to perfect the Agent’s Liens
or to collect or realize upon the Collateral, nor shall loss of or damage to the Collateral release
such Grantor from any of the Secured Obligations. Following the occurrence and during the
continuation of an Event of Default, the Agent may (but shall not be required to), and at the
direction of the Majority Lenders shall, without notice to or consent from any Grantor, sue upon or
otherwise collect, extend the time for payment of, modify or amend the terms of, compromise or
settle for cash, credit, or otherwise upon any terms, grant other indulgences, extensions,
renewals, compositions, or releases, and take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating thereto, any insurance applicable
thereto, or any Person liable directly or indirectly in connection with any of the foregoing,
without discharging or otherwise affecting the liability of such Grantor for the Secured
Obligations or under the Credit Agreement or any other agreement now or hereafter existing between
the Agent and/or any Lender and such Grantor.




          (b) It is expressly agreed by each Grantor that, anything herein to the contrary
notwithstanding, such Grantor shall remain liable under each of its contracts and each of its
licenses to observe and perform all the conditions and obligations to be observed and performed



26









 






by it thereunder. Neither the Agent nor any Lender shall have any obligation or liability
under any contract or license by reason of or arising out of this Agreement or the granting herein
of a Lien thereon or the receipt by the Agent or any Lender of any payment relating to any contract
or license pursuant hereto. Neither the Agent nor any Lender shall be required or obligated in any
manner to perform or fulfill any of the obligations of such Grantor under or pursuant to any
contract or license, or to make any payment, or to make any inquiry as to the nature or the
sufficiency of any payment received by it or the sufficiency of any performance by any party under
any contract or license, or to present or file any claims, or to take any action to collect or
enforce any performance or the payment of any amounts which may have been assigned to it or to
which it may be entitled at any time or times.




          (c) The Agent may at any time after an Event of Default has occurred and is continuing (or if
any rights of set-off or contra accounts may be asserted with respect to the following), without
prior notice to such Grantor, notify Account Debtors, and other Persons obligated on the Collateral
that the Agent has a security interest therein, and that payments shall be made directly to the
Agent, for itself and the benefit of the Lenders. Upon the request of the Agent, such Grantor
shall so notify Account Debtors and other Persons obligated on Collateral. Once any such notice
has been given to any Account Debtor or other Person obligated on the Collateral, such Grantor
shall not give any contrary instructions to such Account Debtor or other Person without the Agent’s
prior written consent.




          (d) The Agent may at any time in any Grantor’s or an assumed name or, after the occurrence of
and during the continuance of an Event of Default in the Agent’s own name, communicate with Account
Debtors, parties to Contracts and obligors in respect of Instruments to verify with such Persons,
to the Agent’s satisfaction, the existence, amount and terms of Accounts, payment intangibles,
Instruments or Chattel Paper. If an Event of Default shall have occurred and be continuing, each
Grantor, at its own expense, shall cause the independent certified public accountants then engaged
by such Grantor (or such other accounting firm as may be reasonably acceptable to the Agent if
applicable law, in the reasonable opinion of such Grantor, prevents such Grantor’s independent
accountant from providing such services) to prepare and deliver to the Agent and each Lender at any
time and from time to time promptly upon the Agent’s request the following reports with respect to
such Grantor: (i) a reconciliation of all Accounts; (ii) an aging of all Accounts; (iii) trial
balances; and (iv) a test verification of such Accounts as the Agent may request. Each Grantor, at
its own expense, shall deliver to the Agent the results of each physical verification, if any,
which such Grantor may in its discretion have made, or caused any other Person to have made on its
behalf, of all or any portion of its Inventory.




     25. INDEMNIFICATION.



          (a) In any suit, proceeding or action brought by the Agent or any Lender relating to any
Collateral for any sum owing with respect thereto or to enforce any rights or claims with respect
thereto, each Grantor will save, indemnify and keep the Agent, the Lenders and the Selected
Revolving Lenders harmless from and against all expense (including reasonable attorneys’ fees and
expenses), loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever of the Account Debtor or other



27









 






Person obligated on the Collateral, arising out of a breach by such Grantor of any obligation
thereunder or arising out of any other agreement, indebtedness or liability at any time owing to,
or in favor of, such obligor or its successors from such Grantor, except in the case of the Agent,
any Lender or any Selected Revolving Lender, to the extent such expense, loss, or damage is
attributable solely to the gross negligence or willful misconduct of the Agent, such Lender or such
Selected Revolving Lender as finally determined by a court of competent jurisdiction. All such
obligations of such Grantor shall be and remain enforceable against and only against such Grantor
and shall not be enforceable against the Agent, any Lender or any Selected Revolving Lender.




          (b) The Grantors jointly and severally agree to pay to the Agent upon demand:





          (i) prior to an Event of Default, the amount of any and all reasonable costs and
expenses, including the reasonable fees and expenses of its counsel and of any experts and
agents, that the Agent may incur in connection with (A) the administration of this
Agreement, (B) the custody, preservation, use or operation of, or the sale of, collection
from, or other realization upon, any of the Collateral, (C) the exercise or enforcement of
any of the rights of the Agent hereunder, or (D) the failure by any Grantor to perform or
observe any of the provisions hereof; and




          (ii) upon the occurrence of and during the continuance of an Event of Default, the
amount of any and all costs and expenses, including the fees and expenses of its counsel and
of any experts and agents, that the Agent may incur in connection with (A) the
administration of this Agreement, (B) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral, (C) the exercise
or enforcement of any of the rights of the Agent hereunder, or (D) the failure by any
Grantor to perform or observe any of the provisions hereof.



          (c) The obligations of the Grantors in this Section 25 shall (i) survive the
termination of this Agreement and discharge of the Grantors’ other Secured Obligations upon Full
Payment thereof under this Agreement, the Selected Revolving Lender Hedge Agreements, the Selected
Revolving Lender Cash Management Services, the Credit Agreement and the other Loan Documents and
(ii), as to any Grantor that is a party to a Guaranty, be subject to the provisions of Section
1(b) thereof.




     26. LIMITATION ON LIENS ON COLLATERAL. The Grantors will defend the Collateral
against, and take such other action as is necessary to remove, any Lien on the Collateral except
Permitted Liens, and will defend the right, title and interest of the Agent and the Lenders in and
to any of the Grantors’ rights under the Collateral against the claims and demands of all Persons
whomsoever.



     27. NOTICE REGARDING COLLATERAL. Each Grantor will advise the Agent promptly, in
reasonable detail, (i) of any Lien (other than Permitted Liens) or claim made or asserted against
any of the Collateral, and (ii) of the occurrence of any other event which would have a Material
Adverse Effect.



28









 





     28. REMEDIES; RIGHTS UPON DEFAULT.



          (a) In addition to all other rights and remedies granted to it under this Agreement, the
Credit Agreement, the other Loan Documents and under any other instrument or agreement securing,
evidencing or relating to any of the Secured Obligations, if any Event of Default shall have
occurred and be continuing, the Agent may exercise all rights and remedies of a secured party under
the UCC. Without limiting the generality of the foregoing, each Grantor expressly agrees that in
any such event the Agent, without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or private sale) to or upon
such Grantor or any other Person (all and each of which demands, advertisements and notices are
hereby expressly waived to the maximum extent permitted by the UCC and other applicable law), may
forthwith enter upon the premises of such Grantor where any Collateral is located through
self-help, without judicial process, without first obtaining a final judgment or giving such
Grantor or any other Person notice and opportunity for a hearing on the Agent’s claim or action and
may collect, receive, assemble, process, appropriate and realize upon the Collateral, or any part
thereof, and may forthwith sell, lease, license, assign, give an option or options to purchase, or
sell or otherwise dispose of and deliver said Collateral (or contract to do so), or any part
thereof, in one or more parcels at a public or private sale or sales, at any exchange at such
prices as it may deem acceptable, for cash or on credit or for future delivery without assumption
of any credit risk. The Agent or any Lender or any Selected Revolving Lender shall have the right
upon any such public sale or sales and, to the extent permitted by law, upon any such private sale
or sales, to purchase for the benefit of the Agent, the Lenders and the Selected Revolving Lenders,
the whole or any part of said Collateral so sold, free of any right or equity of redemption, which
equity of redemption such Grantor hereby releases. Such sales may be adjourned and continued from
time to time with or without notice. The Agent shall have the right to conduct such sales on such
Grantor’s premises or elsewhere and shall have the right to use such Grantor’s premises without
charge for such time or times as the Agent deems necessary or advisable.




     (b) Each Grantor further agrees, at the Agent’s request, to assemble the Collateral and make
it available to the Agent at a place or places designated by the Agent which are reasonably
convenient to the Agent and such Grantor, whether at such Grantor’s premises or elsewhere. Until
the Agent is able to effect a sale, lease, or other disposition of Collateral, the Agent shall have
the right to hold or use Collateral, or any part thereof, to the extent that it deems appropriate
for the purpose of preserving Collateral or its value or for any other purpose deemed appropriate
by the Agent. The Agent shall have no obligation to such Grantor to maintain or preserve the
rights of such Grantor as against third parties with respect to Collateral while Collateral is in
the possession of the Agent. The Agent may, if it so elects, seek the appointment of a receiver or
keeper to take possession of Collateral and to enforce any of the Agent’s remedies (for the benefit
of the Beneficiaries), with respect to such appointment without prior notice or hearing as to such
appointment. The Agent shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale to the Secured Obligations as provided in the Credit Agreement,
and only after so paying over such net proceeds, and after the payment by the Agent of any other
amount required by any provision of law, need the Agent account for the surplus, if any, to such
Grantor. To the maximum extent permitted by applicable law, such Grantor waives all claims,
damages, and demands against the Agent or any Lender



29









 




arising out of the repossession, retention or sale of the Collateral except such as arise
solely out of the gross negligence or willful misconduct of the Agent or such Lender as finally
determined by a court of competent jurisdiction. Such Grantor agrees that ten (10) days prior
notice by the Agent of the time and place of any public sale or of the time after which a private
sale may take place is reasonable notification of such matters. Such Grantor shall remain liable
for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to
pay all Secured Obligations, including any attorneys’ fees or other expenses incurred by the Agent
or any Lender to collect such deficiency.




          (c) Each Grantor recognizes that, by reason of certain prohibitions contained in the
Securities Act of 1933, as from time to time amended (the “Securities Act”), and applicable
state securities laws, the Agent may be compelled, with respect to any sale of all or any part of
the Pledged Collateral conducted without prior registration or qualification of such Pledged
Collateral under the Securities Act and/or such state securities laws, to limit purchasers to those
who will agree, among other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. Each Grantor acknowledges
that any such private placement may be at prices and on terms less favorable than those obtainable
through a sale without such restrictions (including, without limitation, an offering made pursuant
to a registration statement under the Securities Act) and, notwithstanding such circumstances and
the registration rights granted to the Agent by such Grantor pursuant to Section 28(d)
hereof, such Grantor agrees that any such private placement shall not be deemed, in and of itself,
to be commercially unreasonable and that the Agent shall have no obligation to delay the sale of
any Pledged Collateral for the period of time necessary to permit the issuer thereof to register it
for a form of sale requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would, or should, agree to so register it. If the Agent
determines to exercise its right to sell any or all of the Pledged Collateral, upon written
request, each Grantor shall and shall cause each issuer of any Pledged Interests to be sold
hereunder from time to time to furnish to the Agent all such information as the Agent may request
in order to determine the amount of Pledged Collateral that may be sold by the Agent in exempt
transactions under the Securities Act and the rules and regulations of the Securities and Exchange
Commission thereunder, as the same are from time to time in effect.




          (d) If the Agent shall determine to exercise its right to sell all or any of the Pledged
Collateral, each Grantor agrees that, upon request of the Agent (which request may be made by the
Agent in its sole discretion), such Grantor will, at its own expense:





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



30









 







Securities Act and the rules and regulations of the Securities and Exchange Commission applicable
thereto;




          (ii) use its best efforts to qualify the Pledged Collateral under all applicable state
securities or “Blue Sky” laws and to obtain all necessary governmental approvals for the
sale of the Pledged Collateral, as requested by the Agent;




          (iii) cause each such issuer to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the
Securities Act;




          (iv) do or cause to be done all such other acts and things as may be necessary to make
such sale of the Pledged Collateral or any part thereof valid and binding and in compliance
with applicable law; and




          (v) bear all costs and expenses, including reasonable attorneys’ fees, of carrying out
its obligations under this Section 28(d).



          (e) Except as otherwise specifically provided herein, each Grantor hereby waives presentment,
demand, protest or any notice (to the maximum extent permitted by applicable law) of any kind in
connection with this Agreement or any Collateral.




          (f) To the extent that applicable law imposes duties on the Agent to exercise remedies in a
commercially reasonable manner, each Grantor acknowledges and agrees that it is not commercially
unreasonable for the Agent (a) to fail to incur expenses reasonably deemed significant by the Agent
to prepare Collateral for disposition or otherwise to complete raw material or work in process into
finished goods or other finished products for disposition, (b) to fail to obtain third party
consents for access to Collateral to be disposed of, or to obtain or, if not required by other law,
to fail to obtain governmental or third party consents for the collection or disposition of
Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against
Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse
claims against Collateral, (d) to exercise collection remedies against Account Debtors and other
Persons obligated on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through publications or media
of general circulation, whether or not the Collateral is of a specialized nature, (f) to contact
other Persons, whether or not in the same business as the such Grantor, for expressions of interest
in acquiring all or any portion of such Collateral, (g) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the Collateral is of a
specialized nature, (h) to dispose of Collateral by utilizing internet sites that provide for the
auction of assets of the types included in the Collateral or that have the reasonable capacity of
doing so, or that match buyers and sellers of assets, (i) to dispose of assets in wholesale rather
than retail markets, (j) to disclaim disposition warranties, such as title, possession or quiet
enjoyment, (k) to purchase insurance or credit enhancements to insure the Agent against risks of
loss, collection or disposition of Collateral or to provide to the Agent a guaranteed return from
the collection or disposition of Collateral, or (l) to the extent deemed appropriate by the Agent,
to obtain the services of other brokers, investment bankers, consultants and other professionals to
assist the Agent in the collection or disposition of any of the Collateral. Such Grantor



31









 






acknowledges that the purpose of this Section 28(f) is to provide non-exhaustive indications of what
actions or omissions by the Agent would not be commercially unreasonable in the Agent’s exercise of
remedies against the Collateral and that other actions or omissions by the Agent shall not be
deemed commercially unreasonable solely on account of not being indicated in this Section
28(f). Without limitation upon the foregoing, nothing contained in this Section 28(f)
shall be construed to grant any rights to such Grantor or to impose any duties on the Agent that
would not have been granted or imposed by this Agreement or by applicable law in the absence of
this Section 28(f).




     29. ADDITIONAL REMEDIES FOR PATENT COLLATERAL.



          (a) Anything contained herein to the contrary notwithstanding, upon the occurrence and during
the continuation of an Event of Default, (i) the Agent shall have the right (but not the
obligation) to bring suit, in the name of any Grantor, the Agent or otherwise, to enforce any
Patent Collateral, in which event each Grantor shall, at the request of the Agent, do any and all
lawful acts and execute any and all documents required by the Agent in aid of such enforcement and
each Grantor shall promptly, upon demand, reimburse and indemnify the Agent as provided in
Sections 13.7 and 13.12 of the Credit Agreement and Section 25 hereof, as
applicable, in connection with the exercise of its rights under this Section 29, and, to
the extent that the Agent shall elect not to bring suit to enforce any Patent Collateral as
provided in this Section 29, each Grantor agrees to use all reasonable measures, whether by
action, suit, proceeding or otherwise, to prevent the infringement of any of the Patent Collateral
by others and for that purpose agrees to use its commercially reasonable judgment in maintaining
any action, suit or proceeding against any Person so infringing reasonably necessary to prevent
such infringement; (ii) upon written demand from the Agent, each Grantor shall execute and deliver
to the Agent an assignment or assignments of the Patent Collateral and such other documents as are
necessary or appropriate to carry out the intent and purposes of this Agreement; (iii) each Grantor
agrees that such an assignment and/or recording shall be applied to reduce the Secured Obligations
outstanding only to the extent that the Agent (or any Lender) receives cash proceeds in respect of
the sale of, or other realization upon, the Patent Collateral; and (iv) within five Business Days
after written notice from the Agent, each Grantor shall make available to the Agent, to the extent
within such Grantor’s power and authority, such personnel in such Grantor’s employ on the date of
such Event of Default as the Agent may reasonably designate, by name, title or job responsibility,
to permit such Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection with the trademarks,
trademark registrations and trademark rights, such persons to be available to perform their prior
functions on the Agent’s behalf and to be compensated by the Agent at such Grantor’s expense on a
per diem, pro-rata basis consistent with the salary and benefit structure applicable to each as of
the date of such Event of Default.




          (b) If (i) an Event of Default shall have occurred and, by reason of cure, waiver,
modification, amendment or otherwise, no longer be continuing, (ii) no other Event of Default shall
have occurred and be continuing, (iii) an assignment to the Agent of any rights, title and
interests in and to the Patent Collateral shall have been previously made, and (iv) the Secured
Obligations shall not have become immediately due and payable, upon the written request of any
Grantor, the Agent shall promptly execute and deliver to such Grantor such





32












 




assignments as may be necessary to reassign to such Grantor any such rights, title and interests as may have been
assigned to the Agent as aforesaid, subject to any disposition thereof that may have been made by
the Agent; provided, after giving effect to such reassignment, the Agent’s security
interest granted pursuant hereto, as well as all other rights and remedies of the Agent granted
hereunder, shall continue to be in full force and effect; and provided further, the rights,
title and interests so reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to the Agent and Liens
expressly permitted by the Credit Agreement.




     30. LIMITATION ON AGENT’S AND LENDERS’ DUTY IN RESPECT OF COLLATERAL. The powers
conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of reasonable care in
the custody of any Collateral in its possession and the accounting for moneys actually received by
it hereunder, the Agent shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against prior parties or any other rights pertaining to any
Collateral. The Agent shall be deemed to have exercised reasonable care in the custody and
preservation of Collateral in its possession if such Collateral is accorded treatment substantially
equal to that which the Agent accords its own property.



     31. APPOINTMENT AS COLLATERAL AGENT.



          (a) The Agent on behalf of the Lenders and each Selected Revolving Lender with respect to
which a written notice has been received pursuant to Section 32(n)(iii) hereof hereby
appoints Bank of America, N.A. to serve as collateral agent and representative of the Agent (the
“Collateral Agent”) and authorizes the Collateral Agent to act as agent for the Agent for
the purposes of executing and delivering on its behalf the Collateral Documents and, subject to the
provisions of this Agreement, enforcing the Agent’s rights in respect of the Collateral and the
obligations of each Loan Party under the Collateral Documents.




          (b) (i) The Collateral Agent shall have each and every right, power, privilege or duty
expressed or intended by this Agreement or any of the other Loan Documents to be exercised by or
vested in or conveyed to the Agent under the Collateral Documents, which shall be exercisable by
and vest in the Collateral Agent to the extent necessary or desirable to enable the Collateral
Agent to exercise such rights, powers and privileges and to perform such duties with respect to
such Collateral, and every covenant and obligation contained in the Loan Documents and necessary to
the exercise or performance thereof by the Collateral Agent shall run to and be enforceable by the
Collateral Agent, and (ii) the provisions of Section 25 hereof and of Section 13.12
of the Credit Agreement that refer to the Agent shall inure to the benefit of the Collateral Agent
and all references therein to the Agent shall be deemed to be references to the Agent and/or the
Collateral Agent, as the context may require.




     32. MISCELLANEOUS.



          (a) Reinstatement; Indemnity for Returned Payments.





          (i) This Agreement shall remain in full force and effect and continue to be effective
should any petition be filed by or against any Grantor for liquidation or



33









 







reorganization,
should such Grantor become insolvent or make an assignment for the benefit of any creditor
or creditors or should a receiver or trustee be appointed for all or any significant part of
such Grantor’s assets.




          (ii) If after receipt of any payment which is applied to the payment of all or any part
of the Secured Obligations, the Agent, any Lender or any Selected Revolving Lender is for
any reason compelled to surrender such payment or proceeds to any Person because such
payment or application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a diversion of
trust funds, or for any other reason, then the Secured Obligations or part thereof intended
to be satisfied shall be revived and continued and this Agreement shall continue in full
force as if such payment or proceeds had not been received by the Agent, such Lender or such
Selected Revolving Lender and the Grantors shall be liable to pay to the Agent, the Lenders,
and the Selected Revolving Lenders and hereby does indemnify the Agent, the Lenders and the
Selected Revolving Lenders and hold the Agent, the Lenders and the Selected Revolving
Lenders harmless for the amount of such payment or proceeds surrendered. The provisions of
this Section 32(a) shall be and remain effective notwithstanding any contrary action
which may have been taken by the Agent, any Lender or any Selected Revolving Lender in
reliance upon such payment or application of proceeds, and any such contrary action so taken
shall be without prejudice to the Agent’s, the Lenders’ and the Selected Revolving Lenders’
rights under this Agreement and shall be deemed to have been conditioned upon such payment
or application of proceeds having become final and irrevocable. The provisions of this
Section 32(a) shall survive the termination of this Agreement.



          (b) Notices. Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other communication shall be
given in the manner, and deemed received, as provided for in the Credit Agreement.




          (c) Severability. The illegality or unenforceability of any provision of this
Agreement or any instrument or agreement required hereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions of this Agreement or any instrument or
agreement required hereunder. This Agreement is to be read, construed and applied together with
the Credit Agreement and the other Loan Documents which, taken together, set forth the complete
understanding and agreement of the Agent, the Lenders and the Grantors with respect to the matters
referred to herein and therein.




          (d) Limitation of Liability. No claim may be made by the Grantors, any Lender or any
Selected Revolving Lender for which the Agent has received the notice required by Section
32(n)(iii) hereof or other person against the Agent or any other Beneficiary, or the
Affiliates, directors, officers, employees, counsel, representatives, agents or
attorneys-in-fact of any of them for any special, indirect, consequential or punitive damages in
respect of any claim



34









 






for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated by this agreement or any other loan document, or any act,
omission or event occurring in connection therewith, and the Grantors, each Lender and each
Selected Revolving Lender for which the Agent has received the notice required by Section
32(n)(iii) hereof hereby waive, release and agree not to sue upon any claim for such damages,
whether or not accrued and whether or not known or suspected to exist in its favor.




          (e) No Waiver; Cumulative Remedies. No failure by the Agent or any Lender to exercise
any right, remedy, or option under this Agreement or any present or future supplement thereto, or
in any other agreement between or among any Borrower and the Agent and/or any Lender, or delay by
the Agent or any Lender in exercising the same, will operate as a waiver thereof. No waiver,
alteration, modification or amendment by the Agent or any Lender will be effective unless it is in
writing and duly executed by the Agent and the Grantors, and then only to the extent specifically
stated. No waiver by the Agent or the Lenders on any occasion shall affect or diminish the Agent’s
and each Lender’s rights thereafter to require strict performance by the Borrowers of any provision
of this Agreement. The Agent and the Lenders may proceed directly to collect the Secured
Obligations without any prior recourse to the Collateral. The Agent’s and each Lender’s rights
under this Agreement will be cumulative and not exclusive of any other right or remedy which the
Agent or any Lender may have.




          (f) Limitation by Law. All rights, remedies and powers provided in this Agreement may
be exercised only to the extent that the exercise thereof does not violate any applicable provision
of law, and all the provisions of this Agreement are intended to be subject to all applicable
mandatory provisions of law that may be controlling and to be limited to the extent necessary so
that they shall not render this Agreement invalid, unenforceable, in whole or in part, or not
entitled to be recorded, registered or filed under the provisions of any applicable law.




          (g) Termination of this Agreement. Upon Full Payment of all Secured Obligations, the
cancellation or termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall terminate and all rights
to the Collateral shall revert to the applicable Grantors. Upon any such termination the Agent
will, at the Grantors’ expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination. In addition, in connection with the release
of the Agent’s security interest over any Collateral as contemplated by Section 12.11 of
the Credit Agreement, the Agent will, at the reasonable request of the relevant Grantor and at its
expense, execute such documents as are necessary to release such security interest.




          (h) Successors and Assigns. This Agreement and all obligations of the Grantors
hereunder shall be binding upon the successors and assigns of each Grantor (including any
debtor-in-possession on behalf of such Grantor) and shall, together with the rights and remedies of
the Agent, for the benefit of the Agent, the Lenders and the Selected Revolving Lenders, hereunder,
inure to the benefit of the Agent, the Lenders and the Selected Revolving Lenders, all future
holders of any instrument evidencing any of the Secured Obligations and their respective successors
and assigns. No sales of participations, other sales, assignments, transfers
or other dispositions of any agreement governing or instrument evidencing the Secured




35









 







Obligations or any portion thereof or interest therein shall in any manner affect the Lien granted
to the Agent, for the benefit of the Agent, the Lenders and the Selected Revolving Lenders,
hereunder. The Grantors may not assign, sell, hypothecate or otherwise transfer any interest in or
obligation under this Agreement. Without limiting the generality of the foregoing, (A) but subject
to the provisions of Section 11.2 of the Credit Agreement, any Lender may assign or
otherwise transfer any Loans held by it to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to the Lenders herein or otherwise
and (B) any Selected Revolving Lender may assign or otherwise transfer any Selected Revolving
Lender Hedge Agreements to which it is a party to any other Person in accordance with the terms of
such Selected Revolving Lender Hedge Agreement, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to the Selected Revolving Lenders herein or
otherwise.




          (i) Additional Grantors. The initial Subsidiary Grantors hereunder shall be such of
the Subsidiaries of LS&Co as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Domestic Subsidiaries (other than Restricted
Subsidiaries) of LS&Co may become parties hereto as additional Grantors (each an “Additional
Grantor”), by executing a counterpart substantially in the form of Exhibit II attached
hereto (the “Counterpart”). Upon delivery of any such Counterpart to the Agent, notice of
which is hereby waived by the Grantors, each such Additional Grantor shall be a Grantor and shall
be as fully a party hereto as if such Additional Grantor were an original signatory hereto. Each
Grantor expressly agrees that its obligations arising hereunder shall not be affected or diminished
by the addition or release of any other Grantor hereunder, nor by any election of the Agent not to
cause any Subsidiary of LS&Co to become an Additional Grantor hereunder. This Agreement shall be
fully effective as to any Grantor that is or becomes a party hereto regardless of whether any other
Person becomes or fails to become or ceases to be a Grantor hereunder.




          (j) Patent Supplements. If any Grantor shall hereafter obtain rights to any new
Patent Collateral or become entitled to the benefit of any Patent application or Patent or any
reissue, division, continuation, renewal, extension or continuation-in-part of any Patent or any
improvement of any Patent, then in any such case, the provisions of this Agreement shall
automatically apply thereto. Within 45 days after the end of each Fiscal Quarter of LS&Co during
which any Grantor files an application for any Patent, such Grantor shall execute and deliver to
the Agent a Patent Supplement, substantially in the form of Exhibit III attached hereto (a
“Patent Supplement”), pursuant to which such Grantor shall grant to the Agent a security
interest to the extent of its interest in such Patent Collateral. In addition, such Grantor shall,
prior to the end of such 45-day period, record the Patent Supplement with the United States Patent
and Trademark Office. Upon delivery to the Agent of a Patent Supplement, Schedule 1
attached hereto and Schedule A to each Grant, as applicable, shall be deemed modified to include
reference to any right, title or interest in any existing Patent Collateral or any Patent
Collateral set forth on Schedule A to such Patent Supplement. Each Grantor hereby authorizes the
Agent to modify this Agreement without the signature or consent of any Grantor by attaching
Schedule 1, as applicable, that have been modified to include such Patent Collateral or to
delete any reference to any right, title or interest in any Patent Collateral in which any Grantor
no longer has or claims any right, title or interest; provided, the failure of any Grantor
to execute a Patent Supplement
with respect to any additional Patent Collateral pledged pursuant to this



36









 






Agreement shall not
impair the security interest of the Agent therein or otherwise adversely affect the rights and
remedies of the Agent hereunder with respect thereto. Notwithstanding the foregoing, no Grantor
shall be required to record the security interest of the Agent in any Patent Collateral, if such
recordation would result in the grant of a Patent, or any application therefor, in the name of the
Agent.




          (k) Pledge Supplements. Each Grantor agrees that it will, upon obtaining any
additional Equity Interest or Debt, promptly (and in any event within five Business Days) deliver
to the Agent a Pledge Supplement, duly executed by such Grantor, in substantially the form of
Exhibit IV attached hereto (a “Pledge Supplement”), in respect of the additional
Pledged Interests or Pledged Debt to be pledged pursuant to this Agreement. Upon each delivery of
a Pledge Supplement to the Agent, the representations and warranties contained in Sections
20(a) and 20(b) hereof shall be deemed to have been made by such Grantor as to the
Pledged Collateral described in such Pledge Supplement as of the date thereof. Each Grantor hereby
authorizes the Agent to attach each Pledge Supplement to this Agreement and agrees that all Pledged
Interests or Pledged Debt of such Grantor listed on any Pledge Supplement shall for all purposes
hereunder be considered Pledged Collateral of such Grantor; provided, the failure of any
Grantor to execute a Pledge Supplement with respect to any additional Pledged Interests or Pledged
Debt pledged pursuant to this Agreement shall not impair the security interest of the Agent therein
or otherwise adversely affect the rights and remedies of the Agent hereunder with respect thereto.




          (l) Amendments, Etc. No amendment, modification, termination or waiver of any
provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall in any
event be effective unless the same shall be in writing and signed by the Agent and, in the case of
any such amendment or modification, by the Grantors; provided that this Agreement may be
modified by the execution of a Counterpart by an Additional Grantor in accordance with Section
32(i) hereof and the Grantors hereby waive any requirement of notice of or consent to any such
amendment. Any such waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given.




          (m) Counterparts; Effectiveness of Signatures. This Agreement may be executed in any
number of counterparts, and by the Agent and each Grantor in separate counterparts, each of which
shall be an original, but all of which shall together constitute one and the same agreement;
signature pages may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same document. This
Agreement and notices under this Agreement may be transmitted and/or signed by telefacsimile. The
effectiveness of any such documents and signatures shall, subject to applicable law, have the same
force and effect as an original copy with manual signatures and shall be binding on all Grantors
and Beneficiaries. The Agent may also require that any such document and signature be confirmed by
a manually-signed copy thereof; provided, however, that the failure to request or
deliver any such manually-signed copy shall not affect the effectiveness of any facsimile document
or signature.




          (n) The Agent as Agent.




37









 









          (i) The Agent has been appointed to act as Agent hereunder by the Lenders. The Agent
shall be obligated, and shall have the right hereunder, to make demands, to give notices, to
exercise or refrain from exercising any rights and to take or refrain from taking any
action, solely in accordance with this Agreement and the Credit Agreement.




          (ii) The Agent shall at all times be the same Person that is the Agent under the Credit
Agreement. Written notice of resignation by the Agent pursuant to Section 12.9 of
the Credit Agreement shall also constitute notice of resignation as Agent under this
Agreement; and appointment of a successor agent pursuant to Section 12.9 of the
Credit Agreement shall also constitute appointment of a successor Agent under this
Agreement. Upon the acceptance of any appointment as agent under Section 12.9 of
the Credit Agreement by a successor agent, that successor agent shall thereupon succeed to
become vested with all the rights, powers, privileges and duties of the retiring Agent under
this Agreement, and the retiring Agent under this Agreement shall promptly (i) transfer to
such successor Agent all sums held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of the successor
Agent under this Agreement and (ii) take such other actions as may be necessary or
appropriate in connection with the assignment to such successor Agent of the rights created
hereunder, whereupon such retiring Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Agent’s resignation hereunder as Agent, the
provisions of this Agreement shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Agreement while it was the Agent hereunder.




          (iii) The Agent shall not be deemed to have any duty whatsoever with respect to any
Selected Revolving Lender until it shall have received written notice in form and substance
satisfactory to the Agent from a Grantor or the Selected Revolving Lender as to the
existence and terms of the applicable Selected Revolving Lender Hedge Agreement or Selected
Revolving Lender Cash Management Services and unless such Selected Revolving Lender has
satisfied the requirements of Section 3.12 of the Credit Agreement. Each such
Selected Revolving Lender, by its acceptance of the benefits hereof, hereby appoints the
Agent as Agent for such Selected Revolving Lender for purposes of this Agreement.



     (o) Governing Law.




          (i) THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY CONFLICT OF LAW PRINCIPLES (BUT GIVING EFFECT TO FEDERAL LAWS RELATING
TO NATIONAL BANKS).




          (ii) EACH GRANTOR HEREBY CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL OR
STATE COURT SITTING IN OR WITH JURISDICTION OVER NEW YORK CITY, IN ANY PROCEEDING OR DISPUTE
RELATING IN ANY WAY TO THIS AGREEMENT, AND AGREES THAT
ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH



38









 







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




          (iii) EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND
CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO SUCH GRANTOR AT ITS ADDRESS SET FORTH ON THE SIGNATURE PAGES HEREOF
AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE
BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT
THE RIGHT OF THE AGENT OR THE OTHER BENEFECIARIES TO SERVE LEGAL PROCESS BY ANY OTHER MANNER
PERMITTED BY LAW.



          (p) Waiver of Jury Trial. THE GRANTORS, THE AGENT AND THE OTHER BENEFICIARIES EACH
IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE GRANTORS, THE AGENT AND
THE OTHER BENEFICIARIES EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT
TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE GRANTORS, THE AGENT AND THE OTHER
BENEFICIARIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION
OF THIS SECTION 32(p) AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN
WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.




          (q) Section Titles. The Section titles contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be construed to
modify, enlarge, or restrict any provision.




          (r) No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or




39









 







interpretation arises, this Agreement shall be construed as if drafted jointly by the parties
hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any provisions of this Agreement.


          (s) Advice of Counsel. Each of the parties represents to each other party hereto that
it has discussed this Agreement and, specifically, the provisions of Sections 32(o) and
32(p) hereof, with its counsel.




          (t) Benefit of the Lenders and the Selected Revolving Lenders. (i) All Liens granted
or contemplated hereby shall be for the benefit of the Agent, the Lenders and the Selected
Revolving Lenders, and all proceeds or payments realized from Collateral in accordance herewith
shall be applied to the Secured Obligations in accordance with the terms of the Credit Agreement;
and (ii) in the event that any Lien hereunder is released by the Agent under the Credit Agreement
for any reason, such release shall be effective to release such Lien with respect to all
Obligations (including all obligations of LS&Co, LSIFCS and each Material Domestic Subsidiary of
LS&Co under the Selected Revolving Lender Hedge Agreements and any and all obligations of LS&Co and
each of its Subsidiaries incurred in connection with the Selected Revolving Lender Cash Management
Services).




          (u) First Priority Lien. The Lien created by this Agreement shall be primary to any
Lien in favor of an IP Facility Agent, created pursuant to an IP Facility Security Agreement and
shall be subject to the terms of the Intercreditor Agreement. To the extent there is any conflict
between the terms of this Agreement and the terms of the Intercreditor Agreement, the Intercreditor
Agreement shall govern.




[signatures follow]





40












 





          IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and
delivered by its duly authorized officer as of the date first set forth above.




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

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS FINANCIAL CENTER CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Treasurer	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	BATTERY STREET ENTERPRISES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






S-1









 






	 	 	 	 	 	 	 
	 	 	HARTWELL COMMODITIES GROUP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS GLOBAL FULFILLMENT

SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 







	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS INTERNATIONAL	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






S-2









 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS INTERNATIONAL, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS RECEIVABLES FUNDING, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS SECURITIZATION CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Vice President	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS SERVICES INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/  Miguel Silva Gonzales	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Miguel Silva Gonzales	 	 
	 

	 	 	 	 	 
	 

	 	Title:	 	Treasurer	 	 
	 

	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






S-3









 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS, U.S.A., LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI STRAUSS-ARGENTINA, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	LEVI’S ONLY STORES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	NF INDUSTRIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Paul Smith 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	Vice President 	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






S-4









 






	 	 	 	 	 	 	 
	 	 	LEVI’S ONLY STORES GEORGETOWN, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:        /s/
Paul Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:        Paul
Smith	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:          Vice
President	 	 
	 

	 	 	 	 	 	 





	 	 	 	 	 	 	 
	 

	 	Address:
	 	Levi’s Plaza
	 	 
	 

	 	 	 	1155 Battery Street	 	 
	 

	 	 	 	San Francisco, CA 94111	 	 






	 	 	 	 	 	 	 
	 	 	BANK OF AMERICA, N.A.,

as the Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ David Knoblauch 	 	 
	 

	 	 	 	 	 	 
	 
	 	Name:	 	David Knoblauch	 	 
	 

	 	Title:
	 	Senior Vice President	 	 







S-5












 





SCHEDULE 1

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Patents




[To Be Provided by Grantors]




1-1 









 





SCHEDULE 2(a)

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Pledged Interests




[To Be Provided by Grantors]




2(a)-1 









 





SCHEDULE 2(b)

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Pledged Debt




[To Be Provided by Grantors]




2(b)-1 









 





SCHEDULE 3

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Office Locations; Jurisdiction of Organization; Names




[To Be Provided by Grantors]




3-1 









 





SCHEDULE 4

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Location of Collateral




[To Be Provided by Grantors]




4-1 









 





SCHEDULE 5

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Other Names




[To Be Provided by Grantors]




5-1 









 





SCHEDULE 6

TO

SECOND AMENDED AND RESTATED

PLEDGE AND SECURITY AGREEMENT




Filing Offices




[To Be Provided by Grantors]




6-1 









 





EXHIBIT I TO

PLEDGE AND SECURITY AGREEMENT




[FORM OF] GRANT OF PATENT SECURITY INTEREST




          WHEREAS, [NAME OF GRANTOR], a                      corporation (“Grantor”), owns and
uses in its business, and will in the future adopt and so use, various intangible assets, including
the Patent Collateral (as defined below); and




          WHEREAS, Levi Strauss & Co., a Delaware corporation (“LS&Co”), and Levi Strauss
Financial Center Corporation, a California corporation (together with LS&Co, the
“Borrowers”), have entered into that certain Second Amended and Restated Credit Agreement
dated as of October 11, 2007 among the Borrowers, the financial institutions from time to time
party thereto (the “Lenders”) and Bank of America, N.A., as administrative agent (in such
capacity, the “Agent”) for the Lenders (as such agreement may be amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”; the terms
defined therein and not otherwise defined herein being used herein as therein defined);




          WHEREAS, pursuant to the terms of that certain Second Amended and Restated Pledge and Security
Agreement, dated of October 11, 2007, among the Grantor, other grantors party thereto and the Agent
for the Lenders (as such agreement may be amended, restated, supplemented or otherwise modified
from time to time, the “Second Amended and Restated Pledge and Security Agreement”),
Grantor has agreed to continue to provide in favor of the Agent a first priority secured and
protected interest in, and the Agent has agreed to become a secured creditor with respect to, the
Patent Collateral;




          WHEREAS, LS&Co, Levi Strauss International Group Finance Coordination Services Comm V.A., a
Belgian corporation, or any successor thereto (“LSIFCS”) and certain Material Domestic
Subsidiaries of LS&Co may from time to time enter, or may from time to time have entered, into one
or more Selected Revolving Lender Hedge Agreements in accordance with the terms of the Credit
Agreement, and it is desired that the obligations of LS&Co, LSIFCS and such Material Domestic
Subsidiaries under the Selected Revolving Lender Hedge Agreements, including the obligation of
LS&Co, LSIFCS and such Material Domestic Subsidiaries to make payments thereunder in the event of
early termination or close out thereof, together with all obligations of the Borrowers under the
Credit Agreement and the other Loan Documents, be secured hereunder in accordance with the terms of
the Second Amended and Restated Pledge and Security Agreement;




          WHEREAS, LS&Co and certain of its Subsidiaries may from time to time enter, or may from time
to time have entered, into one or more arrangements for Selected Revolving Lender Cash Management
Services in accordance with the terms of the Credit Agreement, and it is desired that the
obligations of LS&Co and such Subsidiaries arising in connection with such Selected Revolving
Lender Cash Management Services, together with all obligations of the Borrowers under the Credit
Agreement and the other Loan Documents, be secured hereunder in accordance with the terms of the
Second Amended and Restated Pledge and Security Agreement;




I-A-1 









 





          WHEREAS, the Domestic Subsidiaries of LS&Co have entered into that certain First Amended and
Restated Subsidiary Guaranty dated as of October 11, 2007, as amended, restated, supplemented or
otherwise modified from time to time, in favor of and for the benefit of the Agent, as agent for
and representative of the Lenders and the Selected Revolving Lenders;




          NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, subject to the terms and conditions of the Second Amended and Restated Pledge
Security Agreement, Grantor hereby continues to provide to the Agent, for the benefit of the
Beneficiaries, a continuing security interest in and lien on all of the following property and
assets of such Grantor, whether now owned or existing or hereafter acquired or arising, regardless
of where located (the “Patent Collateral”):





(i) all rights, title and interest in and to all patents and patent applications and rights
and interests in patents and patent applications under any law of the United States that are
presently, or in the future may be, owned or held by any Grantor and all patents and patent
applications and rights, title and interests in patents and patent applications under any
law of the United States that are presently, or in the future may be, owned by such Grantor
in whole or in part (including the patents and patent applications set forth on Schedule
A attached hereto), all rights (but not obligations) corresponding thereto (including
the right, exercisable only upon the occurrence and during the continuation of an Event of
Default, to sue for past, present and future infringements in the name of such Grantor or in
the name of the Agent or the Lenders), and all re-issues, divisions, continuations,
renewals, extensions and continuations-in-part thereof (all of the foregoing being
collectively referred to as the “Patents”), it being understood that the rights and
interests included in the Patent Collateral hereby shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of such Grantor
pertaining to Patent applications and Patents presently or in the future owned or used by
third parties but, in the case of third parties which are not Affiliates of such Grantor,
only to the extent permitted by such licensing or other contracts and, if not so permitted,
only with the consent of such third parties;




(ii) all proceeds, products, rents and profits of or from any and all of the foregoing
Patent Collateral and, to the extent not otherwise included, all payments under insurance
(whether or not the Agent is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect to any of the
foregoing Patent Collateral. For purposes of this Grant of Patent Security Interest, the
term “proceeds” includes whatever is receivable or received when Patent Collateral or
proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition
is voluntary or involuntary.



          Grantor does hereby further acknowledge and affirm that the rights and remedies of the Agent
with respect to the security interest in the Patent Collateral granted hereby are more fully set
forth in the Second Amended and Restated Pledge and Security Agreement, the terms and provisions of
which are incorporated by reference herein as if fully set forth herein.




[SIGNATURE APPEARS ON FOLLOWING PAGE]




I-A-2 









 








     IN WITNESS WHEREOF, Grantor has caused this Grant of Patent Security Interest to be duly
executed and delivered by its officer thereunto duly authorized as of the ___day of                     ,
___.



	 	 	 	 	 	 	 
	 	 	[NAME OF GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 






I-A-3 









 





SCHEDULE A

TO

GRANT OF PATENT SECURITY INTEREST



Patents Issued:




	 	 	 	 	 	 	 
	Patent No.	 	Issue Date	 	Invention	 	Inventor(s)
	 
	 	 	 	 	 	 




Patents Pending:




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





I-A-1 









 





EXHIBIT II TO

PLEDGE AND SECURITY AGREEMENT




[FORM OF] COUNTERPART




     COUNTERPART (this “Counterpart”), dated as of                     , is delivered pursuant to
Section 32(i) of the Second Amended and Restated Pledge and Security Agreement referred to
below. The undersigned hereby agrees that this Counterpart may be attached to the Second Amended
and Restated Pledge and Security Agreement, dated as of October 11, 2007 (said Second Amended and
Restated Pledge and Security Agreement, as it may hereafter be amended, supplemented, restated or
otherwise modified from time to time, being the “Second Amended and Restated Pledge and
Security Agreement”; the terms defined therein and not otherwise defined herein being used
herein as therein defined), among Levi Strauss & Co. and Levi Strauss Financial Center Corporation,
the other Grantors named therein and Bank of America, N.A., as Agent. The undersigned by executing
and delivering this Counterpart hereby becomes a Grantor under the Second Amended and Restated
Pledge and Security Agreement in accordance with Section 32(i) thereof and agrees to be
bound by all of the terms thereof. Without limiting the generality of the foregoing, the
undersigned hereby:



     (i) authorizes the Agent to add the information set forth on the Schedules to this Agreement
to the correlative Schedules attached to the Second Amended and Restated Pledge and Security
Agreement1;



     (ii) agrees that all Collateral of the undersigned, including the items of property set forth
on the Schedules hereto, shall become part of the Collateral and shall secure all Secured
Obligations; and



     (iii) makes the representations and warranties set forth in the Second Amended and Restated
Pledge and Security Agreement, as amended hereby, to the extent relating to the undersigned.



	 	 	 	 	 	 	 
	 	 	[NAME OF ADDITIONAL GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 








 




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




II-1 









 










EXHIBIT III TO

PLEDGE AND SECURITY AGREEMENT




[FORM OF] PATENT SUPPLEMENT




          This PATENT SUPPLEMENT, dated as of October 11, 2007 is delivered pursuant to and supplements
(i) the Second Amended and Restated Pledge and Security Agreement, dated as of October 11, 2007
(said Second Amended and Restated Pledge and Security Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the “Second Amended and
Restated Pledge and Security Agreement”), among Levi Strauss & Co., Levi Strauss Financial
Center Corporation,                     , a                      corporation (“Grantor”), the other
Grantors named therein and Bank of America, N.A., as Agent, and (ii) the Grant of Patent Security
Interest dated as of                      (said Grant of Patent Security Interest, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time, being the “Grant”;
the terms defined therein and not otherwise defined herein being used herein as therein defined)
executed by the Grantor.




          Grantor grants to the Agent a security interest in all of the Grantor’s right, title and
interest in and to the Patent Collateral set forth on Schedule A attached hereto. All such Patent
Collateral shall be deemed to be part of the Patent Collateral and shall be hereafter subject to
each of the terms and conditions of the Second Amended and Restated Pledge and Security Agreement
and the Grant.




          IN WITNESS WHEREOF, the Grantor has caused this Supplement to be duly executed and delivered
by its duly authorized officer as of the date first above written.




	 	 	 	 	 	 	 
	 	 	[GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 






III-1 









 





SCHEDULE A

TO

PATENT SUPPLEMENT



Patents Issued:




	 	 	 	 	 	 	 
	Patent No.	 	Issue Date	 	Invention	 	Inventor(s)
	 
	 	 	 	 	 	 




Patents Pending:




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





III-A-1 









 





EXHIBIT IV TO

PLEDGE AND SECURITY AGREEMENT




[FORM OF] PLEDGE SUPPLEMENT




          This Pledge Supplement, dated as of                     , is delivered pursuant to the Second
Amended and Restated Pledge and Security Agreement, dated as of October 11, 2007, among Levi
Strauss & Co., Levi Strauss Financial Center Corporation,                     , a                      corporation
(“Grantor”), the other Grantors named therein and Bank of America, N.A., as Agent, as
amended, restated, supplemented or otherwise modified from time to time (the terms defined therein
and not otherwise defined herein being used herein as therein defined).




          Grantor hereby agrees that the [Pledged Interests] [Pledged Debt] set forth on the schedule
attached hereto shall be deemed to be part of the [Pledged Interests] [Pledged Debt] and shall
become part of the Pledged Collateral and shall secure all Secured Obligations.




          IN WITNESS WHEREOF, the Grantor has caused this Pledge Supplement to be duly executed and
delivered by its duly authorized officer as of the date first above written.




	 	 	 	 	 	 	 
	 	 	[GRANTOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 







IV-1