Exhibit 10.67
PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (this "Agreement") is dated as of
January 31, 2003 and entered into by and among LEVI ▇▇▇▇▇▇▇ & CO., a Delaware
corporation (the "Borrower"), each of THE UNDERSIGNED DIRECT AND INDIRECT
SUBSIDIARIES of the Borrower (each of such undersigned Subsidiaries being a
"Subsidiary Grantor" and collectively the "Subsidiary Grantors") and each
ADDITIONAL GRANTOR that may become a party hereto after the date hereof in
accordance with Section 21 hereof (each of the Borrower, each Subsidiary Grantor
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and each Additional Grantor being a "Grantor" and collectively the "Grantors")
and CITICORP NORTH AMERICA, INC., as Administrative Agent for and representative
of (in such capacities herein called the "Secured Party") the several financial
institutions (the "Lenders") from time to time party to the Credit Agreement
referred to below and the Selected Revolving Lenders (as defined in the Credit
Agreement referred to below).
PRELIMINARY STATEMENTS
A. Pursuant to that certain Credit Agreement dated as of January 31,
2003 by and among Levi ▇▇▇▇▇▇▇ & Co., a Delaware corporation, the Lenders from
time to time party thereto, the several financial institutions party thereto as
L/C Issuers, the several financial institutions party thereto as Joint Lead
Arrangers and Joint Book Managers, the financial institutions party thereto as
Co-Syndication Agents, the financial institution party thereto as Documentation
Agent and Citicorp North America, Inc., as Swing Line Lender and Administrative
Agent ("Administrative Agent") for the Lenders (said Credit Agreement, as it may
hereafter be amended, amended and restated, supplemented or otherwise modified
from time to time, being the "Credit Agreement"; the terms defined therein and
not otherwise defined herein being used herein as therein defined), the Lenders
have made certain commitments, subject to the terms and conditions set forth in
the Credit Agreement, to extend certain credit facilities to the Borrower.
B. The Borrower, Levi ▇▇▇▇▇▇▇ International Group Finance
Coordination Services Comm V.A., a Belgian corporation, or any successor thereto
("LSIFCS") and certain Material Domestic Subsidiaries of the Borrower may from
time to time enter, or may from time to time have entered, into one or more
Selected Revolving Lender Swap Contracts in accordance with the terms of the
Credit Agreement, and it is desired that certain obligations of the Borrower,
LSIFCS and such Material Domestic Subsidiaries under the Selected Revolving
Lender Swap Contracts, including the obligation of the Borrower, 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 Borrower
under the Credit Agreement and the other Loan Documents and obligations of the
Borrower and its Subsidiaries arising in connection with Selected Revolving
Lender Cash Management Services, be secured hereunder until the payment in full
of all Obligations under the Credit Agreement and the other Loan Documents, the
cancellation or expiration of all Letters of Credit and the termination of the
Commitments.
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C. The Borrower 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 obligations of the
Borrower and such Subsidiaries arising in connection with such Selected
Revolving Lender Cash Management Services, together with all Obligations of the
Borrower under the Credit Agreement and the other Loan Documents and obligations
of the Borrower and certain of its Subsidiaries arising under or in connection
with Selected Revolving Lender Swap Contracts, be secured hereunder until the
payment in full of all Obligations under the Credit Agreement and the other Loan
Documents, the cancellation or expiration of all Letters of Credit and the
termination of the Commitments.
D. The Subsidiary Grantors have executed and delivered that certain
Guaranty dated as of the date hereof (said Guaranty, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time, being
the "Guaranty") in favor of the Secured Party for the benefit of the Lenders,
Administrative Agent and the Selected Revolving Lenders, pursuant to which each
Subsidiary Grantor has guarantied the prompt payment and performance when due of
all Obligations of the Borrower under the Credit Agreement, certain obligations
of the Borrower and LSIFCS under the Selected Revolving Lender Swap Contracts,
including the obligation of the Borrower and LSIFCS to make payments thereunder
in the event of early termination or close out thereof and all obligations of
the Borrower and its Subsidiaries arising in connection with the Selected
Revolving Lender Cash Management Services.
E. It is a condition precedent to the initial extensions of credit
by the Lenders under the Credit Agreement that the Grantors listed on the
signature pages hereof shall have granted the security interests and undertaken
the obligations contemplated by this Agreement.
NOW, THEREFORE, based upon the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
in order to induce the Lenders and the Secured Party to enter into the Credit
Agreement and to induce the Selected Revolving Lenders to enter into the
Selected Revolving Lender Swap Contracts and to provide the Selected Revolving
Lender Cash Management Services, each Grantor hereby agrees with the Secured
Party as follows:
SECTION 1. Grant of Security.
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Each Grantor hereby assigns to the Secured Party for security
purposes only, and hereby grants to the Secured Party a security interest in,
all of such Grantor's right, title and interest in and to the following, in each
case whether now or hereafter existing, whether tangible or intangible, or in
which such Grantor now has or hereafter acquires an interest and wherever the
same may be located (the "Collateral"):
(a) all equipment in all of its forms, all parts thereof and all
accessions thereto (any and all such equipment, parts and accessions being the
"Equipment");
(b) all inventory in all of its forms, including (i) all goods held
by such Grantor for sale or lease or to be furnished under contracts of service
or so leased or furnished, (ii) all raw materials, work in process, finished
goods and materials used or consumed in the
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manufacture, packing, shipping, advertising, selling, leasing, furnishing or
production of such inventory or otherwise used or consumed in such Grantor's
business, (iii) all goods in which such Grantor has an interest in mass or a
joint or other interest or right of any kind, and (iv) all goods which are
returned to or repossessed by such Grantor and all accessions thereto and
products thereof (collectively the "Inventory") and all negotiable and
non-negotiable documents of title (including documents, warehouse receipts, dock
receipts and bills of lading) issued by any Person covering any Inventory (any
such negotiable document of title being a "Negotiable Document of Title");
(c) all accounts, contract rights, chattel paper, documents,
instruments, letter-of-credit rights and other rights and obligations of any
kind owned by or owing to such Grantor and all rights in, to and under all
security agreements, leases and other contracts securing or otherwise relating
to any such accounts, contract rights, chattel paper, documents, instruments,
letter-of-credit rights or other rights and obligations (any and all such
accounts, contract rights, chattel paper, documents, instruments,
letter-of-credit rights and other rights and obligations being the "Accounts",
and any and all such security agreements, leases and other contracts being the
"Related Contracts");
(d) all deposit accounts ("Deposit Accounts"), including the
restricted deposit accounts established and maintained by the Secured Party
pursuant to Section 11 hereof, together with (i) all amounts on deposit from
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time to time in such deposit accounts and (ii) all interest, cash, instruments,
securities and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
foregoing, including Deposit Accounts set forth on Schedule 1(d) attached
hereto, as Schedule 1(d) may be updated upon the execution of this Agreement by
an Additional Grantor;
(e) the "Securities Collateral", which term means:
(i) all shares of stock, partnership interests, interests in
joint ventures, limited liability company interests and all other equity
interests now or hereafter owned by such Grantor in any Person that is, or
becomes, a direct Domestic Subsidiary or Material Foreign Subsidiary of
such Grantor, including all securities convertible into, and rights,
warrants, options and other rights to purchase or otherwise acquire, any of
the foregoing now or hereafter owned by such Grantor, including those set
forth on Schedule 1(e)(i) attached hereto, as Schedule 1(e)(i) 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 (the "Pledged Interests"), and all
dividends, distributions, returns of capital, cash, warrants, options,
rights, instruments, rights to vote or manage the business of such Person
pursuant to organizational documents governing the rights and obligations
of the stockholders, partners, members or other owners thereof and other
property or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such Pledged
Interests; provided, that if the issuer of any of such Pledged Interests is
a Material Foreign Subsidiary, the Pledged Interests shall not include any
shares of stock of such issuer in excess of the number of shares of such
issuer possessing up to but not exceeding 65% of the voting power of all
classes of capital stock entitled to vote of such issuer, and all
dividends, cash, warrants, rights, instruments and other property or
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proceeds from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such Pledged Interests;
(ii) all indebtedness from time to time owed to such Grantor by
any obligor that is, or becomes, a direct or indirect Subsidiary of such
Grantor, or by any obligor of which such Grantor is a direct or indirect
Subsidiary, including the indebtedness set forth on Schedule 1(e)(ii)
attached hereto, as Schedule 1(e)(ii) 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 (the "Pledged
Indebtedness"), 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 Indebtedness; and
(iii) all other investment property, as that term is defined in
the Uniform Commercial Code (the "UCC") as in effect in any applicable
jurisdiction, of such Grantor;
(f) the "IP Collateral", which term means:
(i) all rights, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all trademarks, service
marks, designs, logos, indicia, tradenames, trade dress, corporate names,
company names, business names, fictitious business names, trade styles
and/or other source and/or business identifiers and applications pertaining
thereto, owned by such Grantor, or hereafter adopted and used, in its
business (including the trademarks set forth on Schedule 1(f)(i) attached
hereto, as the same may be amended pursuant hereto from time to time)
(provided that no security interest shall be granted in United States
intent-to-use trademark applications to the extent that, and solely during
the period in which, the grant of a security interest therein would impair
the validity or enforceability of such intent-to-use trademark applications
under applicable federal law) (collectively, the "Trademarks"), all
registrations that have been or may hereafter be issued or applied for
thereon in the United States and any state thereof and in foreign countries
(including the registrations and applications specifically set forth on
Schedule 1(f)(i) attached hereto, as the same may be amended pursuant
hereto from time to time) (provided that no security interest shall be
granted in United States intent-to-use trademark applications to the extent
that, and solely during the period in which, the grant of a security
interest therein would impair the validity or enforceability of such
intent-to-use trademark applications under applicable federal law) (the
"Trademark Registrations"), all common law and other rights in and to the
Trademarks in the United States and any state thereof and in foreign
countries (the "Trademark Rights"), and all goodwill of such Grantor's
business symbolized by the Trademarks and associated therewith (the
"Associated Goodwill"), it being understood that the rights and interests
included in the IP Collateral hereby shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of
such Grantor pertaining to Trademark applications and Trademarks 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;
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(ii) all rights, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent applications
under any domestic or foreign law that are presently, or in the future may
be, owned or held by such Grantor and all patents and patent applications
and rights, title and interests in patents and patent applications under
any domestic or foreign law that are presently, or in the future may be,
owned by such Grantor in whole or in part (including the patents and patent
applications set forth on Schedule 1(f)(ii) attached hereto, as the same
may be amended pursuant hereto from time to time), all rights (but not
obligations) corresponding thereto (including the right, exercisable only
upon the occurrence and during the continuation of an Event of Default, to
▇▇▇ for past, present and future infringements in the name of such Grantor
or in the name of the Secured Party or the Lenders), and all re-issues,
divisions, continuations, renewals, extensions and continuations-in-part
thereof (all of the foregoing being collectively referred to as the
"Patents"), it being understood that the rights and interests included in
the IP Collateral hereby shall include, without limitation, all rights and
interests pursuant to licensing or other contracts in favor of such Grantor
pertaining to Patent applications and Patents presently or in the future
owned or used by third parties but, in the case of third parties which are
not Affiliates of such Grantor, only to the extent permitted by such
licensing or other contracts and, if not so permitted, only with the
consent of such third parties; and
(iii) all rights, title and interest (including rights acquired
pursuant to a license or otherwise) under copyright in various published
and unpublished works of authorship including computer programs, computer
data bases, other computer software, layouts, trade dress, drawings,
designs, writings and formulas owned by such Grantor (including the works
set forth on Schedule 1(f)(iii) attached hereto, as the same may be amended
pursuant hereto from time to time) (collectively, the "Copyrights"), all
copyright registrations issued to such Grantor and applications for
copyright registration that have been or may hereafter be issued or applied
for thereon by such Grantor in the United States and any state thereof and
in foreign countries (including the registrations set forth on Schedule
1(f)(iii) attached hereto, as the same may be amended pursuant hereto from
time to time) (collectively, the "Copyright Registrations"), all common law
and other rights in and to the Copyrights in the United States and any
state thereof and in foreign countries including all copyright licenses
(but with respect to such copyright licenses, only to the extent permitted
by such licensing arrangements) (the "Copyright Rights"), including each of
the Copyrights, rights, titles and interests in and to the Copyrights, all
derivative works and other works protectable by copyright, which are
presently, or in the future may be, owned, created (as a work for hire for
the benefit of such Grantor), authored (as a work for hire for the benefit
of such Grantor) or acquired by such Grantor, in whole or in part, and all
Copyright Rights with respect thereto and all Copyright Registrations
therefor, heretofore or hereafter granted or applied for, and all renewals
and extensions thereof, throughout the world, including the right to renew
and extend such Copyright Registrations and Copyright Rights and to
register works protectable by copyright and the right, exercisable only
upon the occurrence and during the continuation of an Event of Default, to
▇▇▇ for past, present and future infringements of the Copyrights and
Copyright Rights in the name of such Grantor or in the name of the Secured
Party or the Lenders, it being understood that the rights and interests
included in
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the IP Collateral hereby shall include, without limitation, all rights and
interests pursuant to licensing or other contracts in favor of such Grantor
pertaining to Copyright applications and Copyrights 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;
(g) all information used or useful or arising from the business
including all goodwill, trade secrets, trade secret rights, know-how, customer
lists, processes of production, ideas, confidential business information,
techniques, processes, formulas and all other proprietary information;
(h) to the extent not included in any other paragraph of this Section
1, all general intangibles, including tax refunds, payment intangibles, other
rights to payment or performance, choses in action, software and judgments taken
on any rights or claims included in the Collateral;
(i) all plant fixtures, business fixtures and other fixtures and
storage and office facilities and all accessions thereto and products thereof;
(j) all books, records, ledger cards, files, correspondence, computer
programs, tapes, disks and related data processing software that at any time
evidence or contain information relating to any of the Collateral or are
otherwise necessary or helpful in the collection thereof or realization
thereupon; and
(k) all proceeds, products, rents and profits of or from any and all
of the foregoing Collateral and, to the extent not otherwise included, all
payments under insurance (whether or not the Secured Party is the loss payee
thereof), or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Collateral or proceeds are sold, exchanged, collected or
otherwise disposed of, whether such disposition is voluntary or involuntary.
Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in 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 1 that is defined in
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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
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the Collateral set forth above be construed to include the broadest possible
range of assets, except for assets expressly excluded as set forth above.
Notwithstanding anything herein to the contrary, neither the Borrower
nor any Grantor shall be deemed to have granted a security interest in (i) any
Principal Property, (ii) any capital stock of any Restricted Subsidiary, (iii)
any Pledged Indebtedness of or issued by any Restricted Subsidiary, or (iv) any
accounts or other property to the extent set forth in that certain Consent and
Release Agreement, dated January 31, 2003, among Levi ▇▇▇▇▇▇▇ Financial Center
Corporation as Seller and Servicer, Levi ▇▇▇▇▇▇▇ & Co. as Borrower and
Originator, Levi ▇▇▇▇▇▇▇ Receivables Funding, LLC as Issuer, Citibank N.A. as
Indenture Trustee and Citicorp North America, Inc. as Administrative Agent.
SECTION 2. Security for Obligations.
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This Agreement secures, and the Collateral assigned by each Grantor is
collateral security for, the prompt payment or performance in full when due,
whether at stated maturity, by required prepayment, declaration, acceleration,
demand or otherwise (including the payment of amounts that would become due but
for the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code), of all Secured Obligations of such Grantor. "Secured Obligations" means:
(a) with respect to the Borrower, all Obligations and liabilities of
every nature of the Borrower now or hereafter existing under or arising out of
or in connection with the Credit Agreement and the other Loan Documents and,
until the payment in full of all Obligations under the Credit Agreement and the
other Loan Documents, the cancellation or expiration of all Letters of Credit
and the termination of the Commitments, all obligations and liabilities of every
nature now or hereafter existing (i) under or arising out of or in connection
with that certain Parent Guaranty the Borrower and the Administrative Agent
dated as of January 31, 2003, (ii) of the Borrower, LSIFCS and each Material
Domestic Subsidiary of the Borrower, under or arising out of or in connection
with any Selected Revolving Lender Swap Contract and (iii) of the Borrower and
each Subsidiary of the Borrower, arising out of or in connection with any
Selected Revolving Lender Cash Management Services, provided that obligations
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arising out of or in connection with any Selected Revolving Lender Cash
Management Services shall be Secured Obligations only to the extent such
Selected Revolving Lender Cash Management Services are set forth on Schedule
2(a) attached hereto; and
(b) with respect to each Subsidiary Grantor and Additional Grantor,
all Obligations and liabilities of every nature of such Grantors now or
hereafter existing under or arising out of or in connection with the Guaranty
and, until the payment in full of all Obligations under the Credit Agreement and
the other Loan Documents, the cancellation or expiration of all Letters of
Credit and the termination of the Commitments, all obligations and liabilities
of every nature now or hereafter existing (i) of the Borrower, LSIFCS and each
Material Domestic Subsidiary of the Borrower, under or arising out of or in
connection with any Selected Revolving Lender Swap Contract and (ii) of the
Borrower and each Subsidiary of the Borrower, arising out of or in connection
with any Selected Revolving Lender Cash Management Services, provided that
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obligations arising out of or in connection with any Selected Revolving Lender
Cash Management Services shall be Secured Obligations only to the extent such
Selected Revolving Lender Cash Management Services are set forth on Schedule
2(a) attached hereto; in each case
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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 Borrower or any other Grantor, would accrue on
such obligations, whether or not a claim is allowed against the Borrower or such
Grantor for such interest in the related bankruptcy proceeding), reimbursement
of amounts drawn under Letters of Credit, payments for early termination or
close out of Selected Revolving Lender Swap Contracts, 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 Secured Party 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.
SECTION 3. Grantors Remain Liable.
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Anything contained herein to the contrary notwithstanding, (a) each
Grantor shall remain liable under any contracts and agreements included in the
Collateral, to the extent set forth therein, to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Secured Party of any of its rights hereunder
shall not release any Grantor from any of its duties or obligations under the
contracts and agreements included in the Collateral, and (c) the Secured Party
shall not have any obligation or liability under any contracts, licenses, and
agreements included in the Collateral by reason of this Agreement, nor shall the
Secured Party be obligated to perform any of the obligations or duties of any
Grantor thereunder or to take any action to collect or enforce any claim for
payment assigned hereunder.
SECTION 4. Representations and Warranties.
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Each Grantor represents and warrants as follows:
(a) Ownership of Collateral. Except as expressly permitted by the
Credit Agreement and for the security interest created by this Agreement, such
Grantor owns the Collateral owned by such Grantor free and clear of any Lien.
Except as expressly permitted by the Credit Agreement and such as may have been
filed in favor of the Secured Party relating to this Agreement, no effective
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any filing or recording office.
(b) Locations of Equipment and Inventory. All of the Equipment and
Inventory is, as of the date hereof, or in the case of an Additional Grantor,
the date of the applicable counterpart entered into pursuant to Section 21
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hereof (each, a "Counterpart") located at the places set forth on Schedule 4(b)
attached hereto, as Schedule 4(b) may be updated upon the execution of this
Agreement by an Additional Grantor, except for Equipment and Inventory which, in
the ordinary course of business, is in transit either (i) from a supplier or a
processor to a Grantor, (ii) between the locations set forth on Schedule 4(b)
attached hereto, (iii) from a supplier or a Grantor to a processor, or (iv) to
customers of a Grantor.
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(c) Office Locations; Type and Jurisdiction of Organization. The
chief place of business, the chief executive office and the office where such
Grantor keeps its records regarding the Accounts and all originals of all
chattel paper that evidence Accounts are, as of the date hereof, and, except as
set forth on Schedule 4(c) attached hereto, have been for the four month period
preceding the date hereof, or, in the case of an Additional Grantor, the date of
the applicable Counterpart, located at the locations set forth on Schedule 4(c)
attached hereto, as Schedule 4(c) may be updated upon the execution of this
Agreement by such Additional Grantor; the type (i.e. corporation, limited
partnership, etc.) and jurisdiction of organization of such Grantor are set
forth on Schedule 4(c) attached hereto.
(d) Names. No Grantor (or predecessor by merger or otherwise of such
Grantor) has, within the four month period preceding the date hereof, or, in the
case of an Additional Grantor, the date of the applicable Counterpart, had a
different name from the name of such Grantor listed or the signature pages
hereof, except the names set forth on Schedule 4(d) attached hereto, as Schedule
4(d) may be updated upon the execution of this Agreement by an Additional
Grantor.
(e) Delivery of Certain Collateral. Except as permitted by Section
6.15 of the Credit Agreement, all certificates or instruments (excluding checks)
evidencing, comprising or representing the Collateral (including the Securities
Collateral) have been delivered to the Secured Party duly endorsed or
accompanied by duly executed instruments of transfer or assignment in blank.
(f) Securities Collateral. (i) All of the Pledged Interests set forth
on Schedule 1(e)(i) attached hereto have been duly authorized and validly issued
and are fully paid and non-assessable; (ii) all of the Pledged Indebtedness set
forth on Schedule 1(e)(ii) attached hereto has been duly authorized,
authenticated or issued, and delivered and is the legal, valid and binding
obligation of the issuers thereof and is not in default; (iii) except as set
forth on Schedule 1(e)(i) attached hereto, the Pledged Interests constitute all
of the issued and outstanding shares of stock or other equity interests of each
issuer thereof (subject to the proviso to Section 1(e)(i) hereof with respect to
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shares of a foreign controlled corporation), and there are no outstanding
warrants, options or other rights to purchase, or other agreements outstanding
with respect to, or property that is now or hereafter convertible into, or that
requires the issuance or sale of, any Pledged Interests; (iv) the Pledged
Indebtedness constitutes all of the issued and outstanding intercompany
indebtedness evidenced by a promissory note of the respective issuers thereof
owing to such Grantor; (v) Schedule 1(e)(i) attached hereto sets forth all of
the Pledged Interests owned by each Grantor on the date hereof; and (vi)
Schedule 1(e)(ii) attached hereto sets forth all of the Pledged Indebtedness in
existence on the date hereof.
(g) IP Collateral.
(i) a true and complete list of all Trademark Registrations
and Trademark applications owned by such Grantor, in whole or in part, that
are material to such Grantor's business is set forth on Schedule 1(f)(i)
attached hereto;
(ii) 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(f)(ii) attached
hereto;
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(iii) a true and complete list of all Copyright Registrations
and applications for Copyright Registrations owned by such Grantor, in
whole or in part, that are material to such Grantor's business is set forth
on Schedule 1(f)(iii) attached hereto;
(iv) after reasonable inquiry, such Grantor is not aware of any
pending or threatened claim by any third party that any of the IP
Collateral owned, held or used by such Grantor is invalid or unenforceable
that is reasonably likely to have a Material Adverse Effect; and
(v) after giving effect to the releases delivered on the
Closing Date in respect of the Existing Credit Agreement, no effective
security interest or other Lien covering all or any part of the IP
Collateral is on file in the United States Patent and Trademark Office or
the United States Copyright Office.
(h) Perfection. The security interests in the Collateral granted to
the Secured Party for the ratable benefit of the Lenders and the Selected
Revolving Lenders hereunder constitute valid Liens on such Collateral, securing
the payment of the Secured Obligations. Upon (i) the filing of UCC financing
statements naming each Grantor as "debtor", naming the Secured Party as "secured
party" and describing the Collateral in the filing offices with respect to such
Grantor set forth on Schedule 4(h) attached hereto, as Schedule 4(h) may be
updated upon the execution of this Agreement by an Additional Grantor (ii) in
the case of the Securities Collateral consisting of certificated securities or
evidenced by instruments, delivery of the certificates representing such
certificated securities and delivery of such instruments to the Secured Party,
in each case duly endorsed or accompanied by duly executed instruments of
assignment or transfer in blank, and (iii) in the case of the IP Collateral, in
addition to the filing of such UCC financing statements, the filing of a Grant
of Trademark Security Interest, substantially in the form of Exhibit I, and a
Grant of Patent Security Interest, substantially in the form of Exhibit II, with
the United States Patent and Trademark Office and the filing of a Grant of
Copyright Security Interest, substantially in the form of Exhibit III, with the
United States Copyright Office (each such Grant of Trademark Security Interest,
Grant of Patent Security Interest and Grant of Copyright Security Interest being
referred to herein as a "Grant"), the security interests in the Collateral
granted to the Secured Party 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 or by possession, prior to all other Liens (except for Liens expressly
permitted by the Credit Agreement), and all filings and other actions necessary
or desirable to perfect and protect such security interest have been duly made
or taken.
SECTION 5. Further Assurances.
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(a) Generally. Each Grantor agrees that from time to time, at the
expense of the Grantors, such Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
necessary or desirable, or that the Secured Party may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without limiting the
generality of the foregoing, each Grantor will: (i) at the reasonable request of
the Secured Party, ▇▇▇▇ conspicuously each item of chattel paper included in the
Accounts, each Related Contract and, at the request of the Secured Party, each
of its records pertaining to the Collateral, with a legend, in
10 Pledge and Security Agreement
form and substance satisfactory to the Secured Party, indicating that such
Collateral is subject to the security interest granted hereby, (ii) at the
reasonable request of the Secured Party, deliver and pledge to the Secured Party
hereunder all promissory notes and other instruments (including checks) and all
original counterparts of chattel paper constituting Collateral, duly endorsed
and accompanied by duly executed instruments of transfer or assignment, all in
form and substance satisfactory to the Secured Party, (iii) execute and file
such financing or continuation statements, or amendments thereto, agreements
establishing that the Secured Party has control of Deposit Accounts and
investment property and such other instruments or notices, as may be necessary
or desirable, or as the Secured Party may request, in order to perfect and
preserve the security interests granted or purported to be granted hereby, (iv)
furnish to the Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Secured Party may reasonably request, all in
reasonable detail, (v) if requested by the Secured Party, promptly after the
acquisition by such Grantor of any item of Equipment that is covered by a
certificate of title under a statute of any jurisdiction under the law of which
indication of a security interest on such certificate is required as a condition
of perfection thereof, execute and file with the registrar of motor vehicles or
other appropriate authority in such jurisdiction an application or other
document requesting the notation or other indication of the security interest
created hereunder on such certificate of title, (vi) within 45 days after the
end of each Fiscal Quarter of the Borrower, deliver to the Secured Party copies
of all such applications or other documents filed during such Fiscal Quarter and
copies of all such certificates of title issued during such Fiscal Quarter
indicating the security interest created hereunder in the items of Equipment
covered thereby, (vii) at any reasonable time, upon request by the Secured
Party, exhibit the Collateral to and allow inspection of the Collateral by the
Secured Party, or persons designated by the Secured Party and (viii) at the
Secured Party's request, appear in and defend any action or proceeding that may
affect such Grantor's title to or the Secured Party's security interest in all
or any part of the Collateral. Each Grantor hereby authorizes the Secured Party
to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without the signature of
any Grantor. Each Grantor agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement signed by such
Grantor shall be sufficient as a financing statement and may be filed as a
financing statement in any and all jurisdictions.
(b) Securities Collateral. Without limiting the generality of the
foregoing Section 5(a), each Grantor agrees that it will, upon obtaining any
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additional shares of stock or other securities required to be pledged hereunder,
promptly (and in any event within ten Business Days) deliver to the Secured
Party a Pledge Supplement, duly executed by such Grantor, in substantially the
form of Exhibit IV (a "Pledge Supplement"), in respect of the additional Pledged
Interests or Pledged Indebtedness to be pledged pursuant to this Agreement. Upon
each delivery of a Pledge Supplement to the Secured Party, the representations
and warranties contained in clauses (i)-(iv) of Section 4(f) hereof shall be
------------
deemed to have been made by such Grantor as to the Securities Collateral
described in such Pledge Supplement as of the date thereof. Each Grantor hereby
authorizes the Secured Party to attach each Pledge Supplement to this Agreement
and agrees that all Pledged Interests or Pledged Indebtedness of such Grantor
listed on any Pledge Supplement shall for all purposes hereunder be considered
Collateral of such Grantor; provided, the failure of any Grantor to execute a
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Pledge Supplement with respect to any additional Pledged Interests or Pledged
Indebtedness pledged pursuant to this Agreement
11 Pledge and Security Agreement
shall not impair the security interest of the Secured Party therein or otherwise
adversely affect the rights and remedies of the Secured Party hereunder with
respect thereto.
(c) IP Collateral. Without limiting the generality of the foregoing
Section 5(a), if any Grantor shall hereafter obtain rights to any new IP
------------
Collateral or become entitled to the benefit of (i) any Trademark Registration,
application for Trademark Registration or renewals or extension of any Trademark
Registration (ii) any Patent application or Patent or any reissue, division,
continuation, renewal, extension or continuation-in-part of any Patent or any
improvement of any Patent or (iii) any Copyright Registration, application for
Copyright Registration or renewals or extension of any Copyright Registration,
then in any such case, the provisions of this Agreement shall automatically
apply thereto. Each Grantor shall, within 45 days after the end of each Fiscal
Quarter of the Borrower, notify the Secured Party in writing of any of the
foregoing rights acquired by such Grantor after the date hereof or the date of
the last such notice, as the case may be. Within 45 days after the end of each
Fiscal Quarter of the Borrower during which any Grantor files an application for
any (1) Trademark Registration; (2) Patent; or (3) Copyright Registration, such
Grantor shall execute and deliver to the Secured Party an IP Supplement,
substantially in the form of Exhibit V (an "IP Supplement"), pursuant to which
such Grantor shall grant to the Secured Party a security interest to the extent
of its interest in such IP Collateral. In addition, such Grantor shall, prior to
the end of such 45-day period, in the case of Patents and Trademarks, record the
IP Supplement with the United States Patent and Trademark Office or, in the case
of Copyrights, record the IP Supplement with the Library of Congress Copyright
Office of the United States. Upon delivery to the Secured Party of an IP
Supplement, Schedules 1(f)(i), 1(f)(ii) and 1(f)(iii) attached hereto and
Schedule A to each Grant, as applicable, shall be deemed modified to include
reference to any right, title or interest in any existing IP Collateral or any
IP Collateral set forth on Schedule A to such IP Supplement. Each Grantor hereby
authorizes the Secured Party to modify this Agreement without the signature or
consent of any Grantor by attaching Schedules 1(f)(i), 1(f)(ii) and 1(f)(iii),
as applicable, that have been modified to include such IP Collateral or to
delete any reference to any right, title or interest in any IP Collateral in
which any Grantor no longer has or claims any right, title or interest;
provided, the failure of any Grantor to execute an IP Supplement with respect to
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any additional IP Collateral pledged pursuant to this Agreement shall not impair
the security interest of the Secured Party therein or otherwise adversely affect
the rights and remedies of the Secured Party hereunder with respect thereto.
Notwithstanding the foregoing, Grantor shall not be required to record the
security interest of the Secured Party in any IP Collateral, if such recordation
would result in the grant of a Trademark Registration, Patent or Copyright
Registration, or any application therefor, in the name of the Secured Party.
SECTION 6. Certain Covenants of the Grantors.
---------------------------------
Each Grantor shall:
(a) not use or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or any applicable statute,
regulation or ordinance or any policy of insurance covering the Collateral,
except where such violation would not have a Material Adverse Effect;
(b) notify the Secured Party of any change in such Grantor's name,
identity or corporate structure within 30 days of such change;
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(c) give the Secured Party 30 days' prior written notice of any change
in such Grantor's chief place of business, chief executive office or residence
or the office where such Grantor keeps its records regarding the Accounts and
all originals of all chattel paper that evidence Accounts or a reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization of such Grantor; and
(d) if the Secured Party gives value to enable such Grantor to acquire
rights in or the use of any Collateral, use such value for such purposes.
SECTION 7. Special Covenants With Respect to Equipment and Inventory.
---------------------------------------------------------
Each Grantor shall:
(a) If such Grantor is a Subsidiary Grantor or an Additional Grantor,
keep the Equipment and Inventory owned by such Subsidiary Grantor at the places
therefor set forth on Schedule 4(b) attached hereto or, provided that such
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Subsidiary Grantor gives the Secured Party notice of any transfer of Equipment
or Inventory within 60 days after such transfer, at such other places in
jurisdictions where all action that may be necessary or desirable, or that the
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby, or to enable the Secured Party to
exercise and enforce its rights and remedies hereunder, with respect to such
Equipment and Inventory shall have been taken;
(b) except as otherwise expressly permitted by the Credit Agreement,
cause the Equipment owned by such Grantor to be maintained and preserved in the
same condition, repair and working order as when new, ordinary wear and tear
excepted, and in accordance with such Grantor's past practices, and shall
forthwith make or cause to be made all repairs, replacements and other
improvements in connection therewith that are necessary or desirable to such
end; and Grantor shall promptly furnish to the Secured Party a statement
respecting any material loss or damage to any of the Equipment owned by such
Grantor, but only to the extent that such loss or damage is material to the
Equipment owned by Company and its Subsidiaries, taken as a whole;
(c) keep correct and accurate records of Inventory owned by such
Grantor, itemizing and describing the kind, type and quantity of such Inventory,
such Grantor's cost therefor and (where applicable) the current list prices for
such Inventory;
(d) notify all of any of such Grantor's agents or processors
possessing or controlling any Inventory and all public warehouses in which
Inventory is maintained of the Lien of the Secured Party in such Inventory;
(e) upon the occurrence of an Event of Default, instruct all agents or
processors of such Grantor possessing or controlling any Inventory and all
public warehouses in which Inventory is maintained to hold all such Inventory
for the account of the Secured Party and subject to the instructions of the
Secured Party; and
(f) such Grantor shall, at its own expense, maintain insurance with
respect to the Equipment and Inventory in accordance with the terms of the
Credit Agreement.
13 Pledge and Security Agreement
SECTION 8. Special Covenants with respect to Accounts and Related Contracts.
----------------------------------------------------------------
(a) Each Grantor shall keep its chief place of business and chief
executive office and the office where it keeps its records concerning the
Accounts and Related Contracts, and all originals of all chattel paper that
evidence Accounts, at the locations therefor set forth on Schedule 4(d) attached
hereto, upon 30 days' prior written notice to the Secured Party, at such other
location in a jurisdiction where all action that may be necessary or desirable,
or that the Secured Party may request, in order to perfect and protect any
security interest granted or purported to be granted hereby, or to enable the
Secured Party to exercise and enforce its rights and remedies hereunder, with
respect to such Accounts and Related Contracts shall have been taken. Each
Grantor will hold and preserve such records and chattel paper and will permit
representatives of the Secured Party at any time during normal business hours to
inspect and make abstracts from such records and chattel paper, and each Grantor
agrees to render to the Secured Party, at Grantor's cost and expense, such
clerical and other assistance as may be reasonably requested with regard
thereto. Promptly upon the request of the Secured Party, each Grantor shall
deliver to the Secured Party complete and correct copies of each Related
Contract.
(b) Each Grantor shall, for not less than three years from the date on
which each Account of such Grantor arose, maintain (i) complete records of such
Account, including records of all payments received, credits granted and
merchandise returned, and (ii) all documentation relating thereto.
(c) Except as otherwise provided in this Section 8(c), each Grantor
------------
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor under the Accounts and Related Contracts. In connection with
such collections, each Grantor may take (and, upon the occurrence and during the
continuance of an Event of Default at the Secured Party's direction, shall take)
such action as such Grantor or the Secured Party may deem necessary or advisable
to enforce collection of amounts due or to become due under the Accounts;
provided, however, that the Secured Party shall have the right at any time, upon
--------
the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the account
debtors or obligors under any Accounts of the assignment of such Accounts to the
Secured Party and to direct such account debtors or obligors to make payment of
all amounts due or to become due to such Grantor thereunder directly to the
Secured Party, to notify each Person maintaining a lockbox or similar
arrangement to which account debtors or obligors under any Accounts have been
directed to make payment to remit all amounts representing collections on checks
and other payment items from time to time sent to or deposited in such lockbox
or other arrangement directly to the Secured Party and, upon such notification
and at the expense of the Grantors, to enforce collection of any such Accounts
and to adjust, settle or compromise the amount or payment thereof, in the same
manner and to the same extent as such Grantor might have done. After receipt by
such Grantor of the notice from the Secured Party referred to in the proviso to
the preceding sentence, (i) all amounts and proceeds (including checks and other
instruments) received by such Grantor in respect of the Accounts and the Related
Contracts shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to the Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 17 hereof, and (ii) such Grantor shall not
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adjust, settle or compromise the amount or payment of any Account,
14 Pledge and Security Agreement
or release wholly or partly any account debtor or obligor thereof, or allow any
credit or discount thereon.
SECTION 9. Special Covenants With Respect to the Securities Collateral.
-----------------------------------------------------------
(a) Delivery. Each Grantor agrees that all certificates or instruments
representing or evidencing the Securities Collateral shall be delivered to and
held by or on behalf of the Secured Party pursuant hereto and shall be in
suitable form for transfer by delivery or, as applicable, shall be accompanied
by such Grantor's endorsement, where necessary, or duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the
Secured Party. The Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Securities Collateral for
certificates or instruments of smaller or larger denominations.
(b) Covenants. Each Grantor shall, except as otherwise not prohibited
by the Credit Agreement, (i) not permit any issuer of Pledged Interests to merge
or consolidate unless all the outstanding capital stock or other equity
interests of the surviving or resulting Person is, upon such merger or
consolidation, pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other constituent
corporation; provided, if the surviving or resulting Person upon any such merger
--------
or consolidation involving an issuer of Pledged Interests which is a Material
Foreign Subsidiary, then such Grantor shall only be required to pledge
outstanding capital stock of such surviving or resulting Person possessing up to
but not exceeding 65% of the voting power of all classes of capital stock of
such issuer entitled to vote; (ii) cause each issuer of Pledged Interests not to
issue any stock, other equity interests or other securities in addition to or in
substitution for the Pledged Interests issued by such issuer, except to such
Grantor; (iii) pledge hereunder, immediately upon its acquisition (directly or
indirectly) thereof, any and all additional shares of stock, other equity
interests or other securities of each issuer of Pledged Interests; (iv) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any and all shares of stock or other equity interests of any Person that, after
the date of this Agreement, becomes, as a result of any occurrence, a direct
Subsidiary of such Grantor; provided, notwithstanding anything contained in this
--------
clause (iv) to the contrary, such Grantor shall only be required to pledge the
outstanding capital stock of a Material Foreign Subsidiary possessing up to but
not exceeding 65% of the voting power of all classes of capital stock of such
Material Foreign Subsidiary entitled to vote and any such Grantor shall not be
required to pledge the capital stock of any Restricted Subsidiary; (v) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of additional indebtedness from time to time owed to such Grantor by
any obligor on the Pledged Indebtedness; provided, notwithstanding anything
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contained in this clause (v) to the contrary, any such Grantor shall not be
required to pledge any such instruments or other evidences of additional
indebtedness owed to such Grantor by any Restricted Subsidiary; (vi) pledge
hereunder, immediately upon their issuance, any and all instruments or other
evidences of indebtedness from time to time owed to such Grantor by any Person
that after the date of this Agreement becomes, as a result of any occurrence, a
direct or indirect Subsidiary of such Grantor; provided, notwithstanding
--------
anything contained in this clause (vi) to the contrary, any such Grantor shall
not be required to pledge any such instruments or other evidences of
indebtedness owed to such Grantor by any Restricted Subsidiary; (vii) promptly
notify the Secured Party of any event of which such Grantor becomes aware
causing loss or depreciation in
15 Pledge and Security Agreement
the value of the Securities Collateral that has a Material Adverse Effect; and
(viii), at the request of the Secured Party, promptly execute and deliver to the
Secured Party an agreement providing for the control, as that term is defined in
the UCC, by the Secured Party of all securities entitlements and securities
accounts of such Grantor.
(c) Voting and Distributions. So long as no Event of Default shall
have occurred and be continuing, (i) each Grantor shall be entitled to exercise
any and all voting and other consensual rights pertaining to the Securities
Collateral or any part thereof for any purpose not inconsistent with the terms
of this Agreement or the Credit Agreement; provided, no Grantor shall exercise
--------
or refrain from exercising any such right if the Secured Party shall have
notified such Grantor that, in the Secured Party's reasonable judgment, such
action would have a Material Adverse Effect; and provided further, such Grantor
----------------
shall give the Secured Party at least five Business Days' prior written notice
of the manner in which it intends to exercise, or the reasons for refraining
from exercising, any such right (it being understood, however, that neither (A)
the voting by such Grantor of any Pledged Interests for or such Grantor's
consent to the election of directors or other members of a governing body of an
issuer of Pledged Interests at a regularly scheduled annual or other meeting of
stockholders or holders of equity interests or with respect to incidental
matters at any such meeting, nor (B) such Grantor's consent to or approval of
any action otherwise not prohibited under this Agreement and the Credit
Agreement shall be deemed inconsistent with the terms of this Agreement or the
Credit Agreement within the meaning of this Section 9(c), and no notice of any
------------
such voting or consent need be given to the Secured Party); (ii) each Grantor
shall be entitled to receive and retain, and to utilize free and clear of the
lien of this Agreement, any and all dividends, other distributions and interest
paid in respect of the Securities Collateral; provided, any and all (A)
--------
dividends, distributions and interest paid or payable other than in cash in
respect of, and instruments and other property received, receivable or otherwise
distributed in respect of, or in exchange for, any Securities Collateral, (B)
dividends and other distributions paid or payable in cash in respect of any
Securities Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and (C) cash paid, payable or otherwise distributed in respect
of principal or in redemption of or in exchange for any Securities Collateral,
shall be, and shall forthwith be delivered to the Secured Party to hold as,
Securities Collateral and shall, if received by such Grantor, be received in
trust for the benefit of the Secured Party, be segregated from the other
property or funds of such Grantor and be forthwith delivered to the Secured
Party as Securities Collateral in the same form as so received (with all
necessary endorsements); and (iii) the Secured Party shall promptly execute and
deliver (or cause to be executed and delivered) to such Grantor all such
proxies, dividend payment orders and other instruments as such Grantor may from
time to time reasonably request for the purpose of enabling such Grantor to
exercise the voting and other consensual rights which it is entitled to exercise
pursuant to clause (i) above and to receive the dividends, distributions,
principal or interest payments which it is authorized to receive and retain
pursuant to clause (ii) above.
Upon the occurrence and during the continuation of an Event of
Default, (x) upon written notice from the Secured Party to any Grantor, all
rights of such Grantor to exercise the voting and other consensual rights which
it would otherwise be entitled to exercise pursuant hereto shall cease, and all
such rights shall thereupon become vested in the Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights; (y) all rights of such Grantor to receive the dividends, other
distributions and interest payments which it
16 Pledge and Security Agreement
would otherwise be authorized to receive and retain pursuant hereto shall
cease, and all such rights shall thereupon become vested in the Secured Party
who shall thereupon have the sole right to receive and hold as Securities
Collateral such dividends, other distributions and interest payments; and (z)
all dividends, principal, interest payments and other distributions which are
received by such Grantor contrary to the provisions of clause (ii) of the
immediately preceding paragraph or clause (y) above shall be received in trust
for the benefit of the Secured Party, shall be segregated from other funds of
such Grantor and shall forthwith be paid over to the Secured Party as
Securities Collateral in the same form as so received (with any necessary
endorsements).
In order to permit the Secured Party to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant hereto and
to receive all dividends and other distributions which it may be entitled to
receive hereunder, (I) each Grantor shall promptly execute and deliver (or cause
to be executed and delivered) to the Secured Party all such proxies, dividend
payment orders and other instruments as the Secured Party may from time to time
reasonably request, and (II) without limiting the effect of clause (I) above,
each Grantor hereby grants to the Secured Party an irrevocable proxy to vote the
Pledged Interests and to exercise all other rights, powers, privileges and
remedies to which a holder of the Pledged Interests would be entitled (including
giving or withholding written consents of shareholders or other holders of
equity interests, calling special meetings of shareholders or other holders of
equity interests and voting at such meetings), which proxy shall be effective,
automatically and without the necessity of any action (including any transfer of
any Pledged Interests on the record books of the issuer thereof) by any other
Person (including the issuer of the Pledged Interests or any officer or agent
thereof), upon the occurrence of an Event of Default and which proxy shall only
terminate upon the payment in full of the Secured Obligations.
SECTION 10. Special Covenants With Respect to the IP Collateral.
---------------------------------------------------
(a) Each Grantor shall:
(i) diligently keep reasonable records respecting the IP
Collateral and at all times keep at least one complete set of its records
concerning such Collateral at its chief executive office or principal place
of business;
(ii) use commercially reasonable efforts so as not to permit the
inclusion in any contract to which it hereafter becomes a party of any
provision that could or might in any way impair or prevent the creation of
a security interest in, or the assignment of, such Grantor's rights and
interests in any property included within the definitions of any IP
Collateral acquired under such contracts;
(iii) take any and all reasonable steps to protect the secrecy of
all trade secrets relating to the products and services sold or delivered
under or in connection with the IP Collateral, including where appropriate
entering into confidentiality agreements with employees and labeling and
restricting access to secret information and documents;
(iv) use proper statutory notice in connection with its use of
any of the IP Collateral, except where the failure to give such notice
would not have a Material Adverse Effect;
17 Pledge and Security Agreement
(v) use a commercially appropriate standard of quality
(which may be consistent with such Grantor's past practices) in the
manufacture, sale and delivery of products and services sold or delivered
under or in connection with the Trademarks; and
(vi) furnish to the Secured Party from time to time at the
Secured Party's reasonable request statements and schedules further
identifying and describing any IP Collateral and such other reports in
connection with such Collateral, all in reasonable detail.
(b) Except as otherwise provided in this Section 10, each Grantor
----------
shall continue to collect, at its own expense, all amounts due or to become due
to such Grantor in respect of the IP Collateral or any portion thereof. In
connection with such collections, each Grantor may take (and, after the
occurrence and during the continuance of any Event of Default at the Secured
Party's reasonable direction, shall take) such action as such Grantor or the
Secured Party may deem reasonably necessary or advisable to enforce collection
of such amounts; provided, the Secured Party shall have the right at any time,
--------
upon the occurrence and during the continuation of an Event of Default and upon
written notice to such Grantor of its intention to do so, to notify the obligors
with respect to any such amounts of the existence of the security interest
created hereby and to direct such obligors to make payment of all such amounts
directly to the Secured Party, and, upon such notification and at the expense of
such Grantor, to enforce collection of any such amounts and to adjust, settle or
compromise the amount or payment thereof, in the same manner and to the same
extent as such Grantor might have done. After receipt by any Grantor of the
notice from the Secured Party referred to in the proviso to the preceding
sentence and during the continuation of any Event of Default, (i) all amounts
and proceeds (including checks and other instruments) received by each Grantor
in respect of amounts due to such Grantor in respect of the IP Collateral or any
portion thereof shall be received in trust for the benefit of the Secured Party
hereunder, shall be segregated from other funds of such Grantor and shall be
forthwith paid over or delivered to the Secured Party in the same form as so
received (with any necessary endorsement) to be held as cash Collateral and
applied as provided by Section 17 hereof, and (ii) such Grantor shall not
----------
adjust, settle or compromise the amount or payment of any such amount or release
wholly or partly any obligor with respect thereto or allow any credit or
discount thereon.
(c) Each Grantor shall have the duty diligently, through counsel
reasonably acceptable to the Secured Party, to prosecute, file and/or make,
unless and until such Grantor, in its commercially reasonable judgment, decides
otherwise, (i) any application relating to any of the IP Collateral owned, held
or used by such Grantor and set forth on Schedules 1(f)(i), 1(f)(ii) or
1(f)(iii) attached hereto, as applicable, that is pending as of the date of this
Agreement, (ii) any Copyright Registration on any existing or future
unregistered but copyrightable works (except for works of nominal commercial
value or with respect to which such Grantor has determined in the exercise of
its commercially reasonable judgment that it shall not seek registration), (iii)
application on any future patentable but unpatented innovation or invention
comprising IP Collateral, and (iv) any Trademark opposition and cancellation
proceedings, renew Trademark Registrations and Copyright Registrations and do
any and all acts which are necessary or desirable to preserve and maintain all
rights in all IP Collateral. Any expenses incurred in connection therewith shall
be borne solely by the Grantors. Subject to the foregoing, each Grantor shall,
within 45 days after the end of each Fiscal Quarter of the Borrower, give the
18 Pledge and Security Agreement
Secured Party written notice of any abandonment of any IP Collateral registered
with a Governmental Authority or any pending patent application or any Patent.
(d) Except as provided herein, each Grantor shall have the right to
commence and prosecute in its own name, as real party in interest, for its own
benefit and at its own expense, such suits, proceedings or other actions for
infringement, unfair competition, dilution, misappropriation or other damage, or
reexamination or reissue proceedings as are necessary to protect the IP
Collateral. The Secured Party 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. Each Grantor shall,
within 45 days after the end of each Fiscal Quarter of the Borrower, notify the
Secured Party of the institution of, or of any adverse determination that would
be reasonably likely to have a Material Adverse Effect in, any proceeding
(whether in the United States Patent and Trademark Office, the United States
Copyright Office or any federal, state, local or foreign court) or regarding
such Grantor's ownership, right to use, or interest in any IP Collateral. Each
Grantor shall provide to the Secured Party any information with respect thereto
requested by the Secured Party.
(e) In addition to, and not by way of limitation of, the granting of
a security interest in the Collateral pursuant hereto, each Grantor, effective
upon the occurrence and during the continuation of an Event of Default, hereby
assigns, transfers and conveys to the Secured Party the nonexclusive right and
license to use all trademarks, tradenames, copyrights, patents or technical
processes (including the IP 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 Secured Party to realize on
the Collateral in accordance with this Agreement and to enable any transferee or
assignee of the Collateral to enjoy the benefits of the Collateral; provided,
--------
however, the license granted under this Section 10(e) shall not be construed to
-------------
limit such Grantor's ability to take reasonable steps, in accordance with its
then current business practices, to protect and preserve the Trademarks, the
Trademark Registrations, the Trademark Rights and the Associated Goodwill. This
right shall inure to the benefit of all successors, assigns and transferees of
the Secured Party and its successors, assigns and transferees, whether by
voluntary conveyance, operation of law, assignment, transfer, foreclosure, deed
in lieu of foreclosure or otherwise. Such right and license shall be granted
free of charge, without requirement that any monetary payment whatsoever be made
to such Grantor. In addition, each Grantor hereby grants to the Secured Party
and its employees, representatives and agents the right to visit such Grantor's
and any of its Affiliate's or subcontractor's plants, facilities and other
places of business that are utilized in connection with the manufacture,
production, inspection, storage or sale of products and services sold or
delivered under any of the IP Collateral (or which were so utilized during the
prior six month period), and to inspect the quality control and all other
records relating thereto upon reasonable advance written notice to such Grantor
and at reasonable dates and times and as often as may be reasonably requested.
If and to the extent that any Grantor is permitted to license the IP Collateral,
the Secured Party shall promptly enter into a non-disturbance agreement or other
similar arrangement, at such Grantor's request and expense, with such Grantor
and any licensee of any IP Collateral permitted hereunder in form and substance
reasonably satisfactory to the Secured Party pursuant to which (i) the Secured
Party shall agree not to disturb or interfere with such licensee's rights under
its license agreement with such Grantor so long as such licensee is not in
default thereunder, and
19 Pledge and Security Agreement
(ii) such licensee shall acknowledge and agree that the IP Collateral licensed
to it is subject to the security interest created in favor of the Secured Party
and the other terms of this Agreement.
SECTION 11. Cash Collateral Accounts.
------------------------
The Secured Party is hereby authorized to establish and maintain as
blocked accounts in the name of the Borrower and under the sole dominion and
control of the Secured Party, a restricted deposit account designated as "Levi
▇▇▇▇▇▇▇ & Co. Cash Collateral Account" (the "Cash Collateral Account") and a
restricted deposit account designated as "Levi ▇▇▇▇▇▇▇ & Co. L/C Cash Collateral
Account" the "L/C Cash Collateral Account"). All amounts at any time held in the
Cash Collateral Account and the L/C Cash Collateral Account shall be
beneficially owned by the Grantors but shall be held in the name of the Secured
Party hereunder, for the benefit of the Lenders and the Selected Revolving
Lenders, as collateral security for the Secured Obligations upon the terms and
conditions set forth herein. The Grantors shall have no right to withdraw,
transfer or, except as expressly set forth herein, otherwise receive any funds
deposited into the Cash Collateral Account and the L/C Cash Collateral Account.
Anything contained herein to the contrary notwithstanding, the Cash Collateral
Account and the L/C Cash Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the Federal
Reserve System and of any other appropriate banking or governmental authority,
as may now or hereafter be in effect. All deposits of funds in the Cash
Collateral Account and the L/C Cash Collateral Account shall be made by wire
transfer (or, if applicable, by intra-bank transfer from another account of a
Grantor) of immediately available funds, in each case addressed in accordance
with instructions of the Secured Party. Each Grantor shall, promptly after
initiating a transfer of funds to the Cash Collateral Account, give notice to
the Secured Party by telefacsimile of the date, amount and method of delivery of
such deposit. Cash held by the Secured Party in the Cash Collateral Account and
the L/C Cash Collateral Account shall not be invested by the Secured Party but
instead shall be maintained as a cash deposit in the Cash Collateral Account and
the L/C Cash Collateral Account pending application thereof as elsewhere
provided in this Agreement. To the extent permitted under Regulation Q of the
Board of Governors of the Federal Reserve System, any cash held in the Cash
Collateral Account and the L/C Cash Collateral Account shall bear interest at
the standard rate paid by the Secured Party to its customers for deposits of
like amounts and terms. Subject to the Secured Party's rights hereunder, any
interest earned on deposits of cash in the Cash Collateral Account and the L/C
Cash Collateral Account shall be deposited directly in, and held in the Cash
Collateral Account and the L/C Cash Collateral Account.
SECTION 12. Secured Party Appointed Attorney-in-Fact.
----------------------------------------
Each Grantor hereby irrevocably appoints the Secured Party as such
Grantor's attorney-in-fact, with full authority in the place and stead of such
Grantor and in the name of such Grantor, the Secured Party or otherwise, from
time to time in the Secured Party's discretion to take any action and to execute
any instrument that the Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement, including:
(a) upon the occurrence and during the continuance of an Event of
Default, to obtain and adjust insurance required to be maintained by such
Grantor or paid to Administrative Agent pursuant to the Credit Agreement;
20 Pledge and Security Agreement
(b) upon the occurrence and during the continuance of an Event of Default,
to ask for, demand, collect, ▇▇▇ 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;
(c) upon the occurrence and during the continuance of an Event of Default,
to receive, endorse and collect any drafts or other instruments, documents and
chattel paper in connection with clauses (a) and (b) above;
(d) upon the occurrence and during the continuance of an Event of Default,
to file any claims or take any action or institute any proceedings that the
Secured Party may deem necessary or desirable for the collection of any of the
Collateral or otherwise to enforce the rights of the Secured Party with respect
to any of the Collateral;
(e) except as otherwise permitted by the Credit Agreement, to pay or
discharge taxes or Liens (other than Liens permitted under this Agreement or the
Credit Agreement) levied or placed upon or threatened against the Collateral,
the legality or validity thereof and the amounts necessary to discharge the same
to be determined by the Secured Party in its sole discretion, any such payments
made by the Secured Party to become Obligations of such Grantor to the Secured
Party, due and payable immediately without demand;
(f) upon the occurrence and during the continuance of an Event of Default,
to sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications and notices in connection with Accounts and other documents
relating to the Collateral; and
(g) upon the occurrence and during the continuance of an Event of Default,
generally to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as though the
Secured Party were the absolute owner thereof for all purposes, and to do, at
the Secured Party's option and the Grantors' expense, at any time or from time
to time, all acts and things that the Secured Party deems necessary to protect,
preserve or realize upon the Collateral and the Secured Party's security
interest therein in order to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
SECTION 13. Secured Party May Perform.
-------------------------
If any Grantor fails to perform any agreement contained herein, the Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of the Secured Party incurred in connection therewith shall be payable
by the Grantors under Section 18(b) hereof.
-------------
SECTION 14. Standard of Care.
----------------
The powers conferred on the Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to exercise
any such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually received
by it hereunder, the Secured Party shall have no duty as to any Collateral or as
to the taking of any necessary steps to preserve rights against prior parties or
any other rights pertaining to any Collateral. The Secured Party shall be deemed
to
21 Pledge and Security Agreement
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 Secured Party accords its own property.
SECTION 15. Remedies.
--------
(a) Generally. If any Event of Default shall have occurred and be
continuing, the Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default under
the UCC (whether or not the UCC applies to the affected Collateral), and also
may (i) require each Grantor to, and each Grantor hereby agrees that it will at
its expense and upon request of the Secured Party forthwith, assemble all or
part of the Collateral as directed by the Secured Party and make it available to
the Secured Party at a place to be designated by the Secured Party that is
reasonably convenient to both parties, (ii) enter onto the property where any
Collateral is located and take possession thereof with or without judicial
process, (iii) prior to the disposition of the Collateral, store, process,
repair or recondition the Collateral or otherwise prepare the Collateral for
disposition in any manner to the extent the Secured Party deems appropriate,
(iv) take possession of any Grantor's premises or place custodians in exclusive
control thereof, remain on such premises and use the same and any of such
Grantor's equipment for the purpose of completing any work in process, taking
any actions described in the preceding clause (iii) and collecting any Secured
Obligation, (v) without notice except as specified below, sell the Collateral or
any part thereof in one or more parcels at public or private sale, at any of the
Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, at such time or times and at such price or prices and upon such other
terms as the Secured Party may deem commercially reasonable, (vi) exercise
dominion and control over and refuse to permit further withdrawals from any
Deposit Account maintained with the Secured Party or any Lender and provide
instructions directing the disposition of funds in Deposit Accounts not
maintained with Secured Party or any Lender, (vii) provide entitlement orders
with respect to security entitlements and other investment property]
constituting a part of the Collateral, and (viii) without notice to any Grantor,
transfer to or to register in the name of the Secured Party or any of its
nominees any or all of the Securities Collateral. The Secured Party or any
Lender or Selected Revolving Lender may be the purchaser of any or all of the
Collateral at any such sale and the Secured Party, as agent for and
representative of the Lenders and the Selected Revolving Lenders (but not any
Lender or Selected Revolving Lender in its individual capacity unless Required
Lenders shall otherwise agree in writing), shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations as a credit on account of the purchase price for any
Collateral payable by the Secured Party at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on the
part of any Grantor, and each Grantor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now has
or may at any time in the future have under any rule of law or statute now
existing or hereafter enacted. Each Grantor agrees that, to the extent notice of
sale shall be required by law, at least ten days' notice to such Grantor of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given. The Secured Party may adjourn any public or private sale from time
to time by announcement at the time and place fixed
22 Pledge and Security Agreement
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. Each Grantor hereby waives any claims
against the Secured Party arising by reason of the fact that the price at which
any Collateral may have been sold at such a private sale was less than the price
which might have been obtained at a public sale, even if the Secured Party
accepts the first offer received and does not offer such Collateral to more than
one offeree. If the proceeds of any sale or other disposition of the Collateral
are insufficient to pay all the Secured Obligations, the Grantors shall be
jointly and severally liable for the deficiency and the fees of any attorneys
employed by the Secured Party to collect such deficiency. Each Grantor further
agrees that a breach of any of the covenants contained in this Section 15 will
----------
cause irreparable injury to the Secured Party, that the Secured Party has no
adequate remedy at law in respect of such breach and, as a consequence, that
each and every covenant contained in this Section 15 shall be specifically
----------
enforceable against such Grantor, and each Grantor hereby waives and agrees not
to assert any defenses against an action for specific performance of such
covenants except for a defense that no default has occurred giving rise to the
Secured Obligations becoming due and payable prior to their stated maturities.
(b) Securities Collateral.
(i) Each Grantor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933 and the regulations
promulgated thereunder (the "Securities Act") and applicable state
securities laws, the Secured Party may be compelled, with respect to any
sale of all or any part of the Securities Collateral conducted without
prior registration or qualification of such Securities Collateral under the
Securities Act and/or such state securities laws, to limit purchasers to
those who will agree, among other things, to acquire the Securities
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Each Grantor acknowledges that any such
private sales may be at prices and on terms less favorable than those
obtainable through a public sale without such restrictions (including a
public offering made pursuant to a registration statement under the
Securities Act) and, notwithstanding such circumstances and the
registration rights granted to the Secured Party by such Grantor pursuant
hereto and notwithstanding the provisions of Section 9-610(c) of the UCC,
which each Grantor hereby waives, each Grantor agrees that any such private
sale shall be deemed to have been made in a commercially reasonable manner
and that the Secured Party shall have no obligation to engage in public
sales and no obligation to delay the sale of any Securities Collateral for
the period of time necessary to permit the issuer thereof to register it
for a form of public sale requiring registration under the Securities Act
or under applicable state securities laws, even if such issuer would, or
should, agree to so register it. If the Secured Party determines to
exercise its right to sell any or all of the Securities Collateral, upon
written request, each Grantor shall and shall cause each issuer of any
Pledged Interests to be sold hereunder from time to time to furnish to the
Secured Party all such information as the Secured Party may request in
order to determine the number of shares and other instruments included in
the Securities Collateral which may be sold by the Secured Party in exempt
transactions under the Securities Act and the rules and regulations of the
Securities and Exchange Commission thereunder, as the same are from time to
time in effect.
23 Pledge and Security Agreement
(ii) If the Secured Party shall determine to exercise its right
to sell all or any of the Securities Collateral pursuant to this Section
-------
15, each Grantor agrees that, upon request of the Secured Party (which
--
request may be made by the Secured Party in its sole discretion), such
Grantor will, at its own expense (A) execute and deliver, and cause each
issuer of the Securities Collateral contemplated to be sold and the
directors and officers thereof to execute and deliver, all such instruments
and documents, and do or cause to be done all such other acts and things,
as may be necessary or, in the opinion of the Secured Party, advisable to
register such Securities Collateral under the provisions of the Securities
Act and to cause the registration statement relating thereto to become
effective 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 Secured
Party, are necessary or advisable, all in conformity with the requirements
of the Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto; (B) use its best efforts to qualify
the Securities Collateral under all applicable state securities or "Blue
Sky" laws and to obtain all necessary governmental approvals for the sale
of the Securities Collateral, as requested by the Secured Party; (C) cause
each such issuer to make available to its security holders, as soon as
practicable, an earnings statement which will satisfy the provisions of
Section 11(a) of the Securities Act; (D) do or cause to be done all such
other acts and things as may be necessary to make such sale of the
Securities Collateral or any part thereof valid and binding and in
compliance with applicable law; and (E) bear all costs and expenses,
including reasonable attorneys' fees, of carrying out its Obligations under
this Section 15.
----------
(iii) Without limiting the generality of Sections 10.04 and 10.05
of the Credit Agreement, in the event of any public sale described herein,
each Grantor agrees to indemnify and hold harmless (to the maximum extent
permitted under the Securities Act or other applicable law) the Secured
Party, and each Lender and each Selected Revolving Lender and each of their
respective directors, officers, employees and agents from and against any
loss, fee, cost, expense, damage, liability or claim, joint or several, to
which any such Persons may become subject or for which any of them may be
liable, under the Securities Act or otherwise, insofar as such losses,
fees, costs, expenses, damages, liabilities or claims (or any litigation
commenced or threatened in respect thereof) arise out of or are based upon
an untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, registration statement, prospectus
or other such document published or filed in connection with such public
sale, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and will (to the maximum extent permitted under the
Securities Act or other applicable law) reimburse the Secured Party and
such other Persons for any legal or other expenses reasonably incurred by
the Secured Party and such other Persons in connection with any litigation,
of any nature whatsoever, commenced or threatened in respect thereof
(including any and all fees, costs and expenses whatsoever reasonably
incurred by the Secured Party and such other Persons and counsel for the
Secured Party and such other Persons in investigating, preparing for,
defending against or providing evidence, producing documents or taking any
other action in respect of, any such commenced or threatened litigation or
any claims asserted). This
24 Pledge and Security Agreement
indemnity shall be in addition to any liability which any Grantor may
otherwise have and shall extend upon the same terms and conditions to each
Person, if any, that controls the Secured Party or such Persons within the
meaning of the Securities Act.
(c) L/C Cash Collateral Account. If an Event of Default has occurred
and is continuing and, in accordance with Section 8.02 of the Credit Agreement,
the Borrower is required to pay to the Secured Party an amount (the "Aggregate
Available Amount") equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding under the Credit Agreement, the
Borrower shall deliver funds in such an amount for deposit in the L/C Cash
Collateral Account. If for any reason the aggregate amount delivered by the
Borrower for deposit in the L/C Cash Collateral Account as aforesaid is less
than the Aggregate Available Amount, the aggregate amount so delivered by the
Borrower shall be apportioned among all outstanding Letters of Credit for
purposes of this Section 15 in accordance with the ratio of the maximum amount
----------
available for drawing under each such Letter of Credit (as to such Letter of
Credit, the "Maximum Available Amount") to the Aggregate Available Amount. Upon
any drawing under any outstanding Letter of Credit in respect of which the
Borrower has deposited in the L/C Cash Collateral Account any amounts described
above, the Secured Party shall apply such amounts to reimburse the L/C Issuer
for the amount of such drawing. In the event of cancellation or expiration of
any Letter of Credit in respect of which the Borrower has deposited in the L/C
Cash Collateral Account any amounts described above, or in the event of any
reduction in the Maximum Available Amount under such Letter of Credit, the
Secured Party shall apply the amount then on deposit in the L/C Collateral
Account in respect of such Letter of Credit (less, in the case of such a
reduction, the Maximum Available Amount under such Letter of Credit immediately
after such reduction) first, to the payment of any amounts payable to the
Secured Party pursuant to Section 17 hereof, second, to the extent of any
----------
excess, to the cash collateralization pursuant to the terms of this Agreement of
any outstanding Letters of Credit in respect of which the Borrower has failed to
pay all or a portion of the amounts described above (such cash collateralization
to be apportioned among all such Letters of Credit in the manner described
above), third, to the extent of any further excess, to the payment of any other
outstanding Secured Obligations in such order as the Secured Party shall elect,
and fourth, to the extent of any further excess, to the payment to whomsoever
shall be lawfully entitled to receive such funds.
(d) Cash Collateral Account. If an Event of Default has occurred and
is continuing, the Borrower shall deliver any and all cash dividends paid or
payable to it or any of its Subsidiaries from any of its Subsidiaries from time
to time for deposit in the Cash Collateral Account. Amounts in the Cash
Collateral Account shall be applied in accordance with Section 17 hereof.
----------
SECTION 16. Additional Remedies for IP Collateral.
-------------------------------------
(a) Anything contained herein to the contrary notwithstanding, upon
the occurrence and during the continuation of an Event of Default, (i) the
Secured Party shall have the right (but not the obligation) to bring suit, in
the name of any Grantor, the Secured Party or otherwise, to enforce any IP
Collateral, in which event each Grantor shall, at the request of the Secured
Party, do any and all lawful acts and execute any and all documents required by
the Secured Party in aid of such enforcement and each Grantor shall promptly,
upon demand, reimburse and indemnify the Secured Party as provided in Sections
10.04 and 10.05 of the Credit
25 Pledge and Security Agreement
Agreement and Section 18 hereof, as applicable, in connection with the exercise
----------
of its rights under this Section 16, and, to the extent that the Secured Party
----------
shall elect not to bring suit to enforce any IP Collateral as provided in this
Section 16, each Grantor agrees to use all reasonable measures, whether by
----------
action, suit, proceeding or otherwise, to prevent the infringement of any of the
IP Collateral by others and for that purpose agrees to use its commercially
reasonable judgment in maintaining any action, suit or proceeding against any
Person so infringing reasonably necessary to prevent such infringement; (ii)
upon written demand from the Secured Party, each Grantor shall execute and
deliver to the Secured Party an assignment or assignments of the IP Collateral
and such other documents as are necessary or appropriate to carry out the intent
and purposes of this Agreement; (iii) each Grantor agrees that such an
assignment and/or recording shall be applied to reduce the Secured Obligations
outstanding only to the extent that the Secured Party (or any Lender) receives
cash proceeds in respect of the sale of, or other realization upon, the IP
Collateral; and (iv) within five Business Days after written notice from the
Secured Party, each Grantor shall make available to the Secured Party, to the
extent within such Grantor's power and authority, such personnel in such
Grantor's employ on the date of such Event of Default as the Secured Party may
reasonably designate, by name, title or job responsibility, to permit such
Grantor to continue, directly or indirectly, to produce, advertise and sell the
products and services sold or delivered by such Grantor under or in connection
with the Trademarks, Trademark Registrations and Trademark Rights, such persons
to be available to perform their prior functions on the Secured Party's behalf
and to be compensated by the Secured Party at such Grantor's expense on a per
diem, pro-rata basis consistent with the salary and benefit structure applicable
to each as of the date of such Event of Default.
(b) If (i) an Event of Default shall have occurred and, by reason of
cure, waiver, modification, amendment or otherwise, no longer be continuing,
(ii) no other Event of Default shall have occurred and be continuing, (iii) an
assignment to the Secured Party of any rights, title and interests in and to the
IP Collateral shall have been previously made, and (iv) the Secured Obligations
shall not have become immediately due and payable, upon the written request of
any Grantor, the Secured Party shall promptly execute and deliver to such
Grantor such assignments as may be necessary to reassign to such Grantor any
such rights, title and interests as may have been assigned to the Secured Party
as aforesaid, subject to any disposition thereof that may have been made by the
Secured Party; provided, after giving effect to such reassignment, the Secured
--------
Party's security interest granted pursuant hereto, as well as all other rights
and remedies of the Secured Party granted hereunder, shall continue to be in
full force and effect; and provided further, the rights, title and interests so
----------------
reassigned shall be free and clear of all Liens other than Liens (if any)
encumbering such rights, title and interest at the time of their assignment to
the Secured Party and Liens expressly permitted by the Credit Agreement.
SECTION 17. Application of Proceeds.
-----------------------
Except as expressly provided elsewhere in this Agreement, all
proceeds received by the Secured Party in respect of any sale of, collection
from, or other realization upon all or any part of the Collateral shall be
applied as provided in Section 8.03 of the Credit Agreement.
26 Pledge and Security Agreement
SECTION 18. Indemnity and Expenses.
----------------------
(a) The Grantors jointly and severally agree to indemnify the
Secured Party, each Lender and each Selected Revolving Lender from and against
any and all claims, losses and liabilities in any way relating to, growing out
of or resulting from this Agreement and the transactions contemplated hereby
(including enforcement of this Agreement), except to the extent such claims,
losses or liabilities result solely from the Secured Party's or such Lender's or
Selected Revolving Lender's gross negligence or willful misconduct as finally
determined by a court of competent jurisdiction.
(b) The Grantors jointly and severally agree to pay to the Secured
Party upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Secured Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from, or other realization upon, any of the Collateral, (iii) the
exercise or enforcement of any of the rights of the Secured Party hereunder, or
(iv) the failure by any Grantor to perform or observe any of the provisions
hereof.
(c) The obligations of the Grantors in this Section 18 shall (i)
----------
survive the termination of this Agreement and the discharge of the Grantors'
other Obligations under this Agreement, the Selected Revolving Lender Swap
Contracts, 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.
SECTION 19. Continuing Security Interest; Transfer of Loans; Termination and
----------------------------------------------------------------
Release.
-------
(a) This Agreement shall create a continuing security interest in
the Collateral and shall (i) remain in full force and effect until the payment
in full of the Obligations, the cancellation or termination of the Commitments
and the cancellation or expiration of all outstanding Letters of Credit, (ii) be
binding upon the Grantors and their respective successors and assigns, and (iii)
inure, together with the rights and remedies of the Secured Party hereunder, to
the benefit of the Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), (A) but subject
to the provisions of Section 10.07 of the Credit Agreement, any Lender may
assign or otherwise transfer any Loans held by it to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to the Lenders herein or otherwise and (B) any Selected
Revolving Lender may assign or otherwise transfer any Selected Revolving Lender
Swap Contracts to which it is a party to any other Person in accordance with the
terms of such Selected Revolving Lender Swap Contract, and such other Person
shall thereupon become vested with all the benefits in respect thereof granted
to the Selected Revolving Lenders herein or otherwise.
(b) Upon the payment in full of all 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 the
Grantors. Upon any such termination the Secured Party will, at the Grantors'
expense, execute and deliver to the Grantors such documents as the Grantors
shall reasonably request to evidence such termination.
27 Pledge and Security Agreement
(c) In addition, upon the proposed sale, transfer or other
disposition of any Collateral by a Grantor in accordance with the Credit
Agreement for which such Grantor desires to obtain a security interest release
from the Secured Party, a security interest release may be obtained pursuant to
the provisions of Section 10.19 of the Credit Agreement.
SECTION 20. Secured Party as Agent.
----------------------
(a) The Secured Party has been appointed to act as the Secured Party
hereunder by the Lenders and, by their acceptance of the benefits hereof, the
Selected Revolving Lenders. The Secured Party shall be obligated, and shall have
the right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including the release or substitution of Collateral), solely in accordance with
this Agreement and the Credit Agreement; provided that the Secured Party shall
--------
exercise, or refrain from exercising, any remedies provided for in Section 15
----------
hereof in accordance with the instructions of Required Lenders. In furtherance
of the foregoing provisions of this Section 20(a), each Selected Revolving
-------------
Lender, by its acceptance of the benefits hereof, agrees that it shall have no
right individually to realize upon any of the Collateral hereunder, it being
understood and agreed by such Selected Revolving Lender that all rights and
remedies hereunder may be exercised solely by the Secured Party for the benefit
of the Lenders and the Selected Revolving Lenders in accordance with the terms
of this Section 20(a).
-------------
(b) The Secured Party shall at all times be the same Person that is
Administrative Agent under the Credit Agreement. Written notice of resignation
by Administrative Agent pursuant to Section 9.09 of the Credit Agreement shall
also constitute notice of resignation as the Secured Party under this Agreement;
and appointment of a successor administrative agent pursuant to Section 9.09 of
the Credit Agreement shall also constitute appointment of a successor Secured
Party under this Agreement. Upon the acceptance of any appointment as
Administrative Agent under Section 9.09 of the Credit Agreement by a successor
administrative agent, that successor administrative agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Secured Party under this Agreement, and the retiring Secured
Party under this Agreement shall promptly (i) transfer to such successor Secured
Party all sums, securities and other items of Collateral held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder, whereupon
such retiring Secured Party shall be discharged from its duties and obligations
under this Agreement. After any retiring administrative agent's resignation
hereunder as the Secured Party, the provisions of this Agreement shall inure to
its benefit as to any actions taken or omitted to be taken by it under this
Agreement while it was the Secured Party hereunder.
(c) The Secured Party 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 Secured Party
from a Grantor or the Selected Revolving Lender as to the existence and terms of
the applicable Selected Revolving Lender Swap Contract or Selected Revolving
Lender Cash Management Services.
28 Pledge and Security Agreement
SECTION 21. Additional Grantors.
-------------------
The initial Subsidiary Grantors hereunder shall be such of the
Subsidiaries of the Borrower as are signatories hereto on the date hereof. From
time to time subsequent to the date hereof, additional Material Domestic
Subsidiaries of the Borrower may become parties hereto as additional Grantors
(each an "Additional Grantor"), by executing a counterpart substantially in the
form of Exhibit VI annexed hereto. Upon delivery of any such counterpart to the
----------
Secured Party, notice of which is hereby waived by the Grantors, each such
Additional Grantor shall be a Grantor and shall be as fully a party hereto as if
such Additional Grantor were an original signatory hereto. Each Grantor
expressly agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Grantor hereunder, nor by any
election of Administrative Agent not to cause any Subsidiary of the Borrower to
become an Additional Grantor hereunder. This Agreement shall be fully effective
as to any Grantor that is or becomes a party hereto regardless of whether any
other Person becomes or fails to become or ceases to be a Grantor hereunder.
SECTION 22. Amendments; Etc.
---------------
No amendment, modification, termination or waiver of any provision
of this Agreement, and no consent to any departure by any Grantor therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Secured Party and, in the case of any such amendment or modification, by
the Grantors; provided that Schedule 2(a) may be amended with respect to the
--------
description of the Selected Revolving Lender Cash Management Services of any
Selected Revolving Lender or the maximum amount secured in connection therewith
by a writing delivered to the Secured Party signed solely by the Borrower and
such Selected Revolving Lender; provided further that this Agreement may be
----------------
modified by the execution of a counterpart by an Additional Grantor in
accordance with Section 21 hereof and the Grantors hereby waive any requirement
----------
of notice of or consent to any such amendment. Any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which it was given.
SECTION 23. Notices.
-------
Any notice or other communication herein required or permitted to be
given shall be mailed, faxed or delivered to the applicable address or facsimile
number and shall be deemed to be given or made upon the earlier to occur of (i)
actual receipt by the relevant party hereto and (ii) (A) if delivered by hand or
by courier, when signed for by or on behalf of the relevant party hereto; (B) if
delivered by mail, four Business Days after deposit in the mails, postage
prepaid; and (C) if delivered by facsimile, when sent and receipt has been
confirmed by telephone; provided, however, that notices and other communications
-------- -------
to the Secured Party shall not be effective until actually received. For the
purposes hereof, the address and facsimile number of each party hereto shall be
as provided in Section 10.02 of the Credit Agreement or as set forth under such
party's name on the signature pages hereof or as set forth on Schedule A
attached hereto, as Schedule A may be updated upon the execution of this
Agreement by an Additional Grantor, or such other address or facsimile number as
shall be designated by such party in a written notice delivered to the other
parties hereto.
29 Pledge and Security Agreement
SECTION 24. Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of the Secured Party in the exercise
of any right, remedy, power or privilege hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 25. Severability.
------------
If any provision of this Agreement is held to be illegal, invalid or
unenforceable, (a) the legality, validity and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired thereby and (b)
the parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 26. Headings.
--------
Section headings herein are included for convenience of reference
only and shall not affect the interpretation of this Agreement.
SECTION 27. Governing Law; Terms; Rules of Construction.
-------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, the LAW OF THE STATE OF NEW YORK applicable to agreements made and to be
performed entirely within such State. Unless otherwise defined herein or in the
Credit Agreement, terms used in Articles 8 and 9 of the Uniform Commercial Code
in the State of New York are used herein as therein defined. The rules of
construction set forth in Sections 1.02, 1.05 and 1.07 of the Credit Agreement
shall be applicable to this Agreement mutatis mutandis.
SECTION 28. Consent to Jurisdiction and Service of Process.
----------------------------------------------
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE
BROUGHT IN ▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ SITTING IN NEW YORK CITY OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE GRANTORS, THE SECURED PARTY, EACH LENDER AND
EACH SELECTED REVOLVING LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. THE GRANTORS, THE
SECURED PARTY, EACH LENDER AND EACH SELECTED REVOLVING LENDER IRREVOCABLY WAIVES
ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
30 Pledge and Security Agreement
AGREEMENT. THE GRANTORS, THE SECURED PARTY, EACH LENDER AND EACH SELECTED
REVOLVING LENDER WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH
STATE.
SECTION 29. Waiver of Jury Trial.
--------------------
EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO
TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING UNDER THE
AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT
MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
SECTION 30. Counterparts; Effectiveness.
---------------------------
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document. Any counterpart of this
Agreement may be transmitted and/or signed by facsimile. The effectiveness of
such counterpart and signatures shall, subject to applicable Law, have the same
force and effect as manually-signed originals and shall be binding on all
parties to this Agreement. The Secured Party may also require that any such
counterpart and signatures be confirmed by a manually-signed original thereof;
provided, however, that the failure to request or deliver the same shall not
-------- -------
limit the effectiveness of any facsimile counterpart or signature.
[The remainder of this page has been intentionally left blank.]
31 Pledge and Security Agreement
IN WITNESS WHEREOF, the Grantors and the Secured Party have caused
this Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
LEVI ▇▇▇▇▇▇▇ & CO.
By:___________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Treasurer
BATTERY STREET ENTERPRISES, INC.
By:___________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
LEVI ▇▇▇▇▇▇▇ FINANCIAL CENTER CORPORATION
By:___________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
LEVI ▇▇▇▇▇▇▇ GLOBAL FULFILLMENT SERVICES, INC.
By:___________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
S-1 Pledge and Security Agreement
LEVI ▇▇▇▇▇▇▇ GLOBAL OPERATIONS, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
LEVI ▇▇▇▇▇▇▇ INTERNATIONAL
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
LEVI ▇▇▇▇▇▇▇ INTERNATIONAL, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
LEVI'S ONLY STORES, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
NF INDUSTRIES, INC.
By:_________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Treasurer
S-2 Pledge and Security Agreement
CITICORP NORTH AMERICA, INC.,
as Administrative Agent as Secured
Party
By:_______________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
S-3 Pledge and Security Agreement
Schedule A
Name Notice Address and Facsimile Number for
---- ---------------------------------------
each Subsidiary Grantor
-----------------------
Schedule A-1 Pledge and Security Agreement
SCHEDULE 1(d) TO
PLEDGE AND SECURITY AGREEMENT
Deposit Accounts
----------------
Schedule 1(d)-1 Pledge and Security Agreement
SCHEDULE 1(e)(i) TO
PLEDGE AND SECURITY AGREEMENT
----------------------------------------------------------------------------------------------------------------------
Class of Stock Percentage of
or Equity Stock Par Number of Outstanding
Stock Issuer Interest Certificate Nos. Value Shares Shares Pledged
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Schedule 1(e)(i)-1 Pledge and Security Agreement
SCHEDULE 1(e)(ii) TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------------------------------------------------------------
Amount of
Debt Issuer Indebtedness
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Schedule 1(e)(ii)-1 Pledge and Security Agreement
SCHEDULE 1(f)(i) TO
PLEDGE AND SECURITY AGREEMENT
U.S. Trademarks:
---------------
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
Foreign Trademarks:
------------------
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
Schedule 1(f)(i)-1 Pledge and Security Agreement
SCHEDULE 1(f)(ii) TO
PLEDGE AND SECURITY AGREEMENT
U.S. Patents Issued:
-------------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
U.S. Patents Pending:
--------------------
Applicant's Date Application
Name Filed Number Invention Inventor
----- ----- ------ --------- --------
Foreign Patents Issued:
----------------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
Foreign Patents Pending:
-----------------------
Applicant's Date Application
Name Filed Number Invention Inventor
----- ----- ------ --------- --------
Schedule 1(f)(ii)-1 Pledge and Security Agreement
SCHEDULE 1(f)(iii) TO
PLEDGE AND SECURITY AGREEMENT
U.S. Copyrights:
---------------
Title Registration No. Date of Issue Registered Owner
----- ---------------- ------------- ----------------
Foreign Copyright Registrations:
-------------------------------
Country Title Registration No. Date of Issue
------- ----- ---------------- -------------
Pending U.S. Copyright Registrations & Applications:
---------------------------------------------------
Title Reference No. Date of Application Copyright Claimant
----- ------------- ------------------- --------- --------
Pending Foreign Copyright Registrations & Applications:
------------------------------------------------------
Country Title Registration No. Date of Issue
------- ----- ---------------- -------------
Schedule 1(f)(iii)-1 Pledge and Security Agreement
SCHEDULE 2(a) TO
PLEDGE AND SECURITY AGREEMENT
Maximum Amount Secured in
Selected Description of Cash Connection with such Cash
Revolving Lender Management Services Management Services
---------------- ------------------- -------------------
Schedule 2(a)-1 Pledge and Security Agreement
SCHEDULE 4(b)
TO
PLEDGE AND SECURITY AGREEMENT
Locations of Equipment and Inventory
------------------------------------
Name of Grantor Locations of Equipment and Inventory
--------------- ------------------------------------
Schedule 4(b)-1 Pledge and Security Agreement
SCHEDULE 4(c)
TO
PLEDGE AND SECURITY AGREEMENT
Office Locations, Type and Jurisdiction of Organization
-------------------------------------------------------
Type of Jurisdiction
Name of Grantor Organization Office Locations of Organization
--------------- ------------ ---------------- ---------------
Schedule 4(c)-1 Pledge and Security Agreement
SCHEDULE 4(d)
TO
PLEDGE AND SECURITY AGREEMENT
Other Names
-----------
Name of Grantor Other Names
--------------- -----------
Schedule 4(d)-1 Pledge and Security Agreement
SCHEDULE 4(h)
TO
PLEDGE AND SECURITY AGREEMENT
Filing Offices
--------------
Grantor Filing Offices
------- --------------
Schedule 4(h)-1 Pledge and Security Agreement
EXHIBIT I TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
[FORM OF GRANT OF TRADEMARK SECURITY INTEREST]
GRANT OF TRADEMARK 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 Trademark Collateral (as defined below); and
WHEREAS, Pursuant to that certain Credit Agreement dated as of January
31, 2003 by and among Levi ▇▇▇▇▇▇▇ & Co., a Delaware corporation, the Lenders
from time to time party thereto, the several financial institutions party
thereto as L/C Issuers, the several financial institutions party thereto as
Joint Lead Arrangers and Joint Book Managers, the financial institutions party
thereto as Co-Syndication Agents, the financial institution party thereto as
Documentation Agent and Citicorp North America, Inc., as Swing Line Lender and
Administrative Agent ("Administrative Agent") for the Lenders (said Credit
Agreement, as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "Credit Agreement"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), the Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Borrower; and
WHEREAS, the Borrower, Levi ▇▇▇▇▇▇▇ International Group Finance
Coordination Services Comm V.A., a Belgian corporation, or any successor thereto
("LSIFCS") and certain Material Domestic Subsidiaries of the Borrower may from
time to time enter, or may from time to time have entered, into one or more
Selected Revolving Lender Swap Contracts; and
WHEREAS, the Borrower 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; and
WHEREAS, pursuant to the terms of a Pledge and Security Agreement
dated as of January 31, 2003 (as amended, supplemented, restated or otherwise
modified from time to time, the "Pledge and Security Agreement"), among Grantor,
the Secured Party and the other grantors named therein, Grantor has agreed to
create in favor of the Secured Party a secured and protected interest in, and
the Secured Party has agreed to become a secured creditor with respect to, the
Trademark Collateral;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, subject to the terms and conditions
of the Pledge and Security Agreement, Grantor hereby grants to the Secured Party
a security interest in all of Grantor's right, title and interest in and to the
following, in each case whether now or hereafter existing or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located
(the "Trademark Collateral"):
I-1 Pledge and Security Agreement
(i) all rights, title and interest (including rights acquired
pursuant to a license or otherwise) in and to all trademarks, service
marks, designs, logos, indicia, tradenames, trade dress, corporate names,
company names, business names, fictitious business names, trade styles
and/or other source and/or business identifiers and applications pertaining
thereto, owned by Grantor, or hereafter adopted and used, in its business
(including the trademarks set forth on Schedule A attached hereto)
(collectively, the "Trademarks"), all registrations that have been or may
hereafter be issued or applied for thereon in the United States and any
state thereof and in foreign countries (including the registrations and
applications specifically set forth on Schedule A attached hereto) (the
"Trademark Registrations"), all common law and other rights in and to the
Trademarks in the United States and any state thereof and in foreign
countries (the "Trademark Rights"), and all goodwill of Grantor's business
symbolized by the Trademarks and associated therewith (the "Associated
Goodwill"), it being understood that the rights and interests included in
the Trademark Collateral hereby shall include, without limitation, all
rights and interests pursuant to licensing or other contracts in favor of
Grantor pertaining to Trademark applications and Trademarks presently or in
the future owned or used by third parties but, in the case of third parties
which are not Affiliates of Grantor, only to the extent permitted by such
licensing or other contracts and, if not so permitted, only with the
consent of such third parties; and
(ii) all proceeds, products, rents and profits of or from any
and all of the foregoing Trademark Collateral and, to the extent not
otherwise included, all payments under insurance (whether or not the
Secured Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with respect
to any of the foregoing Trademark Collateral. For purposes of this Grant of
Trademark Security Interest, the term "proceeds" includes whatever is
receivable or received when Trademark 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 Secured Party with respect to the security interest in the
Trademark Collateral granted hereby are more fully set forth in the Pledge and
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
[The remainder of this page has been intentionally left blank.]
I-2 Pledge and Security Agreement
IN WITNESS WHEREOF, Grantor has caused this Grant of Trademark 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-3 Pledge and Security Agreement
SCHEDULE A
TO
GRANT OF TRADEMARK SECURITY INTEREST
United States
Trademark Registration Registration
Registered Owner Description Number Date
---------------- ----------- ------ ----
I-4 Pledge and Security Agreement
EXHIBIT II TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
[FORM OF GRANT OF PATENT SECURITY INTEREST]
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, Pursuant to that certain Credit Agreement dated as of
January 31, 2003 by and among Levi ▇▇▇▇▇▇▇ & Co., a Delaware corporation, the
Lenders from time to time party thereto, the several financial institutions
party thereto as L/C Issuers, the several financial institutions party thereto
as Joint Lead Arrangers and Joint Book Managers, the financial institutions
party thereto as Co-Syndication Agents, the financial institution party thereto
as Documentation Agent and Citicorp North America, Inc., as Swing Line Lender
and Administrative Agent ("Administrative Agent") for the Lenders (said Credit
Agreement, as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "Credit Agreement"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), the Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Borrower; and
WHEREAS, the Borrower, Levi ▇▇▇▇▇▇▇ International Group
Finance Coordination Services Comm V.A., a Belgian corporation, or any successor
thereto ("LSIFCS") and certain Material Domestic Subsidiaries of the Borrower
may from time to time enter, or may from time to time have entered, into one or
more Selected Revolving Lender Swap Contracts; and
WHEREAS, the Borrower 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; and
WHEREAS, pursuant to the terms of a Pledge and Security
Agreement dated as of January 31, 2003 (as amended, supplemented, restated or
otherwise modified from time to time, the "Pledge and Security Agreement"),
among Grantor, the Secured Party and the other grantors named therein, Grantor
has agreed to create in favor of the Secured Party a secured and protected
interest in, and the Secured Party has agreed to become a secured creditor with
respect to, the Patent Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Pledge and Security Agreement, Grantor hereby grants to the
Secured Party a security interest in all of Grantor's right, title and interest
in and to the following, in each case whether now or hereafter existing or in
which Grantor now has or hereafter acquires an interest and wherever the same
may be located (the "Patent Collateral"):
II-1 Pledge and Security Agreement
(i) all rights, title and interest (including rights acquired pursuant
to a license or otherwise) in and to all patents and patent
applications and rights and interests in patents and patent
applications under any domestic or foreign law that are presently, or
in the future may be, owned or held by Grantor and all patents and
patent applications and rights, title and interests in patents and
patent applications under any domestic or foreign law that are
presently, or in the future may be, owned by Grantor in whole or in
part (including the patents and patent applications set forth on
Schedule A attached hereto), all rights (but not obligations)
corresponding thereto (including the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to ▇▇▇
for past, present and future infringements in the name of Grantor or
in the name of the Secured Party or the Lenders), and all re-issues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof (all of the foregoing being collectively
referred to as the "Patents"), it being understood that the rights and
interests included in the Patent Collateral hereby shall include,
without limitation, all rights and interests pursuant to licensing or
other contracts in favor of Grantor pertaining to patent applications
and patents presently or in the future owned or used by third parties
but, in the case of third parties which are not Affiliates of Grantor,
only to the extent permitted by such licensing or other contracts and,
if not so permitted, only with the consent of such third parties; and
(ii) all proceeds, products, rents and profits of or from any and all
of the foregoing Patent Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not the Secured
Party is the loss payee thereof), or any indemnity, warranty or
guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing 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 Secured Party with respect to the security interest
in the Patent Collateral granted hereby are more fully set forth in the Pledge
and Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
[The remainder of this page has been intentionally left blank.]
II-2 Pledge and Security Agreement
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:________________________
II-3 Pledge and Security Agreement
SCHEDULE A
TO
GRANT OF PATENT SECURITY INTEREST
Patents Issued:
--------------
Patent No. Issue Date Invention Inventor
---------- ---------- --------- --------
Patents Pending:
---------------
Applicant's Date Application
Name Filed Number Invention Inventor
---- ----- ------ --------- --------
III-4 Pledge and Security Agreement
EXHIBIT III TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
[FORM OF GRANT OF COPYRIGHT SECURITY INTEREST]
GRANT OF COPYRIGHT 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 Copyright Collateral (as defined
below); and
WHEREAS, Pursuant to that certain Credit Agreement dated as of
January 31, 2003 by and among Levi ▇▇▇▇▇▇▇ & Co., a Delaware corporation, the
Lenders from time to time party thereto, the several financial institutions
party thereto as L/C Issuers, the several financial institutions party thereto
as Joint Lead Arrangers and Joint Book Managers, the financial institutions
party thereto as Co-Syndication Agents, the financial institution party thereto
as Documentation Agent and Citicorp North America, Inc., as Swing Line Lender
and Administrative Agent ("Administrative Agent") for the Lenders (said Credit
Agreement, as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "Credit Agreement"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), the Lenders have made certain commitments, subject to the terms and
conditions set forth in the Credit Agreement, to extend certain credit
facilities to the Borrower; and
WHEREAS, the Borrower, Levi ▇▇▇▇▇▇▇ International Group
Finance Coordination Services Comm V.A., a Belgian corporation, or any successor
thereto ("LSIFCS") and certain Material Domestic Subsidiaries of the Borrower
may from time to time enter, or may from time to time have entered, into one or
more Selected Revolving Lender Swap Contracts; and
WHEREAS, the Borrower 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; and
WHEREAS, pursuant to the terms of a Pledge and Security
Agreement dated as of January 31, 2003 (as amended, supplemented, restated or
otherwise modified from time to time, the "Pledge and Security Agreement"),
among Grantor, the Secured Party and the other grantors named therein, Grantor
has agreed to create in favor of the Secured Party a secured and protected
interest in, and the Secured Party has agreed to become a secured creditor with
respect to, the Copyright Collateral;
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, subject to the terms and
conditions of the Pledge and Security Agreement, Grantor hereby grants to the
Secured Party a security interest in all of Grantor's right, title and interest
in and to the following, in each case whether now or hereafter
III-1 Pledge and Security Agreement
existing or in which Grantor now has or hereafter acquires an interest and
wherever the same may be located (the "Copyright Collateral"):
(i) all rights, title and interest (including rights acquired pursuant to
a license or otherwise) under copyright in various published and
unpublished works of authorship including computer programs, computer data
bases, other computer software, layouts, trade dress, drawings, designs,
writings and formulas owned by Grantor (including the works set forth on
Schedule A attached hereto) (collectively, the "Copyrights"), all copyright
registrations issued to Grantor and applications for copyright registration
that have been or may hereafter be issued or applied for thereon by Grantor
in the United States and any state thereof and in foreign countries
(including the registrations set forth on Schedule A attached hereto, as
the same may be amended pursuant hereto from time to time) (collectively,
the "Copyright Registrations"), all common law and other rights in and to
the Copyrights in the United States and any state thereof and in foreign
countries including all copyright licenses (but with respect to such
copyright licenses, only to the extent permitted by such licensing
arrangements) (the "Copyright Rights"), including each of the Copyrights,
rights, titles and interests in and to the Copyrights, all derivative works
and other works protectable by copyright, which are presently, or in the
future may be, owned, created (as a work for hire for the benefit of
Grantor), authored (as a work for hire for the benefit of Grantor) or
acquired by Grantor, in whole or in part, and all Copyright Rights with
respect thereto and all Copyright Registrations therefor, heretofore or
hereafter granted or applied for, and all renewals and extensions thereof,
throughout the world, including the right to renew and extend such
Copyright Registrations and Copyright Rights and to register works
protectable by copyright and the right, exercisable only upon the
occurrence and during the continuation of an Event of Default, to ▇▇▇ for
past, present and future infringements of the Copyrights and Copyright
Rights in the name of Grantor or in the name of the Secured Party or the
Lenders, it being understood that the rights and interests included in the
Copyright Collateral hereby shall include, without limitation, all rights
and interests pursuant to licensing or other contracts in favor of Grantor
pertaining to Copyright applications and Copyrights presently or in the
future owned or used by third parties but, in the case of third parties
which are not Affiliates of Grantor, only to the extent permitted by such
licensing or other contracts and, if not so permitted, only with the
consent of such third parties; and
(ii) all proceeds, products, rents and profits of or from any and all of
the foregoing Copyright Collateral and, to the extent not otherwise
included, all payments under insurance (whether or not the Secured Party is
the loss payee thereof), or any indemnity, warranty or guaranty, payable by
reason of loss or damage to or otherwise with respect to any of the
foregoing Copyright Collateral. For purposes of this Grant of Copyright
Security Interest, the term "proceeds" includes whatever is receivable or
received when Copyright 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 Secured Party with respect to the security interest in the
Copyright Collateral granted hereby are more fully set forth in the Pledge and
Security Agreement, the terms and provisions of which are incorporated by
reference herein as if fully set forth herein.
III-2 Pledge and Security Agreement
[The remainder of this page has been intentionally left blank.]
III-3 Pledge and Security Agreement
IN WITNESS WHEREOF, Grantor has caused this Grant of Copyright 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:__________________________
III-4 Pledge and Security Agreement
SCHEDULE A
TO
GRANT OF COPYRIGHT SECURITY INTEREST
U.S. Copyrights:
---------------
Title Registration No. Date of Issue Registered Owner
----- ---------------- ------------- ----------------
Pending U.S. Copyright Registrations & Applications:
---------------------------------------------------
Title Reference No. Date of Application Copyright Claimant
----- ------------- ------------------- --------- ---------
III-5 Pledge and Security Agreement
EXHIBIT IV TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
PLEDGE SUPPLEMENT
This Pledge Supplement, dated as of __________________, is delivered
pursuant to the Pledge and Security Agreement, dated as of January 31, 2003
between ____________________, a _______________ ("Grantor"), the other Grantors
named therein and Citicorp North America, Inc., as Administrative Agent as the
Secured Party (said Pledge and Security Agreement, as it may hereafter be
amended, supplemented, restated or otherwise modified from time to time, being
the "Pledge and Security Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined).
Grantor hereby agrees that the [Pledged Interests] [Pledged
Indebtedness] set forth on the schedule attached hereto shall be deemed to be
part of the [Pledged Interests] [Pledged Indebtedness] and shall become part of
the Securities Collateral and shall secure all Secured Obligations.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of _______________.
[GRANTOR]
By: ___________________________
Title:
IV-1 Pledge and Security Agreement
EXHIBIT V TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
IP SUPPLEMENT
This IP SUPPLEMENT, dated as of _______, is delivered pursuant to and
supplements (i) the Pledge and Security Agreement, dated as of January 31, 2003
(said Pledge and Security Agreement, as it may hereafter be amended,
supplemented, restated or otherwise modified from time to time, being the
"Pledge and Security Agreement"), among Levi ▇▇▇▇▇▇▇ & Co., the other Grantors
named therein and Citicorp North America, Inc., as Administrative Agent as the
Secured Party, and (ii) the [Grant of Trademark Security Interest] [Grant of
Patent Security Interest] [Grant of Copyright Security Interest] dated as of
January 31, 2003 (said [Grant of Trademark Security Interest] [Grant of Patent
Security Interest] [Grant of Copyright 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 Grantor.
["Grantor"] grants to the Secured Party a security interest in all of
Grantor's right, title and interest in and to the [Trademark Collateral] [Patent
Collateral] [Copyright Collateral] set forth on Schedule A attached hereto. All
such [Trademark Collateral] [Patent Collateral] [Copyright Collateral] shall be
deemed to be part of the [Trademark Collateral] [Patent Collateral] [Copyright
Collateral] and shall be hereafter subject to each of the terms and conditions
of the Pledge and Security Agreement and the Grant.
IN WITNESS WHEREOF, Grantor has caused this Supplement to be duly
executed and delivered by its duly authorized officer as of ______________.
[GRANTOR]
By:______________________________
Name:
Title:
V-1 Pledge and Security Agreement
EXHIBIT VI TO
PLEDGE AND SECURITY AGREEMENT
-----------------------------
[FORM OF COUNTERPART]
COUNTERPART (this "Counterpart"), dated as of _______, is delivered
pursuant to Section 21 of the Pledge and Security Agreement referred to below.
The undersigned hereby agrees that this Counterpart may be attached to the
Security Agreement, dated as of January 31, 2003 (said Pledge and Security
Agreement, as it may hereafter be amended, supplemented, restated or otherwise
modified from time to time, being the "Pledge and Security Agreement"; the terms
defined therein and not otherwise defined herein being used herein as therein
defined), among Levi ▇▇▇▇▇▇▇ & Co., the other Grantors named therein and
Citicorp North America, Inc., as Administrative Agent as the Secured Party. The
undersigned by executing and delivering this Counterpart hereby becomes a
Grantor under the Pledge and Security Agreement in accordance with Section 21
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 Secured Party to add the information set forth on
the Schedules to this Agreement to the correlative Schedules attached to
the Pledge and Security Agreement/1/;
(ii) agrees that all Collateral of the undersigned, including the
items of property set forth on the Schedules hereto, shall become part of
the Collateral and shall secure all Secured Obligations; and
(iii) makes the representations and warranties set forth in the Pledge
and Security Agreement, as amended hereby, to the extent relating to the
undersigned.
[NAME OF ADDITIONAL GRANTOR]
By:______________________________
Name:
Title:
--------------
/1/ The Schedules to the Counterpart should include copies of all Schedules that
identify collateral to be granted by the Additional Grantor.
VI-1 Pledge and Security Agreement